Petition for Writ of Certiorari — Daimlerchrysler Corp. v. Official Committee of Asbestos, 123 S. Ct. 884 (2003) (No. 02-661)
Supreme Court brief2003
Ask Donna
What actually matters in this document.
Text
(\) — “~ US.
No. 02. O2 661 OCT 29 2002
OPriCE OF THE CLERK
IN THE
Supreme Court of the United States
OCTOBER TERM, 2002
IN RE FEDERAL-MOGUL GLOBAL, INC.
DAIMLERCHRYSLER CORPORATION,
FORD MOTOR COMPANY, AND
GENERAL MOTORS CORPORATION,
Petitioners.
On Petition for Writ of Certiorari to the
United States Court of Appeals for the Third Circuit
PETITION FOR WRIT OF CERTIORARI
DAVID M. BERNICK CHRISTOPHER LANDAU
KIRKLAND & ELLIS Counsel of Record
200 E. Randolph Drive KIRKLAND & ELLIS
Chicago, IL 60601 655 Fifteenth Street, N.W.
(312) 861-2000 :- Suite 1200
Washington, DC 20005
(202) 879-5000
Counsel for Petitioners
October 29, 2002
mir \'
ee ne CaS Ee Ae
Fe ee
QUESTIONS PRESENTED
1. Whether the Third Circuit erred, and created a circuit
conflict, by holding that an order denying a bankruptcy
transfer motion under 28 U.S.C. § 157(b)(5) is not
appealable.
2. Whether the Third Circuit erred, and created circuit
conflicts, by holding that an order remanding claims directly
to state courts across jurisdictional lines for lack of
bankruptcy jurisdiction is not appealable.
—
oo
ill
RULE 29.6 STATEMENT
Pursuant to Rule 29.6, petitioners hereby state as follows:
DaimlerChrysler Corporation is wholly owned by
DaimlerChrysler North America Holding Corporation, which
in turn is wholly owned by DaimlerChrysler AG.
Ford Motor Company has no parent corporation and no
publicly held company owns 10% or more of its stock.
General Motors Corporation has no parent corporation and
no publicly held company owns 10% or more of its stock.
————— hh Sl
_— ee ee Se ee
v
TABLE OF CONTENTS
Page
CTR TIS FTES oc vc cvecccdecccteeesecss i
RARLE SPO BERETS vas cstebavcccedsndiwsens ill
TAG PATER EMD oo voc csercevecenscneres Vii
ARETE ecco cavecdsvcecciseennstetewnent ]
EE ins ccuveecontcacsneuassacecess 4
Ph ky reer rT Te rer Terr ror ree re 4
PERTINENT STATUTORY PROVISIONS ............ 4
STATEMENT OF THE CASE ..... 2.2 ccccvescccscces 6
REASONS FOR GRANTING THE WRIT ...........-. 14
I. THE DECISION BELOW IS WRONG AND CREATES
NUMEROUS CIRCUIT CONFLICTS ............. 14
A. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That An Order Denying A
Transfer Motion Under 28 U.S.C. § 157(b)(5) Is
oe TE PO rr ree re 14
B. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That A Cross-Jurisdictional
Remand Is Not Appealable. .................-. 17
1. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That A Remand Based On
Lack Of Subject Matter Jurisdiction Is Not
Appealable Even If Beyond The District Court’s
EE FE. ce evden veseseceseeees 18
vi
2. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That A Cross-Jurisdictional
Remand Is Not Beyond The District Court’s
Te Tee ere 21
Il. THE DECISION BELOW IS OF SIGNAL
LEGAL AND PRACTICAL IMPORTANCE .... 24
CORNRAAMEMINS sicvedvcccnccalenedcacedsesueuuees 25
Vii
TABLE OF AUTHORITIES
Page(s)
CASES
A.H. Robins Co. v. Piccinin,
788 F.2d 994 (4th Cir. 1986) .................... 16
Abels v. State Farm Fire & Cas. Co.,
oe oe, 22
Adams v. General Motors Corp.,
No. 01-794-GPM (S..). Ill. Jan. 29, c— 7 er 10
AlliedSignal Recovery Trust v. Allied Signal Inc.,
298 F.3d 263 (3d Cir. 2002) .................. 22-23
Amchem Prods., Inc. v. Windsor,
Fn Gs OE OU FD 6 avn bv wentnnedesecns eltke 24
Bloom v. Barry,
Tad Wen SOCIO Ce. BGS) oo onc cvcnccceccdcce 22
Clamon v. Kellogg-Brown & Root, Inc.,
No. G-01-784 (S.D. Tex. Dec. 6, 2001) ............. 9
Cohen v. Beneficial Indus. Loan Corp.,
ok SL et ee ee ae 16
Cunningham v. Hamilton Cty., Ohio,
Se te SIE 6 vic s-yc'c es Geb b Ue CuK eels 17
Daubert v. Merrell Dow Pharmaceuticals, Inc.,
FOF MPs BIENOOOD occ cveireccacecces 1,3, 12, 15, 24
Dunn v. DaimlerChrysler Corp.,
No. 3:01-CV-2870-X (N.D. Tex. Jan. 3, ET awkeas 10
Hudson-Ram L.P. v. Archer,
210 F.3d 387, 2000 WL 14398
ok ee ee ee 3, 21-24
In re Asbestos Litig.,
271 B.R. 118 (S.D. W. Va. Dec. 7,2001) ............ 9
Vili
In re DaimlerChrysler Corp.,
ET CPG BUEN cb vcccesecesecesesess 1]
In re DaimlerChrysler Corp.,
No. 02-10029 (Sth Cir. Mar. 8, 2002) ............... 11
In re Dow Corning Corp.,
86 F.3d 482 (6th Cir. 1996) ................ 2, 14-16
In re Ford Motor Co./Citibank (South Dakota),
N.A. Cardholder Rebate Litig.,
264 F.3d 952 (2001)
cert. granted sub nom. Ford Motor Co. v. McCauley,
534 U.S. 1126 (2002),
cert. dismissed as improvidently granted,
2002 WL 31299625 (Oct. 15,2002) .............. 20
In re General Motors Corp.,
No. 02-1273 (7th Cir. Feb. 15,2002) .............. 11
In re Saco Local Dev. Corp.,
TER Fae Ne CO ee UE ec dndnvcnscevecess 2, 16
Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,
I s cnnn nne'ceeb cchuetessatebass 24
Ortiz v. Fibreboard Corp.,
Se Se ED ev denned sbacksctensnawn 24-25
Poore v. American-Amicable Life Ins. Co.,
218 F.3d 1287 (11th Cir. 2000) .................. 20
Quackenbush v. Allstate Ins. Co,
Pe es PE Ste hebnss donntvenngaes ues 18
Republic of Venezuela v. Philip Morris Inc.,
yop & Ff a | rer 22
Thermtron Products, Inc. v. Hermansdorfer,
ge Be . ererrer cae 3, 12, 17-20, 22
Things Remembered, Inc. v. Petrarca,
Fees PEE boo ees dec vb eresbbiveda 18-22
iX
Tramonte v. Chrysler Corp.,
I Fee ROD CORA. TDNOD onc vcnccccvcccccscs 20
United States v. L.A. Tucker Truck Lines, Inc.,
I RU ace bois iat ce oul dyes 19
Vogel v. U.S. Office Prods. Co.,
ye) 20
Webster v. Fall,
I I se er Si eee a og et 19
West Virginia ex rel. Mobil Corp. v. Gaughan,
903 S.EB.26 419 (W. Va. 2002) ... 0. cc ccc cccsccees 24
Xiong v. Minnesota,
SOS Wows GEO Cee CM. BGFD) on ccc ecevccccescccss 20
STATUTES AND RULES
PP eae SPEED oo cccconcscccccescescs i, 2, 9, 14-17
SN I varie Wo: 4060900 Maleownceeebe 4
eee 4, 15-16, 18
CR ee re ee 8,15
Ee enace > uri eG bs table ekwes ews 8
PE MEMNe te OUEEEED occ cccccvescvccnccescescccceses 5
ES ove assy es Dipwkisvabion saw ewe 10, 22
EE cca h aces bk anr dc ceweca 5, 9, 18-19
ES rere 5, 18-19
G96 rcoid ve ib nbs dcobd bee sober cea 10
tT I 6 nas oy 0 06-06 0 oe ao nesecex 5, 8, 23
ie PD a w-v'v-oc osu ve-wee cues ada 3, 5, 8, 21-23
PP TEUTED a ov sbdvecceedececebeeescéneds 13
ee WI Gis dks soc bce bpecdveeescecets . 24-25
OTHER
Federal-Mogul Form 10-Q (Aug. 1, 2001) .............. 7
Parloff, Roger,
The $200 Billion Miscarriage Of Justice,
dis cele sas bRO KOM Races 6-7
Rand Institute,
Asbestos Litigation in the U.S.:
A New Look at an Old Issue (Aug. 2001) ............ 6
Schmitt, Richard B..,
Burning Issue: How Plaintiffs’ Lawyers Have Turned
Asbestos Into a Court Perennial,
pk ye ee ee 6
ee
INTRODUCTION
This is a case about jurisdiction—both appellate and
bankruptcy—but it is also a case about whether the American
judicial system can address the exploding national asbestos
litigation crisis with even a modicum of fairness and
rationality. In recent years, the system has been engulfed by a
tidal wave of new asbestos claims targeted against not only
asbestos manufacturers, but any and all companies that
incorporated products containing asbestos into their own
products. The latter group includes petitioners, the Nation’s
three largest automobile manufacturers, which for a number of
years incorporated brake pads and other friction products
containing encapsulated asbestos into their vehicles. Although
epidemiological studies have unanimously rejected the notion
that exposure to automotive friction products can cause disease,
petitioners have now been named as defendants in thousands of
individual asbestos lawsuits in the courts of virtually every
State of the Union.
Last fall, this new wave of asbestos litigation swept Federal-
Mogul Global Inc., an automotive-parts supplier, into
bankruptcy. Because petitioners had bought friction products
from businesses owned by Federal-Mogul, they removed these
claims to federal court as “related to” the Federal-Mogul
bankruptcy, and sought a global determination of whether the
expert opinions underlying the friction-product claims pass
scientific muster under Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). = After
provisionally transferring these thousands of removed claims
to itself, the district court below ultimately decided that it
lacked bankruptcy jurisdiction over the claims, and the Third
Circuit in turn decided that it lacked appellate jurisdiction over
that decision. Absent review by this Court, accordingly, the
American judicial system will lose its only opportunity to
dispose of thousands of meritless and docket-clogging asbestos
claims in one fell swoop without any appellate review of the
underlying jurisdictional issue.
This case warrants this Court’s review, however, not only
because of its signal practical significance, but also because the
2
decision below is manifestly incorrect and squarely conflicts
with decisions from other courts of appeals. The district court
below announced two different (and inconsistent) dispositions
of the claims: in the single order under review, it purported not
only (1) to deny petitioners’ motion to transfer the claims to
itself from the federal courts to which they had been removed
(which would leave the claims in those other federal courts),
but also (2) to remand those claims directly to the state courts
from which they had been removed (which would leave the
claims in those state courts). Notwithstanding the logical
impossibility of that outcome, the Third Circuit held that the
order was immune from appellate review regardless of whether
construed as the denial of a transfer motion or as the grant of
a remand motion. On both scores, the Third Circuit erred and
created circuit conflicts.
Construing the order as the denial of a transfer motion, the
Third Circuit simply recited and relied on the general rule that
such orders are not appealable because they are not “final.” As
then-Judge Breyer explained, however, courts have long
applied a relaxed standard of finality in the bankruptcy context,
because it makes no sense to postpone review of any and all
discrete orders for years until confirmation of a final plan of
reorganization. See In re Saco Local Dev. Corp., 711 F.2d 441,
442-46 (1st Cir. 1983). And the Sixth Circuit has applied that
principle specifically to hold that an order denying a motion to
transfer claims under 28 U.S.C. § 157(b)(5)—the very motion
at issue here—is appealable as both a “final” and a “collateral”
order. See In re Dow Corning Corp., 86 F.3d 482, 487-88 (6th
Cir. 1996). That decision makes sense: by denying such a
motion, the district court has conclusively determined that the
relevant claims are not “related to” the bankruptcy, and that
determination is effectively unreviewable when (years later) a
final reorganization plan is confirmed. Because the decision
below is wrong, and squarely conflicts with the Sixth Circuit’s
ruling in Dow Corning, this Court’s review is warranted.
3
Alternatively construing the order as the grant of a remand
motion, the Third Circuit recited and relied on the general rule
that remand orders are unappealable. As this Court has
explained, however, that rule does not apply to remand orders
: beyond the district court’s statutory authority, see Thermtron
Products, Inc. v. Hermansdorfer, 423 U.S. 336, 351
(1976)—like the remand orders here, which purported to
remand bankruptcy-related claims removed to other federal
| courts directly to state courts across jurisdictional lines. The
Third Circuit, however, held that Thermtron simply did not
apply to remand orders based on a lack of subject matter
jurisdiction even if those orders were beyond the district court’s
statutory authority—a holding that is not only erroneous but
inconsistent with the law of at least four other circuits. And the
Third Circuit then compounded its error by proceeding to hold
that the district court below was authorized to “remand”
transferred bankruptcy claims directly to state courts across
jurisdictional lines. That holding conflicts not only with the
plain language of the bankruptcy remand statute—which
authorizes a remand only by “/t/he court to which [a
bankruptcy] claim . . . is removed,” 28 U.S.C. § 1452(b)
(emphasis added), but also with the Ninth Circuit’s decision in
Hudson-Ram L.P. v. Archer, 210 F.3d 387, 2000 WL 14398
(9th Cir. Jan. 7, 2000) (unpublished), applying that plain
language in precisely these circumstances. Because the
decision below is wrong, and squarely conflicts with rulings
from other circuits, this Court’s review is warranted on this
score too.
In evaluating these appellate jurisdictional issues, it is
important not to lose sight of the bigger picture presented here.
The underlying issue whether the district court below has
jurisdiction to resolve thousands of asbestos friction-product
claims in one fell swoop through a global Daubert hearing is
an immensely important legal issue in the context of
bankruptcy jurisdiction and an immensely important practical
issue in the context of the national asbestos litigation crisis.
The Third Circuit pointedly declined to decide whether the
4
district court had erred by rejecting jurisdiction over these
claims; rather, the Third Circuit decided only that any error
was not so unmistakably clear as to warrant the extraordinary
remedy of mandamus. Because the Third Circuit based its
decision on the mandamus standard, the question whether that
court erred by declining appellate jurisdiction is critically
important. Accordingly, this Court’s review of the
(independently certworthy) appellate jurisdiction questions is
warranted, so that the important underlying issues are not
resolved by default without appellate review.
OPINIONS BELOW
The Third Circuit’s opinion is reported at 300 F.3d 368 and
reprinted in the Appendix (“App.”) at la-42a. The district
court’s unreported order purporting to deny petitioners’
transfer motion and remand the claims is reprinted at App. 56a-
57a, and the district court’s subsequent opinion relating to that
order is reported at 282 B.R. 301 and reprinted at App. 58a-
85a.
JURISDICTION
The Third Circuit entered judgment on July 31, 2002. App.
la. This Court has jurisdiction pursuant to 28 U.S.C.
§ 1254(1).
PERTINENT STATUTORY PROVISIONS
The final-judgment statute, in relevant part, provides:
The courts of appeals . . . shall have jurisdiction of appeals
from all final decisions of the district courts of the United
States ....
28 U.S.C. § 1291.
The general federal removal statute provides:
Except as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of which
the district courts of the United States have original
jurisdiction, may be removed by the defendant or the
5
defendants, to the district court of the United States for the
district and division embracing the place where such action
is pending.
28 U.S.C. § 1441(a).
The general federal remand statute, in relevant part, provides:
(c) ... If at any time before final judgment it appears that
the district court lacks subject matter jurisdiction, the case
shall be remanded. ... A certified copy of the order of
remand shall be mailed by the clerk to the clerk of the State
court. The State court may thereupon proceed with such
case.
(d) An order remanding a case to the State court from
which it was removed is not reviewable on appeal or
otherwise, [except for certain civil rights cases].
28 U.S.C. §§ 1447(c), (d).
The bankruptcy removal statute provides:
A party may remove any claim or cause of action in a civil
action . . . to the district court for the district where such
civil action is pending, if such district court has jurisdiction
of such claim or cause of action under section 1334 of this
title.
28 U.S.C. § 1452(a).
The bankruptcy remand statute provides: -
The court to which such claim or cause of action is
removed may remand such claim or cause of action on any
equitable ground. An order entered under this subsection
remanding a claim or cause of action, or a decision to not
remand, is not reviewable by appeal or otherwise by the
court of appeals under section 158(d), 1291, or 1292 of this
title or by the Supreme Court of the United States under
section 1254 of this title.
28 U.S.C. § 1452(b).
6
STATEMENT OF THE CASE
This case arises against the backdrop of a national asbestos
litigation crisis that has only intensified, rather than abated, in
recent years. As the major asbestos manufacturers have gone
bankrupt, and as bankruptcy trusts have begun to dwindle,
claims are increasingly being brought against companies that
never manufactured asbestos, but only used asbestos-
containing materials in their products or operations. “[A]s one
defendant has followed another into chapter 11, plaintiff
attorneys have turned to other defendants to substitute for those
in bankruptcy (against whom litigation is stayed) and have
increased their financial demands on these defendants.” Rand
Institute, Asbestos Litigation in the U.S.: A New Look at an Old
Issue 25 (Aug. 2001). Indeed, it is estimated that
“{njontraditional defendants now account for over 60% of
asbestos expenditures,” id. at 10, and current asbestos litigation
has been characterized as “The Search for the Solvent
Bystander,” Roger Parloff, The $200 Billion Miscarriage Of
Justice, Fortune, March 4, 2002, at 162.
Thus, although the incidence of asbestos-related disease has
declined markedly over the three decades since the government
enacted strict regulations governing asbestos use in 1971, see
National Cancer Institute, SEER Data, available at www-
seer.ims.nci.nih.gov, there has been a dramatic upsurge of
asbestos claims filed in recent years, see Rand Institute,
Asbestos Litigation, at 6, 13; Richard B. Schmitt, Burning
Issue: How Plaintiffs’ Lawyers Have Turned Asbestos Into a
Court Perennial, Wall St. J., Mar. 5, 2001 (“A generation ago,
some experts predicted that asbestos suits would be tailing off
by now. But the pace is only picking up.”).' Many of the
' “It has been 20 to 30 years since most asbestos-containing products were
phased out of production completely. As a result, instances of serious
asbestosis began declining many years ago. The 1994 edition of the medical
text Occupational Lung Disorders describes asbestosis as a ‘disappearing
disease.” But while asbestosis may be disappearing from America’s
(continued...)
7
plaintiffs filing these new claims have neither “incurred any
medical expenses [nor] ever lost a day of work due to asbestos
exposure.” Parloff, $200 Billion Miscarriage, at 155; id. at 156
(noting that “[a]lmost all of th{e] surge [in asbestos claims]
occurred among claimants alleging nonmalignant asbestos-
related conditions . . —the most subjective and least serious
diagnoses.”). The impact on the American economy, however,
has been substantial: in the past two years alone, at least ten
major companies (Babcock & Wilcox, Pittsburgh Corning,
Owens Coming, Burns & Roe, Armstrong World Industries,
G-I Holdings, W.R. Grace, USG, U.S. Mineral, and Federal-
Mogul) have been forced into bankruptcy by asbestos claims.
As Fortune magazine recently reported, “[t]otal corporate
asbestos liability to U.S. plaintiffs is now expected to reach
$200 billion,” and “though as recently as 15 years ago
dispassionate experts predicted that a total of 100,000 people
might eventually file asbestos-related claims, the most recent
forecasts predict between 1.3 million and 3.1 million claims, of
which only about 570,000 have yet been filed.” Jd. at 155-56.
Indeed, so overwhelming was this tidal wave of asbestos
litigation last year that Federal-Mogul alone was engulfed by
over 359,000 such claims—“mainly involving friction
products,” such as brake pads—during the first six months of
2001 alone. Federal-Mogul Form 10-Q, at 10 (Aug. 1, 2001).
Federal-Mogul estimated its liability for such claims at
approximately $236 million. See id at 11. These claims
stemmed primarily from Federal-Mogul’s purchase of two
businesses, Abex and Wagner, that had manufactured
automotive friction products containing asbestos. In light of its
asbestos liability, Federal-Mogul filed for chapter 11
reorganization in the U.S. District Court for the District of
Delaware in October 2001. Chief Judge Becker of the Third
' (...continued)
hospitals, it is precipitously on the rise in America’s courthouses, with the
rate of new filings against some defendants having nearly tripled in the past
two years.” Parloff, $200 Billion Miscarriage, at 156.
8
Circuit thereafter appointed Judge Alfred M. Wolin, of the
District of New Jersey, to sit by designation in Delaware to
handle the Federal-Mogul bankruptcy and several other
asbestos-related bankruptcies: “[I]t is my considered judgment
that these bankruptcy cases, which carry with them tens of
thousands [of] asbestos claims, need to be consolidated before
a single judge so that a coordinated plan for management can
be developed and implemented.” App. 47a.
Federal-Mogul, however, was far from the only company hit
with asbestos claims alleging injury from exposure to
automotive friction products. To the contrary, petitioners
DaimlerChrysler Corporation, Ford Motor Company, and
General Motors Corporation—which over the years had
purchased brake pads containing encapsulated asbestos from
Abex and Wagner, and installed those products in their
vehicles—were also named as defendants in thousands of
asbestos lawsuits filed last year, almost exclusively in state
courts. Most of these lawsuits named as defendants both one
or more of petitioners and one or more of Federal-Mogul’s
friction-product businesses; indeed, a standard plaintiffs’
asbestos complaint now indiscriminately names over one
hundred defendants. See, e.g, C.A. App. 807-09 (standard
asbestos complaint naming 110 defendants, including Chrysler
Corp., Ford Motor Co., and Moog Automotive Products Co.
f/k/a Wagner Electric Corp.).
After Federal-Mogul filed for bankruptcy, petitioners began
removing thousands of asbestos friction-product claims against
them from state to federal court under 28 U.S.C. § 1452(b) as
“related to” the Federal-Mogul bankruptcy under 28 U.S.C.
§ 1334(b). (The removal of these claims did not remove the
entire underlying cases from state court, because the
bankruptcy removal statute (unlike the general federal removal
statute) specifically authorizes the removal of “claims,” as
opposed to entire “civil actions.” Compare 28 U.S.C.
§ 1452(a) (bankruptcy removal statute) with 28 U.S.C. § 1441
(general removal statute)). Petitioners filed a motion to
9
transfer all the removed ffriction-product claims to the
Delaware district court under 28 U.S.C. § 157(b)(5), which
authorizes “the district court in which the bankruptcy case is
pending” to transfer “personal injury tort and wrongful death
claims” to itself. As petitioners explained, such a transfer
would allow a global, uniform resolution of “the core issue of
whether brakes and other automotive parts cause the diseases
claimed,” and would “prevent an untenable free-for-all, where
plaintiffs will request numerous district courts around the
country to remand the removed actions to state courts.” C.A.
App. 474-75.
Plaintiffs responded by filing more than a thousand remand
motions in federal district courts across the country. Almost
immediately, district courts in the Southern District of Texas
(Kent, J.), and the Southern District of West Virginia (Haden,
J.), granted the motions with respect to the claims before them.
See Clamon v. Kellogg-Brown & Root, Inc., No. G-01-784
(S.D. Tex. Dec. 6, 2001) (one of 19 orders); Jn re Asbestos
Litig., 271 B.R. 118 (S.D. W. Va. Dec. 7, 2001).
On December 10, 2001, the Delaware district court entered
an order provisionally transferring to itself the “Friction
Product Claims” against petitioners, which the court referred
to as claims “arising out of so-called ‘friction products’ as to
which [petitioners] contend they have a right of
indemnification against the debtors.” App. 49a. The purpose
of that order, the court explained, was “to preserve the status
quo pending a plenary hearing and determination by the Court
of the Transfer Motion.” Jd. Only thus, the court recognized,
could the jurisdictional issues raised by these claims be
resolved in a global, uniform manner, preventing a crazy-quilt
of conflicting decisions by scores of district courts around the
country. On January 3, 2002, the Delaware court clarified the
scope of its December 10 order by explaining that friction
product claims against petitioners removed after December 10
were also provisionally transferred to itself. App. 51a-55a.
10
Notwithstanding the provisional transfer order, plaintiffs
continued to file and pursue remand motions in district courts
across the country. C.A. App. 636-44. Many of these motions
explicitly urged these other courts to ignore the Delaware
court’s transfer order. See, e.g., Pls.’ Resp. to Notice of Order
Provisionally Transferring Friction Product Claims, Noble v.
E.H. O’Neil Co., No. 1:01CCV391GR, at 7 (S.D. Miss. Dec.
28, 2001), C.A. App. 896 (“[T]he Big Three’s claim that this
Court is without jurisdiction over this case is incorrect and
should therefore be ignored by this Court in its disposition of
this case. ... Plaintiffs urge this Court to disregard the Notice
[of Provisional Transfer Order and] continue to exercise its
exclusive authority and jurisdiction over the removal and
remand proceedings.) (emphasis added). Not surprisingly,
most courts denied such motions on the ground that the
provisional transfer order had divested them of jurisdiction
over the claims. See C.A. App. 900-73.
Notwithstanding the provisional transfer order, however,
district courts in Texas and Illinois granted remand motions in
January 2002. See Dunn v. DaimlerChrysler Corp., No. 3:01-
CV-2870-X (N.D. Tex. Jan. 3, 2002); Adams v. General
Motors Corp., No. 01-794-GPM (S.D. Ill. Jan. 29, 2002).
Petitioners sought mandamus from the Fifth and Seventh
Circuits on the ground that those courts had no authority to
remand claims that had been provisionally transferred to
Delaware.
On Friday, February 8, 2002, the Delaware court held a
hearing on petitioners’ transfer motions, and entered an order
denying those motions on the ground that “this Court lacks
subject matter jurisdiction over the Friction Products Claims.”
App. 57a. Notwithstanding its denial of the transfer motions,
the court then purported to remand those very same claims
directly “to the state courts from which they were removed” all
across the country pursuant to 28 U.S.C. §§ 1447 and 1452. /d.
The district court followed up its order with a written opinion
on February 15, 2002. App. 58a-85a.
1]
Meanwhile, on Monday, February 11, 2002, petitioners filed
a notice of appeal from the February 8 order, and sought an
emergency stay pending appeal. That afternoon, the Third
Circuit (per Scirica, J.) granted a temporary stay “in order for
the Court to receive responses to the motion from opposing
counsel and for full consideration of the matter by a three judge
panel.” C.A. App. 53. The Third Circuit subsequently
extended that stay to all appellants, and kept it in place pending
a decision by the merits panel. C.A. App. 54, 56.
Subsequently, both the Fifth and Seventh Circuits granted
petitioners’ mandamus petitions. Jn re General Motors Corp.,
No. 02-1273 (7th Cir. Feb. 15, 2002), App. 86a-88a; Jn re
DaimlerChrysler Corp., No. 02-10029 (Sth Cir. Mar. 8, 2002),
App. 89a-93a. As those courts explained, the provisional
transfer order had transferred to Delaware all friction-product
claims against petitioners pending in federal courts on or after
December 10, 2001, and hence divested all other federal courts
of jurisdiction over those claims, and the Third Circuit stay had
prevented the Delaware court’s February 8 order from taking
effect. App. 87a, 92a-93a & n.3.
Notwithstanding the Third Circuit stay and the Fifth and
Seventh Circuit mandamus orders, plaintiffs continued to file
remand motions in district courts across the country. In May
2002, the district court in Galveston, Texas (Kent, J.) granted
several such motions without addressing either the Third
Circuit stay or the Fifth and Seventh Circuit mandamus orders.
Petitioners once again sought mandamus. The Fifth Circuit not
only granted the writ, but removed Judge Kent from all
pending and future asbestos friction-product claims against
petitioners. Jn re DaimlerChrysler Corp., 294 F.3d 697 (Sth
Cir. 2002).
On July 31, 2002, however, the Third Circuit ruled that it
lacked appellate jurisdiction to review the Delaware court’s
order, and dismissed petitioners’ appeal. App. la-42a. The
court noted that “[w]e are neither unaware of nor
unsympathetic to the argument of [petitioners] that the crisis
12
created by the current asbestos litigation would be ameliorated
were there a single proceeding that determined whether the
subset of asbestos claims based on alleged exposure to
automotive friction products satisfies the threshold standard of
scientific validity established in Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993).” App. 40a-41la
(internal quotation omitted). But the court held that it could
not address that argument because “we are halted at the pass by
our conclusion that we have no jurisdiction over the decision
of the District Court denying the transfer and remanding the
cases to the state courts from which they came.” App. 41a.
As a threshoid matter, the Third Circuit declined to decide
whether to construe the district court’s order as the denial of a
transfer motion or the grant of a remand motion. Rather,
“[b]ecause there are arguments to support construing the order
as one denying the requested transfer and equally good -
arguments to construe the order as one remanding the cases, we
will follow the prudent course and consider in turn our
jurisdiction under each construction.” App. 19a. The court
never considered whether the order was reviewable as neither a
transfer order nor a remand order because it purported to be
both of these logically inconsistent things at once.
First construing the order as the denial of a transfer motion,
the Third Circuit declared that “[i]t is a well-established rule in
this circuit (and generally) that orders transferring venue are
not immediately appealable.” App. 19a (internal quotation
omitted). Based entirely on that single sentence and the
accompanying citations, the court held that mandamus was the
only mechanism for reviewing the denial of a transfer motion,
and that petitioners had not satisfied the demanding standard
for mandamus review. App. 20a-3 la.
Next construing the order as the grant of a remand motion,
the Third Circuit rejected petitioners’ reliance on Thermtron
Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976), for the
proposition that remand orders beyond a court’s statutory
authority are not unreviewable. App. 34a. According to the
13
Third Circuit, all remand orders based on lack of subject matter
jurisdiction are unreviewable, even where (as here) they are
challenged as beyond the district court’s statutory authority.
Id. In any event, the Third Circuit proceeded to hold that the
remand order here was not beyond the district court’s statutory
authority on the ground that federal courts are authorized to
remand bankruptcy-related claims directly to state court across
jurisdictional lines. App. 34a-36a. Having held that appellate
jurisdiction was lacking, the Third Circuit then proceeded to
hold that mandamus jurisdiction also was lacking, and that in
any event petitioners had not satisfied the demanding standard
for mandamus review. App. 36a-40a & n.13.
On the same afternoon that it issued its opinion dismissing
the appeal for lack of appellate jurisdiction, the Third Circuit
issued the following order: “Inasmuch as the number of judges
in active service on this court who are not recused in this
appeal is insufficient to order rehearing en banc, . . . the
mandate shall issue forthwith.” App. 45a. The court did not
explain why, contrary to the Federal Rules of Appellate
Procedure, see Fed. R. App. P. 40(a), it precluded petitioners
from filing even a petition for panel rehearing.
That same afternoon, petitioners filed an emergency motion
to recall the mandate to allow the entry of a stay pending this
petition. The Third Circuit summarily denied the motion.
App. 46a. Petitioners then applied unsuccessfully for an
emergency stay from this Court.
On August 6, 2002, the Delaware district court posted on its
website an order purporting “to remand all of the friction
product cases transferred to the United States District Court for
the District of Delaware to the state courts where they were
originally filed.” App. 96a. None of the claims thereby
ostensibly “remanded” to state courts across the country has
since proceeded to final judgment. Although some of those
claims have since been settled, thousands still remain.
Accordingly, petitioners respectfully file this petition for
certiorari.
4
REASONS FOR GRANTING THE WRIT
I. THE DECISION BELOW IS WRONG AND
CREATES NUMEROUS CIRCUIT CONFLICTS.
This case presents the question whether a district court can
evade appellate review of a transfer order by simply calling it
a remand order. Until the decision below, it was established
(and uncontroverted by respondents) that a district court order
denying a motion to transfer bankruptcy claims under 28
U.S.C. § 157(b)(5) was appealable as either a “final” or a
“collateral” order. See In re Dow Corning Corp., 86 F.3d 482,
487-88 (6th Cir. 1996). So the district court here did not
simply deny petitioners’ motion to transfer; rather, the court
purported (in the same order denying the motion to transfer) to
“remand” these claims directly to the state courts from which
they had been removed all across the country, thereby allowing
respondents to argue that the order was unreviewable as a
remand order. But that disposition of the claims makes no
sense: the district court could not logically have refused to
transfer the claims to itself from other federal courts and then
remanded those very same claims directly to state courts.
Without addressing this fundamental anomaly, the Third
Circuit simply announced that the order was not appealable as
either a transfer order or a remand order. The appellate court
thereby erred, and created circuit conflicts, on both grounds.
A. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That An Order Denying A
Transfer Motion Under 28 U.S.C. § 157(b)(5) Is Not
Appealable.
The sum and substance of the Third Circuit’s analysis of the
appealability of a transfer order consists of the following
sentence and accompanying citations: “It is a well-established
rule in this circuit (and generally) that orders transferring venue
are not immediately appealable.” App. 19a (internal quotation
omitted). None of the cases on which the Third Circuit relied,
however, involved the denial of a Section 157(b)(5) transfer
motion in the bankruptcy context. That context is critical
15
because, as petitioners pointed out below (and respondents did
not contest) the Sixth Circuit specifically held in Dow Corning
that the denial of a Section 157(b)(5) transfer motion was
appealable as both a final and a collateral order. 86 F.3d at
487-88.
The decision below is thus flatly inconsistent with Dow
Corning. At issue there were personal-injury claims involving
silicone gel breast implants. 86 F.3d at 485. Many of those
claims were brought against the debtor, Dow Coming—a major
manufacturer of such implants—but tens of thousands of
additional claims were brought against nondebtors, including -
the debtor’s shareholders and other implant manufacturers and
suppliers. Jd There, as here, the nondebtor defendants
removed state-court claims to federal court, and obtained an
order under 28 U.S.C. § 157(b)(5) provisionally transferring all
such claims to the district court where the underlying
bankruptcy was pending for the purpose of obtaining a global
Daubert hearing on all the claims. Jd. at 486-87. There, as
here, the district court ultimately denied the transfer motion on
the ground that the claims against nondebtors were not “related
to” the underlying bankruptcy within the meaning of 28 U.S.C.
§ 1334(b) because “an entirely separate proceeding” for
indemnification and/or contribution would be necessary to
increase the bankruptcy estate’s liability. Jd. at 487, 491.
But in Dow Corning, unlike here, the court of appeals held
that the denial of a transfer motion under § 157(b)(5) was
appealable, and proceeded to address the bankruptcy
jurisdiction issue on the merits. See id. at 487-88. As the Sixth
Circuit explained, the finality requirement of 28 U.S.C. § 1291
“is considered in a more pragmatic and less technical way in
bankruptcy cases than in other situations.” Jd. at 488 (internal
quotation omitted). That is so, the court noted, because
“[bJankruptcy cases frequently involve protracted proceedings
with many parties participating. 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
16
approved, courts have permitted appellate review of orders that
in other contexts might be considered interlocutory.” /d.
(internal quotation omitted). Because the denial of a Section
157(b)(5) transfer motion “‘finally disposes of discrete disputes
within the larger case,’” the decision is final and appealable
within the meaning of Section 1291. Jd. (quoting Jn re Saco
Local Dev. Corp., 711 F.2d 441, 444 (1st Cir. 1983) (Breyer,
J.)).
The Sixth Circuit also held in the alternative that the denial
of a Section 157(b)(5) transfer motion is appealable “under the
collateral order doctrine of Cohen v. Beneficial Indus. Loan
Corp., 337 U.S. 541 (1949)).” Dow Corning, 86 F.3d at 488.
That is so, the court explained, because such an order “(1)
conclusively determines the disputed question; (2) resolves an
important question completely separate from the merits of the
action; and (3) is effectively unreviewable on appeal from final
judgment.” Jd.
And Dow Corning hardly stands alone on this point. Indeed,
the Sixth Circuit relied on the Fourth Circuit’s decision in A.H.
Robins Co. v. Piccinin, 788 F.2d 994 (1986), which asserted
appellate jurisdiction over an order granting a motion to
transfer bankruptcy claims under Section 157(b)(5). Jd. at
1009. As the Fourth Circuit explained, a dispute over such a
transfer “illustrates well the justification for the relaxed rule of
appealability in bankruptcy cases.” Jd. Should a Section
157(b)(5) transfer motion be erroneously granted or denied,
“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.” Jd. Like the Sixth Circuit in Dow
Corning, the Fourth Circuit in A.H. Robins thus concluded that
the grant or denial of a Section 157(b)(5) transfer motion is
appealable as either a final or a collateral order. See id.
Indeed, the Third Circuit’s contrary conclusion makes no
sense. The justification for denying immediate appellate
17
review of an order prior to resolution of all claims in a case is
that the order can ultimately be reviewed at a later date. See,
e.g., Cunningham v. Hamilton Cty., Ohio, 527 U.S. 198, 203-
04 (1999). As the Fourth and Sixth Circuits recognized, that
justification simply does not apply in this context. As a
practical matter, a district court’s denial of a transfer motion
under Section 157(b)(5) means that the movant must litigate
the claims elsewhere. Any suggestion that the movant could
challenge the district court’s jurisdictional ruling years later
after confirmation of a final plan of reorganization is fanciful.
Thus, either the district court here properly declined
jurisdiction over these claims or it did not; either way, this is a
purely legal question that must be conclusively resolved at the
outset. By holding that the district court’s resolution of this
jurisdictional issue was not appealable, the Third Circuit
effectively denied petitioners their right to an appeal. Because
that decision is clearly wrong and creates a circuit split, this
Court’s review is warranted.
B. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That A Cross-Jurisdictional
Remand Is Not Appealable.
The Third Circuit next held that the challenged order was
also unappealable if construed as a remand order. App. 31a-
36a. Petitioners acknowledged below the general rule that
remand orders are unappealable, but noted that this rule does
not apply to remand orders beyond the district court’s statutory
authority, see, e.g., Thermtron Prods., Inc. v. Hermansdorfer,
423 U.S. 336 (1976)—like the remand orders here, which
purported to remand bankruptcy-related claims removed to
other federal courts directly to state courts across jurisdictional
lines. The Third Circuit rejected petitioners’ position on two
grounds. According to that court, (1) remand orders based on
lack of subject matter jurisdiction are categorically
unappealable even if beyond the district court’s authority, App.
34a, and (2) in any event, the “cross-jurisdictional” remand
orders here were not beyond the district court’s authority, App.
18
34a-36a. The Third Circuit erred, and created circuit conflicts,
on both grounds.
1. The Third Circuit Erred, And Created A
Circuit Conflict, By Holding That A Remand
Based On Lack Of Subject Matter
Jurisdiction Is Not Appealable Even If
Beyond The District Court’s Statutory
Authority.
Petitioners relied below on this Court’s decision in
Thermtron for the proposition that remand orders beyond a
district court’s statutory authority—even if based on lack of
subject matter jurisdiction—are appealable. Thermtron held
that, notwithstanding the apparently categorical language of 28
U.S.C. § 1447(c), a remand order is reviewable where the
district judge “exceed[s] his statutorily defined power” by
“remand[ing] a properly removed case on grounds that he had
no authority to consider.” 423 U.S. at 351 (emphasis added). -
Otherwise, the Court noted, district courts would have “carte
blanche authority . . . to revise the federal statutes governing
removal” by remanding cases at will. Jd.”
The Third Circuit rejected this interpretation of Thermtron.
According to that court, this Court “clarified” the scope of
Thermtron in Things Remembered, Inc. v. Petrarca, 516 U.S.
124 (1995) by stating that “‘[a]s long as a district court’s
remand is based on a timely raised defect in removal procedure
or on lack of subject-matter jurisdiction—the grounds for
> The Thermtron Court also held that a remand order must be reviewed by
way of mandamus, not appeal, “because an order remanding a removed
action does not represent a final judgment reviewable by appeal.” 423 U.S.
at 352-53 (emphasis added). This Court subsequently retreated from the
latter holding in Quackenbush v. Allstate Insurance Co., ruling that a
remand order is indeed a “final” (and hence appealable) decision within the
meaning of 28 U.S.C. § 1291. See 517 U.S. 706, 714-15 (1996).
Quackenbush, however, expressly reaffirmed Thermtron’s core holding that
Section 1447(d) does not preclude appellate review of remand orders
beyond a court’s statutory authority. See 517 U.S. at 711-12.
19
remand recognized by § 1447(c)}—a court of appeals lacks
Jurisdiction to entertain an appeal of the remand order under
§ 1447(d).”” App. 34a (quoting 516 U.S. at 127-28) (emphasis
added). The Third Circuit interpreted this language from
Things Remembered to limit Thermtron by categorically
rendering unappealable any remand order based on lack of
subject matter jurisdiction, even where (as here) that order is
challenged as beyond the district court’s statutory authority.
See App. 34a (“As the basis for the District Court’s remand in
this case was lack of subject matter jurisdiction (the absence of
‘related to’ jurisdiction), appeal is similarly barred.”).
That interpretation of Things Remembered is untenably
overbroad. The Things Remembered Court reaffirmed—not
limited—Thermtron’s holding that remand orders beyond a
district court’s authority are appealable. 516 U.S. at 127-28.
Generally (but not invariably) remand orders are within a
district court’s authority if they are based on the two grounds
enumerated in 28 U.S.C. § 1447(c): (1) lack of subject matter
jurisdiction and/or (2) a defect in removal procedure. It is in
this context that the Things Remembered Court made the
statement on which the Third Circuit seized—that remand
orders based on “the grounds for remand recognized by
§ 1447(c)” are unappealable. 516 U.S. at 127-28 (emphasis
added). The Things Remembered Court simply did not address,
much less resolve, the issue whether a remand based on a
ground specified in § 1447(c)—such as lack of subject matter
jurisdiction—was nonetheless appealable if otherwise beyond
the district court’s authority. Needless to say, Things
Remembered cannot be deemed to have changed the law on
this point that Things Remembered did not even address. See,
e.g., United States v. L.A. Tucker Truck Lines, Inc., 344 U.S.
33, 38 (1952); Webster v. Fall, 266 U.S. 507, 511 (1925).
Indeed, the Third Circuit’s narrow interpretation of
Thermtror (as “clarified” by Things Remembered) is squarely
inconsistent with caselaw from other circuits holding that
remands based on lack of subject matter jurisdiction are
20
appealable if challenged as beyond a district court’s authority.
Thus, the Fifth Circuit has asserted appellate jurisdiction over
a remand order based on lack of subject matter jurisdiction
where the district court exceeded its authority by failing to
recuse itself. See Tramonte v. Chrysler Corp., 136 F.3d 1025,
1028 (Sth Cir. 1998). Similarly, the Sixth Circuit has asserted
appellate jurisdiction over a remand order based on lack of
subject matter jurisdiction where the order was unauthorized
because entered by a non-Article III magistrate judge. See
Vogel v. U.S. Office Prods. Co., 258 F.3d 509, 518-19 (6th Cir.
2001). Likewise, the Eighth Circuit has asserted appellate
jurisdiction over a remand order based on lack of subject
matter jurisdiction where the district court exceeded its
authority by ignoring binding circuit law. See Xiong v.
Minnesota, 195 F.3d 424, 426-27 (8th Cir. 1999). And the
Eleventh Circuit has asserted appellate jurisdiction over a
remand order based on lack of subject matter jurisdiction where
the district court exceeded its authority by relying on a post-
removal amendment to determine the amount in controversy.
See Poore v. American-Amicable Life Ins. Co., 218 F.3d 1287,
1291-92 (11th Cir. 2000). As all these cases make clear,
“under Thermtron, we have jurisdiction to decide whether a
district court has the power to do what it did in issuing a
remand order, although we cannot examine whether a
particular exercise of power was proper.” Jn re Ford Motor
Co./Citibank (South Dakota), N.A. Cardholder Rebate Litig.,
264 F.3d 952, 965 (2001) (emphasis added; internal quotation
and brackets omitted), cert. granted sub nom. Ford Motor Co.
v. McCauley, 534 U.S. 1126 (2002), cert. dismissed as
improvidently granted, 2002 WL 31299625 (Oct. 15, 2002). A
district court cannot evade appellate review, in other words, by
simply purporting to remand a case for lack of subject matter
jurisdiction if the remand order is otherwise beyond the court’s
statutory authority.
The Third Circuit’s position that Things Remembered stands
for the proposition that appellate review of a remand order is
categorically “barred” whenever that order is based on a lack
21
of subject matter jurisdiction, App. 34a, thus creates a conflict
with no fewer than four other circuits. All of the foregoing
cases from other circuits were decided after Things
Remembered, and all of those cases hold that a remand order
based on a lack of subject matter jurisdiction is appealable
where (as here) the district court lacks authority to enter that
order. Because (as explained below) the district court here
exceeded its statutory authority by purporting to remand these
claims directly to state courts across the country, the Third
Circuit erred, and created a circuit split, by interpreting Things
Remembered to preclude appellate review.
2. The Third Circuit Erred, And Created A
Circuit Conflict, By Holding That A Cross-
Jurisdictional Remand Is Not Beyond The
District Court’s Statutory Authority.
Perhaps sensing the implausibility of its interpretation of
Things Remembered, the Third Circuit proceeded to reject
petitioners’ “premise that the District Court lacked authority to
remand a case improvidently removed to a jurisdiction other
than the one from which it came.” App. 34a. Although the
bankruptcy remand statute could not be clearer—only “/t]he
court to which such claim or cause of action is removed” can
“remand such claim or cause of action,” 28 U.S.C. § 1452(b)
(emphasis added)}—the Third Circuit held that other federal
courts could also remand claims. App. 34a-36a. That is so,
according to the Third Circuit, because “the court to which a
case has been transferred stands in the shoes of the court from
which the case was transferred.” App. 35a. The court gave no
explanation as to how that general principle could overcome
specific statutory language limiting the remand power.
As the Ninth Circuit has held, it cannot. See Hudson-Ram
L.P. v. Archer, 210 F.3d 387, 2000 WL 14398 (9th Cir. Jan. 7,
2000) (unpublished). That case was in an identical procedural
posture to this one: defendants removed a claim from state
court to the local federal court, which then transferred the claim
to the federal court where a related bankruptcy was pending,
22
and the latter court then purported to “remand” the case
directly across jurisdictional lines to the original state court.
See id. at *1. That, the Ninth Circuit held, the court lacked the
power to do under the plain language of Section 1452(b), see
id.—which thus rendered the unauthorized “remand” order
appealable under Thermtron. As the Ninth Circuit explained,
“(t]he order ‘remanding’ the action to Texas state court was not
a valid exercise of the court’s authority under 28 U.S.C.
§ 1452(b) because the United States District Court for the
Central District of California was not the ‘court to which [the]
claim or cause of action [was] removed.’” Jd. A re-transfer to
the federal court to which the case was removed, rather than a
direct cross-jurisdictional remand, was thus the only authorized
course of action. “While the seriatim approach is not as
efficient, it is the procedure mandated by Congress.” Jd.
The Third Circuit based its contrary decision on four other
cases: (1) Bloom v. Barry, 755 F.2d 356 (3d Cir. 1985),
(2) Abels v. State Farm Fire & Cas. Co., 770 F.2d 26 (3d Cir.
1985), (3) Republic of Venezuela v. Philip Morris Inc., 287
F.3d 192 (D.C. Cir. 2002), and (4) AlliedSignal Recovery Trust
v. Allied Signal Inc., 298 F.3d 263 (3d Cir. 2002). See App.
34a-36a. That reliance was wholly misplaced. The first three
cases are inapposite, because they do not even involve the
bankruptcy remand statute (and hence the unmistakably clear
statutory language of Section 1452(b)). Although this Court
has noted that the bankruptcy remand statute, 28 U.S.C.
§ 1452(b), and the general remand statute, 28 U.S.C. § 1447,
should be construed in harmony where feasible, see Things
Remembered, 516 U.S. at 129, that general principle does not
allow courts to read the two provisions as identical where they
are not. Thus, even if it were true that the general remand
statute authorizes direct cross-jurisdictional remands (and none
of the three cases on which the Third Circuit relied for that
proposition actually addressed that issue), that would still not
allow courts to ignore the language of the bankruptcy remand
statute specifying that, with respect to claims improperly
removed on grounds of federal bankruptcy jurisdiction, only
23
“[t]he court to which such claim or cause of action is
removed’ can “remand such claim or cause of action” to state
court. 28 U.S.C. § 1452(b) (emphasis added).
The only case cited by the Third Circuit that actually
addressed this issue, AlliedSignal, was decided by the Third
Circuit on the same day as this case (and indeed based its
conclusion on the decision in this case). See 298 F.3d at 271
(“If . . . the District Court [in Delaware] should desire itself to
remand this case . . . to the Florida state court, such an order
would appear to be within its authority. See In re Federal
Mogul, Nos. 02-1426 et al. (3d Cir. July 31, 2002).”). Like the
decision below, the AlliedSignal decision did not address the
plain language of the bankruptcy remand statute or the Ninth
Circuit’s contrary decision in Hudson-Ram, but simply recited
the general rule that “a transferee court is deemed to inherit all
the authority of a transferor court.” 298 F.3d at 271.
The Third Circuit’s decisions below and in AlliedSignal not
only ignore the plain language of Section 1452(b), and create
a conflict with Hudson-Ram, but undermine the orderly and
symmetrical bankruptcy removal and remand scheme. Under
the plain language of the relevant statutes, claims must be
removed from state court to the federal “district court where
such [claim] is pending,” and then remanded (if appropriate) by
“[t]he court to which such claim or cause of action is
removed.” 28 U.S.C. §§ 1452(a), (b). These statutes simply do
not authorize the procedural “short cut” of a cross-
jurisdictional remand, which has led to substantial confusion in
this very case as files have been stranded in the federal courts
to which claims were removed, and some other such federai
courts have proceeded to remand the claims anyway
notwithstanding the Delaware court’s purported direct cross-
jurisdictional remand. The perceived “efficiency” of this short
cut is thus questionable: enforcing the statutes as written would
maximize the efficiency of the system as a whole by providing
clear and understandable jurisdictional rules. But—as the
Ninth Circuit emphasized in Hudson-Ram—even if direct
24
cross-jurisdictional remands were the most efficient means for
returning claims to state courts, that would hardly justify
ignoring the relevant statutes’ plain language. See 2000 WL
14398, at *1; see also Lexecon Inc. v. Milberg Weiss Bershad
Hynes & Lerach, 523 U.S. 26, 43 (1998).
Il. THE DECISION BELOW IS OF SIGNAL LEGAL
AND PRACTICAL IMPORTANCE.
The appellate jurisdiction issues set forth above merit this
Court’s review in their own right to resolve the myriad circuit
conflicts created by the decision below. But this Court need
not, and indeed cannot, ignore the fact that these issues arise
here in the context of the exploding national asbestos litigation
crisis. The underlying issue here—whether the district court
had jurisdiction to conduct a global Daubert hearing that could
resolve thousands of asbestos friction-product claims in one
fell swoop—is of signal legal and practical importance, and
certainly should not be resolved without any appellate review
(especially where, as here, such review plainly would have
been available in other circuits, and where the Third Circuit
departed from ordinary procedure by denying petitioners the
opportunity for either panel or en banc rehearing).
This Court is in a unique position to appreciate the
importance of this case to the American judicial system as a
whole. Because asbestos claims cannot be resolved through
class action lawsuits consistent with Rule 23 and due process,
see, e.g., Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999);
Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997), the state
courts have now been buried under an avalanche of individual
asbestos claims, many of which name hundreds of defendants.
The response of many state courts has been to devise
procedural “short cuts” for aggregate resolution of these claims
that, to say the least, raise due process concerns of the first
order. See, e.g., West Virginia ex rel. Mobil Corp. v. Gaughan,
563 S.E.2d 419 (W. Va. 2002). It is all fine and good for the
judiciary to lament Congress’ failure to enact national asbestos
legislation, see App. 41a-42a, but such a lament provides no
25
excuse for the judiciary to forswear reliance on the existing
provisions of the U.S. Code (including the bankruptcy
jurisdiction statute) to address the “elephantine mass of
asbestos cases,” Ortiz, 527 U.S. at 821. Indeed, in an
extraordinary concurrence in Ortiz, three Justices of this Court
declared that they agreed with the two dissenting Justices about
the compelling need to devise a rational solution to the national
asbestos litigation crisis, but simply could not justify bending
Rule 23 to meet that end. See Ortiz, 527 U.S. at 865
(Rehnquist, C.J., joined by Scalia and Kennedy, JJ.); see also
id. at 866-68 (Breyer, J., joined by Stevens, J., dissenting).
This case presents an opportunity for this Court actually to do
something about the crisis, in the course of resolving circuit
conflicts on important issues of appellate jurisdiction, rather
than simply observing the grotesque distortion of American
law under the hydraulic pressure of current asbestos litigation.
CONCLUSION
For the foregoing reasons, this Court should grant the petition
for writ of certiorari.
Respectfully submitted,
DAVID M. BERNICK CHRISTOPHER LANDAU
KIRKLAND & ELLIS Counsel of Record
200 E. Randolph Drive KIRKLAND & ELLIS
Chicago, IL 60601 655 Fifteenth Street, N.W.
(312) 861-2000 Suite 1200
Washington, DC 20005
(202) 879-5000
Counsel for Petitioners
October 29, 2002
APPENDIX
APPENDIX
TABLE OF CONTENTS
Page
Opinion of the Court of Appeals,
Pe UE Fh e085 Foe 5d bene OES KO ORs la
Order of the Court of Appeals Issuing Mandate Forthwith,
Pe OLE P86 han ec ke ds abe ee ek oA he eee 43a
Order of the Court of Appeals Denying Motion to Recall
Mandate and Enter Stay Pending Petition for
Certiorari,
PCM ss es os ose eee ean eee ees 46a
Order of Chief Judge Becker Designating a District Judge
For Service In Another District Within the Circuit,
PROWEIIINOE. 27, DUPE ko ci veesnccceverveness 47a
Order of the District Court (1) Partially Withdrawing the
Reference, and (2) Provisionally Transferring Certain
Friction Product Claims,
EPOUMOE PG, DE nk kc ccc ec vc ccevcesvsvcs 49a
Order of the District Court Clarifying Provisional Transfer of
Friction Products Claims,
Se Ee ere ere reer ree Sla
Letter Opinion of the District Court Regarding Provisional
Transfer of Friction Product Claims,
RE sho ct Bhp ee aoe hace auwes 53a
Order of the District Court (1) Denying The Motions To
Transfer the “Friction Products Claims” and
(2) Remanding the Friction Products Claims,
ag EE er rer eth ere 56a
Opinion of the District Court Regarding Order Denying
Transfer Motion and Remanding Claims,
og rrr re ee 58a
Opinion of the Seventh Circuit Granting Mandamus,
a Be «ee ths. 86a
Opinion of the Fifth Circuit Granting Mandamus,
oo | rrr ry re rr nr 89a
Order of the District Court Remanding the Friction Product
Claims,
PEG, DOE x5 600s basnsvcksnssen eee 94a
APPENDIX A
PRECEDENTIAL
Filed July 31, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 02-1426, 02-1491, 02-1492, 02-1528
02-1652, 02-1664, 02-1688, 02-1741
IN RE: FEDERAL-MOGUL GLOBAL, INC.
DaimlerChrysler Corporation; Ford Motor Company;
General Motors Corporation,
Appellants in No. 02-1426
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Hennessy Industries, Inc.
Appellant in No. 02-1491
IN RE: FEDERAL-MOGUL GLOBAL, INC.
MG Rover Group, Inc.; Nissan North America, Inc.;
Volkswagen of America, Inc.; Volkswagen AG;
Mercedes-Benz USA, LLC; BMW North America, Inc.;
Volvo Cars North America, Inc.; Harley-Davidson
Motor Company Group, Inc.,
Appellants in No. 02-1492
2a
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Salvo Auto Parts; Holman Enterprises, Inc.;
B.F. Goodrich, Inc.,
Appellants in No. 02-1528
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Honeywell International, Inc.,
Appellant in No. 02-1652
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Bnitish Motor Cars Distributors, Inc.,
Appellant in No. 02-1664
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Official Committee of Unsecured Creditors,
Appellant in No. 02-1688
IN RE: FEDERAL-MOGUL GLOBAL, INC.
International Truck and Engine Corp.,
Appellant in No. 02-1741
On Appeal from the United States District Court
for the District of Delaware
(D.C. No. 01-10578)
District Judge: Hon. Alfred M. Wolin
3a
Argued June 17, 2002
Before: SLOVITER, COWEN and GIBSON’
(Filed: July 31, 2002)
David M. Bernick (Argued)
John Donley
Douglas G. Smith
| Kirkland & Ellis
Chicago, IL 60601
Christopher Landau (Argued)
Eric B. Wolff
Kirkland & Ellis
Washington, D.C. 20005
Attomeys for Appellants,
DaimlerChrysler Corp.,
Ford Motor Co., and General
Motors Corp.
Arthur Makadon (Argued)
William A. Slaughter
Robert R. Baron, Jr.
Peter C. Amuso
Ballard Spahr Andrews & Ingersoll
Philadelphia, FA 19103
Attomeys for Appellants
Honeywell International, Inc.
* Hon. John R. Gibson, Senior United States Circuit Judge for the United
States Court of Appeals for the Eighth Circuit, sitting by designation.
4a
Charlene D. Davis,
Eric M. Sutty
The Bayard Firm
Wilmington, DE 19899
Robert B. Millner (Argued)
Peter D. Wolfson
Andrew P. Lederman
Sonnenschein, Nath & Rosenthal
Chicago, IL 60606
Attorneys for Appellant
Official Committee of Unsecured
Creditors
David E. Wilks
White & Williams
Wilmington, DE 19899
Attorney for Appellants
MG Rover Group, Inc., Nissan
North America, Inc., Volkswagen
America, Volkswagen AG,
Mercedes-Benz USA, BMW of
North America, Volvo Cars North
America, Harley-Davidson Motor
Co., International Truck & Engine
Corp., British Motor Cars
Distributors, Inc.
Lee Baylin
Towson, MD 21204
Attomey for Appellant
Salvo Auto Parts, Inc.
Sa
Michael A. Stover
Whiteford, Taylor & Preston
Baltimore, MD 21202
Attorney for Appellant
Holman Enterprises, Inc.
Douglas F. Murray
Whiteford, Taylor & Preston,
Baltimore, MD 21202
Attorney for Appellant
BF Goodrich, Inc.
Henry A. Heiman,
Heiman, Aber, Goldlust & Baker
Wilmington, DE 19899
Attorney for Appellant
Hennessy Industries, Inc.
Alan B. Rich (Argued)
Baron & Budd
Dallas, TX 75219
Robert T. Haefele
Wilentz, Goldman & Spitzer
Woodbridge, NJ 07095
Jonathan A. Smith-George
Law Office of Jonathan A. Smith-
George
Newport News, VA 23601
Robert Paul
Philadelphia, PA 19103
6a
Marla R. Eskin
Wilmington, DE 19801
Ronald L. Motley
Nancy Worth Davis
Ness Motley Loadholt Richardson
& Poole
Mount Pleasant, SC 29465
Attomeys for Appellee
Consolidated Asbestos Claimants
Elihu Inselbuch (Argued)
Caplin & Drysdale
New York, NY 10022
Trevor W. Swett, III
Peter Van N. Lockwood
Albert G. Lauber
Caplin & Drysdale
Washington, D.C. 20005
Matthew G. Zaleski, III
Campbell & Levine
Wilmington, DE 19801
Attorneys for Appellee
Official Committee of Asbestos
Claimants
7a
Charles S. Siegel (Argued)
Peter A. Kraus
Waters & Kraus
Dallas, TX 75204
Attormeys for Appellee
Unofficial Committee of Select
Asbestos Claimants; Waters &
Kraus Plaintiffs
William F. Taylor, Jr.
McCarter & English
Wilmington, DE 19899
Michael B. Pullano
McCarter & English
Philadelphia, PA 19103
Attorneys for Appellee
Kaeske-Reeves Claimants
Philip A. Harley
Paul, Hanley & Harley
Berkeley, CA 94710
Attorney for Appellees
Alice Edmiston and Barry
Edmiston
Constance J. McNeil
Lewis, D’Amato, Brisbois & Bisgaard
San Francisco, CA 94104
Attorney for Appellee
The Pep Boys—Manny, Moe &
Jack
8a
Barry R. Ostrager
Simpson, Thacher & Bartlett
New York, NY 10017
Attorney for Amicus- Appellants,
Travelers Indemnity, Travelers
Casualty and Surety Company
Daniel J. Popeo
Paul D. Kamenar
Washington Legal Foundation
Washington, D.C. 20036
Bruce R. Zirinsky
John H. Bae
Edward A. Smith
Cadwalader, Wickersham & Taft
New York, NY 10038
Attormeys for the Washington
Legal Foundation As Amicus
Curiae in Support of Appellants,
DaimlerChrysler Corporation,
Ford Motor Company, and
General Motors Corporation
9a
OPINION OF THE COURT
SLOVITER, Circuit Judge:
Before us is an appeal of the District Court’s decision
denying the motion to transfer tens of thousands of asbestos-
related tort claims and remanding these claims to the state
courts where they were originally filed, primarily on the
ground that the District Court had no subject matter
jurisdiction. The appellants, who moved for the transfer in the
District Court, argue that the District Court has subject-matter
jurisdiction over these claims because they are “related to” the
ongoing bankruptcy proceeding of Federal-Mogul Global, a
company which, through its affiliates, manufactured products
allegedly involved in the asbestos-related torts. The central
issue before us is whether this court has jurisdiction to review
the District Court’s decision to deny the transfer and to remand.
I.
BACKGROUND
A.
Procedural Posture
Tens of thousands of individuals (Friction Product Plaintiffs
or Plaintiffs) have brought personal injury and wrongful death
claims in state courts across the country seeking damages for
injuries allegedly caused by asbestos used in so-called friction
products, such as brake pads (Friction Product Claims). The
Friction Product Plaintiffs allege that they were exposed to
asbestos fibers through, inter alia, the manufacture,
installation, repair, and/or use of friction products and that this
exposure caused them or their decedents to develop severe
respiratory diseases, such as asbestos-related mesothelioma,
asbestos-related lung, laryngeal or esophageal cancer, or
asbestosis. They have brought their tort claims against various
10a
manufacturers and distributors of friction products (including
Federal-Mogul Globai, Inc., which had acquired Apex and
Wagner, makers of friction products) as well as against
companies that made and sold products that incorporated
friction products (in particular, automobile manufacturers that
used brake pads containing asbestos).
On October 1, 2001, Federal-Mogul and its 156 affiliates
and subsidiaries (Debtors) filed Chapter 11 petitions in the
United States Bankruptcy Court for the District of Delaware.
At that time, Debtors were co-defendants in many (though not
all) of the thousands of Friction Product Claims now before us.
The filing of the Debtors’ Chapter 11 petitions stayed the state
court proceedings as to them.
Thereafter, the Friction Product Plaintiffs began severing or
dismissing their claims against Debtors. Other defendants
named in the Friction Product suits (Friction Product
Defendants or Defendants) began removing the claims against
them from state courts to the appropriate federal district courts
pursuant to 28 U.S.C. § 1452(a) (bankruptcy removal), arguing
that the Friction Product Claims were “related to” the Debtors’
bankruptcy proceeding and thus subject to the bankruptcy
jurisdiction of the federal courts under 28 U.S.C. § 1334(b).
The primary theory in support of “related to” jurisdiction is that
the Friction Product Defendants would be able to seek
indemnification or contribution from Debtors because some of
the friction products used by Defendants were purchased from
Debtors.
In response to the removal of the claims, the Friction
Product Plaintiffs filed motions in the respective federal district
courts to remand the cases to state court on the theory that
removal was improper. Some of these district courts granted
these motions to remand.
In November 2001, the chief judge of this circuit, pursuant
to 28 U.S.C. § 292(b), assigned Judge Alfred M. Wolin, a
senior district judge in the District of New Jersey, to sit by
lla
designation in the District of Delaware to manage five
asbestos-related Chapter 11 proceedings, including that of
Debtors. Three of the Friction Product Defendants
(DaimlerChrysler Corporation, Ford Motor Company, and
General Motors; hereinafter, the Big Three Automakers) had
previously filed a motion to transfer provisionally to the
District Court, pursuant to 28 U.S.C. § 157(b)(5),! all of the
removed Friction Product Claims pending against them in
various district courts throughout the country. Thereafter,
Volkswagen of America, Inc., Volkswagen AG, Mercedes-
Benz USA, LLC, BMW North America, Inc., Volvo Cars
North America, Inc., Rolls Royce Bentley Motor Cars, Inc.,
and Nissan North American, Inc. (hereinafter, the International
Automakers) and Honeywell International, Inc.,? as well as
other Friction Product Defendants, also started removing and
then transferring the Friction Product Claims against them to
the District Court in Delaware.
Before the District Court could rule on any motions, some of
the district courts to which the Friction Product Claims had
originally been removed remanded cases before them back to
the state courts. See, e.g., Dunn v. DaimlerChrysler Corp., No.
3:01-CV-2870-X, 2002 WL 1359701 (N.D. Tex. Jan.3, 2002);
In re Asbestos Litig., 271 B.R. 118 (S.D. W.Va. Dec.7, 2001);
Clamon v. Kellogg-Brown & Root, Inc., No. G-01-784
(S.D. Tex. Dec. 6, 2001). Other district courts refused to
' That section provides:
(5) The district court shall order that personal injury tort 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.
28 U.S.C. § 157(b)(5).
; Honeywell is a successor in interest to Bendix Corporation, which
manufactured friction productions functionally identical to those
manufactured by Federal-Mogul. Bendix would sometimes purchase
Federal-Mogul’s products or components to sell under its own brand name.
12a
transfer their Friction Product Claims to the District Court.
See, e.g., In re Asbestos Litig., No. 01-1790, 2002 U.S. Dist.
LEXIS 3083 (D. Or. Feb. 1, 2002). And some of the plaintiffs
in cases that had been transferred to the District Court filed
emergency motions for remand because they were in extremis,
and sought to have the cases tried in state court before they
died. The most pressing matter before the District Court was
decision on the motions of the Friction Product Defendants for
immediate and ex parte provisional transfer of all Friction
Product Claims and their proposal that the District Court
thereafter render a plenary decision on the actual transfer of the
Friction Product Claims under 28 U.S.C. § 157(b)(5).
The primary reason offered by the Friction Product
Defendants for the transfer was to consolidate the Friction
Product Claims “for purposes of a threshold common issues
trial devoted to the core issue of whether brakes and other
automotive parts cause the diseases claimed.” App. at 474.
Specifically, Defendants wanted the District Court to conduct
a “global Daubert hearing” in which the court would perform
its “gatekeeper” function as outlined in Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993) (“[Under
the Rules [of Evidence] the trial judge must ensure that any and
all scientific testimony or evidence admitted is not only
relevant, but reliable.”’”), and amplified in Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 147 (1999). In particular,
Defendants wanted the District Court to determine whether the
evidence that Defendants’ products harmed Plaintiffs is based
on reliable scientific methodology. In their memorandum in
support of their motion to transfer, the Big Three Automakers
maintained that there is “no reliable scientific evidence to
support any claim based on exposure to [the Friction
P}roducts.” App. at 664. Accordingly, the Friction Product
Defendants argued that the promise of the “global Daubert
hearing” is to “excise[ ] [the Friction Product Claims] from the
American judicial system in one fell swoop and [lift] a
substantial cloud . . . from over Federal Mogul.” Br. of Big
Three Automakers at 2.
is ee ee oe
eit ee tt
ile DNS kh Ota hl La
Bb Tat i SAN BPO SAD aed
l3a
The District Court granted the provisional transfer pursuant
to § 157(b)’ in order to consider the appropriateness of actual
transfer as well as to examine its subject matter jurisdiction and
the appropriateness of abstention and remand. Jn re Federal-
Mogul Global, Inc., No. 01-10589 et al., 2001 U.S. Dist.
LEXIS 23553 (D. Del. Dec. 19, 2001) (granting Honeywell’s
provisional transfer motion); App. at 598 (same with respect to
Big Three Automakers); App. at 608 (International
Automakers); App. at 624 (Harley- Davidson Motor Company
Group, Inc.); App. at 615 & 630 (other Defendants).
Subsequently, the Friction Product Defendants succeeded in
obtaining mandamus orders from two appellate courts
prohibiting district courts to which the Friction Product Claims
had originally been removed from deciding any issues in those
cases. In re Gen. Motors Corp., No. 02-1273 (7th Cir. Feb 15,
2002) (App. at 1017); In re DaimlerChrysler Corp., No. 02-
10029, et al., 2002 U.S. App. LEXIS 8756 (5th Cir. Mar. 8,
2002). Those two courts reasoned that the District Court’s
provisional transfer had taken away any jurisdiction that those
district courts may have had. /d.
B.
District Court’s Ruling
After hearing oral arguments on the pending motions to
transfer and remand, the District Court issued the following
order, which was followed shortly thereafter by an opinion:
. Although § 157(b) does not explicitly allow for such provisional
transfers, they have been permitted by some courts. See, e.g., A.H. Robins
Co. v. Piccinin (In re A. H. Robins Co.), 788 F.2d 994, 1015-16 (4th Cir.
1986) (approving district court’s transfer order interpreting that order as
“conditional” pending objections of the parties and requests for abstention);
In re Dow Corning Corp., No. 95-20512, 1995 WL 495978, at *2 (Bankr.
E.D. Mich. 1995) (granting provisional transfer pending hearing to
determine whether the transfer order should be made permanent). The
parties before us do not question the legitimacy of a provisional transfer and
therefore we do not address that issue.
14a
ORDER 1) DENYING THE MOTIONS TO TRANSFER
THE “FRICTION PRODUCTS CLAIMS” AND 2)
REMANDING THE FRICTION PRODUCTS CLAIMS
This matter having been opened before the Court upon the
several motions of parties, denominated in the prior Orders
of the Court as the “Friction Products Defendants,” to
transfer to this District into the above-captioned proceedings
the claims against the movants previously denominated
“Friction Products Claims”; and the Court having previously
granted this motion on a provisional basis and the Friction
Products Claims having already been provisionally
transferred to this Court subject to a plenary hearing on the
motion to transfer; and the Court having previously given
notice to the parties that it would consider arguments
directed to subject matter jurisdiction, abstention and
remand in ruling upon the movants’ applications; and the
Court having reviewed the submissions of counsel and heard
oral argument; and for the reasons set forth on the record at
the hearing on those motions today, as supplemented by a
written Opinion to follow; and for good cause shown
It is this 8th day of February 2002
ORDERED that the motions to transfer the Friction
Products Claims are denied, and it is further
ORDERED that this Court lacks subject matter
jurisdiction over the Friction Products Claims, and it is
further
ORDERED that the Friction Products Claims are
remanded to the state courts from which they were removed
pursuant to 28 U.S.C. § 1447, and it is further
ORDERED that, in the alternative, the Friction Products
Claims are remanded to the state courts from which they
were removed pursuant to 28 U.S.C. § 1452.
In re Federal-Mogul Global, Inc., No. 01-10587, 2002
Bankr. LEXIS 105, *4-5 (Bankr. D. Del. Feb. 8, 2002)
15a
(hereinafter, Feb. 8 Order). The District Court’s written
opinion supplementing the order was issued on February 15,
2002. In re Federal-Mogul Global, Inc., No. 01-10578 et al.,
slip op. (Bankr. D. Del. Feb. 15, 2002) (hereinafter, Feb. 15
Op.).
The District Court held that it lacked subject-matter
jurisdiction because the claims against the Friction Product
Defendants were not “related to” the Federal-Mogul
bankruptcy proceedings. The court found it unlikely that
“Congress . . . intended that the bankruptcy of a single player
[ina multi-player industry] would have automatic, nation-wide
impact in which every manufacturer and distributor and all tens
of thousands of injured parties are concentrated in a single
reorganization proceeding.” Feb. 15 Op. at 16. Specifically,
the District Court found that under this court’s influential
decision in Pacor, Inc. v. Higgins (In re Pacor), 743 F.2d 984
(3d Cir. 1984), “related-to bankruptcy jurisdiction [does] not
extend to a dispute between non-debtors unless that dispute, by
itself, cieates at least the logical possibility that the estate will
be affected.” Jd. at 17.
The District Court noted that Pacor made clear that there is
no “related to” jurisdiction over a personal injury claim against
a non-debtor “without the filing and adjudication of a separate
claim for indemnification” against the debtor. /d. at 18.
Further, the District Court observed that “cases since Pacor
have failed to endorse the proposition that any contract of
indemnification- will support an extension of related-to
jurisdiction.” Jd. at 22 (emphasis in original).
Turning to the Friction Product Claims, the District Court
stated that:
[T]he movants have produced no evidence whatsoever of
even a bare agreement to indemnify running between the
debtors and the solvent co-defendants... .
The Court sees no justification to take the situation . .
outside of the rule of Pacor. A judgment against [the
l6a
Friction Product Defendants] will not bind the debtors. No
asset of the estate is threatened nor is any re-ordering of
creditors in the offing. Jt is true that recovery by asbestos
claimants against the movants may give rise to claims,
indeed very substantial claims, against the debtors in the
future. It is at that time, when the movants appear as
creditors of the estate and the facts underlying the liability
are adjudicated in the context of the bankruptcy, that the
Friction Products Claims will affect the estate.
Id. at 22-23 (emphasis added).
The District Court noted that only Chrysler submitted
documents that could even plausibly support a claim based on
a written indemnification agreement, namely boiler-plate
purchase orders that refer to documents containing
indemnification language. The District Court held that the
“routine nature of this kind of arrangement and lack of other
connections between [Chrysler and Debtors] makes this
[“boiler-plate” language] too thin a thread with which to pull
Chrysler into the Federal-Mogul bankruptcy.” Jd. at 27.
Although the court found that Chrysler had a comparatively
stronger claim for indemnification than the other Friction
Product Defendants, it found that none of them had genuine
indemnification claims “related to” the bankruptcy case. The
court found that even if there were a judgment against one of
the Friction Product Defendants, Debtors would not be bound
by that decision and that any indemnification claims against
Debtors by the Friction Product Defendants have not yet
accrued. Jd. at 23.
Alternatively, and apparently because there might be some
basis for Chrysler’s indemnification claims, the District Court
announced that, even if it did have jurisdiction, it would abstain
from hearing the Friction Product Claims pursuant to 28 U.S.C.
§ 1334(c)(1) (bankruptcy abstention) in light of considerations
of fairness, comity, and the integrity of the bankruptcy process.
Feb. 15 Op. at 28 & 36.
17a
Having found that it lacked jurisdiction (or, in the alternative
that abstention was appropriate), the District Court remanded
the Friction Product Claims directly to the state courts from
which they were removed pursuant to 28 U.S.C. § 1452(b).
While the court acknowledged that it was “rare for a District
Court in one state to remand a matter to the state courts of
another state,” Feb. 15 Op. at 37, the District Court concluded
that such action was permitted by § 1452 and justified by
principles of efficiency and fairness.
$8
The Appeal
The Friction Product Defendants appealed the District
Court’s order. This court granted a temporary stay of the order
remanding the Friction Product Claims. App. at 53-54. Four
groups of Defendants have filed briefs in this appeal: The Big
Three Automakers, Honeywell, the International Automakers,
and the Official Committee of Unsecured Creditors of Federal-
Mogul Global.* Additionally, the Washington Legal
Foundation and Traveler’s Indemnity Company each filed an
amicus brief in support of Defendants.
The Friction Product Defendants argue that the District
Court erred in (1) finding that it lacked “related to”
jurisdiction, (2) deciding to remand the claims directly to the
state courts from which they were removed, and
(3) determining, in the alternative, that it would abstain. In
particular, they argue that the District Court misread this
court’s seminal decision in Pacor and mistakenly ignored the
persuasive authority of the Sixth Circuit’s decision in Lindsey
v. O'Brien (In re Dow Corning Corp.), 86 F.3d 482 (6th Cir.
4
The Official Committee of Unsecured Creditors represents holders of
approximately two and a half billion dollars of Federal-Mogul’s
commercial, trade, and bond debt. Although the unsecured creditors do not,
in general, have any Friction Product Claims pending against them, for
simplicity’s sake we include them among the Defendants.
18a
1996). Further, they argue that remand to state court was not
authorized because only a court to which a claim was removed
has the statutory power to remand to the state court from which
that claim was removed. Thus, they conclude that the District
Court erred by remanding the claims to state court, and also
erred by abstaining with respect to any remaining claims.
Further, Defendants argue that the District Court failed to
adequately consider whether to conduct a global Daubert
hearing. Finally, some Defendants argue that Pacor is flawed
and is at odds with this court’s later decisions concerning
“related to” jurisdiction. Br. of Honeywell at 13-18.
Four groups of Friction Product Plaintiffs have filed briefs:
the Official Committee of Asbestos Claimants of Federal-
Mogul Global, the Ad Hoc Committee of Asbestos Claimants,
the Unofficial Committee of Asbestos Claimants, and the
Waters & Kraus Plaintiffs... The Friction Product Plaintiffs
argue, first, that this court lacks appellate jurisdiction to review
the decision of the District Court in light of 28 U.S.C.
§ 1447(d), which provides that a remand “to the State court
from which [a case] was removed is not reviewable on appeal
or otherwise.” § 1447(d). In the alternative, they argue that
the District Court was correct in finding that it had no “related
to” jurisdiction and in deciding to remand the claims directly
to the various state courts from which they were removed.
Also, in addition to endorsing the District Court’s alternative
holding to abstain pursuant to 28 U.S.C. § 1334(c)(1)
(discretionary abstention), Plaintiffs maintain that the District
Court should have abstained pursuant to 28 U.S.C.
§ 1334(c)(2) (mandatory abstention). Further, some Plaintiffs
argue that Defendants’ proposed “global Daubert hearing” is
inapplicable to the Friction Product Claims in light of the
“infinite variety of exposure histories and medical facts
> The Waters & Kraus Plaintiffs have dismissed all Friction Product
Claims they had brought against Federal-Mogul. Otherwise, there are no
substantial differences among the various committees of asbestos claimants.
4
1
Te re Ce ee ee
19a
presented by the tens of thousands of claimants . . . [and fifty
states’ laws on causation and burden of proof.” Br. of Ad Hoc
Committee at 2.
I.
JURISDICTION
Before we can reach the merits of the District Court’s
decision, we must determine whether we have jurisdiction to
consider this appeal. The District Court denominated its Order
as “1) denying the motions to transfer the ‘friction products
claims’ and 2) remanding the friction products claims.” Feb.
8 Order at *4. To make an assessment of our jurisdiction we
must first consider whether to construe the decision of the
District Court as a denial of a transfer or as a remand order.
Because there are arguments to support construing the order
as one denying the requested transfer and equally good
arguments to construe the order as one remanding the cases, we
will follow the prudent course and consider in turn our
jurisdiction under each construction. Each presents substantial
obstacles to our exercise of appellate jurisdiction. We will
discuss the District Court’s alternative holding abstaining from
hearing the Friction Product Claims only if we need to reach
that issue.
A.
Denial of Transfer
1. Reviewability
It is a well-established rule in this circuit (and generally) that
“orders transferring venue are not immediately appealable.’”
Sunbelt Corp. v. Noble, Denton & Assoc., 5 F.3d 28, 30 (3d
Cir. 1993) (quoting Carteret Sav. Bank, FA v. Shushan, 919
F.2d 225, 228 (3d Cir. 1990)); see also Hershey Foods Corp.
v. Hershey Creamery Co., 945 F.2d 1272, 1278 (3d Cir. 1991)
(“It is well-settled that orders granting or denying a change in
venue are not proper subjects for interlocutory appeals.”)
(citing Nascone v. Spudnuts, Inc., 735 F.2d 763, 764 (3d Cir.
20a
1984)); 15 Charles Alan Wright et al., Federal Practice &
Procedure § 3855, at 472 (2d ed. 1986 & Supp. 2002) (“It is
entirely settled that an order granting or denying a motion to
transfer under 28 U.S.C.A. § 1404(a) is interlocutory and not
immediately appealable . . . .”). However, we, like other
courts, have held that “‘[m]andamus is . . . the appropriate
mechanism for reviewing an allegedly improper transfer
order.”” Jn re United States, 273 F.3d 380, 385 (3d Cir.2001)
(alteration and ellipsis in original) (quoting Sunbelt, 5 F.3d at
30); see also Van Dusen v. Barrack, 376 U.S. 612, 615 n.3
(1964); In re Sealed Case, 141 F.3d 337, 340 (D.C. Cir. 1998);
Warrick v. Gen. Elec. (In re Warrick), 70 F.3d 736, 739 (2d
Cir. 1995); National-Standard Co. v. Adamkus, 881 F.2d 352,
356 n.3 (7th Cir. 1989); Sunshine Beauty Supplies, Inc. v. U.S.
Dist. Ct., 872 F.2d 310, 311 (9th Cir. 1989); Hustler Magazine
v. US. Dist. Ct., 790 F.2d 69, 70 (10th Cir. 1986).
Of course, review via mandamus necessarily is more
circumscribed than review by appeal. As we have stated,
“[M]andamus jurisdiction affords an appellate court less
opportunity to correct district court error in the case before it
and less opportunity to provide guidance for future cases.
Moreover, comity between the district and appellate courts is
best served by resort to mandamus only in_ limited
circumstances.” Kelly v. Ford Motor Co. (In re Ford Motor
Co.), 110 F.3d 954, 964 (3d Cir. 1997).
In reviewing a transfer order by mandamus, we recently
observed, “While 28 U.S.C. § 1651(a) grants federal courts the
general power to issue writs, it is widely accepted that
mandamus is extraordinary relief that is rarely invoked.”
United States, 273 F.3d at 385. In Sunbelt, we described the
- standards for issuing mandamus with respect to a district
court’s transfer order:
Our review of the district court’s transfer order on a
petition for a writ of mandamus is governed by familiar
principles. A writ of mandamus is an extraordinary remedy,
the issuance of which is generally committed to the sound
BENE S BPDSPE SITE SIF MERE IE RSS SIT CR ORES” Het RTS
2la
discretion of the issuing court. Carteret, 919 F.2d at 232-33;
In re School Asbestos Litig., 977 F.2d [764,] 772 [(3d Cir.
1992)}....
Generally, a writ will only issue if the district court did not
have the power to enter the order, and then “only if the party
seeking the writ meets its burden to demonstrate that its
right to the writ is clear and indisputable.” (Carteret, 919
F.2d] at 232. Thus, we turn to whether or not the district
court had the power to transfer this action.
Sunbelt, 5 F.3d at 30.°
This court has on various occasions construed an appeal as
a petition for a writ of mandamus. See, e.g., In re Nwanze, 242
The Supreme Court has stated that “only exceptional circumstances
amounting to a judicial ‘usurpation of power’ will justify the invocation of
this extraordinary remedy.” Will v. United States, 389 U.S. 90, 95
(1967) (quoting De Beers Consol. Mines, Ltd v. United States, 325 U.S. 21 2,
217 (1945)). It has listed among the conditions for the issuance of a writ of
mandamus that “the party seeking . . . the writ have no other adequate means
to attain the relief he desires,” Kerr v. U.S. Dist. Ct., 426 U.S. 394, 403
(1976) (citing Roche v. Evaporated Milk Ass'n, 319 U.S. 21, 26 (1943)), and
that the right to the writ is “‘unclear and indisputable,”” id. (quoting Bankers
Life & Cas. Co. v. Holland, 346 U.S. 379, 384 (1953) (quotation omitted)).
As one commentator has noted, “The circuit court articulations of
what constitutes a ‘clear and indisputable’ right to the writ vary to some
degree, but virtually all suggest that some blatant or unconscionable misstep
by the district court is needed.” Timothy P. Glynn, Discontent and
Indiscretion Review of Interlocutory Orders, 77 Notre Dame L. Rev. 175,
199 (2001). Glynn distinguishes among courts that require a usurpation of
power by the district courts, id. at 200 & n.94 (citing Jn re Rhone-Poulenc
Rorer, Inc., 51 F.3d 1293, 1295 (7th Cir. 1995); In re Pearson, 990 F.2d
653, 656 (Ist Cir. 1993); In re Int’l Precious Metals Corp., 917 F.2d 792,
793 (4th Cir. 1990)), those that require “shocking abuse of discretion,
exercise of power in excess of jurisdiction, or other outrageous behavior,”
id. at 200 & n.95 (citing, inter alia, In re Chambers Dev. Co., 148 F.3d 214,
223 (3d Cir. 1998); In re Sealed Case, 141 F.3d at 339; Boughton v. Cotter
Corp., 10 F.3d 746, 751 (10th Cir. 1993)), and the Ninth Circuit’s less
stringent standard, id. at 200 & n.6 (citing Bauman vy. U.S. Dist. Ct., 557
F.2d 650, 654-55 (9th Cir. 1977)).
22a
F.3d 521, 524 (3d Cir. 2001); Nascone, 735 F.2d at 773.
Defendants request that we do so here, Reply Br. of Big Three
at 21,’ and we proceed to consider whether to issue a writ of
mandamus in light of Defendants’ arguments that the District
Court erred in denying their transfer motion.
2. District Court's Rationale for Denial of Transfer
The District Court denied the Defendants’ motion to transfer
after holding that it lacked subject-matter jurisdiction over the
Friction Product Claims because they were not “related to”
Federal-Mogul’s bankruptcy proceeding. That holding, in turn,
was based on its understanding of this court’s decision in
Pacor Inc. v. Higgins (In re Pacor), 743 F.2d 984 (3d Cir.
1984), where we interpreted the scope of the statutory “related
to” jurisdiction of bankruptcy courts.
In Pacor, John and Louise Higgins sued Pacor in
Pennsylvania state court for work-related injuries to John
Higgins caused by exposure to asbestos supplied by Pacor.
Pacor filed a third-party complaint impleading Johns-Manville,
the manufacturer of the asbestos. Thereafter, Manville filed for
Chapter 11 bankruptcy in the Southern District of New York.
Pacor filed a petition for removal in the Bankruptcy Court for
the Eastern District of Pennsylvania seeking to remove the
Higgins’ case from state court to federal bankruptcy court and
simultaneously to transfer it from that court to the New York
district court where it would be joined with the rest of the
Johns-Manville bankruptcy proceedings. The theory of Pacor’s
petition was that the Higgins suit was “related to” the Manville
bankruptcy proceeding. The.bankruptcy court denied the
petition and remanded the case. Pacor, 743 F.2d at 986-87.
We affirmed. Analyzing the “related to” provision, we
concluded:
7
In their Emergency Motion for Stay Pending Appeal before this court,
the Big Three Automakers specifically asked this court to issue a writ of
mandamus. Emergency Motion for Stay Pending Appeal, 02-1426, at 6
(filed Feb. 11, 2002).
Fe yet PAR IE ARNE CN IP LE PEE OL POLIO CALI LIE IO it AOL GI INT 10 ot Pp a trenwes Vee ¢
eC TE CGE GI A PEE LODL LOLI CNA LILLLIS ILE LAS OL DOE NORE FINI SO"
23a
[T]he primary action between Higgins and Pacor would have
no effect on the Manville bankruptcy estate, and therefore is
not “related to” [the Manville] bankruptcy [proceeding]. At
best, it is a mere precursor to the potential third party claim
for indemnification by Pacor against Manville. Yet the
outcome of the Higgins-Pacor action would in no way bind
Manville, in that it could not determine any rights, liabilities,
or course of action of the debtor. Since Manville is not a
party to the Higgins-Pacor action, it could not be bound by
res judicata or collateral estoppel. Even if the Higgins-Pacor
dispute is resolved in favor of Higgins (thereby keeping
open the possibility of a third party claim), Manville would
still be able to relitigate any issue, or adopt any position, in
response to a subsequent claim by Pacor. Thus, the
bankruptcy estate could not be affected in any way until the
Pacor-Manville third party action is actually brought and
tried.
Id. at 995 (citations omitted).
The arguments made by Pacor were not dissimilar to those
made by Defendants here, but we rejected them, saying:
Pacor stresses that the Higgins-Pacor claim would affect the
Manville bankruptcy estate, in that without a judgment for
plaintiff Higgins in that action, there could never be a third
party indemnification claim against Manville. This
argument does not alter our conclusion. At best, one could
say that a judgment against the plaintiff on the primary claim
would make absolutely certain that the Manville estate could
never be adversely affected. This does not prove the
converse, however, that a judgment in favor of the plaintiff
Higgins necessarily does affect the estate. The fact remains
that any judgment received by the plaintiff Higgins could
not itseif result in even a contingent claim against Manville,
since Pacor would still be obligated to bring an entirely
separate proceeding to receive indemnification.
Id. (emphasis in original).
24a
Thus, the District Court interpreted Pacor and its progeny to
hold that “related-to bankruptcy jurisdiction will not extend to
a dispute between non-debtors unless that dispute, by itself,
creates at least the logical possibility that the estate will be
affected.” Feb. 15 Op. at 17.
Pacor has been favorably cited in dozens of decisions of this
court. As we have observed:
The test . . . articulated in Pacor has been enormously
influential. Pacor not only governs our analysis here, but its
cogent analytical framework has been relied upon by our
sister circuits more than any other case in this area of the
law....
Even for those circuits that have not formally adopted
Pacor, {it] has provided an indispensable and frequently
cited frame of reference, a veritable beacon on the uncharted
and perilous waters of bankruptcy subject matter
jurisdiction. The references to Pacor in Shepard’s Citations
are legion. When federal courts must consider whether an
issue is a related proceeding, the starting point has
universally been Pacor.
Torkelsen v. Maggio (In re Guild & Gallery Plus, Inc.), 72
F.3d 1171, 1181 & n.5 (3d Cir. 1996).
Pacor clearly remains good law in this circuit. Under our
operating procedures, we cannot revisit Pacor unless we are
sitting en banc. Moreover, the Supreme Court has endorsed the
core of this court’s opinion in Pacor, saying:
We agree with the views expressed by the Court of Appeals
for the Third Circuit in Pacor . . . that “Congress intended to
, Honeywell argues that Pacor is unreasonable in various ways and that
Lindsey v. O’Brien (In re Dow Corning Corp.), 86 F.3d 482 (6th Cir. 1996),
articulates a better approach to related-to jurisdiction. Br. of Honeywell at
13-18. Honeywell’s arguments are not ultimately persuasive and, as we
note in the text, we are not in a position to reject Pacor without en banc
review. 3d Cir. Internal Operating P. 9.1.
25a
grant comprehensive jurisdiction to the bankruptcy courts so
that they might deal efficiently and expeditiously with all
matters connected with the bankruptcy estate,” and that the
“related to” language of § 1334(b) must be read to give
district courts (and bankruptcy courts under § 157(a))
jurisdiction over more than simply proceedings involving
the property of the debtor or the estate. We also agree with
that court’s observation that a bankruptcy court’s “related
to” jurisdiction cannot be limitless.
Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995) (citations
omitted) (citing and quoting Pacor, 743 F.2d at 994) (emphasis
added). The Supreme Court noted the general acceptance of
Pacor, commenting that all of the courts of appeal have
adopted the Pacor test with little or no variation with the
exception of the Second and Seventh Circuits, which have
adopted slightly different tests. /d. at 308-309 n.6.
Notwithstanding the widespread acceptance of Pacor,
Defendants argue that the Friction Product Claims are “related
to” the Federal-Mogul bankruptcy proceeding because the
various claims against them could lead to substantial
indemnification or contribution claims against Federal-Mogul,
which would in turn significantly affect the administration of
the bankruptcy estate and the development of an appropriate
plan of reorganization. They focus on our articulation of the
Pacor test for “related to” jurisdiction as “whether the outcome
of that proceeding could conceivably have any effect on the
estate being administered in bankruptcy.” Pacor, 743 F.2d at
994 (emphasis in original). Defendants emphasize that in
Pacor we stated that a civil “proceeding need not necessarily
be against the debtor” to give rise to “related to” jurisdiction;
it is enough that the outcome of such a proceeding “could alter
the debtor’s rights, liabilities, options, or freedom of action.”
Id. They argue that the outcome of the Friction Product Claims
could conceivably have an effect on Debtors’ estate, because
it is “conceivable” that if the Friction Product Plaintiffs
succeed in their claims against them, the Friction Product
26a
Defendants would seek indemnification and/or contribution
from Federal-Mogul.
Their reading of the word “conceivable” ignores the precise
holding of Pacor where, despite the seemingly broad language
of the opinion, we found no “related to” jurisdiction for the
Higgins lawsuit against Pacor because the outcome of that
lawsuit could not result “in eveh a contingent claim” against
the debtor (Manville); rather, “an entirely separate proceeding
to receive indemnification” would have been required. /d. at
995. The test articulated in Pacor for whether a lawsuit could
“conceivably” have an effect on the bankruptcy proceeding
inquires whether the allegedly related lawsuit would affect the
bankruptcy proceeding without the intervention of yet another
lawsuit. Therefore, because any indemnification claims that
the Friction Product Defendants might have against Debtors
have not yet accrued and would require another lawsuit before
they could have an impact on Federal-Mogul’s bankruptcy
proceeding, we cannot hold that the District Court’s ruling that
it lacked subject-matter jurisdiction because the Friction
Product Claims were not “related to” the Federal-Mogul
bankruptcy proceeding was a “clear error . . . approach[ing] the
magnitude of an unauthorized exercise of judicial power.”
Lusardi v. Lechner, 855 F.2d 1062, 1069 (3d Cir. 1988) (citing
Will v. Calvert Fire Ins. Co., 437 U.S. 655, 661 (1978)). We
therefore conclude that the District Court’s decision does not
justify issuance of a writ of mandamus.
The arguments by the Friction Product Defendants for the
existence of “related to” bankruptcy jurisdiction draw heavily
on the decision of the Sixth Circuit in Dow Corning, 86 F.3d
482 (6th Cir. 1996). Dow Coming, the largest producer of
silicone-gel breast implants, also sold silicone materials to
other manufacturers of such implants. It and other
manufacturers and suppliers of silicone implants were sued by
thousands of recipients of the implants for personal injuries
related to the silicone implants. Dow Corning filed for Chapter
11 bankruptcy. The bankruptcy filing automatically stayed all
Ga
re
%
W
a
x]
4
s
‘i
fS
1
)
27a
of the silicone implant cases against it, but not the claims
against Dow Chemical and Corning, Inc. (its co-defendants as
well as its shareholders) or the claims against the other three
co-defendants. As in this case, the various co-defendants
removed many of these personal injury claims from state court
to federal court. Dow Corning then moved to transfer the
removed cases to the district court that had jurisdiction over its
Chapter 11 proceedings, and the co-defendants joined in its
motions, relying on the “related to” provision of the
Bankruptcy Code. The district court held that it did not have
“related to” jurisdiction over the claims against the co-
defendants but the court of appeals, citing Pacor, reversed.
After noting that Dow Coming’s co-defendants may have
thousands of claims of indemnification and contribution against
Dow Corning and that Dow Corning may have similar claims
against them, the court concluded that the district court had
“related to” jurisdiction over the silicone implant claims of
Dow Corning’s non-shareholder co-defendants based on the
following reasoning:
We find that it is not necessary for the appellees first to
prevail on their claims against the nondebtor defendants, and
for those companies to establish joint and several liability on
Dow Coming’s part, before the civil actions pending against
the nondebtors may be viewed as conceivably impacting
Dow Corning’s bankruptcy proceedings. The claims
currently pending against the nondebtors give rise to
contingent claims against Dow Coming which
unquestionably could ripen into fixed claims. The potential
for Dow Corning’s being held liable to the nondebtors in
claims for contribution and indemnification, or vice versa,
suffices to establish a conceivable impact on the estate in
bankruptcy. Claims for indemnification 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
28a
Corning’s ability to resolve its liabilities and proceed with
reorganization.
Dow Corning, 86 F.3d at 494 (emphasis added).
The court concluded:
Cognizant of the fact that “related to” jurisdiction cannot be
limitless and concerned about granting benefits of the
automatic stay in bankruptcy to solvent codefendants, we
nevertheless believe the possibility of contribution or
indemnification liability in this case is far from attenuated.
We conclude that Section 1334(b) jurisdiction exists over
the actions pending against [Dow Corning’s co-defendants].
Id.
The Dow Corning court distinguished Pacor as follows:
In addition, we believe there is a qualitative difference
between the single suit involved in Pacor and the
overwhelming number of cases asserted against Dow
Coming and the nondebtor defendants in this case. A single
possible claim for indemnification or contribution simply
does not represent the same kind of threat to a debtor’s
reorganization plan as that posed by the thousands of
potential indemnification claims at issue here.
Id.
The Friction Product Defendants extrapolate from Dow
Corning a rule that “related to” jurisdiction exists over claims
against non-debtors when these non-debtors have potential
contribution and indemnification claims. However, they
cannot persuasively argue that Dow Corning rather than Pacor
should have provided the rule of law the District Court should
have followed.
The District Court stated that it was:
unconvinced by the Dow Corning panel’s main point of
distinction between that case and Pacor. The Sixth Circuit
reasoned that Pacor contained only one claim, whereas in
29a
Dow Corning many thousands of plaintiffs were suing the
non-debtors. This Court regards with misgiving the
proposition that mere numbers of claims should prevail over
articulable principles when it comes to defining federal
subject matter jurisdiction.
Feb. 15 Op. at 15-16.
The District Court referred only briefly to the Fifth Circuit’s
decision in Arnold v. Garlock, Inc., 278 F.3d 426 (Sth Cir.
2001), reh’g denied, 288 F.3d 234 (2002), which presents
issues like those before us. Like the Friction Product
Defendants here, Garlock, a co-defendant of Federal-Mogul in
over eighty asbestos-related tort cases, removed the tort claims
against it and moved for transfer to the Federal-Mogul
bankruptcy proceeding. Garlock made the same arguments that
Defendants make before us, and relied on Dow Corning to
support “related to” jurisdiction. The Fifth Circuit
distinguished Dow Corning saying:
In Jn re Dow Corning, the Sixth Circuit reversed and
ordered the United States District Court for the Eastern
District of Michigan to transfer under § 157(b)(5) a
relatively small number of non-debtor co-defendants who
had asserted claims for contribution, or announced the intent
of doing so, against the debtor manufacturer of silicone
breast implants. /n re Dow Corning, 86 F.3d at 498. In that
case, each of the co-defendants was closely involved in
using the same material, originating with the debtor, to make
the same, singular product, sold to the same market and
incurring substantially similar injuries. This circumstance
created a unity of identity between the debtor and the co-
defendants not present here, where the co-defendants
variously use asbestos for brake friction products, insulation,
gaskets, and other uses.
Therefore, while we do not disagree that certain mass tort
claims in some circumstances might be consolidated with
bankruptcy proceedings in a single district in accordance
30a
with § 157(b)(5), the relationship of the co-defendants
in ...Jn re Dow Corning is distinguishable from Garlock’s
asserted relationship, through a claim for contribution, to the
debtor here.
Id. at 440. The Fifth Circuit’s analysis in Garlock of the
“related to” provision of the Bankruptcy Code is consistent
with the result on the same issue reached by the District Court
in this case.
We, however, remain a step away from reaching the merits
of whether the District Court has “related to” jurisdiction.
Instead, because our appellate jurisdiction is at issue, we
review the District Court’s denial of Defendants’ transfer
motion in the context of deciding whether to grant a writ of
mandamus. We have recently stated that a writ of mandamus
may issue only if “the district court committed a ‘clear error of
law’ at least approach[ing] the magnitude of an unauthorized
exercise of judicial power, or a failure to use that power when
there is a duty to do so,” Trans Penn Wax Corp. yv.
McCandless, 50 F.3d 217, 227 (3d Cir. 1995) (alteration in
original) (quoting Richman Bros. Records, Inc. v. U.S. Sprint
Communications Co., 953 F.2d 1431, 1448 (3d Cir. 1991)
(quotation omitted)), and only when “the party seeking
[mandamus] demonstrates a clear and indisputable night to
fit].” Jd. (citing Carteret Sav. Bank, 919 F.2d at 232).
The Friction Product Defendants have not met this rigorous
standard for the issuance of the extraordinary writ of
mandamus as to the District Court’s denial of the motion to
transfer. See, e.g., In re United States, 273 F.3d at 385;
Solomon v. Cont’l Am. Life Ins. Co., 472 F.2d 1043 (3d Cir.
1973) (denying petition for mandamus regarding a transfer
order). See also Dalton v. United States (In re Dalton), 733
F.2d 710, 716-18 (10th Cir. 1984) (same in the bankruptcy
context); Jn re McDonnell-Douglas Corp., 647 F.2d 515, 517
(Sth Cir. 1981) (same); Toro Co. v. Alsop, 565 F.2d 998 (8th
Cir. 1977) (denial of mandamus petition regarding transfer in
anti-trust context); 16 Charles Alan Wright et al., Federal
St bk Ce
Sa SALLE see Aa Mine BARDS eae At DO EA
3la
Practice & Procedure § 3935.4, at 619-26 (2d ed. 1996)
(discussing use of mandamus applied to transfer orders). We
will deny the request to issue a writ of mandamus to compel
the District Court to transfer the Friction Product Claims under
§ 1334(b).
B.
Remand Order
1. Appellate Jurisdiction
We next consider whether we have jurisdiction to review the
decision of the District Court if we construe that decision as a
remand order. -
The Friction Product Defendants removed the Friction
Product Claims to various federal courts pursuant to 28 U.S.C.
§ 1452 (bankruptcy removal). That section provides:
(a) A party may remove any claim or cause of action in a
civil action . . . to the district court for the district where
such civil action is pending, if such district court has
jurisdiction of such claim or cause of action under section
1334 [the general jurisdictional provisions of the bankruptcy
code] of this title.
(b) The court to which such claim or cause of action is
removed may remand such claim or cause of action on any
equitable ground. An order entered under this subsection
remanding a claim or cause of action, or a decision to not
remand, is not reviewable by appeal or otherwise by the
court of appeals under section 158(d), 1291, or 1292 of this
title or by the Supreme Court of the United States under
section 1254 of this title.
28 U.S.C. § 1452 (emphasis added).
The comparable provisions applicable to non-bankruptcy
cases are in 28 U.S.C. §§ 1441 and 1447. Section 1441(a)
provides:
32a
(a) Except as otherwise expressly provided by Act of
Congress, any civil action brought in a State court of which
the district courts of the United States have original
jurisdiction, may be removed by the defendant or the
defendants, to the district court of the United States for the
district and division embracing the place where such action
is pending. ;
Sections 1447(c) and (d) provide:
(c) ... If at any time before final judgment it appears that
the district court lacks subject matter jurisdiction, the case
shall be remanded ....
(d) An order remanding a case to the State court from
which it was removed is not reviewable on appeal or
otherwise, [except for certain civil nights cases].
28 U.S.C. § 1447 (emphasis added).
At one time, various courts, including this one, held that
judicial review of the remand of a claim removed pursuant to
the Bankruptcy Code was governed exclusively by § 1452(b),
the provision governing remand of removed claims “related to”
bankruptcy, not by § 1447(d), the general procedural provision
governing remand after removal. See Pacor, 743 F.2d at 990-
92 (discussing § 1478, the predecessor of § 1452).
Subsequently, the Supreme Court rejected this view, stating:
RAP Ee TRC SO Me OLE Sek
Wate ce
There is no express indication in § 1452 that Congress
intended that statute to be the exclusive provision governing
removals and remands in bankruptcy. Nor is there any
reason to infer from § 1447(d) that Congress intended to
exclude bankruptcy cases from its coverage. The fact that
§ 1452 contains its own provision governing certain types of
remands in bankruptcy . . . does not change our conclusion.
There is no reason §§ 1447(d) and 1452 cannot comfortably
coexist in the bankruptcy context. We must, therefore, give
effect to both.
eS eh eae AE LE Buk Pe NS acti Phe AAAS yea ASS ie Bs sionk vist
33a
Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 129
(1995).? Giving effect to both § 1447(d) and § 1452(b) and
applying them to a remand order involving claims allegedly
“related to” a bankruptcy proceeding, it is apparent that such a
remand is expressly “not reviewable by appeal or otherwise.”
28 U.S.C. § 1452(b). See also 28 U.S.C. § 1447(d) (remand
orders “not reviewable on appeal or otherwise.’’).
Defendants argue that this court has jurisdiction to review
the remand order because neither § 1447(c) nor § 1452(a)
authorized the District Court to remand the Friction Product
Claims to the state courts from which they were removed.
Specifically, the Friction Product Defendants argue that the
remand order was not authorized because § 1447(c) only
authorizes remand by the district court to which the claims
were removed and only authorizes remand to a court from
which the removed claims most recently came. Relatedly, they
note that the language of § 1452(b) is even more specific as it
only authorizes remand by “[t]he court to which such claim or
cause of action is removed.” Therefore, they contend that once
the District Court decided the jurisdictional issue against them,
it only had the options of (i) vacating the provisional transfer
order, (ii) denying the final transfer order, or (iii) transferring
the claims back to the district courts from which they were
provisionally transferred. Reply Br. of Big Three Automakers
at 18.'° In any event, as they view the situation, the District
> While Things Remembered overruled Pacor on this precise issue, it did
not disturb the other holdings of Pacor. See, e.g., Halper v. Halper, 165
F.3d 830, 837 n.8 (3d Cir. 1999).
” They assume that under any of these options, the District Court’s
decision would have been subject to appellate review. As we discussed in
the previous section, that would not necessarily be the case.
34a
Court had no authority to remand the claims directly to the
state courts."
Defendants’ argument that we are not precluded from
reviewing the cross-jurisdictional remands because they were
unauthorized by statute stems in part from the Supreme Court’s
holding in Thermtron Products, Inc. v. Hermansdorfer, 423
U.S. 336, 345-46 (1976), that only remand orders based on
grounds specified in § 1447(c) are immune from review under
§ 1447(d). In Thermtron, the remand was ordered solely on the
ground of the district court’s heavy docket. The Court’s
subsequent opinion in Things Remembered clarified the scope
of the prohibition of review of remand orders imposed by
§ 1447(d). The Court held appellate review was properly
denied of an order remanding a case which had been untimely
removed. 516 U.S. at 128. As Justice Thomas stated for the
Court, “As long as a district court’s remand is based on a
timely raised defect in removal procedure or on lack of subject-
matter jurisdiction—the grounds for remand recognized by
§ 1447(c)}—a court of appeals lacks jurisdiction to entertain an
appeal of the remand order under § 1447(d).” /d. at 127-28.
As the basis for the District Court’s remand in this case was
lack of subject matter jurisdiction (the absence of “related to”
jurisdiction), appeal is similarly barred.
Moreover, Defendants’ premise that the District Court
lacked authority to remand a case improvidently removed to a
jurisdiction other than the one from which it came is belied by
two decisions of this court. In Bloom v. Barry, 755 F.2d 356
(3d Cir. 1985), a breach of warranty case commenced in a
Florida state court was removed to the District Court for the
Southern District of Florida and then transferred to the District
lit is unjikely that if the District Court had returned the cases to the
district courts from which they came, under the law of the case doctrine,
those district courts would have been free to reject the ruling of the District
Court on the “related to” jurisdiction issue, but we need not decide that
issue.
35a
Court for the District of New Jersey. The latter court found
that it lacked subject-matter jurisdiction and remanded the case
to a New Jersey state court, a venue in which the case had
never been. We granted a writ of mandamus, concluding that
while the New Jersey district court was right to remand the
case, it was wrong to remand it to the New Jersey state court.
We therefore vacated the district court’s order and directed it
to remand the case to the Florida state court pursuant to
§ 1447(c). Jd. at 358. In explaining our decision directing
remand to the Florida state court from which it had been
removed rather than to the United States District Court in
Florida from which it had come, -we stated, “[f]ollowing the
change of venue [the District Court for] the District of New
Jersey had the same authority with respect to disposition of the
case as had the District Court for the Southern District of
Florida.” Jd. We held that, just as the district court in Florida
could have remanded the case to Florida state court if it found
any jurisdictional defects, after transfer so too could the district
court in New Jersey. /d. Bloom’s holding that the court to
which a case has been transferred stands in the shoes of the
court from which the case was transferred, at least with respect
to remand pursuant to § 1447, is relevant here. See also
AlliedSignal Recovery Trust v. Allied Signal Inc., Nos. 01-
1111, 01-1355, 01-1399 (3d Cir. July 31, 2002).
Similarly, in Abels v. State Farm Fire & Cas. Co., 770 F.2d
26 (3d Cir. 1985), a tort action commenced in California state
court was removed to the United States District Court for the
Central District of California and then transferred pursuant 28
U.S.C. § 1404 to the United States District Court for the
Western District of Pennsylvania where the relevant documents
and many witnesses were located. The district court in
Pennsylvania held that the plaintiff's claims were time-barred
and it dismissed the action. On appeal, we vacated the
dismissal because we found that there was no diversity of
citizenship and therefore the federal courts lacked subject-
matter jurisdiction. Jd. at 31-33. Although we considered
“remanding [the case] directly to the California state court, or
36a
routing [the case] through the federal district court in Los
Angeles,” id. at 33 n.13, we decided to remand the case to the
district court in Pennsylvania with instructions that it remand
the case to the California state court, not to the California
district court that had transferred the case to the Pennsylvania
district court. Thus, once again we authorized a cross-
jurisdictional remand. In sum, the relevant precedent from this
court supports the District Court’s cross-jurisdictional remand
order.
The case before us is in some ways similar to the recent
decision of Republic of Venezuela v. Philip Morris Inc., 287
F.3d 192 (D.C. Cir. 2002), in which foreign countries brought
various actions in a Florida state court to recover damages from
certain tobacco companies. The cases were removed to federal
district court in Florida and then transferred to the federal
district court in the District of Columbia. That court held that
it lacked subject-matter jurisdiction under § 1447, and
remanded four of the cases to the Florida state court. The
tobacco companies appealed the remand order and petitioned
for a writ of mandamus to prevent the district court from
remanding the remaining two cases to the Florida state court.
The Court of Appeals for the District of Columbia held that,
under § 1447, it lacked jurisdiction to review the district
court’s remand order. /d. at 196. That holding is consistent
with the statute and accords with our view of the appellate
jurisdiction issue here. Accordingly, we hold that pursuant to
§ 1447(d), we do not have jurisdiction over the appeal of the
District Court’s order remanding the Friction Product Claims
to the various state courts.
2. Mandamus
The Friction Product Defendants argue, as they did with
respect to the denial of their motion to transfer, that we should
construe their appeal as a petition for mandamus. They
recognize that § 1447(d) states that “[a]n order remanding a
case to the State court from which it was removed is not
reviewable on appeal or otherwise.” 28 U.S.C. § 1447(d)
-- 37a
(emphasis added). We construed that language in Feidr v.
Owens Corning Fiberglas Corp., 153 F.3d 124 (3d Cir. 1998),
where we held that “section 1447(d) prohibits review of
remand orders ‘whether erroneous or not and whether review
is sought by appeal or by extraordinary writ.” Jd. at 126
(quoting 7hermtron, 423 U.S. at 343). See also Black &
Decker (U.S.), Inc. v. Brown, 817 F.2d 13, 14 (3d Cir. 1987)
(“inclusion of the phrase ‘or otherwise’ [in § 1447(d)]
precludes review of a remand order in a proceeding like the
instant one that is originated by a petition for an extraordinary
writ”) (citing Gravitt v. Southwestern Bell Tel. Co., 430 U.S.
723 (1977)). Accord New v. Sports & Recreation, Inc., 114
F.3d 1092, 1095-96 (11th Cir. 1997) (finding no jurisdiction in
light of § 1447(d) to consider appeal or petition for mandamus
_ with respect to remand order); Flores v. Long, 110 F.3d 730,
733 (10th Cir. 1997) (same); Gonzalez-Garcia v. Williamson
Dickie Mfg. Co., 99 F.3d 490, 492 (1st Cir. 1996) (per curiam)
(holding that § 1447(d) precludes mandamus review); /n re
Bus. Men’s Assurance Co. of Am., 992 F.2d 181, 182-83 (8th
Cir. 1993) (per curiam) (same).
However, it is not as obvious that § 1452(b) prohibits review
by mandamus. The language of that section provides that “[a]n
order entered under this subsection remanding a claim or cause
of action . . . is not reviewable by appeal or otherwise by the
court of appeals under section 158(d), 1291, or 1292 of this
title.” 28 U.S.C. § 1452(b) (emphasis added).
On the one hand, the Friction Product Plaintiffs plausibly
argue that the “or otherwise” language must refer to mandamus
review. To read § 1452(b) as allowing for mandamus review
renders the “or otherwise” language meaningless, in violation
of the canon against surplusage. On the other hand, as the
Friction Product Defendants argue, the statute enumerates the
statutory sections that cannot be used to review remands and
fails to mention 28 U.S.C. § 1651(a) (the All Writs Act). They
construe this omission as permitting writs of mandamus. This
is a plausible application of the expressio unius est exclusio
38a
alterius (inclusion of one thing indicates exclusion of the other)
canon of statutory interpretation.
In discussing whether remand decisions are subject to
mandamus review, the Seventh Circuit, in Jn re U.S. Brass
Corp., 110 F.3d 1261 (7th Cir. 1997), held that “section
1452(b) bars review by appeal or otherwise, which would seem
to take in mandamus, which anyway is available only when the
applicant’s right to it is clear.” Id. at 1266 (emphasis in
original) (citations omitted).
The legislative history is somewhat informative as to the
proper interpretation of § 1452(b). The sentence at issue first
appeared in the Bankruptcy Amendments and Federal
Judgeship Act of 1984, Pub. L. No. 98-353, § 103, 98 Stat. 333,
335 (1984) (amended 1990) as follows: “Any order entered
under this subsection remanding a claim or cause of
action . . . is not reviewable by appeal or otherwise.” Six years
later, as part of the Judicial Improvements Act of 1990, Pub. L.
No. 101-650, § 309, 104 Stat. 5089, 5113 (1990), § 1452 was
modified to its current form.
On behalf of the Courts Subcommittee of the Senate
Judiciary Committee, Senator Charles Grassley, the ranking
member of the subcommittee, read into the record its section-
by-section analysis of the act. The relevant portions of its
analysis read as follows:
[The purpose of these changes is] to clarify that, with
respect to certain determinations in bankruptcy cases,
... appeals from the district courts to the courts of appeals
[are forbidden but appeals are] not [forbidden] from
bankruptcy courts to the district courts.
The statutes [as written before the changes] provide that
bankruptcy judges’ orders deciding certain motions (motions
to abstain in favor of, or remand to, state courts) are
unreviewable “by appeal or otherwise.” Because
bankruptcy judges may enter trial orders only if there is
appellate review in an Article II] court, one result of this
39a
limitation is that bankruptcy judges cannot make final
judgments in such cases even when they clearly involve
“core” proceedings.
[The changes] would authorize bankruptcy judges to enter
binding orders in connection with abstention determinations
under Title i] or Title 28 and remand determinations under
Title 28, subject to review in the district court. The statutory
language under each of these sections now provides that the
decision of the bankruptcy court (to abstain or remand) “‘is
not reviewable by appeal or otherwise.” The proposed
amendment would modify these three sections to provide
that the decision of the bankruptcy court is not reviewable
“by the court of appeals . . . or by the Supreme Court of the
United States...” Such determinations would therefore be
reviewable by the district court.
Speeding the disposition of these types of motions will
better serve the purpose of the limitation on appeals from the
district courts to the courts of appeals.
136 Cong. Rec. 36,290 (1990).
It thus appears that these 1990 changes were intended to
make explicit that a district court, but not the Supreme Court or
a court of appeals, could review a bankruptcy court’s decision
to remand and that decisions by a district court to remand were
not reviewable. The broad scope of the original wording of the
statute suggests that Congress did not intend to allow for
mandamus review of remand decisions pursuant to § 1452(b).
As is evident by the last paragraph of the quotation from
Senator Grassley’s remarks, Congress was interested in
“speeding up” the effects of a district or bankruptcy court’s
decision to remand by precluding appellate review of such
orders.
Both the statutory language itself and the intent of Congress
as evidenced by the legislative history lead us to concur with
the conclusion in U.S. Brass Corp., 110 F.3d at 1266, that
§ 1452(b), particularly when read together with § 1447(d), bars
40a
both appeal and mandamus review of orders remanding to state
courts’? pursuant to § 1452(b) and/or § 1447(c}? It follows
that we must deny the requested petition for mandamus as to
the District Court’s order remanding to the state courts.'*
c.
Coda
We are neither unaware of nor unsympathetic to the
argument of the Friction Product Defendants that the crisis
created by the current asbestos litigation would be ameliorated
were there a single proceeding that determined whether “the
subset of asbestos claims based on alleged exposure to
automotive friction products satisfies the threshold standard of
scientific validity established in Daubert v. Merrell Dow
2 In AlliedSignal Recovery Trust v. Allied Signal Inc., Nos. 01-1111, 01-
1355, 01-1355, (3d Cir. July 31, 2002), this court, following Bloom granted
a writ of mandamus to vacate a district court order “remanding” a case to a
Delaware state court where it had never been. In Bloom, we stated that
“*(rjemand’ means ‘send back.’ It does not mean ‘send elsewhere.’”
Bloom, 755 F.2d at 357. We note that in contrast the District Court in this
case remanded to state courts from which the various cases had been
removed.
'3 Even if we did have jurisdiction to consider a petition for a writ of
mandamus, we would not issue such a writ for reasons similar to those we
previously discussed in considering whether to issue a writ of mandamus
construing the decision of the District Court as a denial of transfer.
'$ In light of our decision that we have no jurisdiction to review the
District Court’s order denying transfer and remanding, we need not consider
its alternate order abstaining. Moreover, a straightforward reading of 28
U.S.C. § 1334(d) supports the view that we do not have appellate
jurisdiction to review a district court’s decision to abstain pursuant to
§ 1334(c\(1) (discretionary abstention). See Things Remembered, 516 U.S.
at 131 n.1 (1995) (Ginsburg, J., concurring) (“Section 1334(c\(2) (now
§ 1334(d)) renders unreviewable district court decisions ‘to abstain or not
to abstain’ from adjudicating state-law claims merely ‘related to’ a
bankruptcy case, i.e., claims that do not independently qualify for federal-
court jurisdiction.”).
4la
Pharmaceuticals., Inc., 509 U.S. 579 (1993).” Reply Br. of
Big Three Automakers at 2. The arguments of appellants are
based on their optimistic view that a Daubert hearing would
lead to the rejection of the causation claims of all Plaintiffs.
However, the evidence creates an issue that could well go
either way as to whether Plaintiffs satisfy the Daubert
gatekeeping standard. But this case is not in a posture to face
the Daubert issue, as we are halted at the pass by our
conclusion that we have no jurisdiction over the decision of the
District Court denying the transfer and remanding the cases to
the state courts from which they came.
Throughout Defendants’ briefs and in their oral arguments
they repeatedly contended that we are faced with the question
“whether the American judicial system is capable of dealing
with the recent explosion of automotive ‘friction product’
asbestos claims in a fair and rational manner.” Br. of Big
Three Automakers at 4. This is not dissimilar to the arguments
made by the parties who sought approval of a settlement class
of asbestos victims. The effort was rejected both by this court
in Georgine v. Amchem Products, Inc., 83 F.3d 610 (3d Cir
1996), where we stated that “against the need for effective
resolution of the asbestos crisis, we must balance the integrity
of the judicial system,” id. at 617, and by the Supreme Court,
which affirmed that decision. Amchem Prods., Inc. v. Windsor,
521 U.S. 591 (1997), aff'g sub nom. Georgine, 83 F.3d 610.
Just as both courts declined to permit an end run around the
requirements for class actions imposed by Federal Rule of Civil
Procedure 23, so also are we unwilling to disregard the
statutory impediments to our review of orders of the district
courts transferring and remanding cases. Arguably, a
procedure authorizing the aggregation of state court cases, such
as the Friction Product Claims, into a nationwide class action
would provide a mechanism for a Daubert hearing like the one
Defendants seek, but such proposals, frequently made, have not
passed both houses of Congress.
42a
As Justice Ginsburg stated in Amchem, “The argument 1s
sensibly made that a nationwide administrative claims
processing regime would provide the most secure, fair, and
efficient means of compensating victims of asbestos exposure.
Congress, however, has not adopted such a solution.” /d. at
628- 29.
Ill.
CONCLUSION
For the reasons described above, this court does not have
jurisdiction to review the decisions of the~ District Court
denying the Friction Product Defendants’ transfer motions and
remanding the Friction Product Claims to the state courts from
which they were originally removed. Further, insofar as we
can consider Defendants’ appeal construing it as a petition for
a writ of mandamus, that petition is denied.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
Jor the Third Circuit
43a
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 02-1426, 02-1491, 02-1492, 02-1528
02-1652, 02-1664, 02-1688, 02-1741
IN RE: FEDERAL-MOGUL GLOBAL, INC.
DaimlerChrysler Corporation; Ford Motor Company;
General Motors Corporation,
Appellants in No. 02-1426
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Hennessy Industries, Inc.
Appellant in No. 02-1491
IN RE: FEDERAL-MOGUL GLOBAL, INC.
MG Rover Group, Inc.; Nissan North America, Inc.;
Volkswagen of America, Inc.; Volkswagen AG;
Mercedes-Benz USA, LLC; BMW North America, Inc.;
Volvo Cars North America, Inc.; Harley-Davidson
Motor Company Group, Inc.,
Appellants in No. 02-1492
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Salvo Auto Parts; Holman Enterprises, Inc.;
B.F. Goodrich, Inc.,
44a
Appellants in No. 02-1528
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Honeywell International, Inc.,
Appellant in No. 02-1652
IN RE: FEDERAL-MOGUL GLOBAL, INC.
British Motor Cars Distributors, Inc.,
Appellant in No. 02-1664
IN RE: FEDERAL-MOGUL GLOBAL, INC.
Official Committee of Unsecured Creditors,
Appellant in No. 02-1688
IN RE: FEDERAL-MOGUL GLOBAL, INC.
International Truck and Engine Corp.,
Appellant in No. 02-1741
On Appeal from the United States District Court
for the District of Delaware
(D.C. No. 01-10578)
District Judge: Hon. Alfred M. Wolin
Argued June 17, 2002
45a
Before: SLOVITER, COWEN and GIBSON, Circuit Judges
ORDER
Inasmuch as the number of judges in active service on this
court who are not recused in this appeal is insufficient to order
rehearing en banc, see, 28 U.S.C. § 46(c), Fed. R. App. P.
35(a), Third Circuit Local Appellate Rule 35.3, the mandate
shall issue forthwith.
By the Court,
/s/ Dolores K. Sloviter
Circuit Judge
Dated: July 31, 2002
nmb/cc: All Counsel of Record
” Hon. John R. Gibson, Senior United States Circuit Judge for the United
States Court of Appeals for the Eighth Circuit, sitting by designaticn.
46a
APPENDIX C
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
July 31, 2002
Nos. 02-1426, 02-1491, 02-1492, 02-1528, 02-1652
02-1664, 02-1688 & 02-1741
IN RE: FEDERAL-MOGUL GLOBAL, INC.
(DE Bankruptcy Court No. 01-10578)
Present: SLOVITER, COWEN and GIBSON,
Circuit Judges
Emergency Motion by Appellants DaimlerChrysler Corp.,
Ford Motor Co., GM Corp., and Honeywell International,
Inc. to Recall Mandate and Enter Stay Pending Filing of a
Petition for Certiorari
/s/
Nicole M. Bruno
Case Manager (267) 299-4924
Opinion filed 7/31/02
ORDER
The foregoing motion to recall mandate and enter stay
pending filing of a Petition for Certiorari is denied.
By the Court,
/s/ Dolores K. Sloviter
Circuit Judge
Dated: Aug 01 2002
nmb/cc: All Counsel of Record
47a
APPENDIX D
DESIGNATION OF A DISTRICT JUDGE
FOR SERVICE IN ANOTHER DISTRICT WITHIN THE
CIRCUIT
WHEREAS, in my judgment the public interest so requires
NOW, THEREFORE, pursuant to the provisions of Title 28
U.S.C. § 292(b), I do hereby designate and assign the
Honorable Alfred M. Wolin of the United States District Court
for the District of New Jersey to hold court in the District of
Delaware during the period beginning November 27, 2001 and
ending November 27, 2002, and for such additional time
thereafter as may be required to complete unfinished business
in the following cases:
Armstrong Work Industries No. 00-4471
Federal-Mogul No. 01-10578
USA No. 01-2094
W.R. Grace No. 01-1139
Owens Corning No. 00-3837
This order is entered after consultation with and with and the
assent of Chief Judge Sue L. Robinson, Judge Joseph J. Farnan,
Jr., Judge Roderick R. McKelvie and Judge Gregory M. Sleet
of the District of Delaware. As Chief Judge of the Court of
Appeals and presiding officer of the Judicial Council of the
Third Circuit, it is my considered judgment that these
bankruptcy cases, which carry with them tens of thousands
asbestos claims, need to be consolidated before a single judge
so that a coordinated plan for management can be developed
and implemented. It is contemplated that Judge Wolin will
assign a portion of these cases to various bankruptcy judges
sitting in the District of Delaware so they may assist in moving
these matters forward. As a significant portion of the asbestos
48a
cases in this country are proceeding under the aegis of this
litigation, I deem this assignment and consolidation critically
important to the administration of justice.
/s/
Edward R. Becker
Chief Judge of the Third Judicial Circuit
Dated: 11-27-01
49a
APPENDIX E
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
IN RE: FEDERAL-MOGUL : Chapter 11
GLOBAL, INC., T&N ; Case Nos. 01-10578,
LIMITED, et al., ; et al.’
Debtors.
ORDER: (1) PARTIALLY WITHDRAWING THE
REFERENCE; and
(2) PROVISIONALLY TRANSFERRING
CERTAIN FRICTION PRODUCT
CLAIMS
This matter having been opened upon the motion of General
Motors Corporation, Ford Motor Company and Daimler
Chrysler Corporation for a motion to transfer (the “Transfer
Motion”) certain lawsuits against them arising out of so-called
“friction products” as to which the movants content they have
a right of indemnification against the debtors in these
administratively consolidated Chapter 11 proceedings (the
“Friction Product Claims”); and it appearing that movants have
removed these cases from the several state courts to the United
States District Courts for the District in which these cases were
pending; and the movants having also moved for a provisional
order of transfer to preserve the status quo pending a plenary
hearing and determination by the Court of the Transfer Motion;
and the Court having reviewed the several briefs and letters of
counsel in support and in opposition to the provisional transfer
motion; and good cause appearing.
It is this 10th day of December, 2001
1
See attached list.
50a
ORDERED that, pursuant to 28 U.S.C. § 157 and the Order
of this Court issued December 10, 2001, the reference of this
case to the Bankruptcy Court, Judge Randall K. Newsome
presiding, is hereby withdrawn with respect to the Transfer
Motion and the provisional transfer motion, and with respect to
matters involving subject matter jurisdiction, abstention and
remand regarding the Friction Product Claims, and it is further
ORDERED that the application for a provisional transfer
Order is granted and the Friction Product Claims are hereby
provisionally transferred to this Court subject to further Order
of the Court, and it is further
ORDERED that all parties shall refrain from submitting
papers in support of or in opposition to the Transfer Motion
pending further Order of the Court providing for notice, a
briefing schedule and a hearing date for the Transfer Motion.
/s/
ALFRED M. WOLIN, U.S.D.J.
Sla
APPENDIX F
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: FEDERAL-MOGUL : Chapter 11
GLOBAL, INC., T&N Case Nos. 01-10578,
LIMITED, et al., et al.:'
Debtors.
ORDER OF CLARIFICATION RE:
PROVISIONAL TRANSFER OF FRICTION
PRODUCTS CLAIMS
This matter having been opened upon the Court’s own
motion; and the Court having withdrawn the reference with
respect to several motions to transfer (the “Transfer Motions”)
claims pending in the several United States District Courts
against defendant manufacturers of so-called “friction
products” (respectively the “Friction Products Claims” and the
“Friction Products Defendants”) previously removed by the
Friction Products Defendants from the several state courts; and
for the reasons set forth in the letter opinion of the Court filed
herewith; and for good cause shown
It is this [third] day of January, 2002
ORDERED that this Order governs all Provisional Transfer
Orders whether already issued by the Court or that may be
issued in the future and those Orders shall not be construed in
a manner inconsistent with the terms of this Order, and it is
further
ORDERED that the Provisional Transfer Orders are limited
in effect to only those claims against the Friction Product
Defendant(s) identified in the respective moving papers and
' See attached list.
52a
Provisional Transfer Orders and that no other claims and no
other parties are affected by the Provisional Transfer Orders,
and it is further
ORDERED that any Friction Product Claim that would have
been subject to a Provisional Transfer Order previously issued
by this Court but for the fact that such Friction Product Claim
had not yet been removed on the date the Provisional Transfer
Order was issued is hereby provisionally transferred to this
Court subject to further Order of this Court, and it is further
ORDERED that counsel identified in the Court’s previous
Provisional Transfer Orders shall provide to claimants
provisionally transferred by this Order such notice and waivers
of further service as was specified in the relevant previous
Orders, and it is further
ORDERED that claimants provisionally transferred by this
Order shall not be subject to the briefing schedule with respect
to the Transfer Motion, and shall file no papers in opposition
to the Transfer Motion except as provided by further Order of
this Court.
/s/
ALFRED M. WOLIN, U:S.D.J.
53a
APPENDIX G
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Chambers of Martin Luther King Jr. Federal Building
Alfred M. Wolin 50 Walnut St., Room 4069
Judge P.O. Box 999
Newark, NJ 07101-0999
(973)645-2580
January 3, 2002
LETTER OPINION - NOT FOR PUBLICATION
ORIGINAL FILED WITH THE CLERK OF THE
COURT
IN RE: FEDERAL-MOGUL GLOBAL, INC., T&N
LIMITED, et al.
Case Nos. 01-1578, et al.’
TO ALL COUNSEL:
This matter is opened before the Court upon its own motion.
Familiarity with the motions to transfer and to provisionally
transfer so-called “Friction Products Claims” to this Court is
assumed. It has come to the attention of the Court through
examination of certain papers submitted in support of motions
to transfer and provisionally transfer by additional Friction
Products Defendants and through informal communications of
counsel that the Court’s prior Orders have been interpreted
inconsistently with either their terms, the Court’s intent and/or
the law.
First, only claims against the moving Friction Products
Defendants were transferred to this Court by the Provisional
Transfer Orders. The bankruptcy removal statute only permits
the removal to a district court of a “claim or cause of action”
within the federal bankruptcy jurisdiction. 28 U.S.C.
' See attached list.
54a
§ 1452(a). This does not authorize the wholesale removal of an
entire case regardless of the existence of non-bankruptcy
“claims or causes of action” or parties with no connection to a
debtor. In taking this position, the Court speaks only for itself,
of course, and does not purport to bind any transferor district
court in which the balance of a case may still be pending
following the improvident, overbroad removal. Nor should the
Court be understood to endorse the proposition that federal
bankruptcy jurisdiction is indeed correctly asserted with
respect to the claims actually subject to the Provisional
Transfer Orders.
Second, the only claims transferred to this Court are those
that had already been removed to federal court on the date the
relevant Provisional Transfer Order was entered. The
Provisional Transfer Orders were entered by the Court in
reliance on the representation that the movant Friction Products
Defendants had already removed or were in the process of
removing the claims against them. Regardless of whether
section 157 of Title 28 empowers this Court to transfer claims
to itself directly out of the state courts, and regardless of the
retrospectively perceived desirability of interpreting the
Provisional Transfer Order to transfer claims from state court,
that was not the factional context within which the Court
understood its ruling would operate. Therefore, the Court’s
Orders do not effect the transfer of Friction Products Claims
not already pending within the federal court system on the date
the applicable Provisional Transfer Order was entered. Any
claim removed subsequent to the date of the relevant
Provisional Transfer Order is still pending in the district to
which it was originally removed.
On the other hand, it makes no sense to leave these
subsequently removed claims ins procedural limbo due to an
accident of timing. The Court will order that any Friction
Product Claim now removed to federal court that would have
been subject to one of the extant Provisional Transfer Orders
had that removal been timely will also be provisionally
transferred to this Court. The newly transferred plaintiffs may
55a
feel aggrieved due to lack of time to oppose the plenary hearing
on the transfer motions, particularly in light of the peremptory
briefing schedule now in effect. To obviate this problem, the
Court will adjourn sine die any briefing of plenary transfer of
these late-removed claims.
For the foregoing reasons, the Court is satisfied that an
Order clarifying its previous Provisional Transfer Orders and
governing any future Provisional Transfer Orders will advance
the orderly conduct of these proceedings.
An appropriate Order is attached.
/s/
ALFRED M. WOLIN, U.S.D.J.
56a
APPENDIX H
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
: CHAPTER 11
FEDERAL-MOGUL GLOBAL, Inc. :
: BANKRUPTCY NO.
Debtor. : 01-10578
: jointly administered)
ORDER 1) DENYING THE MOTIONS TO TRANSFER
THE “FRICTION PRODUCTS CLAIMS” AND
2) REMANDING THE FRICTION PRODUCTS CLAIMS
This matter having been opened before the Court upon the
several motions of parties, denominated in the prior Orders of
the Court as the “Friction Products Defendants,” to transfer to
this District into the above-captioned proceedings the claims
against the movants previously denominated “Friction Products
Claims”; and the Court having previously granted this motion
on a provisional basis and the Friction Products Claims having
already been provisionally transferred to this Court subject to
a plenary hearing on the motion to transfer; and the Court
having previously given notice to the parties that it would
consider arguments directed to subject matter jurisdiction,
abstention and remand in ruling upon the movants’
applications; and the Court having reviewed the submissions of
counsel and heard oral argument; and for the reasons set forth
on the record at the hearing on those motions today, as
supplemented by a written Opinion to follow; and for good
cause shown.
It is this 8th day of February 2002
ORDERED that the motions to transfer the Friction Products
Claims are denied, and it is further
57a
ORDERED that this Court lacks subject matter jurisdiction
over the Friction Products Claims, and it is further
ORDERED that the Friction Products Claims are remanded
to the state courts from which they were removed pursuant to
28 U.S.C. § 1447, and it is further
ORDERED that, in the alternative, the Friction Products
Claims are remanded to the state courts from which they were
removed pursuant to U.S.C. § 1452.
/s/
ALFRED M. WOLIN, U.S.D.J.
58a
APPENDIX I
FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: FEDERAL-MOGUL : Chapter 11
GLOBAL, INC., T&N : Case Nos. 01-10578, ef al.
LIMITED. ef ai.,
Debtors. ‘OPINION
APPEARANCES: ALAN B. RICH, ESQ.
BARON & BUDD
3102 Oak Lawn Avenue
Suite 1100
Dallas, TX 75219-4281
(Attorneys for Ad Hoc Committee of
Friction Products Plaintiffs)
CHARLES S. SIEGEL, ESQ.
WATERS & KRAUS
3219 McKinney Avenue
Suite 3000
Dallas, TX 75204
(Attorneys for “Waters & Kraus”
Friction Products Plaintiffs)
ELIHU INSELBUCH, ESQ.
CAPLIN & DRYSDALE
399 Park Avenue
New York, NY 10022
(Attomeys for Official Asbestos
Claimants Committee)
See attached list.
59a
DAVID M. BERNICK, ESQ.
KIRKLAND & ELLIS
200 E. Randolph Drive
Chicago, IL 60601
(Attomeys for “Big Three” Auto
Makers)
THOMAS F. CAMPION, JR., ESQ.
DRINKER, BIDDLE & SHANLEY
500 Campus Drive
Florham Park, NJ 07932
(Attorneys for Honeywell Int’l, Inc.)
ROBERT M. MILLNER, ESQ.
SONNENSCHEIN, NATH &
ROSENTHAL
1221 Avenue of the Americas
New York, NY 10020
(Attorneys for Official Unsecured
Creditors Committee)
DAVID E. WILKS, ESQ.
WHITE & WILLIAMS
824 North Market Street
Box 709
Wilmington, DE 19899-0709 —
(Attomeys for International Auto
Makers)
WOLIN, District Judge
This matter is opened before the Court upon motions
pursuant to 28 U.S.C. § 157 to transfer to this Court certain
personal injury claims against the movants pending in various
United States District Courts based on allegations of exposure
to asbestos in products designed to resist heat caused by
friction (the “Friction Products Claims”). The movants are
DaimlerChrysler Corporation (“Chrysler”), Ford Motor
60a
Company (“Ford”) and General Motors (collectively with the
previously listed parties the “Big Three”), Honeywell
International, Inc. (“Honeywell”) and Volkswagen of America,
Inc., Volkswagen AG, Mercedes-Benz USA, LLC, BMW
North America, Inc., Volvo Cars North America, Inc., Rolls
Royce Bentley Motor Cars, Inc. and Nissan North America,
Inc. (the “International Auto Makers” and collectively with the
other movants the “Friction Product Defendants”). The Court
has reviewed the submissions and heard the argument of
counsel on February 8, 2002. The Court ruled from the bench
at that hearing that the transfer motions would be denied, that
the Court lacked subject matter jurisdiction over the Friction
Products Claims and that the Friction Product Claims would be
remanded to the state courts from which they were originally
removed. At the hearing the Court stated that it would
supplement the record with a written Opinion on the motions.
This is that Opinion.
BACKGROUND
Movant Friction Product Defendants were until recently
parties in state court proceedings in most if not all of the states
of the Union defending against allegations of personal injury
tort and wrongful death. The claims allege that plaintiffs’
injuries were caused by asbestos contained in the defendants’
products, brake pads and other applications involving friction.
The debtors, Federal-Mogul Global, Inc. and several of its
subsidiaries, were co-defendants in many, but not all, of these
suits when their chapter 11 petitions were filed on October 1,
2001.
As to the debtors, of course, the bankruptcy filing
automatically stayed any state court proceedings. The Court is
informed that, after that filing, plaintiffs around the country
immediately began severing claims against the debtors or
dismissing their claims against them altogether to permit their
cases against the solvent parties to go forward. This aim was
thwarted, however, by a massive campaign by the movants of
removing claims against them to the local United States
6la
District Courts on the theory that these claims were related to
the above-captioned bankruptcy proceeding and thus within the
bankruptcy jurisdiction of the federal courts. An illustrative
though incidental fact demonstrating the procedural stakes at
issue here is that case load statistics for each of the various
districts immediately ballooned. Judge Pauley in the Southern
District of New York received 1,500 new cases, and the larger
and more asbestos-litigation intensive jurisdictions doubtless
numbered new filings in the thousands.
Naturally plaintiffs did not remain supine through these
events, but immediately fired off a corresponding number of
motions to remand. Understandably, district judges around the
country moved these motions to the tops of their calendars.
The movants nposted on November 20, 2001, with a motion in
the Delaware District Court wherein the bankruptcy was
pending to transfer, wholesale, all of the removed claims in all
of the different district courts to the District of Delaware. This
motion was pending when, on November 27, 2001, this Court
received the transfer of the above-captioned case and four other
very large asbestos-related chapter !1 cases on November 27,
2001.7
The Court was thus confronted with the issues posed by
these motions in its earliest days of supervising these
bankruptcies. It was represented that various courts were in the
process of ruling on the remand motions. Slip opinions
forwarded to the Court’s attention demonstrated that piecemeal
remand and inconsistent retention of the Friction Product
Claims was becoming a reality with each passing day.
> The Court has over-simplified the chronology of events in the interest
of narrative coherence. In fact, only the Big Three had progressed through
removal to a motion to transfer by the time this Court assumed jurisdiction
of the Federal-Mogul bankruptcy. Honeywell and the International Auto
Makers followed the lead of the Big Three and began the process of removal
and transfer later. Moreover, as subsequent events proved, the initial
removal program was not completed all at once, and removal of new cases
by each of the movants was ongoing through December.
62a
Meanwhile, plaintiffs’ counsel clamored that many of their
clients were in extremis and not likely to live to see their day
in court should the threshold jurisdictional decision be delayed.
In fact, given that each adjudicative inconsistency and hardship
was multiplied by the tremendous numbers of removed cases,
confusion threatened to rule the day.
The movants prayed for relief in two parts. First, they
sought an immediate and ex parte provisional transfer of the
Friction Product Claims in order to protect them from
piecemeal remand orders. Second, the movants proposed that
the Court establish a method by which the large number of
parties-at-interest might have their positions heard and that the
Court then render a plenary decision on whether the Friction
Product Claims would be transferred to this Court. This Court
agreed, withdrew the reference to the Bankruptcy Court for the
purposes of these motions, and charged the plaintiffs’ bar to
arrange among themselves who would brief and argue their
opposition to the motions. The Court put the parties on notice
that, in addition to the narrow issue of transfer pursuant to 28
U.S.C. § 157, the Court would also examine its subject matter
jurisdiction and whether abstention or remand might be
appropriate.
Events have not stood still despite the Court’s best efforts to
expedite disposition of the motions. As noted, some cases had
already been remanded before the Court’s Provisional Transfer
Order could issue. Since that date, at least one District Court
has refused to be bound by the Court’s Provisional Transfer
Order and made its own ruling that subject matter jurisdiction
was lacking in the case before it. Another federal court
reached the same result by interpreting the Provisional Transfer
Order to apply only to Friction Product Claims removed before
the date of the Order. Finally, the Fifth Circuit Court of
Appeals recently denied an application for a stay of remand to
the Texas state courts of thirty-seven lawsuits against another
Federal-Mogul subsidiary, Garlock, Inc. The Fifth Circuit
denied the application for a stay, finding no likelihood of
63a
success in the proposition that Friction Product Claims against
Garlock were related to the Federal-Mogul bankruptcy. Arnold
v. Garlock, Inc., 2001 WL 1669714 at *11 (Sth Cir., Dec. 28,
2001).
Meanwhile, additional provisional transfer and transfer
motions have been filed by other Friction Product Claims
defendants. Rather than delay the briefing of the already
pending motions, the Court granted provisional transfer as to
some of these, adjourning without date their briefing. Other
motions remain pending. The Court heard oral argument on
the plenary motions to transfer on February 8, 2002. This
Opinion constitutes the Court’s plenary ruling on the motions
to transfer the Friction Product Claims to this Court.
DISCUSSION
1. Subject Matter Jurisdiction
The bankruptcy removal statute is 28 U.S.C. § 1452(a):
A party may remove any claim or cause of action in a civil
action other than a proceeding before the United States Tax
Court or a civil action by a governmental unit to enforce
such governmental unit’s police or regulatory power, to the
district court for the district where such civil action is
pending, if such district court has jurisdiction of such claim
under section 1334 of this title.
Section 1334(a) establishes subject matter jurisdiction in the
United States District Courts for all cases under Title 11, but
extends this power as well to “civil proceedings . . . arising in
or related to cases under title 11.” See id. § 1334(b). “Related
to” is a term of art, and jurisdiction under the “related to”
clause has been defined by the United States Supreme Court to
include litigation of claims owned by the debtor’s estate and,
relevant here, litigation between third parties that has an effect
on the estate. Celotex Corp. v. Edwards, 514 U.S. 300, 308 n.5
(1995).
64a
The leading case in this area is our own Third Circuit's
Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984). Pacor
addressed whether an asbestos-related personal injury lawsuit
against a non- debtor was related to the Johns-Manville chapter
11 proceeding on the ground that the non-debtor defendant had
asserted a third-party claim of indemnification against Johns-
Manville as the original manufacturer of the asbestos. While
acknowledging the wide jurisdiction granted by Congress to
federal bankruptcy courts to facilitate the administration of
debtors’ estates, the Court of Appeals noted that this
jurisdiction is “not without limit.” “Related to” jurisdiction still
requires “some nexus between the ‘related’ civil proceeding
and the title 11 case,” the court explained. /d. at 994.
The usual articulation of the test for determining whether
a civil proceeding is related to bankruptcy is whether the
outcome of that proceeding could conceivably have any
effect on the estate being administered in bankruptcy. Thus,
the proceeding need not necessarily be against the debtor or
against the debtor’s property. An action is related to
bankruptcy if the outcome could alter the debtor’s nghts,
liabilities
This text is long and has been trimmed here. Open the source document for the complete record.
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.