Friday, August 19, 2005

The Vioxx verdict - what would a debtor in possession do? . . .

$253 million, mostly in punitive damages, in the jury award on the lawsuit against Merck for Vioxx. And there will be many more trials to come. Of course, with a verdict this large chances are good that the prospective jurors in the later cases will have heard of it. Who knows how that plays out, but my feeling is that high verdicts will engender more high verdicts.

I say, file for Chapter 11 and let the the personal injury claimants all bring their injury claims into one court. That eliminates the spector of death by a thousand nibbles as suits are filed by all and sundry in jurisdictions large and small.

Let all the "real" creditors help out the debtor in making the plan. I figure that a debtor in possession, acting in a fashion that courts and woos the other creditors, can cobble up a plan for the court and that plan could accommodate any jury ambitions to "send a message," by putting all such claims into one separate classification, described as unsecured claimants with injury and punitive damage claims. You know, the one where punitive damages will be stuffed way down on the bottom of the list of important claims to pay, with the ugliest of unsecured creditors enjoying no kind of priority or regard.

Despite the fact that I've been a plaintiff's attorney and despite the fact that I think the drug companies are generally not the sort of people one would welcome into one's family or social club, I don't see why attorney's contingent fees -- the major motivation in these kind of cases -- should be settled in a fashion which wastes shareholders' equity and puts payment of legitimate claimants at risk, and might quite possibly depress the equities market -- and doesn't even do all that much good for the plaintiffs.

We need a sense of proportion and balance. If one must choose between greedy trial attorneys and greedy drug companies, I say, let's favor the shareholders and business creditors.

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