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).

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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.

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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.