(CN) - BASF Catalysts and its attorneys must face claims that they fraudulently concealed evidence that the company's talc products contained asbestos, forcing many asbestos victims to dismiss or settle their tort claims, the 3rd Circuit ruled.
BASF Catalysts is successor to Engelhard Corp., which made talc products containing asbestos.
When Engelhard discovered the asbestos, rather than face the consequences, it enlisted the services of law firm Cahill, Gordon & Reindel to collect the tests and reports proving the presence of asbestos in Engelhard talc and destroy or hide them, according to the court's summary.
Then, when victims brought tort actions against Engelhard for asbestos exposure, the company defended itself by asserting that no tests had ever affirmed that its talc contained asbestos.
The scheme collapsed in a recent lawsuit when a former research chemist for Engelhard testified that he had discovered asbestos in the company's talc many years ago, and had been instructed to turn over all of his talc-related records.
This testimony triggered discovery of potentially concealed documents, of which many were found kept secretly in a Cahill storage facility.
Plaintiffs, primarily relatives of victims who died of asbestos-related diseases, say the scheme outlived most of the people exposed to Engelhard's asbestos, and robbed victims of a fair judgment on their claims.
They seek a declaration that BASF and Cahill committed fraud, and an injunction against the defendants' future invocation of res judicata
based on past state court judgments.
A federal judge found entirely for the defendants, but the 3rd Circuit revived plaintiffs' fraud claims Wednesday.
"We conclude that the District Court erred when it dismissed the fraud and fraudulent concealment claims. The amended class action complaint properly alleges the elements of fraud and fraudulent concealment - namely that BASF and Cahill lied about and destroyed the asbestos evidence to plaintiffs' detriment. Neither the New Jersey litigation privilege nor pleading requirements stand in the way of these claims," Judge Julio Fuentes wrote for the three-judge panel.
While plaintiffs may not have believed defendants' assertions that the product did not contain asbestos, there is no doubt that their cases "would have been much stronger if [they] had evidence that BASF's products contained asbestos," and would have saved significant litigation expenses by having that evidence, the court found.
Fuentes also reinstated the plaintiffs' requests for injunctive and declarative relief, dismissing defendants' arguments that injunctive relief would violate the Anti-Injunction Act.
However, the court found it premature to make a ruling on any particular legal defense that defendants might make if plaintiffs seek to reopen state cases.
"Although the parties certainly have adverse interests on these matters, an injunction or declaration about future legal defenses [such as res judicata
] would not provide a conclusive resolution of an existing controversy. The issues are, therefore, unripe," Fuentes wrote.