# Opposition Brief — Official Committee of Tort v. Dow Corning Corp., 117 S. Ct. 718 (1997) (No. 96-330) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1378%3A5 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1997 ## Text A : Nos. 96-330 & may, Supreme Court, IN THE NOV 27 {99 Supreme Court of the United States. OCTOBER TERM, 1996 aie is > OFFICIAL COMMITTEE OF TORT CLAIMANTS, Petitioner. —Y,— DOW CORNING CORPORATION, THE DOW CHEMICAL COMPANY, CORNING INCORPORATED, BAXTER INTERNATIONAL INCORPORATED, MINNESOTA MINING AND MANUFACTURING COMPANY, BRISTOL-MYERS SQUIBB COMPANY AND MEDICAL ENGINEERING CORPORATION, Respondents. > BREAST IMPLANT TORT CLAIMANTS REPRESENTED BY O’ QUINN, KERENSKY, MCANINCH & LAMINACK, Petitioners, on DOW CORNING CORPORATION, et ai., Respondents. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT BRIEF IN OPPOSITION OF RESPONDENTS BRISTOL-MYERS SQUIBB COMPANY AND MEDICAL ENGINEERING CORPORATION Hayden Smith Counsel of Record David J. Adler MCCARTER & ENGLISH Gateway Four 100 Mulberry Street Newark, New Jersey 07102 (201) 622-4444 Counsel for Respondents Bristol-Myers Squibb Company and Medical Engineering Corporation COUNTER-STATEMENT OF QUESTIONS PRESENTED 1. Whether the decision of the United States Sixth Circuit Court of Appeals in Lindsey v. O’Brien, Tanski, Tanzer & Young Health Care Providers of Connecticut (In re Dow Corning Corp.), 86 F.3d 482 (6th Cir. 1996), petition for cert. filed, 65 U.S.L.W. 3167 (U.S. Aug. 28, 1996) (No. 96-330) is reviewable by this Court in light of the present procedural posture of the case? 2. Whether the decision of the United States Sixth Circuit Court of Appeals in Lindsey v. O’Brien, Tanski, Tanzer & Young Health Care Providers of Connecticut (In re Dow Corning Corp.), 86 F.3d 482 (6th Cir. 1996), petition for cert. filed, 65 U.S.L.W. 3167 (U.S. Aug. 28, 1996) (No. 96-330) conflicts with the decisions of other Courts of Appeals regarding the scope of “related to” jurisdiction under 28 U.S.C. § 1334(b)? ii RULE 29.6 LISTING Pursuant to Supreme Court Rule 29.6, Respondent Bristol- Myers Squibb Company states that it does not have a parent company. The subsidiaries (other than wholly owned sub- sidiaries) of Bristol Myers Squibb Company are: Bristol-Myers Lion Ltd. Bristol-Myers Squibb G.M.B.H. Mead Johnson (Guangzhou) Ltd. P.T. Squibb Indonesia Synbiotics Limited Laboratories UPSA SAS RCS Realty Corporation Sino American Shanghai Squibb Pharma Ltd. Squibb Nigeria Limited 2309 Realty Corporation Respondent Medical Engineering Corporation states that it is a wholly owned subsidiary of Bristol-Myers Squibb Com- pany. Medical Engineering Corporation does not have any subsidiaries (other than wholly owned subsidiaries). TABLE OF CONTENTS PAGE Counter-Statement of Questions Presented............ i EE PME EIRENE vcci ceric scadvcoasevocccocereasasenss il De nee oak abaceertansesines ili Nn Or MIUNEORNE oes ack hs cubbdceccsossnaseectesve iv Counter-Statement of the Case ...............eeceeeees l Reasons for Denying the Writ...............---2000e5: 6 eee Err Fig dc bate cadius cévveveseeve cent 16 Appendices: Appendix A: Opinion of the District Court (July 30, SUED UU y iG aN es de adeORER baw e Mes ae css la Appendix B: Order of the Sixth Circuit (September 24, Ds Lube aind san shh bao es-cn he deans 9a iv TABLE OF AUTHORITIES Cases A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir.), cert. denied, 479 U.S. 876 (1986) ................. Aetna Life Insurance Co. v. Haworth, 300 U.S. 227 €) x 52 BERRI ARON Voy aie. IE yo NED gh American Construction Co. v. Jacksonville, Tampa & Key West Railway Co., 148 U.S. 372 (1893)... Anderson v. Green, ____ U.S. ___, 115 S. Ct. 1059 CROP AD viccacknerschsbecksas ceaas eeeleeeeoeantas. Brotherhood of Locomotive Firemen v. Bangor & Aroostock R.R. Co., 389 U.S. 327 (1967)...... Celotex Corp. v. Edwards, ____ U.S. ___, 115 S. Ct. BOSS CI OOS? ini bei Roi aan Bibvcdnchc aes City Communications, Inc. v. City of Detroit, 888 F.2d CORE CGC Civ. FORD 5 vos bcnncdsetcdskvieesceunsa dn Dames & Moore v. Regan, 453 U.S. 654 (1981)....... Defunis v. Odegaard, 416 U.S. 312 (1974) ............ In re Dogpatch U.S.A., Inc., 810 F.2d 782 (8th Cir. SORE Dk can ctheckescheaec ap snees Consistent with Pacor, the Sixth Circuit recognized that “related to” jurisdiction is not limitless. Jd. at 490. 14 from the Court because they are displeased with the result in Lindsey, certiorari jurisdiction should not be exercised for the “the benefit of the particular litigants”, but instead for the set- tlement of [issues] of importance to the public, as distin- guished from . . . the parties.” Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 250 (1969) (Harlan, J. dissenting) (citations omitted); see also Sup. Ct. R. 10 (“[a] petition for a writ of certiorari is rarely granted when the asserted error consists of . . . the misapplication of a properly stated rule of law.”). Moreover, the Tort Committee seems to suggest that a def- inite finding of liability is required under the Pacor test. Tort Committee Pet. at 14. Such a finding is not required: A key word in [the] test is “conceivable.” Certainty, or even likelihood is not a requirement. Bankruptcy juris- diction will exist so long as it is possible that a pro- ceeding may impact on “the debtor’s rights, liabilities, options, or freedom of action” or the “handling and administration of the bankrupt estate.” In re Marcus Hook Dev. Park, Inc., 943 F.2d 261, 264 (3d Cir. 1991) (quoting Jn re Smith, 866 F.2d 576 (3d Cir. 1989)) (other citations omitted). Finally, the Sixth Circuit explained the dif- ference in the outcome between Lindsey and Pacor: The potential for Dow Corning’s being held liable to the non-debtors in claims for contribution and indemnifi- cation, or vice versa, suffices to establish a conceivable impact on the estate in bankruptcy. Claims for indem- nification and contribution, whether asserted against or by Dow Corning, obviously would affect the size of the estate and the length of time the bankruptcy proceedings will be pending, as well as Dow Corning’s ability to resolve its liabilities and proceed with reorganization. In addition, we believe there is a qualitative difference between the single suit involved in Pacor and tie over- 15 whelming number of cases asserted against Dow Corning and the non-debtor defendants in this case. Id. at 494, Accordingly, Lindsey does not conflict with Pacor. In addition, Petitioners assert that Lindsey “significantly diverges” from In re Fedpak Systems, Inc., 80 F.3d 207 (7th Cir. 1996). Tort Committee Pet. at 12. In fact, the result in Lindsey would be no different if the test in Fedpak were applied.'* In Fedpak, the debtor Fedpak Systems, Inc. (“Fedpak”) was the developer and patent holder on a frozen dessert machine. Id. at 209. Shortly after filing for bankruptcy, Fedpak com- menced a breach of contract action against Stanley Jones (“Jones”). Id. The Fedpak/Jones litigation was subsequently settled on appeal and Fedpak thereafter transferred all of its intellectual property rights in the machines to Polar Express International, Inc. (“Polar Express”) in exchange for royalty payments. /d. at 210. Years later, at the request of Polar Express, Fedpak filed a motion seeking clarification of the findings of facts and conclusions of law issued by the bankruptcy court in the Fedpak/Jones Litigation. On appeal, the Seventh Circuit noted that Fedpak did not have standing to request such an order. /d. at 212. Addition- ally, the Court noted that the bankruptcy court lacked juris- diction to determine the rights of Jones and Polar Express to property outside of the Court’s control. /d. at 213. In so rul- ing, the court set forth its test for determining jurisdiction: “[a] case is related to a bankruptcy case when the dispute ‘affects the amount of property available for distribution [i.e., " Equally unavailing is the assertion of the O’ Quinn Claimants that the decision in Lindsey conflicts with that of In re Turner, 724 F.2d 338 (2d Cir. 1983) and Jn re Lemco Gypsum, Inc., 910 F.2d 784 (11th Cir. 1990). In Lemco, the Eleventh Circuit stated: “[wJe join the majority of the circuits that have adopted the Pacor formulation.” Jd. at 788. More- over, the Opt-Out Actions have a “significant connection” with the Debtor’s bankruptcy as required under Turner. Turner, supra, 724 F.2d at 341. 16 the debtor's estate] or the allocation of property among cred- itors.’ ” /d. at 213-14 (citations omitted). Despite the Petitioners’ assertions to the contrary, the Fed- pak test does not “significantly diverge” from that of Lindsey. Indeed, in the instant case, application of the Fedpak test would not have changed the result. Unlike the thousands of claims pending against the Debtor, the claim in Fedpak was but a single claim. Moreover, as the Sixth Circuit noted, the claims for indemnification and contribution whether asserted by or against the Debtor will undoubtedly “affect the size of the estate”—i.e., the amount of property available for dis- tribution—as well as the Debtor's “ability to resolve its lia- bilities and proceed with reorganization”—i.e., allocation of property among creditors. See Lindsey, 86 F.3d at 494. In sum, there is no conflict among the Circuits with respect to “related to” jurisdiction and Petitioners’ requests for cer- tiorari should be denied. CONCLUSION The petitions for writs of certiorari should be denied. Respectfully submitted, Hayden Smith Counsel of Record David J. Adler MCCARTER & ENGLISH Gateway Four 100 Mulberry Street Newark, New Jersey 07102 (201) 622-4444 Counsel for Respondents Bristol- Myers Squibb Company and Medical Engineering Corporation Dated: November 26, 1996 APPENDIX Syst ob < oe ee. 4 la Appendix “A” UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION Case No. 95-CV-72397-DT HON. DENISE PAGE Hoop In Re: Dow CORNING CORPORATION, Debtor. MEMORANDUM OPINION AND ORDER ON REMAND REGARDING SECTION 1334(c) ABSTENTION I. INTRODUCTION: This matter is before the Court on remand from the United States Court of Appeals for the Sixth Circuit. /n re: Dow Corning Corporation, Nos. 95-2034/2082/2084/2106/2107, 86 F.3d 482 (6th Cir. 1996) (Amended). This Court previously entered an order finding that it did not have subject matter jurisdiction over the tort claims against the nondebtor defen- dants pursuant to 28 U.S.C. § 157(b)(5). The Sixth Circuit reversed this Court’s determination on this issue and found that this Court had subject matter jurisdiction over the tort claims pending against the nondebtor defendants pursuant to 28 U.S.C. § 157(b)(5). The Sixth Circuit remanded this case 2a on the issue of whether or not this Court should abstain from the tort claims against the nondebtors pursuant to 28 U.S.C. § 1334(c)(1) and/or (2). II. ANALYSIS: A. Whether this Court must abstain or, alternatively, exercise its discretion to abstain pursuant to 28 U.S.C. § 1334(c). 1. Mandatory Abstention. The Sixth Circuit has concluded that this Court has “related to” jurisdiction pursuant to 28 U.S.C. § 1334(b) over the actions pending against the nondebtors Dow Chemical, Corn- ing Incorporated, Minnesota Mining, Baxter and Bristol- Myers Squibb in nonbankruptcy forums nationwide. /n re Dow Corning Corp., supra at 494. In a section 157(b)(5) motion, an abstention analysis is required. /n re Pan Ameri- can Corp., 950 F.2d, 839, 844 (2nd Cir. 1991); In re Dow Corning Corp., supra at 497. The Tort Claimants’ briefs and other claimants’ objections and responses to the nondebtors’ motions under Section 157(b)(5) requested this Court to abstain under 28 U.S.C. § 1334(c). Section 1334(c) qualifies Section 1334(b)’s broad grant of jurisdiction. Jn re Dow Corning Corp. at 497. There are two types of abstention under Section 1334(c): discretionary abstention under 28 U.S.C. § 1334(c)(1) and mandatory abstention under 28 U.S.C. § 1334(c)(2). Id. Mandatary abstention will be addressed first. In order for mandatory abstention to apply, a proceeding must: 1) be based on a state law claim or cause of action; 2) lack a federal jurisdictional basis absent the bankruptcy; 3) be commenced in a state forum of appropriate jurisdiction; 4) be capable of timely adjudication; and 5) be a non-core pro- ceeding. /d. As to the first factor, the claims and causes of action at issue against the nondebtors are personal injury tort claims 3a which are essentially state law claims. Addressing the second factor, this Court notes that the Sixth Circuit held that this Court has “related to” bankruptcy jurisdiction over the non- debtors. The personal injury tort actions against the non- debtors are not proceedings which need a determination under the bankruptcy laws and do not arise in a bankruptcy case. Absent the bankruptcy of the debtor in this matter, this Court would lack federal jurisdiction over the actions against the nondebtors.' With respect to the third factor, there have been no allegations that the actions against the nondebtors have not been commenced in a state forum of appropriate jurisdiction. Satisfying the fourth factor, the parties have informed the Court that there are numerous cases ready for trial against the nondebtors. Furthermore, the Honorable Sam C. Pointer, Jr. in his March 19, 1996 (Order 29) and April 16, 1996 (Order 29B) orders and the Multidistrict Litigation Panel’s April 10, 1996 Conditional Remand Order, indicate there are numerous cases against the nondebtors which are indeed ready for trial. Considering the fifth factor, the Court must determine whether the actions against the nondebtors are non-core pro- ceedings. There are two categories of core proceedings: pro- ceedings “arising under” title 11 and proceedings “arising in” title 11. Jn re Harris Pine Millis, 44 F.3d 1431, 1435 (9th Cir. 1995), cert. denied, 115 S.Ct. 2555 (1995). Proceedings “aris- ing under” title 11 “involve a cause of action created or deter- mined by a statutory provision of title 11.” /d. Proceedings “arising in” title 11 are a reference to those “administrative” The only cases against the nondebtors over which this Court would have jurisdiction, sitting in the Eastern District of Michigan, are those cases that involve complete diversity. The Court notes that most of the cases involving the nondebtors also include the Debtor Dow corning Corporation which would defeat this Court's diversity jurisdiction. (See the Court’s Discretionary Abstention analysis, infra.) The Court notes that mandatory abstention also apply to removed cases. William v. Shell Oil Co., 169 B.R. 684, 690-691 (S.D. Cal. 1994). The Court further notes that absent the bankruptcy, the Court has no jurisdiction over the cases against the nondebtors where the claims arose outside of the Eastern Dis- trict of Michigan. 4a matters that arise only in bankruptcy cases and are not based on any right expressly created by title 11, but nevertheless, would have no existence outside of the bankruptcy.)/d. Sec- tion 157(b)(2) provides a nonexclusive list of proceedings which are core proceedings. Non-core proceedings are only “related to” a case under title 11. /d. at 1435. A Non-core pro- ceeding “does not invoke a substantive right created by the federal bankruptcy law and is one that could exist outside of bankruptcy.” /d. Personal injury tort or wrongful death claims are excluded from the catalog of core proceedings by 28 U.S.C. § 157(b)(2)(B) and (QO) which state in pertinent part: (b)(2) Core proceedings include, but are not limited to— cad * * (B) allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation of claims or interests for the pur- poses of confirming a plan under chapter 11, 12 or 13 of title 11 but not the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for pur- poses of distribution in a case under title 11; * * * (O) other proceedings affecting the liquidation of assets of the estate or the adjustment of the debtor- creditor or the equity security holder relationship, except personal injury tort or wrongful death claims. 28 U.S.C. § 157(b)(2)(B) and (QO) (emphasis added). Jn re Hughes, 98 B.R. 115, 118 (D.C. 1988). The actions against the nondebtor defendants are non-core proceedings under 28 U.S.C. § 157. 5a Section 157(b)(4) provides that “[n]on-core proceedings under § 157(b)(2)(B) of title 28 [liquidation of personal injury tort or wrongful death cases], shall not be subject to the mandatory abstention provisions of Section 1334(c)(2).” In re Pan Am, 950 F.2d at 845; 28 U.S.C. § 157(b)(4). As indicated above, the non-core proceedings included in Section 157(b)(2)(B) are “liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under title 11.” (Emphasis added). Here, the personal injury and/or wrongful death tort actions are not “against the estate” of the debtor but against the nondebtors. Consequently, the non-core proceedings and actions against the nondebtors are not exempt from mandatory abstention under Section 157(b)(4). Moreover, 28 U.S.C. § 1334(c)(2) provides for mandatory abstention in cases involving state law claims for which the sole basis of bankruptcy jurisdiction is “related to” jurisdic- tion. Celotex Corp. v. Edwards, 115 S.Ct. 1493, 1506, note 10 (1995) (Stevens, J., dissenting). In the instant case, the Sixth Circuit held that this Court had Section 1334(b) or “related to” jurisdiction over the actions pending against the non- debtors in nonbankruptcy forums nationwide. Jn re Dow Corning, supra at 494. Based on the above, the court finds that the four factors calling for mandatory exemption under Section 1334(c)(2) have been met. 2. Discretionary Abstention. Alternatively, the Court exercises its discretion to remand pursuant to 28 U.S.C. § 1334(c)(1). Section 1334(c)(1) pro- vides: Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title ll or arising in or related to a case under title 11. 6a In Jn re White Motor Credit, 761 F.2d 270 (1985), the Sixth Circuit noted: . . . federal courts should be hesitant to exercise juris- diction when state issues substantially predominate, whether in terms of proof of the scope of the issues raised, or of the comprehensiveness of the remedy sought. Id. at 274 (quotations omitted). Here, the personal injury/tort claims against the nondebtors are predominantly state law claims. The proof and scope of issues in dispute and the com- prehensiveness of the remedies sought varies state to state. The Sixth Circuit in Jn re White Motor further noted that: . .in large bankruptcy cases with hundreds or even thousands of tort litigants beating on the door of one federal judge, . . . at least judicial economy and expe- ditiousness, may depend on the court’s authority to refer cases to other courts. Since the 1984 Bankruptcy Act prevents reference of these tort cases to bankruptcy courts, as in the past, it makes good sense to give the district courts wide latitude in referring the cases through abstention to other courts. Id. The Court finds that discretionary abstention from the cases against the nondebtors would best serve the interest of justice and comity. Waiting until the estimation and confir- mation of a plan of reorganization before the actions against the nondebtors are liquidated would not result in a more pre- cise estimation of the assets needed by the debtor’s estate to cover any indemnification and contribution claims against the debtor’s estate. The estimation of any possible indemnifica- tion and contribution claims by the nondebtors against the debtor’s bankruptcy estate would not be any different than if the cases against the nondebtors proceed to trial at this stage. To the contrary, as the various trials proceed against the non- debtors, a clearer picture would emerge as to whether the non- 7a debtors would have any indemnification or contribution claims against the debtor’s estate. The Sixth Circuit opinion addresses the Joint Insurance issue between Dow Corning, Dow Chemical and Corning Incorporated finding that the Court had “related to” juris- diction based on the Joint Insurance between the parties. The Sixth Circuit opinion does not address the Joint Insurance issue as it pertains to the abstention issue. This Court addresses this issue as it relates to the interest of justice and comity issues which must be addressed in an analysis of dis- cretionary abstention. Although Dow Chemical has apparently notified insurers that it is asserting claims against the jointly- held policies, it has been argued that as to Dow Chemical, the joint policies are in fact excess policies and that Dow Chem- ical has sufficient primary insurance. (Ex. A, p.5, Official Committee of Tort Claimants’ Brief, filed June 7, 1996). The Sixth Circuit’s opinion addresses the insurance issue from the point of view of whether the Debtor’s estate will have suffi- cient resources. The Debtor itself has not put forth proof that its estate would be dissipated based upon the “threat” posed to those insurance policies by Dow Chemical and Corning Incorporated. In The Matter of Zale Corp., 62 F.3d 746 (Sth Cir. 1995), the Fifth Circuit found that even if the bankruptcy court had “related to” jurisdiction over certain insurance poli- cies with indemnification contracts, a nondebtor should not be shielded by the powers of the bankruptcy court. /d. at 760- 761. The Bankruptcy Code discharges the Debtor’s liabilities and not those owed by third parties. /d. at 760, notes 42, 43 and 44; 11 U.S.C. §524(e). If the Court does aid abstain from the tort claims against the nondebtors, the tort claims against the nondebtors would effectively be determined by this Court which would be contrary to 11 U.S.C. §524(e). Section 524(e) does not allow the Bankruptcy Code to be used to discharge the debts of nondebtors. /d., at 760, notes 42, 43 and 44. The Court finds that the “threat” posed to the insurance policies by the nondebtors does not overcome factors in favor of dis- cretionary abstention. Specifically, the Court finds the inter- 8a ests of justice and comity weigh in favor of discretionary abstention. III. CONCLUSION: This court finds that the cases against the nondebtors are subject to mandatory abstention under 28 U.S.C. § 1334(c)(2). Alternatively, the Court finds that in the interest of justice, comity and judicial economy, it will exercise its discretion to abstain from the cases against the nondebtors under 28 U.S.C. § 1334(c)(1) Accordingly, IT 1S ORDERED that the actions against the nondebtor defendants are subject to mandatory abstention under 28 U.S.C. § 1334(c)(2); alternatively, IT IS ORDERED that the Court will exercise its discretion to ABSTAIN from the cases against the nondebtors under 28 U.S.C. § 1334(c)(1). /s/ DENISE PAGE Hoop United States District Judge DATED: Jul 30, 1996 9a Appendix “B” UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT Nos. 96-2005/2008/2009/2010/2011/2012/2013 HEIDI LINDSEY, Rep. of Charlotte Mahum and Cheryl Kahn, et al., Plaintiff, TORT CLAIMANT, Official Committee of Tort Claimants; et al, Plaintiff-Appellees, a | O’ BRIEN, TANSKI, TANZER AND YOUNG HEALTHCARE PROVIDERS OF CONNECTICUT; et al, Defendants, Dow CORNING CORPORATION (96-2009); THE Dow CHEMICAL COMPANY (96-2005); BAXTER INTERNATIONAL INCORPORATED (96-2011); MINNESOTA MINING AND MANUFACTURING COMPANY (96-2010); BRISTOL-MYERS SQUIBB COMPANY (96-2013); and MEDICAL ENGINEERING CORPORATION (96-2012), Defendant-Appellant. 5 | 10a Before: MARTIN and BATCHELDER, Circuit Judges; and WISEMAN, District Judge.* ORDER These appeals are from the district court’s memorandum opinion and order regarding abstention pursuant to this court’s remand. The Official Committee of Tort Claimants moves to dismiss the appeals, and the various appellants respond in opposition. The jurisdictional issue shall be argued along with the merits of the appeals. It is ORDERED that the clerk enter an expedited briefing schedule in this matter. Upon completion of briefing, the cases shall be submitted for argument upon the briefs and the motion to dismiss. ENTERED BY ORDER OF THE COURT /s/ Clerk ag The Honorable Thomas A. Wiseman, Jr., United States District Judge for the Middle District of Tennessee, sitting by designation. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1378%3A5. Public record. Not legal advice.