HOUSTON - Lawyers opposing a $9 billion plan that keeps ovarian cancer lawsuits against Johnson & Johnson out of the hands of juries and judges are upset other firms have clients now voting to approve it.
The drama continues to unfold in Houston federal bankruptcy court, where J&J hopes to use a spinoff company to pay claims its Baby Powder contained asbestos. Judge Christopher Lopez has already conducted a two-week trial on whether it is appropriate for a massive company to pin its liability on a just-created subsidiary, Red River Talc.
Supporters of the bankruptcy say it will pay claimants quicker, easier and possibly more, 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 plaintiffs firm Beasley Allen has been one of the biggest objectors and created the Coalition of Counsel for Justice for Talc Claimants. It has waged a battle over how rival firms collected votes from their clients.
Supporters say client-voting already exceeds a 75% threshold for approval, and last month Ashcraft & Gerel said 1,500 of its clients had changed their minds and now support the plan, after the firm had recommended they do so, thanks to changes in the proposal.
"That a law firm hopes or believes certain changes will be made to a plan is not any basis to change the votes of its clients especially after the request is made at the conclusion of a confirmation hearing with evidence suggesting that the hoped-for changes likely will never come," the Coalition wrote in response on March 10.
"Apart from this hearsay assertion of counsel and copies of the Original Ballot and Amended Ballot - no evidence accompanies the motion (to change votes). There is no further amended plan. There is no new (memorandum of understanding) on record."
Tens of thousands of claims are at issue. On Feb. 28, Ashcraft & Gerel asked Lopez to allow it to change the votes of its clients who had voted no before the Smith Law Firm last year engineered an extra $1.1 billion for the plan.
In July last year, all but two of Ashcraft & Gerel's 1,507 clients voted no. But then came the extra money, plus J&J's agreement to accelerate the effective date of the trust.
Ashcraft & Gerel's new client ballot has 1,493 clients voting to accept the plan, after prodding from the firm. It notified clients it was in their best interest to change their votes, and 839 did.
The rest were told if they didn't cast a vote, the firm would use its power of attorney to vote for them, which it is doing for 654 clients.
The Coalition on March 10 also objected to OnderLaw's request to add a supplemental master ballot of its clients' votes. It says OnderLaw made the choice not to submit a ballot before the July 26 deadline and can't decide to do so now.
"The firm's apparent change of heart, however well-intentioned it may be, cannot suffice to permit a late ballot - particularly when it comes, without any timing justification, on the liter eve of a two-week trial," the Coalition wrote.
"The motion makes no mention of ever having contacted these claimants about how to cast their votes. It does not state whether they were made aware that OnderLaw... was attempting to have their votes cast after the deadline."
Like Beasley Allen, which maintained its opposition throughout the trial, Ashcraft & Gerel serves as co-lead counsel in a multidistrict litigation proceeding in New Jersey. Should cases be resolved there, those firms are entitled to shares of a common fund for attorneys fees.
To alleviate those concerns, J&J is paying $650 million in Houston for a similar fund.
Judge Lopez is also weighing objections from insurers who say the claims have no value and would rather prove that point in court.
It's the third attempt for J&J after two others failed in New Jersey. Lopez refused to transfer the case back there, leading the Coalition to appeal to district court in January.
The Coalition calls its effort the "last practical opportunity for review of a scheme that turns" the bankruptcy system upside down.
Beasley Allen has been 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."
But opposition waned during the Texas bankruptcy. J&J says claimants will receive on average twice what they would in a court case.
Beasley Allen and the Smith Law Firm are fighting each other in Alabama federal court. Beasley Allen is accusing Smith of pushing approval of the settlement on its clients because it owes as much as $240 million to a lender that funded its litigation.
Supporters of the plan say it’s the only realistic way to settle some 40,000 claims by women who say their cancer was caused by asbestos-tainted talc. Johnson & Johnson has won most of the cases that have gone to trial so far and maintains there was never asbestos in its products.
But a few devastating losses, including a $2.1 billion verdict in Missouri, forced the company to enter settlement negotiations. Defending the cases has cost J&J $10-20 million a month and trying each one in court would take decades, with wildly different results for individual plaintiffs.