Opposition Brief — Ortiz v. Fibreboard Corp., 117 S. Ct. 2503 (1997) (No. 96-1394)

No. 96-1394 | Supreme Court US

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IN THE

Supreme Court of the United Files ss

OFFICE OE THE cuEgK

October Term, 1996

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ESTEBAN ORTIZ, et al.,

Petitioners,

VS.

FIBREBOARD CORPORATION, et al.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

BRIEF IN OPPOSITION OF RESPONDENT CLASS

REPRESENTATIVES GERALD AHEARN, ETAL.

JOSEPH F. RICE ELIHU INSELBUCH*

NESS MOTLEY, LOADHOLT CAPLIN & DRYSDALE,

RICHARDSON & POOLE CHARTERED

151 Meeting Street, Suite 600

P.O. Box 1137

Charleston, SC 29402

(803) 577-6747

STEVEN KAZAN

KAZAN, McCLAIN, EDISES

& SIMON

171 Twelfth Street, Third Floor

Oakland, CA 94607

(510) 465-7728

HARRY F. WARTNICK

WARTNICK, CHABER, HAROWITZ,

SMITH & TIGERMAN

101 California Street, Suite 2200

San Francisco, CA 94111

(415) 986-5566

399 Park Avenue, 36th Floor

New York, NY 10022

(212) 319-7125

* Counsel of Record

PETER VAN N. LOCKWOOD

CAPLIN & DRYSDALE,

CHARTERED

One Thomas Circle, N.W.

Washington, DC 20005

(202) 862-5065

JOSEPH B. COX. JR.

COX AND COX, L.L.P.

4300 Six Forks Road, Suite 720

Raleigh, NC 27609

(919) 510-4090

Attorneys for Respondent Class Representatives

Gerald Ahearn, et al.

et ok

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i

PARTIES TO THE PROCEEDING

The parties to the proceeding are accurately described in the

petition except that James Drake and Juanita Drake are not plaintiff

class representatives (and, indeed, as far as respondents are aware,

were not parties below) and William Mitchell is an additional class

representative and a respondent herein.

ii

TABLE OF CONTENTS

Parties to the Proceeding ........0.eeseeeeeeeeeees

Table of Contents .......ccccccccccvecscecceseees

Table of Citations ........cccccccccescecceseecess

Introductory Statement .........66e cece ewww eeeee

Reasons For Denying The Petition ..............+-

A. There Has Been No Miscarriage Of Justice ...

B. No Serious Question Is Raised About Adequacy

Of Representation .........-.eeeeeeeeeees

C. No Serious Question Is Raised About Class

Miaembor COmiicts 2. ccccccsvccccccssccsecs

D. The Claims Settled Here Were Real And Could

Have Been Litigated By The Class ..........

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Page

13

16

19

25

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iii

Page

TABLE OF CITATIONS

Cases Cited:

Anderson v. City of Bessemer, 470 U.S. 564 (1985) .. 3

Apple Barrel Prods., Inc. v. Beard, 730 F.2d 384 (Sth

EME: BU uN bo Ubhlws che’ Wwkewe beeus@uwo ves 24

Cincinnati Ins. Co. v. Holbrook, 867 F.2d 1330 (11th

SD EY Whed KueWaeeids bbWwaveevecibeee bet be 22

City of Green Cove Springs v. Donaldson, 348 F.2d 197

Sn EE SUE wovedete da vadvdbeseesaeéeuevel 24

Duncan v. Cessna Aircraft Co., 665 S.W. 2d 414 (Tex.

EE ateVade die cevue¥iveweesanduddestavietin 21

Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384

SUG EN TEE c.deedcdudediectébiasteclénene’ 22

General Ins. Co. of America v. Whitmore, 45 Cal. Rptr.

Se SE EEE 6 duircebeés kébcekeCiwerds < 22

Georgine v. Amchem Prods. Inc., 83 F.3d 610 (3d Cir.

1996), cert. granted sub nom. Amchem Prods., Inc. v.

TE DES CED: abdcdcecdoces 15, 16, 18, 20, 21, 23

Horace Mann Ins. Co. v. Barbara B., 846 P.2d 792

SED. Soueusvahesesenesclscecdoacuncbecs 22

iv

Page

In re Corrugated Container Antitrust Litig., 643 F.2d 195

Cts COR TOG) kv vacccvccsencvesscsancssnacss 20

In re General Motors Corp. Pick-Up Truck Fuel Tank

Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995) .... 20, 21

Matsushita Elec. Indus. Co. v. Epstein, 116 S. Ct. 873

COREE pv asurocsdaunsnnnassetnsdeet beaesnuen 24

McDonough Power Equip., Inc. v. Greenwood, 464 U.S.

GAB CIFOD 0 vi. cecnidsdéivensvaensiesevers uke 24

National Super Spuds, Inc. v. New York Mercantile

Exchange, 660 F.2d 9 (2d Cir. 1981) ............ 24

Omaha Indem. Co. v. Superior Court, 258 Cal. Rptr. 66

Cal, Ape. IDG). ccccccccccvcscosccsccnvesees 22

Superior Oil Co. v. Pioneer Corp., 706 F.2d 603 (Sth

Cir. 1983), cert. denied, 464 U.S. 1041 (1984).... 23

Statutes Cited:

SR UBK, B SIGS cccccccvcvcccscccvssccsssesses 24

BO UBL. OBIE. cc ccccccvcvcccccsescascssesons 24

SB UBK. FAST ccccccssaccvecenccesvtcesceves 22

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ee Se, a

Page

Rules Cited:

FUG Ms Ge Be GED hod cbchowevescuavdkeccabeced 23

TU See GO OE Us vnsvacnceuncevassebatenennre 20

EUs Be GA We BOUND ca vecsevcsnechaneaxenechasts 19

PU Sav SM Te BG « pose nccvncasaecdeenaeaess 13

Fed. R. Civ. P. ZHI) .. cccccccccveces 17, 18, 22, 23

SU Men GU Ee SD wae eseatehtacisepncdsaces 22, 23

Fs Bee Sate We AUPE. -00 0 b6 nds 0nasdecdcuiacisss 5

Re ES er ee er 20

POs cS Te OE ev évncetecesacessuaunasvness 3

Other Authority Cited:

6A C. Wright, A. Miller & M. Kane, Federal Practice &

Procedure: Civil 2d § 1494 (1990) .............. 24

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INTRODUCTORY STATEMENT

The respondent class representatives adopt and incorporate

the statement of the case and the reasons for denying the writ

set out in the separate briefs in opposition filed by respondents

Continental Casualty Co., Columbia Casualty Co., CNA

Casualty Co. of California (collectively, “Continental”) and

Pacific Indemnity Co. (“Pacific”) and by respondent Fibreboard

Corporation (“Fibreboard”). We suggest that the Court read

those briefs first. This brief addresses those matters that bear

particularly on class members’ interests in, conduct of and

representation in this case.'

In seeking review, petitioners present a picture of the

settlement at issue that ignores its striking benefit to the class

in resolving an otherwise all or nothing insurance coverage

dispute, seriously overstates the extent to which the settlement

affects class members’ ability to control the resolution of their

individual personal injury claims, and completely omits any

reference to the almost universal acceptance of the settlement

by class members and the numerous members of the plaintiffs’

bar who handle such claims on a regular basis.

Indeed, most of the legal arguments mounted by petitioners

against the settlement are dependent on the false premise that

the personal injury claims asserted in the complaint completely

define the issues being resolved by the settlement. What

petitioners would have the Court ignore is that the primary

1. This brief is being filed on behalf of respondents Gerald J. Ahearn,

James R. Dennis, Charles W. Jeep, William J. Mitchell and James Ellison

(collectively the “class representatives”) in opposition to the petition for

certiorari filed on behalf of Esteban Ortiz, et al. (cited as “Pet.”). Respondents

have previously joined in a brief in opposition to the earlier petition for

certiorari filed by James Flanagan and David H. Middleton (No. 96-1379) in

this case. Citations to the Appendix (“App. __”) are to the appendix to the

Ortiz petition.

2

controversy being resolved by the settlement is in fact an

insurance coverage dispute between Fibreboard and its insurers

in the resolution of which the class members had legal and

economic interests in securing a source of recovery for their

personal injury claims against Fibreboard which, were

Fibreboard to lose the dispute, would otherwise go unpaid.

Regrettably, the petition, like the dissent below, is replete

with numerous misstatements of the record concerning the

negotiating history and structure of the settlement that, if not

corrected, would suggest that the representative plaintiffs and

their counsel labored under numerous disabling conflicts of

interest and were otherwise inadequate representatives of the

class.

REASONS FOR DENYING THE PETITION

A. There Has Been No Miscarriage Of Justice.

Although petitioners make no serious argument that the

settlement here is financially unfair to the class, in a variety of

ways petitioners insinuate (and the dissent below on which

petitioners heavily rely flatly asserts) that the class

representatives and their counsel have inadequately represented

and otherwise sold out the class in agreeing to this settlement.”

At various places in the petition, class counsel are alleged to

have been “hand-picked” by Fibreboard (Pet. 10) to engage in

“a friendly joint venture” with Fibreboard (Pet. Question

Presented (3)) to “extinguish” the class members’ claims against

it (Pet. 7) for a derisory $10 million payment (Pet. 6) in exchange

for $43.7 million in attorneys fees (Pet. 8), while simultaneously

negotiating generous settlements on behalf of individual clients

who were not in the class out of insurance funds that could

otherwise have gone to the class (Pet. 8-9).

2. See, ¢.g., Pet. 10; App. 65a-69a.

3

The inferences that petitioners would have this Court draw

from their misleading and selective presentation of the record

are that, to use Judge Smith’s words, a “miscarriage of justice”

(App. 70a) has occurred which this Court should rectify. Nothing

could be further from the truth.’

Asbestos-related personal injury cases have been brought

in increasing numbers against Fibreboard and others since at

least 1967 (App. 218a-219a). By the mid-1980’s, both the

factual and legal bases for Fibreboard’s liability to persons

injured by exposure to its asbestos-containing products was well-

established (App. 219a). By 1987, asbestos-related cases were

being filed against Fibreboard at the rate of 13,000 to 17,000

cases a year (App. 231a).

Since 1979, Fibreboard has also been engaged in litigation

with Continental and Pacific over two insurance policies alleged

to provide it with $500,000 per claim coverage — with no

aggregate limits on the number of claims covered — for all

asbestos-related personal injury claims brought against it by

persons exposed at any time prior to March 15, 1959, to any

asbestos-containing product manufactured, distributed or sold

by Fibreboard (App. 232a-234a). Although that litigation (the

“Coverage Case”), which was consolidated with similar cases

between other asbestos manufacturers and their insurers, had

resulted in favorable trial court rulings in favor of Fibreboard

3. The record in this case is extensive, although one would not know it

from reading either the petition or Judge Smith’s dissenting opinion. And

contrary to Judge Smith’s justification (App. 107a) for his substitution of his

views of the competence and integrity of class counsel for those of the district

court which heard all the evidence presented at an eight-day evidentiary

hearing (which was preceded by massive discovery taken by petitioners), there

were factual disputes in this case and the district court’s resolution of them is

subject to review for clear error, not appellate de novo review. Rule 52(a),

Fed. R. Civ. P.; Anderson v. City of Bessemer, 470 U.S. 564, 573-76 (1985).

4

by 1990 (App. 232a-235a), Continental and Pacific had taken

appeals (App. 236a).

By late 1988, as a result of the exhaustion of all but $100

million of available insurance (except for the disputed

Continental and Pacific policies), Fibreboard had inadequate

cash to defend and pay its ever-mounting asbestos liabilities

(App. 243a). Using its remaining funds, Fibreboard undertook,

successfully, to negotiate a structured settlement program

(“SSP”) with members of the plaintiffs’ bar, principally Steven

Kazan and Harry Wartnick (who had for many years been

Fibreboard’s principal West Coast adversaries). The SSP

program paid a portion of each settlement in cash but payment

of most of the settlement amount was made contingent on the

outcome of the Coverage Case (App. 243a-245a, 356a).

However, by early 1991 even the SSP program was no longer

possible and Fibreboard began negotiating “assignment

settlements” under which it paid no cash but, to the extent of

the settlement amount, assigned its rights under its disputed

Continental policy to the plaintiff (App. 251a-252a). Continental

objected to this procedure and extensive litigation among it,

Fibreboard and plaintiffs ensued (App. 252a-257a).‘

It was in this context that the initial discussions that

ultimately led to the settlement at issue here began. In late 1990

or early 1991, representatives of Fibreboard contacted a partner

in the Ness Motley law firm (which by that time was involved

in virtually all major trials against Fibreboard) and Messrs.

Cazan and Wartnick about the possibility of negotiating a global

assignment settlement of Fibreboard’s present and future

4. During this period, Fibreboard and Pacific reached a conditional $360

million settlement of their dispute of which $225 million was contingent upon

their obtaining a judgment cutting off any contribution rights Continental

might have against Pacific (App. 248a-251a).

5

personal injury asbestos-liabilities (App. 259a-260a). During

1991, Joseph Rice of Ness Motley, Steven Kazan and Harry

Wartnick, and two partners of Caplin & Drysdale whom they

retained to assist in the negotiations (collectively “plaintiffs’

counsel”),’ proceeded to obtain and evaluate extensive

information, including expert epidemiological and investment

banking advice, about Fibreboard, its assets and its existing and

future asbestos liabilities, as well as about developments in the

Coverage Case (App. 260a-264a).

Based on that information, protracted negotiations took

place during 1991 looking towards a Rule 23(b)(3) opt-out class

action global assignment settlement covering both present and

future claims. These negotiations were terminated in December

1991 because of the parties’ inability to agree on mutually

acceptable terms and attempts to revive them in 1992 failed

(App. 266a-267a). At no time was Continental a party to those

negotiations, although it was kept informed of them (App. 267a)

as were members of the asbestos plaintiffs bar (App. 265a).

Following the failure of the global assignment settlement

negotiations, the Ness Motley firm and Fibreboard negotiated

an assignment settlement agreement covering roughly 20,000

existing clients of that firm and its affiliates which was executed

in December of 1992 (App. 268a-269a). Upon the conclusion

of that agreement, by January of 1993, Fibreboard had settlement

agreements in place involving debt to present asbestos claimants

exceeding $1.2 billion (id.), more than five times its total value

excluding asbestos liabilities (App. 343a).

In early 1993, Fibreboard sued Continental in the Eastern

District of Texas, seeking a declaration that the Ness Motley

assignment settlement agreement it had just made was binding

5. Another Ness Motley partner, Joseph B. Cox, Jr., became involved

in the negotiations in May 1992 as one of plaintiffs’ counsel.

6

on Continental in the event Fibreboard prevailed in the Coverage

Case and an order barring Continental from asserting any

contribution rights against Pacific (App. 269a-270a). The case

was assigned to then District Judge (now Circuit Judge) Robert

M. Parker. As that litigation proceeded, settlement negotiations

took place that resulted in the signing of an agreement on April 9,

1993 (the “April 9 Agreement”) between Continental and

Fibreboard pursuant to which, inter alia, the parties mutually

agreed to seek a global settlement of all Fibreboard’s present

and future asbestos-related personal injury liabilities, to be

funded entirely by insurance, in return for which Fibreboard

would cease making assignment settlements (App. 274a-276a).

Following the April 9 Agreement, Continental promptly filed

suit in the Eastern District of Texas against Fibreboard and

Pacific seeking, in effect, to invalidate Fibreboard’s prior

settlement with Pacific. This case was also assigned to Judge

Parker and was consolidated with the litigation between

Continental and Fibreboard over the Ness Motley agreement

(App. 276a-277a).

At the end of April 1993, plaintiffs’ counsel met with

counsel for Continental and Fibreboard to discuss a possible

global settlement. Continental’s offer of $2 billion (payable over

25 years without interest)® to resolve all of Fibreboard’s

unliquidated present claims and all future asbestos claims was

summarily rejected by plaintiffs’ counsel (App. 277a-278a).

Thereafter, negotiations took place among Ness Motley,

Continental and Fibreboard concerning the group assignment

settlement then being litigated before Judge Parker (App. 278a-

279a). At the same time unsuccessful negotiations took place

between Fibreboard and Continental concerning a possible

settlement of their insurance coverage dispute (App. 279a-280a).

6. Depending on the discount rate used, as plaintiffs’ counsel could

easily recognize, the present value of this offer was at least $1 billion less

than its face amount.

7

Between approximately May |, 1993, and August 9, 1993,

no meaningful negotiation for a global class settlement occurred.

Instead, representatives of Fibreboard, Continental and Ness

Motley devoted their efforts, at the recommendation of Circuit

Judge Patrick E. Higginbotham who was serving as a mediator,

to resolving the litigation over the Ness Motley assignment

settlement, which they finally accomplished in early August

1993 through execution of a revised Ness Motley agreement

covering 45,000 then pending cases (App. 278a-285a).

Following Judge Parker's approval of the settlement of the

Fibreboard/Continental litigation involving the Ness Motley

assignment settlement in August 9, 1993, the parties, joined for

the first time by Pacific in mid-August, negotiated towards a

possible global settlement covering both the remaining unsettled

present claims and all future claims against Fibreboard (App.

285a-292a). During this period, a significant impetus toward

reaching an agreement was created by the parties’ knowledge

that a decision by the California Court of Appeal on the Coverage

Case appeal by the insurers was imminent (App. 294a, 296a).

After plaintiffs’ counsel concluded that a settlement including

present claims was impractical, an agreement in principle on a

$1.535 billion cash, futures-only, global settlement was reached

on August 27, 1993, and announced in open court (App. 292a-

298a).

One significant term of the August 27, 1993 agreement in

principle was a provision plaintiffs’ counsel insisted upon,

requiring a “back-up” settlement between Fibreboard and the

two insurers of the Coverage Case that would become operative

only if for any reason the global settlement were not approved

(App. 295a-296a). Negotiation of that $2 billion back-up

agreement,’ known as the Trilateral Agreement, took over six

7. As the record makes clear, the $2 billion represents nothing more

than the sum of the $1.525 billion which the insurers had agreed to pay the

(Cont'd)

weeks (App. 298a-301a), and an additional ten weeks was

required to reach the actual global settlement agreement (App.

301a-302a).

Meanwhile, on September 9, 1993, plaintiffs filed the

complaint in this action against Fibreboard (App. 300a) and

Continenta! and Pacific filed motions to intervene the same day

(App. 543a-546a). The parties jointly moved for provisional

certification of the plaintiff class in the action (which was

granted) (App. 515a-518a, 547a-551a) and Fibreboard and the

insurers sought and received a temporary restraining order

against the filing of additional claims by members of the

provisionally certified class against them (App. 300a).

Thereafter, the court extended the temporary restraining order

and, following a hearing, entered a preliminary injunction (App.

300 n. 22).

Following execution of the global settlement agreement, a

massive dissemination of the notice of the proposed settlement

took place in the latter part of 1994 (App. 419a-430a).

Objections to the proposed settlement on behalf of class

members have been pressed only by the five petitioners herein

and the two petitioners in No. 96-1379 (App. 202a, 404a, 43Ga).

After completion of the dissemination of notice, the district

court permitted petitioners to intervene and allowed them to

conduct extensive discovery (App. 18a). The district court then

held an eight-day hearing at which petitioners were afforded an

(Cont'd)

futures class in the global settlement and $475 million which was the insurers’

estimate of their obligation to resolve those existing cases not yet settled

either under the revised Ness Motley agreement or by other Fibreboard/insurer

settlements reached with plaintiffs during the summer of 1993 (App. 295a-

296a, 298a-299a, 320a-32 1a).

9

unrestricted opportunity to question tne representatives and

expert witnesses of the settling parties (including plaintiffs’

counsel) concerning all matters relevant to the fairness of the

proposed settlement (id.). No petitioner has raised any claim

that he was afforded either insufficient discovery or inadequate

participation in the settlement approval proceedings. Following

the hearing, the district court approved the proposed settlement,

entering extensive findings of fact (App. 209a-435a),

conclusions of law (App. 436a-479a), and a memorandum

opinion (App. 149a-208a).

As the district court found, given the very real risk that

Fibreboard would lose the Coverage Case* — with the attendant

result that Fibreboard’s $235 million net worth would be dwarfed

by the over $1.2 billion of unfunded settlements with non-class

members for which it was already liable — a settlement under

which that significant risk was eliminated for the class by

providing $1.535 billion in cash payable to a trust for the benefit

of the class is clearly and overwhelmingly a great benefit to the

class. While there can be no assurance that $1.535 billion will

be sufficient to pay the claims of all class members in full, the

evidence of record shows that that amount, subject to the

distribution procedures of a trust established for the benefit of

all the class members, is more likely than not adequate to

compensate the claims of all class members at fair and

appropriate values and the district court so found (App. 322a-

327a).?

8. Uncontroverted expert testimony at the settlement approval hearing,

credited by the district court, demonstrated the correctness of the negotiating

parties’ views that the risk was substantial (App. 237a-242a, 323a-324a). No

contrary evidence was proffered by petitioners or anyone else.

9. No contrary evidence was proffered by petitioners or anyone cise at

the settlement approval hearing.

10

Notwithstanding petitioners’ innuendoes (Pet. 10) and Judge

Smith’s intemperate assertions that the class members “suffer

dramatically” (App. 78a) and are “the only losers” (App. 66a)

from the settlement, they point to nothing in the record of this

case that would furnish any basis for the Court to conclude that

the district court and the Fifth Circuit panel majority erred in

finding that the $1.535 billion settlement of this coverage dispute

was eminently fair, reasonable and adequate from the perspective

of the class (App. 63a-64a, 207a). Instead, petitioners (and the

dissent below) would carve the settlement into pieces and

contend that it is unfair for Fibreboard to settle its liability to

the class for only $10 million of its own funds (Pet. 6; App.

65a, 84a-85a). This contention, however, is based upon the

wholly erroneous premise articulated by Judge Smith that the

settlement “is really two agreements: one between Fibreboard

and the insurers to settle their policy disputes for $1.525 billion,

and another between the futures class and Fibreboard to limit

the class’s recovery to insurance proceeds plus $10 million of

Fibreboard’s $225-250 million net worth” (App. 84a).

Such a view can only be based on the false proposition that,

absent a settlement with the class, Fibreboard and the insurers

would (and indeed did) settle their insurance disputes among

themselves (Pet. 3 n.1, 4). It ignores the fact, as demonstrated

by the record, that despite repeated efforts to do so, Fibreboard

and the insurers could not settle the Coverage Case

independently (App. 246a-257a, 267a-268a, 279a-280a). If

Fibreboard prevailed in the Coverage Case it would have

virtually unlimited insurance and would not be faced with

insolvency. It would not settle for an amount which left its

solvency threatened and Continental would not pay an amount

which, in effect, conceded the Coverage Case. The only reason

Fibreboard agreed to the Trilateral Agreement (which did leave

it exposed to the risk that continued litigation with individual

class members would eventually exhaust the $1.525 billion

11

included to cover those claims and ultimately bankrupt

Fibreboard) was that plaintiffs’ counsel made such a back-up

agreement a condition precedent to their entering into the global

settlement agreement (App. 295a-296a, 298a-299a) which, if

approved, would preserve Fibreboard’s equity.

Moreover, under the April 9 Agreement Continental had

agreed with Fibreboard that any global settlement with plaintiffs

would be entirely funded out of insurance proceeds (App. 275a-

276a). Thus, as a practical matter, plaintiffs could not compel

Fibreboard to agree to any class settlement that would come out

of its own coffers because Fibreboard could simply turn to

Continental for the funds. Of course, from plaintiffs’

perspective, as long as they received a fair amount in settlement

they were indifferent as to who paid it.

Finally, the notion that class members traded away

Fibreboard’s liability “for nothing to which they did not already

have a right” (Pet. 10; App. 65a), to the extent the point is

comprehensible at all, appears to assume that the class members

already had the right to Fibreboard’s insurance from Continental

and Pacific in some specific amount — but, of course, the

Coverage Case was all about whether such insurance was zero

or some greater, and possibly open-ended, amount. And it was

the Coverage Case dispute, to which the class members were,

as a practical matter, indispensable parties, that was resolved

initially by the agreement in principle to a global settlement.'°

10. The indispensability of the class members to resolution of the

Coverage Case is demonstrated by the companion Rudd case — a fact

assiduously overlooked by petitioners and Judge Smith. A condition to the

Trilateral settlement was the bringing of a declaratory relief action against

the very class that is the plaintiff class in this case for a determination that

they are bound by that settlement. Although that action (the Rudd case) was

brought against a non-opt-out futures class, and the class representatives

consented to the entry of the judgment sought therein, neither petitioners nor

(Cont'd)

12

If the point is that the Trilateral settlement gave the class a

“right” to the insurance proceeds, it is equally wrong. The record

below conclusively demonstrates that the class will receive

hundreds of millions of dollars less out of the Trilateral

settlement (even including Fibreboard’s entire net worth in the

calculation) because (i) in an effort to drive case values down

far enough to save its net worth, Fibreboard will be forced to

spend hundreds of millions of dollars in defense costs litigating

individual class member claims and (ii) class members will also

pay tens of millions of dollars of additional attorneys fees to

their counsel for handling their claims against Fibreboard in

the tort system in excess of the 25 percent cap on fees for

representation before the settlement trust imposed by the global

settlement agreement (App. 327a-33 1a).

Indeed, it is this dramatic difference in the net dollars that

will ultimately be received by class members, in the event this

global settlement is rejected by the courts and they are left to

litigate with Fibreboard in the tort system, that makes petitioners’

and Judge Smith’s assertions that the class is being victimized

by this settlement ring so hollow. It is one thing for petitioners

to seek to convince this Court that application of their views of

legal rules governing class action settlements should preclude

this settlement from being finally approved. However,

petitioners’ corollary proposition — which they ask this Court

to grant certiorari to endorse — that it would be an affirmative

benefit to the class as a whole to allow Mr. Ortiz and his co-

petitioners to win the race to judgment, and thereby contribute

to the exhaustion of the insurance proceeds available to pay the

later-rmmaturing claims of other class members, is preposterous.

(Cont'd)

Judge Smith raised any of the jurisdictional or Rule 23 objections to Rudd

they assert against this settlement. Indeed, petitioners filed an amicus brief

in support of affirmance of Rudd in the Fifth Circuit and Judge Smith joined

that portion of the panel majority’s opinion affirming Rudd (App. 75a).

13

B. No Serious Question Is Raised About Adequacy Of

Representation.

Both as part of their innuendoes about the unfairness of

this settlement to the class and their explicit assertions of

inadequate representation of the class under Rule 23(a)(4) of

the Federal Rules of Civil Procedure, petitioners cast a variety

of unfounded aspersions upon the conduct of plaintiff’s counsel

in negotiating this settlement. All are belied by the record and,

even if they were open to dispute, are factual questions

inappropriate for review by this Court.

To set the stage, petitioners (supported by Judge Smith)

initially seek to impugn plaintiffs’ counsel’s independence by

asserting that they were “hand-picked” by Fibreboard to

negotiate this settlement (Pet. 10; App. 68a, 70a). The inference

they seek the Court to draw is, of course, that Fibreboard sought

out members of the plaintiffs’ bar who were either beholden to

it or otherwise believed to be likely to be less than vigorous

negotiators on behalf of the class.

As shown by the record, although it is true that Fibreboard

initiated class settlement discussions in 1991 with Messrs.

Kazan, Wartnick, Rice and Motley (later replaced by Mr. Cox),

their selection simply was a recognition of the fact that those

lawyers were Fibreboard’s principal adversaries in the tort

system at that time and, in the case of Messrs Kazan and

Wartnick, had been so for years (App. 259a-260a, 355a-356a).

Indeed, the Ness Motley firm was involved at that time in roughly

50% of all asbestos claims in the United States and in virtually

all major trials involving Fibreboard, while Messrs. Kazan and

Wartnick were generally considered by the asbestos plaintiffs’

bar to be the lawyers most knowledgeable about Fibreboard (id.).

Thus, both Fibreboard and Continental chose to negotiate a

14

global settlement with plaintiffs’ counsel because they realized

that those lawyers would be accepted by the plaintiffs’ asbestos

bar as the most aggressive and knowledgeable representatives

of claimants’ interests (App. 356a)."'

Next, petitioners (and Judge Smith) contend that plaintiffs’

counsel labored under a disabling conflict of interest because

(i) they represented a competing group of non-class plaintiffs

at the sam: time they negotiated this settlement for the class

and (ii) they settled those individual claims for higher-than-

average amounts, contingent upon a global settlement (Pet. 8,

14; App. 76a-77a, 107a-109a). These contentions are both

factually and legally wrong.

First, since asbestos personal injury claimants are not

adversaries, the only possible conflict among them would arise

if they were competing for limited resources. Petitioners seek

to suggest such a conflict here (Pet. 14), but, given the open-

ended nature of the disputed insurance coverage, the district

court correctly concluded that there was in fact no such

competition between the so-called “present” claimants and the

“futures” class (App. 363a, 367a) and the panel majority agreed

(App. 34a). Moreover, despite some insinuation to the contrary

by Judge Smith (App. 68a, 76a), there is no evidence whatsoever

in the record to support the proposition that plaintiffs’ counsel

“sold out” the interests of the class in return for better settlements

11. Inconsistently with their complaint that Fibreboard hand-picked

plaintiffs’ counsel, petitioners also complain that Judge Parker purported to

“authorize” and “appoint” plaintiffs’ counsel in early August of 1993 to

negotiate this settlement (Pet. 4). Given that such counsel had already been

negotiating global issues with Fibreboard off and on for over two years and

that any such appointment or authorization by Judge Parker gave them no

legal capacity they did not already possess, respondents are at a loss to know

what impropriety petitioners are claiming before this Court.

15

for the present individual clients and the district court expressly

found to the contrary (App. 374a-375a).”

Second, the suggestion that the term in the revised Ness

Motley agreement providing that the second 50 percent of the

payments due thereunder would be conditioned on, inter alia, a

giobal settlement of all Fibreboard’s asbestos personal injury

liabilities created “huge financial interests” (Pet. 14) for

plaintiffs’ counsel to negotiate a settlement for the class “on

any terms” (App. 108a) is also incorrect. To begin with, Messrs.

Kazan and Wartnick were not involved in the Ness Motley

settlement and Caplin & Drysdale did not and do not represent

any individual asbestos personal injury plaintiffs at all.

Moreover, the district court expressly found, based on expert

testimony, that on the facts here, the so-called back-end-payment

contingency did not create an impermissible conflict of interest

even for the Ness Motley firm (App. 372a-373a). The panel

majority reached the same conclusion (App. 33a-34a). There is

no reason for this Court to review the extensive district court

12. Indeed the district court found that the revised Ness Motley

settlement was actually used by plaintiffs’ counsel to leverage up the claim

values used in arriving at the global settlement (App. 374a) and the panel

majority concurred (App. 32a). Judge Smith, by contrast, relies entirely on

his personal views (based on law review articles written by others) of the

Ness Motley firm's conduct in negotiating the Georgine settlement (at issue

in Georgine v. Amchem Prods., Inc., 83 F.3d 610 (3d Cir. 1996), cert. granted

sub nom. Amchem Prods., Inc. v. Windsor, No. 96-270 (argued February 18,

1997)) in suggesting that similar conduct occurred here (App. 76a, 110a).

Not only is the Georgine settlement wholly unrelated to this one, but the

allegations concerning the Ness Motley firm's conduct are controverted by

the district court findings in that case and were hotly disputed (but never

decided) on appeal. Moreover, none of the other plaintiffs’ counsel in this

case were even involved in the Georgine settlement much less alleged to have

engaged in any similar conduct there and Mr. Kazan is one of the principal

antagonists of Ness Motley in Georgine (including representing the Cargile

respondents in Amchem).

16

fact findings on which it and the court of appeals based their

respective determinations that no disabling conflict of interest

for plaintiffs’ counsel was present in this case.

C. No Serious Question Is Raised About Class Member

Conflicts. 58

Petitioners also claim, as they allege in Amchem, that the

class was “plagued by an inherent, structural intra-class conflict

between presently injured and exposure-only class members”

(Pet. 14). Once again this position, articulated more fully by

the dissent below (App. 110a-114a), is long on rhetoric and short

on (indeed controverted by) facts of record.

First, as Judge Smith acknowledges, this asserted conflict

arose out of the trust distribution provisions of the global

settlement which governed how the settlement funds would be

paid over time to class members and did not exist with respect

to the negotiations over the total settlement amount (App. 1 14a).

Thus, at most, the issue presented is whether there should have

been separately represented subclasses during the subsequent

negotiation of the trust distribution procedures and not whether

the settlement as a whole is flawed.

Second, the supposed conflict here, according to Judge

Smith, is that the class members with “extant claims” would

oppose any limits on their recoveries from the settlement trust

(being indifferent to its ultimate depletion), while those with

“latent claims” would seek “damage caps” to ensure that the

trust would not run out of funds by the time their claims became

extant (“.pp. 111a).

While superficially plausible, this argument entirely ignores

the basic premise on which this non-opt-out class settlement is

based — absent a unitary settlement of the Coverage Case the

17

entire class runs the risk of going uncompensated for both their

extant and latent injuries. Any unitary settlement for less than a

guaranteed 100 percent payment of all recoverable present and

future damages of class members — and all settlements are by

their nature compromises from full recoveries — requires

equitable apportionment of the settlement fund among the class

members. Judge Smith’s point thus proves too much because,

if accepted, every Rule 23(b)(1)(B) action would require the

creation of subclasses (and attendant separate counsel, at least

following the initial agreement on the settlement amount) for

each category of class member who could arguably claim

entitlement to some form of different treatment from any other

category of class member.

Moreover, Judge Smith wholly fails to explain how a court

would identify the multiplicity of conflicting interests requiring

subclassing, how a court would select counsel for those

subclasses in the middle of ongoing settlement negotiations and

how any disputes among the subclass representatives would be

resolved short of litigation in the event of a negotiating impasse

among them.

In this case, although no subclasses were created, four of

the class representatives had extant claims for either malignant

diseases (plaintiff Jeep had mesothelioma and plaintiff Ellison

had lung cancer) or non-malignant diseases (plaintiffs Ahearn

and Dennis had asbestosis), while only one plaintiff, Mitchell,

alleged exposure to asbestos-containing products manufactured

by Fibreboard but had not manifested any asbestos-related

disease (App. 348a-349a, 351a). The class representatives with

extant claims were aware that the restrictions imposed by the

various spendthrift provisions of the settlement trust — no

punitive damages, a $500,000 cap on compensatory damages,

possible delays in payment with priority given to claimants with

cancer — would limit their and other class members’ recoveries

in order to ensure that all class members were treated fairly and

they agreed with that result (App. 350a-351a). Similarly,

plaintiffs’ counsel historically represented large numbers of

asbestos personal injury plaintiffs and they likewise concurred

that the spendthrift provisions of the trust, including notably

the 25 percent cap on attorneys fees on amounts recovered from

the trust, were fair to all class members (App. 386a).

Strikingly, notwithstanding all the rhetoric about conflicting

interests, the only conflicts that petitioners and Judge Smith point

to between the “extant” and “latent” claimants are those

provisions of the trust distribution process that are designed to

prevent extant claimants from depleting the settlement trust’s

assets to the detriment of the latent claimants. This is, however,

exactly the type of “conflict” at which application of Rule

23(b)(1)(B) to provide for equitable allocation of limited

resources is aimed.

Based on the facts, on competing expert testimony and on

the extent to which the two proposed subclasses’ interests in

this unitary settlement coincide rather than diverge, the district

court concluded that separate subclass representation was neither

legally nor ethically required (App. 386a-389a) and the panel

majority concurred (App. 35a-37a). Notwithstanding Judge

Smith’s contrary views (which are largely unsupported by the

record"), these factbound issues do not warrant review by this

Court."

13. Indeed most of Judge Smith's dissent on this point, as elsewhere, is

based on his view of the facts in Amchem and not on the record of this case

(App. 112a-113a).

14. Although prudently not expressly raised by petitioners, Judge Smith

also asserts a conflict between “pre-1959” and “post-1959" class members

(App. 114a-116a). In a particularily telling rebuttal to his assertion that the

(Cont'd)

19

D. The Claims Settled Here Were Real And Could Have Been

Litigated By The Class.

Many of the legal arguments advanced by petitioners are

based on their contention that this settlement is based on a

“ ‘case’ brought by plaintiffs who do not in good faith plead

claims they intend to litigate, and which is brought as a friendly

joint venture with the defendants” (Pet. Question Presented (3)).

Thus, petitioners claim that the Fifth Circuit majority erred

in holding that the Rule 23(a) requirements of commonality and

typicality were met by “ignor[ing] class members’ actual legal

claims and instead wholly rely[ing] on the settlement” (Pet. 11).

The c! uims referred to are, according to petitioners, “individual,

in personam personal injury claims against Fibreboard”

contained in a complaint which “was no more than a contrivance

to ripen prematurely claims that will! exist, if at all, only at some

unknown time in the future” — “a charade” (Pet. 16).

Based on the foregoing characterization of the case,

petitioners argue, in addition, that (i) because the claims in the

complaint could not be certified as a class action without the

defendant’s consent, plaintiffs had no leverage against the

defendant in the settlement negotiations (Pet. 12), (ii) the claims

of the class representatives are not typical because “the class is

(Cont'd)

conflict issues he raises involve “[njo factual dispute(s)” and thus appellate

review should be de novo (App. 107a), Judge Smith's analysis of this alleged

conflict is flatly erroneous in, among other things, asserting that “[t}he global

settlement . . . eliminated the privileged status of pre-1959 claimants” (App.

115a) when, as the record demonstrates, that distinction (based on available

insurance coverage) was eliminated by bot the April 9 Agreement and the

Trilateral Agreement, beth of which yreceded the negotiations of the trust

distribution provisions of the globa) settlement agreement (App. 37a, 383a-

384a).

20

‘a hodgepodge of factually as well as legally different

plaintiffs’ ” (Pet. 14), and (iii) class members cannot make

meaningful decisions about whether to object to the settlement

because their asbestos-related injury claims are unaccrued and

thus unknown (Pet. 15).

Implicitly recognizing that the settlement here did resolve

the class’s claims against Fibreboard’s insurers, petitioners assert

that (i) those claims involved only a dispute between Fibreboard

and the insurers (in which the class is aligned with Fibreboard)

and (ii) the class could not have litigated any such claims against

the insurers (Pet. 16-17). The very history of this dispute and

its resolution demonstrates how wrong the petitioners are.

When the plaintiffs filed their complaint in 1993, the law

of the Fifth Circuit, embodied in decisions such as Jn re

Corrugated Container Antitrust Litig., 643 F.2d 195 (Sth Cir.

1981), appeared to require the district court to review the class

settlement achieved here primarily on the basis of the fairness

of the settlement itself to the absent class members, and the

complaint simply served as a vehicle to bring the settlement

before the Court for review and approval as required by Rule

23(e) of the Federal Rules of Civil Procedure. Almost two years

after plaintiffs filed their complaint, and following completion

of the settlement approval hearings, the Third Circuit decided

In re General Motors Corp. Pick-Up Truck Fuel Tank Prods.

Liab. Litig., 55 F.3d 768 (3d Cir. 1995), which was followed

shortly by its decision in Georgine v. Amchem Prods., Inc., 83

F.3d 610 (3d Cir. 1996), cert. granted sub nom. Amchem Prods.,

Inc. v. Windsor, No. 96-270 (argued February 18, 1997).

Petitioners read those cases to stand for the proposition that a

class cannot be certified under Rule 23 if it asserts claims that

cannot be litigated to judgment in the absence of a settlement.

Anticipating a favorable decision by this Court in Amchevn, the

petitioners argue that the class here was improperly certified

21

because the complaint that commenced this action similarly

asserted no claim that could have been litigated in the absence

of a settlement.

This approach stands the issues discussed in General Motors

and Amchem on their heads. The question is not whether the

parties have settled the issues they pleaded but, rather, whether

they could have litigated the issues they settled.

Had General Motors been decided before the plaintiffs filed

their complaint, and were it then the law in the Fifth Circuit,

the plaintiff class would have filed a different complaint to invoke

the District Court’s jurisdiction to consider this settlement and,

if necessary, to litigate the very claims that the class in fact

settled here.

Had they been required by this Court's as yet unrendered

decision in Amchem to do so, the plaintiffs could have pleaded

claims — for declarations that Fibreboard was entitled to its

disputed insurance proceeds, and if necessary, that the Trilateral

settlement was not binding upon the plaintiffs — capable of

being litigated to judgment in the absence of this settlement,

and that were in fact settled by this settlement. Although the

class complaint did not specify these claims for relief, the issues

that underlie these claims were in fact the focus of the

proceedings below, and they were fully litigated by petitioners

and the other parties at the fairness hearings.

The plaintiffs here had a strong and unitary interest in the

outcome of the coverage dispute; that interest was pleaded in

their complaint, see Complaint JJ 11-24 (App. 532a-535a); and

they had standing to litigate that interest under California law,”

15. California law, which would govern under Texas conflicts of law

rules, Duncan v. Cessna Aircraft Co., 665 S.W. 2d 414, 421 (Tex. 1984),

(Cont'd)

22

as well as under the Declaratory Judgment Act, 28 U.S.C.

§ 2201." And, indeed, they could properly litigate that interest

in a Rule 23(b)(1)(B) class action since the piecemeal

prosecution of separate actions by individual class members over

the coverage issues would as a practical matter be dispositive

of the interests of the remaining class members — the very

predicate of a Rule 23(b)(1)(B) action. Moreover, as a suit

seeking declaratory relief, such an action could also have

proceeded as a mandatory, non-opt-out class action under Rule

23(b)(2)."”

Of course, such a declaratory judgment action could have

been settled among the plaintiffs, Fibreboard and Continental

as was done in this settlement.

Had Fibreboard settled the coverage dispute with

Continental without the plaintiffs’ participation or consent, in a

manner unsatisfactory to the plaintiffs, the plaintiffs could have

brought suit for a declaration that the settlement was not binding

(Cont'd)

permits third-party plaintiffs to obtain deciaratory relief against a defendant's

insurer before judgment on a coverage question to determine the existence

and scope of coverage. See Omaha Indem. Co. v. Superior Court, 258 Cal.

Rptr. 66 (Cal. App. 1989); General Ins. Co. of America v. Whitmore, 45 Cal.

Rptr. 556 (Cal. App. 1965). See also Horace Mann, Ins. Co. v. Barbara B.,

846 P.2d 792, 795 (Cal. 1993).

16. See Cincinnati Ins. Co. v. Holbrook, 867 F.2d 1330, 1332-33 (11th

Cir. 1989); Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384, 1386

(10th Cir. 1978).

17. That rule provides for mandatory class actions where “the party

opposing the class has acted or refused to act on grounds generally applicable

to the class, thereby making appropriate final injunctive relief or

corresponding declaratory relief with respect to the class as a whole.” Fed.

R. Civ. P. 23(b)(2).

i eters te ala tt ils ly i i a Pe EE AE.

—

Parrett at we \

23

on them, and that the settling parties were not entitled to a

judgment that would bind the plaintiffs to a settlement that would

impair their rights against those parties, where the settlement

did not provide sufficient proceeds or adequate provisions to

ensure all of them a full recovery. Indeed, such a declaratory

judgment action would lie to anticipate the suit that would

inevitably be brought (and, indeed, was brought in Rudd) against

the class by Fibreboard’s insurers to obtain the Settlement

Agreement Approval Judgment required by the Trilateral

settlement (App. 60a-63a). See Superior Oil Corp. v. Pioneer

Corp., 706 F.2d 603, 607 (Sth Cir. 1983), cert. denied, 464 U.S.

1041 (1984).

And, again, such a case could be litigated as a Rule

23(b)(1)(B) class action. As the district court found at the

fairness hearing, the Trilateral settlement would have liquidated

the disputed insurance coverage for an amount that, even

combined with Fibreboard’s equity, would not have sufficed to

ensure that all class members, left to assert their claims

individually in the tort system, would receive a full recovery

from Fibreboard (App. 324a-325a). Thus, the risk remained that

piecemeal litigation would exhaust the Trilateral settlement

proceeds and Fibreboard’s other assets, and would as a practical

matter be dispositive of the interests of the remaining,

uncompensated class members. That risk would justify the

litigation of the claim under Rule 23(b)(1)(B). And, again, as a

suit seeking declaratory relief, it could also have proceeded as

a mandatory class action under Rule 23(b)(2) and could have

been settled.

Thus, if this Court were to decide Amchem as petitioners

hope, in determining whether to grant review in this case (or

vacate and remand to the Fifth Circuit) plaintiffs suggest that

the only issue before the Court would be whether or not to deem

the pleadings amended to conform to the evidence adduced at

the fairness hearings, pursuant to Rule 15(b) of the Federal! Rules

24

of Civil Procedure," hardly meriting review. Moreover, as this

Court has before it a complete record on which to render its

decision, there is no reason to remand the case to the court of

appeals or the district court simply to conform the complaint’s

allegations to the claims actually litigated in the fairness

hearings.'®

Finally, as_for petitioners’ contention that “meaningful

notice” could not be given to the class (Pet. 15), the class

members who received notice of the proposed settlement simply

had to decide whether their interests would be better served by

this settlement or by either rolling the dice on the Coverage

18. Appellate courts permit pleading amendments on appeal where

necessary to affirm a trial court judgment. See 6A C. Wright, A. Miller & M.

Kane, Federal Practice & Procedure: Civil 2d § 1494 (1990). Indeed, courts

of appeal have deemed pleadings “constructively amended” to conform them

to the proof and decision below without requiring a formal motion to amend

from the plaintiff. See, e.g., Apple Barrel Prods., Inc. v. Beard, 730 F.2d 384,

388-89 (Sth Cir. 1984); City of Green Cove Springs v. Donaldson, 348 F.2d

197, 201-02 (Sth Cir. 1965).

19. See 28 U.S.C. §§ 2106, 2111; McDonough Power Equip., Inc. v.

Greenwood, 464 U.S. 548, 553-54 (1984).

Petitioners’ reliance (Pet. 17) on National Super Spuds, Inc. v. New York

Mercantile Exchange, 660 F.2d 9 (2d Cir. 1981), is misplaced. Unlike here,

where the matters actually litigated in the fairness hearings encompassed the

insurance coverage issues described in both the complaint and the notice to

the class, the settlement in Super Spuds purported to settle and release certain

claims not held by the class representatives, not alleged in the complaint and

nowhere adverted to in the class notice. See 660 F.2d at 17-19 and n. 7. And

to the extent petitioners read the decision more broadly to hold that a class

action settlement cannot release claims that were not specifically presented

to the trial court for adjudication, such a reading is inconsistent with this

Court’s decision in Matsushita Elec. Indus. Co. v. Epstein, 116 S. Ct. 873

(1996).

oe) neds

Aan

25

Case or taking hundreds of millions of dollars !ess in the

Trilateral settlement. That choice is straightforward and,

contrary to petitioners’ arguments, wholly unaffected by the fact

that the asbestos-related personal injury claims of most class

members are as yet unaccrued.”

CONCLUSION

Motivated by their expressed desire that petitioner Ortiz be

entitled to obtain and collect a judgment “in its entirety” without

interference by any other class members (Pet. 23), petitioners

have tied up this $1.535 billion settlement on appeal for over

two years asserting a combination of factual misrepresentations

about the record and inapposite legal arguments ostensibly made

on behalf of those class members — the “exposure-only”

claimants — whose very interests petitioners seek to impair for

their own benefit. The thousands of members of the class whose

asbestos-related personal injuries caused by exposure to

Fibreboard products have become manifest over the last four

years should not be required to wait further to obtain

compensation for their injuries. This Court should deny the

petition.

20. Since aormally no class member can predict whether he or she would

even be affected by the settlement’s spendthrift limitations and since the

potential impact of those limitations on any given class member is dwarfed

by the magnitude of the choice between securing $1.535 billion versus either

nothing at all or several hundred million dollars less in the aggregate, any

class member can certainly “meaningfully assess today whether the settlement

will be in his best interests at such future time as an asbestos-related injury

may occur” (Pet. 15). Moreover, if the class had to wait until all injuries had

manifested, the Coverage Case would have decided the issue. Clearly, the

class was not required by the rules of procedure to roll the substantive dice.

26

Respectfully submitted,

JOSEPH F. RICE

ELIHU INSELBUCH*

NESS MOTLEY, LOADHOLT CAPLIN & DRYSDALE,

RICHARDSON & POOLE CHARTERED

151 Meeting Street,

Suite 600

P.O. Box 1137

Charleston, SC 29402

(803) 577-6747

STEVEN KAZAN

KAZAN, McCLAIN,

EDISES & SIMON

171 Twelfth Street,

Third Floor

Oakland, CA 94607

(510) 465-7728

HARRY F. WARTNICK

WARTNICK, CHABER,

HAROWITZ, SMITH

& TIGERMAN

101 California Street,

Suite 2200

San Francisco, CA 94111

(415) 986-5566

399 Park Avenue, 36th Floor

New York, NY 10022

(212) 319-7125

* Counsel of Record

PETER VAN N. LOCKWOOD

CAPLIN & DRYSDALE,

CHARTERED

One Thomas Circle, N.W.

Washington, DC 20005

(202) 862-5065

JOSEPH B. COX, JR.

COX AND COX, L.L.P.

4300 Six Forks Road,

Suite 720

~ Raleigh, NC 27609

(919) 510-4090

Attorneys for Respondent Class Representatives

Gerald Ahearn, et al.