HOUSTON (Legal Newsline) - The Houston bankruptcy judge who denied Johnson & Johnson's $9 billion plan to settle tens of thousands of ovarian cancer claims has now rejected calls from those affected to reconsider.
Judge Christopher Lopez on April 17 rejected four requests for him to reopen the case and order further settlement talks. J&J wanted to use a spinoff company to absorb liability stemming from allegations its Baby Powder used asbestos-containing talc - claims the company has denied.
Lopez denied the plan over concerns with a voting process that resulted in more than 80% of claimants giving their approval. The Official Committee of Talc Claimants was among those on April 14 who filed motions for reconsideration.
"The Court conducted a two-week trial and considered over 1,800 exhibits," Lopez wrote. "No party was deprived an opportunity to present evidence or make arguments to the Court.
"There are no errors of law. There is no mistake, inadvertence, surprise or excusable neglect. There is no manifest injustice or extraordinary circumstances warranting reconsideration or relief from the Order."
J&J wasn't among those requesting reconsideration. The company has announced it will not appeal Lopez's ruling and instead plans to fight claims in civil courts.
Claimants would have been paid quicker and estimates had them receiving twice as much in the J&J bankruptcy than they would have in civil lawsuits. Some gynecological cancer claims have been deemed worthless, but those individuals would have recovered something from the proposed bankruptcy trust.
Erik Haas, worldwide vice president of litigation at J&J, said on March 31 when Lopez rejected the plan that his "decision highlights the broken tort system in the United States."
In its motion for reconsideration, the Official Committee of Talc Claimants wanted the case to stay open for anticipated petitions for fees. Claimants Heather Velasquez and Rhonda McKey said further mediation between J&J and plaintiff lawyers was "the only way this Court can deliver justice" to alleged victims.
After Lopez detailed what he saw as problems with the voting process, Velasquez and McKey said he should order a "do-over."
"The parties now before this Court can simultaneously begin to walk inside the tort system while still chewing gum here in the bankruptcy system," Mikal Watts of Watts Guerra wrote.
Proponents of the plan said they had the support of more than 75% of claimants and last year, after bumping the fund up $1.1 billion, had the backing of most plaintiff firms.
Lopez said he could not certify the votes of claimants based on how the case played out.
"First, the pre-petition vote cannot be certified," he wrote. "Plaintiffs' firms voted tens of thousands of claims without either hearing directly from their clients or having the requisite authority to do so.
"They did not do it in bad faith. One firm was put in a bad spot due to solicitation issues that were not its fault. Others improperly relied on general language in engagement letters in hopes of getting this plan over the 75% threshold."
Having a vote count before the bankruptcy petition was filed, plus an "unreasonably" short voting time for many of the claimants, "was all done to get to 75% at any cost," Lopez wrote.
In response, Johnson & Johnson put out a press release announcing its "return to tort system to defeat meritless talc claims." The company says it is 16-1 in ovarian cancer cases in the last 11 years.
The firm Beasley Allen was most critical of the voting process. It sued a former business partner, the Smith Law Firm, for flip-flopping after J&J offered more money and motioned several times to have votes from other firms discounted because of how they were collected.
It even asked for a new vote. The Smith firm was motivated to accept the plan to repay $240 million a litigation funder provided, Beasley Allen said.
When OnderLaw tried to add a master ballot of its clients' votes earlier this year, Beasley Allen, through its the Coalition of Counsel for Justice for Talc Claimants, objected.
"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 literal 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."
Beasley Allen was one of the few holdouts among plaintiffs firms. It is co-lead counsel in a federal multidistrict litigation in New Jersey, where it will be entitled to a share of a possible common fees fund.
J&J's extra offer included $650 million for lawyers in the Houston bankruptcy.
Around 50,000 cases will now be decided in the New Jersey MDL, where J&J has motioned to exclude plaintiff experts and disqualify lead counsel.