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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0647%3A4

## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 2003

## Text

IN THE OFFICE OF THE CLERK

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,
Vv.

OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS OF
FEDERAL-MOGUL GLOBAL, INC., ET AL.

—

Respondents.

On Petition for Writ of Certiorari to the
United States Court of Appeals for the Third Circuit

REPLY TO BRIEF IN OPPOSITION

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

December 17, 2002

ee

TABLE OF CONTENTS

Page
TABLE OF AUTHORITIES ......... ueeeneer oe iii
I. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That The Denial Of A Transfer
Motion Under 28 U.S.C. § 157(b)(5) Is Not
I oss So phe awe es rN eee ee ]
Il. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That A Cross-Jurisdictional
Remand Is Not Appealable ................... 4
III]. This Case Presents Issues of Signal Importance ... 8
8 re a ee rene er ere 10

il

ill

TABLE OF AUTHORITIES
Page(s)
CASES:
A.H. Robins Co. v. Piccinin,
FOO F.20 9P4 (4 Cir. 1986) . ww ccc cc ccvese i,2
Behrens v. Pelletier,
ee ere 6
Briscoe v. LaHue,
EE EE ci ow i che reccsvesneeseses 3
Celotex Corp. v. Edwards,
er er reer 7
Clark Cty. Sch. Dist. v. Breeden,
PEE AA A BOP EMMONS vce e ce eveccsscsucss 6
Connecticut Nat’l Bank v. Germain,
EE ko cb cesks cere ber dvasens 4,5
Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,
ED as chad chee vesdeeveeneteas 6

Georgine v. Amchem Prods., Inc.,
83 F.3d 610 (3d Cir. 1996),
ee SP Pe EO OTE 55.6 ks wae cececeese c's 7

Hudson-Ram L.P. v. Archer,
210 F.3d 387, 2000 WL 14398

re 5,6
In re Dow Corning Corp.,
86 F.3d 482 (6th Cir. 1996) ................ 1-3, 7,8
In re Saco Local Dev. Corp.,
eo we Te) l
Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson,
Eo os bob px db bse cee wsuvuevess 6
Portland Golf Club v. CIR,
Es cay cote ssenn ee peneeeens 6

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Spectrum Sports, Inc. v. McQuillan,

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Thermtron Products, Inc. v. Hermansdorfer,

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_ Things Remembered, Inc. v. Petrarca,

FO As DR REPOD oc esesecskadecaeus

Torres v. Oakland Scavenger Co.,

TET Cia PEE COPED Hb Kc bee nese cewe see's

United States v. Verdugo-Urquidez,

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STATUTES:

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I. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That The Denial Of A Transfer
Motion Under 28 U.S.C. § 157(b)(5) Is Not Appealable.

The motions that were actually decided by the district
court below, in the decision over which the Third Circuit held
that it lacked appellate jurisdiction, were petitioners’
“motions to transfer the Friction Products Claims.” Pet. App.
56a (emphasis added). Under the Sixth Circuit’s decision in
In re Dow Corning Corp., 86 F.3d 482 (6th Cir. 1996), an
order denying such motions is appealable as both a “final”
and a “collateral” order. See id. at 487-88. The district court
below, however, attempted to insulate its decision from
review by also purporting (in the very same order denying the
motions to transfer) to “remand” these claims directly to the
state courts from which they had been removed, thereby
allowing respondents to argue that the order was
unreviewable as a remand order. And that is precisely what
respondents did argue in the Third Circuit, and argue again
here.

The Third Circuit, however, did not accept respondents’
characterization of the district court’s order as a remand
order. Rather, the Third Circuit held that the district court’s
order was unappealable when construed as the denial of a
transfer motion under 28 U.S.C. § 157(b)(5). See Pet. App.
19a-20a. That holding is not only manifestly incorrect, but
also flatly inconsistent with the Sixth Circuit’s holding in
Dow Corning. See 86 F.3d at 487-88.

Respondents do not even attempt to defend the Third
Circuit’s holding on the merits. That is not surprising,
because it is well-established (or was, until the ruling below)
that a relaxed standard of finality applies in bankruptcy cases,
where orders are “final” (and hence appealable) where “they
finally dispose of discrete disputes within the larger case.”
In re Saco Local Dev. Corp., 711 F.2d 441, 444 (ist Cir.
1983) (Breyer, J.) (emphasis in original). As the Sixth
Circuit recognized in Dow Corning, the denial of a transfer
motion under Section 157(b)(5) easily meets this standard:
whether claims against nondebtors are “related to” a

2

particular bankruptcy is a discrete question separate from the
claims at issue in the underlying bankruptcy, and would be
“effectively unreviewable” by appeal years later upon
confirmation of the debtor’s final plan of reorganization. 86
F.3d at 487-88. Indeed, for just this reason, the Dow Corning
court held that the denial of a transfer motion under Section
157(b)(5) is appealable as both a “final” judgment and a
“collateral” order. See id.; see also A.H. Robins Co. v.
Piccinin, 788 F.2d 994, 1009 (4th Cir. 1986) (holding that the
grant or denial of a Section 157(b)(5) transfer motion is
appealable as both a final and a collateral order).

While respondents conspicuously do mot defend the
decision below on the merits, they do deny the existence of
a circuit split on this issue. See Opp. 21-23 & n.6.
According to respondents, the Sixth Circuit’s decision in
Dow Corning (and the Fourth Circuit’s decision in A.H.
Robins on which it relied) are distinguishable from this case
because the district courts in those cases had not also entered
orders “remanding the claims at issue to the state courts.” Jd.
at 21; see also id. at 23 n.6. But here respondents are simply
quarreling with the Third Circuit’s decision that the district
court’s order was unappealable when construed as the denial
of a transfer motion. Pet. App. 19a-20a. Petitioners may
wish the Third Circuit had held that the denial of a transfer
motion is unappealable when coupled with a remand order,
but that is not what the Third Circuit did. See id. Under the
decision below, the law in the Third Circuit is that orders
denying transfer motions under Section 157(b)(5) are
unappealable, see id, while the law in the Sixth Circuit is
precisely the opposite, see 86 F.3d at 487-88. If that is not a
circuit split, it is hard to know what is.

Indeed, as respondents themselves implicitly acknowledge,
see Opp. 18-19, it is wholly illogical to couple the denial of
a transfer motion with a remand order, because those
dispositions are inherently inconsistent and mutually
exclusive. An order denying a transfer motion sends the

3

claims back to the federal courts to which they were removed
(and from which they were provisionally transferred),
whereas a remand order sends the claims back to the state
courts from which they were removed. A single order cannot
logically send the same claims back to both fora at once. For
the district court to deny the transfer motions after remanding
the claims, as respondents suggest, id. at 19, would have been
a meaningless act, because the court would have had before
it no claims to send back to the federal courts from which
they had been provisionally transferred.

It is not surprising, thus, that the Third Circuit took the
district court at its word and reviewed the challenged order
both as the denial of a transfer motion and as a remand order,
see Pet. App. 19a, and held that it was unappealable as either,
see id. at 19a-20a, 3la-36a. Those are not alternative
holdings: each one is logically necessary to the Third
Circuit’s judgment dismissing petitioners’ appeals for lack of
jurisdiction. Because the Court of Appeals declined to
characterize the challenged order, it could not have dismissed
petitioners’ appeals from that order without holding that it
lacked jurisdiction both over the denial of a Section 157(b)(5)
transfer motion and over a cross-jurisdictional remand order.
Accordingly, both of those holdings are squarely and
properly presently here, regardless of the validity of the Court
of Appeals’ alternative assumptions underlying those
holdings. See, e.g., United States v. Verdugo-Urquidez, 494
U.S. 259, 272 (1990) (“The Court often grants certiorari to
decide particular legal issues while assuming without
deciding the validity of antecedent propositions.”); Briscoe
v. LaHue, 460 U.S. 325, 328 n.3 (1983) (“Because we
granted certiorari to review the Court of Appeals’ holding,
we make the same assumptions for purposes of deciding this
case, without implying that they are valid.”). Respondents
cannot insulate the Third Circuit’s holding on the
appealability of Section 157(b)(5) transfer orders from this
Court’s review by simply challenging the validity of the
assumption underlying that holding.

4

Contrary to respondents’ assertion, thus, it is simply not
true that “[a]t the appellate level, the issue of ‘transfer’ was
completely irrelevant . . . [and] no longer presented a
justiciable case or controversy.” Opp. 18. Petitioners
challenged (and continue to challenge) the district court’s
denial of their transfer motions, and respondents defended
(and continue to defend) that denial. The Third Circuit
specifically and expressly held that the district court’s order,
when construed as the denial of a transfer motion under 28
U.S.C. § 157(b)(5), is not appealable, Pet. App. 19a-20a, and
that holding squarely conflicts with the Sixth Circuit’s
contrary holding in Dow Corning, 86 F.3d at 487-88. This
Court’s review is warranted to correct the Third Circuit’s
error, and resolve the resulting circuit conflict.

II. The Third Circuit Erred, And Created A Circuit
Conflict, By Holding That A Cross-Jurisdictional
Remand Is Not Appealable.

The Third Circuit also held that, when construed as a
remand order, the district court’s order was again
unappealable, notwithstanding the fact that the district court
purported to “remand” claims that had been removed to
other federal courts and then transferred. Pet. App. 31a-36a.
Because any such remand was unauthorized by the
bankruptcy remand statute—which specifically limits the
remand power to “[t]he court to which such claim or cause of
action is removed,” 28 U.S.C. § 1452(b)}—the Third Circuit
thereby erred. See, e.g. Thermtron Products, Inc. v.
Hermansdorfer, 423 U.S. 336, 351 (1976). And that error
created not one but two circuit splits: one on whether
remands based on an asserted lack of subject-matter
jurisdiction are unappealable even if otherwise beyond the
district court’s statutory authority, see Pet. 18-21, and the
other on whether a court other than “[t]he court to which [a
bankruptcy claim] is removed” has the statutory authority to
remand such a claim, see id. at 21-24.

5

Respondents contend in a footnote that the first of those
splits is not implicated here because “[n]Jothing in the court of
appeals’ discussion suggests” a holding that remands based
on lack of subject-matter jurisdiction are unappealable even
if otherwise beyond the district court’s statutory authority.
Opp. 17 n.4. That contention is mystifying, because the
Third Circuit could scarcely have been any more explicit on
this score. The Third Circuit expressly rejected petitioners’
argument that the district court’s order was appealable under
Thermtron dy holding that Thermtron (as _ allegedly
“clarified” by Things Remembered, Inc. v. Petrarca, 516 U.S.
124, 127-28 (1995)) simply did not apply to remand orders
based on lack of subject-matter jurisdiction. Pet. App. 34a.
According to the Third Circuit, “[a]s 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... barred.” Id. (emphasis added). Respondents may be
unwilling to defend that holding, but they cannot simply deny
its existence. And it is telling that respondents do not deny
that at least four other circuits have held that Thermtron and
Things Remembered authorize appellate jurisdiction over
remand orders based on lack of subject-matter jurisdiction
where a district court otherwise exceeds its statutory
authority. See Pet. 19-21. Because those holdings conflict
with the decision below, see Pet. App. 34a, this Court’s
review is warranted.

Respondents also attempt to deny a circuit split on the
validity of direct cross-jurisdictional remands under the
bankruptcy remand statute, 28 U.S.C. § 1452(b), by asserting
that this statute “has no bearing here” at all. Opp. 15.
According to respondents, the remands in this case are
governed exclusively by the general remand statute, 28
U.S.C. § 1447(c), even though the claims in this case were
removed from state to federal court under the bankruptcy
removal statute, 28 U.S.C. § 1452(a), as “related to” the
Federal-Mogui bankruptcy within the meaning of the
bankruptcy jurisdictional statute, 28 U.S.C. § 1334(b).

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6

Needless to say, respondents turn the law upside down by
asserting that the bankruptcy remand statute is wholly
irrelevant to bankruptcy remands.

Respondents purport to base that extraordinary assertion
on this Court’s decision in Things Remembered, but that
reliance is misplaced. Things Remembered held only that
courts must apply both the general remand statute and the
bankruptcy remand statute where both provisions can
“comfortably coexist,” 516 U.S. at 129 (citing Connecticut
Nat'l Bank v. Germain, 503 U.S. 249, 253 (1992))—as in that
case, where both provisions precluded review of a remand
order, and there was no asserted inconsistency between them.
That holding is based on the venerable principle that courts
are required to reconcile the various provisions of the U.S.
Code whenever possible. See, e.g., Germain, 503 US. at
253. But respondents turn that principle on its head by
asking this Court to ignore the specific language of the
bankruptcy remand statute, 28 U.S.C. § 1452(b), in
evaluating the validity of a bankruptcy remand. Things
Remembered does not remotely authorize courts to use the
general remand provision to override the bankruptcy remand
provision where (as here) the provisions differ. The specific
may not always trump the general, but the general certainly
does not trump the specific.

Thus, respondents miss the point by focusing exclusively
on the general remand statute, and acting as if the bankruptcy
remand statute did not exist. Regardless of whether the
general remand statute authorizes a remand by a court other
than the court to which a claim was removed, the bankruptcy
remand statute plainly does not. The claims in this case were
removed from state courts across the Nation to the local
federal courts, and then provisionally transferred to the
federal court in Delaware. The latter court, therefore, was not
“(t]he court to which such claim or cause of action [was]
removed,” 28 U.S.C. § 1452(b), and therefore was not
authorized to remand the claims.

————— ee
i cl

7

That, in fact, is precisely the holding of the Ninth Circuit
in Hudson-Ram L.P. v. Archer, 210 F.3d 387, 2000 WL
14398 (9th Cir. Jan. 7, 2000) (unpublished). Respondents do
not contest this point, but instead deny the existence of a
conflict on the ground that “(t]he remand order in that case
was entered under § 1452(b),” rather than § 1447(c).
Opp. 16. That argument makes no sense. If, as defendants
| argue, Section 1447(c) trumps Section 1452(b) even with
| respect to claims removed under the bankruptcy removal
statute, then Hudson-Ram was incorrectly decided. Hudson-
| Ram is indistinguishable from this case: there, as here, claims
were removed from state to federal court under the
bankruptcy removal statute, and then transferred to another
federal court, which purported to remand them directly to the
| original state court. 2000 WL 14398, at *1. The Ninth
| Circuit held that it could review the case because “this was
not a proper ‘remand,’” id.; the Third Circuit held the
opposite, see Pet. App. 34a-36a. Again, if this is not a circuit
split, it is hard to know what is.

arene ROSSINI —

In the alternative, petitioners argue that the Ninth
Circuit’s decision in Hudson-Ram “could not create a
‘conflict’ requiring resolution by this Court” because it is
unpublished. Opp. 16. Respondents cite no authority for that

- proposition, which is not surprising because none exists. To
the contrary, this Court frequently reviews unpublished
decisions of the Courts of Appeals, including the Ninth
Circuit. See, e.g., Cooper Indus., Inc. v. Leatherman Tool
Group, Inc., 532 U.S. 424, 430 (2001) (reviewing
Leatherman Tool Group, Inc. v. Cooper Indus., Inc., 1999
WL 1216844 (9th Cir. Dec. 17, 1999) (unpublished)); Clark
Cty. Sch. Dist. v. Breeden, 532 U.S. 268, 269 (2001) (per
curiam) (reviewing Breeden v. Clark Cty. Sch. Dist., 2000
WL 991821 (9th Cir. July 19, 2000) (unpublished)); Behrens
v. Pelletier, 516 U.S. 299, 305 (1996) (reviewing Pelletier v.
Federal Home Loan Bank of San Francisco, No. 94-56507
(9th Cir. Nov. 17, 1994) (unpublished)); Spectrum Sports,
Inc. v. McQuillan, 506 U.S. 447, 452 (1993) (reviewing

McQuillan v. Sorbothane, Inc., 1990 WL 92599 (9th Cir. July
3, 1990) (unpublished)); Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson, 501 U.S. 350, 354 (1991) (reviewing
Catalan v. Paulson Inv. Co., No. 88-4099 (9th Cir. Feb. 5,
1990) (unpublished)); Portland Golf Club v. CIR, 497 U.S.
154, 159 (1990) (reviewing Portland Golf Club v. CIR, 1989
WL 61765 (9th Cir. June 1, 1989) (unpublished)); Torres v.
Oakland Scavenger Co., 487 U.S. 312, 314 (1988) (reviewing
Martinez v. Oakland Scavenger Co., No. 85-2903 (9th Cir.
Dec. 11, 1986) (unpublished)). Indeed, were the law
otherwise, a court of appeals could insulate its decision from
this Court’s review by simply declining to publish it. The
fact that the Ninth Circuit chose not to publish its decision in
Hudson-Ram (presumably because the statutory language on
which that decision is based is so straightforward) provides
no basis for declining to review the conflict between that
decision and the decision below.

Ill. This Case Presents Issues Of Signal Importance.

The welter of circuit splits described above underscores
how desperately this Court’s guidance is needed in this area
of the law, but should not deflect attention from the signal
importance of this particular case in its own right. This case
presents the question whether the American judiciary can
address “mass tort” claims—particularly asbestos claims—in
a fair and rational way. Right now, that is not the case: as the
Third Circuit noted more than six years ago,

The most objectionable aspects of asbestos litigation
can be briefly summarized: dockets in both federal
and state courts continue to grow; long delays are
routine; trials are too long; the same issues are
litigated over and over; transaction costs exceed the
victims’ recovery by nearly two to one; exhaustion of
assets threatens and distorts the process; and future
claimants may lose altogether.

Georgine v. Amchem Prods., Inc., 83 F.3d 610, 619 (3d Cir.
1996), aff'd, 521 U.S. 591 (1997). Since then, the problem

has only worsened, as the onslaught of asbestos claims has
engulfed not only asbestos manufacturers, but also “Main
Street” American businesses, including petitioners.

Respondents try to downplay the importance of this case
by arguing that global Daubert hearings on the scientific
validity of the friction product claims “can be conducted, if
the courts deem them useful, without petitioners’ being
present” in particular bankruptcy proceedings. Opp. 23.
That argument makes no sense. Congress granted the federal
bankruptcy courts “comprehensive jurisdiction” precisely so
that they “might deal efficiently and expeditiously with all
matters connected with the bankruptcy estate.” Celotex
Corp. v. Edwards, 514 U.S. 300, 308 (1995) (internal
quotation omitted). To conduct Daubert hearings with
respect to claims against the debtor, but not against parties
(like petitioners) with enormous contingent indemnification
and/or contribution claims against the debtor, would turn the
law upside down, because it would leave the bankruptcy
estate open to substantial additional liability.

That is precisely why the Sixth Circuit recognized in Dow
Corning that personal injury claims against nondebtors based
on products manufactured by the debtor are necessarily
“related to” the bankruptcy within the meaning of 28 U.S.C.
§ 1334(b). 86 F.3d at 488-94. As that court explained,

The claims currently pending against the nondebtors
give rise to contingent claims against [the debtor]
which unquestionably could ripen into fixed claims. -
The potential for [the debtor]’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 (the debtor], obviously would
affect the size of the estate and the length of time the
bankruptcy proceedings will be pending, as well as

i

10

[the debtor]’s ability to resolve its liabilities and
proceed with reorganization.

Dow Corning, 86 F.3d at 494. The district court below
recognized that its holding denying “related to” jurisdiction
over the claims in this case was probably “impossible to
reconcile” with Dow Corning, which “came to the opposite
conclusion on a remarkably similar set of facts,” but opined
that the Sixth Circuit was “wrong.” Pet. App. 68a.

The Third Circuit acknowledged the conflict between the
district court’s ruling in this case and the Sixth Circuit’s
ruling in Dow Corning, Pet. App. 28a-29a, but held that
“[w]le . .. remain a step away from reaching the merits of
whether the District Court has ‘related to’ jurisdiction”
because appellate jurisdiction was lacking, id. at 30a.
Accordingly, the Third Circuit held only that petitioners
“have not met th[e] rigorous standard for the issuance of the
extraordinary writ of mandamus as to the District Court’s
denial of the motion to transfer,” id, thereby avoiding the
critically important question whether “related to” bankruptcy
jurisdiction extends to claims against nondebtors based on
products manufactured by the debtor.

In avoiding that question, however, the Third Circuit
seriously distorted basic principles of appellate jurisdiction,
and effectively gave district courts a roadmap for evading
appellate review of decisions involving bankruptcy
jurisdiction. This Court’s review is thus warranted not only
to resolve the welter of circuit splits described above, but to
prevent the vital underlying issues of bankruptcy jurisdiction
presented here from being wholly insulated from appellate
review.

CONCLUSION

For the foregoing reasons, this Court should grant the
petition for wnt 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

December 17, 2002

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0647%3A4. Public record. Not legal advice.