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1. Dozens Protest $11.75M Caldera Pelvic Mesh Deal

   Jun 14, 2016 | Law360

   By Bonnie Eslinger
   
   
   Three dozen women objected in California federal court Monday to a proposed $11.75 million deal to resolve thousands of claims alleging a transvaginal mesh implant made by Caldera Medical caused injuries, saying they wanted evidence showing whether the payout would be greater if the company liquidated.

Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Online Sources

1. Dozens Protest $11.75M Caldera Pelvic Mesh Deal

   Jun 14, 2016 | Law360

   By Bonnie Eslinger

    Three dozen women objected in California federal court Monday to a proposed $11.75 million deal to resolve thousands of claims alleging a transvaginal mesh implant made by Caldera Medical caused injuries, saying they wanted evidence showing whether the payout would be greater if the company liquidated.
   
   Attorney Lee B. Balefsky of Kline & Specter PC, representing 36 objectors, told the court on Monday an independent audit was the only way to ensure that Caldera Medical Inc. was offering the maximum amount possible to women injured by the medical device.
   
   “We don’t know what the liquidated value of the company is. We know there’s revenue, we know they’re selling products, we know they’re selling the same products that caused injury to thousands and thousands of women,” Balefsky said.
   
   In January, U.S. District Judge Stephen V. Wilson granted preliminary approval to the settlement, jointly filed by Caldera, the company’s insurer, Federal Insurance Company and 23 named claimants representing a potential class anticipated to include up to 3,800 women. Lawsuits against the company maintain that Caldera knew or should have known that the transvaginal mesh devices it manufactured and sold were hazardous and dangerous to patients who were implanted with them. Transvaginal mesh is a net-like implant used to treat pelvic organ prolapse and stress urinary incontinence in women.
   
   Caldera has denied any wrongdoing.
   
   “The principal reasons for the settlement are to maximize the share of Caldera’s limited resources that are paid to claimants and to eliminate the expense, uncertainty and risk of further litigation,” states the settlement notice.
   
   In court on Monday, the parties argued to Judge Wilson that an independent audit wasn’t needed since Caldera had already produced financial records showing it was cash-poor, currently not generating a profit and only had its insurance proceeds for which to settle the lawsuit claims. Further, there was nothing to suggest that the liquidated value of the company would exceed the settlement amount on the table, they said.
   
   Judge Wilson then questioned why the company was still in business.
   
   “If they’re not making a profit, they made this mesh product that was the subject of massive litigation. Why are they still in business if things are as dismal as you suggest?” the judge said.
   
   Caldera attorney Dennis M. Cusack of Farella Braun & Martel LLP told the judge a substantial portion of shareholders don’t want to throw the company’s 30 employees out on the street and there’s just enough revenue coming in to keep paying their salaries.
   
   “There is no ability to borrow; there’s already $1.5 million in secured debt, secured by all the assets of the corporation, and there’s no ability to get equity investment,” Cusack said.
   
   The judge asked how much the company’s CEO was making, and Cusack said he didn’t know, but the annual payroll was about $2.3 million, which broke down to an average of $70,000 per employee.
   
   “There have been no offers to buy the company, and whatever equity if any exists in the company is impaired by the fact that it’s facing 3,000 claims and even if this settlement was to be approved, there are future claims that may still affect the company's balance sheet,” Cusack said.
   
   The judge asked what other types of claims were expected since the current settlement did not have an opt-out provision.
   
   The company's attorney replied that the class is defined as claimants for patients who received the Caldera product and had a “cognizable injury” as of May of this year.
   
   “So there may be claimants out there who have been previously implanted with the Caldera product who may not recognize that they have an injury until later on. Those would fall outside the class and fall on Caldera's shoulders,” Cusack said.
   
   Balefsky told the judge until the court knew the liquidated value of the company, the question would remain if claimants were adequately compensated. He noted that the company’s financial documents state that their annual revenue last year was $7.2 million, with just $2.3 million paid out for employee compensation.
   
   “That’s a lot of money [left] that could help a lot of women,” Balefsky said.
   
   The settlement administrator has estimated that if there are between 3,340 and 3,843 claimants, the average per-claimant payment would be $2,780, with patients with higher injury levels receiving more.
   
   In January, a Philadelphia jury returned a $13.5 million verdict against a Johnson & Johnsonunit in a case over allegations that a transvaginal tape product left a woman with near constant pain and discomfort and an inability to have sex.
   
   Plaintiff Federal Insurance Company is represented by Michael Perlis, Richard Ray Johnson and Lillian Mazian Khanjian of Locke Lord LLP.
   
   Defendant Caldera Medical Inc. is represented by Dennis M. Cusack and John D. Green of Farella Braun & Martel LLP.
   
   Objector Ruth Barry et al is represented by Lee B. Balefsky of Kline & Specter PC.
   
   The case is Federal Insurance Company v. Caldera Medical Inc. et al., number 2:15-cv-00393, in the U.S. District Court for the Central District of California.

   http://www.law360.com/articles/806733/dozens-protest-11-75m-caldera-pelvic-mesh-deal
   

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