Defendants caught in a web of litigation have asked the South Carolina Supreme Court to rein in a former colleague who has turned the state’s asbestos docket into a lucrative enterprise for plaintiff lawyers, including her hand-picked receiver.
Judge Jean H. Toal was put in charge of statewide asbestos litigation after she retired as the first female chief justice of the South Carolina Supreme Court in 2015. Since then, her court “has become a magnet for talc litigation,” as plaintiff lawyers gravitate toward a venue where the judge has consistently issued rulings in their favor and prevented defendants from presenting evidence to support their cases, Johnson & Johnson said in an appeal to the South Carolina Supreme Court.
“Unless this Court steps in to correct these manifestly erroneous, unfair, and recurring decisions, they may evade appellate review,” J&J said in a petition to appeal Toal’s refusal to allow in defense evidence and move a case from her home court in Richland County to Charleston, where the plaintiffs live.
For years, Toal has presided over cases that resulted in tens of millions of dollars in settlements and judgments for asbestos plaintiffs, many of them from out of state. Those cases have accelerated since plaintiff lawyers started suing over claims that cosmetic talcum powder was contaminated with asbestos, reviving litigation that might otherwise have slowed down as a generation of workers exposed to asbestos in industrial settings died off.
Asbestos cases in South Carolina have doubled since Toal took over the docket in 2017, according to the American Tort Reform Association.
Toal also developed a practice of appointing Peter Protopapas, a prominent local personal-injury lawyer, as receiver over defunct companies with long-expired insurance policies Protopapas could tap to pay plaintiffs. Protopapas sued those insurers, claiming asbestos exposure dated back to when their policies were in effect.
Most insurers paid Protopapas to end the litigation, under an arrangement in which Toal allowed the receiver to keep a third of whatever he collected. But Toal has expanded the practice to out-of-state and solvent firms that resisted her attempt to place Protopapas in charge.
Federal courts have twice halted Protopapas from intervening in the affairs of bankrupt companies, with the Third Circuit Court of Appeals ruling in September that he had no power to prevent New Jersey-based Whitaker Clark from filing for bankruptcy protection from asbestos claims.
A U.K. judge last year issued a global injunction against Protopapas from acting as receiver over Cape Intermediate Holdings, a unit of international industrial-services firm Altrad that has never done business in South Carolina. The court also ordered Protopapas to pay $1.3 million in legal costs for interfering in Altrad’s affairs. Protopapas has ignored both orders, while simultaneously convincing Toal to sanction out-of-state companies that refuse to acknowledge her jurisdiction over them.
Companies have good reason to fear falling into Toal’s orbit: Protopapas represents the interests of plaintiff lawyers, not the companies she puts him in charge of. Without his efforts, there would be no money for lawyers to pursue.
A federal judge earlier this year slapped a temporary restraining order blocking litigation against Asbestos Corp. Ltd., a Canadian mining company that complained Protopapas was raiding its assets to pay asbestos lawyers in South Carolina. In a court filing, ACL said Protopapas had negotiated asbestos settlements in South Carolina that were 45 times the average amount it paid nationwide in 2023.
“Since his appointment, the South Carolina Receiver has taken steps that resulted in increased liability and damages for ACL, rather than protecting ACL’s interests and those of its stakeholders,” ACL said in a May filing. “The finite amount of insurance proceeds available to pay claims makes the inequitable treatment of creditors even more likely.”
Donald L. Swanson, a partner with Koley Jensen in Omaha who has written on the Whittaker Clark case, said abuses of the receivership system were a main reason Congress passed the first federal bankruptcy statute in 1898. He said he was shocked by Toal’s comment she used receiverships to avoid “the blunt instrument of bankruptcy,” which she said interferes with “tort litigation.”
Bankruptcy is enshrined in the U.S. Constitution and provides an orderly and transparent method for preserving the assets of a company and distributing them to creditors, Swanson said. Toal allows Protopapas to shift money to secretive trusts, some of them in Delaware, where he has sole authority to disburse the money to lawyers or plaintiffs, Swanson said.
“Such lack of clarity can be a serious problem, especially if it is accompanied by an absence of accountability,” Swanson said.
Toal has made no secret of her distaste for insurance companies and out-of-state corporations, recently criticizing J&J for refusing to settle a talc case before her.
“They’re going to spend millions of dollars renting three stories of a hotel here in town and flying people here from everywhere and doing all this kind of stuff,” she said in front of plaintiff lawyer Theile McVey, who frequently appears in her court. “Maybe this little case could be resolved.”
Perhaps aware of how her comment might appear, Toal then said, “I should have said that off the record.”
Some defendant companies may have given up on trying to work with Toal, instead appealing to the state Supreme Court to order her to moderate her behavior. In a filing this week, J&J said Toal has kept a talc lawsuit in Richland County despite strong evidence the plaintiffs have no connection to the place. The lawsuit involves the mesothelioma death of Anna Marie Gerken, which her husband Andrew blames on J&J talc.
The company asked the high court to reverse Toal’s ruling preventing it from presenting evidence that husband and wife both worked in the Charleston Naval Shipyard, where asbestos exposure was likely.
Toal has repeatedly ruled that plaintiff experts can tell jurors talc was the only possible cause of a person’s mesothelioma, while preventing defense experts from even mentioning other possible causes. (The judge has told lawyers this is basic logic and she is prohibiting a “diagnosis of exclusion.”)
Toal’s rulings in this and other cases obliterate the basic rule that plaintiffs must prove a product caused their injuries, J&J complains, instead forcing defendants to prove the opposite. The judge said she wasn’t going to “allow this mini trial of alternate exposures” absent direct evidence that Gerken was exposed to asbestos in the shipyard.
“In fact, however, Petitioners did present ample evidence of shipyard exposure,” J&J said. “The Circuit Court simply chose to ignore it.”
Johnson & Johnson is also appealing a $62 million jury verdict, reduced to a $39 million judgment, in a case where Toal prevented it from timely deposing a key plaintiff witness, William Longo, about scientific findings he disclosed the day before trial. Toal also prevented J&J from presenting evidence of workplace asbestos exposure.
The South Carolina Court of Appeals has repeatedly rejected defense appeals, to the point that Toal has sanctioned companies from seeking redress there. J&J is hoping it has better luck at the South Carolina Supreme Court.
That court ruled, in a case involving another Canadian company, that the judge could only appoint Protopapas as receiver to collect insurance proceeds in a specific case and he couldn’t gain “entry” into the “boardroom” or make operational decisions.
It said receivers can only be appointed in extraordinary cases involving “moral fraud.” Earlier this month, she found Cape was guilty of that, for obtaining the foreign injunction – the violation of which carries criminal penalties.
