Amicus Curiae Brief — Daimlerchrysler Corp. v. Official Committee of Asbestos, 123 S. Ct. 884 (2003) (No. 02-661)

LT PE AT I AE LLANE PMNS BED MAN an ES SOYA co Sug

h. JON FILED

j A

re 0 2 2002 ¥

No. 02-661

IN THE

Supreme Court of the United States

IN RE FEDERAL-MOGUL GLOBAL, INC.

DAIMLERCHRYSLER CORPORATION,

FORD MOTOR COMPANY, and

GENERAL MOTORS CORPORATION,

Petitioners,

» <4 a

OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS, et al.,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

MOTION OF 3M COMPANY FOR LEAVE TO FILE

BRIEF AMICUS CURIAE AND BRIEF AMICUS CURIAE

IN SUPPORT OF PETITIONERS

Bruce R. ZIRINSKY

Counsel of Record

JounH.BAE

JOSEPH E. FIELD

CADWALADER,

WICKERSHAM & TAFT

Counsel for Amicus Curiae

100 Maiden Lane

New York, NY 10038

(212) 504-6000

_—

—

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859 yf

| } }

MOTION FOR LEAVE TO FILE BRIEF

OF AMICUS CURIAE

3M Company, by its counsel, moves pursuant to

Rule 37.2 of the rules of the Supreme Court of the United

States, for leave to file the annexed brief as amicus curiae in

support of the petition for a writ of certiorari to the United

States Court of Appeals for the Third Circuit. The petitioners,

who filed the petition for a writ of certiorari on October 29,

2002, have consented to the filing of this brief. Amicus was

not able to secure the consent of all respondents. A copy of

the proposed amicus brief is attached hereto.

As set forth in the statement of interest contained in the

brief, the amicus has been named as a defendant with one or

more of the petitioners and Federal-Mogul Global, Inc.

(the “Debtor”) in asbestos personal injury cases pending

throughout the United States. As alleged joint tortfeasors in

the underlying asbestos actions, the litigation of asbestos

claims against the amicus will give rise to indemnification

and contribution claims against the Debtor and other

manufacturers of asbestos products. Thus, the amicus is a

direct beneficiary of any trust that may be established under

section 524(g) of title 11 of the United States Code and any

plan of reorganization approved in the Debtor’s chapter 11

case. As such, the amicus has a direct and vital interest in

the issues presented to the Court — the Third Circuit’s

jurisdiction to review an order denying the petitioners’ motion

to transfer, and the scope of federal courts’ jurisdiction over

proceedings related to a chapter 11 case within the meaning

of 28 U.S.C. § 1334(b).

The amicus supports the petit’on for a writ of certiorari

which seeks review of the Third Circuit’s decision in Jn re

Federal-Mogul Global, Inc., 300 F.3d 368 (3d Cir. July 31,

2002). In that decision, the Third Circuit refused to exercise

appellate jurisdiction over the petitioners’ appeal of the District

Court’s denial of their motion to transfer, and in reviewing the

District Court’s order on a mandamus standard, the Third Circuit

articulated an overly restrictive and unworkable definition of

federal “related to” jurisdiction that all but eliminated federal

“related to” jurisdiction over litigation among nondebtors.

The Third Circuit erred in both respects. In refusing to

exercise appellate jurisdiction over the District Court’s order,

the Third Circuit failed to apply the collateral order doctrine

first enunciated by the Court in Cohen v. Beneficial Industrial

Loan Corp., 337 U.S. 541 (1949), and adopted by every circuit

court of appeals. Presented with facts very similar to those

presented here, the Sixth Circuit in Lindsey v. O’Brien, Tanski,

Tanzer & Young Health Care Providers of Connecticut (In Re

Dow Corning Corp.), 86 F.3d 482 (6th Cir. 1996), exercised

appellate jurisdiction based on the collateral order doctrine.

Likewise, the Third Circuit’s construction of federal “related

to” jurisdiction as requiring an “automatic effect” upon the estate

“without the intervention of yet another lawsuit” is in direct

conflict with the Court’s decision in Celotex Corp. v. Edwards,

514 U.S. 300, 307-08 (1995), as well as the decisions of the

Fifth, Sixth, Seventh and Eighth Circuits. By its decision, the

Third Circuit closed the door on the only avenue available to

federal courts to centralize matters related to a bankruptcy case

in one forum. The petitioners’ brief does not address in depth

the impact of the Third Circuit’s narrow construction of federal

“related to” jurisdiction upon the nationwide asbestos litigation

crisis. The amicus respectfully submits that its brief will assist

the Court in ruling on the petition for writ of certiorari.”

For these reasons, the amicus respectfully requests that the

Court grant it leave to file the attached brief in support of the

petition for a writ of certiorari.

—

Respectfully submitted,

Bruce R. ZIRINSKY

Counsel of Record

JOHN H. BAE

JOSEPH E. FIELD

CADWALADER,

WICKERSHAM & TAFT

Counsel for Amicus Curiae

100 Maiden Lane

New York, NY 10038

(212) 504-6000

* The Court has the discretion to entertain relevant arguments

presented by the amicus, even where those arguments were not raised

by the parties. Teague v. Lane, 489 U.S. 288, 300 (1989). See also

Mapp v. Ohio, 367 U.S. 643, 673 n.5 (1949) (Court’s holding was

not based on argument contained in the appellant’s brief, but upon a

request made in the amici brief submitted by the American and Ohio

Civil Liberties Unions) (Harlan, J. dissenting).

TABLE OF CONTENTS

I. The Third Circuit Erred In Refusing To

Exercise Appellate Jurisdiction Over The

Order Denying The Transfer Motion ......

II. The Third Circuit Misinterpreted The Scope

Of Federal “Related To” Jurisdiction ......

A. The Third Circuit’s Definition of

“Related to” Jurisdiction is in Direct

Conflict with Celotex and Decisions of

Other Civcmat COUmts. nc ccc ec csceccs

B. Federal “Related to” Jurisdiction and its

Broad Scope Enable All Matters Related

to a Bankruptcy Case to be Consolidated

in a Single Forum for an Efficient and

Effective Resolution ...............

CN es. Soo aa eae eee Lene

Page

il

TABLE OF CITED AUTHORITIES

Page

Cases:

A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994

(00 Gs TD oc iv ciatktaes ae 13, 14, 15, 19

Apex Inv. Assocs., Inc. v. TJX Companies, Inc., 121

DR, Fas CR SO 6060006 Ks ceese eee 11,12

Aquamar S.A. v. Del Monte Fresh Produce N.A., Inc.,

179 F.36 TSTS CLE GARG F Ek ev eve cedevecee 6

Autoridad De Energia Electrica De Puerto Rico v.

Ericsson Inc., 201 F.3d 15 (ist Cir. 2000) ..... 5

Beckwith v. U. S. Lines, Inc. (In re United States

Lines, Inc.), No. 90 M 47(MP), 1990 WL 451981

(B.EDe Bs COV G, QOOOe ci ca cde sda beeveceans 14

Calumet Nat’] Bank v. Levine, 179 B.R. 117 (N.D.

Ms HEOEE s wv Nein catcntaeeaes cee 14

Celotex Corp. v. Edwards, 514 U.S. 300 (1995) .....

vod scveleeteepbe elses cee 4, 7, 8,9, 10, 12

Clark v. Johnson, 278 F.3d 459 (Sth Cir. 2002) ..... 5

Cohen v. Beneficial Industrial Loan Corp., 337 U.S.

POL CEE) isevvaccdeceseadssuneuseee 4,5,7

Curry v. Castillo (In re Castillo), 297 F.3d 940

COG GA BOGE 4 be hcveietiunreee eee 6

ii

Cited Authorities

Page

In re Drexel Burnham Lambert Group Inc., 138 B.R.

TED CE Be He SOME Ko vot vce rik eeesse 15

In re FedPak Sys., Inc., 80 F.3d 207 (7th Cir. 1996)

ee PEE Ser Me ee 4, 11

In re Federal-Mogul Global, Inc., 300 F.3d 368

Et Gk OE SE Gb de ceed eeackatnscoks 4,8,9

In re Federal Press Co., 117 B.R. 942 (Bankr. N.D.

Re ee errr ee ee ee 14

Gould v. Davis, 165 F.3d 265 (4th Cir. 1998) ..... 5

In re Joint E. & S. Dist. Asbestos Litig., 129 B.R.

710 (E.D.N.Y. & S.D.N.Y. 1991) .........000. 15

Kocher v. Dow Chemical Co., 132 F.3d 1225

Se re ree 4,11

Lindsey v. O’Brien, Tanski, Tanzer & Young Health

Care Providers Of Connecticut (In re Dow

Corning Corp.), 86 F.3d 482 (6th Cir. 1996),

cert. denied, 519 U.S. 1071 (1997) .. 4,5, 6, 7, 10, 15

Maitland v. Univ. of Minnesota, 260 F.3d 959

(8th Cir. 2001), cert. denied, 122 S. Ct. 1300

RS is hin Sands CA PARA SDS 6S OM Eb OSES RN ORES 6

iv

Cited Authorities

Murray v. Pan American World Airways, Inc. (In re

Pan Am Corp.), 16 F.3d 513 (2d Cir. 1994) ....

Page

Newton v. Johns-Manville Corp. (In re Johns-Manville ~

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

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) ...

Pacor, Inc. v. —s 743 F.2d 984 (3d Cir. 1984)

eoeeeveeeveveeeeeewaeseeeeeoeeeeeseeeeeeeeeeeeeeeee

Salem Mills, Inc. v. Wisconsin Tool & Stamping Co.

(In re Salem Mills, Inc.) 148 B.R. 505 (Bankr. N.D.

Ts CEE cSa Nec uewscuves ter kesebaeeeendes

In re Salem Mortgage Co., 783 F.2d 626 (6th Cir.

PE: thckneathedaees Wisdsadesbedeneces nes

Securities and Exchange Commission v. The Drexel

Burnham Lambert Group (In re Drexel Burnham

Lambert Group, Inc.), 960 F.2d 285 (2d Cir.1992),

cert. dismissed, 506 U.S. 1088 (1993) .........

Timpanogos Tribe v. Conway, 286 F.3d 1195

Ce Ge EE Wve be ol Sawasdee chdsbee vanes

United States v. Durenberger, 48 F.3d 1239 (D.C. Cir.

SE hide bein oenh6heebeaaneehbuneeuswee

12

10

15

Vv

Cited Authorities

Page

United States v. Scarfo, 263 F.3d 80 (3d Cir. 2001)

alert: Shas Os ee eas eee ek toc baled ais 5

Williams v. Katz, 23 F.3d 190 (7th Cir. 1994) ..... 5-6

Wood v. Wood (In re Wood), 825 F.2d 90 (Sth Cir.

A eer ery eer rere eee TT ere 4,10

In re Zamost, 7 B.R. 859 (Bankr. S.D. Cal. 1980) ... 10

STATUTES

28 U.S.C. § 157(b)(5) ...... 3, 12, 13, 14, 16, 18, 19, 20

Se RE b's, Deve ce ieacd cesncvenss a

y UR See Bk | rer 2, 8, 10, 18, 19, 20

SE EE <4 6 64-0.0 0000-0 one es bo eee ees 19

OTHER AUTHORITIES

Affidavit of Richard Fleming, sworn to on June 27,

2001, filed in Jn re USG Corp., Case No. 01-2094

N&R eS pet eee 18

Affidavit of William Rodruan, sworn to on Dec. 5,

2000, filed in Jn re Armstrong World Industries,

Inc., et al., Casé No. 00-4471 (D. Del. 2000) ... 17

vil

Cited Authorities

Page

Affidavit of David Segal, sworn to on Apr. 2, 2001,

filed in Jn re W.R. Grace & Co., Case No. 01-01139

Sf ere ere err rer 17

Affidavit of David Weinberg, sworn to on Jan. 4, 2000,

filed in Jn re G-I Holdings, Inc., Case No. 00-30135

Ge ES i wa Wes bocce eksuaheeeaenss 17

Brickman, The Asbestos Litigation Crisis: Is There

a Need for an Administrative Alternative?,

13 Cardozo L. Rev. 1819 (1992) ............. 16

Debtors’ Motion to Fix Proof of Claim Bar Date and

Approving Bar Date Notice Procedures, dated

Aug. 1, 2002, Jn re United States Mineral Products

Co., Case No. 01-2471 (D. Del. 2001) ........ 18

Glater, Defending a United Detroit on Asbestos,

Pes es SO, FO I 0k db okies Rte eee 17

Greenhouse, Asbestos Appeal Centers on Fears of

Cancer, N.Y. Times, Nov. 7, 2002 ............ 16

Hensler, Asbestos Litigation in the U.S.: A New Look

at an Old Issue, p. 2 (Institute for Civil Justice,

Eee SO, FE, DOGO) voce rcavavevsannss 16

Manual For Complex Litigation (Third) § 31.132

CEDBS) «ines ciae coved eel wise sees ceases 19

;

j

t

Vii

Cited Authorities

Page

Roston, Zhe Asbestos Pit: An Old Issue is Back and

the Lawsuits are Killing Shares, Time, Mar. 11,

yA Me eee US, Ba, SOA Say tyne 17

Testimony of the Honorable Benjamin Nelson,

United States Senate Committee on the Judiciary-

Asbestos Litigation, Sept. 25,2002 ........... 16, 17

ae

1

INTEREST OF AMICUS CURIAE

3M Company, by its counsel, file this brief as amicus

curiae.' The amicus was not able to secure the consent from

all parties to file this brief. Accordingly, the amicus is filing

this brief pursuant to Rule 37.2(b) of this Court.

The amicus has been named as a defendant with one

or more of the petitioners and Federal-Mogul Global, Inc.

(“the Debtor”) in asbestos personal injury cases pending

throughout the United States. As an alleged joint tortfeasor

in these actions, the litigation of asbestos claims against the

amicus will give rise to indemnification and contribution

claims against the Debtor and other manufacturers of asbestos

products. Thus, the amicus is a direct beneficiary of any trust

established under section 524(g) of title 11 of the United

States Code (the “Bankruptcy Code”) in the Debtor’s chapter

11 case. Allowing the asbestos claims against the amicus and

the resulting indemnification and contribution claims against

the Debtor to proceed separately from the plaintiffs’ asbestos

claims against the Debtor-will be extremely inefficient and

expensive for all parties. Identical and related factual and

legal issues will have to be resolved thousands of times in

different courts at great expense, while risking inconsistent

rulings by courts on identical issues. On the other hand,

resolving all related asbestos claims together in the same

forum will enable the Debtor to properly deal with the claims

of the amicus along with all other claims against the estate

1. This brief was not authored, in whole or in part, by counsel

to a party and no contribution to its preparation or submission was

made by any person or entity other than the amicus curiae and its

counsel.

2

in any plan of reorganization and section 524(g) trust

approved in its chapter 11 case.

For these reasons, the amicus has a direct and vital

interest in the issues presented to the Court — the jurisdiction

of the United States Court of Appeals for the Third Circuit

to review an order denying the petitioners’ motion to transfer,

and the scope of federal courts’ jurisdiction over proceedings

“related to” a chapter 11 case within the meaning of 28 U.S.C.

§ 1334(b).

The amicus supports the petitioners’ petition for a writ

of certiorari, and submits that the Third Circuit erred in ruling

that it lacked appellate jurisdiction to review the District

Court’s denial of the petitioners’ motion to transfer, and in

applying a restrictive definition of “related to” jurisdiction

that conflicts with the prior decision of the Court as well as

the decisions of other circuit courts of appeals. The amicus

also submits this brief to impress upon the Court the critical

need for a centralized resolution of what this Court has

described as the “elephantine mass” of asbestos cases pending

in the courts.

SUMMARY OF ARGUMENT

The asbestos litigation was once comprised of claims

by workers who had been seriously injured or had died as a

result of direct, substantial exposure to asbestos. These claims

involving disabling or fatal asbestos-related diseases are now

dwarfed by the tens of thousands of lawsuits filed each year

by individuals with indirect, limited exposure to asbestos

who are not, by any common sense definition of the word,

“sick.” As numerous companies that were directly involved

Pe teins, satin test Clo

BRE REP SIRE ETRL LANE ET AON

3

with the manufacture or sale of products containing asbestos

have filed for bankruptcy protection, the plaintiffs have

expanded the universe of defendants to include any and every

company that had any connection, however remote, with the

manufacture, sale or use of any kind of product that contained

or was used in conjunction with asbestos.

The cumulative number of these highly questionable

claims has driven over 60 companies to seek protection under

the Bankruptcy Code, more than 20 in the last two years

alone. None of those companies has professed an inability

to pay fair compensation to the truly sick. All have attributed

their bankruptcies to the ever-growing number of unimpaired

claimants who continue to file claims each year in carefully

selected state court jurisdictions.

The petitioners and the amicus are among the newer

defendants that have been brought into this ever-expanding

asbestos litigation. By their transfer motion under 28 U.S.C.

§ 157(b)(5), the petitioners asked the District Court below

to utilize the only vehicle available to federal courts to

transfer cases pending in both federal and state courts

throughout the United States to a single forum for a

centralized and efficient resolution. The District Court denied

that motion, based on its ruling that it lacked “related to”

jurisdiction over the claims against the petitioners. On appeal,

the Third Circuit ruled that it lacked appellate jurisdiction to

review the District Court’s denial of the transfer motion. The

Third Circuit also held that, on a mandamus review standard,

the District Court did not err in ruling that the asbestos claims

asserted against the petitioners are not “related to” the

Debtor’s chapter 11 case.

4

The Third Circuit erred in both respects. The Third

Circuit’s failure to exercise appellate jurisdiction cannot be

reconciled with the Court’s collateral order doctrine

articulated in Cohen v. Beneficial Industrial Loan Corp., 337

U.S. 541 (1949), that has been adopted by every other circuit

court of appeals. Likewise, the Third Circuit’s narrow

construction of federal “related to” jurisdiction is in direct

conflict with the Court’s decision in Celotex Corp. v.

Edwards, 514 U.S. 300, 307-08 (1995), as well as the

decisions of the Sixth Circuit in Lindsey v. O’Brien, Tanski,

Tanzer & Young Health Care Providers of Connecticut (In

re Dow Corning Corp.), 86 F.3d 482 (6th Cir. 1996), the

Fifth Circuit in Wood v. Wood (In re Wood), 825 F.2d 90, 94

(Sth Cir. 1987), the Eight Circuit in Kocher v. Dow Chemical

Co., 132 F.3d 1225, 1231 (8th Cir. 1997), and the Seventh

Circuit in Jn re FedPak Sys., Inc., 80 F.3d 207 (7th Cir. 1996).

For these reasons, the amicus respectfully submits that the

Court should grant the petition for a writ of certiorari.

ARGUMENT

I.

THE THIRD CIRCUIT ERRED IN REFUSING TO

EXERCISE APPELLATE JURISDICTION OVER THE

ORDER DENYING THE TRANSFER MOTION

The Third Circuit below erred in ruling that it lacked

appellate jurisdiction to review the District Court’s order

denying the petitioners’ transfer motion. Jn re Federal-Mogul

Global, Inc., 300 F.3d 368, 378-79 (3d Cir. July 31, 2002).

This ruling failed to apply the collateral order doctrine

enunciated by the Court in Cohen v. Beneficial Industrial

Loan Corp., 337 U.S. 541 (1949), and is in direct conflict

with the decisions of other courts of appeals.

CE STE LER REE TERETE, EERE EO

” Cea SV gue deer aie

a oa ae

8 ER SECS Aa E BERNE OR RL EE LE | tessa

we ste

5

In Cohen, the Court established the collateral order

doctrine, and held that an appellate court may exercise

appellate jurisdiction over an interlocutory order where a

decision “finally determine[s] claims of right separable from,

and collateral to, rights asserted in the action, too important

to be denied review and too independent of the cause itself

to require that appellate consideration be deferred until the

whole case is adjudicated.” Jd. at 546. The Court also noted

that the policy of avoiding piecemeal appeals was outweighed

by the need to permit appellate review of important issues:

But this order of the District Court did not make

any step toward final disposition of the merits of

the case and will not be merged in final judgment.

When that time comes, it will be too late

effectively to review the present order and the

rights conferred by the statute, if it is applicable,

will have been lost, probably irreparably.

Id. at 546.

Consistent with Cohen, every circuit court of appeals

has exercised appellate jurisdiction over interlocutory orders

based on the collateral order doctrine. See, e.g., Autoridad

De Energia Electrica De Puerto Rico v. Ericsson Inc.,

201 F.3d 15, 17 (1st Cir. 2000) (employing collateral order

doctrine); United States v. Ramirez, 297 F.3d 185, 190

(2d Cir. 2002) (same); United States v. Scarfo, 263 F.3d 80,

87 (3d Cir. 2001) (same); Gould v. Davis, 165 F.3d 265, 268

(4th Cir. 1998) (same); Clark v. Johnson, 278 F.3d 459, 460-

61 (Sth Cir. 2002) (same); Lindsey v. O’Brien, Tanski, Tanzer

& Young Health Care Providers of Connecticut (In re Dow

Corning Corp.), 86 F.3d 482, 488 (6th Cir. 1996) (same),

cert. denied, 519 U.S. 1071 (1997); Williams v. Katz, 23 F.3d

6

190, 192 (7th Cir. 1994) (same); Maitland v. Univ. of

Minnesota, 260 F.3d 959, 962 (8th Cir. 2001) (same), cert.

denied, 122 S. Ct. 1300 (2002); Curry v. Castillo (In re

Castillo), 297 F.3d 940, 946 (9th Cir. 2002) (same);

Timpanogos Tribe v. Conway, 286 F.3d 1195, 1199-1200

(10th Cir. 2002) (same); Aquamar S.A. v. Del Monte Fresh

Produce N.A., Inc., 179 F.3d 1279, 1287 (11th Cir. 1999)

(same); United States v. Durenberger, 48 F.3d 1239, 1241-

42 (D.C. Cir. 1995) (same).

The collateral order doctrine is clearly applicable to the

facts presented in this case. The District Court’s order denying

the petitioners’ transfer motion conclusively determined that

the petitioners’ asbestos cases are not “related to” the

Debtor’s chapter 11 case. The order does not deal with the

merits of the underlying action, and unquestionably is

separable from and collateral to the issues raised in the action.

Thus, the order will not be merged into a final judgment

rendered in the case, and absent an interlocutory appeal, the

order will never be subject to appellate review at the

conclusion of the case on the merits. Moreover, for the

reasons discussed in Point II, infra, the issue of whether the

asbestos cases should be transferred to the District Court also

raises issues that are too important to be denied appellate

review. |

Under similar circumstances, the Sixth Circuit in Dow

Corning Corp. found that the interlocutory order denying

similar motions to transfer as the motions filed in the District

Court below was appealable under the collateral order

doctrine. The Sixth Circuit stated:

The district court’s order conclusively determines

that claims pending against the nondebtor

PDFS ar TI Ly RRO IAY

ME NOE PRM LL INL PALE LE LIL AA i 1D Ay BONEN RE TONAL DR cg TY oak

°

7

defendants are not “related to” Dow Corning’s

bankruptcy proceeding for purposes of Section

1334(b). In addition, resolution of the “related

to” jurisdictional question does not involve

consideration of the merits of the pending tort claims.

Finally, due to the unique circumstances of this case

and the hardship that would inevitably result if we

were to refrain from addressing the issues presented

by this appeal at this time, the issues presented will

be effectively unreviewable after a final judgment

is rendered.

Dow Corning Corp., 86 F.3d at 488.

Thus, the Third Circuit erred in failing to exercise appellate

jurisdiction over the District Court’s order denying the motion

to transfer. The Third Circuit’s decision is directly contrary to

the Court’s decision in Cohen and conflicts with the decisions

of every circuit court of appeals that has addressed the issue.

As such, the Court should grant the petition for writ of certiorari

and reverse the Third Circuit’s decision not to exercise appellate

jurisdiction over the District Court’s order.

Il.

THE THIRD CIRCUIT MISINTERPRETED THE

SCOPE OF FEDERAL “RELATED TO”

JURISDICTION

While the Third Circuit stated that it remained a “step away”

from addressing whether the District Court below has “related

to” jurisdiction over the asbestos claims asserted against the

petitioners, it nevertheless reviewed the lower court’s order on

a mandamus review standard. In so doing, the Third Circuit

interpreted the “conceivable effect” test articulated in Pacor,

Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984), and adopted by the

Court in Celotex Corp. v. Edwards, 514 U.S. 300, 307-08 (1995),

as requiring that a proceeding between nondebtors must have

8

an “automatic” effect upon the estate, without the “intervention

of yet another lawsuit.” Federal-Mogul, 300 F.3d at 382. That

ruling is in direct conflict with the Court’s decision in Celotex

as well as decisions of other courts of appeals. The amicus

submits that the scope of federal related to jurisdiction is an

issue of significance that should be subject to a uniform standard.

For these reasons, as detailed below, the Court should grant the

petition for writ of certiorari.

A. The Third Circuit’s Definition of “Related to”

Jurisdiction is in Direct Conflict with Celotex and

Decisions of Other Circuit Courts

Federal jurisdiction over claims and causes of action related

to a chapter 11 case is extremely broad. Section 1334(b) of

title 28 of the United States Code provides district courts with

jurisdiction over “all civil proceedings arising under title 11, or

arising in or related to acase under title 11.” The Court in Celotex

explained the breadth of federal “related to” jurisdiction:

Congress did not delineate the scope of “related to”

jurisdiction, but its choice of words suggests a grant

of some breadth. The jurisdictional grant in §

1334(b) was a distinct departure from the jurisdiction

conferred under previous Acts, which had been

limited to either possession of property by the debtor

or consent as a basis for jurisdiction. . . .[C]Jongress

intended to grant comprehensive jurisdiction to the

bankruptcy courts so that they might deal efficiently

and expeditiously with all matters connected with

the bankruptcy estate.

Celotex Corp. v. Edwards, 514 U.S. 300, 307-08 (1995) (internal

footnotes and citations omitted). In adopting the “conceivable

effect” test, the Court stated, “The usual articulation of the test

for determining whether a civil proceeding is related to

bankruptcy is whether the outcome of that proceeding could

9

conceivably have any effect on the estate being administered in

bankruptcy.” Jd. (citing Pacor, 743 F.2d at 994). The Court

defined an action as having a “conceivable effect” on the estate

if the outcome of the action “could alter the debtor’s rights,

liabilities, options, or freedom of action (either positively or

negatively) and which in any way impacts upon the handling

and administration of the bankrupt estate.” Jd. The Court

expressly stated that “proceeding[s] need not necessarily be

against the debtor or against the debtor’s property” to be “related

to” a bankruptcy case. Jd.

Notwithstanding the Court’s articulation of the “conceivable

effect” test to define the scope of federal “related to” jurisdiction,

the Third Circuit below articulated an unworkable, restrictive

test that essentially eliminates federal related to jurisdiction over

proceedings involving nondebtors. The Third Circuit stated that

a proceeding between nondebtors will have a “conceivable

effect” upon the estate only if the outcome of that proceeding

has an “automatic” effect upon the debtor’s estate “without the

intervention of yet another lawsuit.” Federal-Mogul, 300 F.3d

at 382.

Under this test, no proceeding among nondebtors could ever

be related to a bankruptcy case, because no proceeding among

nondebtors will ever have an automatic effect upon the estate

without the intervention of another proceeding. Indeed, even in

instances where the nondebtor has a contractual indemnity or

guaranty right against the debtor — an example the District

Court below cited as having an “automatic” effect upon the estate

— the nondebtor will still have to take some additional step to

enforce that contractual right against the debtor by filing a claim

or commencing an adversary proceeding against the debtor.

Upon the commencement of that proceeding, the debtor then

has the opportunity to contest the nondebtor’s indemnification

or guaranty right. The Third Circuit’s reliance upon the

“automatic effect” test is a distinction without a difference.

10

Whether the underlying indemnification and contribution claims

arise through contract or common law, the court will have to

adjudicate these liabilities.

Other circuits that have adopted the “conceivable effect”

test have refused to adopt such a restrictive definition of “related

to” jurisdiction. Faced with facts very similar to those presented

here, the United States Court of Appeals for the Sixth Circuit in

Dow Corning construed section 1334(b) consistently with the

Court’s ruling in Celotex. In Dow Corning, like the petitioners

here, nondebtor codefendants of debtor Dow Corning filed

motions to transfer claims asserted against them arising from

the plaintiffs’ use of silicone gel breast implants to the district

court where Dow Corning’s chapter 11 case was pending.

In reversing the district court, which ruled that it lacked related

to jurisdiction over the claims against the nondebtors, the Sixth

Circuit found that “‘automatic’ liability is not necessarily

a prerequisite for a finding of ‘related to’ jurisdiction.”

Dow Corning, 86 F.3d at 491. The court explained that “[t}he

potential for. . . [the debtor] 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.” Jd. at 494.

The Fifth Circuit in Wood v. Wood (In re Wood), 825 F.2d

90, 94 (Sth Cir. 1987), similarly refused to require an “automatic

effect” upon the estate as it held that claims asserted against

nondebtors based on joint conduct with the debtor were related

to the debtor’s bankruptcy case. The court stated, “We find

support in the Court of Appeals for the Sixth Circuit and lower

courts, which have held that when the plaintiff alleges liability

resulting from the joint conduct of the debtor and non-debtor

defendants, bankruptcy jurisdiction exists over all claims under

section 1334.” Jd. (citing Jn re Salem Mortgage Co., 783 F.2d

626, 634 (6th Cir. 1986); Jn re Zamost, 7 B.R. 859 (Bankr. S.D.

Cal. 1980)).

11

Likewise, the Eight Circuit in Kocher v. Dow Chemical

Co., 132 F.3d 1225, 1231 (8th Cir. 1997), found that the district

court had “related to” jurisdiction over plaintiffs’ claims against

nondebtors based on the nondebtors’ “potential indemnification

claims against” the debtor. The court stated, “Kocher’s claims

against [nondebtors] Dow Chemical and DuPont conceivably

could affect Dow Corning’s bankruptcy estate and thus are

‘related to’ the bankruptcy case.” Jd.

The Seventh Circuit has refused to follow the Pacor test

altogether. For example, in /n re FedPak Sys., Inc., 80 F.3d 207

(7th Cir. 1996), the Seventh Circuit rejected the conceivable

effect test:

Some courts have adopted a sweeping test

which holds that whenever a proceeding “could

conceivably have any effect on the bankruptcy

estate” it is related to a case under title 11 and the

bankruptcy court has jurisdiction. See, e.g., Pacor,

Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984).

This circuit has adopted a more limited and, we

believe, more helpful definition of the bankruptcy

court’s related to jurisdiction. Our precedents hold

that “a case is related to a bankruptcy case where

the dispute affects the amount of property available

for distribution (i.e., the debtor’s estate) or the

allocation of property among creditors”.

FedPak, 80 F.3d at 213-14 (citations omitted).

In applying this test, courts within the Seventh Circuit found

related to jurisdiction over litigation among nondebtors based

on the fact that the nondebtor asserted indemnification claims

against the debtor, and the courts specifically rejected the

need for an “automatic” effect. In Apex Inv. Assocs., Inc. v. TJX

Companies, Inc., the court stated:

Apex also argues that even if TJX is entitled

to indemnity, there can be no effect on the bankruptcy

12

estate until Apex recovers a judgment against

TJX, and TJX then files a claim against Ames.

This argument is unavailing. Even if Apex is correct

in arguing that this case cannot actually affect the

estate until TJX pays Apex, it does not follow that

the instant case is not “related to” the bankruptcy

proceeding.

121 B.R. 522, 526 (N.D. Ill. 1990). Similarly, in Salem Mills,

Inc. v. Wisconsin Tool & Stamping Co. (In re Salem Mills, Inc.),

148 B.R. 505 (Bankr. N.D. Ill. 1992), the court found related to

jurisdiction over litigation among nondebtors based on the fact

that the nondebtor filed a proof of claim against the debtor. The

court stated, “Wisconsin Tool has filed a proof of claim based

upon the indemnity agreement. Consequently, Wisconsin Tool’s

third-party action is related to the underlying bankruptcy case

even though the Debtor is no longer a party litigant.” Jd. at 510.

In sum, the circuits have not adopted a uniform definition

of federal “related to” jurisdiction. Most importantly, the ngid

“automatic effect” test articulated by the Third Circuit below is

not workable, and is in direct conflict with Celotex and the

decisions of the Fifth, Sixth, Seventh and Eighth Circuits.

B. Federal “Related to” Jurisdiction and its Broad Scope

Enable All Matters Related to a Bankruptcy Case to be

Consolidated in a Single Forum for an Efficient and

Effective Resolution

The breadth of federal “related to” jurisdiction and the

authority under section 157(b)(5) of the district court sitting in

bankruptcy to centralize all personal injury and wrongful death

claims in one forum provide a unique opportunity to federal

courts to both enhance the debtor’s efforts to reorganize and to

help solve the problems posed by the “elephantine mass of

asbestos cases.” Ortiz v. Fibreboard Corp., 527 U.S. 815, 821

(1999). By adopting a restrictive definition of federal “related

13

to” jurisdiction that all but eliminates bankruptcy jurisdiction

over proceedings among nondebtors, the Third Circuit

foreclosed the availability of section 157(b)(5) to centralize

all personal injury and wrongful death claims related to a

bankruptcy case.”

Centralization of related claims serves dual purposes:

¢ To conserve judicial resources by permitting one

court (not thousands) to preside over actions

involving common facts and legal issues; and

* to conserve the resources of all parties involved

in order either to ensure maximum return to

creditors if liability is determined or to protect

defendants from overwhelming defense costs if

liability is not found.

The Fourth Circuit in A.H. Robins Co., Inc. v. Piccinin

described the importance of centralizing mass tort claims to the

ultimate goal of a bankruptcy case, which is confirming a plan

of reorganization:

te

[T]here are very real considerations that support a

centralization of all the Dalkon Shield claims, at least

at first, in the district court having jurisdiction of

the bankruptcy. The “single focal point” of this

proceeding is the development of a reasonable plan

of reorganization for the debtor, one which will work

2. Section 157(b)(5) provides:

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).

14

a rehabilitation of the debtor and at the same time

assure fair and non-preferential resolution of the

Dalkon Shield claims.

788 F.2d 994, 1011 (4th Cir. 1986) (citations omitted).

The plain language of section 157(b)(5) reflects Congress’

recognition of the importance of centralization as it states that

the district court shall determine the venue for all personal injury

and wrongful death claims related to the chapter 11 case,

including cases pending in state court. “Section 157(b)(5)

bestows upon the district court authority to transfer actions

pending in state court.” Calumet Nat'l. Bank v. Levine, 179 B.R.

117, 122 n.7 (N.D. Ind. 1995). The “plain language” of the statute

authorizes the district courts to so act. Murray v. Pan American

World Airways, Inc. (In re Pan Am Corp.), 16 F.3d 513, 516 (2d

Cir. 1994) (“the plain language of section 157(b)(5) authorized

the district court to transfer [the] cases from Florida state court”

to the district court). Accordingly, a party seeking to invoke the

district court’s power to transfer a personal injury or wrongful

death action pending in state court need not first seek removal

of the state litigation to federal court. See, ¢.g., Beckwith v. U.S.

Lines, Inc. (In re United States Lines, Inc.), No. 90 M 47(MP),

1990 WL 451981, at *1 (S.D.N.Y. Nov. 6, 1990) (authorizing

transfer of nine state court cases directly to the federal district

court pursuant to section 157(b)(5)); Jn re Federal Press Co.,

117 B.R. 942, 951 (Bankr. N.D. Ind. 1989) (bankruptcy court

recommended that the district court transfer state cause of action

directly to district court pursuant to section 157(b)(5)).

3. These advantages of consolidating personal injury actions

related to a bankruptcy case have been confirmed repeatedly.

See Murray v. Pan American World Airways, Inc. (In re Pan Am

Corp.), 16 F.3d 513, 516 (2d Cir. 1994); Calumet Nat’] Bank v.

Levine, 179 B.R. 117, 120-21, 123 (N.D. Ind. 1995); Newton v. Johns-

Manville Corp. (In re Johns-Manville Corp.), 45 B.R. 827 (S.D.N.Y.

1984).

15

By centralizing all related asbestos claims in one court, the

debtor can properly deal with all related claims in a single

plan of reorganization. Failure to consider all aspects

of a bankruptcy case, including the contribution and

indemnification claims of codefendants, could severely

compromise the debtor’s ability to effectively deal with its

creditors. Indeed, the Eastern and Southern Districts of New

York, conducting joint hearings in an effort to rehabilitate the

Manville asbestos liability trust years after Manville emerged

from chapter 11, identified the failure of the Manville plan to

deal effectively with claims of nondebtor codefendants as one

cause of the trust’s fiscal demise. Jn re Joint E. & S. Dist.

Asbestos Litig., 129 B.R. 710, 732-33 (E.D.N.Y. & S.D.N.Y.

1991). The court noted that litigation involving claims by the

codefendants and other claimants to the trust “present the most

difficult issues in resolving this class action.” /d. at 733.

Centralizing all claims related to the chapter 11 case will avoid

such problems and will enable the parties to address all matters

related to the debtor’s chapter 11 case in a coordinated and

efficient manner.

The experiences in A.H. Robins, the Dalkon Shield mass

tort case, and in Drexel Burnham Lambert, amass financial tort

bankruptcy case, evidence the benefits of successfully dealing

with all claims, including the channeling of claims for

contribution, reimbursement or indemnification by nondebtor

codefendants into claims against a trust created for the benefit

of creditors. See In“re Drexel Burnham Lambert Group Inc.,

138 B.R. 723, 753 (Bankr. §.D.N.Y. 1992); Securities and

Exchange Commission v. The Drexel Burnham Lambert Group

(In re Drexel Burnham Lambert Group, Inc.), 960 F.2d 285,

292 (2d Cir. 1992) (in each case, describing the channeling

injunctions that were central to the debtor’s chapter 11 plan),

cert. dismissed, 506 U.S. 1088 (1993).

16

The congressional purpose underlying the breadth of

“related to” jurisdiction and section 157(b)(5) — to eliminate

the multiplicity of forums for the adjudication of parts of a

bankruptcy case — is especially pertinent in the context of

asbestos litigation, where a defendant having absolutely no

liability on the merits may become financially impaired as a

result of the raw expense of defending against individual actions

thousands of times. Here, that raw expense drove the Debtor

into chapter 11. The need for centralization in asbestos litigation

is further compounded by the fact that most of asbestos cases

being filed today are filed by plaintiffs with no impairing

asbestos-related illness. While the use of asbestos and asbestos-

containing products was dramatically reduced more than 20

years ago, the number of lawsuits filed by plaintiffs claiming

that they were injured by asbestos has increased rather than

decreased. Currently, there are hundreds of thousands of asbestos

cases pending in the courts.‘

The increasing number of asbestos claims filed by

unimpaired claimants has also resulted in the filing of numerous

4. Inarecent study, the RAND Institute for Civil Justice, which

has been following asbestos litigation since 1984, estimates that

500,000 asbestos claims have been filed and that the number of new

claims has risen sharply in recent years. Hensler, Asbestos Litigation

in the U.S.: A New Look at an Old Issue, p. 2 (Institute for Civil

Justice, RAND Corp., Aug. 2001). This study concludes that the

number of claims yet to be filed could range from 500,000 to 2.5

million. Jd. at 14. A decade ago, new asbestos claims were being

filed at the rate of 1,000 to 2,000 new claims per month. Brickman,

The Asbestos Litigation Crisis: Is There a Need for an Administrative

Alternative?, 13 Cardozo L. Rev. 1819, 1861 (1992). More recent

data shows that over 90,000 new asbestos lawsuits were filed last

year, representing an increase of one third from the previous year.

Testimony of the Honorable Benjamin Nelson before the United

States Senate Committee on the Judiciary-Asbestos Litigation, Sept.

25, 2002; Greenhouse, Asbestos Appeal Centers on Fear of Cancer,

N.Y. Times, Nov. 7, 2002, at C18, col. 4.

17

bankruptcies of once-solvent corporate entities. Currently, there

are more than 60 bankruptcy cases pending in the United States

that have been filed by once healthy corporations as a direct

result of the magnitude of asbestos lawsuits. See Glater,

Defending a United Detroit on Asbestos, N.Y. TIMEs, Nov. 3,

2002, at sec. 3, col. 1; Roston, The Asbestos Pit: An Old Issue

is Back and the Lawsuits are Killing Shares, Time, Mar. 11,

2002. These numbers continue to grow as a result of the

continuing stream of asbestos cases. Indeed, in the first seven

months of 2002, 12 companies facing significant asbestos

liability sought protection under the Bankruptcy Code — more

than in any other three year period before 1999. Testimony of

the Honorable Benjamin Nelson, United States Senate

Committee on the Judiciary-Asbestos Litigation, Sept. 25, 2002.

The debtors’ filings in many of these cases starkly illustrate the

fact that the recent and dramatic influx of claims has left those

companies with no other feasible way to resolve their alleged

asbestos liability other than seeking protection under the

Bankruptcy Code.°

5. See Affidavit of David Weinberg, filed in Jn re G-J Holdings,

Inc., Case No. 00-30135 (D.N.J. 2000), sworn to on January 4, 2001

at J§ 7-9:

[F]aced with a continuous stream of asbestos claims

primarily from individuals who show no asbestos-related

impairment, and the recent bankruptcy filings of four

other major asbestos defendants, G-I has been forced to

succumb to the financial pressure surrounding it and

seeks protection from its creditors under chapter 11 of

the Bankruptcy Code.

See also Affidavit of David Segal, filed in Jn re WR. Grace & Co.,

et al., Case No. 01-01139 (D. Del. 2001), sworn to on April 2, 2001

at Jf 23-25; Affidavit of William Rodruan, filed in Jn re Armstrong

World Industries, Inc., et al., Case No. 00-4471 (D. Del. 2000), sworn

to on Dec. 5, 2000 at J 34 (“in the absence of legislation addressing

(Cont'd)

18

Centralization of claims contemplated by sections 1334(b)

and 157(b)(5) provides an avenue to address many of these

problems arising from the recent explosion of asbestos litigation.

The crippling costs associated with having to litigate essentially

the same asbestos case thousands of times in different courts

could be eliminated, and procedures could be established to

streamline the litigation of common factual and legal issues.

Centralization ultimately will benefit the true asbestos victims

by preserving the resources of the defendants for the benefit of

asbestos claimants with real and enforceable claims. The Fourth

Circuit aptly described the concerns to the claimants of not

centralizing mass litigation in one forum:

If the claimants as a whole are to realize reasonable

compensation for their claims, it is obviously in the

interest of the class of claimants as a whole to obviate

the tremendous expense of trying these cases

separately. If the bankruptcy court could arrive at a

fair estimation of the value of all the claims and

(Cont'd)

the challenges faced by asbestos defendants, the chapter 11 process

is the only means of fully and finally addressing the merits of the

asserted asbestos-related claims. . . .”); Debtors’ Motion to Fix Proof

of Claim Bar Date and Approving Bar Date Notice Procedures, filed

in In re United States Mineral Products Co., Case No. 01-2471 (D.

Del. 2001), dated Aug. 1, 2002 at ] 6-9 (in the year prior to the

chapter 11 filing date, the number of claims and the aggregate

damages sought, as well as the chapter 11 filing by other co-

defendants, strained the debtors’ resources “to the point where

chapter 11 protection became necessary”); Affidavit of Richard

Fleming, filed in Jn re USG Corp., Case No. 01-2094 (D. Del. 2001),

sworn to on June 27, 2001 at J 7 (“these cases have been precipitated

by the skyrocketing demands of asbestos plaintiffs in approximately

100,000 pending claims of such plaintiffs against U.S. Gypsum, one

of USG’s main subsidiaries.”).

19

submit a fair plan of reorganization based on such

estimation, with some mechanism for dispute

resolution and acceptable to all interested parties,

great benefit to all the claimants could be achieved

and the excessive expense of innumerable trials,

stretching over an interminable time, could be

avoided.

A.H. Robins Co., 788 F.2d at 1013.

In the final analysis, the ability to centralize mass tort actions

in one forum provides a unique opportunity to efficiently resolve

these cases on a global scale. As the authors of the Manual For

Complex Litigation (Third) § 31.132 (1995), have recognized,

one of the great advantages of consolidating cases through

procedures such as federal multidistrict litigation pursuant to

28 U.S.C. § 1407 is that “they bring before a single judge all

the cases, parties and counsel comprising the litigation. They

therefore afford a unique opportunity for a negotiation for a

global settlement.” However, because federal multidistrict

litigation does not include cases in state court, its effect is blunted

where, as here, most of the related cases are pending in state

forums. The reach of federal “related to” jurisdiction and the

ability to transfer state court actions pursuant to section 157(b)(5)

provide a unique remedy for this defect, and have been aptly

described by the Manual as “(t]he most powerful device for

aggregating multiple litigation pending in federal and state

courts.” Jd. at 283.

The authority of the Judicial Panel on Multidistrict

Litigation to centralize all cases pending in the federal courts

reflects a strong and important policy favoring centralization of

all cases that are within the jurisdiction of the federal courts.

The reach of “related to” jurisdiction under section 1334(b) to

claims pending in both federal and state courts reflects the same

strong and important policy of centralizing all cases that fall

within federal bankruptcy jurisdiction. The authority to

20

centralize under sections 1334(b) and 157(b)(5) is a tool to

facilitate an orderly, efficient resolution of all claims related

to a bankruptcy case. Centralization gives the parties the

opportunity to arrive at a goal all can agree on: coordinated,

efficient and less expensive resolution of claims against the

Debtor, the petitioners and other codefendants who have

been alleged to be jointly and severally liable to the plaintiffs.

Amicus submits that, through centralization, common key factual

and legal issues may be resolved in a single forum and that it

will be possible to develop a fair adjudication process that

maximizes both the possibility of a successful reorganization

of the Debtor and the fair treatment of all allowed claims.

Ultimately, that process is critical to the Debtor’s reorganization.

The Third Circuit below failed to consider these issues when

it severely limited the reach of federal “related to” jurisdiction

by imposing the “automatic effect” requirement. In so doing,

the Third Circuit closed the door to the only avenue available

to federal courts to centralize, and ultimately, seek to control

the asbestos litigation problem.

CONCLUSION

For all of the foregoing reasons, the amicus urges the Court

to exercise its discretion to grant the petition for writ of

certiorari.

Respectfully submitted,

Bruce R. ZIRINSKY

Counsel of Record

JoHN H. BAE

JOSEPH E. FIELD

CADWALADER,

WICKERSHAM & TAFT

Counsel for Amicus Curiae

100 Maiden Lane

New York, NY 10038

(212) 504-6000