Federal officials have initiated a criminal investigation into PG&E Corp.’s potential role in starting California’s largest wildfire of the year, Bloomberg News reported. On Sept. 24, the US Forest Service removed one of the utility’s transmission poles from the site in Placer County where the Mosquito fire started, PG&E said Monday in a filing. USFS didn’t immediately respond to inquiries about the probe. The investigation marks a significant setback for efforts by PG&E to move past its troubled history with fires. The company was charged with manslaughter for a 2020 blaze and pled guilty to 84 counts of involuntary manslaughter for its role in a deadly 2018 fire that drove it into bankruptcy. The latest investigation could also have significant financial and regulatory implications for the company. If PG&E is found criminally liable for the blaze, it may make it harder for the company to recover those costs from customers. In addition, state regulators could increase their oversight of the utility under an agreement struck as a condition of PG&E emerging from bankruptcy in 2020.
Conspiracy theorist Alex Jones ignited a courtroom shouting match yesterday, railing against critics as he testified in a trial to determine how much he owes families of victims who died in the 2012 Sandy Hook Elementary School mass shooting, which he falsely claimed was a hoax, Reuters reported. Tensions boiled over after roughly four hours of testimony in the Waterbury, Connecticut courtroom, not far from Newtown, the town where the massacre took place. Jones fulminated against "liberals" and refused to apologize to a packed gallery of victims' families. The defamation trial concerns only how much Jones and the parent company of his Infowars site must pay in damages for spreading lies that the U.S. government staged the killing of 20 children and six staff members as a pretext for seizing guns. The testimony triggered a three-way shouting match between Jones, Mattei and Jones' lawyer, Norman Pattis, who repeatedly objected to Mattei's questioning. After jurors left for the day, Judge Barbara Bellis told the attorneys that she would enforce a "zero tolerance" policy for disruptions and would hold contempt-of-court hearings for anyone who "steps out of line," including Jones.
Conspiracy theorist Alex Jones said yesterday that Infowars' bankrupt parent company will find new chapter 11 advisers after a bankruptcy judge booted professionals from the case over an undisclosed conflict, MarketWatch.com reported. Jones addressed the ruling by U.S. Bankruptcy Judge Christopher Lopez outside of a Connecticut courthouse where he and Infowars parent company are facing a damages trial for defaming families of Sandy Hook victims. Jones said that Infowars parent Free Speech Systems LLC remains in control of its chapter 11 case and will work closely with a so-called Subchapter V trustee to find new advisers. Judge Lopez also ordered the Subchapter V trustee to review FSS' finances and transactions Sandy Hook families have raised concerns about. "Free Speech will actively and quickly retain replacement professionals, this time with the guidelines of the Subchapter V trustee," Jones said.
A federal bankruptcy judge in Houston ordered new personnel to oversee the bankruptcy of Alex Jones’s Infowars late on Tuesday, citing an ongoing lack of transparency, including over Mr. Jones’s lavish personal spending, the New York Times reported. Judge Christopher Lopez dismissed Mr. Jones’s attorney and chief restructuring officer in the bankruptcy of Free Speech Systems, Infowars’ parent company, and expanded the duties of a Department of Justice-appointed trustee already monitoring the case. The judge authorized the trustee to hire additional legal and other help, specifying that any new hires must have “no connection to any of these cases,” he said, citing a need to investigate “insider relationships.” “There has to be greater transparency in this case,” Judge Lopez said during the hearing on Tuesday, pointing to concerns with spending and other disclosures on the part of the company, which is run by Mr. Jones. “Without transparency, people lose faith in the process,” he added, referring to the federal bankruptcy system. The lawyer and restructuring officer were together attempting to reorganize the company as part of the bankruptcy. In dismissing them, the judge did not fault their work, but rather cited a “lack of candor” on the part of the company, whose moves are dictated by Jones.
Johnson & Johnson faced tough questions from federal appellate judges about whether placing a unit in bankruptcy to deal with more than 40,000 cancer lawsuits over its baby powder was legitimate, Bloomberg News reported. The three-judge panel in Philadelphia heard arguments about LTL Management’s chapter 11 case Monday and will decide later whether the case was filed in good faith, or should be thrown out because J&J and its units don’t face immediate financial distress. Should J&J and LTL lose, juries would once again hear talc cancer claims, leaving J&J facing legal and financial uncertainties as it fights individual cases around the country. Last year, the health care giant used a legal maneuver, known as the Texas Two-Step, to funnel the suits into a new unit without any operations. That unit, LTL, immediately filed for bankruptcy to block the litigation while trying to negotiate settlements. Cancer victims claim tainted talc in J&J’s iconic baby powder made them sick and want the federal appeals court to let their lawsuits go forward instead of being resolved as part of LTL’s chapter 11 case. The judges asked LTL’s lawyers whether the case was really filed to project J&J from the lawsuits, or to give the company an advantage in negotiating a deal to end them all, as cancer victims claim.“The timing really suggests you did this for litigation advantage,” Judge Luis Felipe Restrepo asked during an unusual, three-hour hearing on Monday. “You concede there is a litigation advantage?” If there is an advantage to bankruptcy, it’s incidental, LTL lawyer Neal Katyal said. “I think it’s a byproduct, but that it isn’t the reason” for the bankruptcy. Katyal was a former acting solicitor general in the Obama administration, meaning he argued cases before the U.S. Supreme Court. J&J, which denies its baby powder products cause cancer, argues LTL’s chapter 11 case is the only way of corralling talc litigation costs and ensuring victims get a fair payment. Bankruptcy Judge Michael Kaplan, who is based in Trenton, New Jersey ruled in February LTL’s bankruptcy was legitimate and a better solution than continuing to have juries weigh claims nationwide. Read more.
The propriety of settling mass torts through bankruptcy is the topic of one of the “Great Debates” at Bankruptcy 2022: Views from the Bench, on Friday, September 23, happening in person at Hogan Lovell’s US LLP in Washington, D.C., and also available virtually. For more information and to register, click here.
People suing Johnson & Johnson over the company's talc products urged an appeals court on Monday to revive their claims, saying that the profitable company should not be allowed to use a bankrupt subsidiary to block lawsuits alleging the products cause cancer, Reuters reported. They asked a panel of the Philadelphia-based U.S. Court of Appeals for the Third Circuit to dismiss the bankruptcy of J&J's subsidiary LTL Management, saying that LTL is a "concocted" corporation set up solely to stop them from getting their day in court. J&J, which maintains its talc products are safe, spun off LTL in October, assigned its talc liabilities to it and placed the newly created subsidiary into bankruptcy days later. That restructuring strategy, known as the "Texas two-step," paused about 38,000 lawsuits J&J was facing alleging that its baby powder and other talc-based products contain asbestos and caused mesothelioma and ovarian cancer. Critics, including lawmakers and legal experts, say J&J's bankruptcy maneuver could provide a blueprint for other big companies to avoid juries in mass tort lawsuits. Circuit Judge Julio Fuentes at Monday's arguments asked the cancer victims' attorney Jeffrey Lamken whether the bankruptcy court could provide a more efficient resolution of the claims than trying cases one at a time in other courts. Read more.
The propriety of settling mass torts through bankruptcy is the topic of one of the “Great Debates” at Bankruptcy 2022: Views from the Bench, on Friday, September 23, at Hogan Lovell’s US LLP in Washington, D.C. For more information and to register, click here.
Johnson & Johnson’s use of bankruptcy to shift mass talc lawsuits against the company to chapter 11 will meet its most serious test yet before a federal appeals judge whose influential bankruptcy rulings shape one of the nation’s top corporate restructuring hubs, WSJ Pro Bankruptcy reported. Judge Thomas Ambro sits on the three-judge panel that will hear arguments Monday in a Philadelphia courtroom over an emerging corporate restructuring strategy where companies facing mass personal-injury litigation use a Texas law to create a new subsidiary with minimal business operations and make it responsible for tort liabilities before filing for bankruptcy. The chapter 11 filings by Johnson & Johnson subsidiary LTL Management LLC and others have carried more than a quarter-million personal-injury claims nationwide into bankruptcy court in recent years, stopping further trials on those claims in the civil justice system. J&J’s case has divided bankruptcy specialists and the appeal’s outcome could determine whether the consumer-health giant’s legal strategy could potentially be used more widely by other businesses facing expansive, and costly, personal-injury litigation. Judge Ambro spent more than 20 years practicing bankruptcy law in Wilmington, Del., before assuming his judgeship on the Third U.S. Circuit Court of Appeals in 2000. His background as a bankruptcy practitioner is a rarity among judges in the federal appeals courts, making him an authoritative voice on thorny legal problems arising from complex chapter 11 cases.
Teva Pharmaceutical Industries expects to finalise an opioid settlement in the United States by year-end and start paying in 2023, its chief executive said on Sunday, while confirming he was unlikely to renew his contract next year, Reuters reported. After years of negotiations, Israel-based Teva in July proposed a $4.35 billion nationwide settlement — mostly cash and partly medicines that will amount to $300 million to $400 million over 13 years — to resolve its opioid lawsuits. U.S. states, cities and counties filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of playing down the risks of addiction and failing to stop pills from being diverted for illegal use. U.S. states, cities and counties filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of playing down the risks of addiction and failing to stop pills from being diverted for illegal use. CEO Kare Schultz said Teva was working on legal wording that should be wrapped up by the end of September. It then needs approval from states and subdivisions within states. "When they opt in, once that is all done . . . then it goes into force and that means the first payments happen next year and go on for 13 years," Schultz told a news conference. "So, by the end of the year, you should have this clarification that it all comes together and we will start paying next year." Teva has denied wrongdoing, saying it sold legal medication that was approved for treatment of pain. The U.S. opioid crisis has caused more than 500,000 overdose deaths over the past two decades, including more than 80,000 in 2021 alone, according to government data.
