HOUSTON - Some insurers and personal injury lawyers have found themselves in a rare position - allied in court.
Objections to a multibillion-dollar settlement that would resolve ovarian cancer claims against Johnson & Johnson are being filed in Houston federal court, where a bankruptcy judge next month will hold a hearing on whether to approve the agreement.
Votes from actual claimants who say the Baby Powder they used contained asbestos will be key. Court records show 83% of more than 93,000 affected claimants support the plan, though some lawyers will be arguing voting defects inflated that number.
J&J is trying to pin all of its ovarian cancer liabilities on a spinoff called Red River in bankruptcy court with a $9 billion trust, rather than fighting tens of thousands of claims in state courts around the country.
Last week came the time to file objections. The U.S. Department of Health and Human Services is one critic, worried about whether it will be repaid for health care services administered to claimants.
And several insurance companies doing business with J&J are hoping to make their voices heard. Allstate notes New Jersey litigation between J&J and its insurers over state law insurance coverage issues.
J&J says there it has rights to coverage under 12 policies issued by Northbrook Insurance, an Allstate subsidiary.
"The plan, if confirmed, would presumably impose the costs and payments under the plan to Allstate, despite the fact that those costs and payments would not be covered under the Allstate policies," attorneys for the company wrote.
"Allstate has a contractual right to participate in the defense and/or settlement of claims. That right is also grounded in principles of equity and public policy."
And, like J&J, Allstate says there is no evidence Baby Powder is causing these cancers. On that, plaintiffs lawyers disagree.
But a coalition of firms who want to be able to take their cases to court rather than submit claim forms to a bankruptcy trust, for now, has the same goal as the insurers: Blocking the plan.
The Coalition of Counsel for Justice for Talc Claimants filed 89 pages of gripes on Jan. 24, finding fault with nearly every aspect of the plan. It says the bankruptcy system can't be used like this, nonconsensual releases are not permissible and all claimants are treated equally no matter what type of cancer they allege.
A 75% approval rate is needed. Data shows that has been met, but the firm Beasley Allen, which has been vocal against the plan, says 11,000 votes were switched to yes unfairly. It, Golomb Legal of Philadelphia and Levin, Sedran & Berman of Philadelphia make up the coalition and believe they can do better for their clients in court.
"(D)epriving the talc claimants of the value of their claims would be a violation of due process, because their rights to fair, equitable and reasonable distribution of the debtor's assets would be denied," the coalition's lawyers wrote.
"(A) plan/trust which does not permit creditors to 'opt out' and return to the tort system for their jury trials may cause an unconstitutional impairment of the claimants' due process and jury trial rights.'
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.