Bankruptcy and product liability litigation stories

The following three stories were from the Big Suits section in The American Lawyer magazine. It involved a lot of reporting by talking to the lawyers concerned on both the plaintiff and defendant sides on the exact processes of the law and the chronological developments in the case.  

CHRYSLER CHAPTER 11

On June 10, after a 42-day trip through U.S. bankruptcy court, Chrysler LLC sold itself to Fiat S.p.A, becoming the new Chrysler Group LLC.

The distressed car company appealed to the government for help last December, borrowing $4 billion under the Troubled Asset Relief Program (TARP). But in March the Obama administration rejected Chrysler’s initial viability plan. The administration agreed to provide additional financing only if Chrysler obtained concessions from creditors and forged a partnership with Fiat by the end of April.

Chrysler could not garner sufficient support from creditors, and on April 30 it filed for Chapter 11 protection. The petition, filed in U.S. bankruptcy court in Manhattan, was structured as a section 363 transaction, a rapid sale of assets where a company cannot survive prolonged court proceedings. In early May the U.S. Treasury lent Chrysler $4.5 billion in debtor-in-possession (DIP) financing.

With the clock ticking on a June 15 deadline for the sale of Chry-sler’s assets to Fiat, a group of creditors objected to the sale, alleging that the government had no authority to use TARP funds for an auto company. On May 31 U.S. bankruptcy court judge Arthur Gonzalez rejected their motion and approved the sale. The dissident creditors appealed, and the sale was stayed pending review. But on June 9 the U.S. Supreme Court lifted the stay. The next day, the government provided the new Chrysler with $6 billion in exit financing.

Fiat now owns a 20 percent stake in Chrysler; it may acquire a majority only after taxpayer loans are repaid. The United Auto Workers’ Retiree Medical Benefits Trust holds 55 percent of the new company; the U.S. government, 8 percent; and the Canadian government, 2 percent. The remainder of the old Chrysler—including some factories and real estate—will be unwound in a court process expected to take several years.

For the Petitioner Chrysler LLC (Auburn Hills, Michigan)

Jones Day: Bankruptcy: Corinne Ball, Jeffrey Ellman, Richard Engman, Robert Hamilton, David Heiman, and Kevyn Orr. Litigation: Lee Armstrong, Steven Bennett, Thomas Cullen, Jr., Todd Geremia, Geoffrey Irwin, Jeffrey Jones, Gregory Shumaker, Geoffrey Stewart, and Todd Swatsler. Corporate: John Kane, Randi Lesnick, Marilyn Sonnie, and Jere Thomson. Finance: Brett Barragate and John Mazey. Environmental: Kevin Holewinski. Employee benefits: John Cornell. Labor: Richard Shaw. Tax: Candace Ridgway. (Ellman is in Atlanta; Heiman in Cleveland; Hamilton, Jones, and Swatsler are in Columbus; Orr, Irwin, Shumaker, Stewart, Holewinski, and Ridgway are in Washington, D.C.; Mazey is in Dallas; Shaw is in Pittsburgh; and the rest are in New York.)

For the Official Committee of Unsecured Creditors

Kramer Levin Naftalis & Frankel: Bankruptcy: Kenneth Eckstein, Thomas Mayer, Adam Rogoff, and Robert Schmidt. Litigation: Jeffrey Trachtman. Corporate: Kenneth Kopelman and Ernest Wechsler. Banking: Kenneth Chin. Tax: Barry Herzog. (All are in New York.) The U.S. trustee selected the firm from among six candidates.

For the United States of America

In-House: At the Department of Justice, commercial litigation division: director Christopher Kohn. At the U.S. attorney’s office in Manhattan: assistant U.S. attorneys Tara La Morte, Jeannette Vargas, and Li Yu.

Cadwalader, Wickersham & Taft: Bankruptcy: John Rapisardi. Litigation: counsel Peter Friedman. Corporate: R. Ronald Hopkinson. Finance: Julian Chung. (Friedman is in Washington, D.C.; the rest are in New York.) The firm advises the U.S. Treasury’s auto task force. It was selected in an RFP process.

For Creditor/Administration Agent JPMorgan Chase & Co. (New York)

Simpson Thacher & Bartlett: Bankruptcy: Peter Pantaleo. Litigation: Mary Forshaw and Thomas Rice. Corporate: David Eisenberg. (All are in New York.) The firm is a longtime counsel to the bank.

For Acquiror Fiat S.p.A. (Turin, Italy)

Sullivan & Cromwell: Bankruptcy: Andrew Dietderich and Hydee Feldstein. Litigation: Steven Holley and counsel John Warden. Corporate: Christopher Mann and Scott Miller. Employee benefits: Matthew Friestedt. Antitrust: Steven Holley and Juan Rodriguez. Tax: Andrew Solomon. (Feldstein is in Los Angeles; Miller is in Palo Alto; Rodriguez and Solomon are in London; and the rest are in New York.) The firm has represented Fiat for M&A matters since 2004.

For The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)

Cohen, Weiss and Simon: Babette Ceccotti, Peter DeChiara, and Bruce Simon. (All are in New York.) The firm was lead bankruptcy counsel.

Cleary Gottlieb Steen & Hamilton: Bankruptcy and litigation: James Bromley and Deborah Buell. Corporate and finance: David Gottlieb and Richard Lincer. Employee benefits: A. Richard Susko. Antitrust: James Modrall and Mark Nelson. Tax: Jason Factor. (Modrall is in Brussels; Nelson is in Washington, D.C.; and the rest are in New York.) The firm, which has had a relationship with the UAW since the 1990s, previously worked on the agreements with the Big Three auto companies that established the retiree health care trusts.

For Objectors the Indiana State Police Pension Trust et al.

White & Case: Bankruptcy: Craig Averch and Thomas Lauria. Litigation: Karen Asner, Stephen Corse, Glenn Kurtz, Alfred Lechner, Jr., Bryan Merryman, and Owen Pell. (Averch and Merryman are in Los Angeles; Lauria and Corse are in Miami; and the rest are in New York.) The firm was tapped after it represented an ad hoc group of non–TARP first-lien lenders.

(Note: Because of space considerations, associates could not be listed.)

–Priti Patnaik

KANO STATE, NIGERIA VS PFIZER

On July 30 Pfizer Inc agreed to pay a Nigerian state $75 million to settle claims on behalf of dozens of children allegedly injured or killed during a clinical trial of a then-experimental drug.

The case was first filed in 2007 in Kano City, Nigeria. State officials alleged that, during a meningitis epidemic in 1996, the company tested the antibiotic Trovan (trovafloxacin mesylate) on 200 critically ill children without informed written consent from parents or approvals from government officials. Pfizer also administered a comparison drug, ceftriaxone, allegedly in insufficient doses. Some test subjects ended up brain damaged, paralyzed, or blind; 11 died. The state originally sought $5 billion.

Pfizer asserted in public statements that it had conducted the study with parental and governmental consent. The company has also said that the deaths and injuries were caused by meningitis, not its drugs. The company did not admit to or deny the allegations under the settlement, which establishes a $35 million trust for test participants, underwrites $30 million in health care initiatives in Kano, and covers $10 million in the state’s legal costs.

Pfizer’s Trovan problems are not over, however. Cases filed by Nigeria’s central government are pending. Also pending are two civil claims filed in the United States under the Alien Tort Claims Act; one, filed in Connecticut, seeks $2 billion.

For plaintiff Kano State, Nigeria

In-House: Kano state attorney general and commissioner of justice Aliyu Umar.

SimmonsCooper Partners: Babatunde Irukera. (He is in Lagos, Nigeria.) Irukera was lead counsel and led settlement negotiations.

For plaintiffs Rabi Abdullahi et al.

Milberg: Peter Safirstein and associate Stephanie Hatzakos. The firm is spearheading an ATCA claim in New York.

For plaintiffs Ajudu Ismaila Adamu et al.

Altschuler & Altschuler: Donald Altschuler and Richard Altschuler. (They are in New Haven.) The firm is spearheading an ATCA claim in Connecticut.

Streamsowers & Köhn: Etigwe Uwa. (He is in Lagos, Nigeria.) Etigwe is cocounsel on the Connecticut claim.

For defendant Pfizer Inc (New York)

In-House: Senior vice president and associate general counsel Bradley Lerman and assistant general counsel Atiba Adams.

Williams & Connolly: Joseph Petrosinelli. (He is in Washington, D.C.) Petrosinelli was lead counsel in the Kano case.

Kaye Scholer: Steven Glickstein. (He is in New York.) Glickstein is handling the ATCA litigation.

Skadden, Arps, Slate, Meagher & Flom: Sheila Birnbaum. (She is in New York.) Birnbaum is handling the ATCA litigation.

Quinn Emanuel Urquhart Oliver & Hedges: Faith Gay and Kathleen Sullivan. (They are in New York.) The firm is advising on ATCA matters.

Madu, Edozie & Madu: John Edozie. (He is in New York.) Edozie helped defend mass torts at a previous firm.

Punuka Attorneys & Solicitors: Chief Anthony Idigbe. (He is in Lagos, Nigeria.)

—Priti Patnaik

WIWA V. ROYAL DUTCH SHELL

On June 8 Royal Dutch Shell PLC agreed to pay $15.5 million to settle human rights claims brought by the families of slain Nigerian Ogoni tribe members. The families accused Shell of complicity in the executions carried out by Nigerian military forces more than a decade ago.

In 1995 Nigerian environmental activist Ken Saro-Wiwa and eight other members of the Ogoni tribe were killed by the Nigerian government. A year later, families of the slain Ogonis, tapping Judith Chomsky at the Center for Constitutional Rights, sued Shell, its Nigerian subsidiary, and the managing director of the subsidiary. In their complaint, filed in federal district court in Manhattan under the Alien Tort Claims Act, the families alleged that Shell was complicit in the Nigerian government’s brutal campaign to suppress protests in a region where Shell was drilling.

Federal district court judge Kimba Wood dismissed the suit in 1996, ruling that a more appropriate forum would be Great Britain or the Netherlands, where Shell is headquartered. The U.S. Court of Appeals for the Second Circuit, however, reinstated the Ogoni families’ suit in 2000.

The tentative settlement came on the eve of trial in late May, and was finalized in early June. But a separate class action, filed in 2002 in the same court on behalf of the Ogoni tribe, remains on appeal.

For the family of Ken Saro-Wiwa (Rivers State, Nigeria) et al.

Schonbrun DeSimone Seplow Harris & Hoffman: Paul Hoffman. (He is in Venice, California.) Hoffman was co–lead trial counsel.

Center for Constitutional Rights: Cooperating attorneys Judith Chomsky and Beth Stephens, and senior staff attorneys Jennifer Green and Maria LaHood. Chomsky was co–lead counsel.

EarthRights International: Litigation coordinator Richard Herz, legal director Marco Simons, and legal fellows Jonathan Kaufman and Jacqui Zalcberg. Herz was cocounsel on a similar case against Unocal Corporation in Myanmar. He brought the case to EarthRights in 1999.

Cohen Milstein Sellers & Toll:Agnieszka Fryszman and asso-ciate Molly McOwen. (They are in Washington, D.C.) Cohen Milstein was tapped by CCR as cocounsel. The firm had worked on a similar case against Exxon Mobil Corporation.

For Defendants Royal Dutch Shell Plc (The Hague) et al.

Cravath, Swaine & Moore: Rory Millson, Lauren Moskowitz, Thomas Rafferty, and Rowan Wilson. (All are in New York.) The firm has been representing Shell since 1909.

–Priti Patnaik

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