COLUMBIA, S.C. (Legal Newsline) - The South Carolina Supreme Court soon will decide whether a judge’s increasingly aggressive view of her authority extends to foreign companies that never did business in the state.
In hearings on Feb. 11, the high court will hear arguments about whether Judge Jean Toal has jurisdiction over two Canadian companies that once mined asbestos that was distributed in South Carolina. The outcome of those cases could have implications for a French company and international mining giants Anglo American and DeBeers, all of which face similar litigation in South Carolina despite having minimal or no business connections with the state.
The Supreme Court is likely to side with Judge Toal, who is highly revered as the state’s first female chief justice. Judge Toal was appointed to oversee the asbestos docket across the state after she retired and has used her position to assert control over defunct and out-of-state companies she says bear responsibility for asbestos-related injuries within the state.
Judge Toal has appointed a personal-injury lawyer, Peter Protopapas, more than 20 times to serve as receiver over those companies, with a commission to sue insurers and other third parties for money to pay asbestos plaintiffs and their lawyers. Once limited to litigation over old insurance policies, Protopapas has expanded his approach to include suing Altrad Group, a multinational corporation that owns Cape Plc, a U.K. unit that once mined asbestos in South Africa.
He’s also sued Anglo American and DeBeers, which he says controlled Cape and engaged in a conspiracy to hide assets from U.S. plaintiffs.
Judge Toal appointed Protopapas receiver over Cape, even though it has never done business or held assets in South Carolina. Altrad has mounted a fierce counterattack, including obtaining a global injunction against Protopapas in the U.K. High Court of Justice, which threatens the receiver with jail if he persists in claiming to act as the legal representative of Cape.
Protopapas has declined repeated requests for comment from Legal Newsline.
The Feb. 11 hearing will test whether Judge Toal has jurisdiction over Asbestos Corp. Ltd. and Atlas Turner, Canadian companies that mined asbestos until the 1980s. Those companies, with the support of insurers including Lloyds of London, argue South Carolina courts can’t assert control over them because they never engaged in business in the state and have no assets there.
Judge Toal has interpreted South Carolina law to conclude insurance policies the Canadian companies held represent assets in the state if an asbestos plaintiff sues them. The companies and their insurers have unsuccessfully appealed Judge Toal’s rulings. The judge, in turn, has assailed their appeals as “moral fraud” and “active wrongdoing.”
The Supreme Court will hear arguments about whether Judge Toal was authorized to appoint Protopapas receiver over ACL as a contempt penalty for failing to provide executives to testify about asbestos cases in South Carolina. ACL says there are no living employees to talk about the asbestos business, which it halted in 1986.
When it provided historical documents instead, Judge Toal “pursued the nuclear option” of appointing a receiver, ACL complains.
The receivership leaves ACL in an untenable position because as a solvent Canadian corporation it can’t operate under the control of its board of directors while also honoring the demands of Protopapas.
The court’s mood may have been revealed in a Jan. 16 order denying a motion by Protopapas to issue an injunction against Altrad’s lawyers. In that Dec. 13 motion, Protopapas asked the court to prohibit Altrad from “attempting to prevent the receiver from fulfilling his court-appointed duties.”
It would be “shocking and indefensible” for any foreign court “to intervene in and threaten the participants in matters properly pending in the courts of South Carolina,” the Supreme Court said. “As an independent judiciary in a sovereign independent state, we are well-equipped to decide the issues presented to us.”
The February hearing will decide whether Protopapas can continue suing insurers in the name of ACL and Atlas Turner. Meanwhile, Altrad, Anglo American and DeBeers present a different question: Can Protopapas sue solvent companies over their alleged role in hiding assets from South Carolina asbestos plaintiffs?
The defendants – and the U.K. court – say if Protopapas is truly the receiver for Cape, he is violating his legal duties by making arguments that benefit the plaintiffs and lawyers suing the company. 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.”
A trial in Toal's court involving those companies has been stayed until the Supreme Court rules in the case of the Canadian companies.
While he complains about illegal interference in his activities, Protopapas has hardly shrunk from confrontation himself. He has sued Altrad’s lawyers at Locke Lord and the lawyers for other third-party defendants. The purported receiver, who refused to appear in U.K. court, accepted service of a new lawsuit by asbestos plaintiffs against Cape four hours after it was filed, which Altrad’s lawyers called “indefensible.”