Elizabeth Warren Legal Representation of Major Corporations
Elizabeth Warren had an extensive private law practice while employed as a Professor at Harvard Law School.[1] Many of those cases involved representation of major corporations in litigation against consumers or individuals.
Represented Large Utility Seeking to Liquidate Rural Electric Cooperative
Louisiana attorney Matt J. Farley described Waren’s role in the Cajun Electric Bankrupcty Case:[2]
Professor Warren’s description of her role in Cajun Electric, as it appeared on the website for The Boston Globe.[3] The description is:
In re Cajun Electric Power Cooperative, 150 F.3d 503 (5th Cir. 1998), cert. denied sub nom Mabey v. Southwestern Electric Power Co., 119 S.Ct. 2019 (1999). In this case, Elizabeth represented a company that offered a plan to help save a bankrupt rural power cooperative. The company also helped defray litigation costs for some members of the cooperative. Elizabeth sought to preserve the plan to save the company, and the Fifth Circuit ruled in favor of Elizabeth’s position.
I can’t imagine that Warren really believes that she was helping to save a rural power cooperative. Her description is seriously inaccurate both by omission and commission….
Warren’s statement that “Elizabeth represented a company that offered a plan to help save a bankrupt rural power cooperative,” simply is not the case. The plan was to liquidate Cajun Electric, not to save it….
So in short: Warren characterizes herself as working to save a rural electric cooperative, when she did no such thing. Her client was a large power company that wanted to liquidate the cooperative, not to save it, in order to acquire its prime asset, a large coal-powered electric plant.
Represented Dow Chemical at time it was fighting breast implant claims
Elizabeth Warren’s work for Dow Chemical was not included[4] in a list of cases provided to The Boston Globe by Warren’s campaign shortly before a debate in the Senate campaign. The representation was uncovered[5] by Legal Insurrection blog.
The Boston Globe[6] reported(emphasis added):
Warren, a Harvard Law School bankruptcy specialist, released a list of 13 cases Monday night, just 15 minutes before the start of her second debate with Brown. Her campaign described those often complex cases in brief, flattering terms. But the list did not include all the clients Warren has consulted with or represented over the years that may not have appeared on court dockets.
Instead, Warren’s list was partial. She included all clients she represented since 2008, information that was already public in disclosure forms she filed when she went to Washington to lead a congressional panel and then serve in the Obama administration.
The cases she included from before 2008 were those already available from other publicly searchable databases, when she represented a client in court.
That meant her list excluded cases in which she may have consulted or served clients in other ways. A 2002 affidavit, first posted on the conservative blog Legal Insurrection, shows examples of some of those consulting clients not mentioned in Monday night’s release. That affidavit shows that among them were Dow Chemical “in the early days of the Dow Corning bankruptcy,” according to Warren’s 2002 affidavit, filed as part of another case. The campaign confirmed that Warren, an expert in bankruptcy trusts, consulted for the company, but did not provide details, citing attorney client privilege. In that period, the company set up a trust to pay plaintiffs who claimed in lawsuits that silicone breast implants had led to health problems.
Warren’s campaign would not say why it would not disclose the full list of her clients.
The Boston Globe further reported:[7]
Warren had declined Tuesday to specify what she did for the company, saying she was bound by attorney-client privilege. But Wednesday she suggested during a press conference that she had advised the company in setting up a trust, which eventually required the firm to establish a fund to pay out $2.3 billion to victims. The 240,000 claimants were expected to receive between $2,000 and $250,000 each, according to a 2004 Houston Chronicle article provided by the Warren campaign. The campaign would not say how much Warren was paid for her work.
Similarly, MassLive reported:[8]
Edwards said Warren was consulted when Dow Corning went bankrupt in 1995. The bankruptcy plan ultimately set up a fund to pay $2.3 billion to settle claims filed by women who were injured by the company’s breast implants. The Houston Chronicle reported[9] that the victims received between $2,000 and $250,000 from the fund. The Warren campaign says establishing the trust fund was the only way to ensure all the victims would be compensated. It is unclear what role if any Warren played in establishing the trust, which was formed only in 1998, according to news reports.
There are multiple problems with Warren’s narrative[10] that she was trying to help the women:
First, the notion that Warren was representing anyone other than her client is preposterous. As an attorney, she had a duty of loyalty to Dow Chemical. If she explored possible ways in which Dow Chemical could extricate itself through settlement, her services were on behalf of and for the benefit of Dow Chemical, not the women.
Second, Warren did not represent Dow Corning, the entity which eventually set up the trust. Again, there may have been strategizing in the early days about how and whether Dow Chemical, the parent corporation, might have to contribute, but there was no resolution in the early days.
Third, during the time Warren was providing legal advice to Dow Chemical, Dow Chemical was fighting liability. As the Dow Corning bankruptcy case wound down, one of the most controversial provisions[11] involved the release of Dow Chemical from liability as part of the Dow Corning reorganization plan which set up the trust. (Analysis[12] here, summary[13] here, Plan[14] here) It also appears that Dow Chemical did not make any payments beyond its equity stake in Dow Corning and its insurance coverage to the trust (I’m still confirming this last point).
In short, in the early days of the Dow Corning breast implant litigation Elizabeth Warren was providing legal advice to Dow Chemical, which was denying liability and fighting breast implant claims for many years to come. Warren was not a legal adviser to Dow Corning, the entity which years later set up and funded a trust for implant claimants.
The Washington Post reported[15] that the “Dow breast implant case spotlights Elizabeth Warren’s work helping big corporations navigate bankruptcies.”[16]
When Dow Corning faced thousands of lawsuits in the 1990s from women saying they had become sick from the company’s silicone gel breast implants, its parent firm, Dow Chemical, turned to one of the country’s leading experts in corporate bankruptcies: Professor Elizabeth Warren.
Warren, now a Democratic presidential candidate, has never publicly discussed her role in the case. Her campaign said that she was “a consultant to ensure adequate compensation for women who claimed injury” from the implants and that a $2.3 billion fund for the women was started “thanks in part to Elizabeth’s efforts.”
But participants on both sides of the matter say that description mischaracterizes Warren’s work, in which she advised a company intent on limiting payments to the women.
“She was on the wrong side of the table,” said Sybil Goldrich, who co-founded a support group for women with implants and battled the companies for years. Goldrich said Dow Corning and its parent “used every trick in the book” to limit the size of payouts to women. The companies, she added, “were not easy to deal with at all.”
. . . . A person familiar with Warren’s role who spoke on the condition of anonymity to describe litigation strategy said the future senator was part of a Dow defense team that had containing the company’s liability as a goal.
Represented Travelers Insurance In Asbestos Litigation
At the first debate between Scott Brown and Elizabeth Warren, Brown raised the issue[17] of Warren’s Supreme Court legal representation of Travelers Indemnity Co. and related companies in asbestos litigation, for which Warren was paid $212,000. Brown made the point that while Warren was paid a small fortune, the workers ended up getting very little after Travelers was able to avoid paying the settlement it had promised.
The issue played into Brown’s campaign theme that Warren was “not who she says she is”[18] and fed upon issues related to Warren’s claim to be Native American for employment purposes.
Warren described her efforts for Travelers[19] as follows:
Travelers Indemnity Co. v. Bailey, 557 U.S. 137 (2009). In this case, Elizabeth worked to protect a $500 million settlement for victims of asbestos poisoning that another insurance company sought to invalidate. The Boston Globe has reported that most asbestos victims were on her side during the case, and the Supreme Court ruled in favor of her position.
The Boston Globe[20] fact checked a Brown ad[21] about Travelers case (emphasis added):
But despite Brown’s contention that Warren fought victims, the Globe reported that the attorneys who were represented most of the victims supported Warren’s efforts to grant Travelers immunity from asbestos-related lawsuits in exchange for the company setting up a $500 million trust, to be divided among current and future claimants.
Travelers won the immunity. But after a series of legal twists, the company avoided paying the $500 million settlement. Warren was no longer involved at that point, but Brown argues she should have foreseen that potential result. Brown’s ad, citing a line from the Globe story, correctly notes: “The case has turned out disastrous for victims.”
A review of the Travelers appellate dockets demonstrated events very much at odds with the positive narrative presented by the Warren campaign and the media:[22]
Warren played a role at a critical time in what ended up as one of the great coups in legal history, the enforcement of settlement agreements by which Travelers promised a massive settlement fund for asbestos victims, but which Travelers didn’t actually have to pay because a precondition to payment had not been met.
The precondition was that other insurers give up their claims against Travelers, without receiving any payment from Travelers. If the other insurers were not bound by the settlement, then Travelers did not have to pay the asbestos victims.
Thus, the asbestos victim fund was held hostage to whether Travelers could strip other insurers of their claims. By the time the case reached the Supreme Court the possibility, if not probabilty, that Travelers would not succeed in this inter-corporate fight — and that it would not have to pay the asbestos victims — was well known.
Warren was not working to help asbestos victims, except ancillary to Travelers fight against other insurers. Travelers ended up losing the fight with other insurers, which gave Travelers a contractual right not to make payment.
This outcome, even if unintended, was foreseeable at the time of Warren’s legal representation of Travelers. Warren got paid, Travelers got to keep its settlement money, and the asbestos workers were left out in the cold.
The settlement was criticized as inadequate and unconstitutional by a group of 10 law professors who filed an Amicus Brief[23] opposite to Warren in the Supreme Court.
The law professors challenged not only the procedures used, which they believed unconstitutionally deprived individual claimants of their right to sue Travelers, but also the adequacy of the settlement amount (at pages 13, 18):
Nor can §1334(b) have been intended to authorize non-debtor releases of independent causes of action on the basis that public good is achieved by confirming a chapter 11 plan providing distributions to thousands of injured persons. Indeed, the recovery by those injured by Manville would be enhanced if the independent claims against Travelers are not extinguished….
In the present case, because Travelers was financially sound, the fund available to satisfy the claimants’ independent causes of action against it was not “limited.” Section 1334(b) should not be construed to confer bankruptcy jurisdiction to extinguish independent claims against a non-debtor which can be satisfied from an unlimited fund.
A group representing “future claimants” took no position[24] in the Supreme Court, other than seeking clarity as to various parties’ rights. As mentioned above, The Asbestos Personal Injury Plaintiffs[25] also took a position against Travelers and Warren.
Did Not Help Save Fairchild Aircraft Jobs
In her incomplete list[26] of cases she released to The Boston Globe shortly before one of the debates, Warren described her involvement in the Fairchild Aircraft case as follows[27] (emphasis added):
• In re Fairchild Aircraft Corp., 184 B.R. 910 (Bankr. W.D. Tex. 1995), vacated 220 B.R. 909 (Bankr. W.D. Tex. 1998). This was a tragic case, involving a plane crash that killed four people. The NTSB and a jury found that the aircraft manufacturer was not at fault. Elizabeth got involved to try to protect hundreds of jobs at the company after new investors had saved it from closing its doors and laying off its workers. In the end, the company survived and 1,000 people had jobs because of it. The bankruptcy court initially ruled against Elizabeth’s position but later vacated that decision.
There was nothing,[28] however, to suggest that Warren was trying to rescue hundreds of jobs, and contrary to the suggestion in the last sentence, Warren’s legal position was not in any way vindicated by the purely procedural vacatur of a prior court decision.
Fairchild Aircraft Corp. (FAC) filed for bankruptcy in 1990 in the Western District of Texas. As part of the bankruptcy, a group of investors formed Fairchild Aircraft Inc. (FAI) to purchase the assets of FAC rather than reorganizing FAC. The asset purchase was supposed to be free and clear of liabilities.
In 1993, after the banktuptcy was over, one of the planes manufactured by FAC prior to the bankruptcy crashed, and four families commenced suit against FAI and numerous other corporate defendants, which ended up consolidated in federal court in Tennessee.
In 1994, when she still was at U. Penn. Law School, Elizabeth Warren got involved and tried to convince the Texas bankruptcy court to issue an injunction preventing the families from continuing their suit in Tennessee on the ground the the bankruptcy asset purchase extinguished future claims against FAI.
Had she been successful, Elizabeth Warren would have deprived these families of any means of receiving compensation for the death of their loved ones even though the claims were unknown at the time of the bankruptcy because the plane crash had not yet taken place.
There is nothing in the decision to indicate these families’ claims would have caused FAI to go out of business, or the loss of hundreds of jobs, as Warren claims in her description to The Globe. There were numerous other corporate defendants in those cases.
In 1995, the issue of extinguishing future claims was considered by bankruptcy court and it rejected Warren’s position, finding that the purchase of assets free and clear did not extend to future liabilities for events that had not yet taken place. The court allowed the families’ cases to proceed to trial in Tennessee.
Warren’s client took an appeal from the bankruptcy court in Texas to the District Court in Texas. That appeal sat unresolved.
The families got their day in court in Tennesse, but lost at trial. The families then appealed to the federal appeals court, and the case was settled before the appeal was decided.
FAI wanted to wipe the prior Texas banktruptcy court decision off the books, presumably because the ruling that it could be liable for accidents on planes it purchased in the bankruptcy left it exposed to more potential claims should there be another crash. It’s not clear if Warren was involved at this stage; her name was listed as one of the counsel, but it also listed her as being at U. Penn Law School, but by this time she was at Harvard. The court may simply have carried over the prior list of counsel.
In 1998, FAI then went back to the Texas bankruptcy court and asked it to vacate its prior decision on the basis that the case had been settled, not on the merits of the prior decision. That was unusual, since normally after a case is settled the case simply is dismissed, prior rulings are not “vacated.” But again, FAI had a strategic reason to want the prior decision vacated.
After struggling with the issue, which presented numerous procedural issues, the Texas Bankrutpcy Court agreed to vacate the prior ruling because the settlement rendered the entire case moot.
Bottom line: Elizabeth Warren worked to deprive four families whose loved ones were killed in a plane crash of getting their day in court based on a legal theory rejected by the bankruptcy court for deaths which resulted from a plane crash after the bankruptcy was over. Had Warren prevailed, not only these families but other families whose loved ones were killed in future plane crashes would have been deprived of a chance for justice. That decision later was vacated on purely procedural grounds after a settlement, not because Warren’s position was vindicated. There is nothing to suggest that Warren was working to protect hundreds of jobs, as she claimed to The Globe.
References
- ^ William A. Jacobson, Elizabeth Warren issues incomplete list of cases, Legal Insurrection, Oct. 1, 2012
- ^ William A. Jacobson, Elizabeth Warren represented large utility seeking to liquidate rural electric cooperative, Legal Insurrection, Oct. 9, 2012
- ^ Globe Staff, Prior to debate, Warren releases information on her cases, The Boston Globe, Oct. 1, 2012
- ^ Noah Bierman, No full client list from candidates, The Boston Globe, Oct. 2, 2012
- ^ William A. Jacobson, Elizabeth Warren issues incomplete list of cases, Legal Insurrection, Oct. 1, 2012
- ^ Noah Bierman, No full client list from candidates, The Boston Globe, Oct. 2, 2012
- ^ Noah Bierman, Brown again targets Warren’s legal work, offers no evidence, The Boston Globe, Oct. 4, 2012
- ^ Shira Schoenberg, Scott Brown campaign criticizes Elizabeth Warren for Dow Chemical consulting, MassLive, Oct. 3, 2012
- ^ Jeannie Kever, No clear victor in silicone implant battle, The Houston Chronicle, Jun. 13, 2004
- ^ William A. Jacobson, Elizabeth Warren's implausible Dow Chemical Claim, Legal Insurrection, Oct. 10, 2012
- ^ Sandra Chereb, Nevada women oppose Dow Corning bankruptcy plan, Las Vegas Sun, Apr. 20, 1999
- ^ Robert J. Lemons, To Facilitate Reorganization, Bankruptcy Court May Enjoin Nonconsenting Creditors' Claims Against Nondebtors, Ebscohost, May 2002
- ^ DOW, Litigation, Wikinvest, Feb. 19, 2008
- ^ Scribd, Dow Corning - Final Re-organization Plan, Scribd, Oct. 10, 2012
- ^ William Jacobson, WaPo confirms: As lawyer, Elizabeth Warren worked to limit Dow Chemical’s liability to breast implant victims, Legal Insurrection, July 21, 2019
- ^ Annie Linskey , Dow breast implant case spotlights Elizabeth Warren’s work helping big corporations navigate bankruptcies, The Washington Post, July 15, 2019
- ^ Legal Insurrection YouTube Channel, Scott Brown - Liz Warren made $225K working against asbestos victims, YouTube, Sep. 20, 2012
- ^ Noah Bierman, Scott Brown launches dark new ad about Elizabeth Warren’s work on coal miners’ case, The Boston Globe, Oct. 4, 2012
- ^ Globe Staff, Prior to debate, Warren releases information on her cases, The Boston Globe, Oct. 1, 2012
- ^ Michael Levenson, Brown ad misleadingly cites Globe story, The Boston Globe, Oct. 15, 2012
- ^ YouTube User, Scott Brown Ad, YouTube, Oct. 13, 2012
- ^ William A. Jacobson, Elizabeth Warren held asbestos workers hostage to inter corporate fight, Legal Insurrection, Oct. 21, 2012
- ^ Scribd, Travelers v Bailey - Brief of Law Professors in Support of Respondents, Scribd, Oct. 21, 2012
- ^ Scribd, Travelers v Bailey - Brief of Future Claimants?, Scribd, Oct. 21, 2012
- ^ Scribd, Travelers v Bailey - Brief of Asbestos Victims in Opposition, Scribd, Oct. 21, 2012
- ^ William A. Jacobson, Elizabeth Warren issues incomplete list of cases, Legal Insurrection, Oct. 1, 2012
- ^ Globe Staff, Prior to debate, Warren releases information on her cases, The Boston Globe, Oct. 1, 2012
- ^ William A. Jacobson, Documenting another Elizabeth Warren fib - Fairchild Aircraft case, Legal Insurrection, Nov. 3, 2012