Proposed California Legislation Would Mandate Asbestos Bankruptcy Trust Disclosures Statewide
Monday, July 13, 2015
Proposed California Legislation Would Mandate Asbestos Bankruptcy Trust Disclosu

California Assemblyman Ken Cooley (D-Rancho Cordova) has introduced and sponsored Assembly Bill No. 597, the Asbestos Tort Claim Trust Transparency Act, which if passed would require asbestos plaintiffs to disclose all asbestos bankruptcy trust claim documents in asbestos tort actions. These mandated disclosures would include “any communications between the plaintiff and an asbestos trust and all proof of claims forms and supplementary or supporting materials submitted to or required by an asbestos trust.” Plaintiffs would be required to submit a sworn statement identifying the status of each claim, including all monies requested and received.

Under the proposed legislation requiring such unilateral disclosures, it would no longer be necessary for defendants to seek discovery of relevant materials regarding any claim made by plaintiffs to an asbestos trust. Any materials disclosed by plaintiffs are potentially admissible evidence to prove alternate causation or to apportion fault for plaintiffs’ injuries.

Frequently, plaintiffs will claim attorney-client privilege, work product or confidentiality as a means to prevent defendants from obtaining these documents. However, the proposed bill would prevent plaintiffs from using those objections to block discovery of asbestos trust claim documents. If plaintiffs fail to disclose asbestos trust claims, defendants are no longer left without other means of discovering such documents. Further, if defendants reasonably believe plaintiffs have a viable but unfiled claim against any trust, defendants may file a motion requiring plaintiffs to file such claims.

Moreover, if plaintiffs identify an asbestos trust in which they could file a viable claim but then fail to do so, under the proposed legislation the court could implement several remedies to timely allow the necessary disclosures. Those could include staying the state court action, denying a motion for an expedited trial date, or vacating or continuing an existing trial date.

The proposed bill would apply to all asbestos tort claims filed on or after the effective date of the approval of the bill and to all asbestos tort actions pending on the date of the approval of the bill if the initial trial date has not passed.

Oppositions to the bill have been filed by the Consumer Attorneys of California, California Labor Federation, State Building & Construction Trades Council of California, Sacramento Central Labor Council, AFL-CIO, California Professional Firefighters, State Teamsters and Environmental Working Group, and the National Lawyers Guild Labor & Employment Committee.

It is anticipated that legislative hearings will be held in fall 2015.