7th circuit


Column: 3M foes act fast to capitalize on J&J’s talc bankruptcy defeat

  • March 1, 2023

Feb 2 (Reuters) – When a U.S. appeals court ruled on Monday that Johnson & Johnson can’t use the U.S. bankruptcy system to offload vast litigation exposure from product liability claims, the people who reacted most quickly were undoubtedly J&J investors.

Within hours of the 3rd U.S. Circuit Court of Appeals decision, investors drove J&J’s share price down by nearly 4% — its biggest one-day decline in years.

But another, albeit much smaller, group of people was also roiled by Monday’s ruling from the 3rd Circuit: appellate lawyers who were finishing up friend-of-the-court briefs due on Wednesday in a 7th Circuit appeal by 3M Co that presents issues similar to those in the J&J case.

The lawyers’ quick response to the 3rd Circuit’s ruling – redrafting sections of their briefs to add quotations and references to the J&J decision – shows the deep significance of these cases for both plaintiffs and corporate defendants ensnared in mass tort litigation. If your appellate brief addresses an issue that could affect hundreds of thousands of people, it’s worth rushing to beat a deadline.

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The 3M and J&J appeals aren’t exactly the same, but both involve the big-picture question of whether corporations facing an onslaught of lawsuits can use the U.S. Bankruptcy Code to halt litigation and push for a global resolution via the Chapter 11 process.

At the 7th Circuit, 3M is appealing a bankruptcy judge’s ruling that tens of thousands of military veterans who allege hearing loss from 3M earplugs can continue litigating against the parent company, despite the Chapter 11 bankruptcy of the 3M subsidiary that originally made the earplugs. Like J&J, 3M shifted litigation liability to the subsidiary, Aearo Technologies, but also provided the bankrupt entity with an uncapped financial

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7th Circuit finds investment firm shielded from fiduciary duty claim by power of attorney

  • August 18, 2022

An opinion from a state appellate court that was issued while the Southern Indiana District Court was considering a motion to dismiss in a fiduciary duty dispute did not change the federal judge’s decision to grant the motion, but it did alter the reasoning on which the 7th Circuit Court of Appeals affirmed.

Joseph P. Allen IV, a resident of Crawfordsville, sued Maryland-based Brown Advisory LLC and Brown Investment Advisory & Trust Co. in 2019, asserting claims under Maryland law for breach of contract and breach of fiduciary duty. The complaint arose from Allen’s belief that Elizabeth Key, his daughter who had power of attorney over his finances, had withdrawn money for her personal use and incurred tax penalties, all of which depleted the value of his IRA accounts from $2.3 million to less than $600,000 .

Also, Allen alleged his daughter and son sold two of his real properties and did not fully credit the proceeds to his Brown Advisory accounts.

Brown Advisory moved to dismiss for failure to state a claim. The investment firm argued it could not be held liable for breach of contract because it acted at the best of Allen’s daughter, who had power of attorney. In addition, the firm pointed out that Maryland does not recognize a claim for breach of fiduciary duty as an independent cause of action arising out of a contractual relationship.

Before Senior Judge Robert Miller ruled, the Maryland Court of Appeals, which is the state’s highest court, issued a ruling in Plank v. Cherneski231 A.3d 436 (Md. 2020), holding that a breach of fiduciary duty can be a standalone cause of action.

Miller dismissed the case, agreeing the daughter’s power of attorney shielded Brown Advisory from liability. On the fiduciary duty claim, the judge did not address

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