COLUMBIA, S.C. (Legal Newsline) - The diamond-trading giant De Beers has filed a scathing motion in South Carolina court accusing a lawyer suing it in the name of another U.K. firm of acting without authority and possibly in collusion with local plaintiff lawyers.
Attorney Peter Protopapas is acting opposite to the interests of Cape Plc, the corporate descendant of a South African asbestos mining company, by arguing it participated in a scheme to shield De Beers and international mining firm Anglo American from asbestos liability, De Beers argued in a filing in state court in South Carolina.
Not only did Cape win a landmark decision in the U.K. on that exact question, De Beers said, but De Beers never owned any shares in Cape or its majority owner and has never conducted business or held assets in South Carolina.
De Beers “has no contacts with South Carolina period, let alone any contacts that relate to (Protopapas’) cause of action,” the company said in its Jan. 6 filing.
Judge Jean Toal appointed Protopapas as receiver over Cape in March 2023 at the request of North Carolina plaintiffs who had actually settled their claims against the company months before. Judge Toal then allowed Protopapas to sue De Beers, Anglo American and 30 other companies in the case of another plaintiff named Tibbs, under the theory they were “alter egos” of Cape or participated in a global scheme to mislead U.S. plaintiffs about asbestos liability.
Protopapas, as the Toal-approved receiver for defunct companies brought back to life in order to raid old insurance policies for money, gets to keep a third of whatever he collects in these cases, and says he uses the rest of the money to pay plaintiffs and their lawyers. This and other happenings in the South Carolina asbestos court have raised red flags with the business community, with the court recently being ranked the No. 3 "Judicial Hellhole" in the country.
Cape sued Protopapas in the U.K. and a judge there last month threatened criminal penalties against him if he continues to claim control over Cape. The company is now owned by Altrad Group, a French conglomerate controlled by billionaire Mohad Altrad.
In its motion to dismiss, De Beers criticized Judge Toal and Protopapas, saying they have no jurisdiction over foreign companies that have never done business in South Carolina. Under Protopapas’ “breathtakingly broad view” of the law, De Beers said, Judge Toal’s court “is the only court in the world that can adjudicate asbestos claims relating to Cape.”
“That cannot be true, and in the eyes of the English court where Cape is domiciled and sued (Protopapas), this view was rejected,” De Beers said. “Instead, it was determined that (Protopapas) is unlawfully representing Cape in South Carolina litigation.”
Judge Toal has repeatedly appointed Protopapas, a personal-injury lawyer, as receiver over defunct companies with a commission to recover money from insurance companies that once issued policies to those firms. After collecting his 33% fee, Protopapas deposits the rest in Delaware partnerships shielded from public scrutiny.
De Beers acknowledged this strategy has “gained legal traction” in South Carolina, where Judge Toal was the first female chief justice of the state Supreme Court and still enjoys considerable goodwill. State appeals courts and the South Carlina Supreme Court have thus far refused to intervene, despite repeated appeals from defendant companies.
Asserting control over a solvent company based in the U.K. that has never done business in South Carolina is going too far, however, De Beers said.
Under basic principles of corporate law, ownership of a separately incorporated firm does not transmit liability to the parent. Against Cape, Protopapas is asserting claims that U.S. lawyers pursued in vain over the years, mainly that Cape’s U.S. subsidiary was dissolved to protect the parent company and other South African companies those lawyers say formed a cartel. A U.K. court with jurisdiction over Cape rejected that theory in 1990.
Protopapas “is a receiver, one of whose functions is apparently to protect the interests of” Cape, U.K. Justice Anthony Mann wrote in an injunction order last year. “Yet he has demonstrated that he is not fulfilling that obligation, and is indeed apparently doing the opposite.”
De Beers suggested a possible reason why: Protopapas and lawyers for the Tibbs plaintiffs may actually be on the same side. Tibbs, like the Park plaintiffs before him, entered a secret settlement agreement in 2023 while Protopapas went on to sue De Beers and other third-party defendants based on a theory he needed money to pay Tibbs and other plaintiffs.
Any future settlement “should be closely scrutinized for collusion,” De Beers wrote.
Protopapas has declined repeated requests for comment from Legal Newsline directed to his law firm email address.
"In sum, while this Court’s recent expansion of receiver powers in South Carolina asbestos litigation has gained legal traction in other contexts, most notably in pursuit of in-state insurance assets to satisfy in state debts, (De Beers) respectfully requests that the Court decline (Protopapas') invitation to expand radically receiver powers in the manner in which they are being expanded in this lawsuit," De Beers wrote.
"Cape is a solvent entity in the UK that has not consented to the appointment of the Receiver over it, let alone to the Receiver’s conduct in trying to maximize (not minimize) Cape’s liabilities by contending Cape was in a fraud scheme to avoid U.S. asbestos liabilities."