HOUSTON - A court-ordered deposition of a lawyer next week should produce plenty of fireworks, as he explains why 1,500 of his clients suing Johnson & Johnson changed their minds on whether to accept the company's massive settlement proposal.
The battle for answers between lawyers who want to reject J&J's $9 billion offer and Benedict and Alexander Morelli involves allegations the latter two dodged service of subpoenas following nearly all of their clients deciding to accept the settlement.
Lawyers are in a heated battle for votes from claimants that will decide whether J&J's bankruptcy plan to keep ovarian cancer claims out of court will be approved. The Coalition of Counsel for Justice for Talc Claimants is a group of three firms including Beasley Allen hoping to gain enough votes to block the plan.
"The Morellis knew the Coalition was seeking their deposition," the coalition's Jan. 9 filing says. "Yet every attempt to serve them was unsuccessful.
"Each time the server reached the NYC buildings where the Morellis office or reside the server was stopped at the building's messenger center or its service entrance or its front desk - blocking the server from personally serving subpoenas on these attorneys."
At issue are tens of thousands of claims J&J's Baby Powder contained asbestos and caused ovarian cancer. To avoid facing cases and trials around the country, J&J has sought to create spin-off companies that will absorb these liabilities and pay claimants through the bankruptcy system instead of various civil courts.
After two rejected attempts, J&J moved to Texas to try with a new company called Red River Talc. Critics complain it is unfair for J&J to move only a portion of its corporate assets into Red River and that the entirety of its worth should be up for grabs.
Baby Powder litigation exploded when Mark Lanier scored a $4 billion-plus verdict in St. Louis, later reduced to $2.1 billion and affirmed by the U.S. Supreme Court. It created a frenzy for clients that led to massive attorney advertising spending.
J&J has contended there was no asbestos in its talc, though plaintiffs have found highly paid experts willing to say otherwise. Trials become battles-of-the-experts, leading to split verdicts. One jury in Pittsburgh was so confused by the process it tried to hit J&J with $22 million in punitive damages despite finding it wasn't liable for the plaintiff's illness.
Using the Texas bankruptcy system would help J&J quickly resolve ovarian cancer claims, avoiding lengthy litigation that costs both sides plenty while delaying any recovery for sick plaintiffs.
The Coalition of Counsel for Justice for Talc Claimants believes J&J's offer isn't enough, despite an extra $1.1 billion that swayed firms like Morelli Law and the Smith Law Firm.
Originally, each of Morelli's 1,598 clients voted to block the settlement. But after the company tacked more on to its offer, all but 41 voted to approve it.
That's why the coalition wants to depose Benedict Morelli, which it will get to do for three-and-a-half hours on Jan. 27. That's three weeks before a hearing before Houston bankruptcy judge Christopher Lopez that will calculate support for the plan.
The coalition claims Morelli told Lopez that the deposition concerns had been worked out by both sides but it never reached such an agreement with him.
Morelli contended on Jan. 14 that the intent of a deposition would be to intimidate him and others who broke ranks with the coalition or want to.
The standard for changing one's mind on a bankruptcy plan is whether there was cause to. Morelli will argue that the extra $1.1 billion that put the entire settlement over $9 billion was good enough cause.
He expects the deposition to be focused on why his clients changed their minds, which he has already explained in earlier court documents, he says.
"Requiring Benedict Morelli to sit for a deposition regarding his protected decision-making process and Morelli Law’s changed votes risks inviting the Coalition to engage in other bad faith conduct, such as by seeking the deposition of any attorney who wishes to change his or her clients’ votes—a facially reasonable position for any such firm to take, given the increased value to claimants offered under the Second Amended Plan," Morelli wrote.
Nevertheless, Judge Lopez rejected a two-hour time limit proposed for the deposition, increasing it by 90 minutes.
Other members of the coalition are Golomb Legal of Philadelphia and Levin, Sedran & Berman, also of Philadelphia. They are represented by lawyers at Otterbourg in New York City, Lawson & Moshenberg in Houston and Bailey & Glasser in D.C. and West Virginia.