Amicus Curiae Brief — William K. Harrington, United States Trustee, Region 2, Petitioner v. Purdue Pharma L.P., et al.

No. 23-124

In the

Supreme Court of the United States

_____________________________________________________________

WILLIAM K. HARRINGTON, UNITED STATES TRUSTEE,

REGION 2

Petitioner,

V.

PURDUE PHARMA L.P., ET AL.

____________________________________________________________

On Writ of Certiorari

To the United States Court of Appeals

For the Second Circuit

____________________________________________________________

BRIEF FOR THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA, THE

AMERICAN TORT REFORM ASSOCIATION,

THE PRODUCT LIABILITY ADVISORY

COUNSEL, INC., AND THE NATIONAL

ASSOCIATION OF MANUFACTURERS AS

AMICI CURIAE IN SUPPORT OF

AFFIRMANCE

_____________________________________________________________

ROBERT E. DUNN

Counsel of Record

Counsel for Amici Curiae

EIMER STAHL LLP

Additional counsel

99 S. Almaden Boulevard

on inside cover

Suite 600

San Jose, CA 95113

(408) 889-1690

rdunn@eimerstahl.com

ADDITIONAL COUNSEL

TARA S. MORRISSEY

ANDREW R. VARCOE

U.S. CHAMBER

LITIGATION CENTER

1615 H Street, NW

Washington, DC 20062

ERICA KLENICKI

MICHAEL A. TILGHMAN II

NAM LEGAL CENTER

733 Tenth Street, NW

Suite 700

Washington, DC 20001

H. SHERMAN JOYCE

LAUREN SHEETS JARRELL

AMERICAN TORT

REFORM ASSOCIATION

1101Connecticut

Avenue, NW

Suite 400

Washington, DC 20036

TERESA A. MANION

EIMER STAHL LLP

10 E. Doty Street

Suite 621

Madison, WI 53703

TABLE OF CONTENTS

STATEMENT OF INTEREST ................................. 1

INTRODUCTION AND SUMMARY OF

ARGUMENT ............................................................ 4

ARGUMENT ............................................................ 8

I. The Bankruptcy Code Authorizes Courts to

Approve Nonconsensual Third-Party

Releases ......................................................... 8

II. Third-Party Releases Are Important Tools

for Addressing Mass Tort Claims Efficiently

and Fairly .................................................... 19

III. Bankruptcy Courts Can Confirm Plans

Containing Nonconsensual Third-Party

Releases Consistent with Due Process

Requirements .............................................. 26

CONCLUSION ....................................................... 29

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TABLE OF AUTHORITIES

Cases

Adams v. United States ex rel. McCann,

317 U.S. 269 (1942) .............................................. 15

Bank of Am. Corp.,

639 F.3d 572 (2d Cir. 2011) .................................... 8

Celotex Corp. v. Edwards,

514 U.S. 300 (1995) ................................................ 8

Cent. W. Va. Energy Co. v. Wheeling-Pittsburgh

Steel Corp.,

245 F. App’x 415 (6th Cir. 2007) .......................... 14

CIGNA Corp. v. Amara,

563 U.S. 421 (2011) .............................................. 11

Clinton v. Goldsmith,

526 U.S. 529 (1999) .............................................. 15

Davis v. Michigan Dept. of Treasury,

489 U.S. 803 (1989) .............................................. 13

E.E.O.C. v. Rath Packing Co.,

787 F.2d 318 (8th Cir. 1986) ................................ 14

Ex parte Foster,

9 F. Cas. 508 (Cir. Ct. D. Mass. 1842) ................... 9

- ii -

Great-West Life & Annuity Ins. Co. v. Knudson,

534 U.S. 204 (2002) .............................................. 11

Harris v. Nelson,

394 U.S. 286 (1969) .............................................. 15

Helsinn Healthcare S.A. v. Teva Pharms.

USA, Inc.,

139 S. Ct. 628 (2019) ............................................ 12

In re 3M Combat Arms Earplug Prods. Liab. Litig.,

No. 3:19-md-2885-MCR-GRJ, ECF No. 3188

(N.D. Fla. June 10, 2022) ..................................... 22

In re A.H. Robins Co.,

880 F.2d 694 (3d Cir. 1989) ............................ 19, 25

In re Airadigm Comms., Inc.,

519 F.3d 640 (7th Cir. 2008) ................................ 19

In re Combustion Eng’g, Inc.,

391 F.3d 190 (3d Cir. 2004) .................................. 14

In re Cont’l Airlines,

203 F.3d 203 (3d Cir. 2000) .................................. 23

In re Dow Corning Corp.,

280 F.3d 648 (6th Cir. 2002) .......................... 18, 24

In re G.S.F. Corp.,

938 F.2d 1467 (1st Cir. 1991) ............................... 14

In re Le Centre on Fourth, LLC,

17 F.4th 1326 (11th Cir. 2021) ............................. 28

- iii -

In re LTL Management, LLC,

637 B.R. 396 (Bankr. D. N.J. 2022) ..................... 22

In re Millennium Lab Holdings II, LLC,

945 F.3d 126 (3d Cir. 2019) .................................. 19

In re Purdue Pharma L.P.,

69 F.4th 45 (2d Cir. 2023) ........................ 18, 25, 27

In re Seaside Eng’g & Surveying, Inc.,

780 F.3d 1070 (11th Cir. 2015) .............6, 18–19, 25

In re W.R. Grace & Co.,

729 F.3d 311 (3d Cir. 2013) .................................. 16

Ingham v. Johnson & Johnson,

608 S.W.3d 663 (Mo. Ct. App. 2020) .................... 20

Kreisler v. Goldberg,

478 F.3d 209 (4th Cir. 2007) ................................ 25

Law v. Siegel,

571 U.S. 415 (2014) .............................................. 17

Loc. Loan Co. v. Hunt,

292 U.S. 234 (1934) .............................................. 11

MacArthur Co. v. Johns-Manville Corp.,

837 F.2d 89 (2nd Cir. 1988) .................................. 28

Martin v. Wilks,

490 U.S. 755 (1989) ........................................ 26–27

- iv -

Mullane v. Cent. Hanover Bank & Tr. Co.,

339 U.S. 306 (1950) ........................................ 27–28

NLRB v. Bildisco & Bildisco,

465 U.S. 513 (1984) .............................................. 27

Norwest Bank Worthington v. Ahlers,

485 U.S. 197 (1988) .............................................. 11

Ortiz v. Fibreboard Corp.,

527 U.S. 815 (1999) .............................................. 26

Pennsylvania Bureau of Corr. v. United States

Marshals Serv.,

474 U.S. 34 (1985) ............................................ 5, 13

Pepper v. Litton,

308 U.S. 295 (1939) ................................................ 8

Richards v. Jefferson Cnty., Ala.,

517 U.S. 793 (1996) .............................................. 27

Roberts v. Sea-Land Servs., Inc.,

566 U.S. 93 (2012) ................................................ 13

Rohe v. Wells Fargo Bank, N.A.,

988 F.3d 1256 (11th Cir. 2021) ............................ 14

Spinelli v. City of New York,

579 F.3d 160 (2d Cir. 2009) .................................. 27

Taylor v. Sturgell,

553 U.S. 880 (2008) .............................................. 27

-v-

Tulsa Pro. Collection Servs., Inc. v. Pope,

485 U.S. 478 (1988) .............................................. 27

United States v. Energy Res. Co.,

495 U.S. 545 (1990) .............................................. 11

United States v. New York Tel. Co.,

434 U.S. 159 (1977) ...........................5–6, 14–16, 18

United Student Air Funds, Inc. v. Espinosa,

559 U.S. 260 (2010) .............................................. 28

Zacarias v. Stanford Int’l Bank, Ltd.,

945 F.3d 883 (5th Cir. 2019) ................................ 23

Statutes

11 U.S.C. § 105 .............. 4–6, 12–13, 16–18, 25–26, 28

11 U.S.C. § 524 ....................................5, 16–17, 25–26

11 U.S.C. § 1123 ............................................. 4, 12, 17

28 U.S.C. § 1651 ................................................... 5, 13

18 U.S.C. § 3123 ....................................................... 15

U.S. Const. art. I, § 8, cl. 4 ......................................... 9

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Other Authorities

1 Bankruptcy Law Manual § 1:3 (5th ed.) .............. 10

6 Cong. Ch. 19, 2 Stat. 19 (1800) ............................... 9

8 Cong. Ch. 6, 2 Stat. 248 (1803) ............................... 9

27 Cong. Ch. 9, 5 Stat. 440 (1841) ............................. 9

27 Cong. Ch. 82, 5 Stat. 614 (1843) ........................... 9

39 Cong. Ch. 176, 14 Stat. 517 (1867) ....................... 9

45 Cong. Ch. 160, 20 Stat. 99 (1878) ......................... 9

H.R.Rep. No. 95-595................................................. 14

Pub. L. 55-541, 30 Stat. 544 (1898) ......................... 10

Pub. L. 75-696, 52 Stat. 840 (1938) ......................... 10

Pub. L. 103-394, 108 Stat 4106 (1994) .............. 17, 26

2 Collier on Bankruptcy ¶ 105.01[1]

(15th ed. 1991) .......................................... 13–14, 17

Anthony J. Casey & Joshua C. Macey,

In Defense of Chapter 11 for Mass Torts,

90 U. Chi. L. Rev. 973 (2023) ..............17, 20–21, 24

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C. Anne Malik, Unlocking the Code: The Value of

Bankruptcy to Resolve Mass Torts,

U.S. Chamber of Commerce Institute for Legal

Reform (2022) ................................17, 21–22, 24–25

Elizabeth Chamblee Burch & Margaret S. Williams,

Perceptions of Justice in Multidistrict Litigation:

Voices from the Crowd,

107 Cornell L. Rev. 1835 (2022) ........................... 22

Joseph R. Goodwin, Remand: The Final Step in the

MDL Process—Sooner Rather than Later,

89 UMKC L. Rev. 991 (2021) ............................... 22

Marcia S. Krieger,“The Bankruptcy Court Is

A Court of Equity”: What Does That Mean?,

50 S.C. L. Rev. 275 (1999) ................................ 9–10

Michelle M. Harner, Final Report of the ABI

Commission to Study the Reform of Chapter 11,

American Bankruptcy Institute (2014) ............... 25

Samuel L. Bray, The System of Equitable

Remedies, 63 UCLA L. Rev. 530 (2016) ......... 11–12

Tina Bellon, Jury orders J&J to pay $4.7 billion in

Missouri asbestos cancer case, Reuters

(July 12, 2018) ...................................................... 20

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STATEMENT OF INTEREST1

The Chamber of Commerce of the United States of

America (the “Chamber”) is the world’s largest

business federation. It represents approximately

300,000 direct members and indirectly represents the

interests of more than three million companies and

professional organizations of every size, in every

industry sector, and from every region of the country.

An important function of the Chamber is to represent

the interests of its members in matters before

Congress, the Executive Branch, and the courts. To

that end, the Chamber regularly files amicus curiae

briefs in cases, like this one, that raise issues of

concern to the nation’s business community.

The American Tort Reform Association (“ATRA”)

is a broad-based coalition of businesses, corporations,

municipalities, associations, and professional firms

that have pooled their resources to promote reform of

the civil justice system with the goal of ensuring

fairness, balance, and predictability in civil litigation.

For more than three decades, ATRA has filed amicus

briefs in cases, such as this one, that involve

important liability and jurisdictional issues.

The Product Liability Advisory Council, Inc.

(“PLAC”) is a non-profit professional association of

corporate members representing a broad cross-section

of

American

and

international

product

manufacturers. These companies seek to contribute to

the improvement and reform of law in the United

1 Pursuant to Supreme Court Rule 37.6, amici curiae state

that no counsel for any party authored this brief in whole or in

part and that no entity or person, aside from amici curiae, their

members, or their counsel, made any monetary contribution

intended to fund the preparation or submission of this brief.

-1-

States and elsewhere, with emphasis on the law

governing the liability of product manufacturers and

others in the supply chain. PLAC’s perspective is

derived primarily from its corporate members’

experiences spanning a diverse group of industries in

various facets of the manufacturing sector. In

addition, several hundred leading product litigation

defense attorneys are sustaining (non-voting)

members of PLAC. Since 1983, PLAC has filed more

than 1,200 briefs as amicus curiae in both state and

federal courts, including this Court, presenting the

broad perspective of its members and seeking fairness

and balance in the development and application of the

law as it affects product risk management.

The National Association of Manufacturers (the

“NAM”) is the largest manufacturing association in

the United States, representing small and large

manufacturers in all 50 states and in every industrial

sector. Manufacturing employs nearly 13 million men

and women, contributes $2.91 trillion to the United

States economy annually, has the largest economic

impact of any major sector, and accounts for over half

of all private-sector research and development in the

nation. The NAM is the voice of the manufacturing

community and the leading advocate for a policy

agenda that helps manufacturers compete in the

global economy and create jobs across the United

States.

Amici and their members have a strong interest in

ensuring that bankruptcy courts are capable of

effectively resolving mass tort claims through the

bankruptcy process. One key component of resolution

of mass tort claims is the power to confirm

reorganization plans, which may sometimes require

nonconsensual third-party releases. Amici and their

-2-

members believe that such releases, when used

appropriately, are an efficient and equitable way to

pool resources available to compensate tort claimants.

As amici’s brief explains, the Bankruptcy Code grants

bankruptcy courts broad equitable authority to issue

third-party releases when appropriate to ensure the

success of a plan of reorganization.

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INTRODUCTION AND SUMMARY OF

ARGUMENT

I. Bankruptcy courts are creatures of statute, but

Congress has given them broad equitable powers to

carry out the purposes of the Bankruptcy Code. Those

equitable powers are codified most clearly in 11

U.S.C. §§ 105(a) and 1123(b)(6). As explained below,

these provisions authorize bankruptcy courts to

include nonconsensual releases of non-debtors’ claims

against other non-debtors (“third-party releases”) in

bankruptcy reorganization plans in appropriate

circumstances.

Section 1123(b)(1)–(5) authorizes bankruptcy

courts to include certain specific provisions in a

reorganization plan. But Congress also included a

catchall provision, which provides that a

reorganization “plan may” “include any other

appropriate provision not inconsistent with the

applicable provisions of this title.” 11 U.S.C.

§ 1123(b)(6) (emphasis added). Section 105(a), in

turn, gives bankruptcy courts authority to “issue any

order … that is necessary or appropriate to carry out

the provisions of this title.” 11 U.S.C. § 105(a)

(emphasis added). Read together, these two

provisions give bankruptcy courts authority to issue

any order necessary or appropriate to effectuate a

plan of reorganization, so long as that order is not

inconsistent with some other applicable provision of

the Code. Third-party releases fit comfortably within

that grant of equitable authority.

This conclusion is consistent with decades of

jurisprudence interpreting the All Writs Act, which

provides that “courts established by Act of Congress

may issue all writs necessary or appropriate in aid of

their respective jurisdictions and agreeable to the

-4-

usages and principles of law.” 28 U.S.C. § 1651(a). As

this Court has recognized, that statute fills “the

interstices of federal judicial power when those gaps

threaten[] to thwart the otherwise proper exercise of

federal courts’ jurisdiction.” Pennsylvania Bureau of

Corr. v. United States Marshals Serv., 474 U.S. 34,

40–41 (1985). Section 105(a) plays the same role, and

courts have recognized that Section 105(a) gives

bankruptcy courts similar equitable powers to those

conferred on all federal courts by the All Writs Act.

Federal courts may exercise the All Writs Act’s

gap-filling authority when that authority is

“consistent with” the governing statutory scheme and

federal laws. United States v. New York Tel. Co., 434

U.S. 159, 176 (1977). That authority “extends, under

appropriate circumstances, to persons who, though

not parties to the original action or engaged in

wrongdoing, are in a position to frustrate the

implementation of a court order or the proper

administration of justice, and encompasses even

those who have not taken any affirmative action to

hinder justice.” Id. at 174 (citations omitted).

Sections 105(a) and 1123(b)(6), taken together,

similarly authorize bankruptcy courts to issue thirdparty releases. No statute specifically prohibits such

orders, and Congress has specifically authorized

these types of injunctions in the context of asbestos

claims, see 11 U.S.C. § 524(g), confirming that thirdparty releases are not contrary to any other section of

the Code.

Of course, the fact that bankruptcy courts have the

authority to issue third-party releases does not mean

that they should do so routinely. On the contrary,

sections 105(a) and 1123(b)(6) should be interpreted

harmoniously with the All Writs Act, which requires

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courts to consider the “burden[]” imposed on third

parties. New York Tel. Co., 434 U.S. at 175. Indeed,

every court of appeals that has upheld the use of

third-party releases has insisted that they be

reserved for “unusual cases.” In re Seaside Eng’g &

Surveying, Inc., 780 F.3d 1070, 1078 (11th Cir. 2015).

But where a bankruptcy court concludes that thirdparty releases are necessary to ensure the success of

a reorganization, the court may use its

congressionally delegated equitable authority to

enjoin claims against third parties.

II. Third-party releases are an important tool to

help bankruptcy courts resolve mass tort cases

involving thousands of claimants. The collective

action problem that arises in all bankruptcy cases is

especially pronounced in mass tort cases where the

rush to the courthouse could deplete the distressed

firm’s assets given the possibility of enormous jury

awards. Bankruptcy offers a superior forum in which

to resolve mass tort claims because it gathers the

largest possible pool of available assets to pay the

largest number of claimants. Creditors often demand

third-party releases because hold-out litigation

against non-debtors can reduce the pool of assets

available to all creditors, and targeted third-party

releases can increase the asset pool by encouraging

third parties to make significant financial

contributions to the bankruptcy estate.

Third-party releases issued in connection with a

corporate reorganization can also prevent the race to

the courthouse that can arise between the debtor and

its claimants when they both seek recovery from

officers, shareholders, or other alleged corporate

insiders accused of wrongdoing. If a handful of

claimants are able to pursue those claims outside of

-6-

bankruptcy, the assets available to the debtor may be

diminished, decreasing its ability to pay claims to all

claimants. Allowing those third parties to settle with

the bankruptcy estate in exchange for releases

furthers the goal of bankruptcy by ensuring the

largest pool of assets to make payment on all claims.

Although some claimants might prefer to opt out

and try their luck in individual litigation, allowing

these holdouts to pursue their claims separately

against third-party non-debtors may threaten the

recovery of all other claimants. Congress gave

bankruptcy courts discretion to determine whether a

third-party release is necessary to ensure the success

of

a

reorganization

under

the

particular

circumstances at issue.

III. Petitioner contends that the Due Process

Clause

prohibits

courts

from

permanently

extinguishing claims against third parties without

the “affirmative consent of the affected claimants.”

Pet. Br. at 41. But this Court has recognized that

bankruptcy is necessarily an “exception” to the

general rule that everyone deserves their day in court,

because it authorizes the discharge of both current

and future claims. Put otherwise, the Bankruptcy

Code presumes that creditors can have claims cut off

without their consent. Accordingly, third-party

releases cannot present an insurmountable due

process problem. At all events, due process requires

only an opportunity to be heard and to present

objections, and bankruptcy courts can issue thirdparty releases consistent with that requirement.

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ARGUMENT

I. The Bankruptcy Code Authorizes Courts to

Approve

Nonconsensual

Third-Party

Releases

A. Although bankruptcy involves the relations

between a debtor and its creditors, Congress has

provided bankruptcy courts with broad subjectmatter jurisdiction extending to all civil actions where

the “outcome might have any ‘conceivable effect’ on

the bankrupt estate,” Parmalat Cap. Fin. Ltd. v. Bank

of Am. Corp., 639 F.3d 572, 579 (2d Cir. 2011) (citation

omitted), including “suits between third parties.”

Celotex Corp. v. Edwards, 514 U.S. 300, 307 n.5

(1995). Petitioner does not dispute that, in certain

situations, claims against non-debtors may directly

affect the bankruptcy estate. Instead, Petitioner

contends that nonconsensual third-party releases are

always ultra vires because the Bankruptcy Code does

not “specifically authorize[]” a bankruptcy court to

release such claims. Pet. Br. at 21. That broad

contention rests on a fundamental misunderstanding

of the nature of the equitable power that Congress has

conferred on bankruptcy courts.2

1. It is axiomatic that “a bankruptcy court is a

court of equity at least in the sense that in the

exercise of the jurisdiction conferred upon it by the

act, it applies the principles and rules of equity

jurisprudence.” Pepper v. Litton, 308 U.S. 295, 304

(1939). In wielding equitable authority, bankruptcy

courts follow the tradition of the English courts of

2 The Court granted certiorari to decide only this question,

and the Chamber accordingly takes no position on the

appropriateness of the specific releases at issue in this case.

-8-

equity, which were first given power to address

bankruptcies in 1542. Marcia S. Krieger, “The

Bankruptcy Court Is A Court of Equity”: What Does

That Mean?, 50 S.C. L. Rev. 275, 282–84 (1999).

England’s bankruptcy statutes, while not directly

adopted in the United States, influenced American

law and prompted the Founders to grant Congress the

power “[t]o establish . . . uniform Laws on the subject

of Bankruptcies throughout the United States.” U.S.

Const. art. I, § 8, cl. 4. And Congress enacted several

short-lived bankruptcy statutes in the nineteenth

century conferring equitable jurisdiction on the

federal district courts to resolve bankruptcies.3 For

example, the 1841 statute vested district courts with

“the full jurisdiction of a court of equity, over the

whole subject-matters which may arise in

bankruptcy.” Ex parte Foster, 9 F. Cas. 508, 512 (Cir.

Ct. D. Mass. 1842) (Story, J.) (discussing power

conferred by the 1841 bankruptcy statute). The

district court was authorized “to administer all relief

which a court of equity could administer under the

like circumstances.” Id. The district court’s

jurisdiction under the 1841 statute was even “more

wide and liberal” than the jurisdiction that “the lord

chancellor, sitting in bankruptcy, was authorized to

exercise.” Id. (“In short, whatever [the lord

chancellor] might properly do, sitting in bankruptcy,

or sitting in the court of chancery, under his general

equity jurisdiction, the courts of the United States are

by the act of 1841 competent to do.”).

3 See 6 Cong. Ch. 19, 2 Stat. 19 (1800), repealed by 8 Cong.

Ch. 6, 2 Stat. 248 (1803); 27 Cong. Ch. 9, 5 Stat. 440 (1841),

repealed by 27 Cong. Ch. 82, 5 Stat. 614 (1843); 39 Cong. Ch.

176, 14 Stat. 517 (1867), repealed by 45 Cong. Ch. 160, 20 Stat.

99 (1878).

-9-

The Bankruptcy Act of 1898, the first national

bankruptcy statute to survive more than a decade,

again vested equity jurisdiction in the district courts.

Pub. L. 55-541, 30 Stat. 544 (1898). Although the 1898

Act gave companies the option of protecting

themselves from creditors, it did not provide for

corporate reorganizations. See 1 Bankruptcy Law

Manual § 1:3 (5th ed.). That option was first provided

in the Chandler Act of 1938, which created the

bankruptcy courts and gave them “such jurisdiction

at law and in equity as will enable them to exercise

original jurisdiction in proceedings under this Act.”

See Pub. L. 75-696, § 2, 52 Stat. 840, 842–844 (1938).

The Act enumerated certain powers vested in the

bankruptcy courts, see id. § 2(a)(1)-(21), including to

“[m]ake such orders, issue such process, and enter

such judgments, in addition to those specifically

provided for, as may be necessary for the enforcement

of the provisions of this Act,” id. § 2(a)(15). The Act

further provided that “[n]othing in this section

contained shall be construed to deprive a court of

bankruptcy of any power it would possess were

certain specific powers not herein enumerated.” Id.

§ 2(b). The Chandler Act also empowered bankruptcy

courts to “[c]onfirm or reject arrangements or plans

proposed under this Act.” Id. § 2(a)(9); see also id. §§

101–276. “The corporate reorganization chapters” of

the Chandler Act “became the precursors of Chapter

11 of the current Bankruptcy Code,” which was

enacted in 1978. 1 Bankruptcy Law Manual § 1:4 (5th

ed.).

As this brief history confirms, bankruptcy courts

are creatures of statute, but “[t]he traditions of both

law and equity are woven” into the Bankruptcy Code.

Krieger, “The Bankruptcy Court Is A Court of

- 10 -

Equity", 50 S.C. L. Rev. at 295. This Court has long

recognized that “courts of bankruptcy are essentially

courts of equity, and their proceedings inherently

proceedings in equity.” Loc. Loan Co. v. Hunt, 292

U.S. 234, 240 (1934). To be sure, “whatever equitable

powers remain in the bankruptcy courts must and can

only be exercised within the confines of the

Bankruptcy Code.” Norwest Bank Worthington v.

Ahlers, 485 U.S. 197, 206 (1988). But “the traditional

understanding” is “that bankruptcy courts, as courts

of equity, have broad authority to modify creditordebtor relationships.” United States v. Energy Res.

Co., 495 U.S. 545, 549 (1990).

Historically, courts in equity provided an array of

remedies,

including

injunctions,

surcharges,

constructive trusts, and equitable liens. See generally

Samuel L. Bray, The System of Equitable Remedies,

63 UCLA L. Rev. 530, 541–42 & n.53 (2016) (listing

equitable remedies). A surcharge, for example, is an

equitable remedy that permits courts “to provide

relief in the form of monetary ‘compensation’ for a loss

resulting from a trustee’s breach of duty, or to prevent

the trustee’s unjust enrichment.” CIGNA Corp. v.

Amara, 563 U.S. 421, 441–42 (2011). And a plaintiff

can seek in equity “a constructive trust or an

equitable lien, where money or property identified as

belonging in good conscience to the plaintiff could

clearly be traced to particular funds or property in the

defendant’s possession.” Great-West Life & Annuity

Ins. Co. v. Knudson, 534 U.S. 204, 213 (2002).

Constructive trusts and equitable liens generally did

not seek “to impose personal liability on the

defendant, but to restore to the plaintiff particular

funds or property in the defendant’s possession.” Id.

at 214. At bottom, traditional equitable remedies

- 11 -

allow “courts to compel action or inaction.” Bray, The

System of Equitable Remedies, 63 UCLA L. Rev. at

553.

2. The Bankruptcy Code extends this equitable

power to include nonconsensual third-party releases

that are necessary or appropriate to ensure the

success of a plan of reorganization. This authority

arises from the interplay of the two statutes at issue

here: 11 U.S.C. §§ 105(a) and 1123(b)(6).

Section 1123(b) provides that a reorganization

plan may “impair or leave unimpaired any class of

claims, secured or unsecured”; “provide for the

settlement or adjustment of any claim or interest

belonging to the debtor or to the estate”; “provide for

the sale of all or substantially all of the property of

the estate”; and “modify the rights of holders of

secured claims.” 11 U.S.C. § 1123(b)(1), (3)(A), (4), (5).

Because each reorganization plan is unique, Congress

included a catchall provision that allows bankruptcy

courts to deal with unusual situations. Section

1123(b)(6) provides that a reorganization “plan may”

“include any other appropriate provision not

inconsistent with the applicable provisions of this

title.” 11 U.S.C. § 1123(b)(6). This section plainly

authorizes courts to include provisions not specifically

permitted by the Code. See Helsinn Healthcare S.A. v.

Teva Pharms. USA, Inc., 139 S. Ct. 628, 634 (2019)

(explaining that a “catchall phrase” “captures

material that does not fit neatly into the statute’s

enumerated categories but is nevertheless meant to

be covered”). The only limitations are that the

adopted provision must be appropriate and cannot

conflict with other sections of the Bankruptcy Code.

Congress further provided bankruptcy courts with

authority to “issue any order . . . that is necessary or

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appropriate to carry out the provisions of this title.”

11 U.S.C. § 105(a) (emphasis added). Read together,

these two provisions give bankruptcy courts authority

to issue any order necessary or appropriate to

effectuate a plan of reorganization, so long as that

order is not inconsistent with some other applicable

provision of the Code. See Roberts v. Sea-Land Servs.,

Inc., 566 U.S. 93, 101 (2012) (“It is a fundamental

canon of statutory construction that the words of a

statute must be read in their context and with a view

to their place in the overall statutory scheme.”

(quoting Davis v. Michigan Dept. of Treasury, 489

U.S. 803, 809 (1989))); see also 2 Collier on

Bankruptcy ¶ 105.01[2] (Lawrence P. King ed., 15th

ed. 2001) (“The equitable origins of the bankruptcy

power suggest substantial leeway to tailor solutions

to meet the diverse problems facing bankruptcy

courts.”). It follows that third-party releases are

authorized under the Code in the unusual

circumstance where they are appropriate to ensure

the success of a plan of reorganization.

B.1. This conclusion is bolstered by decades of

jurisprudence granting judges substantial authority

to issue orders to third parties under the All Writs

Act, which contains a similar grant of equitable

authority to all federal judges.

Originally adopted in the Judiciary Act of 1789,

the All Writs Act now provides that “courts

established by Act of Congress may issue all writs

necessary or appropriate in aid of their respective

jurisdictions and agreeable to the usages and

principles of law.” 28 U.S.C. § 1651(a). The Act serves

to fill “the interstices of federal judicial power when

those gaps threaten[] to thwart the otherwise proper

exercise of federal courts’ jurisdiction.” Pennsylvania

- 13 -

Bureau of Corr., 474 U.S. at 40–41.

As Congress explained when it reorganized the

Bankruptcy Code in the late 1970s, “Section 105 is

similar in effect to the All Writs Statute.” H.R.Rep.

No. 95-595, at 316–17 (1977), reprinted in 1978

U.S.C.C.A.N. 5963, 6273–74 (“The section is repeated

here for sake of continuity from current law and ease

of reference, and to cover any powers traditionally

exercised by a bankruptcy court that are not

encompassed by the All Writs Statute.”); see also In re

G.S.F. Corp., 938 F.2d 1467, 1475 n.6 (1st Cir. 1991)

(noting that the All Writs Act “provides Article III

courts with statutory authority to issue [certain]

injunction[s]” and that “Section 105 of the

Bankruptcy Code was apparently intended to extend

such authority to the bankruptcy courts”) (citing 2

Collier on Bankruptcy ¶ 105.01[1] (15th ed. 1991)).

Courts have thus recognized that “Section 105

provides bankruptcy courts with powers of equity

similar to those granted to federal courts under the

All Writs Act, including writs of injunction.” In re

Combustion Eng’g, Inc., 391 F.3d 190, 224 n.36 (3d

Cir. 2004); see also E.E.O.C. v. Rath Packing Co., 787

F.2d 318, 325 (8th Cir. 1986); Rohe v. Wells Fargo

Bank, N.A., 988 F.3d 1256 (11th Cir. 2021); Cent. W.

Va. Energy Co. v. Wheeling-Pittsburgh Steel Corp.,

245 F. App’x 415, 420 (6th Cir. 2007).

As this Court has explained, the All Writs Act

provides federal courts with gap-filling authority in

situations where the exercise of that authority is

“consistent with” the governing statutory scheme and

other relevant laws. New York Tel. Co., 434 U.S. at

176. That authority is “not limited to those situations

where it is ‘necessary’ to issue the writ or order ‘in the

sense that the court could not otherwise physically

- 14 -

discharge its … duties.’” Id. at 173 (citation omitted).

Rather, the All Writs Act confers “a power essentially

equitable and, as such, not generally available to

provide alternatives to other, adequate remedies at

law.” Clinton v. Goldsmith, 526 U.S. 529, 537 (1999);

see also New York Tel. Co., 434 U.S. at 172 (“This

statute has served since its inclusion, in substance, in

the original Judiciary Act as a ‘legislatively approved

source of procedural instruments designed to achieve

the rational ends of law.’’” (cleaned up)) (citing Harris

v. Nelson, 394 U.S. 286, 299 (1969)); Adams v. United

States ex rel. McCann, 317 U.S. 269, 273 (1942)

(“Unless appropriately confined by Congress, a

federal court may avail itself of all auxiliary writs as

aids in the performance of its duties, when the use of

such historic aids is calculated in its sound judgment

to achieve the ends of justice entrusted to it.”).

In New York Telephone, this Court explained that

“[t]he power conferred by the Act extends, under

appropriate circumstances, to persons who, though

not parties to the original action or engaged in

wrongdoing, are in a position to frustrate the

implementation of a court order or the proper

administration of justice, and encompasses even

those who have not taken any affirmative action to

hinder justice.” 434 U.S. at 174 (collecting cases). The

question in that case was whether the Act authorized

courts to order telephone companies to install pen

registers in connection with ongoing criminal

investigations. This Court held that the All Writs Act

granted courts this sweeping authority even though

no statute at the time specifically authorized such

orders. Id. at 177.4 Rejecting the telephone company’s

4 Congress later provided the authority for such orders in 18

- 15 -

argument that the district court had interpreted the

All Writs Act too broadly, this Court explained that

although the company was a third party to the

underlying criminal investigation, it was not “so far

removed from the underlying controversy that its

assistance could not be permissibly compelled.” Id. at

174.

2. The same logic applies here, and this Court

should thus reject the Solicitor General’s argument in

this case that Sections 105(a) and 1123(b)(6) do not

authorize orders affecting third parties. First, as

several courts of appeals have recognized, third-party

releases are, in certain situations, essential for the

confirmation of a plan of reorganization. See infra

Part II. This is because such releases are essential to

resolving overlapping claims against the third parties

and protecting the estate. Second, no statute

specifically prohibits third-party releases. Indeed, in

the lone instance where Congress has considered the

matter—in the context of asbestos claims—it has

authorized them. See 11 U.S.C. § 524(g)(4)(A)(ii) (“an

injunction may bar any action directed against a third

party” in certain enumerated situations, including

where the “alleged liability of such third party arises

by reason of … (II) the third party’s involvement in

the management of the debtor or a predecessor in

interest of the debtor, or service as an officer, director

or employee of the debtor or a related party”). Section

524(g) permits companies “to set up a trust that will

assume its asbestos liabilities” and “authorizes an

injunction to channel all asbestos-related claims to

such a trust.” In re W.R. Grace & Co., 729 F.3d 311,

315 (3d Cir. 2013). The procedure in § 524(g),

U.S.C. § 3123(b)(2).

- 16 -

including the authorized third-party releases,

permits the pooling of assets and allows late-filers to

nevertheless receive recoveries from their tort claims.

See Anthony J. Casey & Joshua C. Macey, In Defense

of Chapter 11 for Mass Torts, 90 U. Chi. L. Rev. 973,

998–99 (2023). This consolidation of assets permits a

more equitable distribution of funds to claimants. See

C. Anne Malik, Unlocking the Code: The Value of

Bankruptcy

to

Resolve

Mass

Torts,

U.S. Chamber of Commerce Institute for Legal

Reform, at 16–17 (2022), https://tinyurl.com/5dfdn3fe.

And though Section 524(g) applies only to asbestosrelated bankruptcies, Congress made clear that

nothing in that section “shall be construed to modify,

impair, or supersede any other authority the court

has to issue injunctions in connection with an order

confirming a plan of reorganization.” Pub. L. 103-394,

§ 111(b), 108 Stat. 4106, 4117 (1994).

Of course, as with the All Writs Act, neither

sections 105(a) nor 1123(b)(6) of the Bankruptcy Code

can be invoked to “to override explicit mandates of

other sections of the Bankruptcy Code.” Law v. Siegel,

571 U.S. 415, 421 (2014) (quoting 2 Collier on

Bankruptcy ¶ 105.01[2] (16th ed. 2013)). “Section

105(a) confers authority to ‘carry out’ the provisions

of the Code, but it is quite impossible to do that by

taking action that the Code prohibits.” Id. And section

1123(b)(6) prohibits a plan from including terms

“inconsistent with” “applicable provisions” of the

Bankruptcy Code. 11 U.S.C. § 1123(b)(6). But no

provision of the code expressly (or even impliedly)

prohibits third-party releases, as the Trustee’s brief

itself confirms.

The fact that bankruptcy courts have the

authority to issue such releases does not mean that

- 17 -

they always should. Nor does it give bankruptcy

courts license to disregard the interests of the

claimants whose claims are released. Sections 105(a)

and 1123(b)(6) should instead be interpreted

harmoniously with the All Writs Act, which requires

courts to consider any “burden[]” imposed on third

parties. New York Tel. Co., 434 U.S. at 175. The

Second Circuit adopted this interpretation of the

statute in the decision below when it held that one of

the factors a bankruptcy court should consider when

deciding whether to authorize a third-party release is

“whether the plan provides for the fair payment of

enjoined claims.” In re Purdue Pharma L.P., 69 F.4th

45, 79 (2d Cir. 2023) (“the determinative question is

not whether there is full payment, but rather whether

the contributed sum permits the fair resolution of the

enjoined claims.”); see also In re Dow Corning Corp.,

280 F.3d 648, 658 (6th Cir. 2002) (requiring the plan

to “provide[] a mechanism to pay for all, or

substantially all, of the class or classes affected by the

injunction”).

As these limitations make clear, sections 105(a)

and 1123(b)(6) do not give bankruptcy courts a roving

commission to extinguish claims against third parties

however they see fit. On the contrary, every appellate

court that has interpreted the Bankruptcy Code has

cautioned that third-party releases should be

reserved for “those unusual cases in which such an

order is necessary for the success of the

reorganization.” Seaside Eng’g & Surveying, Inc., 780

F.3d at 1078. For example, the Second and Sixth

Circuits have adopted seven-factor tests to determine

whether third-party releases are warranted. See

Purdue Pharma, 69 F.4th at 78–79; Dow Corning, 280

F.3d at 658 (explaining that “enjoining a non- 18 -

consenting creditor’s claim is only appropriate in

‘unusual circumstances’” (citation omitted)). Other

circuits have imposed “exacting standards that must

be satisfied if such releases and injunctions are to be

permitted.” In re Millennium Lab Holdings II, LLC,

945 F.3d 126, 139 (3d Cir. 2019); see also In re A.H.

Robins Co., 880 F.2d 694, 702 (3d Cir. 1989)

(discussing factors supporting third-party releases in

that case). And all courts upholding such releases

have recognized that “whether a release is

‘appropriate’ for the reorganization is fact intensive

and depends on the nature of the reorganization.” In

re Airadigm Comms., Inc., 519 F.3d 640, 657 (7th Cir.

2008); Seaside Eng’g & Surveying, 780 F.3d at 1079

(“The inquiry is fact intensive in the extreme”).

A careful factual inquiry is therefore required. But

where a bankruptcy court finds that such releases are

necessary to ensure the success of a reorganization,

the court may use its congressionally delegated

equitable authority to enjoin claims against third

parties.

II.

Third-Party Releases Are Important Tools

for Addressing Mass Tort Claims

Efficiently and Fairly

The power to issue third-party releases can be a

crucially important tool for bankruptcy courts

working to resolve mass tort claims through

reorganization.

A. At its core, bankruptcy law exists to resolve the

collective action problem that arises when creditors of

an insolvent firm pursue their claims in separate

proceedings—the so-called “race to the courthouse”

that can drain a firm’s assets and leave late claimants

with no recovery. Mass tort cases with thousands of

- 19 -

potential creditors present an acute version of this

collective action problem, as “claimants who file early,

or who find themselves before a sympathetic jury, or

whose injuries happen to manifest quickly, may

receive a large payout” while late claimants get

nothing. Casey, In Defense of Chapter 11 for Mass

Torts, 90 U. Chi. L. Rev. at 977. “[T]he costs of a

decentralized, lengthy resolution of mass torts claims

over time can be large and value destructive for all

stakeholders.” Id. Indeed, if a small number of early

claimants obtain massive awards—perhaps because

their juries seek to punish the defendants and are

unaware of the number of other potential claimants—

a firm’s assets may be drained before even a fraction

of the potential claimants receive any recovery. 5

Absent an organized process, “luck plays a large role

in determining who gets paid.” Casey, In Defense of

Chapter 11 for Mass Torts, 90 U. Chi. L. Rev. at 999.

This is precisely why Congress authorized

bankruptcy courts to create asbestos trusts in the

1990s following the explosion of mesothelioma

litigation in the 1970s and 1980s. Id. at 998–99.

1. As bankruptcy scholars have recognized,

Chapter 11 is often a “superior forum in which to

For example, one jury awarded around $4.69 billion—

which included $4.14 billion in punitive damages—to 22

plaintiffs who sued Johnson & Johnson (“J&J”) for injuries

related to the company’s baby powder, though the award was

reduced on appeal to $2.24 billion to 20 plaintiffs. See Ingham v.

Johnson & Johnson, 608 S.W.3d 663 (Mo. Ct. App. 2020), cert.

denied, 141 S. Ct. 2716 (2021). Even a small number of such

awards could have stripped J&J of its ability to pay later

claimants, and J&J was battling 9,000 similar cases at the time

of the verdict. See Tina Bellon, Jury orders J&J to pay $4.7

billion in Missouri asbestos cancer case, Reuters (July 12, 2018),

https://tinyurl.com/mr227y4u.

5

- 20 -

resolve mass tort claims” because it “provides tools for

dealing with holdouts and future claimants that are

unavailable in conventional class action or

multidistrict litigation.” Id. at 977. Third-party

releases are one such tool. Third-party releases

benefit claimants by preventing holdout creditors

from undermining collective global settlements

necessary for the confirmation of a reorganization

plan. Id. at 1003. Third parties are unlikely to provide

funding to the bankruptcy estate if opt-out creditors

can still pursue them in separate litigation. Id. “Why

would they offer to settle if they still face hundreds or

thousands of state court claims?” Id. And even where

third parties might be willing to contribute some

amount to the bankruptcy estate, they would

undoubtedly offer less in a world where they are still

subject to suit by the holdouts. Id. This would

“decrease[] the relative attractiveness of a

bankruptcy settlement compared to the alternative

litigation system.” Id. Thus, when used appropriately,

third party releases can result in “significant

financial contributions” to the bankruptcy estate. Id.

at 1001. This “benefit[s] tort claimants by enlarging

the pie of recoverable funds and reducing the

duplicative administrative and legal expenses that

arise when tort claimants sue the debtor in

bankruptcy and the nondebtors in state and federal

courts.” Id.

By channeling related claims against the

bankrupt entity and third parties into a single forum,

third-party releases “lower legal fees and

administrative costs.” Id. at 1002; see also Malik,

Unlocking the Code at 30 (The “Bankruptcy Code can

be an efficient and equitable way to pool assets and

claims into one setting so mass tort liabilities can be

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appropriately resolved.”). After all, mass tort

litigation is notoriously slow and expensive. See, e.g.,

In re LTL Management, LLC, 637 B.R. 396, 412

(Bankr. D. N.J. 2022), rev’d and remanded, 64 F.4th

84 (3d Cir. 2023) (“The fact remains that since 2014—

over seven years ago—only 49 trials have gone to

verdict, and many of those remain on appeal or have

been remanded to retry.”).

Though the MDL process may be used to handle

pre-trial coordination of mass-tort proceedings, MDLs

“have limited utility in providing effective, timely,

and final global resolution” of such claims, especially

in situations involving “latent injuries and an

unknown class of potential future claimants.” Malik,

Unlocking the Code at 9–10, 30 (describing hurdles to

efficient resolution of claims through the MDL

process). “Even Judge Goodwin, who handled the

seven pelvic-mesh MDLs, observed that ‘delay may

deny the parties timely justice and is rightly

considered by many as a major failure of the MDL

paradigm.’” Elizabeth Chamblee Burch & Margaret S.

Williams, Perceptions of Justice in Multidistrict

Litigation: Voices from the Crowd, 107 Cornell L. Rev.

1835, 1890 (2022) (quoting Joseph R. Goodwin,

Remand: The Final Step in the MDL Process—Sooner

Rather than Later, 89 UMKC L. Rev. 991, 995 (2021)).

And even where the MDL process provides some pretrial efficiencies, mass tort cases can still threaten to

swamp the judicial system once the cases are

remanded to their respective district courts. See, e.g.,

In re 3M Combat Arms Earplug Prods. Liab. Litig.,

No. 3:19-md-2885-MCR-GRJ, ECF No. 3188, at 2

(N.D. Fla. June 10, 2022) (noting that the unresolved

cases “average[] to approximately 2,500 cases being

remanded for trial to each of the 94 districts

- 22 -

nationwide” and that “the amount of judicial

resources required to handle this number of cases is

staggering”). Bankruptcy proceedings can resolve

these claims quickly and fairly, and in some

circumstances these goals can be aided by issuing

third-party releases to non-debtors who contribute

substantial assets to the bankruptcy estate.

2. Third-party releases can also benefit claimants

by avoiding the race to the courthouse that can

sometimes arise between the debtor and its creditors.

In a corporate setting, both the debtor and its

creditors may have claims against the same alleged

corporate insiders based on accusations of

wrongdoing. Creditors have an incentive to pursue

their claims directly—and before the debtor does so—

in order to collect as much as possible outside the

bankruptcy. Such actions have the dual effect of

decreasing the amount of assets a debtor has and

upsetting the core bankruptcy purpose of equitably

apportioning assets to creditors. Cf. Zacarias v.

Stanford Int’l Bank, Ltd., 945 F.3d 883, 900 (5th Cir.

2019) (“The Plaintiffs-Objectors’ claims affect

receivership assets because every dollar the

Plaintiffs-Objectors recover from Willis and BMB is a

dollar that the receiver cannot, frustrating the

receiver’s pro rata distribution to investors—a core

element of its draw upon equity.”). One solution is to

allow the debtor to maximize its assets in a voluntary

settlement with the third parties, and channel all

proceeds for the benefit of all creditors, instead of

allowing holdout creditors to try and get a better

bargain from the third party outside of bankruptcy.

See In re Cont’l Airlines, 203 F.3d 203, 212–13 (3d Cir.

2000) (“A central focus of these three reorganizations

[with releases] was the global settlement of massive

- 23 -

liabilities against the debtors and co-liable parties.”).

To be sure, third-party releases necessarily limit

the options of tort claimants who might prefer to opt

out and roll the dice in individual litigation. But

allowing a few holdouts to threaten third-party nondebtors with enormous jury verdicts “would threaten

the recovery of the class claimants” by discouraging

those third parties from contributing to the

bankruptcy estate at all, much less in the amounts

facilitated by a comprehensive settlement with

enforceable third-party releases. Casey, In Defense of

Chapter 11 for Mass Torts, at 1005. And the

overarching goal of the bankruptcy process is to

maximize recovery for creditors, not to punish

wrongdoers. If the misconduct of a third-party

tortfeasor is sufficiently egregious, criminal

prosecution remains available to satisfy society’s need

for personal accountability.

And creditors—who have a concrete interest in

ensuring the largest possible recovery—are uniquely

situated to ensure that third-party releases are

appropriate and fair. See Malik, Unlocking the Code

at 30 (noting that “interested parties” should provide

“oversight to ensure that bankruptcy assets are

equitably distributed”); cf. Casey, In Defense of

Chapter 11 for Mass Torts, 90 U. Chi. L. Rev. at 995

(“Creditors as a group will receive more compensation

if they can agree to leave valuable but financially

distressed businesses intact.”). Indeed, many of the

circuits that have approved third-party releases have

held that such releases are not appropriate unless

broadly supported by creditors. See Dow Corning, 280

F.3d at 658 (listing one of the factors to determine if

a third-party release is appropriate is whether “[t]he

impacted class, or classes, has overwhelmingly voted

- 24 -

to accept the plan”); Seaside Eng’g & Surveying, 780

F.3d at 1079 (same); Purdue Pharma, 69 F.4th at 78

(same); A.H. Robins, 880 F.2d at 702 (similar).

Requiring robust creditor support before approving

third-party releases will prevent the sorts of abuses

Petitioner hypothesizes.

Moreover, contrary to Petitioner’s assertion, Pet.

Br. at 21, released third parties plainly do not obtain

all benefits of bankruptcy, because only claims related

to the underlying corporate reorganization can be

released under sections 105(a) and 1123(b)(6). Third

parties continue to remain liable for any other debts

and liabilities that they may have incurred unrelated

to the bankrupt debtor.

For all these reasons, third-party releases, when

used appropriately, can further the goals of the

Bankruptcy Code by removing roadblocks to

reorganizations. See Kreisler v. Goldberg, 478 F.3d

209, 215 (4th Cir. 2007) (explaining that section

105(a) permits injunctive relief to prevent

“detrimental pressure on the[] reorganization effort”);

see also Michelle M. Harner, Final Report of the ABI

Commission to Study the Reform of Chapter 11,

American Bankruptcy Institute, at 252 (2014),

https://tinyurl.com/3zycxnay (recommending that

debtors or plan proponents “should be permitted to

seek approval of third-party releases”).

B. Recognizing these efficiencies, Congress

specifically authorized certain types of third-party

releases in the context of asbestos litigation. See 11

U.S.C. § 524(g)(4)(A)(ii); see also Malik, Unlocking the

Code at 15 (“The administrative procedures of

bankruptcy settlement trust funds are designed to

eliminate certain transaction costs, time delays, and

other burdens that the tort system can impose on

- 25 -

litigants, such as discovery, depositions, expert

testimony, motions and briefings, settlement

negotiations, and in some instances, trial and

appeals.”). And it explicitly provided that the thirdparty releases specifically authorized in section

524(g) should not be interpreted as an indication that

bankruptcy courts lack authority to issue other types

of third-party releases. Pub. L. 103-394, § 111(b), 108

Stat 4106, 4117 (1994).

Because the same policy considerations that

support third-party releases in the context of asbestos

litigation support the use of third-party releases in

other types of mass-tort litigation, this Court should

interpret sections 105(a) and 1123(b)(6) consistent

with their broad language and affirm the authority of

bankruptcy courts to issue such releases in

appropriate circumstances.

III.

Bankruptcy Courts Can Confirm Plans

Containing Nonconsensual Third-Party

Releases Consistent with Due Process

Requirements

Petitioner suggests that the Due Process Clause

prohibits courts from permanently extinguishing

claims against third parties without the “affirmative

consent of the affected claimants.” Pet. Br. at 41. But

while it is axiomatic that “everyone should have his

own day in court,” Martin v. Wilks, 490 U.S. 755, 762

(1989) (citation omitted), this Court has recognized

that bankruptcy proceedings can be an “exception” to

the general principle and “deep-rooted historic

tradition that everyone should have his own day in

court.” Ortiz v. Fibreboard Corp., 527 U.S. 815, 846

(1999) (citing Martin, 490 U.S. at 762). Specifically,

“where a special remedial scheme exists expressly

- 26 -

foreclosing successive litigation by nonlitigants, as for

example in bankruptcy or probate, legal proceedings

may terminate preexisting rights if the scheme is

otherwise consistent with due process.” Martin, 490

U.S. at 762 n.2 (citing NLRB v. Bildisco & Bildisco,

465 U.S. 513, 529–30, n.10 (1984)); Tulsa Pro.

Collection Servs., Inc. v. Pope, 485 U.S. 478 (1988));

see also Taylor v. Sturgell, 553 U.S. 880, 895 (2008);

Richards v. Jefferson Cnty., Ala., 517 U.S. 793, 799

(1996) (same). Indeed, holding that the Due Process

Clause requires claimants to consent to the release of

their claims would “call into question all releases

through

bankruptcy,

including

bankruptcy

discharges.” Purdue Pharma, 69 F.4th at 83

(emphasis added). That result would be incompatible

with a core function of the Bankruptcy Code, and of

historic bankruptcy law more generally.

Extinguishing claims against third parties is

“otherwise consistent” with due process so long as the

claimants are given notice and an opportunity to be

heard. The “fundamental requirement of due process

in any proceeding which is to be accorded finality is

notice reasonably calculated, under all the

circumstances, to apprise interested parties of the

pendency of the action and afford them an

opportunity to present their objections.” Mullane v.

Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314

(1950). The relevant due process inquiry is thus

whether claimants whose claims are extinguished

received adequate notice or a meaningful opportunity

to be heard. See Spinelli v. City of New York, 579 F.3d

160, 168 (2d Cir. 2009). A proposed plan that provides

sufficient notice to those creditors whose claims will

be released, and a confirmation proceeding that

provides an opportunity for such creditors or their

- 27 -

representatives

to

object,

can

meet

this

constitutionally required “minimum.” Mullane, 339

U.S. at 313.

Consistent with this historical framework, several

circuits have held that the confirmation of third-party

releases can be consistent with due process. For

example, the Eleventh Circuit concluded that due

process was satisfied where the creditors received

“actual notice” of “third-party releases in [a]

bankruptcy plan.” In re Le Centre on Fourth, LLC, 17

F.4th 1326, 1334, 1336 (11th Cir. 2021). This was true

“even where [the] debtor violate[d] procedural

requirements for supplying notice prescribed by the

Bankruptcy Rules.” Id. at 1336 (citing United Student

Air Funds, Inc. v. Espinosa, 559 U.S. 260, 272 (2010)).

The Second Circuit similarly considered the

contention that the party, whose claims had been

released, “was denied due process of law because it

received notice of the insurance settlements only after

the settlements had been negotiated.” MacArthur Co.

v. Johns-Manville Corp., 837 F.2d 89, 94 (2nd Cir.

1988). The court held that this “contention [was]

without merit” because all “interested parties were

provided with notice and a hearing before the

settlements were approved by the Bankruptcy Court.”

Id.

In short, interpreting sections 105(a) and

1123(b)(6) to authorize nonconsensual third-party

releases does not raise any “substantial questions

about constitutionality,” Pet. Br. at 43, and the

constitutional avoidance doctrine is thus not

implicated.

- 28 -

CONCLUSION

The Court should answer the question presented

in the affirmative and hold that the Bankruptcy Code

authorizes bankruptcy courts to issue nonconsensual

third-party releases when such releases are narrowly

tailored to ensure the success of a plan of

reorganization.

Respectfully submitted,

TARA S. MORRISSEY

ANDREW R. VARCOE

U.S. CHAMBER

LITIGATION CENTER

1615 H STREET, NW

WASHINGTON, DC 20062

H. SHERMAN JOYCE

LAUREN SHEETS JARRELL

AMERICAN TORT

REFORM ASSOCIATION

1101 Connecticut Avenue,

NW

Suite 400

Washington, DC 20036

ROBERT E. DUNN

Counsel of Record

EIMER STAHL LLP

99 S. Almaden Blvd.

Suite 600

San Jose, CA 95113

(408) 889-1690

rdunn@eimerstahl.com

TERESA A. MANION

EIMER STAHL LLP

10 E. Doty Street

Suite 621

Madison, WI 53703

ERICA KLENICKI

MICHAEL A. TILGHMAN II

NAM LEGAL CENTER

733 Tenth Street, NW

Suite 700

Washington, DC 20001

Counsel for Amici

Curiae

October 27, 2023

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