Although the Plan has many positive elements, it also contains provisions that the Altig Objectors believe are illegal, unfair, and unwise. Under the Plan and this Court's scheduling orders, objections must be filed before all claimants are required to vote and their votes must be cast before the Court rules on objections. Accordingly, some of the Altig Objectors have not voted yet, and some may vote for the Plan, while others may oppose it. But even those who vote for the Plan do so reserving their rights to challenge the unlawful features described below.

There may be persons who will contend that the dollar amounts achieved in negotiation with the debtor are insufficient or that the amounts to be paid to claimants under the settlement facility should be greater.Although we do not disagree with those positions, it is not our view that the judgments of the Tort Claimants Committee should be second-guessed on matters relating solely to the amount of money that is available. Rather, our objections go to a combination of terms and conditions imposed on the amounts of money available, and, in some instances, to the fairness of the treatment of some segments of Class 5 claimants.

Before turning to the specific defects on which the Altig Objectors will focus, there are several points that need to emphasized about the Plan as a whole. Although the Plan is extremely complicated, there are several features that provide valuable and unjustifiable benefits to the debtor and its shareholders. This is not a plan, like the A.H. Robins' reorganization, in which the debtor and others put up a fixed amount of money and leave the entire question of distribution to third parties. In this case, although the debtor has a ceiling of $2.35 billion (Net Present Value), it is not obligated to put up the entire amount unless there is a need for the full amount. FP 6, ß2.02(b)(iii). To ensure that there is not a need for all of the money, the Plan channels all of the litigation to a new entity that will be completely controlled by the debtor, which will appoint its board of directors and select its manager. LF 1, �D; LF 8, ß3.02. That entity will be in charge of all the litigation, and it is expected to litigate "aggressively (DS 25)," which means that it will raise every defense and drag out every lawsuit to minimize the amounts paid to claimants. Indeed,the plan provides that all of the costs of defense are payable from the fund created for claimants (LF 7, 2.07(a)), which means that the debtor, in effect, has every incentive to litigate since the money will be spent in any event. And, as this proceeding has made clear, the debtor is prepared to spend millions for defense and not one cent for claimants. In our view, the first change to the proposed Plan that is required is that, if the debtor wishes to have a plan that imposes a cap, but no requirement to fill it, the defense costs should be paid directly by the debtor and excluded from the cap, because otherwise all of the incentives are in the wrong direction from the claimants' perspectives.

The Court need not decide whether, if there were a fixed cap in which all claimants had to share, there would be a basis for limiting punitive damages, which in effect takes away a cause of action from those claimants who wish to assert it. In such a case, or in a Chapter 7 bankruptcy, there might be a justification for assuring that all of the claimants are paid their actual damages before anyone receives punitive damages. But in this case, even if the actual damages are below the agreed upon ceiling, those persons with punitive damage claims are not allowed to seek to obtain a punitive damages verdict, even if they are willing to leave it uncollected until all of the other claimants are paid their actual damages. As such, the Plan effectively transfers value from the claimants, who wish to assert punitive damages claims, to the shareholders, which would, in the event of a cramdown, violate the absolute priority rule of 11 U.S.C. ß 1129(b). The loss of punitive damages is made even more egregious by the fact that, as part of the Plan, the debtor's shareholders, principally Dow Chemical, receive a full release (Plan 70, ß8.3), and so punitive damages cannot be sought against them either. Even if these defects alone are not unlawful, they are fundamentally unfair to claimants. Moreover, since the debtor has agreed to pay up to $2.35 billion, the illegal features of the Plan, to which we now turn, can be cured and still stay well within the debtor's own cap.

Under the Plan, the payments provided under the settlement option will include a single payment for a woman and her spouse, even though the spouse has his own separate claim for loss of consortium. Under the Plan, the spouses of breast implant users with loss of consortium claims can be denied their right to litigate their claims without receiving any payment in return. The plan provides that if the woman chooses to settle her claims, her spouse's consortium claim is automatically extinguished, for no additional compensation. Plan 43, ß5.4.1.4; DS 20, 187. In addition, if If the woman elects the settlement option, the spouse is bound, even if he would prefer to litigate (since he might receive something as opposed to nothing). Indeed, this treatment of both claims as one applies even if there has been a divorce and the couple are unable to agree on anything.

Although the Plan purports to provide an "option" to "settle" consortium claims, in truth the plan neither gives consortium claimants any options, nor provides any money in return for releasing their claims. The Plan is absolutely clear on this point. It provides that the "option to settle Consortium Claims shall be controlled by and be subject to the election of the [woman]." Plan, art I., ß 1.1(B)(5)(a). If the woman elects the settlement option, or simply fails to timely litigate her claims, "any and all Consortium Claims related to that Primary Claim shall be deemed settled and discharged for no additional compensation regardless of whether the [spouse] elects or would have elected to litigate his or her Consortium Claim separately." See id.

We agree that in most cases the principal person injured – the woman should receive the vast majority of the compensation; that is probably the reason why there is no payment for the spouse. But that approach is shortsighted, and threatens to injure the women, and/or is unfair to the spouse in some cases, for several reasons. More importantly, the failure to provide any separate remedy for the husband effectively eliminates his claim, with no payment and not even a right to litigate, and therefore violates several provisions of chapter 11.

Although allocating all of the money to the women seems to give them the maximum protection, even that is not always the case, it puts their awards at risk. Under the Plan, if the woman elects to settle her claim, and her spouse's consortium claim is thereby released as well, the monetary award she receives is "intended to cover both the primary claimant and the related consortium claims" The woman and her spouse are seen as sharing the award. In community property states like Washington and California, if a husband has filed a loss of consortium claim, and there is a single check that covers both his claims and her claims, it is almost certain that the payment would be then treated as community property, to which he would have an equal right. See, e.g., Cal. Fam. Code ß 760; see also United States v. Real Property Located at Incline Village, 976 F. Supp. 1327, 1341 (D. Nev. 1997). On the other hand, if there were separate checks written to each, the argument would be very different, and the woman would be much more likely to be able to keep her complete payment. In short, the settlement puts at risk half of the breast implant user's award by purporting to merge the claims of the primary claimant with the consortium claimants of her spouse.

Even in non-community property states, the problem will also arise, particularly where there is a divorce, or one may ensue. In such a situation, particularly if a check is made out jointly (which it would have to be in order for there to be a joint release), the husband would obtain enormous leverage and could insist on a disproportionate amount from the payment simply as a means of preventing the wife from getting anything at all.

The answer to both of these problems is, we submit, to set aside an additional amount of money (as is being done for the domestic health insurers and government health claims) that would be available solely for spouses. If the amount were set at a modest level, such as $100, and even if there were a hundred thousand loss of consortium claims (although we do not have the numbers, we seriously doubt that the figure would be that much given the total number of breast implant claimants), that would only be $10 million which, while a significant amount of money, hardly puts a dent in the total fund. Separate checks would be written to each spouse, and neither would have a claim on the money awarded to the other.There is one additional situation in which the treatment of spouses is plainly unfair. Although in most cases the male will have relatively modest damages, there may be cases where the woman was seriously ill, and the husband had to quit his job to stay home and take care of the wife and the children, or he had to take a job at a much reduced salary because the new job would more easily permit him to carry out the family responsibilities.

In such cases, the spousal claim may be far greater than is the norm, and in those cases the spouse should be entitled to litigate that claim on his own,even if the woman wanted to settle her claim.

Although this latter problem is somewhat different from those outlined above (although there may be overlaps if the couple is no longer married), they both stem from the same flaw of treating husband and wife as a single unit. That may have been appropriate in medieval days, but it is no longer proper today, not only because of the status of women, but because of the economic consequences outlined above. Merging the consortium claims of spouses with the personal injury claims of the women ignores the fact that breast implant users and their spouses are different people, each of whome merits compensation in return for releasing their claims against Dow. The Plan's merger of women's claims with those of their spouses is reminiscent of the long-abandoned doctrine of marital unity, whereby a woman's legal identity was subsumed into that of her husband, so that "husband and wife are one person in law." 1William Blackstone, Commentaries on the Laws of England, 442-43, 445. It may seem somewhat counter-intuitive to give the husband a separate right to payment, but the vast majority of women will be at least as well off, and some much better, if separate payments go to spouses who have filed loss of consortium claims, than if they are treated as a single person and are able to "share" in the wife's recovery.

Nor can the merger of the husband's and wife's claims be justified by the argument that consortium claims are derivative of the women's personal injury claims. Certainly, consortium claims arise from the fact of the wife's injuries, but they are nontheless distinct. For instance, the financial losses suffered by a husband who had to quit his job to care for his injured wife, or the emotional losses suffered by a husband whose wife died from her injuries, are entirely separate from, and in addition to, the losses of his wife.

The Plan cannot be approved as it now stands. As this Court is aware, Chapter 11 provides two methods by which the Plan may be confirmed: A majority of claimants in each class, who control more than two-thirds of the dollar value of the class' claims, vote to confirm the plan, see 11 U. S.C. ß 1126(c); or, if the vote fails, the court confirms the plan. See 11 U.S.C. ß 1129. Under 11 U.S.C. ß 1126(g), consortium claimants will be "deemed not to have accepted" the Plan because the Plan "do[es] not entitle [them] to receive any property "As dissenting creditors, these consortium claimants are entitled to receive as much under the plan as they would receive if the company had been liquidated. See 11 U.S.C. ß 1129. Since they are to receive nothing in return for releasing their claims, the Plan clearly fails to meet this requirements. [Alan I think you said get rid of this, but I wasn't sure to so I left it in.] Nor can a cram-down under ß 1129(b) go forward if the Plan's current treatment of consortium claimants is allowed to stand. This Court may only

confirm the Plan over the objections of the classes if the Plan is "fair and equitable" and does not "discriminate unfairly."11 U.S.C. ß 1129(b)(1).The Plan here fails to meet the requirements, because it gives the deotr an interest in the reorganized estate without providing any compensation for the consortium claimants. See e.g., In re Perez, 30 F.3d 1209, 1212-13 (9^th Cir.1994). If junior classes, such as equity holders, receive property under the plan, even while senior credits, such as the consortium claimants, receive nothing, a cramdown is not possible.

Courts have addressed the problem of consortium claimants in the context of mass tort settlements. In Bowling v. Pfizer, 143 F.R.D. 141 (S.D.

Ohio 1992), under the original proposed settlement, persons implanted with a defective heart valve whose valve fractured, causing injury or death, were awarded compensation from a schedule of benefits, ranging roughly from $500,000 to $2 million, binding arbitration, or a jury trial. Id. at 150. However, like the consortium claimants here, the claims of spouses of the implantees were extinguished by the settlement even though they were awarded nothing in their own right. After receiving objections on that issue, the court in Bowling issued an interim order, which specifically raised concerns about the mistreatment of spouses, and strongly implied that the settlement was not approvable for that reason, among others. See Bowling v. Pfizer, 143

F.R.D. 138, 140 (S.D. Ohio 1992). Thereafter, the settlement was renegotiated, and substantial benefits were provided for the spouses. See Bowling, 143 F.R.D. at 149,169-70. Also instructive is the settlement in the Dalkon Shield litigation. See In re A. H. Robbins Co., Inc., 880 F.2d 709 (4th Cir. 1989). There, the spouses of users of the Dalkon Shield IUD have been accorded completely separate rights to compensation from the Dalkon Shield Trust. See Decl. of Lewis Saul, 4-5 (attachment 1). They have the right to have their injuries judged on their own merits, they submit claims separately from their wives, and they can opt for arbitration or a jury trial, regardless of whether their wives do so. Id. The treatment accorded to these spouses recognizes that the spouses are separate legal persons with their own rights to due process of law.

Likewise, the mistreatment of consortium claimants under the proposed plan is easily remedied, and can be achieved without great cost to the defendants. The language purporting to merge or join the consortium claims with the personal injury claims must be deleted. In addition, the spouse's claim cannot be extinguished without some compensation in return. The consortium claimants should either be entitled to receive some amount of money under the settlement, or else should be free to litigate their claims. Under the former option, the consortium claimants are receiving something of value in return for their agreement to release their claims; under the latter, the consortium claimants retain their right to pursue their claims in litigation.

In general, we are satisfied with the settlement alternative, but we are concerned about one aspect: the prohibition on the payments of interest, or any form of adjustment for cost of living for claimants who will be paid many years in the future. DS 29, ß1.1.E. The cost of living aspect principally affects those who have not yet manifested any symptoms, but who may develop them in the 15 or more years that the Settlement Facility will continue in operation. Assuming that the grid payments are reasonable today, and are roughly gauged to the current cost of medical care, it is inevitable that medical costs will rise in the future and that an amount that is fair today, will be unfair tomorrow. Although one could argue for a system of annual cost of living increases, that may well not be necessary, at least as far as the first few years are concerned. However, since the program will last for more than 15 years, and since some of the claimants will develop diseases at a time when the cost of treatment will be much higher than it is now, it is grossly unfair that they not receive some form of cost of living adjustment.

Perhaps it is not surprising that the feature is not included since there was no one on the Tort Claimants Committee who solely represented the interest of future claimants, nor was there a separate future claimants representative appointed by the Court to look after their interests. But the fact that the Plan does not provide for them does not relieve the Court of its obligation to assure that future claimants (including current claimants whose injuries might worsen in the future) are able to receive an appropriately adjusted amount based upon increases in the cost of medical and other expenses when they file their claims against the Settlement Facility.

The problem relating to interest is somewhat different, and it is caused by the annual ceilings on payments that the debtor has negotiated. We do not oppose those annual ceilings, but we also believe that, if an annual ceiling results in a delayed payment to a claimant, the claimant should be entitled to collect interest, particularly since the failure to pay interest will benefit the debtor. However, if it appears that, because of the total cap, the amount being paid, including interest, might result in some claimants not receiving the face value of their claims, excluding interest, a hold-back provision of some kind on interest payments could be included. But the possible need for a hold-back does not justify the total denial of all interest payments to all claimants, particularly when the benefit of the delay in payment accrues entirely to the debtor and when the debtor may never reach the negotiated ceiling.

There are a number of other lesser features in the Plan which we urge the parties and/or the Court to correct. These include: verify each one of these

a) The Plan allows the litigation election form to be sent out while the case is on appeal, and the six month election period would start to run from that point (SF Annex A 4, ß3.02(c)), as does the 270 day period for the possible commencement of the Daubert hearing. DS 201, ß6.6.J.4.b. We do not object to the flexibility that would allow the election to be made at that time, but we believe that the form should not be mailed out without an express requirement that the Court approve it so that interested persons, and not simply those in charge of the claims administration, can be heard on this matter.

b) The Plan requires all claimants to make an election of settlement or litigation shortly after the Plan becomes effective. That is reasonable for claimants with current illnesses, since they are in a position to make a reasonably informed decision. The possibility of a worsening condition may make the choice difficult, but the provision of the Settlement Facility that allows a second disease payment if a new or worsened condition develops (SF Annex A 15, ß6.02(d)(ix), lessens the harshness of that choice.

But for a woman who has no current symptoms, but filed a claim to avoid the bar date (and perhaps to obtain an explantation), forcing her to choose between litigation and settlement is mandating a decision that will be little more informed than choosing by flipping a coin. The woman will not know what diseases she might contract, let alone what her financial, job, and family situation will be at that time. For women with current diseases, some may choose the litigation option, whereas others with similar injures may prefer to settle, but whatever their choice, they make it knowing the extent of their injury and their needs at the time. Because none of that information is known to claimants with no current disease, they are not given a meaningful opportunity to choose litigation or settlement, in violation of their rights to Due Process. This provision should be changed so that claimants who have no current symptoms are given a right to elect settlement within a reasonable time after they develop symptoms.

c) Various officials are appointed under the Plan to assist in the administration of the trust. It should be made clear what the standard for their removal is (we urge that persons should be removed only for just cause). In some places that standard is set forth (LF 8, ß3.02(c); LF 20, ß6.03(e)), and in others it is not. SF 8, ß4.02(d). It is important that these officials have independence, but that they are subject to removal if there is truly just cause for doing so.

It is our understanding that there will be a separate proceeding before the District Court concerning the proposed Case Management Order. There does not appear to be a specific schedule for raising objections to it, and so the Altig Objectors are including their objections to that proposed Order in this filing, but will make a separate filing if that is required. The Altig Objectors also specifically request that they be notified of any orders proposed or entered with regard to proposed Case Management Order.

Under the proposed case management order, there are restrictions imposed on those claimants who wish to litigate that give the debtor enormous strategic advantages. First, all of the cases must remain in the District Court for the Eastern District of Michigan, even after preliminary proceedings are concluded, unless the Court agrees to allow the cases to be sent to the district in which the claimant resides or, if a case was filed pre-petition in a state court, to that state court, but then only if the debtor consents, which will almost never occur. CMO 10, �12(c). In addition, there are substantial controls on case flow that will prevent any significant number of cases coming to trial in the immediate future because the case management order precludes trials unless, in effect, the debtor is willing to go to trial. CMO 9, �12(b). This is clear from the provisions that direct the District Court to give virtually uncontrolled discretion to the debtor to say that the press of business will not enable it to be ready for trial. Id. 12(b)(3).

The continuation of the cases in the District Court for the Eastern District of Michigan, or the possibility of allowing them to go to other federal courts, but not state courts, will also significantly delay these cases because there are far fewer federal judges to try them and because, in some federal courts, few if any civil cases are being tried due to heavy criminal caseloads. As a result, claimants will be forced to wait long periods of time to obtain fair compensation or have to settle for less than fair value because they cannot afford to wait.

In addition, requiring these cases to be tried in the federal courts may make it impossible to join additional defendants, such as doctors, who are citizens of the same State as the claimant if jurisdiction is based on 28 U.S.C. ß 1332. See 28 U.S.C. ß 1367(b). Moreover, if the cases have to be tried in Detroit, it is doubtful that a defendant, such as a doctor who practices only where the claimant resides, can constitutionally be sued in Detroit if his practice is in the State of Washington, even if there is subject matter jurisdiction under 28 U.S.C. ß 1334. In addition, while the impact of cases like Phillips Petroleum v. Shutts, 472 U.S. 797 (1985), on bankruptcy is not entirely clear, traditional notions of due process would seem to preclude requiring a claimant who resides far from the bankruptcy court to try her claim there, as opposed in her home state, although she can be required to file proof of claim and do other acts in that forum that are essential to the basic bankruptcy proceeding.

Furthermore, even federal courts in a claimant's home state may be inconvenient to claimants, their counsel, and witnesses, especially in large states where the population is highly dispersed and there are relatively few venues for federal courts, in contrast to state courts, which are located in the counties where each person resides. And, of course, many personal injury lawyers practice principally in the state courts, and requiring them to go to federal court places them at an unnecessary disadvantage because of their lack of familiarity with federal procedures.

Nor is there any reason to require the cases to be tried in federal courts, other than to create an advantage for the debtor. In the A.H. Robins reorganization, by contrast, once a claimant was entitled to exit the alternative dispute resolution system created by that plan, she had the right to bring suit in any appropriate forum, not just in the federal court in Richmond, or another federal court, or in a state court if her case had been filed there pre-petition. We do not object to the provisions of the case management order that would require the state court to agree to the case management and case flow procedures, but that is an entirely different question from whether the claimants should be deprived of their right to bring suit in a state court.

There is one other aspect of the litigation option that needs to be corrected. Under the Litigation Facility Agreement, all suits will be brought against the Dow Corning Litigation Facility but not against the debtor. LF 1, �E. This creates two separate problems. First, it needs to be made clear that, for purposes of discovery, the debtor is a party so that, if a deposition is noticed or document production is required, the Facility cannot refuse to respond on the ground that it is not in possession of the documents or does not control the witness. The debtor should be required to consent to such an arrangement, without putting its assets at risk (other than when it does not obey a court order).

Second, since the debtor has the real economic interest in this case, a claimant's lawyer should be entitled to make that clear to the jury, despite the naming of the Litigation Facility as the defendant. Any such effort by a claimant's attorney appears to be forbidden, and while we do not oppose the restriction on an actual lawsuit against the debtor, juries should be entitled to know that the debtor, not an abstract Litigation Facility, has the real stake in the matter. Otherwise, the jury might mistakenly believe that it will be dividing money up among claimants and thus be more reluctant to award full compensation.

For the foregoing reasons, a substantial number of changes in the Plan and Case Management Order should be made to bring it in line with the requirements of Chapter 11 and fundamental notions of fairness. We stand ready to assist the Court, the debtor, and the proponents of the Plan in whatever way is most helpful.

Alan B. Morrison

Amanda Frost

Public Citizen

Litigation Group

1600 20th Street, N.W.

Washington, D.C. 20009-1001

202) 588-7720

Ralph Pittle

Medical Legal

Consultants of

Washington

14205 SE 36th Street,

Suite 100

Bellevue WA 98006-1553

425 644 6881

April 16, 1999