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THIS IS NOT A FINAL TRANSCRIPT. THIS IS A ROUGH DRAFT

TRANSCRIPT.
THURSDAY, OCTOBER 16, 2014.
(Prior proceedings were not requested at this time.)
THE COURT: I don't want to cut the rest of you off
but I'm going to. Because I think it's clear that I need to
deny the motions that we've talked about so far to seal, and
to order, instead, that we simply redact the things that are
listed as on Mr. Cassada's page two. And so I will order that
the record be open with respect to everything except Social
Security numbers, except for the last four digits, days and
months of birth, the names of identifiable minors, financial
account numbers except the last four digits, and medical
information except for claimed disease type. And will
otherwise order the record unsealed and we'll talk about
procedures, I guess, at the end.
But the -- and I'll tell you why. The District
Court said that I was first to identify the sources of the
right to access in order to properly weigh the competing
interests. And I think that Mr. Pflaum mentioned three
sources, First Amendment, common law, and bankruptcy code.
Although technically, I guess, maybe it's not
necessary to reach the First Amendment issue, the District
Court kind of told me to do that. So I'll talk about that a
little bit.
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I believe that the First Amendment does apply.
Although this was not a finally adjudicative trial, in the
sense of the normal civil or criminal trial. It was a
significant determination that took place over, I think, more
than 15 days of hearing which should have been public.
I guess I should say by way of background, only that
probably appropriate to observe that, what a long strange trip
this has been. It's had a lot of twists and turns. I guess
in a lot of ways I'm like Columbus. I set out on day one of
the hearing not knowing where I was going, and when I got
there I wasn't sure where I was. If I had to guess where I
was going on day one, I wouldn't have guessed where I ended
up. So we've had lots of twists and turns and I guess that
makes things interesting.
But, in any event, the hearing should have been
opened to the public. This is the type of proceeding that
would have historically been open, and public access would
have served a positive role in the functioning of the Court by
enabling the public to evaluate the Court's decision based on
all of the evidence rather than on simply part of it.
The First Amendment requires a compelling government
interest to overcome the public's right to access and I can't
find that such exists here.
The common law rights require a balancing of
interests, and I think here, which I'll discuss a little bit
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more in a minute, the balances are in favor of allowing
access, and under the code I think there is -- under 107(a)
the access is required.
The restriction of assets appropriate -- restriction
of access is appropriate only in unusual circumstances, and I
don't think we have any of that here.
As to the names of adult claimants, I can't find any
extraordinary circumstances that would require anonymity. All
of the adult claimants are named in state court complaints. I
think also in the schedules in this proceeding. The names are
necessary for matching with other information in order that
things can be properly evaluated.
With respect to the questionnaire responses and
trust claims including the Delaware Trust Facility and
settlement amounts, it's clear that case law holds that the
fact that the information was produced pursuant to
confidentiality agreement, or in this case seven
confidentiality orders, that that doesn't determine the
matter, and that the public's right to access overcomes
whatever expectations may have been created by that.
It's also clear that Federal Rule of Evidence 408 is
not applicable to this determination.
I believe that the public's right to access
outweighs any policy favoring settlements that might be
enhanced by keeping them confidential. There have been no
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specific showing of any negative impact on settlements. The
settlement and the settlement amount are important to the
issues in this case, because I guess in large measure the
issue in this case is the settlement amounts. Any de-linking
of names and settlement amounts, I think, would destroy the
ability of the public to analyze the data, and to determine
whether the evidence supported the decision. Who made the
settlement and for how much is essentially the issue that is
important here.
I don't believe that the settlement amounts can be
classified as financial information. They are very different
than what is commonly understood to be financial information.
The settlement amount is a conclusion of a publicly filed
lawsuit, and not akin to a bank account.
It's also probably worth noting that any of the
settlements we're talking about here are now ancient history,
at least the youngest one would be over four years old. I
think that further reduces any risk of harm to individuals, or
any risk of identity theft that might apply by disclosure of
that information.
I believe that the appropriate privacy interests of
the individuals involved here are protected by the other
redactions that I mentioned.
So that will be my order on that matter.
So I guess now let's go to Garlock's --
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MR. SWETT: Your Honor, I have one question by way
of follow-up. It has to do with the medical information.
It's possible that the advocacy on our side of this was a
little too vague. Some of the claimants, I believe, submitted
medical records, and the entire record is the medical
information. Either redaction of those records will make them
complete blanks, which would be a waste of effort, or they
should be sealed instead of redacted.
I'm not sure I'm making myself clear, but it just
occurred to me in listening to your ruling, that the medical
information is in a form that's unlike the social security
number.
THE COURT: I think that's fine. If redaction would
lead something to be a blank page, we can simply seal it if
that's simpler. But I believe the parties were pretty much in
agreement that what -- the medical information that was
appropriate was the disease type.
MR. SWETT: Right.
THE COURT: And not, you know, not the entire
medical examination.
MS. JOHNSTON: Your Honor, I might add. If a
medical record is the only place where the type of asbestos
disease appears, then in that limited circumstance, then a
redaction or a reverse redaction would be appropriate, so that
the type of disease is not shielded. Don't throw the baby out
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with the bath water if this is the approach we're taking.
MR. SWETT: We're thinking along the same lines.
THE COURT: Thank you. Okay.
(Further proceedings not requested at this time.)
THE COURT: Mr. Swett, I don't want to cut you
off -- well, I do. But I don't believe I should grant the
request to seal that, so. Although the attorney-client
privilege is something that's important and is entitled to
substantial protection, I think this is an unusual situation
where it is required to be made public.
Garlock has asserted that its settlement history was
impact -- adversely impacted by improprieties in the process.
It has done so I think as early as the information brief that
was filed along with the petition in this case.
The Court ordered the disclosure of the MEAs and
PEFs only after Garlock's general counsel began testifying
about its reasons for settling cases in general, and with
respect to specific claimants.
There was also later testimony by a retained outside
litigation lawyers about settlement of cases in general and
specific cases.
I think all of that requires that the information
not be sealed that Garlock's reason for settling cases is an
issue. Garlock put it at issue.
Now my conclusion from reading these documents is
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substantially different than what's been asserted they show by
the ACC. But I think that the public is entitled to see them
and make up its own mind about those things.
And for that reason I will deny the motion to seal
the documents claimed by -- asserted by Garlock.
I think that brings us to talking about how do we do
all of this. I believe that whatever we do will take long
enough to give all of you all time to perfect appeals and get
any of my madness straightened out if you want to try to do
it. So I won't worry too much about staying things so that
you can appeal.
My belief is that whatever we do, we should unseal
things at one time and not piecemeal. While I know certain
parties don't want to wait any longer than they have to, I
think that if we get things piecemeal, we would have a real
problem with keeping track of what they've done. And perhaps
more inadvertent disclosures than are necessary, so I would
like to do it all at once.
And do you all want to talk about this beforehand?
I don't know if you all have discussed Mr. Cassada's proposal
beforehand or not, but it sounds like a reasonable way to me,
and there may be others.
MR. SWETT: I would love to discuss it. It sounded
very constructive. And the protocol order requires that stuff
that is not to be redacted or sealed come forth promptly. I
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take it you're not talking about that when you speak of, "all
at once."
That the -- that what is to be redacted, should be
redacted in its entirety, and that set of materials should
come forth at one time. But to the extent sealing or
redaction has been denied, it would seem to be no reason to
wait.
THE COURT: I'm not sure what the difference is in
what you just said.
MR. CASSADA: I think it would be constructive for
us to talk about it.
THE COURT: Yeah. Do you want to talk about it and
come back after lunch, or talk about it over the weekend or
just what?
MR. SWETT: I'm here. Might as well get as far as
we can today.
MR. CASSADA: I'm available.
MS. JOHNSTON: Same. Like to do it today.
THE COURT: Why don't we let everybody who wants to
talk about it. I think this room is free. And do you want to
come back at 1:00?
MR. SWETT: That will be fine.
MR. CASSADA: Okay.
THE COURT: Okay. Let's do that. We'll just
reconvene at 1:00 and see where we are, okay?
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MR. SWETT: Your Honor, I believe Mr. Miller and Mr.
Clodfelter and I would also like a little time with you in
chambers to discuss the schedule with regard to tomorrow's
matters.
THE COURT: Yeah, I understood you all are talking
about that.
MR. SWETT: So at any point convenient to you.
THE COURT: Do you want to do that now, or are you
ready?
MR. CLODFELTER: Your Honor, I'm happy to discuss it
now. It doesn't need to be on the record or in chambers, it
doesn't really matter.
MR. SWETT: Your Honor, when we had suggested
tomorrow's date as the time to argue the motion for the
appointment of fee examiner and the Caplin and Drysdale fee
application, the information based upon communications from
the Court was that you would not be sitting today. So it was
not our intention to back you into two back to back hearings
with a lot of briefing. We would like to ensure that
tomorrow's matters are heard when you have had plenty of time
to read the briefs. And if you've had that time, that's
terrific. Otherwise we're amenable to rescheduling in the
near term, assuming Mr. Clodfelter's and Mr. Miller's
schedules will permit, and Your Honor's of course.
Now, the other side has suggested that you should
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hold back on ruling with respect to fees and the motion to
reopen. And I just want to take exception to that notion for
the following reasons:
The motion to reopen is a large important effort
that has a lot to do with ensuring that however this case
ultimately comes out, it is both fair and perceived to be
fair. It is not a project that was undertaken on a contingent
fee basis in any sense other than that fees charged to a
bankruptcy estate or subject to the fee application process,
including the final fee application. It does not differ in
character from many times when the debtors have, in effect,
renewed their pitch on issues that you have decided in the
first instance.
For example, the waiver issue that we just heard
about, or so much of the discovery in the estimation process
where the early going we tended to win those motions, and they
came back, shifted ground, and argued again. And ultimately
they got the discovery that they got.
The nature of the case, the length of the project,
the importance of the matter, all suggest to me that it
wouldn't be appropriate or fair to hold off on the interim fee
application because of the presence of fees regarding the
motion to reopen, or to carve them out for separate treatment.
So I'm hoping to go forward with both the fee
examiner motion and the interim fee application at one in the
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same time, either tomorrow or at some other time convenient to
you and opposing counsel in the near term.
But I just wanted to underscore that I don't believe
it would be appropriate to have to carve out that Mr. Miller
has suggested -- and I bring that up in a scheduling context,
because I understand that that had some impact on your
thinking.
THE COURT: Actually, it was a thought that occurred
to me as well, just simply because of the valuation standards.
At any rate that's neither here nor there. That --
like a lot of things, my brain's like Grand Central Station,
there's trains coming and going all the time, but that doesn't
mean I have to get on every one of them. Maybe that's one of
them I shouldn't get on.
But I do think it probably be a good idea to put it
off to another date, and just because of the logistical
problems of properly preparing for it.
MR. SWETT: Do you have any dates in mind, Judge, or
should we communicate with your secretary?
THE COURT: I can -- what do you have any particular
constraints?
MR. SWETT: Well, we have a couple hearings
scheduled for next week. Since I'll be here, assuming other
counsel's availability, we can do it then.
MR. CLODFELTER: Your Honor, we had cleared the date
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tomorrow with some considerable difficulty. This was
originally scheduled for fee examiner motion for
September 18th and the Court decided to continue it at that
time, and we were put to a difficult task of finding
alternative date. Tomorrow was actually the only substitute
we could find before the end of the month.
So I'm concerned that we probably can't find a date
before the beginning of November. I know, also, that the
bankruptcy administrator is not available in the near term,
and she does have a position on fee examiner motion that we
would like to be sure is presented to the court.
The fee examiner -- the proposed fee examiner that
we've offered, the former U.S. Trustee Division Four, is also
not available in the next week due to some family things.
So I think if we're going to reschedule from
tomorrow on the fee examiner motion, that would need to be at
the earliest, first week of November. Based upon the
determination we already made about alternative dates for the
month of October.
THE COURT: We could do it the first Thursday in
November.
MR. CLODFELTER: Your Honor, that is acceptable to
me, if it is to Mr. Swett and Mr. Miller. I would like to
consult, again, make sure the Bankruptcy Administrator is
available on that day. Although I don't think it is
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absolutely essential, it would be preferable if the proposed
fee examiner were available. We would like to have him
available. I don't think it's essential though. If the Court
wanted to establish that date for hearing, we would proceed
even if we were not available.
MR. SWETT: I just have to check my calendar. It
sounds okay to me.
THE COURT: It's something like the 7th, maybe?
MR. SWETT: Yes, Your Honor.
MR. MILLER: Yes, Your Honor.
THE COURT: The 6th. The 6th. It would be
November 6th, I think, wouldn't it?
MR. MILLER: And that works fine for me, Your Honor.
THE COURT: Okay.
MR. SWETT: We can check --
MR. CLODFELTER: Your Honor, both the 12th interim
application and the fee examiner motion, would both be
contingent that day so we would not have them out of sync; is
that correct?
MR. SWETT: That was my contention.
THE COURT: Okay. Well you all look at that and
we'll come back at 1:00 and see where we are.
(The matter is concluded at 11:41 a.m.)
1:04 p.m.
THE COURT: All right. Were you all able to make
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any progress?
MR. CASSADA: Yes, Your Honor. We conferred and I
believe we have an agreement that we will include in the order
on the public access issues that you've announced earlier
today. I'm going to recite my understanding of the ruling.
THE COURT: Okay.
MR. CASSADA: I'm relatively certain that I won't
get it completely right and I'll rely on the parties in the
room to correct, clarify or amplify what I have to say.
First, Your Honor, there is agreement on the
fundamental procedure that I had announced at the beginning of
the hearing. I'm going to repeat that in pertinent part, just
for purposes of clarification.
But we -- the debtors will engage Worldwide Digital
to undertake the review process, and with an exception I'll
mention later, we would intend for that company to review the
entire record.
We will commence promptly to provide a sample of
record materials for review and redaction training under the
debtor's supervision with Caplin's participation -- with the
Caplin and Drysdale firm participation -- asking Worldwide
Digital to apply the Court's redaction rules. We'll review,
correct, and comment during that process which we think will
be sufficient to prepare for Worldwide Digital to review the
broader record.
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And then the company will undertake the assignment
of reviewing the estimation record, and making the required
redactions, periodically providing the record review to date
to the debtors. We'll share that with Caplin and Drysdale.
And than each of us will make review random -- review random
samples of materials reviewed by Worldwide Digital for quality
control purposes.
And that's the way we'll proceed. At the end of the
day we'll have the record and we'll provide it to the Court in
a form where we think the Court can easily provide it to
parties, members of the public who ask for access.
Now we talk about a number of clarifications and
details on that basic procedure and I'll go over those now.
First, we did agree to begin the training process
promptly. And we expect we'll be able to do that early next
week. We're going to review the entire record at once, and
produce it at once, with one exception that I'll bring up in a
moment.
We did agree that while Worldwide Digital will
presumptively review the record, there are things that we
might except from that. There's one of them we know for
certain today, and that's the two claims databases, the
Garlock database and the Garlock analytical database. We
think that we're better equipped to review that between the
estimation parties and their professionals, and get that
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reviewed accurately and easily, more so than Worldwide
Digital. So we'll accept that. And it could be that when
we're first undertaking this process, we might find other
materials that we believe are better suited to be reviewed by
the professionals in the case, and those materials will be
subject to agreement by the committee and the debtors. And
absent an agreement, they'll be reviewed by Worldwide Digital.
The exception to reviewing and producing the entire record at
once is that if there are appeals, and if in connection with
appeals or any appeal, there's a stay pending appeal, then
we've agreed that we will accept those documents from the
review process, and go ahead and review the documents that are
not subject to appeal.
We will save for another day what happens to
documents subject to appeal. Presumably there might be an
appeal taken and a motion for stay pending appeal, and then
the parties can argue then how those documents should be
treated during any appeal when we have clear instructions from
the -- from this side of the room, the public access parties,
that they don't want it to be implied that they're agreeing to
a stay at this point, or that they're waiving any argument
whatsoever about whether a stay should be granted and what
should happen during the stay.
We've agreed that in connection with the quality
control process, and I guess you'd say the process in general,
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that the parties will act diligently, and taking due care to
promptly to make sure that this process goes forward and that
the public is given access to the record as soon as reasonably
possible.
Finally, we've agreed that there are documents
relative to the motion to reopen that can be handled
separately from this process. Because the anticipation is
that if there is an appeal or appeals, they could last some
time, and that the motion to reopen ought to go ahead and be
heard sometime in the reasonable near future. So we're going
to deal separately with that.
We're going to, each of us, look at our pleadings
and briefs and exchange those, and make sure that we redact
from those anything that we think is subject to the Court's
order. I don't expect there's much of that at all in the
briefs. There are some materials that have been produced in
connection with that, and we'll put those through the review
process promptly so that those can be made available for use
on appeal.
And finally, just procedure from the Committee's
point of view, is subject to hearing back on whether the
debtors intend to appeal, given the debtor's motion to seal.
I'm advised that my reasonable expectation is that it's not
likely that there will be an appeal. We'll find out
promptly -- I think I'll know today -- and we'll let the
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parties know about that. And if that's the case, then this is
the way we plan it, we'll go forward.
THE COURT: All right. Okay. Everybody all right
with all of that?
MR. SWETT: Yes, sir.
THE COURT: Sounds like a good plan to me.
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