Toxic Justice

Lawyer Fred Baron says he's one of the good guys, fighting a war against evil asbestos manufacturers. But some former employees claim his firm is a factory that mass-produces lawsuits by implanting memories and inventing testimony.

"And I must say, in this context, I'm not even sure lying would be the worst thing to do, if in fact you were injured by these products and the only reason you can't recover is it's 20 years ago, the companies aren't willing to settle with you, and you can't even remember which one it was."

Of course, if that was the context 25 years ago, it no longer is.
"These folks have such volume, they may have drifted across the line because of the volume," Pepper continues. "I'm sympathetic to that, until you tell me the volume involves people who aren't sick, and then I'm less sympathetic to that."

Geoffrey C. Hazard, director of the American Law Institute in Philadelphia, also believes that the "context" of Baron & Budd's practice is important, but he interprets it less charitably.

"If the [Terrell] memorandum simply provides a formal structure for what was even more intensive coaching--if you accept that set of facts, then it was clearly unethical, because they're inducing people to give statements that they couldn't have remembered themselves, and it's all focused on setting up liability, and that's essentially telling the witnesses what to say, and that's wrong.

"Many plaintiffs' lawyers probably do something like that, and probably there's a lot of it in the asbestos cases, and obviously it's very difficult to detect, and there are not many prosecutions for that reason."

"By the way," says Baron on July 2, "I assume, number one, you know that the grand jury expired."

It's true. In late June, the held-over county grand jury looking into the matter of the Terrell memo quietly disbanded without taking any action.

"The DA's office issued a statement that we were advised of," Baron continues. "It came from Cecil Emerson [the assistant district attorney in charge of intake]. Cecil told us that the grand jury had completed its investigation, as had the district attorney's office, and they had decided to take no further action on any matter, period."

That's not exactly the story coming from the district attorney's office--or, for that matter, from the U.S. Attorney's Office.

"I guess you know our investigation has been taken over federally," says Luke Madole, the assistant Dallas County district attorney who advised the grand jury investigating Baron & Budd. "I'd better not say too much more, because I wouldn't want to interfere with their investigation."

The criminal investigations are but the latest chapters in the drama prompted by the Terrell memo, a drama that Baron casts as a Hatfield-and-McCoy-style blood feud between himself and Raymark Corp.

Like Johns-Manville, Raymark is a bankrupt former asbestos manufacturer. Baron, who once sat on a bankruptcy creditors committee overseeing Raymark, claims the company has stirred up the furor over the Terrell memo in an effort to "kill Fred Baron." Raymark's attorney denies the claim.

Nevertheless, in mid-September, Raymark and two other manufacturers began filing the Terrell memo in courts in three states, seeking to put Baron & Budd cases on hold.

Baron launched an aggressive counteroffensive, claiming that the document was privileged and therefore that everyone had to give it back. The resulting rulings have taken Baron to two state courts of appeals, with mixed results. And in the meantime, state District Judge John Marshall referred the matter of the Terrell memo to a Dallas County grand jury.

Baron's response was swift and personal. "He's a fruitcake," Baron said of the judge--a comment that was made within earshot of several reporters. Though Baron later apologized to the judge, he also fired off a judicial-conduct complaint. (The complaint was later dismissed.) In a later interview, he alleged that the judge has a habit of referring trivial matters to the district attorney. "We were told that he routinely refers matters to the grand jury and that so far the grand jury has--the DA's office has never accepted any of Marshall's complaints," Baron says.

Meanwhile, Baron was busy at the district attorney's office, sending over brief after affidavit after personal emissary in an effort to squelch the grand jury inquiry. He argued that suborning perjury was not a crime in Texas, that the Terrell memo was a one-of-a-kind document by a rogue employee, and that it wasn't unethical under the code of professional responsibility, and therefore couldn't be a crime.

"I didn't really engage with him on any of those issues," says Luke Madole. "The decision to surrender the case was made while I was out of town. When I got back, I found out we'd received word that the federals were going to take the matter up."

The story from the DA's office makes a couple of assistant U.S. attorneys chuckle. "The spin from the DA's office is, ah, different than kinda how the case got up here," says one federal prosecutor. "Because of the politics of it, they wanted to drop it, and so it ended up here.

"The Man [U.S. Attorney Paul Coggins] definitely said go after it full-bore," the prosecutor adds. "He's definitely said if there's anything to be done there, he wants it done."

The Observer has learned that at least one former Baron & Budd employee has been subpoenaed by a federal grand jury. And a number of other potential witnesses or their attorneys told the Observer that the FBI or the U.S. Attorney's Office has contacted them about matters related to the Terrell memo.

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