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"3rd Circuit Revives Case Against Asbestos Class Action Lawyers"

Big news in asbestos litigation, and maybe for mass torts generally:

The 3rd U.S. Circuit Court of Appeals has revived a proposed class action suit against a group of lawyers from southern states brought by more than 2,600 former clients from northern states who say they were cheated out of their fair share of $400 million in asbestos personal injury settlements in the Mississippi state courts when the lawyers gave larger payouts to southern plaintiffs.

Reversing a lower court's decision that dismissed the suit, Senior U.S. Circuit Judge Jane R. Roth issued a stern lecture to lawyers about the duty of loyalty.

"We are embarrassed to have to explain a matter so elementary to the legal profession that it speaks for itself: All attorneys in a co-counsel relationship individually owe each and every client the duty of loyalty. For it to be otherwise is inconceivable," Roth wrote in Huber v. Taylor.

The case provides a rare glimpse into the high-stakes world of asbestos litigation in which plaintiffs are termed "inventory" and settlements often involve hundreds or even thousands of cases. ...

Geographic origin was an appropriate factor in determining settlement value, the defense lawyers said, because jury verdicts in northern states are traditionally lower than in southern states and because, in southern courts, jury verdicts for northerners are typically lower than for southerners in their home state.

But Roth found there was evidence that the settlements were, in fact, aggregate, and that the plaintiffs may have a valid claim under Texas law for breach of fiduciary duty that could entitle them to a disgorgement of the southern lawyers' fees.

At the heart of the claim, Roth found, is the duty of loyalty every lawyer has to every client.

That duty exists, Roth said, "even when clients are viewed as mere 'inventory.'"

"This is the cost of doing business as an attorney at law, and we will not countenance shortcuts," Roth wrote.

P.S. Daniel Fisher at Forbes covers the story here.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.