A. H. Robins Co. said yesterday it is considering bankruptcy-law protection to survive its mounting legal costs from litigation related to the Dalkon Shield.
"A. H. Robins acknowledges that a Chapter 11 proceeding which provides protection from claims under federal bankruptcy law is one of Robins' obvious options for an orderly, global solution of the Dalkon Shield litigation," said Roscoe E. Puckett Jr., spokesman for the Richmond, Va.-based company, which is facing thousands of punitive-damage claims from users of the intrauterine contraceptive device.
Puckett added, however, that the company believes "such a proceeding would, in the long run, be more detrimental to the interests of plaintiffs than the interests of the company.
"Robins therefore hopes that plaintiffs' counsel can yet be persuaded that it is in the best interests of their clients to devise, as suggested by U.S. District Court Judge Robert A. Merhige Jr., a procedure that will fairly and expeditiously conclude the litigation," Puckett said.
Since the 1970s, Robins, a diversified pharmaceutical and health care firm, has been sued by more than 12,000 users of the Dalkon Shield, which the company sold from 1970 to 1974 in the United States. The suits contend that the nickel-sized device caused uterine perforations, pelvic inflammatory disease, sterility, spontaneous abortions and, in some cases, death.
Lawyers for women who have sued Robins compared the company's statement yesterday to the action taken by Manville Corp., the Denver-based maker of construction materials that filed for bankruptcy protection in 1982. Manville said it faces $69 billion in property damage claims over asbestos insulation in buildings.
Attorneys disagreed yesterday about how a bankruptcy filing by Robins might affect the women who have sued Robins for compensation.
To the extent that using the bankruptcy law "would expedite an early and just resolution of all outstanding claims, it would be good," said Roger P. Broshnahan, an attorney with Robins, Zelle, Larson and Kaplan, a Minneapolis firm that represented about 600 women in Dalkon Shield lawsuits and has settled all of the cases. But to the extent it would delay resolution, it would not be good for the plaintiffs, he said.
But Janet Hathaway, an attorney with Public Citizen's Congress Watch, took a less benign view: "The Chapter 11 filing for Manville has been in the courts for several years, and for the entire period of bankruptcy reorganization, people who have been injured by Manville have been unable to get any money."
Robins took a $15 million charge against second-quarter earnings, and in April created a $615 million reserve to cover Dalkon Shield compensatory-damage claims that the company anticipates paying over the next 17 years.
Even after the $15 million charge, Robins reported that second-quarter net income increased 31 percent to $5.3 million (22 cents a share), compared with $4.1 million (16 cents) a year earlier. Sales climbed 8 percent to $164.8 million from $152 million. Pre-tax operating profit, however, fell 22 percent.
On the New York Stock Exchange, Robins closed Wednesday at 16 3/8 a share, down 2 3/8. Yesterday, Robins stock dropped another 3 1/2 to close at 12 7/8.