WHEELING – An evidentiary hearing over discovery requests made by CSX Transportation to asbestos attorneys found to have committed fraud has been delayed.

Pittsburgh attorneys Robert Peirce and Louis Raimond, formerly of the firm Peirce Raimond & Coulter, filed their motion for a protective order Feb. 28 in U.S. District Court for the Northern District of West Virginia. They say CSX, which sued them in 2005, have served dozens of intrusive discovery requests on them.

They seek a protective order against CSX’s post-trial discovery requests regarding financial information from Peirce and Raimond, who have put up a bond of $450,000.

In December, a jury found they, along with Ray Harron, committed fraud and racketeering and reached a $429,000 verdict.

The hearing was to occur March 20. At the request of counsel, a paperless order from U.S. District Judge Frederick Stamp said, the hearing is continued until April 3.

On Dec. 20, an eight-person jury found Peirce, Raimond and Harron committed racketeering, conspiracy and fraud and ordered them jointly and severally liable for a penalty of $429,240.27.

CSX’s original complaint, filed in 2005, said Peirce’s firm hid nine fraudulent claims among other lawsuits filed by the law firm in West Virginia.

The nine lawsuits were filed and settled from 2000-2006. U.S. District Judge Frederick Stamp granted summary judgment to the Peirce firm in 2009, ruling a four-year statute of limitations began when the Peirce firm began targeting CSX.

However, nearly two years ago, the U.S. Court of Appeals for the Fourth Circuit overturned that decision and gave new life to the lawsuit. The U.S. Supreme Court declined to hear the Peirce firm’s appeal of the decision.

CSX amended its complaint to include additional claims it said were fraudulent. The Peirce firm filed counterclaims against the company that said it was engaging in fraud by bringing and conducting the lawsuit, though the jury ruled for CSX on them.

Other pending motions include the lawyer defendants’ request for judgment as a matter of law or a new trial, CSX’s motion for attorneys fees and costs and CSX’s motion to triple the damages award, pursuant to the Racketeer Influenced and Corrupt Organizations Act.

The asbestos attorneys’ memorandum says if a good faith basis existed for filing the 11 claims at issue, they cannot be liable under the RICO act or common law.

“Simply, while CSX put on evidence of Peirce Firm practices that clearly offended the jury and prejudicially influenced its verdict, those practices do not prove fraud or a fraud conspiracy,” the memorandum says.

“When this ‘evidence’ is eliminated because it was improperly admitted and/or does not support a fraud/RICO fraud verdict, CSX’s verdict rests on nothing more than evidence that Dr. Harron was a liberal reader with a positive read rate of roughly 60-65 percent.”

If the verdict is allowed to stand, the attorneys ask that the damages amount be reduced to $95.368.98. The attorneys had previously asked that CSX not be able to recover any damages on RICO claims that post-dated July 5, 2007.

If there were a racketeering scheme, CSX knew about it by then, they argued. The proposed reduction in the verdict amount represents a subtraction of damages for claims after the date, based on legal billings submitted by the company.

On Jan. 21, CSX asked the court to order the defendants to pay its attorneys fees and litigation costs — $9,751,838 and $923,094, respectively.

“Two points bear mentioning at the outset,” the motion says. “First, the fees and expenses that CSXT is seeking are directly attributable to the complexity and duration of the case and the manner in which the defendants litigated it.

“Indeed, fully one-third of the total fees CSXT is seeking were caused by the Lawyer Defendants’ unnecessarily broad post-remand discovery demands.

“Second, the amount CSXT is seeking is substantially less than the total fees CSXT actually incurred and paid in connection with this case. In particular, CSXT has carefully reviewed its billing records and excluded from this motion more than $2.5 million in various fees and expenses.”

CSX cited the state Supreme Court’s ruling in a 1992 decision that says, “where it can be shown by clear and convincing evidence that a defendant has engaged in fraudulent conduct which has injured a plaintiff, recovery of reasonable attorneys fees may be obtained in addition to the damages sustained as a result of the fraudulent conduct.”

CSX also claims that courts have rejected arguments that fees awarded should be proportional to the compensatory damages awarded.

“In fact, courts routinely grant RICO fee awards many times larger than the damages recovered,” the motion says.

“This approach is consistent with — indeed, mandated by — RICO’s objective of ensuring that the plaintiff’s recovery will not be diminished by counsel fees.”

One-third of the fees and expenses the company is seeking are attributable to the defendants’ discovery demands, the motion says.
In 2005, federal court judge Janis Graham Jack made national headlines when she uncovered duplicate and fraudulent silica diagnoses in her Texas courtroom. Many of those diagnoses were made by Harron and were made on plaintiffs who had already brought asbestos claims.

In Jack’s opinion dismissing the claims, she said “These diagnoses were driven by neither health nor justice – they were manufactured for money.”

Following Harron’s admission that he did not even make the diagnoses of the patients whose X-rays he read, Jack noted that most of “these diagnoses are more the creation of lawyers than doctors.”

CSX’s lawsuit was filed later that year.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.

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