Opposition Brief — Breast Implant Tort Represented By O'Quinn v. Dow Corning Corp., 117 S. Ct. 718 (1997) (No. 96-742)

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Nos. 96-330, 96-742 cay ay 1996

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In the Supreme Court of the Unites. State 2

OCTOBER TERM, 1996

OFFICIAL COMMITTEE OF TORT CLAIMANTS, et al.,

Petitioners,

V.

Dow CORNING CORPORATION, et al., Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Sixth Circuit

BRIEF FOR DOW CORNING CORPORATION,

THE DOW CHEMICAL COMPANY AND CORNING

INCORPORATED IN OPPOSITION

HERBERT L. ZAROV BARBARA J. HOUSER

JOHN E. MUENCH Counsel of Record

JAMES C. SCHROEDER GEORGE H. TARPLEY

THERESA A. CANADAY Sheinfeld, Maley & Kay P.C.

Mayer, Brown & Platt 1700 Pacific Avenue, Suite 4400

190 South LaSalle Street Dallas, TX 75201-4618

Chicago, IL 60603 (214) 953-0700

(312) 782-0600

Counsel for Dow Corning

Counsel for The Dow Corporation

Chemical Company

WILLIAM D. EGGERS

Nixon Hargrave Devans

& Doyle LLP

P.O. Box 1051, Clinton Square

Rochester, NY 14603

(716) 263-1000

Counsel for Corning Inc.

a,

i

QUESTIONS PRESENTED

1. Whether this Court should review the Sixth Circuit’s

ruling on the motion to transfer when no cases have yet been

transferred and the district court’s second denial of transfer

is currently the subject of another appeal now pending in the

Sixth Circuit.

2. Whether litigation against non-debtors is "related to"

a bankruptcy only when a judgment against the defendant in

that litigation would result in the automatic creation of

contribution or indemnity liability against the debtor.

3. Whether district courts, in exercising the power to

fix trial venue provided in 28 U.S.C. § 157(b)(5), may

transfer, to the district where a bankruptcy is pending, cases

related to the bankruptcy.

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RULE 29.6 STATEMENT

The Dow Chemical Company and Corning Incorporated

each own 50% of Dow Corning Corporation. The following

is a list of nonwholly owned subsidiaries of Dow Corning

Corporation:

Devonshire Underwriters Limited

Dow Corning de Argentina S.A.I.C.

Dow Corning de Brazil LTDA

Dow Corning de Colombia, S.A.

Dow Corning de Mexico S.A. de C.V.

Dow Corning de Venezuala S.A.

Dow Corning Chile S.A.

Dow Corning Taiwan Inc.

Dow Corning Thailand Ltd.

Dow Corning Construction S.A.

DC STI S.A.

Dow Corning France S.A.

Dow Corning Investment S.A.

Dow Corning Coordination Center S.A.

Dow Corning Limited

Dow Corning S.A.

Dow Corning STI Limited

DC Krafft S.A.

The Dow Chemical Company has no parent company.

The following is a list of nonwholly owned subsidiaries of

The Dow Chemical Company:

Destec Energy, Inc.

Corning Incorporated has no parent company. The

fallowing is a list of nonwholly owned subsidiaries of

Corning Incorporated:

Corning Incorporated Foreign Sales Corporation

Corning France, S.A.

Corning Japan K.K.

iil

Corning Asahi Corporation

Corning Asahi Video Products Company

Iwaki Corning (M) SDN BHD

Dominique Dutscher, S.A.

Siecor Corporation

Siecor Mexico S.A. de C.V.

Siecor S.A. de C.V.

Associated Clinical Laboratories L.P.

CORNING SciCor Limited Partnership

CORNING Bio Inc.

Pathology Building Partnership

CALP S.p.A.

EuroKera S.N.C.

Keraglass

Morgane S.A.

Samcor Glass Limited

Sicover, S.A.

Siecor GmbH

Siecor GmbH & Co. KG

International Hau-Mei Glass Engineering Co., Ltd.

Optical Waveguides Australia Pty. Ltd.

Pittsburgh Corning Europe N.V.

Pittsburgh Corning (U.K.) Ltd.

Shanghai Corning Engineering Corporation Ltd.

Optical Fibres

Samsung-Corning Co., Ltd.

Samsung Corning Company (Malaysia) SDN BHD

N-Cor, Ltd.

ACOR Programs, Inc.

CeraMem Separations, Inc.

Cormetech, Inc.

American Video Glass Company

Watkins Glen International, Inc.

Corporate Venture Partners

Samsung Corning Precision Glass Co., Ltd.

Corsam Glasstec K&D Center

Doan Associates

Eurokera North America, Inc.

Fairfield Venture Partners II, L.P.

Fiber Sensys, Inc.

Molecular Simulations, Inc.

MDL Information Systems, Inc.

Pittsburgh Corning Corporation

U.S. Conec, Ltd.

Steuben Partners, L.P.

Surgical Eye Enterprises L.P.

Surgical Eye Institute L.P.

Clinical Pathology Institute

Nevillewood L.P.

Pharmakon Research & Development

Hazleton Clinical Research Institute Inc.

Bio-Imaging Technologies, Inc.

Quanterra Incorporated

Home Access Health Corp.

Vv

TABLE OF CONTENTS

Page

TUES LTE PROMI: ooo Fo a ht a ee. i

MAINES APO CEAIEMEEL. 66s 5 oo oo ii

RaW AER ORR OE 6 Soke he Se eas 1

TURN 552 5 gees Wh ane oe 1

RRM 8s CN ak ea eee 1

Ph,’ TE FE Ss ope i ee at l

B. Dow Corning’s Shared Insurance With Dow

Keen Alt Comien 3. eo epee ae 3

C. The Proceedings Below.....2......... 4

D. Subsequent Proceedings. ............. 6

REASONS FOR DENYING THE PETITIONS .... 7

I. RECENT DEVELOPMENTS IN THIS CASE

MAKE REVIEW COMPLETELY UNNECES-

WOE es SRS a RAR Ea ee 7

Il. THE SIXTH CIRCUIT’S RULING ON "RELATED

TO" JURISDICTION IS CORRECT AND DOES

NOT CONFLICT WITH DECISIONS OF OTHER

CUURTS OF APPEALS. oak ce IO 9

vi

TABLE OF CONTENTS—Continued

Ill. THE SIXTH CIRCUIT’S RULING THAT THERE

IS A POWER TO TRANSFER UNDER § 157(b)(5)

IS CORRECT AND IS CONSISTENT WITH DECI-

SIONS OF OTHER COURTS OF APPEALS. .. 16

CUP RARE 606 Eb a. 0 ONS ob ee eS 19

Vii

TABLE OF AUTHORITIES

Cases: Page

A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th

Cir.), cert. denied, 479 U.S. 876 (1986) ..... ae A

16, 17, 18

American Constr. Co. v. Jacksonville, T. & K.W.

Mp RO As BEE AUP rics ve... 8

Artiglio v. Corning Inc. , 56 Cal. Rptr. 2d 877 (App.

Ng aes a eg ee ee a 2

Bendectin Litig., In re, 857 F.2d 290 (6th Cir.

1988), cert. denied, 488 U.S. 1006 i.) Seem =

Brotherhood of Locomotive Firemen v. Bangor &

Aroostook R.R., 389 U.S. 327 SRN a hoes ce 9

Celotex Corp. v. Edwards, 115 S.Ct. 1493 hs Re 2 8

8 a

Cuyahoga Equip. Corp., In re, 980 F.2d 110 (2d

RPE Oe BW k a keg bce iw kk 12

Fedpak Systems, Inc., In re, 80 F.3d 207 (7th Cir

cg, BEL CORES ae ESET BEE at Ra 9

G.S.F. Corp., In re, 938 F.2d 1467 (1st Cir.

cigs ORES BPD a? Bn SSB in me a 10

Guild & Gallery Plus, Inc., In re, 72 F.3d 1171 (3d

UMN ee a es pee eb Gare ek ec 11

Vili

TABLE OF AUTHORITIES—Continued

Page

Home Ins. Co. v. Cooper & Cooper, Lid. , 889 F.2d

ORTH Te eae ck eR Sere et 10

Jenkins v. Raymark Industries, Inc., 782 F.2d 468

CART CEE Se ers tah kh eee ees 13

Marcus Hook Development Park, Inc., In re, 943

Fan ae COR Na OPER cs BE ee 11

Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir.

SE 8 8 ee Oo 4 eee ee 10

Pan Am Corp., In re, 16 F.3d 513 (2d Cir. 1994)... 17

Pan Am Corp., In re, 950 F.2d 839 (2d Cir. 1991) .. 18

Patterson v. Shumate, 504 U.S. 753 (1992) ...... 18

Silicone Gel Breast Implants Prods. Liab. Litig., In

re (MDL 926), 793 F. Supp. 1098 (J.P.M.L.

ee saa ca tee be oea hs Dae eC eau a; 42

Silicone Gel Breast Implants Prods. Liab. Litig. , 887

F. Sepp. 1455 ON... AM. IS ee ees 14

United States Lines, In re, 128 B.R. 339 (S.D.N.Y.

SO aw ko a bak ee ee ee ee 17

Virginia Military Institute v. United States, 508 U.S.

CREE bc a se a eee se ee eae 8

ix

TABLE OF AUTHORITIES—Continued

Page

Wolverine Radio Co., In re, 930 F.2d 1132 (1991),

cert. dismissed, 503 U.S. 978 (1992) ........ 11

Wood, In re, 825 F.2d 90 (5th Cir. 1987)........ 10

Zerand-Bernal Group v. Cox, 23 F.3d 159 (7th Cir.

MO a6 Wise g Koa ana RR Ct A ark Sia 12

Statutes: Page

PAs © PPPOE kkk 5. a leree ass 1

28 U.S.C. § 157(bM(S5) ....... 4, 6, 7, 16, 17, 18, 19

MO I Goes ee eta ]

es EA ee we a ees iS. gk ek 14

MEA hes S BAOD. a oe st ke Gh, Do Fy Ake be A 10

A Mace EARP 6k Nhe ck Ce ee mk 16

Oe ei WOOD ee Cee x ek ke eek Os 4

Miscellaneous: Page

J. Sanchez-Guerrero, et al., Silicone Breast Implants

nad the Risk of Connective-Tissue Diseases and

Symptoms, 332 NEW ENG. J. MED. 1666

CME a iy Ax: te Beige Dake we Eat Sie ar ooo ars he: 2

x

TABLE OF AUTHORITIES—Continued

Page

Marcia Angeli, Science on Trial: The Clash of

Medical Evidence and the Law in the Breast

SE CATT ak ee oe ORE ew 2

Robert L. Stern, Eugene Gressman, Stephen M.

Shapiro & Kenneth S. Geller, Supreme Court

POC CH AE a we ee wR Os 16

BRIEF FOR DOW CORNING CORPORATION,

THE DOW CHEMICAL COMPANY, AND

CORNING INCORPORATED IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-28a')

is reported at 86 F.3d 482. The opinions of the district court

(Pet. App. 29a-56a and 57a-64a) are reported at 187 B.R.

919 and 187 B.R. 934 respectively.

JURISDICTION

The judgment of the court of appeals was entered on

April 9, 1996. The petitions for rehearing were denied on

June 3, 1996. Pet. App. 65a. The petitions for writ of

certiorari were filed on August 28, 1996. The jurisdiction of

this Court is invoked under 28 U.S.C. § 1254(1).

STATEMENT

A. Background.

Dow Corning Corporation ("Dow Corning" or "the

debtor") is a leading manufacturer of silicone industrial

products. Along with its subsidiaries, Dow Corning sells

more than 8,700 products, nearly all of which are made from

silicones or otherwise incorporate silicone technologies.

C.A. App. 3033. In 1991, the peak year for sales of Dow

Corning’s breast implant products, silicone gel breast

implants constituted less than 1% of Dow Corning’s total

sales. Ibid.

Studies by disinterested scientists have consistently found

no connection between silicones and disease. See Marcia

' References in this brief to "Pet." and "Pet. App.” are to the

Petition and attached Appendices filed by the Official Committee

of Tort Claimants in No. 96-330. The petition filed in No. 96-742

is cited as "O’Quinn Pet."

piteaasecarpmartieas

2

Angell, Science on Trial: The Clash of Medical Evidence

and the Law in the Breast Implant Case 195-197 (1996)

("several good epidemiologic studies have failed to show an

association between implants and a host of connective tissue

diseases, symptoms, and abnormal lab tests. * * * The best

evidence now is a relative risk of 1.0, indicating no contribu-

tion of implants to disease"). Nonetheless, tens of thou-

sands of recipients of Dow Corning’s breast implants have

sued in recent years, claiming to have contracted various

diseases as a result of the silicones in their implants. Pet.

App. 3a.

In thousands of these cases, the plaintiffs have sued not

only Dow Corning, but also its corporate parents, The Dow

Chemical Company ("Dow Chemical") and Corning Incorpo-

rated ("Corning") (collectively the "Shareholders"), even

though neither Dow Chemical nor Corning designed,

manufactured, tested, or sold breast implants. Jd. at 4a-5a.

The Shareholders, in turn, have each asserted cross-claims

against Dow Corning for indemnity and contribution. Jd. at

13a; C.A. App. 2028, 2135-2140. All of the claims against

2 Dr. Angell is executive editor of The New England Journal

of Medicine. See also, e.g., J. Sanchez-Guerrero, et al., Silicone

Breast Implants and the Risk of Connective-Tissue Diseases and

Symptoms, 332 NEW ENG. J. MED. 1666, 1670 (1995) (Harvard

Medical School study concluding that "we found no evidence of an

association between silicone breast implants and either connective-

tissue diseases defined according to a variety of standardized

criteria or signs or symptoms of connective-tissue disease").

Petitioners’ allegations about the testing and safety of silicones

(Pet. 4-5) are wildly inaccurate and inconsistent with all of the

responsible scientific studies performed in recent years. See

generally Artiglio v. Corning Inc., 56 Cal. Rptr. 2d 877 (App.

~ 1996) (describing tests on silicone compounds and holding that

there is no basis to impose liability on Dow Chemical or Corning).

3

the Shareholders are brought by plaintiffs who are also

asserting the same claims against the debtor, seeking recov-

ery for the same alleged injuries resulting from the same

products — the debtor’s implants. C.A. App. 2027-2133,

3035-3036, 3049-3050. Thus, all of the cases against the

debtor and its Shareholders raise the same threshold issue —

do Dow Corning’s implants cause disease, as the tort

claimants assert? > C.A. App. 107, 2028, 2032-2133.

Throughout this litigation, Dow Corning and its Shareholders

have suggested that the federal courts keep open the option

of eventually holding a single trial to resolve this common,

potentially dispositive, question. E.g.,C.A. App. 198-206,

1181-1193, 1203-1207, 1215-1216.

B. Dow Corning’s Shared Insurance With Dow

Chemical And Corning.

For many years, Dow Corning shared insurance cover-

age with Dow Chemical and Corning under a substantial

number of liability insurance policies. As the court of

appeais noted, Dow Corning’s interest in these policies and

their proceeds constitutes “one of the largest assets of [the]

bankruptcy estate"; the policies have total aggregate coverage

limits of more than $1 billion. Pet. App. 21a.

The court of appeals held — and petitioners do not

contest in this Court — that if the claims against Dow

Chemical and Corning proceed "separate[ly]," the debtor’s

"insurance coverage may be eviscerated when the proceeds

are eventually distributed." Pet. App. 23a. This could occur

because settlements or judgments paid by the Shareholders,

or defense expenses incurred by the Shareholders, are reim-

> Some cases include claims that implants have ruptured or

leaked, but those cases also allege uniformly that the implants

cause disease.

4

bursed by joint insurance proceeds that would otherwise be

part of the debtor’s estate. Jd. at 22a-23a.

C. The Proceedings Below.

Shortly after its Chapter 11 filing, Dow Corning moved

under 28 U.S.C. § 157(b)(5) to transfer to the Eastern

District of Michigan, where its bankruptcy case is pending,

all pending breast implant claims involving Dow Corning

implants — that is, all of the claims against Dow Corning

and its Shareholders. Dow Chemical and Corning joined in

that motion. Pet. App. 4a-Sa. The motion to transfer

covered claims that were in federal court under diversity

jurisdiction, as well as claims that had been, or were in the

process of being, removed from state courts pursuant to the

bankruptcy removal statute, 28 U.S.C. § 1452(a). Ibid.

In September 1995, the district court granted the transfer

motion as to the claims against the debtor, but refused to

transfer the claims against the Shareholders, ruling that the

latter claims were not "related to" the debtor’s bankruptcy

case. Pet. App. 29a; see 28 U.S.C. § 1334(b) ("the district

courts shall have original but not exclusive jurisdiction of all

civil proceedings * * * related to cases under title 11"). In

so ruling, the district court expressly noted that

one or more causation trials held during the estima-

tion process for the purpose of assuring a more

accurate estimation can best be accomplished if all

cases pending against the Debtor are before one

court, the district court where the bankruptcy is

pending.

Pet. App. 47a. The court indicated that it would remain

open to the possibility of having a common issues trial at

some point in the future, id. at 48a, 53a-54a, and in the

meantime, transferred the claims against the debtor to Judge

Pointer in the Northern District of Alabama for consolidated

5

pretrial proceedings, subject to the Bankruptcy Code’s

automatic stay. Jd. at 47a. Pursuant to an order of the

Multidistrict Litigation Panel, Judge Pointer has been

overseeing all of the federal breast implant cases since 1992,

including claims against the debtor and its Shareholders. Jn

re Silicone Gel Breast Implants Prods. Liab. Litig. (MDL

926), 793 F. Supp. 1098 (J.P.M.L. 1992).

The Sixth Circuit reversed the district court’s refusal to

transfer the claims against the Shareholders. First, the court

held that contribution or indemnity claims that may be

brought against the debtor were "contingent claims against

Dow Corning" that "obviously would affect the size of the

estate and the length of time the bankruptcy proceedings will

be pending, as well as Dow Corning’s ability to resolve its

liabilities and proceed with reorganization." Pet. App. 20a.

Second, the court of appeals gave an "additional" reason

for finding "related to" jurisdiction under § 1334(b) with

respect to the claims against the Shareholders. Pet. App.

21a. The court held that there was a significant risk that the

Shareholders would be "able to assert mature, liquidated

claims against the [joint] insurance proceeds if litigation

pending against them is permitted to go forward." /d. at

22a, 23a. Asa result, the court held that the joint insurance

proceeds available to the debtor may be substantially depleted

when those proceeds are ultimately distributed. Jd. at 21a,

23a. Indeed, the court of appeals noted that

certain of the policies cover defense expenses, and

those costs alone may significantly reduce the pool

of coverage available to Dow Corning if the claims

pending against Dow Chemical and Corning Incor-

porated are allowed to proceed separately.

Id. at 23a.

6

The Sixth Circuit also concluded that district courts have

the power, under 28 U.S.C. § 157(b)(5), to fix trial venue

for claims "related to" the bankruptcy in the district where

the bankruptcy is pending. /d. at 23a-26a. In so holding,

the court followed the Fourth Circuit’s decision in A.H.

Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir.), cert.

denied, 479 U.S. 876 (1986), another mass tort case. In

Robins, the Fourth Circuit held that claims related to a

bankruptcy case could be centralized in one forum under

§ 157(b)(5); this provided an opportunity for adoption of a

"mechanism for dispute resolution" that would obviate the

need for "innumerable trials, stretching over an interminable

time" and would avoid the "stupendous costs that would be

involved if all the claims here had to be tried." 788 F.2d at

1013 (quoted at Pet. App. 25a-26a).

D. Subsequent Proceedings.

On remand from the Sixth Circuit’s decision, the district

court, in an order entered on July 30, 1996, again declined

to transfer the claims against the Shareholders, this time on

the ground that it would abstain from hearing those claims.

Dow Corning and its Shareholders have appealed from this

order. That appeal is currently pending in the Sixth Circuit.

In re Dow Corning Corp., Nos. 96-2005, 96-2008, 96-2009,

96-2010, 96-2011, 96-2012, 96-2013, 96-2139 (consolidated)

(6th Cir.).

In the MDL case, Judge Pointer has continued to preside

over a host of ongoing pretrial matters. In addition to

coordinating discovery efforts and other pretrial activity,

Judge Pointer has recently appointed a panel of neutral

experts, pursuant to Fed. R. Evid. 706, to evaluate and

critique the pertinent scientific literature and studies. Jn re

Silicone Gel Breast Implant Prods. Liab. Litig. (MDL 926),

Order Nos. 31 (May 30, 1996), 31A (June 10, 1996), and

31B (June 13, 1996). (Dow Corning had previously moved

7

in the bankruptcy court for appointment of a Rule 706 panel.

The bankruptcy judge has not yet ruled on Dow Corning’s

request. )

REASONS FOR DENYING THE PETITIONS

The questions presented in the petitions clearly do not

warrant this Court’s review. The most obvious reason is

that, as a result of the district court’s July 1996 order

denying respondents’ motion to transfer, petitioners have not

been affected in any way by the Sixth Circuit’s April 1996

decision that the district court had jurisdiction to entertain

respondents’ motion to transfer the claims against the

Shareholders to the Eastern District of Michigan for trial.

Unless respondents prevail in their pending Sixth Circuit

appeal from the district court’s most recent order, the issues

raised in the petitions will be moot. And if respondents do

prevail in that appeal, the questions presented here may be

raised in a subsequent petition from the upcoming Sixth

Circuit decision.

In any event, there is no circuit conflict on the issue

whether potential contribution or indemnity claims, arising

out of the debtor’s acts, establish "related to" jurisdiction

under 28 U.S.C. § 1334(b). The circuits agree that there is

jurisdiction under § 1334(b) as long as it is possible that a

case may affect the bankruptcy. Nor are the circuits divided

on whether a district court has the authority, in setting trial

venue under 28 U.S.C. § 157(b)(5), to transfer cases related

to the bankruptcy to the district where the bankruptcy is

pending for trial. Indeed, in accordance with the plain

language of the statute, the circuits have uniformly upheld

the power to order such transfers in appropriate cases. See,

e.g., Robins, 788 F.2d at 1010.

8

I. RECENT DEVELOPMENTS IN THIS CASE MAKE

REVIEW COMPLETELY UNNECESSARY.

The principal point in the petitions — that this Court’s

review is essential so that the claims against the Shareholders

are not transferred to the Eastern District of Michigan for

trial — is simply inexplicable. As noted above, the district

court, on July 30, 1996, again refused to transfer the claims

against the Shareholders, on grounds different from those

articulated before. The Sixth Circuit is currently reviewing

that decision. Under these circumstances, there obviously is

no need to review the earlier Sixth Circuit decision that the

district court had jurisdiction to entertain the transfer motion.

If the Sixth Circuit affirms the most recent decision denying

transfer (or dismisses the appeal for lack of jurisdiction, as

petitioners have requested), then the Sixth Circuit’s earlier

decision on transfer will be of academic interest only. That

decision would have no impact on this case; the bottom line

would be that no transfers will occur regardless of whether

this Court affirmed or reversed the Sixth Circuit decision that

is the subject of the current petitions for certiorari.

Alternatively, if the current Sixth Circuit appeal results

in reversal of the district court’s refusal to transfer, petition-

ers may then seek review of that decision, at which time they

could raise the very issues they are raising now. Virginia

Military Institute v. United States, 508 U.S. 946 (1993)

(Scalia, J., respecting the denial of certiorari). If that

occurs, the Court, in deciding whether to review the transfer

issue at that time, would have the benefit of the Sixth

Circuit’s most recent views on the best way for the judiciary

to manage this massive litigation.

"[M]any orders made in the progress of a suit become

quite unimportant by reason of the final result, or of inter-

vening matters." American Constr. Co. v. Jacksonville, T.

& K. W. Ry., 148 U.S. 372, 384 (1893). This is just such

ee

9

a case. This Court has long followed the general rule that it

will not grant certiorari when the courts below have not yet

reached a final decision on a particular issue and later events

in the case may make the issues raised in the petition moot

or insignificant. Jbid.; see also, e.g., Brotherhood of

Locomotive Firemen v. Bangor & Aroostook R.R., 389 U.S.

327, 328 (1967) ("because the Court of Appeals remanded

the case, it is not yet ripe for review by this Court"). The

reasons for denying review are even stronger here. Because

of intervening events in the district court, the petitioners are

not harmed in any way by the decision that they challenge in

the petitions. On the contrary, the current posture is that

transfer has been denied, exactly the result that petitioners

have requested. Under these circumstances, it would be

imprudent for the Court to grant review at this juncture.

Il. THE SIXTH CIRCUIT’S RULING ON "RELATED

TO" JURISDICTION IS CORRECT AND DOES

NOT CONFLICT WITH DECISIONS OF OTHER

COURTS OF APPEALS.

The petitions for certiorari rest largely on the premise

that the Sixth Circuit’s decision on "related to" jurisdiction

conflicts with rulings in other circuits. Pet. 12-18; O’Quinn

Pet. 8-11. In fact, however, the purported conflict is illusory

with respect to the issues involved in this case; the Sixth

Circuit’s ruling is fully consistent with decisions of other

courts of appeals. While the circuits may be "split on how

best to interpret this statutory language" in other contexts, Jn

re Fedpak Systems, Inc., 80 F.3d 207, 213 (7th Cir. 1996),

they are not divided in any way that is relevant to this case.

1. The Sixth Circuit held that the possibility that the

debtor would be held liable to non-debtors for contribution

or indemnity "suffices to establish a conceivable impact on

the estate in bankruptcy." Pet. App. 20a. Other courts of

appeals have reached the same conclusion. See In re G.S.F.

10

Corp., 938 F.2d 1467, 1476 (1st Cir. 1991) (a "potential

indemnity claim" is related to the bankruptcy because it "puts

the * * * estate at risk of liability for what could be a

substantial damage award"); Home Ins. Co. v. Cooper &

Cooper, Lid. , 889 F.2d 746, 750 (7th Cir. 1989) ("Potential

liability" of non-debtors, who could assert indemnity claim

against the debtor, would be "‘related’ to the bankruptcy" if

the non-debtors filed their "contingent claims" against the

estate by the bar date); see also In re Wood, 825 F.2d 90, 94

(Sth Cir. 1987) (finding "related to" jurisdiction over suit

against non-debtor where, depending on the outcome of the

litigation, the debtor "may bear" all, part, or none of the

judgment).

It is true, of course, that in its 1984 decision in Pacor,

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

Circuit stated that an action between non-debtors that could

result in a contribution action against the debtor is related to

the bankruptcy only if a judgment against the defendant

would result in the "automatic creation of liability" against

the debtor. Jd. at 995. As the Sixth Circuit observed,

however, the facts in this case are dramatically different;

"there is a qualitative difference" between the "single

possible claim for indemnification" at issue in Pacor and the

"threat" to a reorganization plan that is “posed by the

thousands of potential indemnification claims at issue here."

Pet. App. 20a-21a.

More fundamentally, as the Sixth Circuit also noted

(Pet. App. 15a), the Third Circuit no longer follows Pacor’s

requirement of "automatic" liability. Instead, the Third

Circuit now adheres to the consensus view that "a civil

proceeding is related to bankruptcy” if "the outcome of that

proceeding could conceivably have any effect on the estate.”

Pacor, 743 F.2d at 994 (emphasis omitted). In fact, the

author of Pacor (Judge Garth) has joined in an opinion

explaining that

11

[a] key word in this test is "conceivable." Cer-

tainty, or even likelihood, is not a requirement.

Bankruptcy jurisdiction will exist so long as it is

possible that a proceeding may impact on "the

debtor’s rights, liabilities, options, or freedom of

action" or the "handling and administration of the

bankrupt estate."

In re Marcus Hook Development Park, Inc., 943 F.2d 261,

264 (3d Cir. 1991) (emphasis added) (citing, inter alia, the

Sixth Circuit’s decision in Jn re Wolverine Radio Co., 930

F.2d 1132, 1143 (1991), cert. dismissed, 503 U.S. 978

(1992)).* The Third Circuit’s most recent discussion of

"related to" jurisdiction reaffirms the Marcus Hook standard.

In re Guild & Gallery Plus, Inc., 72 F.3d 1171, 1181 (3d

Cir. 1996).

All of this is consistent with a long line of cases holding

that actions involving non-debtors that may affect a bankrupt-

cy are within federal jurisdiction under § 1334(b). This

Court’s decision in Celotex Corp. v. Edwards, 115 S. Ct.

1493 (1995), is but one example. In Celotex, the Court held

that "related to" jurisdiction was established where, if suits

against the debtor’s sureties proceeded, the sureties (a)

"*would seek to lift the Section 105 stay to reach Debtor’s

collateral,’” (b) triggering actions by debtor to preserve its

rights, (c) both of which "‘could completely destroy any

chance of resolving the prolonged insurance coverage

disputes,’" and (d) settlement of the insurance disputes "‘may

well be the linchpin of Debtor’s formulation of a feasible

* — The Wolverine Radio court held that there was "related to”

jurisdiction even though the debtor "would not be affected until

and unless” the non-debtor sought indemnification. 930 F.2d at

1143. The court recognized that the non-debtors’ dispute “may

ultimately have no effect on the debtor." Jbid.

12

plan.’" Jd. at 1500 (emphasis added). See also, e.g., cases

cited at Pet. App. 15a-17a, 22a-23a (all holding that "related

to" jurisdiction exists when third-party actions might affect

the bankruptcy estate); Zerand-Bernal Group v. Cox, 23 F.3d

159, 162 (7th Cir. 1994) (Posner, C.J.) (one purpose of

§ 1334(b) is to "force into the bankruptcy court suits to

which the debtor need not be a party but which may affect

the amount of property in the bankrupt estate") (emphasis

added); In re Cuyahoga Equip. Corp., 980 F.2d 110, 114

(2d Cir. 1992) ("The test for determining whether litigation

has a significant connection with a pending bankruptcy

proceeding is whether its outcome might have any ‘conceiv-

able effect’ on the bankrupt estate") (emphasis added).

In short, there is no circuit split on whether potential

contribution or indemnity claims against the debtor, based on

the debtor’s alleged conduct, are sufficient to provide a basis

for "related to" jurisdiction. To the contrary, in accordance

with this Court’s decision in Celotex, the courts of appeals

recognize uniformly that such claims are related to the

bankruptcy because they may affect the size of the estate, the

length of time bankruptcy proceedings are pending, and the

debtor’s ability to finally resolve its liabilities in the reorgani-

zation process. |

2. It is simply not true that the Sixth Circuit’s decision

is "a recipe for total paralysis" and that the cases against the

Shareholders are "effectively frozen pending resolution of the

* * * bankruptcy." Pet. 9, 11. Rather, in recognition of the

significant impact that those claims — all based on allegedly

defective Dow Corning products — could have on Dow

Corning’s reorganization efforts, Dow Corning is simply

attempting to keep the claims against it and its Shareholders

together in one federal court so that this massive litigation

can be coordinated in a sensible and economical fashion.

That is the only way to maximize the assets in Dow

Corning’s estate and optimize the chances for a successful

13

reorganization, while at the same time resolving Dow

Corning’s contingent breast implant liabilities comprehensive-

ly and equitably.

This would not, as the petitioners assert, bring the cases

to a grinding halt. On the contrary, discovery and other pre-

trial activities can continue (and have continued) in a

coordinated, coherent fashion. To be sure, keeping all of the

cases against the debtor and its Shareholders together will

prevent the threat of scores of simultaneous trials.’ But this

is likely to facilitate resolution of the cases, not impede it.

A single judge in control of all of the cases could ensure an

orderly scheduling of trials so that the burden of defending

them — and-the drain on the joint insurance — does not

become overwhelming.

Even more importantly, that judge would also be in the

best position to devise means of resolving, in a single

proceeding, issues common to all of the cases, such as

whether the debtor’s implants cause disease. E.g., In re

Bendectin Litig. , 857 F.2d 290, 294, 308-317 (6th Cir. 1988)

(ruling that the district court properly held a causation-only

trial to determine whether Bendectin causes birth defects),

cert. denied, 488 U.S. 1006 (1989); Jenkins v. Raymark

Industries, Inc. , 782 F.2d 468, 473 (Sth Cir. 1986) (approv-

ing the use of a consolidated trial to litigate whether the

defendants’ products were defective and the state of the art

defense in thousands of asbestos cases). Indeed, the court of

appeals stressed that its "primary goal” in this litigation is

"to establish a mechanism for resolving the claims at issue in

5 “[MJany” cases are not "verging on trial." Pet. 11. In

connection with the district court’s most recent denial of transfer

— now on appeal in the Sixth Circuit — petitioners identified only

14 cases with actual trial dates in the near future, none of which

involves the Shareholders.

14

the most fair and equitable manner possible." Pet. App. 7a.

Along these lines, Judge Pointer in recent months has

appointed a Rule 706 panel of independent experts to assist

in the resolution of scientific issues in the MDL proceeding,

and the bankruptcy judge is currently considering Dow

Corning’s motion for appointment of a Rule 706 panel to be

used as part of the bankruptcy process. There might also be

a common issxes trial in the Eastern District of Michigan to

resolve the question whether Dow Corning’s implants cause

disease — an issue that the debtor and the Shareholders face

in all of the cases against them. Other alternatives are

available as well.°

Efforts like these not only go a long way to avoiding the

dissipation of the joint insurance proceeds that might other-

wise result from massive, simultaneous, and uncoordinated

litigation against the debtor’s Shareholders, but they preserve

the opportunity to resolve all of the claims involving the

debtor’s products expeditiously, on a global basis. If, on the

®° For example, Judge Pointer has already granted final

summary judgment in favor of Corning, Jn re Silicone Gel Breast

Implants Prods. Liab. Litig., 887 F. Supp. 1455 (N.D. Ala. 1995),

and has narrowed (and pursuant to some pending motions, could

further narrow) the remaining issues with respect to Dow Chemi-

cal. In addition, Judge Pointer currently has before him Dow

Chemical’s motion to certify for immediate appeal, under 28

U.S.C. § 1292(b), the court’s ruling on Dow Chemical’s motion

for summary judgment. A ruling by the Eleventh Circuit in Dow

Chemical’s favor on the merits, in whole or in part, would, of

course, resolve or, at a minimum, further streamline the litigation

against Dow Chemical. As these examples illustrate, the possibili-

ty of a global resolution of the claims against the Shareholders —

which otherwise threaten to drain the debtor’s available insurance

— and of avoiding the need for repetitive, duplicative briefing

and/or trials in a series of courts is obviously enhanced if all of the

cases are kept together in federal court.

15

other hand, the claims against the Shareholders are not trans-

ferred, thousands of cases against them will be tried separate-

ly, in virtually every jurisdiction in the country — an

endeavor that will take years, cost enormous sums of money,

and occupy vast blocks of judicial time. This would not only

have a detrimental effect on the overwhelming majority of

individual tort claimants, waiting for trials at the end of very

long queues, but it could significantly delay the debtor’s

reorganization efforts (as well as deplete the size of the estate

due to the erosion of the joint insurance).

3. The result here does not threaten the usurpation of

"state judicial authority," as petitioners warn. Pet. 10. For

one thing, thousands of the claims against the Shareholders

will never be tried in state court even if this Court were to

reverse the Sixth Circuit. There is federal jurisdiction over

those claims for reasons unrelated to the bankruptcy; they are

in federal court under diversity or federal question jurisdic-

tion. C.A. App. 2032-2047, 2077-2083, 2105-2112. Well

before Dow Corning’s bankruptcy, these claims against the

Shareholders were consolidated in front of Judge Pointer. Jn

re Silicone Gel Breast Implants Prods. Liab. Litig., 793 F.

Supp. 1098 (J.P.M.L. 1992).

As for the remaining claims, to the extent that § 1334(b)

means that some state court suits are subject to the bankrupt-

cy court’s "related to" jurisdiction, that is a function of the

"breadth," Celotex, 115 S. Ct. at 1499, of the language that

Congress used in drafting the statute. Courts have held

consistently since the statute was passed that state court

litigation can be "related to" a bankruptcy proceeding within

the meaning of § 1334(b). Thus, it has long been accepted

that state court actions that may affect the size of the debtor’s

estate — in particular, suits that may affect the debtor’s

insurance (see Pet. App. 22a-23a) — are within the district

court’s "related to" jurisdiction.

ee

16

In most cases, however, the practica! effect of § 1334(b)

on state court litigation is minimal; in a typical bankruptcy,

many state cases are never transferred to federal court

because the district court abstains. 28 U.S.C. § 1334(c)(1),

(2). But "related to" jurisdiction, in conjunction with the

venue-fixing power of 28 U.S.C. § 157(b)(5), also provides

a means for the courts, in the interest of judicial efficiency,

to attempt to resolve thousands of claims affecting the

debtor’s estate in one forum. Pet. App. 24a-26a; Robins,

788 F.2d at 1010-1014. Nothing in the statutory language

requires that federal courts be deprived of that flexibility

when needed in unusual circumstances.

4. Petitioners’ contention that contribution or indemnity

claims against the debtor are "farfetched" (Pet. 18) does not

provide a basis for this Court’s review either. As a factual

matter, petitioners are wrong; the Shareholders have already

asserted cross-claims for indemnity and contribution against

Dow Corning. See p. 2, supra. Moreover, because the

factual predicates for those claims and the context in which

they will be litigated are not yet known, the Sixth Circuit

correctly concluded that "the possibility of contribution or

indemnification liability in this case is far from attenuated."

Pet. App. 21a. This Court does not typically review factual

determinations like that. Robert L. Stern, Eugene Gressman,

Stephen M. Shapiro, & Kenneth S. Geller, Supreme Court

Practice 189 (7th ed. 1993).

Il. THE SIXTH CIRCUIT’S RULING THAT THERE

IS A POWER TO TRANSFER UNDER § 157(b)(5)

IS CORRECT AND IS CONSISTENT WITH DECI-

SIONS OF OTHER COURTS OF APPEALS.

The second question presented by petitioners concerns

a district court’s ability to transfer claims that affect a bank-

ruptcy case: petitioners contend that district courts have no

power to transfer any claims involving non-debtors under 28

17

U.S.C. § 157(b)(5). Pet. 19-23; O’Quinn Pet. 17-20. In

other words, petitioners’ theory is that even if it is indisput-

able that claims against third parties will have an effect on a

bankruptcy case — say, by dissipating insurance proceeds

that would otherwise be available to the estate — a district

court would have no authority to transfer such cases to the

district in which the bankruptcy was pending. Rather, a

district court would have the power to transfer only claims

asserted directly against the debtor.

1. No court has ever adopted such an extreme limita-

tion on the power to transfer.’ And the only other circuit to

address the question whether personal injury claims "related

to" a bankruptcy may be transferred under § 157(b)(5) when

those claims are not against the debtor agrees with the Sixth

Circuit. In Robins, the Fourth Circuit answered that question

in the affirmative, reaching the same conclusion as that

reached by the Sixth Circuit here. See 788 F.2d at 1010

(affirming an order transferring claims against non-debtors to

the district in which the bankruptcy was pending; "[u]nquest-

ionably" the district court "had the power under [§ 157(b)(5)]

to fix the trial venue in its district for all the Dalkon Shield

7 Petitioners cite In re United States Lines, 128 B.R. 339

(S.D.N.Y. 1991), for the proposition that § 157(b)(5) is only "a

venue-setting provision for personal injury tort cases against the

debtor" (Pet. 19-20), but that case says nothing of the sort. It

holds only that claims pending in state court could not be trans-

ferred to federal court under § 157(b)(5) — a ruling that is no

ionger good law, having been rejected by the Second Circuit. See

In re Pan Am. Corp., 16 F.3d 513, 516 (2d Cir. 1994) ("the plain

language” of § 157(b)(5) “authorize[s]" the transfer of cases from

state court to federal court).

18

cases").* Thus, there is no disagreement among the courts

of appeals on this question of statutory construction.

2. Petitioners’ argument that § 157(b)(5) is limited to

claims "against the debtor" (Pet. 19) is also contrary to the

plain language of the statute. The phrases "against the

debtor" and "against the estate" are nowhere to be found in

§ 157(b)(5); rather, the statute grants district courts the

authority to set the venue for trials of "personal injury tort

and wrongful death claims" generally. Nor is there anything

to the argument that because Congress referred elsewhere in

§ 157 to personal injury claims "against the estate," it must

have intended to apply this same limiting qualification to the

district court’s powers under § 157(b)(5). See Pet. 20

(quoting § 157(b)(2)(B)). Quite the contrary — Congress’s

decision to qualify personal injury claims in one section but

not in another demonstrates clearly that "Congress, when it

desired to do so, knew how to restrict the scope of" personal

injury claims. Patterson v. Shumate, 504 U.S. 753, 758

(1992) (emphasis added). Congress’s use of a "broader

phrase" in § 157(b)(5) than in § 157(b)(2)(B) "strongly

suggests that it did not intend to restrict the provision in the

manner that petitioner[s] contend[ ]."_ /bid.

3. The purpose of § 157(b)(5) is to centralize claims

related to the bankruptcy in one forum in order to facilitate

reorganization. Pet. App. 24a; In re Pan Am. Corp., 950

F.2d 839, 845 (2d Cir. 1991). As the court of appeals

* Petitioners’ contention that the Robins court did not order the

transfer of claims against non-debtors (Pet. 21) is meritless. The

Fourth Circuit unequivocally upheld the district court’s authority

to order the transfer to the Eastern District of Virginia of "all

actions related to the Robins’ Chapter 11 case now pending in any

federal district court or subsequently removed," including claims

against non-debtors. 788 F.2d at 998 (emphasis added).

19

recognized, the statute gives district courts the ability, in

appropriate cases, to transfer all personal injury claims

"related to" a bankruptcy because without this power, courts

could not eliminate fragmented, duplicative, and wasteful

litigation of "related to" claims, which would inevitably harm

the reorganization process.’ Pet. App. 24a-26a. Indeed, if

the transfer of "related to" claims were not permitted, there

would be little point in having courts decide whether a suit

involving non-debtors was "related to" a bankruptcy case;

that exercise only makes sense if a court can do something

if the cases are related, like ordering a transfer.

* * *

The Sixth Circuit’s refusal to deprive district courts of

the flexibility to consolidate all related claims in the district

in which the bankruptcy is pending is fully supported by

precedent, logic, and the language of § 157(b)(5). There is

no reason for this Court to grant review on the second

question presented in the petitions.

* Centralization is particularly important with regard to the

Shareholders because, wholly apart from the effect of separate

litigation on the joint insurance, the claims against the debtor and

the claims against the Shareholders are the very same claims: they

are brought by the same plaintiffs, involve the same Dow Corning

products, and have the same factual issues. There is no reason to

require a plaintiff seeking compensation for one injury to litigate

the same issues on two fronts — as part of the bankruptcy process

and in state court.

Respectfully submitted.

HERBERT L. ZAROV

JOHN E. MUENCH

JAMES C. SCHROEDER

THERESA A. CANADAY

Mayer, Brown & Platt

190 South LaSalle Street

Chicago, IL 60603

(. 12) 782-0600

Counsel for The Dow

Chemical Company

NOVEMBER 1996

20

CONCLUSION

The petitions for certiorari should be denied.

BARBARA J. HOUSER

Counsel of Record

GEORGE H. TARPLEY

Sheinfeld, Maley & Kay P.C.

1700 Pacific Avenue, Suite 4400

Dallas, TX 75201-4618

(214) 953-0700

Counsel for Dow Corning

Corporation

WILLIAM D. EGGERS

Nixon Hargrave Devans

& Doyle LLP

P.O. Box 1051

Clinton Square

Rochester, NY 14603

(716) 263-1000

Counsel for Corning

Incorporated