Opposition Brief — Patenaude v. Owens-Illinois, Inc.

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(3) Supreme Court, U.S.

FILED

No. 00-281 OCT 2 3 on

IN THE

Supreme Court of the

JOANN PATENAUDE ET AL., Petitioners,

OWENS ILLINOIS, INC., ET AL., Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Third Circuit

BRIEF IN OPPOSITION FOR RESPONDENTS

ARMSTRONG WORLD INDUSTRIES, INC.,

GASKET HOLDINGS, INC., T&N, LTD.,

PFIZER INC., AND UNITED STATES GYPSUM

COMPANY

WILLIAM F. SHEEHAN

Counsel of Record

ELIZABETH RUNYAN GEISE

TImoTHY G. LYNCH

SHEA & GARDNER

1800 Massachusetts Avenue, N.W.

Washington, D.C. 20036

(202) 828-2000

JOHN G. GAUL

CHRISTOPHER D. WOLFE

CENTER FOR CLAIMS RESOLUTION

504 Camegie Center

Princeton, N.J. 08540

(609) 951-6000

Counsel for the Center For Claims

October 23, 2000 Resolution as Agent for Respondents

RULE 29.6 STATEMENT

Respondent Armstrong World Industries, Inc. is wholly owned

by. Armstrong Worldwide, Inc., which is wholly owned by

Armstrong Holdings, Inc., a publicly held company.

Respondent Gasket Holdings, Inc. (formerly known as

Flexitallic, Inc.) and respondent T&N, Ltd. (formerly known as

T&N plc) are owned by Federal-Mogul Corporation, a publicly

held company.

Respondent Pfizer Inc. has no parent company, and no publicly

held company holds ten percent or more of its stock.

Respondent United States Gypsum Company is owned by USG

Corporation, a publicly held company.

(i)

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TABLE OF CONTENTS

Page

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Bemeneees Ge Cee GAWD co ES Sie l

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B. Coordinated Activities Before the

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C. The Transferee Court’s Handling of

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D. The Multidistrict Panel’s Denial of Petitioners’

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E. The Third Circuit’s Denial of Mandamus ............. 6

REASONS FOR DENYING THE WRIT ................ 8

A. The Decision Below Correctly

Applied § 1407 ...... cal ae pth US Rn aah A ae 9

B. The Decision Below Does Not

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C. The Real Issue Here is Factual ................... 12

Te ne es Tg ek x dag Ae scm 13

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TABLE OF AUTHORITIES

CASES:

Carlough v. Amchem Products, Inc.,

5 F.3d 707 (3d Cir. 1993)

In re Asbestos Prods. Liab. Litig. (No. V1),

771 F. Supp. 415 (J.P.M.L. 1991)

In re Patenaude, 210 F.3d 135 (3d Cir. 2000)

Lexecon Inc. v. Milberg Weiss Bershad Hynes

& Lerach, 523 U.S. 26 (1998)

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

STATUTES:

28 U.S.C. § 1407(a)

MISCELLANEOUS:

Report of the Judicial Conference Ad Hoc

Committee on Asbestos Litigation (1991)

Administrative Office of the United States Courts,

U.S. District Courts—Civil Cases Commenced,

by Nature of Suit During 12-Month Periods

Ending September 30, 1995 Through 1999

(Table C-2A)

IN THE

Supreme Court of the Anited States

No. 00-281

JOANN PATENAUDE, ET AL.,

Petitioners,

OWENS ILLINOIS, INC., ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Third Circuit

BRIEF IN OPPOSITION FOR RESPONDENTS

ARMSTRONG WORLD INDUSTRIES, INC.,

GASKET HOLDINGS, INC., T&N, LTD.,

PFIZER INC., AND UNITED STATES GYPSUM

COMPANY

STATEMENT OF THE CASE

Petitioners comprise three groups of plaintiffs seeking damages

for personal injury and wrongful death as a result of alleged

exposure to asbestos and asbestos-containing products.

Respondents, who are (or were) members of the Center For Claims

Resolution (“the CCR”), which acts herein as their agent, are

defendants in some of the cases brought by Petitioners. !

' The CCR is a non-stock, non-profit corporation established in 1988 to

handle personal injury asbestos claims asserted against its members, who

have designated the CCR as their exclusive agent to act on their behalf in

asbestos cases. These respondents are current CCR members, except for

Gasket Holdings, Inc., which was formerly a CCR member and has

authorized the CCR to act on its behalf herein. Before the Third Circuit,

the CCR also acted as agent for the Asbestos Claims Management

Corporation and GAF Corporation, but those companies are no longer CCR

Petitioners’ claims were initially pending in the Northern District

of New York (the “New York Petitioners”), the Northern District

of Georgia (the “Georgia Petitioners”), and the District of Oregon

(the “Oregon Petitioners”). Their claims were transferred under 28

U.S.C. § 1407(a) by the Judicial Panel on Multidistrict Litigation

(the “Multidistrict Panel”) to Multidistrict Litigation No. 875

(“MDL No. 875”), pending in the United States District Court for

the Eastern District of Pennsylvania (the “transferee court”). The

transferee court declined requests by some petitioners for a

suggestion of remand, the Multidistrict Panel denied motions for

remand, and the Third Circuit denied Petitioners’ petition for a writ

of mandamus.

A. History of MDL No. 875.

The Multidistnict Panel created MDL No. 875 in 1991 after

finding that the more than 30,000 asbestos-related personal injury

or wrongful death actions then pending in the federal courts had

“reached a magnitude * * * that threatens the administration of

justice and that requires a new, streamlined approach.” Jn re

Asbestos Prods. Liab. Litig. (No. V1), 771 F. Supp. 415, 418

(J.P.M.L. 1991). The Multidistrict Panel was heavily influenced by

the recommendations of the Judicial Conference Ad Hoc

Committee on Asbestos Litigation, whose members were appointed

by the Chief Justice. The Committee described the growing

number of asbestos claims as a “disaster of major proportions to

both the victims and the producers of asbestos products.” Jd. at

418 (quoting Report of the Judicial Conference Ad Hoc Committee

on Asbestos Litigation 1-3 (1991)).

The Panel sought to address these problems by centralizing

asbestos-related personal injury and wrongful death claims in the

Eastern District of Pennsylvania before the Honorable Charles R.

Weiner, an experienced district court judge whom the Panel praised

for his “famuiliar[ity] with the issues in asbestos litigation” and his

“track record of accomplishment and successful innovation.” 771

members, and the CCR does not act on their behalf here.

F. Supp. at 423. In its 1991 Order, the Panel urged Judge Weiner

to consider a variety of innovative approaches to the resolution of

asbestos claims. Jd. at 420-22.

B. Coordinated Activities Before the Transferee Court.

As the Third Circuit explained, Judge Weiner gives greatest

priority to plaintiffs with the most serious illnesses, and encourages

resolution of cases through negotiation and settlement whenever

possible. Pet. App. 7-8. That approach is reflected in

Administrative Order No. 3, entered by the transferee court on

September 8, 1992. The Order establishes a mandatory discovery

and negotiation process, and sets priorities for remand to transferor

courts based on the severity of plaintiffs’ medical conditions. Jd. at

8-9. The Order also provides that, if a case does not settle after

good faith negotiations, “the Court shall determine whether the

matter is appropriate for immediate remand.” Jd at 8. As Judge

Weiner has explained, he typically does not suggest remand unless-

and until “all avenues of settlement [have been] exhausted.” Jd.

Administrative Order No. 3, together with Judge Weiner’s

personal, involvement in settlement efforts, have produced

remarkable results. As the Third Circuit noted below, “[a]s of late

1996, some 62,000 cases had been assigned to MDL 875 and

approximately 40,000 had been resolved.” Pet. App. 9. In

addition, many of the 22,000 remaining cases had been resolved but

not yet dismissed. /d. Moreover, as of January 1999, nearly

60,000 cases had been closed, meaning that Judge Weiner closed

cases in 1997 and 1998 at the rate of nearly 10,000 a year. Id.”

* Judge Weiner has sought to resolve cases in the docket on a

comprehensive basis, and, under his auspices, many large group settlements

have been negotiated. See Carlough v. Amchem Products, Inc., 5 F.3d

707, 711 (3d Cir. 1993).

When avenues for settlement have in fact been exhausted, Judge

Weiner has not hesitated to remand cases for trial, and in fact has

remanded nearly 1,000 actions or claims. Id.’

Finally, as the Third Circuit noted, Judge Weiner has also

conducted coordinated discovery involving “many cases from many

different transferor courts.” Pet. App. 17. Over the past two years,

Judge Weiner has overseen global discovery into plaintiffs’ practice

of filing cases on the basis of medical data obtained from attorney-

sponsored asbestos screening programs. See id.

C. The Transferee Court’s Handling of Petitioners’ Cases.

Judge Weiner has participated in numerous settlement

conferences in Petitioners’ cases. Some of these conferences took

place after Judge Weiner did not grant Petitioners’ requests for

suggestions of remand. Pet. App. 59. As the Third Circuit noted

below, “the number and amount of settlements [for these particular

plaintiffs] have in many cases been substantial.” Pet. App. 6-7.

For example, based on data in docket sheets for the New York

Petitioners, by late 1999, when the parties filed briefs before the

Third Circuit, the named Petitioner, Jo-Anne L. Patenaude, had

received $739,135 in settlements, $201,000 of which was received

after the Multidistrict Panel’s February 1999 Order denying

remand.* The docket sheets for the six actions brought by the New

York Petitioners alone showed that, by late 1999, defendants had

paid almost $5.8 million to settle the claims of those Petitioners, of

* Recent statistics concerning asbestos personal injury filings in federal

courts demonstrate the continuing need for MDL No. 875. In the past

decade, 80,000 asbestos cases were filed, 18,000 of them in 1998 and 1999.

See Ortiz v. Fibreboard Corp., 527 U.S. 815, 866 (1999) (Breyer, J.,

dissenting); Administrative Office of the United States Courts, U.S. District

Courts—Civil Cases Commenced, by Nature of Suit During 12-Month

Periods Ending September 30, 1995 Through 1999 (Table C-2A).

“Brief of Respondents Armstrong World Industries, Inc. et al. at 10, Jn

re Patenaude, 210 F.3d 135 (3d Cir. 2000) (No. 99-1540) (filed Nov. 15,

1999).

which approximately $1.1 million came from settlements reached

after the Panel’s February 1999 Order denying remand.’ Moreover,

as the Third Circuit noted, these figures may significantly

understate the actual settlement amounts obtained by Petitioners,

for “the docket summaries show significant delays (in some cases,

five years) between settlements being signed and their being

entered on the docket.” Pet. App. 7.

The Third Circuit also noted that Petitioners did not contest

these figures by “provid[ing] settlement information of their own.”

Id. at 6.

D. The Multidistrict Panel’s Denial of Petitioners’ Remand

Motions.

On May 30, 1997, certain of the Oregon Petitioners asked Judge

Weiner to issue a suggestion of remand to the Panel. Certain of the

New York Petitioners filed a similar motion in March of 1998, as

did certain of the Georgia Petitioners on April 29, 1998 and May

15, 1998. When Judge Weiner did not issue such suggestions, the

various groups of Petitioners sought remand directly from the

Multidistrict Panel.

The Multidistrict Panel denied the motions in Orders of May 20,

1998 (denying the motion of the Oregon Petitioners) and February

5, 1999 (denying the motions of the New York and Georgia

Petitioners). Pet. App. 47-49, 58-59. In the latter Order the Panel

noted that it

has consistently given great weight to the transferee

judge’s determination that remand of a particular

* Jd. at 12. Unlike the docket sheets for the New York claims, the

) docket sheets for the Georgia and Oregon cases do not list settlement

information. It is quite likely, however, that many of those plaintiffs have

also obtained significant settlements. For example, in its Answer to

Petitioner’s Petition for a Writ of Mandamus, defendant Owens-Illinois,

Inc. (“O-I”) stated that it had settled a// of Petitioners’ claims. See O-I

Answer at 5, 4 9, Jn re Patenaude, 210 F.3d 135 (3d Cir. 2000) (No.

99-1540) (filed Aug. 4, 1999).

Fenraereee ee

action at a particular time is appropriate because the

transferee judge, after all, supervises the day-to-day

pretrial proceedings.- * * * Absent a notice of

suggestion of remand from the transferee judge to the

Panel, any party advocating remand before the Panel

bears a strong burden of persuasion. (Pet. App. 58

(citations omitted)).°

The Multidistrict Panel then noted that the transferee court was

“thoroughly familiar with the issues in MDL-875” and, “in light of

the unprecedented scale of this docket, is in the best position to

determine the future course of the actions before him.” Jd. The

Panel found it significant that Judge Weiner had continued to hold

settlement conferences in various actions brought by Petitioners

even after they had sought remand from him. /d. at 59. In the view

of the Panel, “[s]uch a scenario illustrates why the Panel is reluctant

to rely solely on the conclusions of parties to an action when

determining whether remand is appropriate.” Jd.

E. The Third Circuit’s Denial of Mandamus.

On June 29, 1999, thirteen months after the Multidistrict Panel

denied the Oregon Petitioners’ motion and nearly five months after

it denied the New York and Georgia Petitioners’ motions, the

Petitioners filed a single petition for a wnt of mandamus in the

Third Circuit. .

The Third Circuit denied the wnt, taking particular notice of

Judge Weiner’s success in settling and remanding cases and the

numerous and significant settlements reached by these Petitioners.

Pet. App. 6-9. The court held that the Petitioners who had never

sought a suggestion of remand from Judge Weiner could not show

that they had no other adequate means to obtain relief, id. at 11-12,

and that the remaining Petitioners had not shown a “clear and

indisputable” right to relief. Jd. at 12-22.

° Multidistrict Panel Rule 7.6(d) provides that “[t}he Panel is reluctant

to order remand absent a suggestion of remand from the transferee court.”

The court rejected Petitioners’ argument that cases transferred

under § 1407 must be remanded to the transferor court unless the

‘ transferee court is conducting global discovery affecting all claims.

| Id. at 17. Instead, relying on this Court’s analysis in Lexecon Inc.

v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998),

and the legislative history of § 1407, the court held that cases in an

MDL proceeding can be “coordinated” under § 1407, even in the

absence of one issue common to all cases, “so long as issues

‘overlap.”” Pet. App. 17 (citations omitted). Looking to the facts

before the Multidistrict Panel in the Petitioners’ cases, the court

held:

In the instant case, where the possibility exists that

even individual settlement negotiations will be more

efficient if facilitated by a judge who is intimately

familiar with the general issues and many of the

parties, and where in fact the record reflects that

settlements are successfully being negotiated, one

cannot say that the Panel abused its discretion in

refusing to remand. (/d. at 21.)

Finally, the court held that the Multidistrict Panel’s actions were

fully consistent with the Panel’s obligation to remand cases to the

transferor court “‘at or before the conclusion of pretrial

proceedings.”” Jd. at 22 (quoting § 1407(a)). The court ruled that,

“{ujnlike a [transferee court’s self-transfer of an MDL case], which

makes it impossible for the Panel to remand even though the action

has not been terminated, settlement negotiations will either be

successful, in which case the action will terminate, or they will

eventually conclude and the action can be remanded at that point.”

Pet. App. 22.’

’ The court also rejected Petitioners’ argument that setilement

opportunities had in fact ended, noting that the docket sheets for

Petitioners’ cases “show a pattern of settlements continuing through

1999”—after the Multidistrict Panel denied remand—and noting that

Petitioners had never presented to Judge Weiner or the Multidistrict Panel

their argument that the “remaining defendants have stated conclusively that

REASONS FOR DENYING THE WRIT

The Third Circuit nghtly denied Petitioners’ belated petition for

mandamus, and further review by this Court is unwarranted. The

decision below correctly construes § 1407 and expressly follows,

rather than conflicts with, this Court’s holding in Lexecon

Lexecon held that a transferee court may not transfer to itself

cases for trial because that would “conclusively thwart” the Panel’s

obligation to remand cases when pretrial proceedings have

concluded. Here, however, the transferee court has not transferred

to itself these or any other cases for trial. Nor has the Third Circuit

thwarted the Multidistrict Panel’s obligation to remand cases when

pretrial proceedings have concluded. To the contrary, it specifically

noted that Petitioners’ cases must be remanded when all avenues

for settlement have been exhausted and pretrial proceedings have

therefore concluded. Moreover, relying on this Court’s reasoning

in Lexecon, the Third Circuit held that cases in an MDL proceeding

are “coordinated” under § 1407 even when the transferee court is

not conducting discovery applicable to all cases, so long as the

cases share a common core and issues overlap. In short, the Third

Circuit’s interpretation of § 1407 directly tracks this Court’s

analysis in Lexecon.

Finally, although the Petition purports to raise a dispute about

whether cases are “coordinated” under § 1407 when they are

subject to very successful settlement procedures before a district

court judge who is intimately familiar with all facets of the asbestos

litigation, the real dispute is a factual one, namely, whether the

transferee court was wrong in concluding that settlement

possibilities in these cases continued to exist. Both the Multidistrict

Panel and the Third Circuit declined to upset that conclusion, which

warrants no further review by this Court.

they will not settle until the cases are set for trial.” Pet. App. 13-14 n.4.

A. The Decision Below Correctly Applied § 1407.

Section 1407 places two limitations on the proceedings a

transferee court may conduct: such proceedings “must be (1)

coordinated or consolidated and (2) pretrial.” Pet. App. 13.

Petitioners acknowledge that the term “pretrial” “encompasses

more than merely discovery.” Pet. at 19 n.3. But, in Petitioners’

view, a particular case is only “coordinated or consolidated” with

other cases in an MDL proceeding if pretrial proceedings are

common to all transferred cases. See id. Thus, in Petitioners’

view, since the transferee court is conducting settlement

negotiations that apply to groups of cases, but not all cases in MDL

No. 875, coordinated and consolidated proceedings have ended and

their cases should be remanded. See Pet. at 15-16.

Relying on this Court’s interpretation and the legislative history

of § 1407, the Third Circuit correctly rejected that view. In

Lexecon, the Court held that a particular transferred case is

“coordinated” with other cases in an MDL proceeding if the cases

share a common core and are “brought before judges in a district

where much of the evidence [is] found and overlapping issues [are]

considered.” 523 U.S. at 34. As the Third Circuit noted, Lexecon

interpreted “coordinated” to mean that a single case could be

coordinated for pretrial purposes with other cases previously

transferred in the MDL proceeding even though, in Lexecon, “the

case was being heard by a different judge” than the one who had

heard cases previously transferred and “all of the proceedings with

which the individual action was ‘coordinated’ had already

concluded.” Pet. App. 16-17.

On the basis of that analysis, the Third Circuit held that, “[t]o be

coordinated, it is not necessary that common issues are being

contemporaneously addressed.” Pet. App. 17. It noted that

Administrative Order No. 3 established procedures for all plaintiffs

in MDL No. 875 “regarding the mandatory exchange of

information, the negotiation process, and the prioritizing of cases.”

Id. It then held that, “applying the reasoning of Lexecon, it appears

that the individual settlement negotiations and conferences that are

occurring in plaintiffs’ cases are in fact ‘coordinated’ proceedings.”

Id* That reasoning is in perfect accord with this Court’s

interpretation of § 1407's requirement that pretrial proceedings be

coordinated.”

As the Third Circuit also noted, the legislative history of § 1407

supports a broad interpretation of “pretrial proceedings” to include

settlement efforts: hearings before the House Judiciary Committee

show that Congress intended for transferee courts to have all the

pretrial powers possessed by district court judges, including the

power to facilitate settlement. Pet. App. 18-19. The Petition raises

no issue on this score.

For these reasons, the Third Circuit correctly concluded that

settlement efforts being conducted by Judge Weiner in MDL No.

875 are appropriate “coordinated” “pretrial proceedings” under

§ 1407.

B. The Decision Below Does Not Conflict With Lexecon.

Petitioners assert that the Third Circuit’s decision conflicts with

Lexecon by adopting a position Lexecon supposedly rejected, and

by requiring remand of a particular case only when pretrial

proceedings in every case in the multidistrict proceeding had

* The court of appeals also determined that cases in MDL No. 875 were

in fact coordinated because Judge Weiner has been conducting discovery on

litigation screenings and that such discovery “overlaps many of the cases

in MDL-875” even if it does not particularly apply to Petitioners’ cases.

Pet. App. 17.

* Petitioners assert that Administrative Order No. 3 does not make the

cases “coordinated” because that would make any two cases in a district

court “coordinated” by virtue of being subject to the court’s local mules. Pet.

at 8. Unlike two unrelated cases randomly filed in the same district court,

however, cases in MDL No. 875 all involve asbestos litigation and are

subject to particular discovery, case-priority, and settlement procedures

before a single judge with extensive experience with plaintiffs’ counsel, the

defendants and their counsel, and this very specialized litigation.

completed. Pet. at 17-19. Those assertions mischaracterize both

_ courts’ opinions.

In Lexecon the question was whether a transferee court could

transfer to itself for trial a case transferred to it for pretrial

proceedings. The Court concluded that the language in

§ 1407(a)—“[e]ach action so transferred shall be remanded by the

panel at or before the conclusion of such pretrial

proceedings”—was “impervious to judicial discretion” and thus

barred self-transfers. 523 U.S. at 35. Before reaching that

conclusion, however, the Court considered whether transferee —

courts had self-transfer powers under their authority to conduct

“coordinated or consolidated” proceedings. Jd. at 33-34. Since the

case at hand involved only one case in the MDL proceeding, the

Court was skeptical of an argument that one such case could be

“consolidated” with other cases. Jd. at 34. But, as noted above, it

nonetheless interpreted the term “coordinated” broadly, finding that

proceedings to resolve pretrial matters were

“coordinated” with the conduct of earlier cases sharing

the common core of the Lincoln Savings debacle, if

only by being brought before judges in a district where

much of the evidence was to be found and overlapping

issues had been considered. (/d.)

Although the Court held that its broad interpretation of the term

“coordinated” was not enough to overcome the explicit ban on self-

transfers, it did not do so by repudiating its broad interpretation of

“coordinated,” but rather because of the “plain command” of the

statute banning self-transfers. See id. at 35. Thus the Third

Circuit’ s broad interpretation of the term “coordinated” in this case

is in accord, not in conflict, with Lexecon.

Nor does the Third Circuit’s opinion thwart the Multidistrict

Panel’s remand obligation by requiring remand of particular cases

only when all the cases in an MDL proceeding have been

completed for pretrial purposes. Pet. at 18.'° On the contrary, the

Third Circuit recognizes that these particular cases should be

remanded when settlement prospects no longer exist:

[C]onducting individual settlement conferences does

not “conclusively thwart” the Panel’s ability to remand

* * * [because] settlement negotiations will either be

successful, in which case the action will terminate, or

they will eventually conclude and the action can be

remanded at that point. (Pet. App. 22.)

In short, the Third Circuit did not thwart the Panel’s remand

obligation, and is not in conflict with Lexecon.

C. The Real Issue Here Is Factual.

Petitioners’ real complaint is with the conclusion shared by the

three courts below that further settlement efforts were not fruitless.

The transferee court declined to issue a suggestion of remand and

continued to hold settlement conferences in Petitioners’ cases—with

successful results. See pp. 4-5, supra. The Multidistrict Panel

noted the ongoing settlement conferences and declined to remand

on the ground that the transferee court had an unmatched

understanding of the cases and their potential for settlement. The

Third Circuit noted that “individual settlement negotiations and

discovery continue in MDL 875 and the docket sheets show a

pattern of settlements continuing through 1999.” Pet. App. 13.

In short, three courts effectively found that Petitioners had not

demonstrated that settlement opportunities had truly ended and that

their cases were fit for remand. Those factual conclusions, which

were clearly correct on the record before the lower courts, do not

warrant further review here.

'° Petitioners do not identify where in its opinion the Third Circuit

supposedly so ruled.

CONCLUSION

The petition for a writ of certiorari sheuld be denied.

Respectfully submitted,