Appendix — Piccinin v. A. H. Robins Co.

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Supreme Court, U.S.

FILED

g§6-211 AUG g 1986

JOSEPH F. SPANIOL, JR.

GCLER

ee ea

NO.

IN THE

Supreme Court Of The United States

OCTOBER TERM, 1986

ANNA PICCININ,

Petitioner,

vs.

A.H. ROBINS COMPANY, INCORPORATED, ET AL.,

Respondents

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

C. Neal Pope

Counsel of Record

Max R. McGlamry

POPE, KELLOGG, McGLAMRY,

KILPATRICK & MORRISON

Post Office Box 2128

Columbus, Georgia 31902-2128

404/324-0050

Attorneys for Anna Piccinin

TABLE OF CONTENTS

Opinion of the United States ........ A l

Court of Appeals for the

Fourth Circuit, entered

April 10, 1986

Findings of Fact and Conclusions ....A106

of Law as Stated from the

Bench by the District Court,

October 9, 1985

Order of the District Court ......... A123

for Preliminary Injunction,

entered October 11, 1985,

nunc pro tunc October 9,

1985

Order of the District Court .........A142

Pursuant to 28 U.S.C.

Sections 157(b) (5) and 1334(b)

and 11 U.S.C. Section 105(a),

(the Transfer Order) entered

November 9, 1985

Order of the United States ..........A146

Court of Appeals for the

Fourth Circuit denying

Appellant Piccinin's petition

for rehearing, entered May 14,

1986

Certidmmeece GE SOrVice .cccscccsccece A149

of Appendix

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 85-2183

A.H. Robins Company, Incorporated,

Appellee,

versus

Anna Piccinin, Appellant.

and

Nancy Campbell, Kathryn Conrad,

Jeanette Dicharry, Vernon Dicharry,

Luisa Mosa, Stella J. Camp, John

H. Camp, Helen Barnett, Michael

Barnett, and Edna Lindsey Ruminiski,

Defendants.

Aetna Casualty and Surety Company,

Intervenor/Appellee.

No. 85-2184

A.H. Robins Company, Incorporated,

Debtor.

A.H. Robins Company, Incorporated,

Appellee,

versus

Committee Representatives of

Dalkon Shield Claimants, Appellants.

-Al-

Aetna Casualty and Surety Company,

Intervenor/Appellee.

No. 85-2185

A.H. Robins Company, Incorporated,

Debtor.

A.H. Robins Company, Incorporated,

Appellee,

versus

Kathryn Conrad, Luisa and

Jack Mosa, Appellants.

No. 85-2186

In Re:

A.H. Robins Company, Inc.,

Debtor.

A.H. Robins Company, Inc., Appellee,

versus

Anna Piccinin, Appellant.

Appeals from the United States District

Court for the Eastern District of

Virginia, at Richmond.

Robert R. Merhige, Jr., District Judge.

(85-01307-R)

-A2=-

Argued: December 3, 1985

Decided: April 10, 1986

Before RUSSELL and CHAPMAN, Circuit

Judges, and SWYGERT, Senior Circuit Judge

of the United States Court of Appeals for

the Seven Circuit, sitting by designa-

tion.

C. Neal Pope (Max R. McGlamry; Pope,

Kellogg, McGlamry, Kilpatrick & Morrison;

Robert L. Dolbeare on brief) for Appel-

lant Anna Piccinin; H. Robert Erwin, Jr.

(Pretl & Schultheis, P.A. on brief) for

Appellants Kathryn Conrad, Luisa Mosa and

Jack Mosa; Mark cC. Ellenberg (Murray

Drabkin; Cadwalader, Wickersham & Taft;

George B. Little; L.B. Cann, III; Little,

Parsley & Cluverius, P.C. on brief) for

Appellant Committee of Representatives of

Dalkon Shield Claimants; Patrick A.

Murphy (Penn Ayers Butler; Michael Kip

Maly; Murphy, Weir & Butler; William R.

Cogar; Bradfute W. Davenport, Jr.3

Clifford W. Perrin, Jr; James S.

Crockett, Jr.; Mays, Valentine, Davenport

& Moore on brief) for Appellee; Jan Z.

Krasnowiecki for Intervenor.

-A3-

RUSSELL, Circuit Judge:

Confronted, if not overwhelmed, with

an avalanche of actions filed in various

state and federal courts throughout the

United States by citizens of this country

as well as of foreign countries seeking

damages for injuries allegedly sustained

by the use of an intrauterine contracep-

tive device known as a Dalkon Shiela,?

the manufacturer of the device, A.H.

Robins Company, Incorporated (Robins)

filed its petition under Chapter 11 of

the Bankruptcy Code, 11 U.S.C. Secs. 101

et. seg., in August, 1985.

lror the current FDA regulation on

intrauterine devices, see 21 C.F.R. Sec.

310.502 (1984).

-A4=-

Background

The device, which is the subject of

these suits, had been developed in the

1966's by Dr. Hugh Davis at the Johns

Hopkins Hospital in Baltimore, Maryland.”

In mid-1970 Robins acquired all patent

and marketing rights to the Dalkon Shield

and engaged in the manufacture and

marketing of the device from early 1971

until 1974, when it discontinued manufac-

ture and sale of the device because of

complaints and suits charging injuries

arising allegedly out of the use of the

device. The institution of Dalkon Shield

suits did not, however, moderate with the

2 Book Note, 99 Harv.L.Rev. 875

(1986) (reviewing Engelmayer and Wagman,

Lord's Justice: One Judge's Battle to

Expose the Deadly Dalkon Shield I.U.D.

(1985)).

-A5-

discontinuance of manufacture of the

device, since Robins did not actually

recall the device until 1984.

By the

middle of 1985, when the Chapter li

petition was filed the number of such

suits arising out of the continued sale

and use of the Dalkon Shield device

earlier put into the stream of commerce

by Robins had grown to 5,000. More than

half of these pending cases named Robins

as the sole defendant; a co-defendant or

co-defendants were named in the others.

Prior to the filing, a number of suits

had been tried and, while Robins had

prevailed in some of the actions, judg-

ments in large and burdensome amounts had

3In response to that recall,

Engelmayer & Wagman, supra, note 2, at

878, n.8, state that 4,500 women had

removed the shield as of August, 1985, at

a cost of $1,600,000.

-A6-

been recovered in others. Many more had

been settled. Moreover, the costs of

defending these suits both to Robins and

to its insurance carrier had risen into

the millions. A large amount of the time

and energies of Robins' officers and

executives was also being absorbed in

preparing material for trial and in

attending and testifying at depositions

and trials. The problems arising out of

this mounting tide of claims and suits

precipitated this Chapter 11 proceeding.

4 englemayer & Wagman, supra, note 2,

at 876, n. 6, state that of the approxi-

mately 7,500 Dalkon Shield cases settled

from 1972 to February 1985, fewer than 40

went to a jury.

A recent article in the Nat. L.J.,

p. 10, (March 17, 1986), states that by

mid 1985, Robins, along with its insurer,

Aetna Casualty & Surety Company, "had

paid roughly $517 million for 25 trial

judgments and 9,300 settlements since the

first verdict in 1975."

-A7=-

The filinoe of the Chapter 11 peti-

tion automatically stayed all suits

against Robins itself under’ section

362 (a) of the Bankruptcy Code, even

though no formal order of stay was

immediately entered. See In re Larmar

Estates, 5 B.R. 328, 330 (Bankr. E.D.N.Y.

1980). But a number of plaintiffs in

suits where there were defendants other

than Robins, sought to sever their

actions against Robins and to proceed

with their claims against the co-

defendant or co-defendants. Robins

responded to the move by filing an

adversary proceeding in which it named as

defendants the plaintiffs in eight such

suits pending in various state and

federal courts. In that proceeding, the

debtor sought (1) declaratory relief

adjudging that the debtor's’ products

liability policy with Aetna Casualty and

-A8-

Insurance Company (Aetna) was an asset of

the estate in which all the Dalkon Shield

plaintiffs and claimants had an interest

and (2) injunctive relief restraining the

prosecution of the actions against its

co-defendants. Service of the summons

and complaint in that adversary proceed-

ing, a memorandum of law in support of

the motion for a preliminary injunction

therein, a notice of the debtor's inten-

tion to apply for a temporary restraining

order, a copy of the proposed temporary

restraining order and affidavits in

Support were duly mailed by first-class

mail and by Federal Express to all the

defendants and their attorneys at their

addresses. See Bankruptcy Rule 7004 and

Rule 4, Fed.R.Civ.P.

The debtor's application for a

temporary restraining order and for the

setting of a date for a hearing on the

-A9=-

request for preliminary injunction in the

adversary proceeding was heard ex parte

by the district judge who had jurisdic-

5 The district

tion over the proceedings.

judge granted at the time a temporary

restraining order in the proceedings and

set a hearing on the debtor's application

for a preliminary injunction. On that

same day, Robins mailed by first-class

mail and by Federal Express to all the

defendants and their attorneys at their

addresses "Notice of Hearing on

-Section 151 of the 1984 Amendments

to the Bankruptcy Code provides that

"Tijn each judicial district, the bank-

ruptcy judges in regular active service

shall constitute a unit of the district

court to be known as the bankruptcy court

for the district. Each bankruptcy judge

» « « May exercise the authority cocn-

ferred under this chapter .. . except as

otherwise provided by law or by rule or

order of the district court."

“ALO=

Plaintiff's Motion for Preliminary

Injunction. '

At the hearing on the motion for a

preliminary injunction, a number of

defendants as well as the Committee

constituted by the court to represent

Dalkon Shield Claimants appeared by

counsel. ° At the commencement of the

hearing the defendant Piccinin, a plain-

tiff in one of the Dalkon Shield actions

which Robins sought to. stay, filed

through her attorney a written motion to

dismiss as against her. No other defen-

dant filed a motion in response to the

motion for a preliminary injunction.

After receiving certain testimony,

Sror a discussion of the authoriza-

tion for and responsibilities of such

Committees, see Note, The Chapter 11

Creditors' Committee: Statutory Watch-

dog? 2 Bankr. Dev. J., 247 (1985)).

-All-

admitting various records, and hearing

arguments of parties, the district court

granted Robins' request for a preliminary

injunction.

In his order granting the prelimi-

nary injunction, the district judge found

(1) that continuation of litigation in

the civil actions threatened property of

Robins' estate, burdened and impeded

Robins' reorganization effort, contra-

vened the public interest, and rendered

any plan of reorganization futile; (2)

that this burden on Robins'- estate

outweighed any burden on the Dalkon

claimants caused by enjoining their civil

actions; and (3) that all remaining

insurance coverage in favor of the debtor

under its liability policy issued by

Aetna was property of the Robins' Chapter

1l estate. The district judge then held

tlat all actions for damages that might

be satisfied from proceeds of the Aetna

insurance policy were subject to the stay

pursuant to 11 U.S.C. Sec. 362(a)(3) and

enjoined further litigation in the eight

civil actions, pursuant to 11 U.S.C. Sec.

362(a)(1)(3) as supplemented by 11 U.S.C.

Sec. 105.

Only the defendants Piccinin, the

Mosas, and Conrad filed timely notices of

appeal from the grant of the preliminary

injunction. Their appeals, questioning

the propriety of that preliminary injunc-

tion as against suits by Robins' co-

defendants is the first of the issues now

before this Court.

Some three weeks after entry of the

preliminary injunction, Robins filed a

motion for (1) a determination of trial

venue of all Dalkon Shield suits, (2)

identification of such Dalkon Shield

cases as were “related to" the Chapter 11

“Aij3=

Se eeeeeeeeeEET—m

case, and (3) transfer of such cases to

the Eastern District of Virginia for

trial. It also requested an expedited

hearing on these motions. This request

for an expedited hearing was granted and

the expedited hearing was set ten days

later. Notice of the hearing was given

the Representatives of the Dalkon Shield

Claimants Committee and the Unsecured

Creditors Committee. The Committees and

the defendants Piccinin, the Mosas and

Conrad appeared by counsel at the hearing

and joined in entering objections to the

motion.

After a hearing on the motions, the

district judge entered an order holding

that (1) pursuant to 28 U.S.C. Sec.

1334(b), all actions based upon personal

injury tort or wrongful death claims

arising from the use of the Dalkon Shield

were proceedings related to this Chapter

~Al4-

11 case over which this court had juris-

diction; (2) pursuant to 28 U.S.C. Secs.

157(b) (5) and 1334(b), all such actions,

wherever pending, were to be tried in the

Richmond Division of the United States

District Court for the Eastern District

of Virginia; (3) all actions related to

the Robins' Chapter 11 case now pending

in any federal district court or subse-

quentiy removed to any federal district

court, during the pendency of this

Chapter 11 case, were to be transferred

to this court [the Richmond Divisicn of

the United States District Court]; and

(4) nothing in the order limited the

7In Chatz & Schumm, 1984 Bankruptcy

Code Amendments--Fresh from the Anvil, 89

Com.L.J., 317, 319-20 (1984), the authors

refer to these two sections as the

"critical sections" of the Amendments,

establishing as they do what "a bankrupcy

court can and cannot do."

-AlL5=

power of this court [the Richmond Divi-

sion of the United States District Court]

later to abstain from hearing any pro-

ceeding under section 1334(c) (1) or

remanding under’ section 1452(b), 28

U.S.C.

From this order, the Committee of

Representatives of Dalkon Shield Claim-

ants and the defendant Piccinin have

appealed. ® This appeal poses the second

issue on appeal.

The initial question in the appeal

of the first issue relates to the court's

jurisdiction to grant a stay or injunc-

tion of suits in other courts against

co-defendants of the debtor or of third

Ban order of the Honorable H. Emory

Widener, Jr., after a motion for a stay

pending appeal, permitted Aetna to

intervene. Aetna appears in the appeal.

-Al6-

Madore

parties; none of the parties herein

contest the jurisdiction of the bank-

ruptcy court to stay actions against the

debtor itself in any court. Jurisdiction

over suits involving co-defendants or

third-parties may be bottomed on two

statutory provisions of the Bankruptcy

Act itself as well as on the general

equitable powers of the court. The first

of these statutory grants of jurisdiction

is found in section 362, 11 U.S.C. The

purpose of this section by its various

subsections is to protect the debtor from

an uncontrollable scramble for its assets

in a number of uncoordinated proceedings

in different courts, to preclude one

creditor from pursuing a remedy to the

disadvantage of other creditors, and to

provide the debtor and its executives

with a reasonable respite from protracted

litigation, during which they may have an

-Al7-

opportunity to formulate a plan of

reorganization for the debtor. Matter of

Holtkamp, 669 F.2d 505, 508 (7th Cir.

1982). As the Court in Fidelity Mortg.

Investors v. Camelia Builders, Inc., 550

F.2d 47, 55 (2a Cir. 1976), cert. denied,

429 U.S. 1093, put it, “[(tjhe stay

insures that the debtor's affairs will be

centralized, initially, in a single forum

in order to prevent conflicting judgments

from different courts and in order to

harmonize all of the creditors' interests

with one another."

Section 362 is broken down into

several subsections, only two of which

are relevant on this appeal. The first

of such subsections is (a)(1), which

imposes an automatic stay of any proceed-

ing "commenced or [that] could have been

commenced against the debtor" at the time

of the filing of the Chapter 11

-~A18-

proceeding; the second is (a)(3), which

provides similar relief against suits

involving the possession or custody of

property of the debtor, irrespective of

whether the suits are against the debtor

alone or others. We shall discuss the

extent of jurisdiction given the bank-

ruptcy court under these two subsections,

beginning with (a) (1).

(a)

Subsection (a)(1) is generally said

to be available only to the debtor, not

third party defendants or co-defendants.

The rationale for this narrow construc-

tion of the statute has-been stated in

Lynch v. Johns-Manville Sales Corp., 710

F.2d 1194, 1196-1197 (6th Cir. 1983), and

in our own case of Williford v. Armstrong

World Industries, Inc., 715 F.2d 124,

126-127 (4th Cir. 1983), and it need not

be repeated here. However, as the Court

-A19-

in Johns-Manville Sales Corp., 26 B.R.

405, 410 (S.D.N.Y. 1983) remarked, in

discussing the oft-cited case, Royal

Trucks & Trailer v. Armadors Meritina

Salvadoreana, 10 B.R. 488, 491 (N.D.I1l.

1981),° "there are cases [under 362(a)

(1)] where a bankruptcy court may prop-

erly stay the proceedings against non-

bankrupt co-defendants" but, it adds,

that in order for relief for such non-

bankrupt defendants to be available under

(a) (1), there must be "unusual circum-

stances" and certainly "'[{s]jomething more

than the mere fact that one of the

parties to the lawsuit has filed a

Chapter 11 bankruptcy must be shown in

order that proceedings be stayed against

non-bankrupt parties.'" This "unusual

°This case is generally cited on the

strict construction of this subsection.

-A20-

situation," it would seem, arises when

there is such identity between the debtor

and the third-party defendant that the

debtor may be said to be the real party

defendant and that a judgment against the

third-party defendant will in effect be a

judgment or finding against the debtor.

An illustration of such a situation would

be a suit against a third-party who is

entitled to absolute indemnity by the

debtor on account of any judgment that

might result against them in the case.

To refuse application of the statutory

stay in that case would defeat the very

purpose and intent of the statute. This

fact was recognized by the court in In Re

Metal Center, 31 B.R. 485 (D.Conn. 1983).

In Metal Center the third-party

plaintiff had been sued, along with the

debtor, on his guaranty of the debtor's

obligation. The third-party was entitled

“Ae i

to be indemnified by the debtor on

account of any judgment rendered against

him on account of his guaranty. While

the action against both the debtor and

the guarantor was pending, the debtor

filed its Chapter 11 petition. The

action was stayed against the debtor but

the plaintiff sought to continue his suit

against the guarantor. The guarantor at

this point moved to stay the action as

against hin. The bankruptcy court

reviewed the motion because of the

possible “effect upon the debtor of a

state court judgment against Gardner [the

guarantor]." In discussing the issue,

the court first dismissed as inapplicable

to the facts of this case the situation

where the third-party defendant was

"independently liable as, for example,

where the debtor and another are joint

tort feasors or where the nondebtor's

. —

=e (eee ai

liability rests upon his own breach of

duty." It noted that in such a case "the

automatic stay would clearly not extend

to such non debtor." But, in contrast to

those situations, it cleared that "where,

however, a debtor and nondebtor are so

bound by statute or contract that the

liability of the nondebtor is imputed to

the debtor by operation of law, then the

Congressional intent to provide relief to

debtors would be frustrated by permitting

indirectly what is expressly prohibited

in the Code." It concluded with the

statement: "Clearly the debtor's protec-

tion must be extended to enjoin litiga-

tion against others if the result would

be binding upon the debtor's estate," and

this is so, whether the debtor is a party

or not. -31 B.R. at 462.

It is true that, although the

third-party defendant in Metal Center was

-A23-

20 GORDA

found to be entitled to indemnity from

the debtor, the court held that the

situation was not such as to qualify for

a stay under section 362(a)(1). The

court reached this conclusion because in

its opinion the judgment in the suit

against the third party would not be

binding on the bankruptcy court. of

course, if the indemnitee, who has

suffered a judgment for which he is

entitled to be absolutely indemnified by

the debtor, cannot file and have allowed

as an adjudicated claim the actual amount

of the judgment he has suffered but must

submit his claim for allowance in the

bankruptcy proceeding with the prospect

that his claim may not be allowed in the

full amount of the judgment awarded

against him, the indemnitee will be

unfairly mulcted by inconsistent judg-

ments and his contract of indemnity in

~A24-

effect nullified. We do not accept such

reasoning with its shocking result and

would find a stay under (a)(1) accept-

able. Apparently the court in Metal

Center recognized the inconsistency and

the injustice resulting from its refusal

to sustain a stay under (a)(1) for it did

grant a stay of the action against the

third-party but on equitable grounds,

finding in justification that "severing

and remanding [the plaintiff's action

against the indemnitee to the state court

for the trial and judgment would)...

potentially expose[s] Gardner [the

indemnitee] to inconsistent judgments."

31 B.R. at 463. While, as we have said,

it seems that a ruling sustaining the

stay in that case under section 362(a) (1)

would have been more logical and appro-

priate, it is unimportant whether the

stay is granted under section 362(a) (1) .

-A25@=

or on equitable grounds: the result is

the same; a stay is proper in such a

situation.

In Seybolt v. Bio-Energy of Lincoln,

Inc., 38 B.R. 123 (D. Mass. 1984), the

issue was similar to that in Metal

Center, i.e., whether a guarantor enti-

tled to indemnity by the debtor would be

entitled to seek a stay under section

362(a)(1). In granting the stay in that

case, the Court, after quoting the

language of Metal Center with respect to

the case in which "the liability of the

non-debtor is imputed to the debtor by

operation of law," said:

The concept that notice and an

opportunity to defend binds the

principal on a judgment against

a guarantor (in a case in which

the principal did not partici-

pate) springs from notions of

res judicata. If George

Seybolt recovers a judgment

against the guarantors in the

state court, Bio-Energy Associ-

ates' assertion that the

$100,000 was not a loan but a

“A26-

pissin ee

contribution to capital may

well be rendered moot when the

guarantor subsequently asserts

a claim against it for inden-

nity. At the very least, the

dual litigation of these issues

in the state court and the

bankruptcy court is not judi-

cially economic and potentially

exposes Bio-Energy, Inc. and

Bio-Energy Associates to

inconsistent judgments. See In

re Metal Center, Inc., supra,

at 463.

Accordingly, I find that

George Seybolt's claims against

the individual guarantors are

within this Court's jurisdic-

tion and should be stayed until

an appropriate motion for

relief from stay is filed and

granted by the bankruptcy

court. 38 B.R. at 127-28.

In Re Brentano's, 27 B.R. 90 (S.D.

N.Y. 1983), also involved the situation

of a guarantor of a debtor in a Chapter

ll proceeding who was entitled under

contract to indemnity by the debtor

against any judgment against him. While

the case did not directly concern section

362 but the question of bankruptcy

jurisdiction, the language of the court

-A27-

appears relevant on the issue under

review here. It said that the action

against the guarantor-indemnitee "could

and would affect the estate in bank-

ruptcy," since, under the indemnity

agreement, “a judgment in favor of the

[plaintiff] in the guaranty action would

automatically result in indemnification

liability against Brentano's" [i.e., the

indemnitor]. Accepting this language one

would have difficulty in not concluding

that the action was in effect one against

the debtor and as such would qualify for

relief under (a)(1). Brentano's is cited

and discussed in Pacor, Inc. v. Higgins,

743 F.2d 984, 995 (3d Cir. 1984), which

was an asbestos case. The issue in

Pacor, as in Brentano's, was one of

bankruptcy jurisdiction. The court

described the facts in Breantano's and

-A28-

stated the resulting legal situation as

follows:

In Brentano's, however, it

is clear that the action

between the landlord and

MacMillan could and would

affect the estate in bank-

ruptcy. By virtue of the

indemnification agreement

between Brentano's and Mac-

Millan, a judgment in favor of

the landlord on the guarantee

action would automatically

result in indemnification

liability against Brentano's.

See also Note, Selective Exercise of

Jurisdiction in Bankruptcy-Related Civil

Proceedings, 59 Tex.L.Rev. 325, 330-31

(1981):

One can imagine controversies

over which the new bankruptcy courts

funder 1471(b)] would have jurisdic-

tion even if neither the debtor nor

a representative of the estate were

a party, and it is difficult to

imagine any instance in which a

bankruptcy court would not have

jurisdiction if the debtor were a

party.

It is true that both Pacor and the Texas

Note were referring to section 1471(b) of

the 1978 Act. That section, however, was

re-enacted in the exact words of the

(Footnote Continued)

“A36-

that the bankruptcy court

lacked [under Sec. 105] the

power to enjoin parties from

pursping actions against

non-bankrupts in state court.

In re Aboussie Brothers Con-

struction Co., S BR. 302

(D.C.E.D.Mo. 1981). In

Aboussie, the court did not

address Sec. 105(a), but relied

on cases decided under the old

Bankruptcy Act to hold that

there was no jurisdiction to

enjoin parties from pursing

actions which did not involve

the bankrupt directly. The

pre-1978 Act confined jurisdic-

tion to "the debtor and his

property, wherever located."

Act of June 22, 1938, ch. 575,

Sec. 1, 52 Stat. 906 (1938).

Under the new Bankruptcy Code,

the jur'sdictional statute

provides «hat the bankruptcy

court shal. have jurisdiction

“eft all civil proceedings

(Footnote Continued)

repealed 1471(b) in section 1334(a) and

(b) of the 1984 Act. Therefore, "[tjhe

jurisdiction conferred on the district

court [under the 1984 Act's’ section

1334(a) and (b)) is exactly the same

jurisdiction that was conferred on the

district courts under the Bankruptcy

Reform Act [of 1978]." Taggart, The New

Bankruptcy Court Systems, 59 Am. Bank.

L.J. 231, 239 (1985). To the same

effect, King, Jurisdiction and Procedure

Under the Bankruptcy Amendments of 1984,

38 Vand. L.Rev. 675, 677 (1985).

-A37-

arising under title 11 or

arising in or related to cases

under title 11." 28 U.S.C.A.

Sec. 1471 (Supp. 1982). This

broader jurisdictional statute,

combined with Sec. 105(a),

grants the bankruptcy court

power to enjoin parties from

proceeding in state court

against non-bankrupts where the

state proceeding is related to

a case arising under Title 1l.

25 B.R. at 1020.

In stating the same scope for

section 105, the Court in Johns-Manville

Corp., 26 B.R. 420, 425 (S.D.N.Y. 1983),

quoting from 2 Collier on Bankruptcy

Secs. 362.02 and 362.05 (15th ed. 1982),

put the matter thus:

[Section 362 of the Code]

does not attempt to state the

jurisdiction of the bankruptcy

court with respect to stays and

injunctive relief or to deter-

mine the boundaries of the

exercise of the court's injunc-

tive power.

Section 105 which is the

successor to Section 2A(15),

gives the court the power to

issue any order, process or

judgment that is necessary or

appropriate to carry out the

provisions of this title.

-A38-

‘

_ [Tj)he exceptions to the

automatic stay of Sec. 362(a)

which are set forth in Sec. 362

(b) are simpiy exceptions to

the stay which protect’ the

estate automatically at the

commencement of the case and

are not limitations upon the

jurisdiction of the bankruptcy

court or upon its power to

enjoin. That power is general-

ly based upon Sec. 105 of the

Code. The court will have

ample power to enjoin actions

excepted from the automatic

stay which might interfere in

the rehabilitative process

whether in a liquidation or in

a reorganization case.

See to the same effect, In Re

Landmark, 19 B.R. 556, 559 (N.D. Ohio

1982); In Re Larmar Estates, Inc., 5 B.R.

328, 330-31 (S.D.N.Y. 1980).

Accepting that section 105 confers

on the bankruptcy court power under its

expanded jurisdiction as expressed in

section 1471(b) (28 U.S.C.}] of the

Bankruptcy Reform Act of 1978 and now

section 1334(b), 28 U.S.C. of the 1984

Bankruptcy Amendments to enjoin suits

“~A39~

against parties in other courts, whether

state or feé#ral, it is necessary to mark

out the circumstances under which the

power or jurisdiction may be exercised.

In Otero Mills, supra, the Court approved

a ruling that "[t]Jo so enjoin a credi-

tor's action against a third party, the

court must find that failure to enjoin

would effect [sic] the bankruptcy estate

and would adversely or detrimentally

influence and pressure the debtor through

the third party." 25 B.R. at 1020. In

Johns-Manville, the Court phrased some-

what fuller the circumstances when

section 105 may support a stay:

In the exercise of its

authority under Sec. 105, the

Bankruptcy Court may use its

injunctive authority to "pro-

tect the integrity of a bank-

rupt's estate and the Bank-

ruptcy Court's custody thereof

and to preserve to that Court

the ability to exercise the

authority delegated to it by

Congress" [citing authority].

Pursuant to the exercise of

-A40-

that authority the Court may

issue or extend stays to enjoin

a variety of proceedings

{including discovery against

the debtor or its officers and

employees] which will have an

adverse impact on the Debtor's

ability to formulate a Chapter

ll plan. 40 B.R. at 226.

(da)

Beyond these statutory powers under

section 362 and section 105 to enjoin

other actions whether against the debtor

or third-parties and in whatsoever court,

the bankruptcy court under its comprehen-

sive jurisdiction as conferred by section

1334, 28 U.S.C., has the "inherent power

of courts under their general equity

powers and in the efficient management of

the dockets to grant relief" to grant a

stay. Williford v. Armstrong World

Industries, Inc., supra, 715 F.2d at 127,

Austin v. Unarco Industries, Inc., 705

F.2d 1, 5 (lst Cir. 1983). In exercising

such power the court, however, must

~A4l-

"weigh competing interests and maintain

an even balance" and must justify the

stay "by clear and convincing circum-

stances outweighing potential harm to the

party against whom it is operative."

Williford, supra, Metal Center and

Seybolt, discussed supra, are illustra-

tive of situations in which courts have

found sufficient grounds to grant a stay

under this power.

(e)

There are thus four grounds on which

the bankruptcy court may enjoin suits

against the bankrupt or its assets and

property. In some instances only one of

these grounds may be relevant; in an

involved and complex case, several or

even all of the grounds may require

consideration. The present case is such

an involved and complex case. It has a

striking similarity to a Chapter 11

~A42-

ui ceil

pre yank

proceedings, initially begun in the

bankruptcy court of the Southern District

of New York, concerning the reorganiza-

tion of the Johns-Manville Corporation.

In that proceeding, which was litigated

both in the New York and Louisiana

courts, many of the issues posed on this

aspect of the case were raised and

analyzed by the courts of the two cir-

cuits and the decisions resolving such

issues present in a practical form the

application of the power of a bankruptcy

court to stay actions relating to the

bankruptcy proceeding against the debtor,

its property and their operations. For

this reason, it seems pertinent to review

the decisions in those proceedings, for

their guidance on the resolution of the

issue herein. We begin with the initial

proceedings in the bankruptcy court of

the Southern District of New York.

-~A43-

(f)

Johns-Manville, an asbestos produc-

er, was beset by a mass of suits seeking

large awards for damages sustained by

reason of asbestos exposure much as has

Robins in this case and, after suffering

large and burdensome recoveries by

plaintiffs and making substantial settle-

ments in many of the cases, filed its

Chapter 11 petition in the Southern

District of New York in August, 1982.

Such filing operated as an automatic stay

of all proceedings against Johns-

Manville. However, many of the thousands

of cases named as defendants not only

Johns-Manville but a number of other

asbestos producers and dealers as co-

defendants. Shortly after Johns-Manville

filed its Chapter 11 petition, these

co-defendants, charged in the complaints

of the plaintiffs in the actions as joint

~A44-

Mes spiel

tort feasors, sought judicial relief in

the bankruptcy court, “inviting,” that

court by way of a declaratory judgment in

the exercise of "its equitable powers" to

enlarge the automatic stay provided by

section 362 of the Act to include non-

debtor defendants "under the penumbra of

section 362's protection" as well as

under section 105, and to extend this

stay throughout the nation to all asbes-

tos litigation. Matter of Johns-Manville

Corp., 26 B.R. 405 (S.D.N.Y. 1983). The

primary issue at this stage was stated to

be "whether this Court should take the

unprecedented step of exercising its

discretion pursuant to section 105 of the

Code to extend the section 362 automatic

stay so as to encompass the co-defendants

herein." 26 B.R. at 408-409. The

bankruptcy court ruled, first, "that

section 362 is limited in scope to the

-~A45-

debtor and does not operate to stay

actions against the co-defendants of this

debtor." 26 B.R. at 409-414. Secondly,

it held that relief under section 105 is

only available if found to be "necessary

or appropriate in order to achieve the

goals of a Chapter 11 reorganization,"

and, even then, only after a finding that

"a failure to enjoin would affect the

bankruptcy estate and would adversely or

detrimentally influence and pressure the

debtor through that third-party," thereby

justifying a finding of irreparable

injury and likelihood of prevailing on

the merits. None of these facts the

court found present on the instant

showing, but it added:

In an appropriate case,

where the proposed extension of

the stay is designed to cover

acticns against entities that

truly are inextricably interwo-

ven with the debtor or which

affect property of the debtor's

estate, section 105 may be

~A46-

ok CERT Oe

Sra Ps AW Ue OR ET Re aN

used. the stant case

such _is t the situation as

any liability of these co-

defendants is not directly

attributable to the debtor as

it would be if these co-

defendants were, for example,

key employees of the debtor.

26 B.R. at 418 (italics in

text).

It concluded by deciaring that there was

"no basis [as shown by the record] to

extend the section 362 stay to cover them

[the appeals] by means of section 105."

A second action was begun shortly

afterwards, this time by the debtor, to

enjoin (1) the prosecution of "proceed-

ings against Manville's employees, agents

and others" and of discovery proceedings

involving them in actions covering "the

same issues and subject-matter as are

involved in the stayed litigations

against Manville," (2) “"'direct action'

lawsuits against insurers and sureties of

~A47-

12 since the coverage of such

the debtcr"

policies of insurance or _ suretyship

"represent[ed] property of [the debtor's]

estate which must be preserved for the

benefit of all creditors," and (3) a suit

brought by certain security holders

against "various of the ‘employees,

agents and others'" in the district court

of Colorado. In re Johns-Manville Corp.,

26 B.R. 420, 423 (S.D.N.Y¥Y. 1983). It

will be observed that this proceeding

involved matters not litigated in the

earlier proceeding; in fact, it involved

actions against the debtor's employees

for actions attributable to Manville,

precisely the point which the court in

12unirect actions" against insurers

are described in Wedgeworth v. Fibeboard

[sic] Corp., 706 F.2d 541, 546-47 (5th

Cir. 1983), and were recognized in

Lumbermen's Mutual Casualty Co. .

Elbert, 384 U.S. 48, 50 (1964).

~A48-

the earlier case had said was not before

it at that time. The bankruptcy court

granted a temporary injunction against

the continuance of either the suits or of

discovery against present or future

officers, employees and agents but

refused a stay for past officers and

employees. In reaching that conclusion

it found that "in great measure the suits

being pursued against Manville's officers

and employees are in reality derivative

of identical claims brought against

Manville," which, if sustained against

the officers and employees, would expose

the estate "to claims for contribution

and indemnification" and might result in

collateral estoppel against the debtor

"in subsequent actions." 26 B.R. at 426.

It accordingly held it proper to stay

these actions and discovery "against

[such] non-debtors which would frustrate

~A49—

ne nr

the statutory scheme or impact adversely

on a debtor's ability to formulate a plan

or on the debtor's property." 26 B.R. at

427. It further granted the injunction

against the security action, finding

"that [such] suit is nothing more than an

effort to circumvent section 362 by suing

Manville's officers and directors when

the real party in interest is Manville.

In all but formal detail, the [security]

litigation is against the debtor within

the meaning of section 362." 26 B.R. at

428. It, also, said that:

An adverse judgment in the

[security] case would have

serious consequences for the

debtor's estate. Manville's

By-Laws require it to indemnify

its officers and directors for

their litigation expenses,

including any amounts paid to

satisfy a judgment of liabil-

ity, so long as the conduct at

issue was intended to benefit

the company .... Although

Manville believes that the

insurance policies which it had

in force cover these expenses,

the insurance company has

-A50-

‘

AL GVM ales Shy

et LPS ect

hE NE in S18 Ns ote

reserved its right to contest

coverage and to terminate on 30

days notice the payment of

defense costs. If the insur-

ance company fails to live up

to its obligations, the offi-

cers and directors would look

to the Company for reimburse-

ment pursuant to the By-Laws.

In any event, the policies have

specific dollar limits beyond

which Manville itself must pay.

To the extent expenditures

related to the (security) suit

exhaust those limits, an asset

of the estate is diminished and

Manville's exposure in other

litigations increases. 26 B.R.

at 429.

But it denied a stay of the suits against

the insurers and sureties, saying:

Unlike suits against the

debtor's employees and agents,

Manville maintains no obliga-

tion to indemnify or pay for

the defense costs of its

insurers or sureties. Thus,

the liability of these insurers

and sureties in no way inures

to the detriment of the Man-

ville estate. 26 B.R. at 431.

On motion for rehearing, however,

the bankruptcy court withdrew its deci-

sion denying an irjunction against suits

-A5l1-

directed against the debtor's insurers

and granted such injunction. It did so

on the basis of these findings:

The debtor "could be

adversely affected by the

continuation of such suits"

since the “insurance policies

and proceeds thereof and the

causes of action previously

asserted by Manville against

its insurance carriers in suits

pending in California ("Cali-

fornia Insurance Litigation")

and elsewhere constitute

substantial property of the

Manville estate which will be

diminished if and to the extent

that third party direct actions

against the insurance carriers

result in plaintiffs' judg-

ments" and since “important

issues respecting policy

coverage and liability may be

pressed as collaterally estop-

ping Manville." 26 B.R. at

435. Further, "({t]o permit the

third party actions to continue

against Manville's insurance

carriers will result in a

multiplicity of positions and

defenses on the part of the

insurance carriers and will

most likely result in inconsis-

tent decisions and rulings

concerning the coverage and

liability of the insurance

carriers to the third party

“ASZ-

Claimants and to Manville.

Such a disorganized and frag-

mented procedure for resolving

such major issues will under-

mine Manville's attempt at

reorganization." 26 B.R. at

436.

: It ended with these legal conclusions:

de "Manville's rights under

its insurance policies and all

the causes of action arising

thereunder constitute property

of the Manville estates within

the purview of section 541(a)

of the Code." 26 B.R. at 436.

2. "Pursuant to Sec. 105(a),

the Bankruptcy Court may extend

the automatic stay under Sec.

362 of the Code to stay and

enjoin proceedings or acts

against non-debtors where such

actions would interfere with,

deplete or adversely affect

property of Manville's estates

or which would frustrate the

statutory scheme of Chapter 11

or diminish Manville's ability

to formulate a plan of reorgan-

ization." 26 B.R. at 436.

3. Pursuant to Sec. 362(a) of

the Code, all actions "to

obtain possession of or inter-

fere with property from Man-

ville estates" are stayed and

enjoined. 26 B.R. 436.

-233~—

As a result of action in the Fifth

Circuit to which we later advert and in

order to enlarge the stay theretofore

granted to include past officers and

employees, (the court having reached the

decision that suits against past as well

as present employees of the debtor should

be stayed) the bankruptcy court in New

York entered a third reported decision in

33 B.R. 254 (S.D.N.Y¥. 1983). It found

that:

In the event of a recovery

against the past or present

officers, directors or employ-

ees of Manville in any of the

pending 1,000 cases, Manville's

insurers may be called upon to

indemnify such officers,

directors and employees under

the provisions of the policies

issued by them to Manville. If

such insurers are called upon

to make such indemnification

payments, those payments may

1 cause an asset of the Manville

estates to be diminished. 33

B.R. at 261.

It reiterated in this same decision its

ruling that the iisurance policies

-~A54-

constituted assets of the debtor, and

stated the test for granting a stay or

injunction in the circumstances: "(a)

possible irreparable harm and (b) either

(1) likelihood of success on the merits

or (2) sufficiently serious questions

going to the merits to make them a fair

ground for litigation and a balance of

hardships tipping decidedly toward the

party requesting the preliminary relief."

It concluded by granting the stay in

favor of the insurers and the past as

well as present directors, officers and

employees, finding that the required

findings for a preliminary injunction had

been satisfied. 33 B.R. at 262-63.

On appeal of certain of these

decisions, the district court affirmed

the decisions of the Bankruptcy Court

staying discovery of any officers,

directors or employees of the debtor and

-ASS-

ruled that the provisions of section 362

stayed proceedings against the debtor's

insurers. Specifically, it declared that

"the fact that it [Manville] ultimately

may not receive all of the proceeds under

its products liability insurance does not

affect its status as property under the

Code subject to the provisions of the

automatic stay." 40 B.R. at 230.

At the same time that these Johns-

Manville cases were proceeding in New

York, similar issues were arising in

asbestos cases filed against Johns-

Manville, other joint tortfeasors, and

their insurers in the three districts of

Louisiana. The three district courts had

ruled differently on the right to a stay

of all co-defendants of Manville, there

being no dispute that the stay was proper

of Manville itself. On appeal, the Court

of Appeals’. held in Wedgeworth v.

-A56-

Fiberboard, 706 F.2d 541 (5th Cir. 1983),

that the automatic stay applied only to

Manville, not to the other defendants and

that the showing as made was insufficient

to sustain a stay in favor of the co-

defendants under equitable principles;

however, it sustained the right of the

plaintiffs to amend their complaints to

state a "direct action" under’ the

Louisiana statute against Manville's

insurer and held that such an action was

not stayed by any provision of the

Bankruptcy Act. After a petition for

rehearing, however, the Court modified

its decision on the plaintiffs' motion to

amend and held "that the district did not

abuse its discretion in declining to

permit the plaintiffs to amend their

complaints to add, as party defendants,

the liability insurance carriers of

Johns-Manville and Unarco." 706 F.2d at

"AS 7T=

548. Two days after this decision was

filed, the bankruptcy court modified its

previous orders by staying "any and all

suits against any past, present or future

Manville officer, director or employee or

against {his or her] insurers." It added

in this order, also, that its prior order

would be amended to preclude discovery of

the parties against whom suits were

proscribed. In an appeal based on a

petition for certiorari and for a writ of

prohibition against a ‘contempt order

against plaintiffs' counsel for violating

such stay, the orders of the bankruptcy

court were in effect sustained in In Re

Davis, 730 F.2d 176 (5th Cir. 1984).

(g)

As we have earlier indicated, we

have discussed at some length these

proceedings in the Johns-Manville pro-

ceedings in New York and _ Louisiana,

-A58=-

because, with their striking similarity

both factually and on the legal issues to

this case, the decisions of those courts

provide persuasive guidance for our

action herein. Though the district judge

below did not cite the various rulings of

the Manville courts in support of his

decision, there was a close identity of

issues between those in the Manville

cases and in the present case. In the

three situations in which the defendants

have challenged the injunction granted by

the district judge [{i.e., the Mosa,

Conrad and Piccinin cases], the only

defendants other than the debtor, are the

two Robins, Dr. Frederick A. Clark, Jr.,

Dr. Hugh J. Davis, and the debtor's

insurer Aetna. So far as the _ suits

against the two Robins and Dr. Clark,

those defendants were entitled to indem-

nification by the debtor under’ the

-A59-—-

corporate by-laws and the statutes of

Virginia, the state of debtor's incorpo-

is and were, in addition, addi-

ration,

tional insureds under the debtor's

insurance policy. Dr. Davis was the

137 is the accepted practice for

corporations such as the debtor to

indemnify their directors, officers and

employees for the costs of their defense

for any judgment rendered against them in

such cases. See A.D.M. Corp. Vv.

Thorisgon, 707 F.2d 25, 28 (ist Cir.

1983); 13 Fletcher, Cyclopedia of the Law

of Corporations, Sec. 6045.1 and 6045.3

(1980 ed.). Virginia, the State of the

debtor's incorporation, has by statute

empowered corporations of that State, by

their charter, . to provide for’ such

indemnity. Section 13.1-3, 1 Virginia

Code; Fletcher, supra, section

6045.2-235. The charter of the debtor,

included in the record, provides’ such

right of indemnification for the

directors, officers and employees of the

debtor in the broadest sense. As we have

seen, a stay in favor of such officers,

directors and employees, protected as

they are by the right to indemnity from

the debtor, and the record in this case

shows undisputably that these directors

and employees are so protected, was in

order.

-~A60-

beneficiary of an express contract of

indemnification on the part of Robins and

was, under a compromise agreement with

Robins and Aetna, an additional insured

under Robins' insurance policy. The

Manville court had granted a preliminary

injunction in favor of defendants in the

same position as these defendants, as we

have seen, on facts similar to those

here, finding that the requirements of

possible irreparable harm "had _ been

satisfied by the showing ... [that the

suits against the defendants would

represent] an immediate and irreparable

impact on the pool of insurance assets,

of the existence of sufficiently serious

questions going to the merits," and of

the tipping in the defendants' favor in

the hardships in a balancing of the

debtor's and the plaintiffs'. 33 B.R. at

262-63. That court had _ previously

~A61-

disposed of the public interest being

weighted in the debtor's favor: "Indeed,

this Court finds the goal of removing all

obstacles to plan formulation eminently

praiseworthy and supports every lawful

effort to foster this goal while protect-

ing the due process rights of all con-

stituencies." 26 B.R. at 428.

The district court in this case

applied the test for a grant of prelimi-

nary injunctive relief as stated by us in

Blackwelder Furniture, 550 F.2d 189, 195

(4th Cir. 1977), and Televest v. Brad-

shaw, 618 F.2d 1029, 1032 (4th Cir.

1980). It found, as had the Johns-

Manville courts, that irreparable harm

would be suffered by the debtor and by

the defendants since any of these suits

against these co-defendants, if success-

ful, would reduce and diminish the

-AG62-

insurance fund or pool represented in

Aetna's policy in favor of Robins and

thereby affect the property of the debtor

to the detriment of the debtor's credi-

tors as a whole. The likelihood of

success by the debtor under these circum-

stances appeared indisputable. The

hardships which would be suffered irrepa-

rably by the debtor and by its creditors

generally in permitting these plaintiffs

to secure as it were a preference in the

distribution of the insurance pool herein

to which all creditors were entitled,

together with the unquestioned public

interest in promoting a viable reorgan-

ization of the debtor can be said to

outweigh any contrary hardship to the

plaintiffs. Such was the finding in the

Manville cases and that finding does not

appear unreasonable here.

“AG3-

The appellants, however, suggest

that the record is insufficient to

support such findings by the district

judge. We disagree. The record is not

extensive but it includes every fact

considered by the courts in the Manville

cases to be necessary for their decision.

The rights of Dr. Davis, Dr. Clark and

the two Robins to indemnity and their

status as additional insureds’ under

Robins' insurance policy are undisputed

on the record. That there are thousands

of Dalkon Shield actions and claims

pending is a fact established in the

record and the limited fund available

under Robins' insurance policy is recog-

nized in the records. It seems incon-

testable that, if the suits are permitted

to continue and discovery allowed, any

effort at reorganization of the debtor

will be frustrated, if not permanently

-~A64-

thwarted. It is obvious from the record

that if suits are permitted to proceed

against indemnitees on claims on which

the indemnitees are entitled to indemnity

by Robins, either a binding judgment

against the debtor will result or, as the

court in Metal Center said, inconsistent

judgments will result, calling for the

exercise of the court's equitable powers.

In our opinion, the record was thus more

than adequate to support the district

court's grant of injunctive relief.

Certainly, the district court did not

commit an abuse of discretion in granting

the injunction herein.

The appellants add a final complain-

ing note that the district judge stated

in his decision that the "Conclusions of

Law" made by him should apply "with equal

force to all defendants similarly situat-

ed who are brought to the attention of

-A65-

the court." This is little different,

however, from the language of the court

in the Manville cases in which there was

a broad, general injunction against all

present or future suits.

In summary, we have no difficulty in

sustaining the grant of a preliminary

injunction herein. We are sustained in

this conclusion by the fact, recognized

by the district judge on the record, that

any Dalkon Shield plaintiff may at any

time petition for the vacation of the

stay as it affects his or her suit and he

or she is entitled to a hearing on such

petition. Actually, there is one such

petition pending and the district judge

has agreed to set a hearing on that

petition.

Lad

The second appeal questions’ the

validity of the district court's order of

-A66-

November 9, 1985, fixing the venue for

the trial of all Dalkon Shield cases and

providing for the transfer of such cases

to the District Court of the Eastern

District of Virginia at Richmond. Robins

has challenged the appealability of such

order. We find the challenge without

merit.

It is unquestionably true that, as

the Court in In Re Amatex Corp., 755 F.2d

1034, 1038-9 (3d Cir. 1985), declared,

jurisdiction in a Court of Appeals to

review a decision or order of a district

court sitting in bankruptcy is controlled

by Sec. 1291, 28 U.S.C. See also Matter

of UNR Industries, Inc., 725 F.2d 1111,

1114-6 (7th Cir. 1984). While section

1291 limits jurisdiction to appeals from

"all final decisions of the district

courts," the concept of finality under

such statute has traditionally been

-A67-

applied "in a more pragmatic and less

technical way in bankruptcy cases than in

other situations." Amatex, supra, at

1039. Judge Breyer in In Re Saco Local

Development Corp., 711 F.2d 441, 443-5

(lst Cir. 1983) has traced this tradi-

tional rule of more liberal construction

of finality as applied to appeals in

bankruptcy cases over the years. in

tracing appealability under the statute

in bankruptcy cases, Judge Breyer noted

the definition of a "proceeding" in

bankruptcy as stated in Taylor v. Voss,

271 U.S. 176, 181 (1926), as "not the

overall liquidation or reorganization,

but rather an individual ‘'matter[] of an

administrative character ... presented

in the ordinary course of the administra-

tion of the bankrupt's estate." (Empha-

sis added by Judge Breyer.) He then

declared on the basis of this

-A68-

determination that "any dispute between a

bankrupt and his creditors over a claim

or priority was a separate 'proceeding'

and an order settling such dispute was

appealable." 711 F.2d at 445. Such is

but another practical expressing of the

principle that "finality" under 1291 is

to be given not an absolute and inflexi-

ble construction in bankruptcy cases in

which a "functional" and "practical"

application is to be the rule.

The special or unique reason for

this relaxed rule of appealability in

bankruptcy is that

[bJankruptcy cases frequently

involve protracted proceedings

with many parties participat-

ing. To avoid the waste of

time and resources that might

result from reviewing discrete

portions of the action only

after a plan of reorganization

is approved, courts have

permitted appellate review of

orders that in other contexts

might be considered interlocu-

tory. In Re Amatex, supra, at

1039.

-A69-

This particular appeal illustrates

well the justification for the relaxed

rule of appealability in bankruptcy

cases. Should appeal be denied and

trials proceed in the district court of

the myriad of claims involved with the

possibility of reversal on appeal from a

final decision in such proceedings,

months and months of litigation, carried

on at great expense to all concerned

might be voided and the reorganization

derailed, with consequent extensive

delays both in reorganization and in

resolution of the claims of the tort

plaintiffs themselves. Weighty consider-

ations of fairness and efficient judicial

administration, therefore, mandate

appealability in this case. We accord-

ingly dismiss Robins' challenge to the

appealability of the order in question.

-A70=-

Were it necessary, appealability

could be sustained under Cohen v. Benefi-

cial Industrial Loan Corp., 337 U.S. 541,

546-47 (1949), as well as in mandamus.

See In re Ralson [sic] Purina Co., 7265

F.2d 1002, 1005 (4th Cir. 1984). We,

however, prefer to ground our decision on

the more relaxed standard of finality for

appeal purposes under 1291 traditionally

assigned bankruptcy appeals.

Turning to the merits of the appeal

on this part of the case, we address

first the power of the district court,

sitting in bankruptcy, to enter an order

fixing the venue for the trial of tort

personal injury claims against the debtor

and for transferring all such cases to

the bankruptcy court for trial and

disposition. Section 157 (b) (5), 28

U.S.C. states:

The district court shall

order that personal injury tort

-A71-

and wrongful death claims shall

be tried in the district court

in which the bankruptcy case is

pending, or in the district

court in the district in which

the claim arose, as determined

by the district court in which

the bankruptcy case is pending.

We do not understand the appellants to

contend that under this language the

a@istrict court did not have authority

under this statute to issue an order

fixing the venue for trial of tort cases

against a Chapter 11 debtor. They do

argue, however, that the sense of the

section, if not its precise language, was

to decentralize the trial of those tort

claims and to permit their continuance

for trial in the court in which the

complaints were filed and that the ruling

of the district judge in this case fixing

venue in the district court in which the

bankruptcy petition was filed flies in

the face of this congressional purpose.

They refer to the language of Senator

-A72-

Dole in commenting on the Senate Confer-

ence Report on the 1984 amendments and

construe it as suggesting that tort

claims were to be tried in the court in

which those claims were originally filed.

Senator Dole, in the language to which

appellants refer and out of which the

appellants arrive at their finding of the

sense of the Congress, actually restated

simply the language of the _ statute

itself. He said that "where abstention

does not occur, +4

those cases [i.e.,

"personal injury cases"j will be handled

by the district court where the bank-

ruptcy has been filed or, if that court

14uvandatory abstention under

section 1334(c)(2) is not applicable to

personal injury claims, but the district

court may abstain as a matter of discre-

tion and lift the stay of the state court

action." Taggart, The New Bankruptcy

Court System, 59 American Bank. L.J. 231,

253 (1985).

“A 73

finds it appropriate, where the claim

arose." Statement by Hon. Robert Dole

130 Cong. Rec. S 8889 (daily ed. June 29,

1984), reprinted in, 1984 U.S. Code Cong.

& Ad. News 586, 587. We discern nothing

in that language to warrant the conclu-

sion that, in enacting the statute the

Congress favored decentralizing the

administration of the bankruptcy by

leaving all “personal injury cases" to

the court in the place where the claim

“arose.” In fact, to accept the view of

the appellants on the construction of the

statute would be completely at variance

with the House version of the bill, which

was in effect accepted by the Conference

Committee, and would be to adopt the

Senate version, which, according to

Congressman Kastenmeier's statement as a

House Conference member, was "largely

reject[{ed]" by the Conference Committee

-A74-

and "would have dissipated the assets of

the estate by creating a multiplicity of

forums for the adjudication of parts of a

bankruptcy case."?°

Nor do we find anything in In re

White Motor Credit, 761 F.2d 270, 273-4

(6th Cir. 1985), also relied on by the

appellants, that lends support to appel-

lant's construction of Sec. 157(b)(5).

The extent of the holding in White Motor

was that the district court had the power

under the statute to allow products

liability cases to be tried where the

claim arose; there was nothing in the

opinion, however, that declared that such

action was mandated or even preferred.

Specifically, there was no statement in

15 statement by the Hon. Robert

Kastenmeier, 130 Cong.Rec. H.7492,

reprinted in 1984 U.S. Code Cong. & Adm.

News at 579.

-A75-

the opinion that the district court in

which the bankruptcy was pending could

not try the claim. Unquestionably the

district court in this case had the power

under the statute to fix the trial venue

in its district for all the Dalkon Shield

cases.

The primary point of difference

between the parties, however, relates not

so much to the power of the district

court in this case to fix venue for all

the pending Dalkon Shield tort cases--

that power is stated in unmistakable

terms in section 157(b)(5)--but to the

manner in which that power may be exer-

cised. Concededly [sic], section 157(b)

(5) does not prescribe any procedure.

The appellants suggest that the procedure

to be follows is laid out in 28 U.S.C.

Sec. 1412, which provides that "[a]

district court may transfer a case or

-A/6=

proceeding under title 11 to a district

court for another district, in the

interest of justice or for the conve-

nience of the parties." As the appel-

lants correctly construe section 1412,

the authority to transfer a suit under

that statute rests solely with the court

in which the suit is pending and it

provides no authority whatsoever to a

district court sitting in bankruptcy in

one district and having jurisdiction of

the bankruptcy to transfer the venue of a

case against the bankrupt to another

district. Section 157(b)(5), however,

expressly confers on the district court

sitting in bankruptcy and having juris-

diction of the bankruptcy proceedings the

power to fix the venue of any tort case

against the debtor pending in other

districts. The purpose of this latter

statute was, as Congressman Kastenmeier

-A77-

declared, to centralize the administra-

tion of the estate and to eliminate the

"multiplicity of forums for the adjudica-

tion of parts of a bankruptcy case." 130

Conag. Rec. H 7492, June 29, 1984, re-

printed in 1984 U.S. Code Cong. & Adn.

News at 579. That purpose would be

thwarted and the plain language of

section 157(b)(5) nullified if the power

of the district court sitting in bank-

ruptcy to fix the venue for tort claims

against a debtor was to be preempted by

the provisions of section 1412. We do

not believe this to have been the inten-

tion of Congress in enacting the two

statutes. Section 157(b)(5) was drafted

to cover the procedure in connection with

a special group of cases, to wit, person-

al injury tort claims against a debtor in

Chapter 11 proceedings wherever pending

and in that connection the section is

-A78-

supreme. In all other cases related to

the bankruptcy proceeding, however, the

general statute (i.e., section 1412)

would govern. This, we think, is the

proper construction to be given the two

statutes. It is a construction which

harmonizes the two sections. It conforms

to that established canon of statutory

construction that "[w]je must read the

statutes jin those instances where there

is any possible conflict] to give effect

to each if we can do so while preserving

their sense and purpose." Watt v.

Alaska, 451 U.S. 259, 267 (1981); Colum-

bia Gas v. Federal Energy Regulatory

Comm., 651 F.2d 1146, 1158 (5th Cir.

1981); Pennsylvania v. Dept. of Health &

Human Resources, 723 F.2d 1114, 1119 (3d

Cir. 1983). To accept the appellants'

interpretation and to negate the plain

language of Sec. 157(b)(5) “would violate

-A79-

OOo OOO

the basic principle of construction that

statutes should be read, if possible, as

harmonious texts." Leaf Tobacco Export-

ers Assn. v. Block, 74S F.2d 1106, 1115

(4th Cir. 1984). We, therefore, have no

difficulty in finding that the district

judge's authority to fix venue of person-

al injury tort actions against the debtor

exists under Sec. 157(b) (5), irrespective

of the district in which such controversy

is pending.

And there are very real considera-

tions that support a centralization of

all the Dalkon Shield claims, at least at

first, in the district court having

jurisdiction of the bankruptcy. The

"single focal point" of this proceeding

is the development of a reasonable plan

of reorganization for the debtor, one

which will work a rehabilitation of the

Gebtor and at the same time assure fair

-A80-

and non-preferential resolution of the

Dalkon Shield claims. See In re Towner

v. Petroleum Co., 48 B.R. 182, 190

(W.D.Okla. 1985). These Dalkon Shield

claims, asserted by thousands of individ-

uals in courts through the United States

on behalf of both citizens of this

country and citizens or residents of

other countries, represent what are

characterized in the Act as "contingent

or unliquidated claims." 11 U.S.C. Sec.

502. Ordinarily such claims would be

"estimated" by the bankruptcy court as a

"core proceeding," 28 U.S.C. Sec. 157(b)

(2), for purpose of allowance if failure

to do so "would unduly delay the adminis-

tration of the case." 11 U.S.C. Sec.

502(c); 3 Collier of Bankruptcy, Sec.

502.03 (15 ed. 1982). That duty of

estimation in a proper case under section

502(c) is not a permissive one; it is a

-A81-

mandatory obligation of the bankruptcy

court. In re Nova Real Estate Inv.

Trust, 23 B.R. 62 (E.D.Va. 1982). This

customary process of estimation of

contingent claims is, however, different

where the unliquidated, contingent claims

are personal injury tort claims.

Section 157(b)(2)(B) excepts from

the definition of "core proceedings"

personal tort claims against the debtor.

The bankruptcy court thus is without

authority under the Act over "the liqui-

dation or estimation of contingent or

unliquidated personal injury or wrongful

death claims against the estate for

purposes of distribution under Title 11"

28 U.S.C. Sec. 157(b) (2) (B). (Italics

added) It will be observed, however,

that the statute denies authority to the

bankruptcy court to "estimate" contingent

claims only if the purpose is to make a

-AS2-

"distribution" of the assets of the

debtor; the statute does not in express

terms deny to the bankruptcy court the

authority, or relieve it of the duty, to

"estimate" the contingent "personal

injury" claims for purposes of determin-

ing the feasibility of a reorganization.

And such has been the construction of the

statute which has been adopted by the

courts which have had to face the issue,

the two leading cases being proceedings

arising out of the asbestos litigation.

Roberts v. Johns-Manv e Corp., 45 B.R.

823, 825-26 (S.D.N.Y. 1984); In re UNR

Industries, Inc., 45 B.R. 322, 326-27

(N.D.Ill. 1984). Both of these cases

hold that estimations of the debtors’

potential personal injury tort liabili-

ties as an incident of the development of

a plan of reorganization are core pro-

ceedings within the bankruptcy court's

-A83-

jurisdiction and that such estimations

are not foreclosed by Section 157(b) (5)

of the act.?®

Roberts at 826 said:

Even assuming that section

157(b) (5) requires that all

personal injury and wrongful

death claims be tried in the

district courts, the Court does

not find that immediate

withdrawal and liquidation of

Roberts! claim is appropriate.

Section 157(b)(2)(B) does not

exclude from the definition of

core proceedings estimations of

personal injury and wrongful

death claims for all purposes.

The section. is limited to

estimation "for purposes of

distribution." This leaves

estimation for other purposes

within the jurisdiction of the

bankruptcy court. See In re

UNR Industries, 45 B.R. 322

(N.D. Ill. 1984). A trial is

not needed, therefore, to

satisfy the requirement of

section 502(c) that “all claims

against the debtor be converted

into dollar amounts." (citing

Congressional sources). Thus,

even if the Code and the 1984

Act require that each and every

(Footnote Continued)

-~A84-

This is not to say the personal

injury claimants in this proceeding will

not be ultimately entitled, if they elect

to do so, to have a jury trial of their

claim in the district court. Section

157(b) (5) gives them that right. But,

even though the tort claimants may be

entitled to their jury trials, the

bankruptcy court is not relieved of its

duty in a Chapter 11 proceeding to

estimate those contingent claims. The

real question thus arises as to which

proceedings takes precedence, whether the

estimation by the bankruptcy court of the

claims or the jury trials in the district

court of the claims. The authorities

(Footnote Continued)

asbestos claim filed in this

eventually be tried, they do

not require immediate

withdrawal of those claims

before a reorganization plan

has been confirmed.

-AgS-

which have considered this question in

connection with a complicated products

liability situation such as this are all

unanimous. The estimations of ‘the

potential and pending claims by the

bankruptcy courts should precede any

trials of the claims. This was specifi-

cally held in the asbestos’ cases.

Roberts v. Johns-Manville Corp., 45 B.R.

at 825-26. After ail, the first and

primary purpose of the proceedings,

however, is to ascertain whether a fair

reorganization of the debtor can be

achieved. This purpose may well be

completely thwarted if the energies cf

the debtor's executives and officers are

initially diverted by, and the resources

of the debtor are dissipated in the

expenses of litigating, the trial of

thousands of personal injury suits in

courts through the land spread over an

“AS6=-

interminable period of time. As the

Court in Newton v. Johns-Manville Corp.,

45 B.R. 827, 830 (S.D.N.Y. 1984), put it,

in explaining its decision to proceed in

the estimation of the claims before

setting any claim for trial: there is no

"sense in ordering a trial of a [tort

claimant's] claim against Manville until

a plan has been developed for Manville

and until there is reason to believe that

the time and expense of potentially

25,000 personal injury trials of the

claims against Manville will not deplete

the estate and leave other creditors with

empty judgments."

There are 5,000 suits’ pending

against the debtor in this proceeding.

There are perhaps an equal number not

filed. If all these claims were to be

tried, the expense of discovery proceed-

ings and trial would likely consume all

“AgT=

the assets of the debtor and exhaust all

the resources of its executives and

employees. As one court has commented,

we "must be mindful of the realities of

modern litigation. Pre-trial discovery

under modern federal practice has become

a monster on the loose... . Pre-trial

proceedings have become more costly and

important than trials themselves." In re

Johns-Manville, supra, 40 B.R. at 224.

Since the Dalkon Shield litigation began,

forty claims have sctuasil been tried but

over $517,000,000 have been expended in

defending or settling Dalkon Shield suits

or claims. It is impossible to antici-

pate the stupendous costs that would be

involved if all the claims here had to be

tried. If the claimants as a whole are

to realize reasonable compensation for

their claims, it is obviously in the

interest of the class of claimants as a

-A88-

whole to obviate the tremendous expense

of trying these cases separately. If the

bankruptcy court could arrive at a fair

estimation of the value of all the claims

and submit a fair plan of reorganization

based on such estimation, with some

mechanism for dispute resolution and

acceptable to all interested parties,

great benefit to all the claimants could

be achieved and the excessive expense of

innumerable trials, stretching over an

interminable time, could be avoided.?’

17 section 157 (b) (5) "does not

mandate that all tort actions must be

tried in district curt, but only those

which are not settled otherwise. ..."

Bankruptcy Service, L.Ed. Sec. 2:14.5, at

22 (Supp. 1985) (summarizing Roberts v.

Johns-Manville, supra, 45 B.R. at

825-26), and "the parties are certainly

free to agree to a dispute-resolution

procedure that does not involve trial,"

UNR, su , 45 B.R. at 326. To the same

effect is Newton v. Johns-Manville Corp.,

45 B.R. 827, 830 (S.D.N.Y. 1984).

~A89-

In addition, the real purpose of the

proceeding (i.e., a reorganization of the

debtor and its continuance as a going

business) could be attained.

It is manifest, of course, that the

process of estimation will involve some

examination of the claims. But this

examination will be conducted by the

court, will likely not involve duplica-

tive discovery, and can be accomplished

expeditiously. It was argued in In re

UNR Industries, Inc., 45 B.R. 322 (N.D.

Ill. 1984), though, that this would

require a — by the bankruptcy court

in making its estimation of the tort

claims and accordingly would "not be any

more efficient than ordering district

court trials." The court dismissed the

argument with this apt comment:

This contention both

understates the time and

expense of trials and over-

states the time and expense of

~A90-

the estimation process. Even

should Judge Toles decide the

Towers study is insufficient to

accurately estimate asbestos

claims and that some sort of

hearing is necessary, there is

no reason to believe 17,000

hearings must be held to get an

accurate enough picture of the

debtor's liability to asbestos

victims. 45 B.C.[{sic] at 326.

That language is applicable in this

case. It is unlikely that all 8,000 to

10,000 claims which have been filed would

have to be tried before an intelligent

estimation of the claims could be made by

the bankruptcy court. The interests of

all the claimants and the public interest

in a reasonable and fair reorganization

combine in favor of an effort at an

estimation of the Dalkon Shield claims as

a basis for formulating such a plan of

reorganization and as a possible step in

working out a mechanism acceptable to all

the claimants for a dispute-resolution of

their claims without burdening the estate

with the tremendous expense of endless

litigation and reducing if not exhaust-

ing, the assets available for paying

those claims.

No progress along estimating these

contingent claims, however, can be made

until all Dalkon Shield claims and suits

are centralized before a single forum

where all interests can be heard and in

which the interests of all claimants with

one another may be harmonized. Cre

Fidelity Mortgage Investors v. Camelia

Builders, Inc., 550 F.2d 47, 55 (2d Cir.

1976), cert. denied, 429 U.S. 1093. That

undoubtedly was the purpose of the motion

to fix venue and to transfer the pending

suits to the district court sitting in

bankruptcy before which the proceedings

were pending. This unquestionably was

the idea which prompted the district

court to opt tentatively in his order

-ASZ2=

a een ee ye ee

fixing venue in the district court

sitting in bankruptcy for all these

claims. We approve of the idea and find

it conducive of the interests of all

concerned.

However persuasive may . be the

reasons for fixing temporarily at least

venue of all the pending suits against

the debtor in the district court sitting

in bankruptcy where all the other Dalkon

Shield claims not in suit may be handled

together, the question remains as to what

procedure must be followed in effecting

such change of venue in order to satisfy

the requirements of due process. It is

the position of the appellants that a

right of action in tort is "property"

which may not under due process be

adversely affected by an involuntary

change of venue in the absence of a full

hearing after reasonable notice. It may

-A3S3-

bé accepted that, as the appellants

argue, a tort claim or action is a

"species of property" in the constitu-

tional sense. Logan _v. Timmerman Brush

Co., 455 U.S. 422, 428 (1982); cf.

Martinez v. California, 444 U.S. 277,

281-82 (1980). Similarly, it may be

agreed that where the plaintiff has such

a claim against a debtor in a Chapter 1l ;

proceeding, he has a statutory right to a

jury trial in a district court and that

the place of such trial is an important

right which may be entitled to some form

of due process protection under the broad

principles of Mullane v. Central Hanover

Bank & Trust Co., 339 U.S. 306 (1950).

The question is, though, what form such

protection must take.

"Due process" does not estabiish an

inflexible standard to be rigorously

applied in all cases. Recently, in

-A94-

BCom + i i a tee li

McClelland v. Massinga, F.2d (4th

Cir. 1986), we said that "due process is

not ‘a technical conception' of 'inflexi-

ble procedures' (citing Cafeteria Workers

v. McElroy, 367 U.S. 886, 895 (1961) nor

is it ‘a mechanical instrument' or

‘'yardstick'; it is rather ‘a delicate

process of adjustment! and of a balancing

of interests in which it is recognized

‘that what is unfair in one situation may

be fair in another... .'" In particu-

lar, it is important to recognize that

the notice and hearing is not "always

require[d] .. . prior to the initial

deprivation of property" and that

"(w]here only property rights are in-

volved, mere postponement of the judicial

enquiry is not a denial of due process,

if the opportunity given for ultimate

judicial determination of liability is

adequate." Parratt v. Taylor, 451 U.S.

“AS5~

527, 540 (1981). We conclude, therefore,

that due process requires some form of

notice and opportunity for a hearing

before there can be a change of venue and

before trial of a personal injury tort

cause of action against a debtor may be

transferred finally from the court in

which the cause was initially filed to

the district where the bankruptcy pro-

ceedings are pending.

We reach this conclusion not only

under due process analysis, but also

under the language and Rules issued under

the Bankruptcy Act. In our opinion, the

debtor's motion herein qualified as a

"contested matter" under the Act. As

such it had tc be begun by the filing of

a motion with "reasonable notice and

opportunity for hearing .. . afforded

the party against whom [the] relief [was]

sought." Bankruptcy Rule 9014. The

-A96-

debtor filed with the district court

sitting in bankruptcy an appropriate

motion for a fixing of venue and for

transfer of tort claims against the

debtor, and notice in the manner provided

by the Rules in this case was given but

only to the Committee of Representatives

of Dalkon Shield claimants. There was no

notice given the individual Dalkon Shield

claimants who had causes of action

against the debtor pending in court.

Counsel for the debtor asserted in

argument in district court in justifica-

tion of failure to serve the individual

plaintiffs in the — actions that "in

these cases the traditional rule is that

you serve the counsel for the Committee,

and the Committee, the counsel then has

the obligation to bring such matters as

are appropriate to the attention of the

members of the Committee." Counsel cited

“AS i=

no authority for this "traditional rule."

The Committee, however, contends that

notice to it was not notice to the

individual claimants and that such notice

did not satisfy the notice requirements

of Bankruptcy Rule 9014 or of due pro-

cess.

The role of the Committees appointed

under the Act as revised has received

considerable discussion but remains

somewhat uncertain. As we have already

noted, the status and position of Chapter

11 Committees are thoroughly canvassed in

Andrews, The Chapter 11 - Creditors'

Committee: Statutory Watchdog?, 2 Bank-

ruptcy Developments Journal, 247 (1985).

As that article indicates, the Commit-

tee's right to intervene and be heard in

any proceeding is, we think, fairly

established. Matter of Marin Motor Oil.,

Inc., 689 F.2d 445, 454-6 (3d Cir.),

-AS&-

Te ll Eas eal ae ”

cert. denied, 459 U.S. 1206 (1983). In

fact, the Rules require that certain

notices in the course of the proceedings

must be given the Committee. But it

seems clear under the Rules that the

Committee is not authorized to represent

the individual interests of any claimant,

as distinguished from the general inter-

ests of all claimants, In re Johns-

Manville, 26 B.R. 919, 926 (S.D.N.Y.

1983), and only in certain specific

situations, no one of which is relevant

here, may proper service be made on the

Committee rather than on the individual

claimants themselves under Bankruptcy

Rule 2002(i). It follows that, in our

opinion, service of notice of the hearing

on the motion to fix venue and to trans-

fer, as given only to the Committee did

not represent compliance with Bankruptcy

Rule 9014 or with due process.

-A99—-

Conceding that notice to the Commit-

tee did not qualify as service on indi-

vidual claimants, it does not follow that

the absence of such notice may be fatal

to due process in this proceeding. The

notice to the Committee may have been

sufficient under Cleveland Bd. of Educa-

tion v. _Louderm » —__U.S.__, 84

L.Ed.2d 494, 506 (1984), to permit the

issuance of a provisional or conditional

order providing for a fixing of venue in

the district court sitting in bankruptcy

for all the pending Dalkon Shield cases

against the debtor but giving the claim-

ants individual notice and an opportunity

to object and to be heard before the

order became final in any case where the

plaintiff has filed an objection. fThat

procedure would satisfy due process under

Parratt and the other cases. And, as we

read the record as well as the formal

-~A100-

Eee

order of the district court, this is

precisely what the district court intend-

ed, though the language of its order may

be obscure on the point.

The district court entered a ruling

bringing for the time being all the

pending suits against the debtor before

the district court sitting in bankruptcy

in order to proceed expeditiously in the

reorganization but with the definite

condition that any party might object and

might petition for abstention in his or

her case. It was in our opinion intended

as a conditional order, though not

Clearly stated as such. We are of the

opinion, because of this possible want of

clarity in the order assailed, that such

order must be modified to make it crystal

clear that the determination of venue

therein is, as we have said, conditional,

dependent finaliy and ultimately on a

-Al0l-

ruling to be made only after notice to

all claimants advising them of their

right to enter any objections they may

have to such a tentative ruling and to

submit a motion for abstention in their

particular case.+® The notice to be

given all claimants could be in the form

of a letter both to the claimant and to

his or her attorney stating the condi-

tional ruling made subject to a final

hearing, to become final only after

reasonable opportunity given all claim-

ants to object and/or to seek abstention.

We would think the notice should fix a

18ntil the conditional order is

made final with regard to a particular

case, a case should not be physically

transferred. Thus, no filing fee shall

be paid under Rule 9027 or expenditures

accompanying photocopying, freight, etc.

be made. Only after an order is final

shall the expense of transfer be

necessary.

-Al102-

time limit for the filing of objections

by claimants and should fix a day for a

hearing on the objections. The tentative

order might be made final as to any

claimant who failed to enter an objection

within the prescribed time. The mailing

of the notice as required will not

involve any great expense. Such a

modification of the order, followed by a

notice in the form suggested, it would

seem, should satisfy the requirements of

due process and of the Bankruptcy Rules

in the unusual circumstances of this

case. In order to achieve this modifica-

tion in the order of the district judge,

this phase of the appeal is remanded to

the district court for further proceed-

ings in accordance with the opinion

herein.

We do not presume to suggest rigid

guidelines for the district judge to

-A103-

follow when considering objections to the

transfer. We believe it important,

however, to observe that although there

may be distinct advantages of the tort

claims being transferred to Richmond,

those advantages should be balanced

against the disadvantages that may be

advanced at the hearing. In that regard,

some cases may be fully prepared and

ready for state trial. Some cases may

require substantial numbers of local

witnesses. Claimants may be receiving

critical medical, physical or psychologi-

cal care in a local area which would have

to be halted or transferred to Richmond.

All cf these factors are relevant.

Moreover, there are issues of state law

that may substantially affect the results

in individual cases.

In summary, we affirm the district

court's order staying the suits of the

-~A104-

plaintiffs against the debtor and all

co-defendants, but remand with directions

the order fixing venue for all pending

suits against the debtor and transferring

the suits to the district court before

which the bankruptcy proceedings were

pending.

AFFIRMED IN PART

and

REMANDED WITH DIRECTIONS.

-~A105-

FILED FILED

Oct 11 40-PM '85 Ost il, i985

Clerk, U.S. District Court Clerk, U.S.

Richmond, Virginia District

Court

Richmond, VA

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

A.H.ROBINS COMPANY, ) Bankruptcy No.

INCORPORATED, ) 85~-01307-R

Debtor ) AP No. 85-

Vv. ) 1006-R

NANCY CAMPBELL, )

et als., )

Defendants)

FINDINGS OF FACT AND CONCLUSIONS OF LAW

AS STATED FROM THE BENCH

Before: Honorable Robert R. Merhige, Jr.

United States District Judge

Richmond, Virginia

October 9, 1985

THE COURT: I think Judge Shelley

can probably do this better than I. We

either misunderstood each other or I

disagree with him. In either event, you

are stuck with me. So there you go.

I have trouble with 11 U.S.C.

Sec.362 covering anything but the

-A106-

es Ss

protection of the property of the bank-

rupt, to be perfectly frank with you.

But let me do the best I can. You all do

what you want to do.

This is a motion filed by the debtor

seeking to enjoin certain actions now

pending in various courts throughout the

country. Additionally, debtor seeks a

declaration under 28 U.S. C. Sec. 2201,

that the automatic stay provided for

under 11 U. S.C. Sec. 362 embraces

actions against its insurer and insured

co-defendants. The debtor contends that

even if the Court does not hold that Sec.

362(A) precludes actions against the

debtor's insurance carrier (and here is

where I have a little problem--though I

do find that actions against the insur-

ance carrier are likely to diminish the

fund that is available to the debtor for

the benefit of creditors).

-A107-

As to indemnified and _ insured

co-defendants and other co-defendants,

that it seeks relief under 11 U.S.C. Sec.

105(a) which provides that (and this is

where I think you are entitled to your

relief for sure), "The Court may issue

any order, process or judgment that is

necessary or appropriate to carry out the

provisions of this title." ll U.8.C.

Sec.105(a). At issue for now are the

eight suits that are pending. Now, let

me go over those very briefly.

I may mispronounce them. Dicharry,

et al. v. A. H. Robins Co. and Aetna Life

and Casualty. I don't know who is

handling that as plaintiff, but they have

sued Aetna Life and Casualty. Maybe that

is who they intended to sue, I don't

know. But those are what the papers in

front of me reflect. Discharry [sic] is

pending in the Eastern District of

-A108-

Lousianna [sic], and is set for February

24, 1986.

Plaintiff's complaint seeks damages

against both of the defendants on the

basis of strict liability and alterna-

tively breach of duty and/or negligence

of A. H. Robins in several respects. It

would appear Aetna's liability is prem-

ised on strict liability, the nature of

which I cannot tell from the complaint.

The complaint does not allege facts to

support that conclusion.

Now, as. to Dicharry, everybody

agrees that they cannot bring actions

against Robins, so that claim has to be

severed, or forgotten about because of

the stay.

The Court finds from the evidence

before it that there are approximately

2,400 suits outstanding joining entities

~A109—-

or persons with Robins as parties. I do

not want to face 2,400 of these.

Article 6 of Robins' Articles of

Incorporation provides indemnification

for certain of their officers, directors,

and employees. Robins' insurance policy

also includes, as insureds, the vendors

of Dalkon Shield, as well as Dr. Davis,

who was the inventor of the product. Dr.

Davis is also indemnified by Robins.

Let me go to the next case, Piccinin

v. A. H. Robins Co. and Aetna Casualty

and Surety. The case has not been set

for trial. The plaintiff has sought

leave to commence discovery against

Aetna. Mr. Pope recognizes that Sec. 362

stays the plaintiff's action against

Robins. The claim against Aetna is

premised on Aetna's own alleged actions

and alleged failure to act. Plaintiff

alleges that Robins and Aetna were

-A110-

engaged in a joint enterprise and that

they were joint tort feasors and conspir-

ators. In essence, the complaint alleges

the actions of one were the actions of

the other.

’ Next is Mosa v. A. H. Robins and

Hugh J. Davis, Jr., M.D., which I believe

is in the District of Maryland. In Mosa,

plaintiffs already severed Robins.

Plaintiff's complaint alleges false and

deceptive advertising, fraud and deceit,

subjecting the plaintiff to involuntary

testing, negligence, strict liability for

making a defective pyxoduct, strict

liability for alleged misrepresentation

on the part of both defendants, breach of

both implied and expressed warranties by

both defendants. Violation of the F.

D.A. Cosmetic Act, deliberately failing

to recall the product, negligence in

failing to recall, conspiracy to

“Alii=

misrepresent, to conceal, and to commit

fraud. I cannot for the life of me see

how Robins is not going to get right in

the middle of that one, at least their

people.

Next is the Barnett case filed in

state court, in the 9th Judicial Circuit

of Florida, in Orange County. Barnett v.

Aetna Casualty and Surety, A. H. Robins

Company, Florida Physicians Supply and

Medical Supply Company of Jacksonville, I

believe.

The evidence before me would indi-

cate that Florida Physicians Supply and

Medical Supply Company are both indemni-

fied by Robins. The complaint alleges

that Robins was negligent, that they were

guilty of fraud and misrepresentation,

that both Robins and Aetna jointly and

severally violated the laws of the United

Sates and Florida, i.e., the Food, Drug

-All2-

and Cosmetic Act. As to Robins, the

Florida Physicians Supply and Medical

Supply Company plaintiff claims strict

liability. She also claims a breach of

implied and express warranties from each

of those parties, and that Robins knew

about it.

There is a case pending in the

Superior Court of New Haven, Connecticut:

Ruminski_ v. A. H. Robins and Dr. Holly.

The complaint alleges as to Robins a lack

of testing, defective design and manufac-

turing, lack of proper and adequate

instructions, failure to warn as to Dr.

Holly, and negligence in diagnosis and

treatment.

Now, this case is the one that

bothers me the most, to be perfectly

frank with you. It looks like a medical

malpractice suit against the doctor. I

also point out that the allegation of

-All3<

Paragraph 16 sort of confused me: the

plaintiff alleges Dr. Holly told her that

she did not have a Dalkon Shield and

would be able to become pregnant. ze

seems to me that is a perfect defense for

Robins, and maybe it would be one you

would want to lift the stay to defend.

However, I have a feeling that it is just

a typographical error, but I am not at

all sure.

The next one is Conrad v. David, M.

D., Clark . D. and A. H. Rob ns, filed

in the City of Baltimore. As to all

defendants it is alleged that they were

negligent in | testing, manufacturing,

marketing, and promoting; misrepresenta-

tion; negligent enterprise between the

parties; fraudulent misrepresentation;

fraudulent concealment; and conspiracy

among the parties to commit fraud.

“~All4-

Then there is the Campbell case in

the Western District of Wisconsin. That

is against Robins and Aetna Casualty and

Surety Company, E. Claiborne Robins, Sr.,

Mr. Robins, Jr., and Hugh J. Davis. M. D.

Campbell alleges violation of the

R.I.C.O. Act (which may have already been

disposed of, I don't know), negligence,

strict liability, breach of implied and

express warranties, misrepresentations,

and fraud.

Finally, there is the Camp case,

which I had here a few minutes ago. I

will not go into the details of it.

There is not any question that 1l

U.S.C. Sec. 362(A) creates an automatic

stay of all actions against the debtor.

See Lynch v. Johns-Mansville Sales Corp.,

710 F.2d 1194 (6th Cir. 1983). See also

Williford v. Armstong, 715 F.2d 124 (4th

Cir.1983).

-Al15=-

Now, 11 U.S.C. Sec. 362, as I view

it--and I think the cases so interpret

it--the purpose of the stay is to give a

debtor a "breathing spell" from its

creditors. It stops all collection

efforts and harassment, and that language

is used frequentiy. The stay permits the

debtor to attempt to repay or to create a

reorganization plan, and it further

provides for equal treatment of all

creditors.

It is correct, as counsel has

pointed out, that the Williford case held

that the petitioners, who were joint tort

feasors, were not entitled to a discre-

tionary stay under the Court's general

equity powers pending resolution of the

bankruptcy claims of their co-defendants.

But in Williford, the court held that its

power to enjoin called for the exercise

of judgment which must weigh competing

-~A116-

interests and maintain an even balance.

Parties seeking a stay must make out a

clear case of hardship or inequity in

being required to go forward if there is

even a fair possibility that the stay

sought will work damages to someone else.

See Wi ford, 715 F.2d at 129, quoting

Landis v. North American Co., 299 U.S.

248, 255 (1936).

Well, I think there is a big differ-

ence between the Williford case and the

instant case. I think there is a big

difference between the Metals case and

the instant case. Here we have poten-

tially 2,400 suits involving other

people--people who may or may not be

indemnified. I do not think I have to

make that ruling: it would appear from

the evidence that most of them are

indemnified by Robins. It would also

appear from the evidence that anywhere

-All17-

insurance is involved, any judgment

covered by Aetna will lower the amount

recoverable by other people. Vendors

are protected under the policy according

to the evidence before me. That conclu-

sion is all subject, of course, to

change.

I think 11 U.S.C. Sec. 105(A) is

simply a codification of the principles

enunciated in this circuit in Blackwelder

Furniture, 550 F.2d, 189 (4th Cir. 1977),

and Televest v. Bradshaw, 618 F.2d 1029,

1032 (4th Cir. 1980). Those principles

are first, the Court must look to whether

there is irreparable harm to either of

the parties, the likelihood of success on

the merits, and the public interest. See

also In re Otero Mills, Inc., Sec. 21

B.R.777 (1982).

There is also--I cite not in support

of this proposition--the Metal Center

-~A118-

case, 31 B.R. 458 (1983). I do not think

that case is on point, and if it is, I

disagree with the court's conclusion:

that a debtor guarantor is not bound by a

judgment against the party so indemni-

fied. At least as to the amount which

might go against the guarantee. I do not

see any difference between that type of

thing and one of thse [sic] claimants who

has already gotten a judgment against

Robins or who has settled a case, even

though they have not been paid. That

amount is set!, and nobody can change it.

I am satisfied that situation is the same

thing here.

The success of our instant case

depends on the probability of a success-

ful plan of reorganization. These

outside suits frankly interfere with the

exclusivity of the debtor to establish a

plan, and that is what we are after. I

“ALL9=

do not see how these individual plain-

tiffs can be harmed by an injunction, at

least until a plan has been filed. Then

the Court, given an opportunity after

sxliciting counsel's views, can judge the

merits of the plan, or the lack thereof.

Certainly the public interest

requires that the Court consider, under

Fourth Circuit principles, an orderly

procedure leading to a successful reor-

ganization.

As I said before, this very proceed-

ing is proof of the difficulties to be

anticipated if an injunction does not

issue. I do not see how Mr. Forrest and

whoever else is responsible for the plan

and can develop it without the help of

other Robins' employees. They ought to

be free from distractions,and they cannot

be if these suits are allowed to proceed

to trial. It is inevitable that the

-A120-

nature of these law suits will involve

Robins' personnel. I find that the law

suits have a detrimental effect on the

debtor's assets.

Anything else?

Well, Judge Shelley suggests that

requiring Robins to reject executory

contracts would affect the officers in

operating the Company.

Well, I will accept that as part of

my conclusion. He is right. If relief

were not granted here, we would have a

rush to judgment: we would have 5,000 law

suits filed throughout the country

against anybody that counsel thought they

had a reasonable chance of getting a

judgment against. No, these suits are

enjoined. As far as I am concerned, the

law of this case is that all such suits

will be enjoined. If you have any

trouble, come in.

-Al2l1-

Certainly they are enjoined. This

decision is a preliminary until the

reorganization plan is either rejected or

accepted. Then we can see much more

intelligently how much effect, if any,

these suits might have on the debtor's

assets. That is it.

Thank you very much for yovr help.

Go ahead and draw a sketch, Mr.

Cogar. |

Pass it over here.

I would like to see Mr. Cogar,

counsel for the debtor, and counsel for

the claimants. Mr. Manchester, I have no

objection to your coming it--the trustee

--also counsel for the government.

-A122=-

RECEIVED FILED

OCT 11 1985 OCT 11 1985

Clerk, U.S. Dist. DAPR

Court, Richmond, VA Clerk, U.S.

District Court

Richmond, VA

UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

DICHARRY and VERNON

DICHARRY, ANNA

PICCININ, LUISA MOSA

and JACK MOSA, STELLA

J. CAMP and JOHN H.

CAMP, HELEN BARNETT and

MICHAEL BARNETT, and

EDNA LINDSEY RUMINSKI,

Defendants.

In re: ) Chapter 11

) Case No. 85-

A.H. ROBINS COMPANY, ) 01307-R

INCORPORATED, )

)

Debtor. )

)

Employer's Tax )

Identification )

No. 54-0486348 )

A.H. ROBINS COMPANY, ) Adversary

INCORPORATED, ) Proceeding

) No. 85-1006-R

Plaintiff, )

Ve )

)

NANCY CAMPBELL, KATHRYN ) (Retained

CONRAD, JEANETTE ) Proceeding)

)

-A123=

ORDER FOR PRELIMINARY INJUNCTION

This cause came on to be heard on

plaintiff's motion for preliminary

injunction. The Court having considered

plaintiff's complaint, the memorandum of

law and the declarations in support of

the motion and the papers filed in

opposition thereto and, having heard

testimony and argument and considered the

evidence presented, the Court adopts its

remarks and rulings as stated from the

bench and makes the following findings of

fact, conclusions of law, and order for a

preliminary injunction pursuant to

Bankruptcy Rule 7065 and Federal Rule of

Civil Procedure 65(d), all objections by

opposing counsel being duly preserved:

Findings of Fact

As of August 21, 1985, the plaintiff

in this action, A.H. Robins Company,

Incorporated ("Robins") was named as the

defendant in approximately 5,000 civil

actions in state and federal courts

throughout the country alleging injuries

and seeking damages stemming from Robins'

manufacture and marketing of the Dalkon

Shield intrauterine contraceptive device.

Pursuant to 11 U.S.C. Section 362(a), all

litigation against Robins in those

approximately 5,000 civil actions was

stayed automatically on August 21, 1985

upon filing of Robins' petition for

protection from its creditors under

Chapter il.

Approximately 2,400 of those civil

actions name persons or entities other

than Robins as_ co-defendants. Those

approximately 2,400 civil actions seek

damages from Robins co-defendants based

upon theories of liability which are

derivative of or interrelated with the

causes of action or claims for relief

-A125-

asserted against Robins. Any judgment

rendered against a Robins co-defendant in

any one of those approximately 2,400

civil actions could result in a claim

against Robins for either contractual

indemnity or commonlaw’ contribution.

Although Robins may be entitled to

relitigate the issue of its liability to

each indemnity or contribution claim, the

burden on Robins' estate of such litiga-

tion would significantly impede Robins’

reorganization and render any plan of

reorganization futile.

Moreover, many of those 2,400 civil

actions against the co-defendants would

require the participation of Robins’

officers, executives and employees as

witnesses and in pre-trial and post-trial

proceedings. The diversion of Robins'

key personnel from the reorganization

effort which would result from

-A1l26-

continuation of litigation in those 2,400

civil actions would impair Robins'

reorganization effort and would be

contrary to the public interest.

The continuation of litigation in

those 2,400 civil actions which name

Robins' co-defendants poses a significant

threat to Robins' reorganization effort

and could cause a direct and substantial

drain upon the assets of Robins' Chapter

ll estate. If this relief sought is not

granted, a rush to judgment will likely

ensue. Such a race to obtain judgments

against Robins' co-defendants would be

detrimental to the debtor and would

adversely affect Robins' reorganization

effort.

Any rejection by the debtor of its

contractual duty to indemnify its offi-

cers, directors, and employees would

adversely affect the debtor and would not

“Al27=

be consistent with the debtor's reorgan-

ization under Chapter ll.

Defendant Nancy Campbell has a civil

action pending in the United States Court

for The Western District of Wisconsin.

In her complaint Ms. Campbell asserts

Claims against Robins, The Aetna Casualty

and Surety Company, E. Claiborne Robins,

Sr., E. Claiborne Robins, Jr. and Dr.

Hugh J. Davis. Ms. Campbell seeks

recovery from those defendants under

theories of negligence, strict liability,

implied and express warranties, misrepre-

sentation, fraud and under the Racketeer

Influcenced [sic] and Corrupt Organiza-

tion Act ("RICO"). The continuation of

litigation in the Campbell Action against

any of Robins' co-defendants threatens

property of the debtor's estate and

threatens to impair and impede the

debtor's reorganization effort.

Defendant Kathryn Conrad has a civil

action pending in the Circuit Court for

Baltimore City. In her complaint, Ms.

Conrad asserts claims against Robins, Dr.

Hugh J. Davis and Dr. Frederick A. Clark,

Jr. Ms. Conrad seeks recovery from those

defendants under theories of negligence,

strict liability, fraudulent misrepresen-

tation and conspiracy. The continuation

of litigation in the Conrad action

against any of Robins' co-defendants

threatens property of the debtor's estate

and threatens to impair and impede the

debtor's reorganization effort.

Defendants Jeanette Dicharry and

Vernon Dicharry have a civil action

pending in The United States District

Court for the Eastern District of

Louisiana. In their complaint, the

Dicharrys assert claims against Robins

and Aetna Casualty and Surety Company

-A129=-

(served herein as Aetna Life and Casual-

ty). The Dicharrys seek recovery from

those defendants under theories of strict

liability, negligence, misrepresentation

and breach of warranty. The continuation

of litigation in the Dicharry Action

against Aetna Casualty and Surety Company

threatens property of the debtor's estate

and threatens to impair and impede the

debtor's reorganization effort.

Defendant Anna Piccinin has a civil

action pending in The United States

District Court for The Middle District of

Alabama. In her complaint, Ms. Piccinin

asserts claims against Robins and The

Aetiia Casualty and Surety Company. Ms.

Piccinin seeks recovery from those

defendants under theories of conspiracy,

fraud, negligence, misrepresentation and

breach of warranty. The continuation of

litigation in the Piccinin Action against

~A130-

The Aetna Casualty and Surety Company

will impair and impede the debtor's

reorganization effort.

Defendants Luisa Mosa and Jack Mosa

have a civil action pending in The United

States District Court for the District of

Maryland. In their complaint, the Mosas

assert claims against Robins and Dr. Hugh

J. Davis. The Mosas seek recovery from

those defendants under theories of fraud

and deceit, involuntary testing and

battery, negligence, strict liability,

breach of warranty, violation of the

Federal Food and Drug Act and conspiracy.

The continuation of litigation in The

Mosa Action against Dr. Hugh J. Davis

threatens property of the debtor's estate

and threatens to impair and impede the

debtor's reorganization effort.

Defendants Stella J. Camp and John

H. Camp have a civil action pending in

“Ai3i=

The Circuit Court for Madison County,

Alabama. In their complaint, the Camps

assert claims against Robins, D.L.K.,

Incorporated and John or Jane Does

numbers three through nine. The Camps

seek recovery from those defendants under

theories of negligence, strict liability,

misrepresentation, breach of warranty,

conspiracy and fraud. The continuation

of litigation in The Camp Action against

any of Robins' co-defendants threatens to

impair and impede the debtor's reorgan-

ization effort.

Defendants Helen Barnett and Michael

Barnett have a civil action pending in

the Circuit Court of the Ninth Judicial

Circuit, Orange County, Florida. In

their cotehiibak. the Barnetts assert

claims against Robins, Aetna Casualty and

Surety Company, Florida Physicians

Supply, Incorporated and Medical Supply

"AiL32=-

Company of Jacksonville. The Barnetts

seek recovery from those defendants under

theories of willful negligence, fraud and

misrepresentation, violation of State and

Federal Food and Drug Acts, strict

liability, breach of warranty and bat-

tery. The continuation of litigation in

the Barnett Action against any of Robins'

co-defendants threatens property of the

debtor's estate and threatens to impair

and impede the debtor's reorganization

effort.

Defendant Edna Lindsey Ruminski has

a civil action pending in the Superior

Court for the Judicial District of new

Haven, Connecticut. In her complaint,

Ms. Ruminski asserts claims against

Robins and Dr. Marshall R. Holley. Ms.

Ruminski seeks recovery from those

defendants under theories of negligence.

The continuation of litigation in the

“AL33~

Ruminski Action against Dr. Marshall R.

Holley threatens to impair and impede the

debtor's reorganization effort.

The eight civil actions described

above are representative examples of

similar civil actions among the approxi-

mately 2,400 civil actions currently

pending against Robins which name persons

or entities other than Robins as co-

defendants. The continuation of litiga-

tion in those approximately 2,400 civil

actions against the various categories of

co-defendants represented by the eight

civil actions described above would pose

a serious threat to the success of the

debtor's reorganization and is contrary

to the public interest.

Conclusions of Law

The District Court exercising its

jurisdiction under 28 U.S.C. Sections

1334(b) and (dad), has the authority

"ALIE@—

pursuant to 11 U.S.C. Section 105 and 28

U.S.C. Section 1651, to stay all actions

which adversely affect the estate of the

debtor and the debtor's reorganization

effort and to stay all actions which will

impair and impede the debtor's reorgan-

ization effort.

Robins has established that the

likelihood of irreparable harm to Robins

if this injunction is not granted out-

weighs the likelihood of irreparable harm

to the defendants if the injunction is

granted.

Robins has established the likeli-

hood of its success on the merits and the

likelihood of a successful reorganization

if it is not burdened by continued

litigation against it and its co-

defendants.

-A135-

Robins has established that’ the

granting of this preliminary injunction

is in the public interest.

The conclusions of law contained in

this order constitute the law of this

case and shall be applied with equal

force to all defendants similarly situat-

ed who are brought to the attention of

this court.

To the extent any of the foregoing

conclusions of law constitute findings of

fact, they are to be deemed as such, and

of en

Order

Based upon the foregoing, and good

cause appearing therefor, it is hereby

DECLARED all available proceeds of

liability insurance issued to Robins are

property of the debtor's estate pursuant

to 11 U.S.C. Section 541 and any civil

action seeking a judgment that might be

-A136-

satisfied from the proceeds of that

insurance is automatically stayed pursu-

ant to 11 U.S.C. Section 362(a);

ORDERED defendant Nancy Campbell is

enjoined and restrained from continuing

with litigation against any of the

defendants named in Civil Action No.

85-C-230-S currently pending in the

United States District Court for the

Western District of Wisconsin; and

further

ORDERED defendant Kathryn Conrad is

enjoined and restrained from continuing

with litigation against any of the

defendants named in Civil Action No.

85231036 currently pending in the Circuit

Court for the City of Baltimore, State of

Maryland; and further

ORDERED defendants Jeanette Dicharry

and Vernon Dicharry are enjoined and

restrained from continuing with

-A137-

litigation against any of the defendants

named in Ciwit Action No. 85-1243 cur-

rently pending in the Unites States

District Court for the Eastern District

of Louisiana; and further

ORDERED defendant Anna Piccinin is

enjoined and restrained from continuing

with litigation against any of the

defendants named in Civil Action No.

CV-85-H-9120-N currently pending in the

United States District Court for the

Middle District of Alabama; and further

ORDERED defendants Luisa Mosa and

Jack Mosa are enjoined and restrained

from continuing with litigation against

any of the defendants named in Civil

Action No. H82-49 currently pending in

the United States District Court for the

District of Maryland; and further

ORDERED defendants Stella J. Camp

and John H. Camp are enjoined and

-A138-

restrained from continuing with litiga-

tion against any of the defendants named

in Civil Action No. CV-85-671-W currently

pending in the Circuit Court for Madison

County, State of Alabama; and further

ORDERED defendants Helen Barnett and

Michael Barnett are enjoined and re-

strained from continuing with litigation

against any of the defendants named in

Civil Action No. 83-5426 currently

pending in the Circuit Court for the

Ninth Judicial District, Orange County,

State of Florida; and further

ORDERED defendant Edna Lindsey

Ruminski is enjoined and restrained from

continuing with litigation against any of

the defendants named in Civil Action No.

CV-81-0209979-S currently pending in the

Superior Court for the Judicial District

of New Haven, State of Connecticut.

“ALI9=

This injunction shall remain in

force until further order of this Court.

DATED:

10-11-85

Nunc pro tunc 10-9-85

/s/ Robert R. Merhige, Jr.

UNITED STATES DISTRICT JUDGE

WE ASK FOR THIS;

MURPHY, WEIR & BUTLER

Patrick A. Murphy

Penn Ayers Butler

Michael K. Maly

Robert A. Julian

101 California Street, 39th Floor

San Francisco, California 94111

(415) 398-4700

By: /s/_ M.K. Maly

MAYS, VALENTINE, DAVENPORT

& MOORE

William R. Cogar

Bradfute W. Davenport, Jr.

Clifford W. Perrin, Jr.

23rd Floor, Sovran Center

1111 East Main Street

P. O. BOx 2426

Richmond, Virginia 23218

(804) 644-6011

-A140-

By: /s/ William R. Cogar

Attorneys for

A.H. ROBINS COMPANY,

INCORPORATED

-A1l41-

‘RECEIVED FILED

Nov 8 1985 IN OPEN COURT

Clerk, U.S. Dist. Nov. 9, 1985

Court Clerk, U.S.

Richmond, Va. Dist.

Richmond, Va.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF VIRGINIA

Richmond Division

In re

A.H. ROBINS COMPANY ) Case No.85-

INCORPORATED ) 01307-R

)

Debtor. ) Retained

) Proceeding

) (Judge Merhige)

)

EMPLOYER'S TAX )

IDENTIFICATION )

No. 54-0486348 )

ORDER PURSUANT TO

28 U.S.C. SECTIONS 157(b) (5) AND 1334(b)

AND 11 U.S.C. SECTION 105(a)

Upon the motion of A. H. Robins

Company, Incorporated ("Robins), for

orders pursuant to 28 U.S.C. Sections

157(b) (5) and 1334(b), and 11 U.S. C.

Section 105(a) for determination of trial

venue, identification of cases "related

to" this Chapter 11 case and transfer of

~Al42-

cases; the Court having considered the

motion, the memorandum of law, the

Statement of Financial Affairs For Debtor

Engaged in Business Question 12 (Exhibit

1), and having heard the arguments of

counsel and good cause appearing there-

for, it is hereby

ORDERED, pursuant to Sections

157(b) (5) and 1334(b) of Title 28 of the

United States Code, that to the extent

personal injury tort or wrongful death

actions against Robins or any other

defendant that are related to the Robins

Chapter 11 case are to be tried in a

district court, such action shall be

tried in the Richmond Division of the

United States District Court for the

Eastern District of Virginia; and it is

further

ORDERED, pursuant to Section 1334 (b)

of Title 28 of the United States Code,

that all actions based upon personal

injury tort or wrongful death claims

arising from the use of the Dalkon Shield

intrauterine contraceptive device are

proceedings related to this Chapter 11

case over which this Court has jurisdic-

tion; and it is further

ORDERED that all actions related to

the Robins Chapter 1l case, as determined

by this Order, now pending in any federal

district court or subsequently removed to

any federal district court during the

pendency of this Chapter 11 case, be

transferred by the Clerks of those Courts

to this Court; and it is further

ORDERED that nothing contained

herein shall affect or limit the power of

this Court to abstain from hearing any

particular proceeding under Section

1334(c)(1) of the United States Code or

~Al44-

remanding any particular proceeding under

Section 1452(b) of the United States

Code.

DATED: /s/November 9,1985

/s/Robert R.Merhige, Jr.

United States District Judge

NOTICE OF JUDGMENT OR ORDER

Entered on docket 11-12-85

(Handwritten) This Order is

stayed for a period of five (5)

days from this date.

/s/Robert R. Merhige, Jr.

11-9-85

We ask for this:

/s/William R.Cogar

William R. Cogar

Clifford W.Perrin,Jr.

Mays,Valentine, Davenport,

& Moore

Post Office Box 1122

Richmond, Virginia 23208

Patrick A. Murphy

Penn Ayers Butler

Murphy, Weir & Butler

101 California Street,39th Floor

San Francisco, California 94111

-A1l45-

FILED

MAY 14, 1986

US COURT OF APPEALS

Fourth Circuit

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 85-2183(L)

A.H.Robins Company, Appellee,

INnc.,

versus

Anna Piccinin, Appellant.

and

Nancy Campbell, Defendants.

et al,

Aetna Casualty and Intervenor/

Surety Company, Appellee.

No. 85-2184

A.H.Robins Company,

ENG s, Debtor.

A.H.Robins Company, Appellee,

inc.,

versus

Committee Represen- Appellants.

tatives of Dalkon

Shield Claimants,

~Al46-

Aetna Casualty and Intervenor/

Surety Company Appellee.

No. 85-2185

A.H. Robins Company, Debtor.

Inc.,

A. H. Robins Company, Appellee,

Inc.,

versus

Kathryn Conrad, Luisa Appellants.

and Jack Mosa,

No. 85-2186

In Re:

A.H. Robins Company, Debtor.

Inc.,

A. H. Robins Company, Appellee,

Inc.,

versus

Anna Piccinin, Appellant.

Appeals from the United States District

Court for the Eastern District of

Virginia, at Richmond. Robert R. Merhige,

District Judge.

~A1l47-

Upon consideration of the petition

of appellant Piccinin for rehearing;

IT IS ORDERED that the petition for

rehearing is denied.

Entered at the direction of Judge

Russell, with the concurrence of Judge

Chapman and Judge Swygert, Senior U. S.

Circuit Judge sitting by designation.

For the Court,

/Ss/JOHN M. GREACEN

Clerk

-~A148-

CERTIFICATE OF SERVICE

I, C. Neal Pope, do hereby certify

that I am a member of the Bar of The

Supreme Court of the United States. I

further certify that I have served the

foregoing Appendix to Petition for Writ

of Certiorari upon each Respondent by

mailing three copies of the same properly

addressed, postage prepaid, to each of

the following:

Attorneys for A.H. Robins Company,

Incorporated

William R. Cogar

James S. Crockett, Jr.

Bradfute W. Davenport, Jr.

Clifford W. Perrin, Jr.

Mays, Valentine, Davenport & Moore

1111 East Main Street

Richmond, Virginia 23218

Patrick A. Murphy

Penn Ayers Butler

Michael Kip Maly

Murphy, Weir & Butler

101 California Street, 39th Floor

San Francisco, California 94111

Attorneys for The Aetna Casualty &

Surety Company

Jan Z. Krasnowiecki

123 South Bread Street

Philadelphia, Pennsylvania 19109

-Al49-

W. Scott Street

Williams, Mullen & Christian

919 East Main Street

Richmond, Virginia 23218

Attorney for Kathryn Conrad and

Luisa Mosa and Jack Mosa

H. Robert Erwin, Jr.

Pretl & Schulthels, P.A.

2600 St. Paul Street

Baltimore, Maryland 21218

Attorneys for Committee of Represen-

tatives of Dalkon Shield Claimants

Murray Drabkin

Mark C. Ellenberg

Cadwalader, Wickersham & Taft

1333 New Hampshire Avenue, N.W.

Washington, D.C. 20031

Lawrence 3. Cann, III

George B. Little

Little, Parsley & Cluverius, P.C.

13th Floor

701 East Byrd Street

Richmond, Virginia 23219

This 8th day of 2 ia 1986.

Cc. Neal Pope

Attorney for Anna

Piccinin, Petitioner

Post Office Box 2128

Columbus, GA 31902-2128

404/324-0050

-A150-

ee ee Sono

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.