April 15, 2019
(Mass Tort Nexus Media) Bayer and Johnson & Johnson both issued press releases on March 25th indicating to the public, as well as stockholders and analysts, that the companies had reached a settlement to resolve approximately 25,000 claims related to Xarelto. This announcement was arguably highly misleading, in that the agreement reached has not actually resulted in the settlement of a single Xarelto lawsuit (to the best of our knowledge) and certainly not 25,000 cases.
This was the headline in Reuters: Bayer, J&J settle U.S. Xarelto litigation for $775 million,see Reuters.com/article/us-bayer-xarelto/bayer-jj-settle-us-xarelto-litigation-for-$775-million
At the time of press release, in which Bayer and Johnson & Johnson led the public and the market to believe they had resolved (settled) 25,000 pending Xarelto lawsuits, the overwhelming majority of firms representing those 25,000 clients had yet to receive significant details related to the proposed settlement, and of course had yet to present any offer to their individual clients, who would have to accept any offer made before a case could actually be settled.
Law Firms attending the Mass Torts Made Perfect conference in Las Vegas last week received more details related to the defendants proposed settlement and the reaction was not positive.
Large Scale Rejection of Proposed Settlement?
Mass Tort Nexus has spoken with a great a number of firms who were in attendance at MTMP, as well as numerous others since that time, and the clear indication that we have received would lead us to the conclusion that it is highly unlikely that the defendants proposed settlement will be accepted by enough firms (or rather their clients), to make going forward with the current proposed settlement anything other than a waste of time.
Law Firms that have been in contact with Mass Tort Nexus have indicated that they will fulfill their duty to present any offer made by defendants for their cases to the individual clients; however, they will not likely recommend that clients accept the offers made under the proposed settlement scheme. Many of the firms made colorful comments that we will not publish; however, there was a common theme among the comments:
“I would feel like I was selling out my clients if I recommend they accept the current offer the defendants have made.”
Others went as far as to say:
“I think it would be malpractice to recommend that clients accept the final amounts likely to be offered in this settlement scheme”
Dilemma for Bayer and Johnson & Johnson
The premature and arguably misleading public announcement, which would likely be considered official stock holder guidance, may create additional problems for the corporations already plagued by legal woes, which pose risks to their respective stock prices and stock holder value. If the proposed Xarelto settlement does fall through, as it appears will likely be the case, the companies will be faced with having to walk back previous positive news “We have resolved the risk associated with the Xarelto litigation” to “not only have we not resolved the risk associated with the Xarelto litigation, but that risk may now be more significant than it was before we proposed a settlement, and many plaintiffs firms see it as more of an insult than an offer.”
If the proposed settlement was even close to something plaintiffs might except in significant numbers, Bayer and J&J might have been in a position to “tweak the settlement” and avoid having to deliver bad news to their stockholders and the public. Unfortunately for Bayer and J&J, the proposed settlement seems to be so far from “acceptable” that their only option may be to scrap the current proposed settlement and come back with another proposal, that will not be received with such strong resistance. If the two corporate giants have any hope of salvaging their messaging to the market, they will need to act quickly.
Proposed Settlement Appears to be a “Non-Starter”
For now, it appears that there is no amount of lipstick that would make the proposed Xarelto settlement scheme attractive. Most of the firms Mass Tort Nexus has spoken to have indicated that the defendants offer is not even a starting point.
MTN will provide more information in future articles about the proposed settlement, as well as the reasons a large number of firms do not feel the settlement is fair and just to their clients. At this point in time; however, it seems likely that the proposed Xarelto settlement is:
The Industry Comment