COLUMBIA, S.C. (Legal Newsline) - An all-powerful judge raises the dead. A lawyer herds them into court. Their prey: Insurance companies. It sounds like the worst horror movie ever made, but it would actually be a documentary.
In South Carolina’s specialized court for asbestos lawsuits, a company that ceased operating decades ago can be worth millions. Adopting an idiosyncratic view of the law that infuriates defense attorneys, Judge Jean H. Toal transforms long-dead companies into “receiverships” under the control of a prominent personal-injury lawyer who teams with one of the state's most powerful political figures to score settlements that are sent into private funds in a different state.
Armed with subpoena power and a contingency-fee agreement awarding him a third of whatever he recovers, Peter Protopapas has used the receiver power granted to him by Toal to take control of more than 20 dead companies and sue their former insurers over old policies he says cover asbestos claims, scoring millions of dollars as the leader of these zombies.
He's acting in the name of a nonexistent company and doesn't need approval from anyone once associated with it. The money he recovers doesn’t flow directly to plaintiffs: In some cases, it goes into secretive Delaware partnerships where Protopapas has broad discretion to spend it on anything related to asbestos litigation, including fees for other plaintiff lawyers.
"No one knows what the receiver or the attorneys that he hires when not using his own firm are making off of their actions as the circuit court seals all records related to fees," one company complained.
One lawyer who benefits from this arrangement is the Republican Speaker of the South Carolina House of Representatives, G. Murrell Smith, who represents receiverships Protopapas controls. When he’s not practicing law, Rep. Smith selects half of the members of the committee that recommends judicial candidates for the entire state, including the South Carolina Supreme Court (more on that later).
Judge Toal has been called “South Carolina’s Ruth Bader Ginsburg” for serving as the first female Chief Justice of the state Supreme Court. Since she retired and was handed the asbestos docket in 2017, however, she has confounded defense lawyers with her unusual, and typically pro-plaintiff, legal theories.
One lawyer described the idea a receiver could work actively to collect money for lawyers suing the company he represents “quite possibly a first in the annals of judicial history.”
“I am not aware of this procedure having been adopted in any other jurisdiction,” said Lester Brickman, emeritus professor at Yeshiva University’s Cardozo School of Law, who has written extensively on fraud and abuse in asbestos litigation.
A local man of international power
Judge Toal’s courtroom practices will be on display tomorrow when she hears a motion by South African mining giants Anglo American and De Beers to order Protopapas to turn over information including the names of experts he plans to use in an upcoming trial over whether they helped another company, Cape Plc, hide assets from asbestos plaintiffs.
The case has sparked a bizarre round of international wrangling as Protopapas and Cape’s U.S. lawyers fight over who’s in charge of the company, now a unit of a French conglomerate with more than $6 billion in annual sales.
Protopapas says Judge Toal appointed him receiver for Cape, which is incorporated on the island of Jersey in the English Channel and has never done business in South Carolina. He’s sued Cape’s former insurers in Cape’s name as well as a number of other companies, including Anglo American and De Beers, accusing them of a long-running scheme to hide assets from U.S. asbestos claimants.
Cape is owned by Altrad Group, which bought the firm in 2017, long after it had gotten out of the mining business. Altrad is owned by Mohed Altrad, a French-Syrian billionaire dubbed the “scaffolding king” who is appealing a 2022 conviction for a bribery scheme. Altrad argues Judge Toal has no jurisdiction over Cape and that Protopapas is working actively against the company’s own interests.
South Carolina law “does not authorize receiverships over foreign companies over which the South Carolina courts have no jurisdiction, does not authorize receiverships over foreign companies with no property in South Carolina, and does not authorize receivers to file lawsuits on behalf of foreign corporations,” Cape’s lawyers said in a filing in Toal’s court last year.
A trial has been set for Dec. 9 – a schedule that was accelerated at the behest, defense lawyers say, of Rep. Smith, who will be in legislative session in early 2025.
Cape isn’t the first foreign company to find itself under a receiver appointed by Judge Toal. She also put Protopapas in charge of Atlas Turner, an asbestos mining firm once owned by the government of Quebec, saying Atlas “sold its poison through out the United States well knowing that it would end up in the workplaces of working men and women.”
Atlas griped about the secrecy of the fees generated by Protopapas' receiverships in a December court filing, but what is known is that Protopapas has recovered tens of millions of dollars so far. And at least $50 million of that, and likely much more, has flowed into “qualified settlement funds” Judge Toal authorized him to establish in Delaware.
One firm at the center of a mass of litigation, Covil, was dissolved by the South Carolina Secretary of State in 1992. Judge Toal revived Covil in 2018 after it defaulted on a $32.7 million jury verdict in North Carolina (the other defendants settled). The judge appointed Protopapas receiver for the long-dead company and he soon filed lawsuits against Zurich Insurance and others seeking coverage under old policies that expired decades ago.
Protopapas even sued Covil’s former law firm, Wall, Templeton & Haldrup, claiming it committed legal malpractice by failing to answer two asbestos lawsuits. Wall, Templeton didn’t respond to a request for comment, but the firm’s insurers settled the case for the policy limit of $5 million in 2022.
Protopapas also obtained at least $44.5 million in settlements with Covil’s former insurers. Those deals were structured as “buy backs,” where the insurers “bought back” their policies for cash.
All the money flowed into the Covil QSF, a Delaware LLC whose operating agreement says can be used to pay “legal fees and settlement costs” of asbestos suits. Judge Toal set up the QSF without a public hearing and appointed Protopapas manager with authority to invest and disburse funds as he sees fit.
She also authorized him to keep a third of the money – at least $16 million – as a contingency fee. Beyond that, Judge Toal has said it was “necessary and beneficial to the public” to keep details secret.
It is not known if actual asbestos plaintiffs have or will ever see any of that money. The plaintiffs in the Cape case apparently settled more than a year ago. (Protopapas is fighting defense efforts to see his email exchanges with plaintiff lawyers.)
None of the lawyers named in this story responded to requests for comment. Defense lawyers may be particularly loathe to comment, given Judge Toal’s history of handing down stiff sanctions, including orders to pay Protopapas and other lawyers millions of dollars in fees.
Morgan Lewis, the big corporate law firm, has submitted a bill for $2.2 million for its work on a successful sanctions order against Altrad, for example. Another firm sharing in receivership-driven fees is Kassel McVey, where Partner Jamie Rutkoski is a former clerk to Judge Toal.
South Carolina's plaintiff lawyer power machine
Judge Toal’s courtroom represents a microcosm of South Carolina’s political structure. As Speaker of the House, Smith holds considerable power over the appointment of judges throughout the South Carolina judiciary, including the Supreme Court.
He selects five of the 10 members of the Judicial Merit Selection Commission, which recommends candidates that are voted on by the entire legislature. He was once the chair of the JMSC.
Five of the six lawmakers currently on that commission are lawyers with personal injury practices: Chairman, GOP Rep. Micah Caskey; Sens. Ronnie Sabb, Luke Rankin and Scott Talley; and Rep. Todd Rutherford.
Those five - plus the sixth lawmaker member, Jay Jordan - share a common benefactor: The state's plaintiff lawyer group, the South Carolina Association for Justice. The group has given $1.6 million to state candidates over 17 years, with more than $100,000 going to the six members of the Judicial Selection Merit Commission.
Rankin, the vice chair of the JSMC and as Senate Judiciary Committee chair is entitled to pick three of the seats, has received $25,000. (He's also facing a possible defamation trial after ads labeled his 2020 primary election opponent, John Gallman, a domestic abuser, with the source material being an interview between Gallman's 10-year-old daughter and the Children's Recovery Center.)
Caskey has received $16,500 from the SCAJ. Sabb's top donor is himself, with the SCAJ second at $15,500. The Republican Caucus gave Talley $15,000, but the SCAJ wasn't far behind at $14,000. The SCAJ gave Rutherford $8,266, tops among his donors. And Jordan, a criminal defense lawyer, has received $27,500.
Three of the four citizen members of the commission also are personal injury lawyers, one of whom has offices at the same address as Protopapas. That member is Pete Strom, who once employed Richland County Circuit Court judge Robert E. Hood.
So if personal injury lawyers are picking their preferred candidates, does that mean South Carolina's top courts have turned into a safe space for mass tort plaintiff firms looking to expand liability in the state? Not necessarily.
The Supreme Court has issued a few noteworthy pro-plaintiff rulings in recent years. One reversed a Court of Appeals' denial of Workers' Comp benefits based on a lack of medical evidence and reinstated them because there was "substantial evidence."
One, which was a win for the SCAJ, said employers can be liable for harm caused by the negligent selection of an independent contractor. Another forced a woman's auto insurer to pay when an underinsured motorist struck and killed her while she was riding a bicycle. Another scaled back the standard for harms caused by broken promises, from "clear and convincing evidence" to a "greater weight of the evidence." None of these particularly invite a flood of related, high-dollar claims.
But none of them involved asbestos and Judge Toal, either. Twice this year, the Supreme Court affirmed her actions in the asbestos court to add her own personal justice on top of jury verdicts.
An insurer sued by Protopapas, acting as receiver for Covil, was ordered by Toal to pay $50,000 defense and indemnification costs in one of the many asbestos suits against Covil. That company - Penn National - argued to the Supreme Court it wasn't notified of the case until nine months had passed, which triggered an exception in the policy. The Court called that immaterial.
Another exception dealt with a "products hazard" caused by Covil. It was also rejected by both the Court of Appeals and the Supreme Court, and Toal's judgment was affirmed earlier this year.
The case of Justice John Cannon Few
When John Cannon Few applied in 2015 for the position of Supreme Court justice, he was asked to name the most significant orders or opinions he had written during his time as chief judge of the Court of Appeals.
He pointed to Riley v. Ford Motor Co., a 2014 ruling over an accident that killed Jasper County Sheriff Benjamin Riley. It was in that opinion that he rejected the idea that Bamber County Judge Doyet Early III could on his own double a $300,000 verdict handed down by a jury under a doctrine known as nisi additur, which is banned as unconstitutional in federal courts.
Ten years later and now on the Supreme Court, Few had a chance to vote to preserve the sanctity of a jury's verdict after Toal twice took it upon herself to increase awards in asbestos case.
But he didn't. Instead, he was part of a 4-1 majority that said Toal was justified when she increased a verdict more-than-six-fold, from $300,000 to $1.9 million. Few and the Supreme Court had said the same earlier in the year in a similar case that added $200,000 to a $400,000 award in Toal's court.
It was quite a switch for Few. In his JMSC application, he wrote his 2014 ruling against additur was "significant because it upholds a litigant's constitutional right to a trial by jury." He even cited a book written by his father, J. Kendall Few, a noted products liability and environmental lawyer with whom he partnered in the 1990s.
"(T)he judgment of twelve impartial [jurors] on the average of the community, applying their separate experiences of life to the solution of such doubts as may arise, is more likely to be wise and safe than the conclusion of any single judge," was a quote from federal judge William Brawley that Few's father included in "In Defense of Trial by Jury."
The judge's "mere disagreement with the jury's determination of the proper amount of (noneconomic damages) is not a compelling reason for granting additur," Few wrote in the Riley opinion.
This year, Few found differences between the Riley case and one brought on behalf of the late Dale Jolly, a victim of mesothelioma allegedly from asbestos exposure. Toal had "compelling reasons" to add nearly $1.6 million to a jury's verdict, including Jolly's pain and suffering and uncontested testimony that his medical bills approached $1 million (though that could have been paid off by the settlements already reached by other defendants).
"The trial court's explanation clearly supports its determination that this is one of those rare cases in which 'compelling reasons' justify the conclusion the verdicts were inadequate, despite the 'substantial deference' due to the jury's constitutional role," Few wrote.
The lone dissenter was Chief Justice John Kittredge, finding the increase was "far beyond any additur this Court has upheld." Kittredge and Few seem to be having trouble finding common ground on the issue, as Kittredge's 2015 Supreme Court opinion reversed Few's in the Riley case.
Trials and tribulations
Since Judge Toal took over, asbestos claims in South Carolina have surged, driven significantly by the Dallas law firm of Dean Omar Branham Shirley. Plaintiff lawyers are now using her court as a venue for lawsuits over talc, a new avenue lawyers pursued as the supply of industrial workers exposed to talc dwindled. Johnson & Johnson is facing an onslaught of litigation in the state now.
She recently refused to let Johnson & Johnson tell a jury that the man who blamed Baby Powder for his mesothelioma actually worked in a building once condemned for asbestos.
The result was a $63 million verdict against the company, which now faces trial in another talc case in October.
The American Tort Reform Association has declared South Carolina a “judicial hellhole,” largely because of Judge Toal’s management of the asbestos docket and the state Supreme Court’s approval of her orders.
She has gotten pushback elsewhere, too. Toal appointed Protopapas receiver of talc supplier Whittaker Clark & Daniels after it lost a $29 million jury verdict in 2023.
But a federal court in New Jersey this year refused to allow Protopapas to block WCD from filing for bankruptcy, saying nothing in South Carolina law authorizes a court there to overrule the board of directors of a New Jersey corporation.
"The enacting statute in question limits the power of a receiver over a foreign corporation to 'the property within this state,'" Judge Zahid Quraishi wrote.
"This is intuitive - traditionally, a state court's power is limited to its territorial boundaries."
From Legal Newsline: Reach reporter Daniel Fisher at dan.fisher@therecordinc.com and editor John O'Brien at john.obrien@therecordinc.com.