OPERATING OUTSIDE OF THE PUBLIC EYE, RECEIVERSHIP ARRANGEMENTS ARE BEING ABUSED TO OBTAIN SETTLEMENTS.
Lawyer-Legislators
This situation is tied to the cozy relationship among lawyers, state legislators and state court judges in South Carolina. Judges are elected by the part-time Legislature. Currently, 47 out of 170 voting members of the General Assembly are themselves lawyers who practice in the state. That means in many cases, the same legislators deciding who will be a judge in South Carolina are practicing in courtrooms before the very judges they elected. This is true at both the trial and appellate levels.
The relationship between South Carolina’s legislature and lawyer class is further tainted by the fact that many members of the legislature receive thousands of dollars in campaign contributions from South Carolina trial lawyers. In an organized and deliberate attempt to exploit a loophole in SC campaign finance laws, the South Carolina Association for Justice (formerly known as the S.C. Trial Lawyers Association) funds a network of TEN separate political action committees that funnel money from individual lawyers to the campaigns of legislators who are willing to rubber stamp bills that will benefit the lawyer class.
Case Details
A receivership arrangement has operated in the shadows of the South Carolina asbestos docket for the last five years, enriching a connected group of lawyers and South Carolina lawyer-legislators.
South Carolina receivership statute is meant to identify assets of a judgment debtor “when an execution has been returned unsatisfied.” It is extremely rare because of the power it holds over the appointed entity and its remaining assets. South Carolina law expressly allows for a receiver to be appointed only “[w]hen a corporation has been dissolved, is insolvent or in imminent danger of insolvency.”
But through this new back-scratching arrangement, receiverships are being extended to solvent companies far removed from long-ago asbestos injuries, with the obvious goal of trying to get at the assets of those companies.
The most recent case in the suspect arrangement is Tibbs v. 3M Company, Inc., which initially involved claims related to asbestos injuries of a single plaintiff. Tibbs has since morphed into a multi-party action as the result of a receiver named Peter Protopapas. Protopapas was appointed to cases over corporations that have no connection to South Carolina or to the injuries suffered by the original plaintiffs. These include international companies that are fully solvent and do not qualify for the appointment of a receiver under current South Carolina law. This includes international companies that have never had a physical presence, customers, or employees in South Carolina.
How it Works
The judge in charge of asbestos cases, Judge Jean Toal, has appointed receivers in 21 instances of dissolved asbestos manufacturers. But once the receivership is in place, it can be misused to extend the court’s mandate to solvent companies and ultimately obtain settlements. The receiver is supposed to be an outside entity that is disconnected and disinterested in the case. Receiverships under Judge Toal neglect this rule and use illicit settlements to nurture the lawyer-legislator relationships.
The Tibbs case is a test of how far the receiver arrangement can be stretched in pursuit of settlements, and a test of whether scrutiny of the court, the Legislature and the legal climate in South Carolina will force change. The lawyer-legislator system is viewed with increasing suspicion on both sides of the political divide. The receivership arrangement is under legal challenge. And international firms are watching to see whether South Carolina lives up to its claim to be the best place in the country to do business.
READ: “A South Carolina judge criticized as overly generous to plaintiffs in asbestos cases is making defendants pay whatever she feels, despite what juries and federal courts say, and was just given approval to do so by the state Supreme Court.” Jury of one: Asbestos judge fattens verdicts when she wants