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ROBINS DALKON SHIELD PUNITIVE DAMAGES LIABILITY COULD EXCEED RESOURCES

Executive Summary

ROBINS DALKON SHIELD PUNITIVE DAMAGES LIABILITY COULD EXCEED RESOURCES, the firm said in an Oct. 22 motion asking the Richmond Federal Court to consolidate all such cases into a class action on punitive damages. Robins said in its motion that "there is a risk amounting to a substantial probability that if there are successive awards of excessive punitive damages to individual class members, those awards, when combined with awards of compensatory damages, could exhaust the financial resources of A. H. Robins before many class members have received any payment." The motion maintains that the punitive damage issue is "the primary difficulty in most cases in the resolution of the Dalkon Shield litigation." In a memorandum supporting the motion, Robins argues that the class action on punitive damages "will promote the fair administration of the Dalkon Shield litigation" by determining the company's total punitive damages liability, and by avoiding inconsistent and inequitable awards of the damages in future claims settlements. Robins reported to the court that it has already paid $17.2 mil. in punitive damages.The company noted that some 3,500 cases are currently pending in the U.S., with most of them asking for punitive damages. Additional Dalkon Shield cases "continue to be filed at a steady rate," the memorandum states. An average of 30 additional cases were filed each week in 1984. Altogether Robins and its insurer Aetna have paid a total of approximately $244 mil. in the settlement of 6,289 Dalkon Shield cases and claims, the company said. The filing states that Robins' individual bill for the Dalkon Shield litigation has been steadily increasing, with aggregate payments for 1984 as of Sept. 30 having reached $67.1 mil. Robins' litigation costs for 1983 were $18.7 mil., up from $7.1 mil. a year earlier. Insurance coverage, Robins said, does not include punitive damages. The motion filed by Robins also asks the court to create and implement a voluntary "opt-in" proceeding which, the company maintained, would allow for the more efficient disposition of compensatory damage claims. The effects on the company of the escalating litigation expenses were clearly reflected in the company's third quarter earnings report issued Oct. 22. Net earnings for the third quarter ended Sept. 30 amounted to $200,000 compared to $14.8 mil. for the corresponding period of 1983. The company attributed this 99% earnings decline for the quarter primarily "to a 417% increase in Dalkon Shield litigation expenses to $12.8 mil." In addition, operating earnings declined 13% to $24.6 mil. from 28.4 mil. in the third quarter 1983.

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