Galarneau v. Dalkon Shield Trust (In re A. H. Robins Co.)
Docket: No. 85-01307-R
Court: United States Bankruptcy Court, E.D. Virginia; September 27, 1996; Us Bankruptcy; United States Bankruptcy Court
Anna M. Galarneau, a claimant alleging that the Daikon Shield caused her 1972 miscarriage, filed a motion to enforce the claims plan and set aside her Alternative Dispute Resolution (ADR) decision, which the Court denied. Galarneau had rejected a $9,000 Option 3 offer and opted for binding ADR, signing an agreement acknowledging that the decision of the ADR referee would be final and that she bore the burden of proving causation. The ADR referee ultimately concluded that Galarneau did not meet this burden and awarded no compensation. Galarneau contended that she was misinformed by the Trust about her burden of proof and the nature of the ADR decision compared to the Option 3 offer. The ADR process was established by the Trust in 1992 to provide a more efficient and less costly alternative to litigation, with claimants waiving certain rights, including the right to discovery and litigation, in exchange for a quicker resolution. Importantly, the ADR framework requires claimants to prove causation without any presumption and emphasizes the finality of the referee’s decision, which is binding on all parties. The agreement clearly states that the referee's decision cannot be contested, aligning with the Trust’s goal of efficiently resolving claims.
The ADR framework aims to provide an efficient mechanism for liquidating claims, prioritizing settlement over litigation. The court recognizes ADR as a definitive alternative to trial or arbitration, but emphasizes that relief from ADR decisions is limited. Relief is only permissible under extreme circumstances, specifically when a claimant can demonstrate "flagrant referee misconduct" with clear and convincing evidence.
In the case of Galarneau, the court concludes that she has not met this burden. Galarneau claims she was misinformed about her obligation to prove causation during the ADR hearing, believing it was similar to Option 2, which required only showing Daikon Shield use and an injury. She mistakenly thought ADR would guarantee her an award comparable to the Trust's Option 3 offer. However, the Trust provided substantial evidence indicating that Galarneau was aware of the causation requirement, as outlined in the First and Second Amended ADR Rules, which she acknowledged reading. These rules clearly stated her burden to prove that the Daikon Shield caused her injury and the associated compensatory damages.
Despite Galarneau's assertion that the Trust's materials were confusing due to minor wording variations, she does not contest having received the necessary documentation and had prepared for the hearing by reviewing the rules. The court finds that the Trust adequately informed her of the requirements, undermining her claims of confusion.
Galarneau's claim regarding the burden of proof at the ADR hearing is central to the court's findings. Though she noted discrepancies in document wording, both the First and Second Amended ADR Rules clearly state the burden of proof, indicating she needed to present evidence linking her miscarriage to the Daikon Shield. The court recognized Galarneau's initial confusion but determined that this did not meet the threshold for vacating the referee's decision as established in prior case law (Bledsoe). Despite her claims of misunderstanding, Galarneau acknowledged the Trust's position that the IUD did not cause her miscarriage in her pre-hearing Statement of Issues. Furthermore, the Trust presented evidence showing no documented infection related to the IUD, which is critical to establishing a causal link to the miscarriage.
Galarneau's assertion that she believed the hearing's purpose was solely to assess the Trust's offer was noted, along with her claim that a Trust representative indicated favorable outcomes for claimants. However, the court emphasized that for relief to be granted, there must be clear evidence of misconduct or procedural violations by the ADR referee, none of which were found in this case. Galarneau's motion to vacate the ADR award, treated as a Motion to Enforce the Plan and Set Aside the ADR decision, was ultimately denied. The court also acknowledged Galarneau's pro se status and the need for liberal interpretation of her pleadings. Finally, it was noted that any appeal must occur within 60 days of the decision notification unless justified otherwise.
Galarneau's reference to the conduct of her ADR hearing is limited to an allegation of an "appearance of impropriety" regarding the presence of a non-lawyer Trust representative in the hearing room during and after the hearing. However, this alone does not constitute flagrant misconduct, as ex parte communication is prohibited but not evidenced here. Galarneau received a "Question and Answer" pamphlet outlining her burden of proof at the ADR hearing, emphasizing that she must demonstrate (1) suffering an injury, (2) that it was caused by the Daikon Shield, and (3) her entitlement to compensatory damages. The Second Amended Rules, effective January 1994, increased the maximum recoverable amount in ADR from $10,000 to $20,000 and reiterated the burden of proof requirements, specifying that Galarneau must show (1) usage of the Daikon Shield, (2) injury, (3) causation, (4) entitlement to damages, and (5) the amount of damages. It is noted that Galarneau was confused by terminology related to the burden of proof in the First Amended Rules, despite having opted for ADR instead of arbitration. Additionally, the Second Amended ADR Rules mandate the exchange of exhibits and a summary of facts and issues twenty days prior to the hearing. Galarneau acknowledged in her pre-hearing statement the difficulty of proving product causation in such cases.
