MONTGOMERY, Ala. (Legal Newsline) - Disappointment can't be the basis for a lawsuit, a personal injury firm says after being sued by lawyers it once teamed with to push asbestos litigation against Johnson & Johnson.
The Smith Law Firm of Mississippi on March 26 filed a motion to dismiss the case brought against it by Beasley Allen, which is one of the lone holdouts in J&J's $10 billion plan to resolve claims the talc in its Baby Powder contained asbestos and caused ovarian cancer in tens of thousands of women.
Smith and Beasley once partnered on these lawsuits, but when Smith changed its mind and encouraged clients to vote for J&J's bankruptcy plan in Houston federal court, the relationship soured.
Beasley sued Smith last year in Alabama federal court, claiming partly that Smith was motivated to accept the plan because it owes some $240 million to an outside litigation funder. Smith notes that J&J offered to pump more money into the bankruptcy, which is why it now votes to approve the deal.
"Beasley's suit contains contrived claims based on conclusory allegations, but the gravamen of Beasley's suit is its opposition to the Proposed Resolution," Smith's motion says.
"Now, however, Beasley finds itself virtually alone in opposing the Proposed Resolution. Nearly every plaintiff firm in the Talc Litigation supports the Proposed Resolution, as does the Talc Claimants Committee, which is appointed by the U.S. Trustee to represent the interests of the Talc claimants in the latest bankruptcy proceeding."
Houston bankruptcy judge Christopher Lopez recently conducted a trial and will determine whether to approve or deny J&J's plan to use a spinoff company designed to go bankrupt in order to absorb the company's talc liabilities.
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, as current numbers show more than the 75% of clients needed support the plan.
Smith reached out to Beasley in 2013 for a possible partnership on talc cases. It and Porter Malouf signed an agreement with Beasley in 2014 that split the work and expenses evenly.
Things went well at first. After J&J pulled talc-based Baby Powder from American shelves in 2020, leading Beasley partner David Dearing to send Allen Smith a glowing email that called him a "Giant Killa!"
And they were aligned when J&J tried to use bankruptcy court in New Jersey to settle ovarian cancer claims. And when J&J's third try came in Texas court.
But Smith was part of negotiations that added more than $1 billion to J&J's $8 billion proposal. That arrangement also called for $650 million into a fund to pay plaintiff lawyers.
Beasley's lawsuit accused Smith of breaching their contract and fraudulent suppression of those negotiations - claims Smith says are intended to "punish Smith for having the temerity to disagree with Beasley."
"Beasley alleges Smith breached the (Joint Venture) Agreement by failing to perform 50% of the 'work,'" the motion to dismiss says.
"However, Beasley's JV Agreement does not define 'work' or how each party's 'work' contribution will be calculated."
"Work" could mean success for clients, or it could simply mean administrative hours, Smith says. The agreement never refers to hours performed by either firm.
And nothing prevented it from splitting from Beasley on the bankruptcy issue, Smith says. It adds that Beasley was well aware Smith was negotiating more money for the plan with J&J, dooming the fraudulent suppression claim.
And Smith says it was not required to tell Beasley about any money it owed to outside funders.
"Moreover, Beasley was aware of Smith's litigation financing debt," the motion says. "In fact, Beasley was actively involved in Smith's use of litigation financing."