Vol. 2 No. 5 (May, 1992) pp. 83-85
BENDING THE LAW: THE STORY OF THE DALKON SHIELD BANKRUPTCY by
Richard B. Sobol. Chicago: The University of Chicago Press, 1991.
408 pp. Cloth $29.95.
Reviewed by Cary Coglianese, Department of Political Science,
University of Michigan.
Richard Sobol's book provides a well-written, critical account of
the A. H. Robins bankruptcy proceeding. Based on court records
and interviews with key participants in the proceeding, Sobol
tells the story of how the manufacturer of the Dalkon Shield
intrauterine device used a Chapter 11 reorganization to escape
massive products liability litigation. As with other works on the
Dalkon Shield (Mintz 1985; Perry and Dawson 1985), Sobol's book
tells a story of corporate greed and indifference. Yet his book
stands apart from others on the Dalkon Shield controversy in its
detailed attention to the politics and law of the Robins
bankruptcy proceeding.
Although students of products liability, bankruptcy, or
commercial law will find Sobol's book of immediate relevance,
BENDING THE LAW deserves, and will likely find, a much wider
audience. Because the Robins bankruptcy proceeding resembled the
settlement of a large class action, readers interested more
generally in the politics of litigation will find Sobol's account
engaging and illuminating, if not altogether disturbing in some
of its implications.
Sobol portrays the bankruptcy of A. H. Robins as a strategic
attempt by the company to consolidate its massive Dalkon Shield
litigation. The Dalkon Shield had major design flaws which caused
injuries ranging from pelvic infections to sterility, septic
abortions to death. Robins took the Dalkon Shield off the market
in 1974, but in subsequent years faced a wave of law suits from
among the millions of women who had been implanted with the
device. By 1985, 9,500 Dalkon Shield cases had been litigated or
settled at a total cost to Robins and its insurer of $530 million
(p. 349, n. 84). At the same time, Robins faced 6,000 additional
pending cases, with about sixteen new lawsuits being filed each
day (p. 47). After making several unsuccessful attempts to
consolidate the litigation using a multidistrict transfer and a
mandatory class action, Robins petitioned for a Chapter 11
reorganization in 1985.
In petitioning for bankruptcy, Robins prevented the filing of
additional lawsuits and managed to consolidate all pending (and
eventually all future) Dalkon Shield claims before a single
federal judge sitting in Richmond, Virginia, site of Robins's
corporate headquarters. Sobol describes the judge, Robert R.
Merhige, Jr., as a major figure in the Richmond community who
also happened to be a neighbor of the chairman of A. H. Robins's
board. According to Sobol, Merhige is a type of judge who
"prides himself on his ability to solve a big problem and on
his willingness to invoke innovative measures to do so. Merhige
will decide on a solution, however unorthodox, that seems
sensible to him and then shrewdly and effectively use the many
tools available to a federal judge to achieve it" (p. 25).
Page 84 follows:
Throughout the Robins bankruptcy Merhige used his discretionary
"tools" to facilitate negotiations and influence the
outcome of the litigation. Instead of formally ruling on a
matter, for example, Merhige would sometimes just provide the
attorneys with his informal "views" (which are not
appealable) (e.g. pp. 125-126). On other occasions, he delayed
ruling on motions altogether, apparently to encourage the parties
to reach an agreement of their own (e.g. p. 170). Merhige also
controlled information by managing discovery (e.g. pp. 85, 256).
He held ex parte and off-the-record discussions (e.g. p. 82). He
regularly extended deadlines for Robins (e.g. pp. 138, 144), but
held others to their deadlines (pp. 68, 260). He imposed
prohibitive notice requirements on litigants apparently to avoid
ruling on their motions (pp. 67-68). And he decided on his own
initiative to sanction or threaten to sanction lawyers for making
arguments he found frivolous (pp. 179, 386 n. 34). In these ways,
argues Sobol, Judge Merhige came to "dominate and ultimately
control the disposition of Robins's liability to women injured by
the Dalkon Shield" (p. 25).
Sobol finds many aspects of the final outcome in the case
disturbing. Although the final reorganization plan included a
trust fund of about $2.3 billion for 195,000 eligible women, it
also allowed Robins's shareholders to walk away from the
bankruptcy with $916 million in unburdened stock and the Robins
officers to escape all personal liability for their action in
marketing the Dalkon Shield. Moreover, the bankruptcy may
actually have limited compensation for some women injured by the
Dalkon Shield. According to Sobol, at least half a million
potential claimants were excluded from the bankruptcy proceeding
because of inadequate notice (pp. 102-103). The $2.3 billion
trust fund itself had never been adequately shown to reflect the
actual value of even those claims included in the proceeding (pp.
329-331). And Robins' insurer used the bankruptcy as an
opportunity to foreclose potential liability for its own
allegedly reckless involvement with the Dalkon Shield (pp.
250-268).
Sobol argues that a better outcome for the injured women would
have resulted had their lawyers not been prevented from fully
representing their interests (p. 338). For Sobol, the Robins
bankruptcy "lacked the credibility of an adversarial
proceeding. Many of the most important hearings in the case were
little better than charades, as every knowledgeable observer
understood that Merhige had orchestrated the presentation and
that his decision was a foregone conclusion" (p. 339). In a
concluding chapter, Sobol outlines his principal criticisms and
offers his own views about how the case should have been handled
differently.
The major value of the book for most readers lies in its lucid
narrative. Sobol's own overall goal, which he ably achieves, is
"to describe an important legal proceeding in terms that are
accessible and yet allow real understanding of what went on"
(p. ix). Towards this end, Sobol does more than focus solely on
Judge Merhige. He provides an extensive description of the
tactics and counter-tactics of the many lawyers involved in the
case. He also details the role of the appellate courts both
during the negotiation process and after the final reorganization
plan had been approved.
Page 85 follows:
Furthermore, Sobol devotes considerable attention throughout the
book to doctrinal aspects of bankruptcy, civil procedure, and
products liability law. These are intricate and, at times,
complicated bodies of law, but Sobol succeeds in making his book
accessible to nonspecialists. He provides a crisp overview of
bankruptcy law at the beginning of the book, and makes
conscientious efforts in the rest of the book to define new legal
terms when he first uses them. Even with Sobol's generally clear
writing, however, BENDING THE LAW is a much more detailed and
involved narrative than such popular accounts of civil litigation
as Stern's THE BUFFALO CREEK DISASTER. To appreciate Sobol's
account of this complex case, it is helpful to have some prior
understanding of the rudiments of trial procedure, insurance
practice, and commercial law, which means that BENDING THE LAW
will probably not find its way onto many undergraduate course
syllabi. (For a less technical, though also less detailed and
illuminating treatment of the Dalkon Shield bankruptcy, see
Bacigal 1990.) However, it is precisely Sobol's willingness to
confront, and clarify, legal complexities that makes this book
strong. In order to explain how a judge might bend the rules, one
must first understand those rules. After introducing the relevant
doctrine to the reader, Sobol uses it to explain the issues and
interests at stake throughout the bankruptcy proceeding. He shows
how the relevant legal rules often influenced, even if they did
not always control, the choices, arguments, and decisions of the
participants in the Robins proceeding.
In this way, Sobol's book takes the reader on a revealing trip
inside an important legal case. Sobol's rich description of the
A. H. Robins bankruptcy illustrates quite clearly the discretion
available to federal trial judges. Yet the book's emphasis on
doctrine also suggests the importance of studying legal rules to
gain a "real understanding" of the litigation process.
In the end, Sobol's book illustrates well how legal rules can
shape litigation and negotiation even in those cases where some
of the rules are also bent. In writing this book, Richard Sobol
has provided readers with an engaging, realistic account of the
interaction between politics and law in a major civil action.
References
Bacigal, Ronald J. 1990. THE LIMITS OF LITIGATION: THE DALKON
SHIELD CONTROVERSY. Durham, N.C.: Carolina Academic Press.
Mintz, Morton. 1985. AT ANY COST: CORPORATE GREED, WOMEN, AND THE
DALKON SHIELD. New York: Pantheon.
Perry, Susan and Jim Dawson. 1985. NIGHTMARE: WOMEN AND THE
DALKON SHIELD. New York: Macmillan.
Stern, Gerald M. 1976. THE BUFFALO CREEK DISASTER. New York:
Random House.
Copyright 1992