FATAL LITIGATION, PART II: DOW CORNING SUCCUMBS
(FORTUNE Magazine) – BY THE SPRING of 1993, the small handful of companies that had once manufactured and sold silicone breast implants were in a bad way. For more than a year, they had been ensnared in a web of litigation that showed no signs of loosening, as plaintiffs lawyers around the country filed lawsuits claiming that the implants caused auto-immune disease in women. The number of lawsuits aimed at Dow Corning alone, once the preeminent manufacturer, was fast approaching 10,000. Just months before, Bristol-Myers Squibb, which also faced thousands of breast-implant lawsuits, lost the very first case it attempted to try, against a Houston lawyer named John O'Quinn. He persuaded a jury to award his client, Pamela Johnson, an almost unbelievable $25 million in damages. The verdict had created a frenzy as lawyers rushed to join what appeared to be a litigation gold rush.
While this was going on, Dow Corning, Bristol-Myers, and a third major defendant, Baxter Healthcare, were frantically negotiating with a small group of plaintiffs lawyers, searching for a broad settlement that would mollify the litigation beast. The settlement talks were being led by a Cincinnati attorney named Stanley Chesley, whose bread and butter was "helping" companies put litigation behind them--for a price, of course. That Chesley was often responsible for creating the beast was an irony no one found remarkable or even surprising anymore.
The barrel that Dow Corning and the other breast-implant defendants were staring down was called a "mass tort." As the defendants were discovering, it is hard to imagine a more terrifying threat to any corporation. Over the course of the past decade, as more and more product-liability suits had exploded into mass torts, they had mutated into a frightening industry, with the power to drive companies straight into bankruptcy--regardless of the merit of the underlying claim.
"The liability system in this country is totally broken," complains William Griffin, a San Francisco corporate attorney, and the breast-implant litigation offered a classic case in point. Where was the proof that silicone breast implants caused women to come down with auto-immune disorders, from achy joints and fatigue to full-fledged diseases like lupus or scleroderma? It didn't exist. In fact, studies debunking the link between silicone breast implants and disease were about a year away.
But that was beside the point. The mass tort industry derived its strength from raw numbers, not from evidence or science. If plaintiffs lawyers could create enough parallel litigation--if they could scare thousands of clients into filing thousands of lawsuits--then the strength or weakness of the actual cases would be rendered nearly irrelevant. The sheer volume of lawsuits would force companies to plead for mercy; otherwise they would be put in the near-suicidal position of trying dozens of cases at a time, all across the country, well into the next century.
Never had this tactic been used as successfully--or as baldly--as in the breast-implant litigation. John O'Quinn, for instance, had built up a roster of some 2,500 breast-implant clients. That gave him an immense amount of power. By the spring of 1993, matters of evidence and liability had been overtaken by a single question: how much was it going to cost Dow Corning and the other defendants to be rid of this litigation?
A decade before, Chesley had negotiated the first big product-liability mass tort, the Agent Orange litigation, which had been settled for $180 million. As he remembers it, after it was over, the presiding judge, peering out the window of his New York office, had fixed his gaze on the Chrysler building and remarked off-handedly: "You know, Stan, that used to be the tallest building in New York." Over the years, just as the Chrysler building had been gradually dwarfed by other, newer buildings, so had the Agent Orange settlement been dwarfed by other, newer settlements. By the time of the breast-implant mass tort, the record for a "global" settlement had risen to $2.5 billion. What Chesley knew, what everybody knew, was that any breast-implant settlement was going to cost much more.
Ever since the mass tort had begun, in January 1992, the complex legal maneuverings had been dominated by two lawyers: Chesley and O'Quinn. While pursuing completely different strategies, the two men had wound up executing a delicious squeeze play. From his position as co-chairman of the plaintiffs' steering committee, Chesley was running what might be thought of as the Big Case. The Big Case was really thousands of breast-implant cases, consolidated as a class action in a single courtroom, that of a Birmingham, Alabama, federal judge named Sam C. Pointer Jr. Chesley knew from past experience that consolidation would guarantee that the companies would come crawling to him, looking to settle.
O'Quinn's strategy, meanwhile, rested on his ability to keep his 2,500 cases in Texas state court, where he could push his caseload through the system and force companies to either try them or settle them. Given that O'Quinn operated in legendarily pro-plaintiff Harris County, he was likely to win either way. And so he had: His $25 million verdict in the Pamela Johnson case had caused Bristol-Myers to run up a white flag. Bristol-Myers never again tried a breast-implant suit, but settled them whenever trial dates were set-for a sum rumored, in Texas, to be $1 million a case. Of course, a verdict like that also strengthened the bargaining position of those working on the Big Case. So well did these strategies reinforce each other that one could be forgiven for wondering whether the lawyers were acting in concert. they weren't; there was too much bad blood between them.
In the months after the big Bristol-Myers verdict, though, Chesley and O'Quinn began to share center stage with two other attorneys. The first was Mike Gallagher, a Houston plaintiffs lawyer with over 1,000 clients, who was the one Harris County lawyer to decide that he needed to participate in the goings-on in Pointer's courtroom. Having practically forced his way onto Chesley's negotiating committee, he began slowly taking command of the negotiations. By turns blunt and coy, funny and angry, Gallagher was the kind of negotiator who would joyously drink you under the table by night even as he was demanding your first-born by day. To his considerable financial detriment, Gallagher spent the next year negotiating alongside Chesley instead of following O'Quinn's lucrative, fool-proof strategy in Harris County.
The second man was a natty, disarming, whip-smart attorney named David Bernick, a 38-year-old "national litigator" for the rough-and-tumble Chicago firm of Kirkland & Ellis. Bernick was Dow Corning's lawyer. Along with Kenneth Feinberg, who was handling the settlement negotiations, he had been retained back in 1992, after the mass tort had gotten under way. Bernick, though young, had already built a reputation as someone who could win complex product-liablity cases. His best-known victory had come some five years before, when he had defended a product called Sarabond, a mortar additive that allegedly weakened brick structures and corroded steel. By the time Bernick got involved, the manufacturer, Dow Chemical, had lost the only two lawsuits that had been tried and had spent more than $100 million in settlements. Bernick's first trial, however, resulted in a verdict for the company so convincing that no Sarabond case was ever tried again.
Though he had never taken more than basic science courses in school, Bernick had a gift for science. Perhaps even more than his trial skills, that was what he brought to cases like the breast-implant lawsuits. He also had a talent for explaining complex scientific issues to nonscientists in a way that was understandable without being patronizing. "My basic premise," he says, "is that jurors can understand science if you take the time to explain it to them." Though Bernick knew he had to be able to defend the company's actions, to mute the plantiffs' cries of negligence, he saw his primary goal as something else: refocusing the lawsuits on the allegation that had created this mass tort in the first place. Did breast implants cause disease, as the plaintiffs said, or did they not?
As is often true in a mass tort, science was the plaintiffs' Achilles' heel. When you got right down to it, all they had was a theory. The theory said that the silicone gel somehow caused a breakdown in a woman's immune system, making her susceptible to auto-immune symptoms. The strongest evidence in support of this theory, of course, was the plaintiffs themselves-women who had both implants and a disease. What the lawyers didn't have was any serious science--things like controlled studies--to support their claim of a link between the two.
Until Bernick arrived on the scene, they had managed to fudge this pretty well. Dan Bolton, the lawyer who had won the first important breast-implant case, had dug up several "experts" who genuinely believed that silicone gel implants were harmful--people like Pierre Blais, a chemist who formerly worked for the Canadian government. Like virtually all the plaintiffs' experts, however, Blais had never conducted a study to test his theory, nor had he attempted the kind of epidemiology that could discover whether women with breast implants had any greater incidence of auto-immune illness than the rest of the population. Still, as a man of science who believed what the plaintiffs believed, he was extremely valuable. In addition to helping Bolton win several trials, he had also played a crucial role in O'Quinn's victory over Bristol-Myers.
As spring approached summer and Bernick prepared to try his first case, he concentrated on three things: showing that Dow Corning's internal story was more honorable than the plaintiffs alleged; laying out mainstream science's belief that silicone breast implants were safe; and gathering the ammunition he needed to shoot holes in the other side's expert testimony.
That trial took place in Colorado in May and June of 1993; when it was over, Bernick's grateful client could claim its first victory. Although there were complaints afterward that Bernick had conducted a campaign of "character assassination" against the plaintiff, a former stripper, the people he actually went after were the experts. Blais got off easy; he was merely neutralized. Several others weren't so lucky. A doctor named Andrew Campbell, who ran a chronic-fatigue clinic in Houston where he had "diagnosed" hundreds of clients referred to him by various attorneys, was forced to admit that his rasuma had been doctored and that he had never published a research paper in his life. So devastating was Bernick's cross-examination of Campbell that his career as an expert witness abruptly ended. The extent of Bernick's accomplishment could also be seen in the aftermath of the trial, when the jury foreman wrote an article defending the decision. "The jury believed that many women with silicone breast implants are sick," he wrote, but "there has been no substantial proof that silicone is the cause."
Bernick's Colorado victory was the first good news in a year and a half for Dow Corning. It also gave the defendants their first bit of bargaining leverage in the global settlement talks: Now it was the plaintiffs who needed to think twice about trying these cases forever. And the Harris County lawyers realized something else: When the moment came, as it surely would, that John O'Quinn found himself up against David Bernick, it was going to be something to see.
As encouraging as Bernick's victory was for the defendants, it couldn't undo the perverse logic of any mass tort--that the final leverage lies in the numbers. Thus, its major effect was to intensify negotiations toward a settlement in the Big Case, which was still Dow Corning's best hope of getting out alive. Kenneth Feinberg immediately began pushing hard for a deal with Chesley. The two men were old hands at this; they had sat across the table in most of the big settlements to date. But this one would be different. Gallagher, a trial lawyer suspicious of their relationship, was determined not to permit the kind of cozy agreement that so often enriches attorneys at the expense of everyone else.
Gallagher was haunted by the experience of Agent Orange. In that mass tort, Chesley had wound up with a fee of $525,000, while the most a totally disabled veteran could collect was $12,000--with no further right to sue. That memory is what caused Gallagher to insist that the plaintiffs be given not one but two separate opportunities to "opt out" of any broad settlement and bring their own cases if they thought the money wasn't enough.
He also began demanding that the plaintiffs not be required to prove "causation." In other words, no woman would have to show a link between her implants and her ailments to be eligible for damages. What's more, he wanted women to be able to participate in the settlement even when their symptoms did not amount to a recognizable disease. Again, his rationale was rooted in Agent Orange. "In Agent Orange," he recalls bitterly, "the veterans got screwed because of so-called science. A lot of them were really sick, but their symptoms didn't add up to a known disease." He continued: "Silicone implants don't cause lupus so much as they cause something like lupus. A lot of my clients may not have lupus, but they can't walk up the stairs." Though you won't find it in any medical textbook, the plaintiffs' experts were calling this loose collection of symptoms "breast adjuvancy disease"; thanks to Gallagher, the phrase was eventually embedded in the settlement language.
At one point Feinberg tried to reopen the proof-of-illness issue. Gallagher slammed his fist on the table in anger. "I worked out a claims process," he shouted, "where the claim goes in one end and a check comes out the other end. And we're not going to change that!"
And of course all the plaintiffs' negotiators were insisting on gigantic sums of money. Gallagher once said that the hardest thing about being a plaintiffs lawyer was "keeping a straight face the first time you ask for a million dollars." Now he and the others were asking for billions, and they weren't laughing. For months, the two sides haggled over the sum--not only how much it would come to but how the settlement fund would be structured. In the end, the three defendants engaged in the negotiations agreed to pay around $4.75 billion over 30 years, 25% of which would go to the lawyers. As incredible as that sum was, the only reason it wasn't any higher was that Feinberg told the plaintiffs that Dow Corning had reached its financial limit; by pushing for more, he implied, they might push the company into bankruptcy. Since bankruptcy halts litigation, it was the one thing the plaintiffs' negotiators wanted to avoid at all costs.
Then the question became: How much would each company kick in? This took another seven months to decide, as the companies fought furiously with each other, all their built-up resentment at their plight finally exploding in an orgy of mutual recrimination. All the while, Ralph Knowles, another plaintiffs' negotiator, openly threatened "massive litigation" if they didn't stop dawdling and agree to terms.
When the settlement was finally made official in the spring of 1994, it was revealed that Dow Corning would pay $2 billion and the others would pay the rest. The amount itself had been reduced to a little under $4 billion; the assumption was that a fourth defendant, 3M, would come in and make up the difference. Within two months 3M did come in, bringing the total amount to $4.25 billion. Wouldn't you know it: 3M entered into the settlement just weeks after going to trial against John O'Quinn. The judge was Carolyn Johnson, who had received her largest campaign contribution from O'Quinn just months after getting the case. Three plaintiffs won a $27.9 million verdict. O'Quinn had struck again.
IN OR OUT
What is hard to understand, even now, is how anybody could have believed that such a deal could possibly work. Under the terms, individual claimants would be eligible for sums that ranged from $200,000 to $2 million, depending on their ages and the severity of their symptoms. But the money was supposed to last 30 years; only $1.2 billion would be available for current claims. So even using that lowest figure of $200,000, the fund would cover only 6,000 women. There were already three times that number of lawsuits pending. Even the negotiators assumed that number could rise to 60,000 potential claimants.
Worse, no one could say for sure that "only" 60,000 women would join the settlement class. In fact, by the time the numbers were in--and it took close to a year--there weren't 60,000 women but an almost unbelievable 480,000. They were drawn on the one hand by the prospect of the six- and seven-figure sums that were being advertised, and on the other by the fear that it was now or never. Even women who suffered no symptoms were driven to get "on the grid," as it was called, in case they became ill later on.
Then there was the John O'Quinn problem. A mass tort settlement won't make lawsuits go away unless the vast majority of plaintiffs abandon their lawsuits and take the money. With O'Quinn's success in Harris County, why would he ever advise his clients to do that? Far better for them to "opt out" of the settlement so that they could continue bringing cases in state court, and let O'Quinn take care of the rest. Since the Harris County bar as a whole had around 6,000 cases, and most of those cases were likely to be opt-outs, the defendants still faced a tremendous amount of litigation. It was a disaster in the making, quite possibly the worst mass tort settlement ever negotiated.
Ah, but what a glorious time it was to be a breast-implant lawyer in Texas! Those spring and summer months of 1994--the opt-out period, as it was called--that was when a Harris County plaintiffs lawyer could really make some money.
Just picture, for a moment, the pressure on those who had negotiated the settlement. Here they were racing around the country, trying to persuade several hundred lawyers to commit their clients to the settlement by the opt-out deadline. Always, their pitch was the same: If too many women opted out, the companies would walk. Then they'd all be back where they had started--except that it would be worse because Dow Corning, in all likelihood, would file for bankruptcy. The threat of bankruptcy was Dow Corning's leverage.
The last thing any of the negotiators wanted during those months was a multimillion verdict coming out of Harris County. Which, of course, is exactly why every plaintiffs lawyer in Houston was lining up trial dates as fast as he could get them. As cases came up, defendants had no choice but to settle them. One source close to the O'Quinn firm says they were bringing in upwards of $13 million a month during that stretch, a figure O'Quinn dismisses. ("It's too low," he joked to one writer.)
Finally, that June, as Dow Corning realized that Harris County had become a bottomless pit, Feinberg made an extraordinary secret trip to Houston. There he met with Rick Laminack, who was O'Quinn's breast-implant point man, and Richard Mithoff, who had his own large caseload, to plead for a temporary truce. The two men had 34 cases scheduled for trial over the next two months against Dow Corning. Feinberg told the lawyers that the company would settle all 34 cases--for a sum that reportedly topped the $1 million per case that had become the Harris County benchmark--but the money could not change hands until after the opt-out deadline. The Harris County lawyers agreed to the deal.
But in late August, after the deadline, Feinberg returned to Houston bearing a different message. Dow Corning had decided that it wasn't going to settle the cases after all, he bluntly told Laminack and Mithoff. There had simply been too many opt-outs, Feinberg continued--most of which were in Harris County. The company just didn't have the money to keep settling individual lawsuits indefinitely. "I've never been lied to like I was lied to by Dow Corning," Laminack later fumed. But that's when he knew that Dow Corning's eventual bankruptcy was probably inevitable.
All that summer and into the fall, women around the country streamed into law offices either to join the global settlement--or to opt out of it, on the assumption that they would get so little from the settlement that that they would still do better in court. Both developments were equally disastrous. Yet it took months before the participants finally conceded the obvious: Their settlement was hopeless.
Why hadn't they seen it coming? One school of thought says that Feinberg, with a seven-figure bonus at stake, simply willed himself into believing the terms made sense. This Feinberg vehemently denies: "No one expected 480,000 claims," he says, "and no one expected all those opt-outs in Harris County. O'Quinn wrecked this settlement." The other person who received much of the blame was Gallagher. With his insistence on "claims coming in one end and a check coming out the other," he was largely responsible for the loose medical standards that brought so many women into the class. And he knows it. "I was wrong," he says contritely.
THE OTHER DOW
In terms of sheer destructive power, this mass tort was proving to be mightier than even the plaintiffs had ever dreamed. The pincer movement that had begun years before--Chesley's Big Case in federal court; O'Quinn's guerrilla actions in Harris County--was closing in on the defendant companies. The problem was, their armies had grown so large, and their greed so uncontrolled, that there simply wasn't enough loot to go around. They needed a deeper pocket. They needed to rope Dow Chemical into the case. And for that, they needed each other.
Dow Chemical, of course, had co-founded Dow Corning in 1943; it and the other co-founder, Corning Inc., remained Dow Corning's only shareholders. With $20 billion in annual revenue, Dow Chemical was a truly deep pocket--larger than Corning and ten times the size of Dow Corning. It was also, ever since the Agent Orange litigation, the most hated company in America among plaintiffs lawyers. That Dow Chemical had never made a breast implant in its history did not bother the plaintiffs lawyers in the least. The way they saw it, Dow Chemical was as culpable for Dow Corning's missteps as Bristol-Myers, Baxter, and 3M were for the breast-implant subsidiaries they had once owned. But Judge Pointer disagreed, ruling that since Dow Corning was not a subsidiary but an independent company, its founders were not responsible for its legal problems.
The plaintiffs' lawyers had no intention of accepting Pointer's ruling as the final word. Convinced that Dow Chemical was in this thing up to its elbows and that Dow Corning was, in effect, sacrificing itself to shield its larger neighbor--Chesley was calling Dow Corning "the Manchurian candidate"--they set about a new round of discovery with one aim: to establish a strong enough connection between Dow Corning and Dow Chemical to cause Pointer to change his mind.
There was no finesse involved in this attempt. They simply sat Dow Corning and Dow Chemical people down in a small room, turned on a videocamera, and questioned them for days at a time. What did they learn? First, they learned that before Dow Corning set up its own toxicology lab in the early 1970s, Dow Chemical used to do some of its silicone toxicology work. They also discovered that Dow Chemical once controlled a small company in Italy that marketed breast implants abroad. And finally, they came across some joint Dow Chemical-Dow Corning studies from the mid-1980s exploring the possibility of developing silicones for insecticides. And that was it. Even Bolton, by then watching the big boys skeptically from the sidelines, was bemused at how slender a reed this was on which to hang a potential multibillion liability. "That's a tough sell," he remarked, shaking his head in wonder.
The big boys, though, had exactly what they wanted. They raced back to Pointer's courtroom, laid out their new "evidence," and then asked him to stick Dow Chemical back into the case. Stunningly, Pointer reversed. "[U]nder the substantive law of at least some states--though not necessarily all states--the evidence would create a jury question in federal court," he wrote. As ever, though, one state hadn't waited for Pointer. In the fall of 1994, well before Pointer's decision, a Texas judge had concluded that the evidence was sufficient to make Dow Chemical a defendant. And John O'Quinn was preparing to try just such a case.
Dow Chemical's first reaction upon learning of the Texas ruling was to sue Dow Corning. The suit was really a legal maneuver to obtain Dow Corning's help. After all, Dow Chemical didn't have a clue about how to defend a silicone breast implant. It needed quick access to the things Dow Corning knew, and more to the point, it needed David Bernick. In all, seven lawyers would be representing the four principals at the trial; in addition to the two companies, there were also two different plaintiffs. But everyone knew that this was about Bernick and O'Quinn. This was the trial Harris County had been waiting for.
O'Quinn scoured Harris County for the perfect plaintiff, eventually choosing someone not from his own 2,500-client roster but from that of a lawyer named Edward Blizzard. O'Quinn's choice was Gladys Laas, a sweet, matronly 57-year-old woman who had received breast implants after an operation to remove fibrocystic tissue. "She's a wonderful person," attests Blizzard. "Deeply religious, with a good, solid work history. She had been a nurse at St. Luke's." But she could no longer work because of her pain. Her once happy and productive life had degenerated into a spiral of suffering and anguish. "John," adds Blizzard, "was very impressed with her." The other plaintiff, a client of Mithoff's, was no less sympathetic. Jenny Ladner, a 35-year-old doctor and mother of three, was about to leave the Army to go into private practice. She had lupus. The two plaintiffs were asking for $29 million in damages.
The trial began last November and instantly became the kind of event that people want to see. Among those who could be found in attendance was the Houston mayor's wife, Elyse Lanier, who sat on the University of Houston's board of regents with O'Quinn--and had breast implants. At key moments, the trial had to be moved to Harris County's cavernous ceremonial courtroom to accommodate all the spectators.
The stars in this theater were determined to live up to their billing. Here was O'Quinn, with his fiery rhetoric, calling on the jury to punish the evil Dow entities: "Dow Corning violated the sacred rules that you don't sell a product to be put in the human body until you have first done the testing and proven it to be safe," he railed. "This case is not that much about science and chemistry," he said at another point. "This case is about ethics." And here was Bernick, throwing it right back at him:"In all the closing arguments that you have heard today from the plaintiffs, where did you hear reference to one...study where they said..."Let me tell you about this piece of data?" Not once. Why?" He concluded sarcastically, "I guess because this case is about ethics, not science and chemistry."
In fact, in the months before the trial, several important epidemiological studies examining the link between implants and disease had been completed. Though their sample populations were too small to be definitive, they strongly backed the companies' position. One study, by a group of researchers at the Mayo Clinic, had been published in the New England Journal of Medicine. A second study, by researchers at Harvard, had not yet been published, though an abstract was being circulated. Bernick, of course, wanted to be able to tell the jury about the studies; O'Quinn wanted them kept away from the jury. The judge ultimately ruled the jury could be told about the Mayo Clinic study, but not the Harvard one, because it hadn't yet been published.
Mostly, though, the trial revolved around the testimony of the "experts" O'Quinn had brought in to attest to the dangers of breast implants. Campbell and Blais were gone, of course; they had been damaged too badly in the Colorado trial. O'Quinn had a whole new crop of experts, but Bernick was ready for them. Harris Busch, a professor at Baylor College of Medicine who was a critic of breast implants, spent parts of five days on the stand. During that time he admitted that the first time he had ever criticized implants was at a convention of plaintiffs lawyers, and that there had never been a controlled study showing a connection between implants and disease. Another scientist, Nir Kossovsky from UCLA, who had supposedly come up with a way to test for an immune reaction, was forced to acknowledge that in his study of 250 women with breast implants--all of whom claimed to be ill--only two "tested" positive to immune reaction.
And so it went. O'Quinn would put an expert on the stand, and Bernick would poke holes in his testimony. Which would cause O'Quinn to put yet another expert on the stand, and they'd start all over again. This went on for months--yet in all that time, the one expert O'Quinn would not put on the stand was the man who had actually diagnosed Gladys Laas. His name was Bernard Patten, and he too was a doctor at the Baylor College of Medicine. By his own account, he had examined more than 1,000 women--women who had been fed to him by plaintiffs lawyers all over Harris County. So when it came time for the defense to put on its case, Bernick simply read to the jury from Patten's deposition. It was devastating. He had believed that implants had caused auto-immune disease since 1988 but hadn't said anything for three years. His one paper on the subject, which he called his "disquisition," was intended, he said, "to be a virtuoso demonstration of my knowledge of classical antiquity and oratorical techniques." And he said he had never told any of his patients that their implants had caused their disease.
By the time the testimony had ended, there was no doubt that Bernick had damaged the O'Quinn mystique. Just before the closing arguments, O'Quinn came down with a severe case of shingles. The trial was delayed until he recovered; the jury didn't get to deliberate until February, some three months after the trial had started.
When it emerged several weeks later, it rendered the single most confusing verdict in the entire history of the breast- implant litigation. In the case of Jenny Ladner, it found that the two companies were innocent of any wrongdoing. She got nothing. In the Gladys Laas case, the jury concluded that Dow Corning had not acted negligently, had not made a defective product, had not misrepresented the implants, and had not acted with "conscious indifference." It did not award Laas any punitive damages. As each question was answered by the jury, the plaintiffs' team seemed to sag under the weight of their growing defeat. But then, on the last question, the jury found Dow Corning guilty of a "deceptive trade practice," and awarded Laas and her husband $5.2 million in actual damages. In addition, the jury found that while Dow Chemical had not "conspired" with Dow Corning, it should nonetheless pay 20% of the damages to the Laases.
Even O'Quinn knew that the verdict was problematic. "Dave," he said quietly to Bernick after the jury foreman had finished speaking, "it don't make any sense."
Publicly, of course, O'Quinn spun a different tale. The next day, on CNN, he was asked point-blank about the jury's rejection of the charges against Dow Chemical. "They are clearly implicated," he retorted. "And I believe [the judge] will uphold that." But he was wrong. Dow Chemical's assessment was soon thrown out, when the judge found it inconsistent with the jury's other findings. And for the same reason, it seemed likely that the judgment against Dow Corning would be thrown out on appeal as well: It didn't square with the rest of the verdict.
But this vindication never came. Even before the Laas appeal could be argued, Dow Corning finally succumbed to the stark calculus of the mass tort: It filed for Chapter 11 bankruptcy protection. Despite the prospects for a reversal, it just couldn't wait any longer. At that moment all litigation was frozen, including the Laas case.
At a bankruptcy hearing a few days after the filing, Dow Corning president Gary Anderson tried to explain what had led the company to take this drastic step. It had already spent over $400 million in "costs and legal liabilities." And despite its $2 billion commitment to the global settlement, there was no end in sight. "As we enter the summer," said Anderson, "we will face 75 cases, with over 200 plaintiffs represented. And it is going to be physically impossible for our corporation to deal with that." It was "ironic," he added, that this was happening now, just as "the science we talked about is beginning to come in [and] beginning to say there is no connection between the implants and the immune-system diseases that are alleged here."
And it was ironic. But so was this: Because of the bankruptcy, the $5.2 million judgement awarded to the Laases still stood. Which meant that Gladys Laas and her husband held a liability that made them, in theory, Dow Corning's 20th-largest creditor.
Dow Corning filed for bankruptcy on May 15, 1995. Over the intervening months, the breast-implant mass tort has gotten no closer to being resolved. For most of this past summer, the non-Dow Corning defendants were engaged in marathon negotiations with the plaintiffs' steering committee to salvage what they could of the settlement. Pointer set two deadlines; both were missed. The third deadline, set for the end of September, would have been missed as well except that Pointer essentially pushed the plaintiffs' negotiators aside and struck his own deal with the companies. Under the revised terms, the three companies will pay anywhere between $10,000 and $100,000 to be rid of those cases at "the bottom end of the grid"--the cases that Gallagher's demands had brought into the settlement. That could well add up to $3 billion--a huge sum just to clear away the weakest cases. Those whose symptoms are more severe will be eligible for sums that could go as high as $1 million, but they have to pass much tougher medical criteria. It is a foregone conclusion that most of these women will opt out and keep suing. This could well mean that an additional 50,000 lawsuits will be filed.
Though it received far less publicity than the settlement talks, Dow Chemical was also engaged in a mammoth struggle this past summer. After Dow Corning's bankruptcy, numerous lawyers around the country refiled their Dow Corning lawsuits as Dow Chemical lawsuits. Suddenly Dow Chemical found itself on the receiving end of thousands of breast- implant suits. It first attempted to have the suits frozen, arguing that they could not be separated from the Dow Corning bankruptcy. By the end of the summer, though, it seemed clear that it was going to have to go to trial in at least some states. Its first trial began in Reno on October 2. Meanwhile, in Texas, the company is still fighting to keep cases in federal court rather than state court. If it loses that fight, it knows exactly what will happen next. O'Quinn and Laminack alone have 800 cases waiting for Dow Chemical.
As for Dow Corning, it's difficult to say at this point how or when it will emerge from bankruptcy. In some ways, bankruptcy gives the company some control over its destiny. The lawsuits have stopped. It has some breathing room. And it can deal with its problems before one judge, rather than piecemeal in courts all over the country.
Still, bankruptcy has hardly allowed Dow Corning to elude the plaintiffs' lawyers. In any bankruptcy, the creditors will have a large say in how events play out--and its main creditors are the plaintiffs. The plaintiffs' lawyers talk boldly about forcing the sale of the company, with the proceeds going to the plaintiffs. That, of course, is exactly what happened to A.H. Robins, the maker of the Dalkon Shield.
Dow Corning, for its part, is pushing for a "common issue" trial, which would allow a judge to set some kind of value for breast-implant cases--and determine the company's liability for the litigation. Bernick, of course, would try the case for Dow Corning, and who knows? Maybe, after hearing the evidence, the judge will rule that its liability is small, and Dow Corning can emerge relatively unscathed. In any case, the company and its opponents face months, and perhaps years, of legal wrangling.
In the meantime, the company's current CEO, Richard Hazleton, has tried to rally support in Washington, describing the plaintiffs bar as "Litigation Inc.," and calling on Congress to pass a tort reform bill. Although breast implants have become Exhibit A for Republicans who want a tort reform measure, the bills currently under discussion would actually help the mass tort industry. Their centerpiece is a provision that would cap the size of outsize awards (think McDonald's coffee) that seem to assault common sense. With such a cap, though, lawyers out to make an old-fashioned killing will have to do it by accumulating many cases instead--in other words, by fomenting mass torts.
The one thing Dow Corning continues to have in its favor is the science. The Harvard study has since been published, and it too fails to show a link between silicone breast implants and disease. And an even bigger Harvard study is said to be only a few months away. FDA commissioner David Kessler recently told Congress: "We now have, for the first time, a reasonable assurance that silicone-gel implants do not cause a large increase in disease in women." So far, though, he has refused to lift his "temporary" moratorium, which, of course, triggered the mass tort in the first place. Nearly four years after Kessler's decree, the mass tort he helped create is not even close to ending. In some ways, it is just getting started.
EARLY ONE MORNING this past summer, with all the complexities of the breast-implant litigation swirling around him, Rick Laminack took time out from an interview to consult privately with one of his associates. It turned out that the associate was in a meeting with lawyers from 3M, trying to settle some upcoming cases. When the interviewer expressed surprise that settlements were continuing, even after the Dow Corning bankruptcy, Laminack broke into a sardonic grin. "There are settlement talks going on in here every day," he said. His associate quipped, "Gotta pay the bills, you know." As the two lawyers swaggered out of the room, they both chuckled at the younger man's remark.
Months before, a plaintiffs lawyer had been asked if there was anything to stop O'Quinn and Laminack from bringing breast-implant lawsuits forever. He thought for a minute. "No," he replied finally. "There isn't."