A U.S. Bankruptcy Court in Richmond is scheduled to hear arguments today on whether A. H. Robins Co. improperly filed for bankruptcy in the face of a tide of lawsuits from women who claim they were injured by the company's Dalkon Shield.
About 150,000 women have filed claims against Robins in the five weeks since the company opened an advertising and public relations campaign to notify former users of the shield in more than 80 countries of an April 30 deadline for filing claims against Robins. The claims are arriving at the court at a rate of 2,000 to 3,000 a day, but court clerk Michael M. Sheppard said the pace may be slowing.
Robins started to sell the shield, an intrauterine contraceptive device, in January 1971, and it was used by an estimated 2.2 million women in the United States and 1.7 million women in other countries. The company stopped selling the device in June 1974 in the United States and elsewhere by April 1975. It undertook a U.S. recall campaign in October 1984.
The Richmond pharmaceutical manufacturer filed for voluntary reorganization under the bankruptcy code on Aug. 21, saying it needed the protection of the bankruptcy law to get its financial affairs in order and to establish "an efficient and economical procedure for the just resolution" of the massive and growing Dalkon Shield product-liability litigation.
At the time of the filing, some 15,000 U.S. women had filed lawsuits, and Robins and its Dalkon Shield insurer, Aetna Casualty & Surety Co., reportedly had spent $520 million to dispose of approximately 10,000 cases and to pay legal expenses. Most of the women said they had suffered serious pelvic infections and the loss or impairment of their ability to bear children.
The Chapter 11 filing froze all of the litigation. It also halted a review of normally privileged documents in the offices of two Dalkon Shield defense law firms in Richmond. The review was being done by two special masters appointed by U.S. District Judge Frank G. Theis, who for more than a decade has been in charge of pretrial discovery in a large group of federal and state shield cases consolidated for that purpose in his court in Wichita, Kan.
The issues to be argued today by lawyers for plaintiffs and Robins include:
*Whether to dismiss Robins from Chapter 11. One alleged ground is that it is "a healthy business" that improperly sought refuge in a bankruptcy code intended to help a debtor in "genuine financial distress" rehabilitate itself.
*Whether to lift the automatic stay of litigation to let the discovery ordered by Theis to resume.
*Whether to grant a petition by Robins for a civil contempt order against Sidney L. Matthew, a plaintiffs' lawyer in Tallahassee, Fla., for alleged "clear, blatant and deliberate violations of the automatic stay."
Before the Aug. 21 filing, Robins and Matthew had agreed to settle a shield case for $150,000, and Aetna had delivered a check in that amount to a Florida defense attorney. He had it in his office when Robins went into Chapter 11.
Robins refused to turn over the check, saying payment was "permissible but not mandatory," and Matthew sued. In December, a federal judge in Miami ordered Robins to pay in 15 days or be penalized $100 a day. Robins asked the judge to reconsider; the petition is pending.
*Whether Chapter 11 deprives Dalkon Shield plaintiffs of the equal protection of the law as guaranteed by the Constitution, partly by enabling a company alleged to have engaged in "years of misconduct" to escape its just debts to the women. Robins denies any wrongful conduct.