Matter of New York City Asbestos Litig.

[*1] Matter of New York City Asbestos Litig. 2012 NY Slip Op 52298(U) Decided on November 15, 2012 Supreme Court, New York County Heitler, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 17, 2012
Supreme Court, New York County

In the Matter of New York City Asbestos Litigation



40000/88



JERRY KRISTAL, ESQ.

Weitz & Luxenberg

SCOTT EMERY, ESQ.

Lynch Daskal

Sherry Klein Heitler, J.

Pursuant to Section III, paragraph B of the September 20, 1996 Case Management Order, as amended May 26, 2011 ("CMO"), which governs all New York City Asbestos Litigation ("NYCAL"), the law firm of Weitz & Luxenberg, P.C., on behalf of the plaintiffs it represents ("Plaintiffs"), objects to and seeks vacatur of the December 12, 2011 recommendation ("Recommendation")[FN1] of then Special Master Laraine Pacheco ("Special Master"). Said motion was fully submitted on August 7, 2012. In general, Plaintiffs object insofar as it requires all state tort plaintiffs in these NYCAL actions to disclose to defendants all materials submitted in connection with any claims filed with the asbestos-related bankruptcy trusts established pursuant to 11 USC 524(g). Plaintiffs also seek to vacate CMO § XV(E)(2)(l) which requires NYCAL plaintiffs to file their proofs of claim with such bankruptcy trusts within certain periods of time. For the reasons set forth below, Plaintiffs' motion is denied and the Recommendation is confirmed as modified herein.

BACKGROUND

NYCAL cases typically involve large numbers of defendants who are alleged to have caused personal injury to individuals by reason of their exposure to asbestos. In or about the early 1980's, it became increasingly apparent that the economic viability of the major asbestos product manufacturers would not survive the onslaught of asbestos-related lawsuits filed against them, not only in New York, but across the country.

In 1982, the Johns-Manville Corporation, one of the world's largest producers of asbestos products, filed for bankruptcy protection. See In re Johns-Manville Corp, 68 BR 618 (SDNY 1986), aff'd 78 BR 407 (SDNY 1987), aff'd sub nom. Kane v Johns-Manville Corp., 843 F2d 636 (2d Cir. 1988). In 1986, in light of the long latency period of asbestos-related injuries, and in response to the overwhelming need for a mechanism to protect unknown future asbestos [*2]claimaints, as well as the need to enable otherwise vibrant companies to reorganize without the debilitating effect of having to defend countless future lawsuits, the Bankruptcy Court for the Southern District of New York approved as part of Johns-Manville's plan of reorganization the Manville Personal Injury Settlement Trust. See In re Johns-Manville Corp., supra.[FN2]

By this mechanism, a separate trust that survived the debtor's discharge was created, into which all of the debtor's asbestos-related liabilities were to be channeled. Upon confirmation of the plan of reorganization, all future asbestos claimants were enjoined from proceeding against the debtor in the tort system and had to instead assert their claims with the trust. Using the Manville injunction and trust structure as a model, in 1994 Congress added § 524(g) to the Bankruptcy Code, which explicitly authorizes the creation of such asbestos trusts and concomitant injunction, and

§ 524(h), which retroactively authorizes such injunctions previously issued in then pending bankruptcy cases. See 11 USC § 524(g),(h). Under 11 USC § 524(g), asbestos bankruptcy trusts are to be funded by stock in the reorganized company, insurance proceeds, and other company assets which are used toward the payment of claims submitted by present and future claimants. See 11 USC § 524(g)(2)(B)(I). Over the past three decades, more than 50 asbestos bankruptcy trusts have been established on behalf of companies that have filed for reorganization under Chapter 11 of the Bankruptcy Code, and more are in the process of being created each year. See Lloyd Dixon & Geoffrey McGovern, Asbestos Bankruptcy Trust and Tort Compensation, RAND Inst. for Civil Justice, 2011, at 1 ("2011 Rand Report").[FN3]

An essential requirement for imposing the injunction against proceeding in the tort system is the channeling of all asbestos-related liabilities of the debtor to the newly formed trust. See 11 USC § 524(g)(2)(B).Among other things, before a debtor's asbestos liabilities can be channeled into a trust, plan organizers must establish procedures to administer the trust and determine the qualifications that must be met in order for claimants to obtain compensation. These procedures are set forth in several documents that are approved by the bankruptcy courts and are specific to each trust.[FN4] The Trust Agreement "formally establishes the trust and details the authorities of its administrative officers." 2011 Rand Report at 11. The Trust Distribution Procedures ("TDPs") "describe the process by which claims will be collected, reviewed, and paid." Id. A third document, the Proof of Claim ("POC") form, is the vehicle by which claimaints seek compensation from the various asbestos bankruptcy trusts. These POC forms often provide specific factual details regarding a claimant's employment, exposure, and medical [*3]history.[FN5]

Discovery in mass tort asbestos cases can be complex, time-consuming, and expensive. In recognition of these burdens, on March 25, 1988 Justice Helen Freedman, who formerly presided over this litigation, so-ordered the NYCAL CMO in order to streamline discovery and promote early settlements. Like its current version, the 1988 CMO applied to all NYCAL cases. It was "crafted with great care by representatives chosen by both the plaintiffs' and the defendants' asbestos personal injury bar and . . . bears the imprimatur of the court." In re NYC Asbestos Litigation (Ames v Kentile Floors), Index No. 107574/08, at *2 (Sup. Ct. NY. Co. June 17, 2009, Heitler, J.), aff'd 66 AD3d 600 (1st Dept 2009). In this regard, the First Department has recognized the authority of the CMO as a controlling factor in the conduct of all NYCAL cases. In re NYC Asbestos Litigation, supra, 66 AD3d at 600 (the court has "full authority, under the controlling [CMO], to issue its discovery order pertaining to ongoing cases . . . .")

The current CMO is the product of several revisions that have from time to time been integrated into the document to reflect the evolving nature of this mass tort litigation. The 1996 CMO revision added the requirement to the standard interrogatories and document requests that plaintiffs identify all asbestos-containing products to which they allege exposure and disclose whether they have sought compensation from any asbestos bankruptcy trusts.[FN6] The 2003 amendment mandated the use of the form of standard interrogatories that are still used today. These interrogatories require plaintiffs to provide defendants with all knowledge and information available to them relating to their exposure, including all documents relating to claims made to asbestos bankruptcy trusts. The 2003 amendment also provides in § XV(E)(2)(1) thereof, that "[a]ny plaintiff who intends to file a proof of claim form with any bankrupt entity or trust shall do so no later than ten (10) days after plaintiff's case is designated in a FIFO Trial Cluster, except in the in extremis cases in which the proof of claim form shall be filed no later than ninety (90) days before trial."[FN7] The 2011 amendment did not change this section and as such recites the exact same requirement in its § XV(E)(2)(1).[FN8]

The Special Master's Recommendation

Pursuant to CMO § III, certain defendants sought the intervention of the Special Master with respect to their claim that Plaintiffs were not complying with their discovery obligations with regard to the disclosure of bankruptcy trust submissions and related information. On December 12, 2011, recognizing that "this discovery dispute regarding [POCs] is ongoing and is [*4]currently at issue in all clustered FIFO cases and in the upcoming April 2012 in extremis cluster . . . .", the Special Master directed all NYCAL plaintiffs to produce all materials filed with the asbestos bankruptcy trusts on their behalf, including, but not limited to, "affidavits (including those signed by plaintiffs, plaintiffs' family members, or a non-party), sworn statements, proofs of diagnosis, extraordinary claim certificates, and signature/certification pages."[FN9] The Special Master recommended that plaintiffs be permitted to redact trust claim identification numbers and settlement amounts from the POC documents. Pursuant to CMO § III(B), Plaintiffs noticed their objections and filed this motion to vacate the Recommendation. Plaintiffs' motion is opposed by a group of over 100 NYCAL defendants ("Defendants").[FN10]

Plaintiffs object to the Recommendation's directives on the grounds that: (1) POC submissions are made in the course of settlement discussions and are thus inadmissible and confidential; (2) the requested non-party affidavits are protected by the attorney work-product privilege; (3) the TDPs and all documents filed thereunder with the trust administrators are subject to the jurisdiction of and interpretation by the bankruptcy courts; and (4) CMO § XV(E)(2)(l) is overly broad and unconstitutional under the Supremacy Clause of the United States Constitution.

In opposition, the Defendants assert that the Plaintiffs have an obligation to fully comply with standard discovery in accordance with the interrogatories and supporting document requests established by the CMO and as mandated by the CPLR. The Defendants submit that this court should adopt the Special Master's Recommendation in all respects and order the NYCAL plaintiffs to timely produce all documents and forms that they have or plan to submit to the asbestos bankruptcy trusts within the time limits set forth in the CMO.

DISCUSSION

CPLR 3101(a) mandates that as to non-privileged matter "[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof . . . ." The words material and necessary' should be "interpreted liberally to require disclosure

. . . of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity." Allen v Crowell - Collier Publ. Co., 21 NY2d 403, 406 (1968).The purpose of CPLR 3101 is to "advance the function of a trial to ascertain truth and to accelerate the disposition of suits." Rios v Donovan, 21 AD2d 409, 411 (1st Dept 1964). Its scope is "generous, broad, and is to be construed liberally." Mann ex rel. Akst v Cooper Tire Co., 33 AD3d 24, 29 (1st Dept 2006). CPLR 3101 has been interpreted "to give effect to the strong public policy favoring full disclosure to adequately prepare for trial . . . ." New York State Elec. & Gas Corp. v Lexington Ins. Co., 160 AD2d 261, 261 (1st Dept 1990).

I.Jurisdiction

Plaintiffs argue that the POCs and materials submitted in connection therewith are subject [*5]to the confidentiality provisions of the TDPs and protected by all state and federal privileges. In this regard Plaintiffs allege that the discoverability of POCs in the state tort system is a determination that must be made by the federal bankruptcy courts in their capacity as supervisors of the asbestos bankruptcy trusts and in light of their broad jurisdiction over issues "related to" to such bankruptcy proceedings.See A.H. Robins Co., Inc. - Bergstrom v Dalkon Shield Claimants Trust, 86 F.3d 364, 372 (4th Cir 1996); see also In Re Casual Male Corp.: Longacre Master Fund, Ltd. v Telecheck Servs., Inc., 317 BR 472, 476-77 (SDNY 2004). Plaintiffs assert that the Defendants should bring their discovery requests to those courts, which Plaintiffs purport have retained jurisdiction to interpret the scope of the TDPs and make assessments regarding such issues on a case-by-case basis.

But the scope of a bankruptcy court's "related to" jurisdiction is not unlimited and may appropriately give way in a case where, as here, state law questions predominate. As an example, in In re Casual Male, notwithstanding that some issues would require bankruptcy court interpretation of the bankruptcy court's order, the case nevertheless was remanded to state court because "the essence of the controversy" was an issue of state law. Id. at 479 ("the essence of the controversy is . . . the contractual rights and duties, if any, of Longacre and TeleCheck as between each other, under state law. The fact that the winner of that dispute might have had rights against the Debtors under federal law does not make issues of federal law predominate in what is in essence a state law contract dispute

. . . .") Id. Contrary to the Plaintiffs' position, the issues herein do not depend on this court's interpretation of the TDPs, but on whether under state law this court may require Plaintiffs themselves (and not the trusts) to make full disclosure of information that is material and necessary to the litigation pending before it. CPLR 3101(a). The essence of the controversy in this matter is this court's interest in supervising and determining the discovery that is essential to the course of the tort actions commenced by Plaintiffs in this court, which presides over all NYCAL actions filed in this court and which has the most compelling interest to adjudicate all such matters to avoid inconsistent results. State trial courts are "vested with broad discretion in supervising the discovery process, and [their] determinations will not be disturbed absent an improvident exercise of that discretion." Brooklyn Union Gas Co. v American Home Assur. Co., 23 AD3d 190, 190 (1st Dept 2005). Accordingly, this court disagrees with Plaintiffs' argument that the "federally administered trust submission scheme"[FN11] preempts this court from deciding these issues.

II.Confidentiality

Citing, among other things, to CPLR 4547[FN12], Plaintiffs assert that certain materials, [*6]including non-party affidavits, submitted in connection with POCs to the trusts are exempt from disclosure as protected confidential settlement materials.[FN13] In support of this proposition Plaintiffs rely on the confidentiality clauses contained in the TDPs which essentially provide that all submissions to the trust by a holder of a POC "and materials related thereto" shall be treated as made in the course of settlement discussions and are intended by the parties to be confidential and protected by all applicable state and federal privileges (see pp. 10-11, infra).

Such issue was previously addressed by Justice Freedman of this court in Negrepont v A.C. & S., Inc., Index No. 120894/01 (Sup. Ct. NY. Co. Dec. 11, 2003, Freedman, J.). The Negrepont plaintiffs raised several of the same issues that are now before this court. The court held that POC materials are generally discoverable (Defendants' Exhibit 25, pp. 3-4):

Plaintiffs argue long, hard and cogently that these are really, in effect, settlement negotiations, that the proofs of claim are not public documents, that they are filed with the bankrupt trusts that have been set up by the bankruptcy courts and that pursuant to 4547 of the CPLR are not discoverable.

* * * *

[W]hile the proofs of claim are partially settlement documents, they are also presumably accurate statements of the facts concerning asbestos exposure of the plaintiffs. While they may be filed by the attorneys, the attorneys do stand in the shoes of the plaintiffs and an attorney's statement is an admission under New York law. Therefore, any factual statements made in the proofs of claim about alleged asbestos exposure of the plaintiff to one of the bankrupt's products should be made available to the defendants who are still in the cases.

There is also a caveat in [CPLR] 4547 that says that factual statements made during settlement discussions are discoverable and we are dealing only with discoverability at this time.

This order stands today as written. Accord Andrucki v Aluminum Company of America., Index No. 190377/10 (July 27, 2011, Shulman, J.) (Defendants' exhibit 27, p. 813-814)[FN14]: [*7]

. . . Judge Fr[e]edman makes very clear that based upon arguments before her that information underlying the proofs of claims are clearly discoverable; that factual statements made in the context of settlement negotiations are can be con[s]trued as quasi-judicial admissions on behalf of a party. They do not go to negotiations . . . [M]any jurisdictions [have] recognized such information is critical to a defendant's ability to be able to seek to apportion liability or to meet their burden under CPLR Article 16 and/or its corollary statutes in the respective states in which the issues are being raised.

See also Drabczyk v Amchem Products, Inc., Index No. 1583/2005 (Sup. Ct. Erie Co. Jan. 18, 2008, Lane, J.) ("Pretrial disclosure of inadmissible documents and other evidence that may lead to disclosure of admissible proof is required . . . thus even if the bankruptcy trust [POCs] defendant seeks should not be received in evidence [see CPLR 4547], they must be disclosed.").

In similar circumstances, the California Court of Appeal, First District, in Volkswagen of America, Inc., v Superior Court, 139 Cal. App 4th1481 (2006), has decreed that a POC is analogous to a complaint rather than a settlement demand. "A statement by a claimant concerning the extent of his injuries or disease, or concerning the amount of damages he . . . claims to have suffered, if not connected with an offer of compromise,' may well constitute an admissible admission . . ." Id. at 1494. The court found (Id. at 1495, internal citations omitted):

[Plaintiff] has provided the bankruptcy trusts with factual information concerning both his work history and his medical condition. Both unquestionably are directly pertinent to the claim [plaintiff] is asserting against Volkswagen. And Volkswagen has good reason to ascertain what [plaintiff] has told others about these issues. Since each party who shares responsibility for any asbestos-related disease from which a claimant suffers is liable only for its proportionate share of noneconomic damages . . .each will understandably be concerned to determine whether the claimant has overstated its share of responsibility.While the Volkswagen Court of Appeal decision is not binding on this court, it is nonetheless persuasive insofar as it is consistent with the decisions in this state on this issue.Plaintiffs nevertheless maintain that the Special Master's Recommendation conflicts with the express confidentiality and related protections prescribed by most TDPs. In support, Plaintiffs cite to the so-called "sole benefit" and confidentiality provisions that are found within the TDPs. As one example, the Babcock & Wilcox TDP, revised as of January 4, 2008, provides (Plaintiffs' Exhibit L):

5.7(b)(3)B & W Exposure

. . . Evidence submitted to establish proof of exposure to B & W products is for the sole [*8]benefit of the PI Trust, not third parties or defendants in the tort system.

* * * *

6.5Confidentiality of Claimants' submissions. All submissions to the PI Trust by a holder of a PI Trust claim of [sic] a proof of claim form and materials related thereto shall be treated as made in the course of settlement discussions between the holder and the PI Trust, and intended by the parties to be confidential and to be protected by all applicable state and federal privileges, including but not limited to those directly applicable to settlement discussions. The PI Trust will preserve the confidentiality of such claimant submissions, and shall disclose the contents thereof only with the permission of the holder, to another trust established for the benefit of asbestos personal injury claimaints pursuant to section 524(g) and or section 105 of the Bankruptcy Code or other applicable law, to such other person as authorized by the holder, or in response to a valid subpoena of such materials issued by the Bankruptcy Court . . . .

The numerous examples of TDPs submitted on this motion contain substantially similar if not identical provisions. However, as Defendants point out, many of these TDPs did not contain confidentiality provisions in their original form,[FN15] and were not subject to bankruptcy court approval upon confirmation of the plan of reorganization. Several other TDPs that did contain confidentiality provisions were actually amended to expressly allow POC materials to be discoverable in tort actions. As an example, an August 9, 2008 provision amending section 6.5 of the A.C. & S. Asbestos Trust TDP provides, in relevant part (Plaintiffs' Exhibit H):

Nothing in the TDP, the Plan, or the Trust Agreement expands, limits or impairs the obligation under applicable law of a claimant to respond fully to lawful discovery in an underlying civil action regarding his or her submission of factual information to the Trust for the purpose of obtaining compensation for asbestos-related injuries from the Trust[FN16].

This type of situation was addressed by United States Bankruptcy Judge Judith K. Fitzgerald of the Delaware Bankruptcy Court, who aptly observed that several of the confidentiality provisions on which the plaintiffs relied were not contained in earlier versions of the TDPs as presented to the court for approval. A.C. & S Asbestos Settlement Trust v Hartford Accident Indem. Co, 2011 Bankr. LEXIS 609, at *39-41, n.11 (D. Del. Feb. 22, 2011). Consequently, Judge Fitzgerald held that such added TDP provisions are not binding on third parties. Id. at 39-40.

Plaintiffs point out that several court approved TDPs contain confidentiality provisions in [*9]their original forms and do not contain provisions expressly permitting discovery in tort actions.[FN17] Even so, in as much as confidentiality agreements are not an absolute bar to discovery, those TDPs do not relieve Plaintiffs from their obligation to provide relevant discovery to third parties. See National Union Fire Ins. Co. Of Pittsburgh v Porter Hayden Co., No. CCB-03-3408, at *4 (D. Md. February 24, 2012, Blake, J.) (Defendants' exhibit 30) ("There is no privilege for documents merely because they are subject to a confidentiality agreement, and confidentiality agreements do not necessarily bar discovery that is otherwise permissible and relevant"); Conopco v Wein, 05-CV- 9899, 2007 U.S. Dist. LEXIS 27339, at *14 (SDNY Apr. 4, 2007) ("[T]he simple fact that the parties to the settlement agreement agreed to its confidentiality does not shield it from discovery.'") (citation omitted); cf. Maroons Home Prods. v. Manufacturers & Traders Trust Co., 244 AD2d 882, 885 (4th Dept 1997) ("[The termination] agreement provides only that the parties will keep confidential the circumstances surrounding [third party defendant's] embezzlement . . . . M & T was not a party to that agreement. Thus, the confidentiality clause does not hinder M & T from discovering facts relevant to its defense.")

The cases relied on by Plaintiffs in this regard are inapposite. In In Re Garlock Sealing Industries, LLC, No. 10-31607 (WDNC March 4, 2011, Hodges, J.) (Plaintiffs' Exhibit 3), the court denied a request by a group of debtors who sought to compel production of the "aggregate tort recoveries and aggregate trust recoveries" received by a group of plaintiffs who made claims against the debtors over the course of fifteen years. Here, the Defendants agree that Plaintiffs will redact monetary amounts from the POCs before disclosing them to the defendants. Similarly, in Renfrew v Hartford Accident & Indem. Co., No. 07-4141, 2008 Bankr. LEXIS 1308 (ND Cal. April 11, 2008), the court determined that highly sensitive information contained in a trust claim form about a claimaint's alcohol abuse and HIV status should not be disclosed. The Renfrew court did note that such information would be discoverable if it were relevant to a claim of damages being asserted against the party seeking disclosure. Renfrew, supra, at *22-23.

III.Work-Product Privilege

Plaintiffs also argue that they can withhold the discovery at issue pursuant to New York's work-product doctrine, as codified in CPLR 3101(c)[FN18] and CPLR 3101(d)(2)[FN19]. The First [*10]Department has defined the scope of CPLR 3101(c) as limited to "documents prepared by counsel acting as such, and to materials uniquely the product of a lawyer's learning and professional skills, such as those reflecting an attorney's legal research, analysis, conclusions, legal theory or strategy." Brooklyn Union Gas Co. v American Home Assur. Co., 23 AD3d 190, 190-191 (1st Dept 2005); see e.g., Spectrum Sys. Int'l Corp. v Chem. Bank, 78 NY2d 371 (1991). Thus, when documents are generated for litigation, courts have tended to classify them as trial preparation materials (protected by CPLR 3101(d)(2)) unless they contain otherwise privileged communications, such as memoranda of private consultations between attorney and client. People v Kozlowski, 11 NY3d 223, 244 (2008) (citing Connors, Practice Commentaries, McKinneys Cons Laws of NY, Book 7B, CPLR C3101:27, at 53-54). Unlike pure work-product, which is generally not obtainable, materials prepared in anticipation of trial may be obtained if the party seeking discovery demonstrates that it has a substantial need for the materials, or that it is unable, without undue hardship, to obtain the substantial equivalent of the materials by other means. People v Kozlowski, supra; CPLR 3101(d)(2).Mindful of these authorities, and on the facts of this matter, I find that neither the POCs nor the non-party affidavits at issue may be categorized as pure attorney work-product entitled to absolute protection. This court understands that the Plaintiffs exercised strenuous efforts and devoted substantial time and resources to obtain the POC documents at issue for the purpose of substantiating claimants' allegations to the trusts and to obtain appropriate compensation for them and their families. However, under the reasoning in this jurisdiction, documents generated to "evaluate the extent of a claimant's loss are not privileged, and, therefore, discoverable" and "such documents do not become privileged merely because an investigation was conducted by an attorney.'" Brooklyn Union Gas Co., supra, at 191 (citation omitted). As set forth in Skinner v Basco Drywall and Painting, No. RG11599223, at *2 (Superior Court of California, Alameda County, August 6, 2012, Lee, J.)[FN20], I agree that the "documents filed with bankruptcy trusts are not work product merely because they were compiled by counsel. They are analogous to documents produced in response to discovery or mandatory exhibits filed with certain types of complaints."

The non-party affidavits at issue might arguably be deemed materials prepared in anticipation of litigation or for trial, but this classification provides only limited protection from disclosure. To the extent they contain facts not otherwise discoverable by the Defendants they should be produced. As an example, this court is sensitive to the privacy issues concerning the non-party affiants, and as such they should not be brought into the state tort system without a compelling reason. Balancing these interests, the court finds that the Defendants are entitled only to the factual information contained in the non-party affidavits. Accordingly the Recommendation is hereby modified to the extent that Plaintiffs shall redact all of the affiants' [*11]personal information prior to producing such materials to the Defendants in accordance with the Recommendation and this order, including, but not necessarily limited to, surnames, addresses, and social security numbers. Should the Defendants seek further discovery upon receipt of the redacted documents, they can avail themselves of the discovery provisions of the CPLR and CMO, by, for example, commissioning their own investigations. See Curry v American Standard, No. 08-CV-10228, at *11 (SDNY Jan, 10, 2011, Gwin, J.) ("In fact I think instead you were supposed to do your own investigations as to what exposure he had, and you would have had access presumptively to discovery mechanisms to find it."); see also Volkswagen, supra, at 1492 ("the cases that have approved a heightened standard [of discovery] are concerned primarily with . . . the privacy interests of third parties.")

IV.CMO § XV(E)(2)(l)

The CMO was established, in part to "allow the parties to obtain reasonably necessary documents and information without imposing undue burdens in order to permit the parties to evaluate cases, reach early settlements, and prepare unsettled cases for trial." CMO § II. With respect to POC materials in in extremis cases, the CMO provides that plaintiffs who intend to file POCs with asbestos bankruptcy trusts must do so at least 90 days before trial.

CMO § XV(E)(2)(l). In FIFO cases, plaintiffs are required to file no later than ten days after their case is designated in a FIFO trial cluster. Id.

Plaintiffs seek to strike this section as unconstitutional on the ground that it conflicts with the time limitations provided by the TDPs, which typically provide that claimaints may submit POCs to the asbestos bankruptcy trusts within three years after the date of diagnosis or of the initial filing of the claim, whichever is later.[FN21] Plaintiffs also argue that they did not negotiate and/or agree to CMO § XV(E)(2)(1).

By letter dated June 28, 2012, Plaintiffs refer to several recent rulings which they claim are compelling on this issue. In Brumley v Azko Nobel, et al., No. 17509-2010, at 16-17 (Harris County, Texas, Feb. 12, 2012), the Hon. Mark Davidson, who presides over Texas' Asbestos Multidistrict Litigation, held that he could not compel plaintiffs to disclose information regarding trusts with whom they anticipated filing claims. Judge Parkins in McGhee v AT & T, Inc., No. 10C-12-114 (Del. Super. Ct. June 7, 2012) and Judge Bellis in Ouellette v A.W. Chesterton Co., No. CV05-4009802 (Conn. Super. Ct. Mar. 19, 2012) implied that they too would not compel such a disclosure. McGhee, supra, at 106-07 ("I know you could find out, in my courtroom anyway, whether the plaintiff was exposed to asbestos in connection with other entities which are now in bankruptcy, but beyond that, I don't think I can force them to say whether they contemplate making a claim, and in fact, they may not know"); Ouellette, supra, at 52-53 ("it's not even happened yet, it's just something that's not been done but may happen in the future, and who can predict the future."). These cases are distinguishable from this NYCAL proceeding. The CMO requires Plaintiffs to file their intended claims with the various bankruptcy trusts within certain time limitations, not claims they may or may not anticipate filing.

Moreover, it is axiomatic under New York law that parties may shorten an applicable [*12]time limitation by written agreement, so long as such agreement does not conflict with public policy. See CPLR 201; Boss v Am. Express Fin. Advisors, Inc., 15 AD3d 306, 308 (1st Dept 2005). In this case, we have the negotiated CMO which governs all NYCAL actions. See In re Asbestos Litigation, supra. Since its creation in 1988 the asbestos bar has worked diligently to mold the NYCAL CMO into a document that aids the parties in facilitating the efficient, economic, and fair resolution of the tens of thousands of asbestos cases that have been filed in this court. It is the product of deliberate, arms-length negotiations through which, to the benefit of both sides, the parties have charted their own course. The court has no reason to believe that the parties will not continue to pursue such negotiations, which could result in future amendments to the CMO. While the plaintiffs' bar is not completely satisfied with some of the CMO's provisions, the defendants' bar is similarly not content with others. That is the reality of any bargained for position, to which the parties have signed on.

The NYCAL CMO has guided the court and this litigation for more than two decades. Section XV(E)(2)(l) thereof has been included in the CMO since 2003. For the court to now vacate this particular clause which effects the intent of the parties would diminish the effectiveness of the CMO as a whole. I therefore reject Plaintiffs' challenge to CMO

§ XV(E)(2)(1) and decline their request to strike this provision from the CMO.

CONCLUSION

This decision and order is intended to serve as a guide in all NYCAL cases on the issue of discovery of asbestos bankruptcy trust information. Still, the court recognizes that there may be extraordinary circumstances that would lead this court to deviate from same. Thus, the court shall not foreclose Plaintiffs from seeking a protective order with respect to materials that this court has herein deemed discoverable or the Defendants from seeking to compel the production of information that this court believes should be kept confidential. However, the court cautions that these measures should only be utilized under exceptional circumstances so that the exception does not overcome the rule.Accordingly, and in light of the foregoing, it is hereby

ORDERED that Plaintiffs' motion to vacate the Special Master's December 12, 2011 Recommendation is denied in its entirety; and it is further

ORDERED that, as modified herein, the Recommendation is confirmed; and it is further

ORDERED that Plaintiffs are directed to comply with any outstanding discovery requests as per the Recommendation within 60 days of the date of this order.

This constitutes the decision and order of the court.

DATED:________________________________________

SHERRY KLEIN HEITLER

J.S.C. Footnotes

Footnote 1:Submitted as Plaintiffs' exhibit 1.

Footnote 2:Cf. Plevin, Epley, & Elgarten, The Future Claims Representative in Prepackaged Asbestos Bankruptcies: Conflicts of Interest, Strange Alliances, and Unfamiliar Duties for Burdened Bankruptcy Courts, 62 NYU Ann. Surv. Am. L. 271, at 1 (2006).

Footnote 3:The 2011 Rand Report is submitted as defendants' exhibit 3. The research described therein was supported by, among others, a coalition of asbestos defendants and insurers. Plaintiffs do not dispute the factual information referred to therein.

Footnote 4:See Francis E. McGovern, The Evolution of Asbestos Bankruptcy Trust Distribution Plans, 62 NYU Ann. Surv. Am. L. 163 (2006).

Footnote 5:See McGovern, supra, pp. 1-3.

Footnote 6:See 1996 CMO § VIII (defendants' exhibit 4); Defendants' Third Amended Standard Set of Interrogatories and Request for Production of Documents, No. 30 (defendants' exhibit 5).

Footnote 7:See 2003 CMO § VIII (defendants' exhibit 6); Defendants' Fourth Amended Standard Set of Interrogatories and Request for Production of Documents, No. 31 (defendants' exhibit 8).

Footnote 8:See 2011 CMO § XV(E)(2)(1) (defendants' exhibit 7).

Footnote 9:Recommendation, pp. 1, 2.

Footnote 10:Neither Plaintiffs nor the Defendants object to that portion of the Recommendation which permits the redaction of settlement figures from the POCs. Accordingly, that part of the Recommendation is confirmed.

Footnote 11:Plaintiffs' Reply Affirmation, dated March 26, 2012, pp. 4-5.

Footnote 12:CPLR 4547 provides, in relevant part: "Evidence of . . .furnishing, or offering. . .to furnish, or. . . accepting, or offering. . . to accept, any valuable consideration in compromising. . .a claim which is disputed as to either validity or amount of damages, shall be inadmissible as proof of liability for or invalidity of the claim or the amount of damages. Evidence of any conduct or statement made during compromise negotiations shall also be inadmissible. The provisions of this section shall not require the exclusion of any evidence, which is otherwise discoverable, solely because such evidence was presented during the course of compromise negotiations." (Emphasis Added).

Footnote 13:Plaintiffs concede that CPLR 4547 is not an absolute bar to admissibility, and it is undisputed that settlement documents are not exempt to the extent they contain underlying factual material relevant to the litigation. See Central Petroleum Corp. v Kyriakoudes, 121 AD2d 165, 165 (1st Dept 1986) ("while evidence of settlement negotiations is generally inadmissible, admissions of fact made in connection with settlement negotiations are admissible."); see also Rule 408 of the Federal Rules of Evidence.

Footnote 14:Andrucki was one of 8 NYCAL cases from the April 2011 in extremis cluster that Justice Martin Shulman consolidated for trial. One of the defendants moved in limine to preclude six plaintiffs from introducing any evidence of its alleged liability due to their alleged failure to disclose information or supplement their prior productions regarding the asbestos bankruptcy trusts.



Footnote 15:Compare Armstrong World Industries, Inc. TDP, Defendants' Exhibit I, at 19 with Defendants' Exhibit J, at 20; DII Industries TDP, Defendants' Exhibit M, at 3-26 with Defendants' Exhibit N, at 36; Kaiser Aluminum & Chemical Corporation Asbestos Distribution Procedures, Defendants' Exhibit Q, at 48 with Defendants' Exhibit R, at 53; Porter Hayden Co. TDP, Defendants' Exhibit S, at 40 with Defendants' Exhibit T, at 41.

Footnote 16:See also Federal Mogul Asbestos Trust Agreement, Defendants Exhibit P, at 67.

Footnote 17:Compare Babcock & Wilcox Co. TDP, Defendants' Exhibit K at 47-48 with Babcock & Wilcox Co. TDP Revised 01/04/08, Defendants' Exhibit L at 46-48; United States Gypsum TDP, Defendants' Exhibit U, at 47-48 with United States Gypsum Revised 03/29/10, Defendants' Exhibit V, at 50-51.

Footnote 18:CPLR 3101(c) provides in its entirety that: "The work product of an attorney shall not be obtainable."

Footnote 19:CPLR 3101(d)(2) provides: "Materials. Subject to the provisions of paragraph one of this subdivision, materials otherwise discoverable under subdivision (a) of this section and prepared in anticipation of litigation or for trial by or for another party, or by or for that other party's representative (including an attorney, consultant, surety, indemnitor, insurer or agent), may be obtained only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the case and is unable without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of the materials when the required showing has been made, the court shall protect against disclosure of the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation."

Footnote 20:Defendants submitted a copy of Skinner by letter dated August 7, 2012.

Footnote 21:See, i.e., section 5.1(a)(2) to amended A.C. & S., Owens Corning/Fibreboard, Babcock & Wilcox, United States Gypsum, and Federal-Mogul TDPs, submitted respectively as Plaintiffs' Exhibits 2, 4, 8, 9, and 10.