A federal appeals court yesterday upheld a judge's stay of a lawsuit filed by Dalkon Shield victims against Aetna Casualty & Surety Co., which had provided product-liability insurance for the device made by A.H. Robins Co.
The stay -- affecting efforts by more than 4,000 plaintiffs to pursue claims against Aetna in federal courts in Kansas and New Hampshire -- was issued by U.S. District Judge Robert R. Merhige Jr. He presides in Robins' two-year-old bankruptcy case.
The women had said that their litigation would burden Aetna, not the bankrupt Robins. But a three-judge panel of the 4th U.S. Court of Appeals in Richmond said, "Inevitably, Aetna must involve Robins in this litigation. Aetna's primary defense logically will be that Robins -- not Aetna -- is responsible for the injuries suffered by these plaintiffs."
The same panel also unanimously upheld a Merhige ruling arising from last year's discovery that Robins had improperly paid millions of dollars out of the bankrupt firm. The Dalkon Shield Claimants' Committee urged the judge to appoint a trustee to run the company, but he refused, while holding it in civil contempt. The panel called his decision carefully considered and proper.
Meanwhile, in another development, the committee asked Merhige to order a court mailing of a letter on the status of the case to the more than 200,000 women whose Dalkon Shield claims have passed initial screening. The company would pay the cost. Robins objects to the letter.
Committee counsel Murray Drabkin called the letter "urgent," saying that more than a thousand claimants have phoned or written to his law firm, that the clerk of the bankruptcy court in Richmond has been "besieged" and that the law obligates the committee to send such a letter.