Adam Silverstein on Fighting for Plaintiffs’ Rights in Bankruptcy Court

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Welcome to Raising the Bar with RebuttalPR, the podcast where we elevate the stories of the plaintiff's bar and dive into the key trends shaping the civil justice system today. I'm your host, Ray DeLorenzi, and in each episode, we'll bring you insightful interviews with leading attorneys, expert perspectives on current legal events, and in-depth discussions on the issues that matter most. Now, let's jump in.

I have felt like the work I've been doing for companies and high net worth individuals is about money. And so for me now, the work has been much more enriching because I know that at the end of my work product are real human beings. And I think that's also another part of this which has made the work so much more fulfilling.

Ray: Hey everyone, welcome to a new edition of Raising the Bar with RebuttalPR. I'm your host, Ray DeLorenzi, and today I'm joined by Adam Silverstein of Otterbourg, who's the co-leader of the Mass Tort Bankruptcy Practice out of New York. If you are in the mass tort space and don't know the importance of bankruptcy issues, you must have been living under a rock for the last couple of years. Adam has been at the center of a lot of these battles, so we're really excited to have him on the podcast today. Thanks, Adam, for joining us.

Adam: Ray, I think you know I'm a fan of the podcast, so I'm thrilled to be one of your guests. Thank you.

Ray: So, usually I like to do less talking and have our guests do more of the talking, but I have to start with this story. Most of our listeners here are in the plaintiff's bar and up until a couple of years ago never touched bankruptcy. And I think an illustration of this was, I think we first met in Indianapolis at the 3M bankruptcy for the earplug litigation. I'm not going to call it the Aearo bankruptcy, but, you know, 3M slash Aearo. And I remember, I think it was the first day of the hearing, or I don't know exactly when it was, it was early on in the bankruptcy. I walk into the courthouse in Indianapolis, I go in the courtroom, and I always just go to the back row. And standing in back is a great mass tort lawyer, I'm not going to say who, who's been doing it for close to three decades. And he has kind of this somber look on his face. I go up and say hello to him, and I said something like, oh, this is my first time in bankruptcy court. And he looks at me and he goes, I've been practicing 30 years, and this is my first time in bankruptcy court.

And it kind of just struck me as, you know, the plaintiff's bar at the time were sort of fish out of water. But now bankruptcy, fortunately or unfortunately I suppose, has become a really important, integral part of how lawyers need to think about and litigate these types of mass tort cases. So anyway, I know it's a very long wind up, but that's how our roads connected. And again, I think for the folks in the plaintiff's bar, knowing how bankruptcy works is becoming essential. So, in any event, I want you to give us a windup, Adam, of early on in your career. I know you started at Paul Weiss. Did you envision, what were you doing there? And I want to sort of pull that thread to how you got to where you are today.

Adam: All right. So first, with regard to your story about the courtroom in 3M, I do joke with our plaintiff's lawyer clients that I'm going to be a plaintiff's lawyer and they're going to be bankruptcy lawyers. We're all going to be doing the same thing one day, unfortunately. And they laugh about it, but it's both funny and scary at the same time. I never envisioned that I would be doing what I'm doing now. My career started at Paul Weiss, as you mentioned, as pretty much a straight complex and corporate litigator, doing traditional type of work in that line, securities, antitrust, and the like.

Ironically, my very first trial at Paul Weiss as a fourth or fifth year associate was actually a plaintiff's asbestos case. Paul Weiss represented Chase Bank, which had its flagship building, Chase Manhattan Plaza, One Chase Manhattan Plaza downtown, and it was filled with fireproof, asbestos-laden fireproofing. And so Paul Weiss, on behalf of Chase, brought a lawsuit. It was Arthur Lyman, a famous corporate litigator's, last trial, and I was on the team as a fourth or fifth year associate. We tried a plaintiff's case to recover the amount of remediation it cost to rip out all the fireproofing and replace it with non-asbestos fireproofing. So it was sort of odd, that for that one experience, which we lost by the way, because Paul Weiss at the time was not really a plaintiff's firm of that type. We lost the trial, and for the next 20 some odd years, I was back to doing sort of traditional corporate and complex litigation until 2021 when Johnson & Johnson filed its first bankruptcy. And then my entire career took off and veered in a different direction.

Ray: So Johnson & Johnson files that bankruptcy. How does it reach you? What were you doing at the time where you saw that case and said, you know, I have expertise to offer here?

Adam: It's so funny, Ray, because it just goes to show that all of our careers can go in many directions, and you just have to be open and receptive to them. What happened was my partner, Melanie Cyganowski, a retired former Chief Bankruptcy Judge of the Eastern District of New York and the chair of our bankruptcy practice, got a call from two lawyers at Beasley Allen about the possibility of Johnson & Johnson filing a bankruptcy. Melanie knew that she would need litigation support, and so she gave me a call. And at the time, we had had experience with Purdue and Mallinckrodt in a different way, dealing with governmental agencies who had claims related to the opioids there. But we really hadn't been following the Johnson & Johnson talcum powder saga at all. And Melanie called, and it just so happened that I had just finished a big case and I had the time, and I said, Melanie, don't worry, we'll figure it out. We're quick learners and we'll have time. Johnson & Johnson is not going to file tomorrow. And sure enough, they filed like two days later. We ran into court in North Carolina representing the plaintiffs' executive committee in the MDL. The two lawyers were Andy Birchfield and Leigh O'Dell from Beasley Allen, who contacted us. And we just jumped into it and were successful, with our friends from the mesothelioma bar, in getting the case sent over from North Carolina, where it was filed, to New Jersey. And then, you know, the rest is history, as they say.

Ray: So you go from being this, and may view yourself still as sort of a corporate litigator in some respect, but in these bankruptcies now you're talking about real people. And that's not to say in the transactional work there aren't real people involved, but here you have people who are dealing with the worst things that you can imagine, people suffering from mesothelioma, cancer. How has that impacted your view of how you practice and litigate these sorts of cases?

Adam: It's enriched my career. For much of my time, I have felt like the work that I've been doing, which is good, honest, important work for companies and high net worth individuals, is about money. I've never been in the criminal bar. I haven't been a plaintiff's lawyer representing individuals with serious injuries. And so, while I've been an aggressive, hardworking lawyer, it's not the same passion that you have when at the end of the day the clients you are helping are everyday individuals who are now suffering from some injury or some malady, and are just looking for their right to choose their course of how they want to resolve their case, either take it to trial or resolve it on terms that are acceptable to them, but not be channeled into a bankruptcy where they have the potential for not getting that choice. And so for me now, the work has been much more enriching because I know that at the end of my work product are real human beings.

And the other thing, Ray, about this is that what's at stake in these cases is also bigger than just the individuals. There's a real battle here over the integrity of the bankruptcy courts versus the courts, and where these cases really should be resolved. And that's an important question that we grapple with, and I think that's also another part of this which has made the work so much more fulfilling.

Ray: To go back to that first Johnson & Johnson bankruptcy, I assume you're at like the first day hearing, and you're with a bunch of attorneys, folks in the plaintiff's bar who, again, have never been in bankruptcy court. I'm curious, what types of questions were you getting, or what reactions? Was it like, why are we here? And I assume some folks eventually just came to terms with the situation, like let's get to work, but what were the stages of grief and denial?

Adam: We went through all of them. I'm not quite sure we got to acceptance, which is the final stage. But the bankruptcy practice is a code-driven practice. And so a lot of the work is based on what is in the statute, which none of these plaintiffs' lawyers were really familiar with, for good reason, because it wasn't part of their daily practice. And so while on the equities and on the law that they were familiar with in terms of litigating the cases, none of that really applied to how this bankruptcy code works. And so a lot of early on was educating the plaintiffs' lawyers, trying to build trust that we understand where you're coming from, we agree with your goals, but you have to understand we're now in a different forum, we're speaking to a different audience, and you need to have confidence in us that we can communicate your message in a way that works within the bankruptcy code. So a lot of what we did was education.

And then, you know, these are among the greatest lawyers that are practicing. They're extremely smart and extremely capable, and they were quick studies. And at some point it turned from educating them to getting the suggestions from them about, well, shouldn't we make this argument, or what about this code provision, or the like? And it became much more collaborative, because really, our clients in the first instance are the plaintiffs' lawyers, who are extraordinarily accomplished litigators, and they can understand all of the bankruptcy nuances. And once they got that education, then it was a lot of joint strategizing over how best to proceed.

Ray: How do you balance it in these cases where you have, let's say in 3M, service members who have hearing damage, or in talc, cancer and mesothelioma, telling that story, but often, and I don't want to speak for a bankruptcy judge, they may have the view of, okay, but that's not sort of what the problem is here. How do you balance that storytelling, but, as you said, going really central to what's in the statute and whether bankruptcy is legitimate or not?

Adam: It can be a challenge, but that is really the key, in my mind, to success: to be able to present the stories of the plaintiffs and their right to be heard and to have a choice, but within the context of the bankruptcy issues at hand. And so what I try to do, having now done the opening and much of the closing in the 3M Aearo bankruptcy and now the most recent Red River, is to take a theme. In 3M, I used the analogy of a false fire alarm. The filing of the bankruptcy was like pulling an alarm where it wasn't needed and using all the tools of the fire department, or in this case the bankruptcy, to try to get to a result, but there was no fire. And in Red River, I use the analogy of trust the process, that Johnson & Johnson never trusted the process. And so I've tried to take the real crux of the matter for the plaintiff's bar and communicate it in a way that expresses the story, but within the prism of the bankruptcy code. But at the end of the day, Ray, I will hold up the bankruptcy code and say, regardless of what the court thinks, what the company is doing has to comply with this code. And in Red River, the court found that it did not, and the same in 3M.

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Ray: Again, I'm joined by Adam Silverstein with Otterbourg in New York. He's the co-leader of the Mass Tort Bankruptcy Practice there. Adam, something that has surprised me about bankruptcy, and again, my work has been on the plaintiff side and in the civil tort system, is the speed and transparency in bankruptcy, where within less than a month everyone's getting deposed, books and records are open. I'm sure there's some discovery disputes, but not like in a typical tort case where you can have briefing after briefing just on discovery issues. And I'm just curious what the reaction has been of the plaintiff's bar when they find out how some of those bankruptcy rules are far different than probably what they've encountered in their typical practice.

Adam: It's definitely the cold water that gets splashed on them right away. And certainly going back to 2021, it was part of the education process, that the bankruptcy code provides for all of these expedited proceedings. We have had depositions over weekends, and not of the same sort and the same quality that the plaintiffs' bar is used to through the normal course and the normal due process that you find in a civil case in district or state court. And the reason is that bankruptcy is really designed for the company with a melting ice cube that needs assistance. It needs a breathing spell immediately, because without that there's going to be a race to the courthouse, there's going to be a fettering of assets and dealing with all of that. And so there are compromises that Congress made to expedite all of that, to give that breathing spell. The cost of it is some sort of impairments and diminutions of ordinary course due process.

And what's so frustrating for our clients is when those impairments really aren't justified because there is no melting ice cube, which was the case in Johnson & Johnson's bankruptcy strategy, and the same with 3M. These are bankruptcies that the companies file for strategic reasons, at a time of their choosing, having nothing to do with any event that causes financial distress, and require that sort of, all of a sudden the table gets turned over, and now we're rushing in dealing with all of these depositions at hearings on, occasionally, one day's notice or less. So it is difficult to swallow.

Ray: I'm curious, do you have like a go bag by the door for when one of these hits, because you're in court literally the next day. What's that life like?

Adam: It's one-way tickets. I don't have a go bag, but we don't book our return flights. Because, you know, in North Carolina, for example, we went down, it started with a hearing to enjoin all of the lawsuits, talcum powder lawsuits against Johnson & Johnson across the country, on a TRO basis. And the judge, based on our efforts and our collaboration with our friends over in the mesothelioma bar, denied the TRO, but then set this down for expedited discovery and was setting preliminary injunction hearings and interim hearings along the way. So we were down there doing discovery and dealing with hearings that we never anticipated. And it was a good 10 days of sort of back and forth, New York to North Carolina. None of it was expected. And it is difficult on you as a human being. It's difficult on your family. It's obviously difficult for the plaintiffs' bar who are not accustomed to it. And I don't know that there's ever any getting used to it, to be honest with you.

Ray: Yeah. I want to talk about, in 3M you had, I think, an entirely united plaintiff's bar looking to challenge and get that bankruptcy ultimately dismissed, which occurred. In the latest Johnson & Johnson bankruptcy, through Red River, you had fissures there. And I'm curious how that sort of informed your approach, and also just navigating it from a relationship standpoint. I know you have a client, you have a duty to it, but just also on a personal level, what that was like.

Adam: It's a wonderful question, Ray. And you just put your finger on one of the great challenges of the most recent bankruptcy we dealt with, which was the division of the plaintiff's bar, which was wrought by Johnson & Johnson. That was part of their strategy, to pit plaintiff's firm against plaintiffs' firm, to create, you know, plaintiff's bar on plaintiff's bar violence. And that was not present at all in 3M, as you noted. It was a united plaintiff's bar, and that was very much due to a lot of effort by the leaders of the MDL, Bryan Aylstock and Chris Seeger. And it's not to say that that effort wasn't also made in talc, but they did a great effort in 3M and it succeeded. In talc, Johnson & Johnson was successful in pitting the plaintiff's bar against the others.

And going into the hearing, it was something that we were very cognizant of. What we wanted to do was keep the focus at all times on Johnson & Johnson and not to play into the strategy of trying to pit plaintiff's firm against plaintiff's firm. We had wonderful plaintiff's lawyers on both sides of this issue who were passionate about the deal that Johnson & Johnson had on the table. And so what we did was, I think, respectful cross-examinations on the issues of the plaintiff's lawyers on the other side who took the stand. With regard to our client, we tried to stay focused not on grievances, but rather on their good faith belief, on what they thought was best for their clients. And I think our effort succeeded, because if you read Judge Lopez's decision, he essentially found that there was no bad faith by any of the plaintiffs' firms, that everybody was acting in good faith, and he really points the blame, if you will, at Johnson & Johnson. And that's what we tried to do, and I'm glad that that's how it turned out. It is difficult. And I do believe that at the end of the day, all of these plaintiffs' firms are trying to do what they think is best for their clients. They have different thoughts about it, good faith disagreements, but we really try not to make it personal at all.

Ray: Yeah. And I would say it seems like, and look, who knows, I don't know everything that's happening behind the scenes, but I think everyone in the plaintiff's bar now is united. It's like, okay, we had a decision, and now onward in many ways.

Adam: Your lips to God's ears.

Ray: Yeah. Let me play devil's advocate for a moment and let's try to put a Johnson & Johnson hat on, God help me. But what do you say to the plaintiffs' firms who are like, look, I'm trying, this has been going on for close to a decade, my clients are dying, I need to get them compensated, who are you to stand in their way? And by you, I mean also the people we represent. What do you say to that criticism? Do you think there's legitimacy to that?

Adam: There's legitimacy, and it's not easy to stand in the way of, and ultimately to defeat, a $10 billion settlement as part of a bankruptcy plan. That was hard to do. Judge Lopez, the judge overseeing the bankruptcy in Houston, asked me that very question in closing, and asked, what am I to do with these women with ovarian cancer who are dying, and there's a $10 billion settlement proposal on the table that a number of women have supported? And my answer, Ray, is it's hard. And that's what I said to Judge Lopez. Ultimately, the court has to have trust in the process. That was the theme. And if the settlement doesn't work within the parameters of the law, and it, for example, doesn't give the women the choice to opt in or opt out, then it doesn't work. And it's not the judge's job or my job to make it right. At the end of the day, it's our job to advocate for our clients, in my case, and the judge's job to apply the law. And having trust in the process, hopefully, ultimately leads to the virtuous outcome. And at 3M, we dismissed the bankruptcy, and there were billions of dollars on the table, and within six weeks after the dismissal, the case settled for a multiple of that, and there was global peace. And so I don't know whether that's the result that's going to follow here. I hope it is. But just by following the process, following the law, the goal and the hope is to get to the right result at the end of it.

Ray: So, we spent a lot of our time talking about bankruptcies that have been challenged as being, I'll use the word illegitimate, which is not exactly the legal term of art, but I think you're picking up what I'm putting down, or maybe it is right on the nose. But there's also been mass tort bankruptcies now where the company is in actual distress, and they're not doing spin-offs here, they're actually putting themselves into bankruptcy. What's your approach in those cases? And what are you informing your clients, and what are you trying to accomplish out of those sorts of cases?

Adam: It highlights that there's not necessarily room for ideology in these cases, because no one size fits all. There are instances in which companies legitimately need to reorganize in bankruptcy, in part because they face distress from products liability cases. And in those cases, it's a different situation. So take Purdue, for example, where the company was just enveloped with liabilities all over for opioids. And the only way that they could really get to fairly compensate the states, the municipalities, and the individuals was through the Sackler contribution. But that would require giving a release to the Sacklers. And ultimately, everybody was on board with that. The Department of Justice wasn't. And that's what led to the Supreme Court decision.

And so the reason I'm bringing up Purdue is because it's not one size fits all. Each of these circumstances does require sort of a case-by-case analysis. And in cases where the company is in legitimate distress, then it's a different set of analyses and functions, including trying to look to other sources of recovery, whether that's possible through insurance or the like, in a way that is different from when you're dealing with the Johnson & Johnson or 3M, where insurance was sort of irrelevant to what the companies were proposing. And there are many other differences. I don't mean to suggest that this is it, but it is a different ball of wax. And again, educating the plaintiff's bar about that, understanding, okay, these are the circumstances, now we have to adjust our goals and what we're trying to do and getting them to buy into that. So there's no one answer to that, Ray. It's just, again, figuring out what works in that case, and then trying to get an education and buy-in from the clients.

Ray: So, with the outcomes in, I guess, the Johnson & Johnson manufactured bankruptcies, pre-packaged, whatever you want to call it, and then also the outcome in 3M, I think there's some in the plaintiff's bar that are like, all right, this era is behind us. And, like, Johnson & Johnson has signaled they're going back into the tort system. Do you share that opinion? What are your views on what the future holds? Look into your crystal ball for us.

Adam: I do think that the most recent decision should put a pause on the bankruptcy solution while companies consider what this decision means in terms of their strategy. But the reality is that the tools of bankruptcy, which is what the companies argue, are more powerful than what's generally available outside of bankruptcy in terms of aggregating everybody, both federal and state claims, and bringing them into one forum, in terms of getting a potential channeling injunction in the case of an asbestos case where the requisite votes were in and counted. And there are other abilities to pause all of the litigation potentially while settlement discussions are going on in bankruptcy. There are just too many powerful tools. And while I don't accept that companies have a choice in where to resolve their liabilities, because I believe it's a matter of the law that describes which cases belong in bankruptcy and which cases belong in court, while those incentives exist, and while there are very smart and capable bankruptcy lawyers working at how to navigate around the evolving lay of the land, I don't think we've seen the end of mass tort bankruptcies.

Ray: With that, Adam Silverstein, who is co-leader of the Mass Tort Bankruptcy Practice at Otterbourg, thank you so much for joining the podcast today and for the time. Really appreciate the conversation.

Adam: Ray, thank you so much for having me.

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