WHEELING – A recent decision by a federal appeals court proves the asbestos attorneys convicted of fraud should pay certain litigation costs to CSX Transportation, the company is arguing.

On May 17, CSX’s attorneys filed a notice of supplemental authority in support of its bill of costs, which asks U.S. District Judge Frederick Stamp to tax the $331,888.83 in costs incurred electronically scanning documents during the lawsuit, which was filed in 2005.

A jury found in December that attorneys Robert Peirce and Louis Raimond conspired with radiologist Ray Harron to fabricate asbestos claims in West Virginia. Since then, the sides have filed several post-trial motions.

CSX’s latest draws Stamp’s attention to a decision by the U.S. Court of Appeals for the Fourth Circuit in The Country Vintner of North Carolina’s lawsuit against E. & J. Gallo Winery.

“Specifically, the Fourth Circuit adopted the Third Circuit’s holding that ‘the scanning of hard copy documents [and] the conversion of native files to TIFF… involved ‘copying’ within the meaning of (federal law),” CSX’s motion says.

“Therefore, the Fourth Circuit’s holding in Country Vintner confirms that CSXT’s costs for scanning millions of pages of paper documents for electronic production to the Lawyer Defendants, as well as the costs of converting native files to TIFF format, are fully taxable as ‘the costs of making copies.’”

Attorneys for Peirce and Raimond filed a response May 22 that says the Country Vintner decision has no relevance in their case.

“At the outset, CSX’s description of what the Fourth Circuit ‘directly addressed’ in (Country Vintner) – i.e., in CSX’s view, ‘whether costs for creating electronic copies of hard copy documents by scanning were taxable… - does not match the actual issues or holding of the case,” the response says.

“In fact, Country Vintner did not address the issue of scanning hard copy documents at all, and it affirmed an award of costs of little more than $200, amounting to a mere 0.19 percent of what was sought.

“This approach bears no resemblance to CSX’s attempt to use (federal law) to force Defendants to subsidize hundreds of thousands of dollars of its free-spending litigation practices.”

The Fourth Circuit’s opinion can be read here.

CSX is also seeking almost $10 million in attorneys fees.

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.

The penalty could be tripled pursuant to the Racketeer Influenced and Corrupt Organizations Act.

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, 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 and CSX’s motion to triple the damages award.

If the verdict is allowed to stand, the defendants have also asked that the damages amount be reduced to $95.368.98. They 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.

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.”

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

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