HOUSTON - Johnson & Johnson takes aim at plaintiffs attorneys opposing its massive settlement of cancer claims related to Baby Powder, basically calling them hypocrites whose lone standard is how much money they will make for themselves.
J&J is trying to use a spinoff company, Red River Talc, to absorb the company's liabilities in cases alleging its Baby Powder contained asbestos and caused ovarian cancer in tens of thousands of individuals. Rather than fight each case individually in various courts nationwide, J&J hopes to streamline the process through a $9 billion bankruptcy.
If approved, ovarian cancer claims will be resolved through a bankruptcy trust in Houston federal court. Supporters say this will pay claimants quicker and easier, but law firms opposed say their clients won't get their day in court and lose the potential for a blockbuster, multimillion-dollar verdict from a jury.
The Coalition of Counsel for Justice for Talc Claimants is a group of two firms including Beasley Allen hoping to block the plan. It was also a vocal critic of J&J's repeated attempts to use the bankruptcy system to stay out of civil court, considering how much money the company has. The move to Texas bankruptcy court has been dubbed the "Texas Two-Step."
It called J&J's strategy an "existential" threat to bankruptcy law.
"(A)pparently all those concerns go away if (Red River) and J&J agree to pay more money," Red River's lawyers wrote Feb. 10. "In its recent objection to the Debtor's request to extend exclusivity, the Coalition for the first time states that it is not opposed to the bankruptcy if the Debtor agrees to 'reasonable' terms, which include a demand for more money.
"The Coalition's newly found position on this case belies the credibility of almost the entirety of its objection."
Red River will be funded with $9 billion for the settlement, an amount that will give the average claimant more than twice what their claim would be worth in court, J&J says. It would be the largest asbestos settlement in U.S. history.
But the Coalition has opposed it, even after an extra $1 billion was added to it last year. Beasley Allen has accused one firm whose clients changed their minds of being motivated by a need to repay loans it took out to fund its search for clients and their cases and is deposing lawyers at firms supporting the plan.
J&J says Beasley Allen's motivations are similarly self-serving. It serves as lead counsel in a federal multidistrict litigation proceeding, which would ordinarily entitle it to at least 8% of a common fund. Should these cases be resolved out of the MDL, Beasley could lose its share in hundreds of millions of dollars.
J&J has agreed to supply an extra $650 million for common benefit fees that would have been due if the settlement was reached in the MDL. That money would go to all plaintiffs lawyers, even those opposing the bankruptcy plan, and not keep them from recovering the contingency fees they charge their clients.
Beasley Allen was once joined by several firms in its Coalition, though only Golomb Legal is still with it now.
"These firms and, in particular, Beasley Allen have employed a variety of 'scorched earth' tactics to derail a consensual bankruptcy resolution since the first bankruptcy filing, including misleading media blitzes, frivolous lawsuits and repeated mischaracterizations of the terms of the plan," J&J wrote.
"They have done so notwithstanding that none of these firms has ever secured any recovery for their clients outside of bankruptcy, either through a successful verdict or by settlement."
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.
Key to the Red River bankruptcy is the approval of the actual claimants. Court records show 83% approve it, clearing a threshold by eight percentage points, though the firms opposing the settlement say that figure is false.
But J&J says the 11,000 votes Beasley Allen's clients cast against the plan were on an invalid master ballot. There is evidence Beasley Allen lawyer Andy Birchfield cast negative votes for clients who approved the plan, J&J says.
Included were 5,500 gynecological cancer claimants rejecting the plan, even though Birchfield testified their claims had no value in the tort system.
"They have not - they have not sustained a legally cognizable injury that would allow us to file a claim in the tort system," he said at a deposition.
J&J said more irregularities made themselves known, including clients whose claims had been dismissed in civil courts who nevertheless chose to reject money from the Red River bankruptcy.
"Other claimants identified on the ballot were deceased, with no appointed estate representative," J&J wrote.
"Yet Mr. Birchfield certified he had collected and recorded their affirmative vote to reject the initial plan. Eventually, in discovery, Mr. Birchfield would admit that he had actually collected and recorded the votes of fewer than 3,000 of the more than 11,000 claimants identified on his master ballot."
Judge Christopher Lopez will begin a trial on the proposed plan on Feb. 18.