Opposition Brief — Hospitality Management Associates, Inc. v. Shell Oil Co., Dba Shell Chemical Co.

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JUN 17 2004 |

No. 03-1431 |

} OFFICE OF THt CLERK

IN THE

Supreme Court of the United States

HOSPITALITY MANAGEMENT ASSOCIATES, INC., et al,

Petitioners,

SHELL OILCOMPANY d/b/a

SHELL CHEMICAL COMPANY, et al,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT OF SOUTH CAROLINA

BRIEF IN OPPOSITION FOR RESPONDENT

HOECHST CELANESE CORPORATION

JANE W. TRINKLEY Paut M. O’Connor III

RoBerT L. WIDENER Counsel of Recerd

McNair Law Firm, P.A. SETH A. MoskowItTz

P.O. Box 11390 KasoOwITZ, BENSON, TORRES

Columbia, SC 29211 & FRIEDMAN LLP

(803) 799-9800 1633 Broadway

New York, NY 10019

(212) 506-1700

Attorneys for Respondent

Hoechst Celanese Corporation

187896 ce

COUNSEL PRESS

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

QUE. TION PRESENTED

Did the South Carolina Supreme Court hold correctly

that a final Tennessee state court judgment approving a

nationwide class action settlement was entitled to full faith

and credit under Article IV of the United States Constitution

where (i) that judgment was final and entitled to res judicata

effect in Tennessee; and (ii) all relevant matters set forth

in that judgment, including jurisdiction, adequacy of

notice, adequacy of representation and the fairness and

reasonableness of the settlement, were fully litigated 1:1 and

finally decided by the Tennessee court.

STATEMENT PURSUANT TO RULE 29.6

Respondent CNA Holdings, Inc., formerly known as

Hoechst Celanese Corporation, (“Celanese’’), is an indirect,

wholly-owned subsidiary of Celanese AG. Celanese AG is a

publicly traded company.

ili

EXPLANATION OF RECORD CITES

“Petition” refers to the Petition for Writ of Certiorari.

“Petition App. __” refers to the Appendix attached to

the Petition for Writ of Certiorari.

“Celanese App. _” refers to the Appendix attached to

Respondent Hoechst Celanese Corporation’s Brief In

Opposition.

“R. _” refers to the Record on Appeal filed with the

Supreme Court of South Carolina.

TABLE OF CONTENTS

Page

Oe ee eee i

Statement Pursuant To Rule 29.6 ............... ll

Explanation Of Record Cites .................. lil

See See kp ha hae GA Ko RO Ne Ree IV

Table Of Cited Authorities ........cccccccccees Vill

TROTe SE OIG ncn sce vpee cet inasteus Xlli

Counterstatement Of The Case ................. |

I Fhe Cox Settlement 20... .ccccsccscseees 3

II. Approval Of The Cox Settlement ......... 4

A. Litigation In Cox Concerning Adequacy

Of Representation ...........cce0.- 4

B. Litigation In Cox Concerning The

Proposed Notice Program ........... 2

C. Litigation In Cox Concerning The

Settlement’s Fairness, Reasonableness

Fe TI ag 5s 05405 405k eens 6

Ill. The Cox Final Order And Judgment Has Been

Given Full Faith And Credit By Courts

ee ee ere ee 6

Contents

Page

IV. Proceedings In The Trial Court .......... 7

A. Respondents’ Motions For Summary

EET ee er ever 8

V. The South Carolina Supreme Court’s

Reet og ins oeeeuansnen ees etiseeeee 8

Reasons For Denying The Petition .............. 9

I. The South Carolina Supreme Court Held

Correctly That The Cox Final Order And

Judgment Is Entitled To Full Faith And Credit,

And That Petitioners’ Claims Were Barred

scenes eneds ee becuse eal eien teen eee 9

A. The South Carolina Supreme Court Held

- Correctly That The Scope Of Review On

A Full Faith And Credit Motion Is Limited

Expressly To Whether The Foreign Court

Litigated And Decided All Issues

Relevant To The Foreign Judgment ... 9

B. The South Carolina Supreme Court Ruled

Correctly That The Cox Court Had

Adopted And Utilized Appropriate

Procedures To Protect The Rights Of The

Absent Class Members ............- 13

1. All Issues Concerning Subject Matter

And Personal Jurisdiction Were

Litigated And Decided By The Cox

Ce oi ikke sdiee tenes 13

II.

Contents

2. The South Carolina Supreme Court

Properly Found That The Adequacy

Of The Notice Program Was Litigated

And Decided By The Cox Court ..

The South Carolina Supreme Court

Properly Found That The Adequacy

Of Representation Was Litigated And

Decided By The Cox Court ......

The Fairness Of The Cox Settlement

Was Litigated And Decided ......

The South Carolina Supreme Court’s Decision

Does Not Conflict With Any Decision Of This

Court, Any United States Court Of Appeal, Or

Any Other State Court Of Last Resort On The

BOO DOE io: 5-é 02.00énvekes eee

A. The South Carolina Supreme Court’s

Decision Does Not Conflict With Any

Decision Of Any Court Of Appeal Or

State Court Of Last Resort To Address

The Same Matter In the Context Of A

| ee re tn rare

The United States Court Of Appeals

For The Ninth Circuit ...........

The United States Court Of Appeals

For The Second Circuit .........

Page

as wes

a ee oD

Conclusion

vil

Contents

3. The United States Courts Of Appeals

For The First And Third Circuits . .

4. The Ohio Court Of Appeals ......

The South Carolina Supreme Court’s

Decision Does Not Conflict With Any

Other Decision Of Any Court Of Appeal

Or State Appellate Court Outside The

Class Action Context ..........+.+5-

1. The United States Court Of Appeals

For The Fifth Circuit ...........

2. The United States Courts Of Appeals

For The Tenth And Eleventh

cep cndsoeneeens

3. State Courts Of Last Resort ......

Page

vill

TABLE OF CITED AUTHORITIES

Page

Cases

A.L.T. Corp. v. Small Business Admin., 801 F.2d 1451

oe Byer eee eee eee 27

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)

Nese SN KEKE LERECLTO RS SOUT ea tae 18, 19, 20, 21

Amstadt v. United States Brass Corp., 919 S.W.2d 644

Ces SEEN 94 04+ ON 4 cain Oa e wae Oe ecw eek 22

Cox v. Shell Oil Co., C.A. No. 18,844 (Chancery Ct.

Ree SIND iv kan 060004 0406 40s Mek cass passim

Durfee v. Duke, 375 U.S. 106 (1963) ............ 9

Epstein v. MCA, Inc., 179 F.3d 641 (9th Cir.),

cert. denied, 528 U.S. 1004 (1999) ............ 23, 24

Farr v. RCP Invs., CV 93-08807 (Ariz. Super. Ct.,

Maricopa Cty. Jan. 29, 1996) .............05. 7

F idelity Standard Life Ins. Co. v. First Nat'l Bank &

Trust Co., 510 F.2d 272 (Sth Cir. 1975) ....... 27

Fine v. America Online, Inc., 743 N.E.2d 416 (Ohio

Fry v. Hoechst Celanese Corp., No. 95-6414-CA-11

(Fla. Cir. Ct., Dade Cty. July 17, 1996) ........ 7

wn nr nn see

Cited Authorities

Fry v. Hoechsi Celanese Chemical Group, No.

95-2225-CA-B (Fla. Cir. Ct., Marion Cty. Jan. 29,

OD cca chaser ebreassucSeseKeeepcahesae's

Gawara v. United States Brass Corp., 74 Cal. Rptr.2d

663 (Cal. Ct. App. 1998)... -- eee eee e eee eees

_ Grimes vy. Vitalink Communications Corp., 17 F.3d

1553 (3d Cir. 1994) 00... eee e eee eee eens

Hamilton v. Patterson, 115 S.E.2d 68 (S.C. 1960) ...

Harbuck v. Marsh Block & Co., 896 F.2d 1327

(11th Cir. 1990) ...... eee e eee eee ener eens

Harper v. Virginia Dep't of Taxation, 509 U.S. 86

(1993)... 000003 et Vee eer erehaee awe

Hop v. Hoechst Celanese Corp., No. 95-CV-004930

(Wis. Cir. Ct., Milwaukee Cty. Mar. 28, 1996) ..

Hospitality Mgmt. Assoc., Inc. v. Shell Oil Co.,

591 S.E.2d 611 (S.C. 2004) «2... ee eee renee

Hospitality Mgmt. Assoc., Inc. Vv. Shell Oil Co.,

No. 95-(’P-10-1948 (Ct. Common Pleas, 3.C.

June 14, 2002) .... cece eee e cere eee eerees

James B. Beam Distilling Co. v. Georgia, 501 US.

S29 (1991) nc ceerccccceccvercvccvevcveces

Magnolia Petroleum Co. v. Hunt, 320 U.S. 430 (1943)

Page

Cited Authorities

Page

Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367

EE dade ew p86 i dirt tain Cheater eee 9,11, 12

Mayhew vy. Caprito, 794 §.W.2d 1 (Tex. 1990) .... 28

Milliken v. Meyer, 311 U.S. 457 (1940) .......... 11

Mullane v. Central Hanover Bank & Trust Co.,

Da Uiees SCID 66 ov bso ees vvevccuenet¥ce 16

Nobl Park, L.L.C. v. Shell Oil Co., No. 00-2-03776-!

(Wash. Super. Ct. Nov. 26, 2002) ............ 7

Northern Ind. Commuter Transp. Dist. v. Chicago

Southshore & §. Bend R.R., 685 N.E.2d 680

SE WE hac iy i ee hee a aera cane 28

Nothorn v. Shell Oil Co., No. 661692 (Super. Ct.,

San Diego Cty., Cal. Jan. 26, 1996) ........... 7

Nottingham Partners v. Trans-Lux Corp., 925 F.2d

DPC Ee. SU ans i ee ee 25

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) ... 21 -

Peoples Nat'l Bank v. Manos Bros., Inc., 84 S.E.2d

AFCO bid once eeu once seeks 10

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)

OTE eT eT e eT ere ye er Peer ee Tee CET Te passim

Read v. Dunn, 2000 U.S. App. LEXIS 16482

CECH Cz. Jelly 06, ZOGG) 2 ccc ccccccvnvceses 27

Cited Authorities

Page

Reppert v. Marvin Lumber & Cedar Co., 359 F.3d 53

tgs | Seer ner err rr re re 25

Smith v. Mason, 964 P.2d 743 (Mont. 1998) ...... 28

Spencer v. Shell Oil Co., CV-94-047 (Aia. Cir. Ct.,

Greene Cty. Dec. 4, 1995) .....ccccccccuves: me,

State v. Homeside Lending, Inc., 826 A.2d 997

OE NE aris ky eke ea EO REE RS 24

Stephenson v. Dow Chemical Co., 273 F.3d 249

(2d Cir. 2001), aff’d in part per curiam by an

equaily divided Court, 539 U.S. 111 (2003) ...3, 24, 25

Stoll v. Gottlieb, 305 U.S. 165 (1938) ........... 11

Underwriters Nat’l Assurance Co. v. North Carolina

Life & Accident & Health Ins. Guar. Ass'n,

Po gSe @ 0a >: rere ere 2 8

United States Brass Corp. vy. Andraus, 1993 WL

313208 (Tex. App. 1993) .......-.ccesececes 22

Williams v. North Carolina, 325 U.S. 226 (1945) .. 10

United States Constitution

ft ee we ey we! ee rere i, 9

xil

Cited Authorities

Page

Statutes

Be eB UFO oo oe ck eee 9

Rule

ts eS § errr we 2

TABLE OFAPPENDICES

Page

Appendix A — Final Judgment Of The Chancery

Court ror Obion County, Tennessee At Union City,

Tennessee Dated And Filed November 17, 1995

Ee la

Appendix B — Final Order Approving The Class

Action Settlement, Attorneys’ Fees And Expenses,

And Awards To Representative Plaintiffs Of The

Chancery Court For Obion County, Tennessee,

Union City, Tennessee Filed November 17, 1995

a a ae os 8 he 6 6 eee 6 ee es eee eee ee ee 6 O

Appendix C — Minute Order: Recommendation

Re: Spencer/Cox Settlement Dated November 8,

ee 38a

Av I Sih Dat .08 SE RNA AND aetna SBE RUIN hh

]

COUNTERSTATEMENT OF THE CASE

By this case, Petitioners seek to contravene established full

faith and credit law, claiming that they may collaterally attack

and relitigate the merits of a final judgment approving a

nationwide polybutylene (i.e., plastic) plumbing class action

settlement agreed to by Celanese, Respondent Shell Oil

Company (“Shell”) and the plaintiff class in Cox v. Shell Oil

Co., C.A. No. 18,844 (Chancery Ct. Obion Cty., Tenn.) (““Cox’’).!

The lower courts in South Carolina held that well-settled

authority and the Full Faith and Credit Clause of .be United

States C. astitution prohibited this collateral attack on the Cox

final order and judgment. Petitioners offer nothing to justify

this Court’s review of the South Carolina courts’ rulings.

The $950 million settlement approved by the Cox court

(the “Cox Settlement” or “Settlement”) — one of the largest

property damage settlements in history — brought to a

conclusion over a decade of litigation relating to polybutylene

plumbing in courts across the United States. The Cox Settlement

has enabled hundreds of thousands of property owners to obtain

complete relief (i.e., replacement of leaking polybutylene

plumbing, as well as reimbursement for any damages allegedly

caused by such leaks, at no cost to the consumer). Petitioners

are class members, but rather than avail themselves of this relief,

Petitioners instead pursued this lawsuit. However, the November

17, 1995 final order and judgment approving the Cox Settlement

(the “Cox Final Order and Judgment’) bars property owners

like Petitioners here, who have not opted out of the class, from

1. Petitioners have also challenged the final judgment approving

the settlement agreed to by Respondent E.J. duPont de Nemours &

Company (“DuPont”) in Spencer v. Shell Oil Co., C.A. No. CV-94-047

(Cir. Ct., Greene Cty., Ala.) (“Spencer”). Celanese was not a party to

the Spencer settlement, and thus did not seek to have that final judgment

accorded full faith and credit. Celanese does not question that Spencer

should be entitled to full faith and credit under settled law, but that

determination-is not relevant to whether the South Carouna Supreme

Court ruled correctly that the Cox final judgment was entitled to full

faith and credit.

pursuing a lawsuit relating to polybutylene plumbing against

Celanese or Shell.

Under established authority of this Court, the scope of

review on a full faith and credit motion is whether the foreign

court fully litigated and finally decided all issues relevant to the

judgment. See Underwriters Nat’l Assurance Co. v. North

Carolina Life & Accident & Health Ins. Guar. Ass'n, 455 U.S.

691, 706 (1982) (“‘a judgment is entitled to full faith and credit

— even as to questions of jurisdiction — when the second court’s

inquiry discloses that those questions have been fully and fairly

litigated and finally decided in the court which rendered the

original judgment””) (citation omitted).

Following this settled law, the South Carolina Supreme

Court, upholding the ruling of the Court of Common Pleas,

Charleston County, South Carolina (the “Trial Court’’), ruled

that the Cox Final Order and Judgment was entitled to full faith

and credit, and that Petitioners’ claims were barred. Hospitality

Mem. Assoc., Inc. v. Shell Oil Co., 591 S.E.2d 611 (S.C. 2004)

(Petition at 1a-27a); Hospitality Mgmt. Assoc., Inc. v. Shell Oil

Co., No. 95-CP-10-1948 (Ct. Common Pleas, S.C. June 14,

2002) (Petition at 28a-63a). In so holding, the South Carolina

Supreme Court found that all matters contained in and central

to the Cox Final Order and Judgment, including jurisdiction,

adequacy of notice, adequacy of representation, and the fairness

and reasonableness of the settlement, were fully litigated and

finally decided by the Cox court. As such, the court ruled that

further litigation was prohibited by the full faith and credit

clause. Celanese respectfully urges the same result here.

As shown below, the South Carolina Supreme Court’s

decision does not conflict with any decision of this Court, a

United States court of appeal or a state court of last resort.

See U.S. Sup. Ct. R. 10. To the contrary, this Court, and every

federal court of appeal and state appellate court to have recently

addressed the issue, have held uniformly that in determining

full faith and credit the permissible scope of review is whether

i - |

the relevant matters set forth in the foreign judgment were

fully litigated and finally decided by the foreign court.

The few cases cited by Petitioners as alleged conflicting

authority stand for the non-controversial proposition that

collateral review is appropriate only where, unlike in Cox, a

matter central to the prior judgment was not fully litigated

and finally determined in the foreign court. Indeed,

Petitioners’ central authority, Stephenson v. Dow Chemical

Co., 273 F.3d 249 (2d Cir. 2001), aff'd in part per curiam by

an equally divided Court, 539 U.S. 111 (2003), concerns the

rights of class members after a settlement fund had been

exhausted, an issue which was not litigated or decided in the

original action and which is completely irrelevant to the

instant case where the Cox Settlement continues to operate

and to pay all valid claims.

As such, Petitioners offer nothing to contradict settled

authority barring relitigation of the Cox case and Settlement,

and offer nothing to justify this Court’s review of the matter.

' The Cox Settlement

In 1995, Celanese and Shell agreed without admitting

liability to commit at least $950 million to provide new

plumbing systems and property damage compensation to

class members with qualifying leaks. (Celanese App. 11a,

17a-18a.) Under the terms of the Settlement, if the initial

fund should ever be exhausted, either (a) Celanese and Shell

will provide additional funds, or (b) those class members

who have not received their claimed benefits will have the

right to pursue their claims against Shell and Celanese

as they did prior to the Settlement. (/d. at lla-12a.)

The Settlement has paid hundreds of millions of dollars on

claims to date, and continues to operate and pay claims.

(R. 2209; R. 2344.)

The Cox Settlement provides for recurring notice to the

class, every three years through the year 2009, to ensure that

I aa

full benefits are dei'vered to the class and to permit subsequent

opt out periods, which occurred in 1999, 2002 and will occur

again in 2005. (See Celanese App. 18a.)

II. Approval Of The Cox Settlement

The Cox Final Order and Judgment was the end result of

intense litigation and arms-length negotiations over a long period

of time among all of the various interested parties, and included

a two-week long settlement conference mediated by a California

state court judge. Every aspect of the Settlement was litigated

and decided by the Cox court, including, among other things,

jurisdiction, the notice program, the adequacy of representation,

and the fairness of the Settlement.

A. Litigation In Cox Concerning Adequacy Of

Representation

On several occasions, the Cox court addressed and

determined the adequacy of representation of the class. For

example, in its order certifying the class, the court recognized

that class counsel “included highly qualified and well-regarded

lawyers with extensive class action and complex litigation

experience, as well as lawyers with vast experience in

polybutylene plumbing litigation.” (Celanese App. 15a; see also

id. at 30a.) The issue was addressed again by the court during

the fairness phase of the proceedings. (R. 2244.) At the

same time, the court addressed the adequacy of the class

representatives, and found them to be adequate. (R. 2251, 2254,

2258.) In addition, the issue was litigated at length in connection

with objections to the application for attorneys’ fees by class

counsel. (R. 2472-75; R. 2483-85.) The Cox court, presented

with evidence that the requested attorneys’ fees in the Cox

Settlement represented only 5% of the minimum class recovery,

rejected such challenges. (Celanese App. 13a.)

Numerous challenges to the adequacy of representation

were also raised through allegations of collusion among counsel

and the parties. (See, e.g., R. 2773; R. 2787-88.) These

accusations were rejected as meritless, as the court found that

“the settlement agreement is the result of good faith, arms-length

and non-collusive negotiations.” (R. 2735.)

Finally, Judge Silver of the Superior Court of California,

Monterey who, pursuant to joint orders of several courts before

which polybutylene plumbing cases were pending, mediated

an intensive settlement conference between the various parties,

determined that the class had been adequately represented.

(R. 2644-45; Celanese App. C; Celanese App. 15a-16a.)

B. Litigation In Cox Concerning The Proposed Notice

Program

The Cox notice program, which cost over $10 million in

1995, and which includes an additional $18 million to be spent

on continuing notice over the life of the settlement, was at the

time the largest property damage class action settlement notice

program in the history of American jurisprudence. (R. 2381-

82.) The $10 million campaign provided at least three exposures

of the notice to more than 89% of the U.S. population over

twenty-five years of age. (R. 3215; R. 3001.) The notice program

thus reached most property owners in the United States,

including virtually all likely class members. (R. 3217.)

Notwithstanding its unprecedented extent, numerous

objections to the notice program were lodged with the Cox

court.? To address these objections, the court held multiple

hearings where all interested parties were given the opportunity

to be heard and where evidence both in support of and in

opposition to the notice program was submitted. (Celanese App.

19a, 23a.) As the Cox court ultimately ruled after hearing

argument and receiving this evidence, the Cox notice program

“met and exceeded” all constitutional requirements, as it was

“one of the most coniprehensive class notice campaigns ever

undertaken.” (Jd. at 24a, 32a; R. 2242, 2251.)

2. See R. 2817; R. 2468; R. 2858; R. 2864-65; R. 2885.

C. Litigation In Cox Concerning The Settlement’s

Fairness, Reasonableness And Adequacy

On November 8-9, 1995, the Cox court conducted a fairness

hearing on the proposed settlement which was open to all

interested parties. (Celanese App. 8a; Petition at 32a.) At the

hearing, numerous briefs in support of and in opposition to the

Cox Settlement were presented, evidence was received, and

extensive argument was heard over a two day period. In addition,

a number of class members either appeared to voice their

objections to the Settlement or sent letters supporting or

objecting to the Settlement. (Celanese App. 9a.)

Further, the Cox court accepted into evidence the

Recommendation of Judge Silver. (R. 2644-45; Celanese

App. C; Celanese App. 15a-16a.) In recommending that the Cox

Settlement receive final approval, Judge Silver noted, among

other things, that: (1) the negotiations were adversarial and arms-

length; (2) the settlement created “an even handed evaluation

of claims and requests for treatment .. . and a fair method of

resolution of disputes”; and (3) attorneys’ fees were determined

completely independent of all discussions on the terms of the

Settlement. (/d. at 14a, 42a-43a, 46a.)

On November 17, 1995, the Cox court entered its Final

Order and Judgment approving the Settlement. In so doing, the

court stated that “[i]n independently determining to approve

the Settlement and the Application, the Court has considered

the substance of all objections to the Settlement, whether timely,

qualified or not, including those ... that have since been

withdrawn or stricken.” (/d. at 26a.) Thus, each and every

objection which was raised was considered by the Cox court

before approving the Settlement.’

Ill. The Cox Final Order And Judgment Has Been Given

Full Faith And Credit By Courts Nationwide

Because every issue relevant to the approval of the Cox

Final Order and Judgment was fully litigated and decided by

3. All appeals from the Cox Final Order and Judgment have been

dismissed. (R. 3565-66.)

the Tennessee court, that order and judgment has uniformly been

granted full faith and credit by courts nationwide. See Nobl Park,

L.L.C. v. Shell Oil Co., No. 00-2-03776-1 (Wash. Super. Ct.

Nov. 26, 2002); Fry v. Hoechst Celanese Corp., No. 95-6414-

CA-11 (Fla. Cir. Ct., Dade Cty. July 17, 1996) (R. 3567);

Hop v. Hoechst Celanese Corp., No. 95-CV-004930 (Wis. Cir.

Ct., Milwaukee Cty. Mar. 28, 1996) (R. 3569; R. 3947); Farr v.

RCP Invs., CV 93-08807 (Ariz. Super. Ct., Maricopa Cty. Jan.

29, 1996) (R. 3571); Fry v. Hoechst Celanese Chemical Group,

No. 95-2225-CA-B (Fla. Cir. Ct., Marion Cty. Jan. 29, 1996)

(R. 3944); Nothorn vy. Shell Oil Co., No. 661692 (Super. Ct.,

San Diego Cty., Cal. Jan. 26, 1996) (R. 3578); Spencer v. Shell

Oil Co., CV94-047 (Ala. Cir. Ct., Greene Cty. Dec. 4, 1995)

(R. 3583).

IV. Proceedings In The Trial Court

Petitioners are all members of the Cox settlement class who

did not opt out of the Settlement. (Petition App. at 33a.) Instead

of seeking relief under the Settlement, Petitioners sought

damages from Respondents under various theories of liability,

alleging that they own commercial and residential propertiesin

South Carolina containing defective polybutylene plumbing.

(See id. at 2a.) Petitioners did not sue any of the various

companies that designed, manufactured, sold or installed the

different types of polybutylene plumbing and components

thereof. Rather, Petitioners sued only some of the raw material

suppliers, such as Shell, Celanese and DuPont, that provided

the resins used by other companies in the manufacture of certain

components for the different types of polybutylene plumbing.‘

(See id.)

4. Contrary to Petitioners’ assertion (Petition at 3), Celanese did

not market or manufacture polybutylene plumbing, but rather Celanese

supplied a raw material, known as Celcon, which was used by certain

manufacturers to fabricate insert fittings that joined pieces of pipe in

some types of polybutylene plumbing, and is still used today successfully

in hundreds of applications, including properly designed potable

plumbing applications. (See Petition App. at 2a n.1.)

A. Respondents’ Motions For Summary Judgment

On May 1, 2001, Celanese and the other Respondents

moved for summary judgment on full faith and credit grounds.

Specifically, Celanese argued that Petitioners’ claims were fully

resolved pursuant to the Cox Final Order and Judgment.

(See R. 232, 4412.) In a detailed, thirty page order, the Trial

Court granted Respondents’ motions, ruling expressly that:

The Supreme Court does not allow a state court to

examine de novo or undertake such broad collateral

review of another state court’s judgment before

according it full faith and credit. Rather, the permissible

scope of review here is to examine the findings of the

Cox and Spencer courts, subject to te limited collateral

review allowed by the Supreme Court, and ascertain

whether the Tennessee and Alabama courts extended

the relevant due process to the nationwide class.

The record unmistakably shows that the courts fully

considered all due process issues relating to its

jurisdiction over absent class members and determined

that jurisdiction existed. Thus, the judgments are

entitled to full faith and credit in this Court as

guaranteed by the Constitution.

(Petition App. at 42a.) Petitioners appealed that order directly

to the South Carolina Supreme Court.

V. The South Carolina Supreme Court’s Decision

Consistent with established jurisprudence of this Court, the

South Carolina Supreme Court held that the Cox Final Order

and Judgment was entitled to full faith and credit, and affirmed

the dismissal of Petitioners’ claims. (Petition App. at 26a-27a.)

The court rejected Petitioners’ contention that the court was

required to conduct a broad collateral review of the Cox Final

Order and Judgment before ruling on full faith and credit, as

such review would permit one state court to * bey reopen,

the fully litigated decisions of our sister courts . . .” (/d. at 18a.)

The court concluded that:

[proper] procedures were not only in place in...

Cox, but were also consciously and steadfastly utilized

to accord minimum due process to the absent class

members. Consequently, we hold the trial court

correctly accorded full faith and credit to the...

Cox order[].

(/d. at 27a.)

REASONS FOR DENYING THE PETITION

I. THE SOUTH CAROLINASUPREME COURT HELD

CORRECTLY THAT THE COX FINAL ORDER AND

JUDGMENT IS ENTITLED TO FULL FAITH AND

CREDIT, AND THAT PETITIONERS’ CLAIMS

WERE BARRED

The United States Constitution provides that “[f]ull faith

and credit shall be given in each State to the public Acts, Records,

and judicial Proceedings of every other State.” U.S. Const.

art. IV, § 1.° This Court has explained that full faith and credit

“generally requires every State to give to a judgment at least the

res judicata effect which the judgment would be accorded in

the State which rendered it.” Durfee v. Duke, 375 U.S. 106, 109

(1963). As this Court made clear in Matsushita Elec. Indus. Co.

v. Epstein, 516 U.S. 367 (1996), full faith and credit applies

equally to judgments entered in class actions as to those entered

in individual lawsuits: “[ A] judgment entered in a class action,

like any other judgment entered in a state judicial proceeding,

is presumptively entitled to full faith and credit. . . .” Jd. at 374.

A. The South Carolina Supreme Court Held Correctly

That The Scope Of Review On A Full Faith And

Credit Motion Is Limited Expressly To Whether The

Foreign Court Litigated And Decided All Issues

Relevant To The Foreign Judgment

Petitioners argue that the South Carolina Supreme Court

should have permitted broad collateral review of the Cox Final

5. The requirement that federal courts give full faith and credit to

state court judgments is codified at 28 U.S.C. Section 1738.

Order and Judgment prior to ruling on full faith and credit.

According to Petitioners, unless absent class members are

entitled to litigate de novo any objections which they may have

to a class action settlement, absent class members would have

no “meaningful avenue” to protect their due process rights.°

(Petition at 2-3, 9.) In making this argument, Petitioners ignore

the law and the very purpose of the Full Faith and Credit Clause.

This Court does not allow a court to examine de novo or

undertake broad collateral review of a foreign judgment before

_ determining whether it is entitled to full faith and credit. Rather,

the scope of review permissible with respect to any issue relevant

to a judgment or order of a sister state is limited: ““‘a judgment

is entitled to full faith and credit —- even as to questions of

jurisdiction — when the second court’s inquiry discloses that

those questions have been fully and fairly litigated and finally

decided in the court which rendered the original judgment.’”’

6. Petitioners claim that because they did not personally appear in

Cox, they are entitled to attack collaterally the Cox court’s findings.

(Petition at 13.) In so arguing, Petitioners ignore the representational

nature of a class action. See Phillips Petroleum Co. v. Shutts, 472 U.S. —

797, 808 (1985) (explaining that “a ‘class’ or ‘representative’ suit was

an exception to the rule that one could not be bound by judgment in

personam unless one was made fully a party in the traditional sense”’)

(citing Hansberry v. Lee, 311 U.S. 32, 40-41 (1940)).

7. Petitioners argue that the jurisdictional findings in the Cox Final

Order and Judgment are “self-serving jurisdictional recitals,” and thus

not entitled to full faith and credit. (Petition at 13-14.) Petitioners are

wrong. First, jurisdiction was litigated and decided in Cox. Thus, the

findings of jurisdiction by the Cox court are not mere recitals. Second,

the cases Petitioners cite for their proposition make clear that where, as

here, the prior court litigated and decided jurisdiction, it may not be

relitigated (even if, unlike here, the jurisdictional ruling was erroneous).

See Williams v. North Carolina, 325 U.S. 226, 230 n.6 (1945)

(“We have not here a situation where a State disregards the adjudication

of another State on the issue of domicil squarely litigated in a truly

adversary proceeding”); Peoples Nat’i Bank v. Manos Bros., Inc.,

84 S.E.2d 857, 866 (1954) (noting expressly that the prior court’s decree

“contained no recital or express finding” concerning jurisdiction).

OE Fee ee ee TE et

se ee

Underwriters Nat'l Assurance Co. v. Nerth Carolina Life &

Accident & Health Ins. Guar. Ass'n, 455 U.S. 691, 706 (1982)

(quoting Durfee, 375 U.S. at 111). Accord Milliken v. Meyer,

311 U.S. 457, 462 (1940) (“.. . the full faith and credit clause

of the Constitution precludes any inquiry into the merits of the

cause of action, the logic or consistency of the decision, or the

validity of the legal principles on which the judgment is based

... Whatever mistakes of law may underlie the judgment’)

(citation omitted); Stoll v. Gottlieb, 305 U.S. 165, 172 (1938)

(“After a party has his day in court, with opportunity to present

his evidence and his view of the law, a collateral attack upon

the decision as to jurisdiction there rendered merely retries the

issue previously determined”).

That the foreign judgment concerns a class action settlement

does not alter this settled rule. Indeed, in Matsushita, this Court

reversed a decision of the Ninth Circuit Court of Appeals that

denied full faith and credit to a class action settlement approved

by a Delaware state court. In-holding that the Delaware judgment

was entitled to full faith and credit, the Court found that the

procedural due process requirements set forth in Phillips

Petroleum Co. v. Shutts, 472 U.S. 797 (1985) — adequate notice,

an opportunity to be heard and participate, the right to opt out,

and adequate representation — had been litigated in and decided

by the Delaware court:

[T]he Court of Chancery found, and the Delaware

Supreme Court affirmed, that the settlement was “fair,

reasonable and adequate and in the best interests of

the . . . Settlement class” and that notice to the class

was “in full compliance with . . . the requirements of

due process.” . . . The Court of Chancery “further

determined that the plaintiffs, . .. as representatives of

the Settlement Class, have fairly and adequately

protected the interests of the Settlement Class.”

516 U.S. at 378-79 (citations omitted). Having determined that

the Delaware court had considered and addressed each of the

relevant due process elements necessary to bind absent class

members, the Court reviewed the issue no further. /d. at 379.

Moreover, if Petitioners’ theory was the law, class action

judgments would never be t-uly final, as they would always be

subject to collateral attack in multiple fora by any dissatisfied

class member who had not actually appeared in the initial case.

See Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 439 (1943)

(explaining that the “clear purpose” of full faith and credit is

“te establish throughout the federal system the salutary principle

of the common law that a litigation once pursued to judgment

shall be as conclusive of the rights of the parties in every other

court as in that where the judgment was rendered”).

Following this settled authority, the South Carolina Supreme

Court held that the proper scope of review here is “limited”’ to

whether the due process issues were fully litigated and decided

by the foreign court. The court explained that broad collateral

review “would run counter to the class action goals of efficiency

and finality to allow successive reviews of issues that were, in

fact, fully and fairly litigated in the rendering court.” (Petition

App. at 18a.) Applying this appropriate scope of review to the

Cox Final Order and Judgment, the South Carolina Supreme

Court concluded that the Cox court had adopted and utilized

appropriate procedures to safeguard the due process rights of

the absent class members. Having reached this conclusion, the

court reviewed the matter no further, ruling that:

the proper scope of collateral review of a rendering

court’s rulings on the due process requirements for

binding absent class members is one limited to a

consideration of whether the procedures in the prior

litigation allowed a full and fair opportunity to litigate

the due process issues.

(Id. at 26a-27a.) As such, the South Carolina Supreme Court’s

decision is fully consistent with prior holdings of this Court.

B. The South Carolina Supreme Court Ruled C. orrectly

That The Cox Court Had Adopted And Utilized

Appropriate Procedures To Protect The Rights Of The

Absent Class Members

The South Carolina Supreme Court properly concluded that

the Cox court had adopted and utilized appropriate procedures to

safeguard the absent class members’ due process rights, as the

court found that all issues central to the Cox Final Order and

Judgment were fully litigated and finally decided by the Tennessee

court. As shown below, Petitioners’ assertions are simply collateral

attacks aimed at relitigating the Cox case and Settlement.

1. All Issues Concerning Subject Matter And

Personal Jurisdiction Were Litigated And

Decided By The Cox Court

Despite Petitioners’ conclusory, single sentence assertion

that personal jurisdiction was not litigated in Cox (Petition at

15), the Trial Court reviewed the massive record of the Cox

proceeding, and found that the Cox court “fully considered all

due process issues relating to its exercise of jurisdiction over

absent class members and determined that jurisdiction existed.”

(Petition App. at 47a.) Indeed, the Cox court heard argument

concerning personal jurisdiction, and in its Final Order ruled

that: “[t]he Court has jurisdiction over all claims asserted in the

Action on behalf of all . .. members of the Settlement Class.”

(Celanese App. 33a.) Therefore, this issue is not subject to

collateral review.

Petitioners have not even attempted to challenge the Trial

Court’s finding, affirmed by the South Carolina Supreme Court,

that the “issue of subject matter jurisdiction was fully contested,

briefed, and argued before being finally decided by the Cox...

court[].” (Petition App. at 46a.) This is not surprising, as the

uncontradicted record below demonstrates that the Cox court

issued a reasoned and thorough order rejecting a subject matter

jurisdiction challenge. (R. 2465; R. 2385; see also Celanese

App. 33a.) Therefore, this issue was fully litigated and finally

decided, and is not subject to collateral review.

2. The South Carolina Supreme Court Properly

Found That The Adequacy Of The Notice

Program Was Litigated And Decided By The

Cox Court -

The record below demonstrated conclusively that the

extensive Cox notice program was the subject of numerous and

detailed briefs, including objections, several adversarial

hearings, and several court orders. (Petition App. at 48a.) After

considering each of the objections, the Cox court found that the

notice program provided the best practicable notice under the

circumstances, and that it “met and exceeded the requirements

of the United States Supreme Court, Tennessee’s Rule 23, due

process and the Constitution, as construed in [Shutts] and its

progeny.” (Celanese App. 24a.) Based on this record, the South

Carolina Supreme Court found that “the Cox court [had]

designed and utilized various procedural safeguards to guarantee

sufficient notice” to the absent class members, and that

well-established principles of full faith and credit prohibited

further review. (Petition App. at 22a.)

Petitioners seek to relitigate the issue, contending that the

Cox notice program was inadequate. However, as shown below,

the arguments which Petitioners raise here were rejected by both

the South Carolina Supreme Court and the Trial Court because,

_ among other things, the Cox court had addressed and decided

each of these contentions, and thus relitigation was barred.

First, Petitioners claim erroneously that the content of the

Cox notice was inadequate because it allegedly did not contain

information concerning the assignment of rights to defendants

and the exact amount of attorneys’ fees.* (Petition at 20-21.)

However, the Trial Court found, and the South Carolina Supreme

Court affirmed, that these issues were fully litigated and finally

decided by the Cox court. (Petition App. at 55a.) The record

8. Contrary to the Petition, the Cox Settlement provides more

generous relief than that offered on a voluntary basis through the

Plumbing Claims Group (“PCG”), as the PCG generally does not pay

for damages, just a replumb.

ere hiananailil

below demonstrates that the Cox court rejected objections to

notice similar to those Petitioners raise here, and determined

that the “notice accurately and adequately advised [class

members] of this action; the proposed Settlement and its terms,

features and benefits: their rights and options; and the applicable

procedures and deadlines for exercising them.” (R. 2251.)

Moreover, the record — which Petitioners ignore —

demonstrates that the Cox notice complied fully with the

requirements of procedural due process, as the notice informed

potential class members of (1) the existence of the action,

including a description of the pending litigation, polybutylene

plumbing and the criteria for inclusion in the settlement class;

(2) the requirements for opting out; (3) the requirements for

entering an appearance before the court; and (4) the applicability

of a final judgment to all members who do not opt out of the

class. (See R. 3960-61; Petition App. at 20a-21a; Celanese App.

24a.) Thus, relitigation of this issue is not permitted under the

Full Faith and Credit Clause.

Second, Petitioners claim erroneously that the Cox notice

program was inadequate because they did not actually receive

notice of the Cox Settlement. (Petition at 17-20.) However, the

Trial Court found, and the South Carolina Supreme Court

affirmed, that this very issue had been fully litigated and decided

by the Cox court. (Petition App. at 52a-53a; see, e.g., R. 3684;

R. 2858.) As the Trial Court concluded:

The record clearly reveals that the Cox and Spencer

courts carefully considered the issue of how to best

provide notice to unknown class members and that the

issue was fully and fairly litigated. As such, their

decisions that the respective notice campaigns provided

the best practicable notice under all the circumstances

are not subject to relitigation in this Court. ...

(Petition App. 22a.) Indeed, in determining that the Cox notice

campaign met and exceeded all due process requirements, the

Cox court found that: “Since not all Settlement Class Members

were known or readily identifiable, the notice program

implemented in this case combined multimedia publication

(newspapers, magazines, radio and television), individual mailed

notice, ongoing press and media outreach, and a toll-free

telephone information service.” (Celanese App. 19a-20a.) Thus,

further litigation of this issue is barred by the Full Faith and

Credit Clause.

Moreover, even if Petitioners were permitted to relitigate

the issue, they have misstated the law. As the South Carolina

Supreme Court recognized, this Court does not require that every

class member receive personal notice. Rather, notice must be

“the best practicable, ‘reasonably calculated, under all

circumstances, to apprise interested parties of the pendency of

the action and afford them an opportunity to present their

objections.’”’ (Petition App. at 21a) (quoting Shutts, 472 U.S. at

812.) As shown above, the extensive multi-media notice program

used in Cox clearly met this standard, as it was one of the most

comprehensive class notice campaigns ever undertaken.

The notice experts who designed and implemented the notice

program testified in the Cox court that notice would reach nearly

every class member a number of times. Based on this evidence,

which Petitioners do not contest, the Cox court approved the

notice as exceeding the constitutional requirement for adequate

notice. (Celanese App. 19a-24a.) See Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306, 317-18 (1950)

(in affirming notice by publication, the Court held that

“Impracticable and extended searches are not required in the

name of due process”).

3. The South Carolina Supreme Court Properly

Found That The Adequacy Of Representation

Was Litigated And Decided By The Cox Court

The record below demonstrated clearly that all objections

concerning the adequacy of both Cox class counsel and the Cox

class representatives were fully considered and finally decided

by the Cox court. Indeed, in its Final Order, the Cox court rejected

objections similar to those Petitioners raise here and found that

“(t]he Cox Class Counsel maintained the highest standards of

professionalism and advocacy in protecting and promoting the

interests of the Class throughout the prosecution and settlement

of this case.” (Celanese App. 30a.) Likewise, the Cox court

considered and determined that the class representatives were

adequate. (R. 2258; Celanese App. 24a.) Consistent with its

limited scope of review, the South Carolina Supreme Court

concluded that “there obviously were procedures in place to

ensure adequate representation in ... Cox, and that such

procedures were implemented throughout.” (Petition App. at

26a.)

Nonetheless, Petitioners seek to relitigate adequacy of

representation here. Once azain, both the South Carolina

Supreme Court and the Trial Court rejected nearly identical

arguments to those raised by Petitioners here because, among

other things, the Cox court had addressed and decided each of

these contentions, and thus relitigation was barred.

First, Petitioners claim erroneously that the attorneys’ fees

awarded to Cox class counsel created a conflict of interest

between class counsel and the class. (/d. at 24-25.) However,

_ the Trial Court found, and the South Carolina Supreme Court

affirmed, that this very issue was fully litigated and finally

decided by both the Cox court and Judge Silver.’ (Petition App.

at 26a, 57a-59a.) As the Cox court found: “There is no factual

basis for the asserted objection that there is any conflict of

interest with respect to the Cox Class Counsel.” (Celanese App.

30a.) To the contrary, the Cox court determined that attorneys’

fees represented only 5% of the minimum class recovery — an

amount substantially less than the percentage of counsel fees

awarded in similar cases. (/d. at 13a.) Moreover, the Cox court

found that fees paid to class counsel were separate and apart

9. Petitioners claim erroneously that “Spencer counsel”

were paid “to drop their objections” to the Cox Settlement. (Petition

at 5, 24-25.) This objection was considered and rejected by both the

Cox court and Judge Silver before any fees were awarded. (See Petition

App. at 60a-61a; Celanese App. 30a, 35a, 45a-46a.) Thus, this very

issue was fully litigated and finally decided.

from the settlement, and thus did not affect the amount of money

available to class members under the settlement. (/d.) Thus,

relitigation of this issue is barred by the Full Faith and Credit

Clause.'°

Second, Petitioners make a number of conclusory and

erroneous assertions regarding Cox class counsel’s conduct.

(Petition at 26-27.) However, the Trial Court found, and the

South Carolina Supreme Court affirmed, that the Cox court heard

and rejected essentially identical objections concerning the

conduct of class counsel. (Petition App. at 26a, 57a; Celanese

App. 44a-46a.) As the South Carolina Supreme Court noted:

“The Cox court responded specifically to various objections to

class counsel’s alleged conflicts of interest and found such

allegations to be without factual support. Indeed, the court

commented on class counsel’s professionalism in protecting and

promoting the interests of the class.” (Petition at 26a.) Thus,

this issue was fully litigated and finally decided by the Cox court,

and is not subject to collateral review.

Third, Petitioners claim that the Cox class representatives

did not adequately represent the interests of the entire class

because under Amchem Prods., Inc. v. Windsor, 521 U.S. 591

(1997), subclasses should have been created to represent the

interests of future claimants.'' (Petition at 23, 27-28.) However,

10. Contrary to the Petition, the Cox Settlement approval was not

conditioned on “the separate settlement of Plaintiff’s counsels’ private

inventory of claims.” (Petition at 24.) Indeed, in Cox, the judge who

oversaw the final two week negotiating session rejected this exact

objection: “There was absolutely NO “private inventory sale”

conditioned on class settlement. . . . [MJonitoring this issue was one of

my responsibilities.” (Celanese App. 44a-45a.) Likewise, the Cox court

found that “[t]here is no factual basis for the asserted objection that

settlements in individual cases are improperly disparate from the Cox

Settlement.” (/d. at 30a.)

11. Even if (contrary to law and fact) the Cox Final Order and

Judgment were deemed erroneous under Amchem, it would still be

entitled to full faith and credit. See Underwriters, 455 U.S. at 709 n.16

(Cont’d)

the Trial Court found, and the South Carolina Supreme Court

affirmed, that the Cox court fully considered and determined

that the class representatives were more than adequate, and that

no subclasses were necessary. (Petition App. at 61a-63a.)

Significantly, as the evidence before the Trial Court

demonstrated, the class representatives’ ability to adequately

represent future claimants was the subject of intensive litigation

in the Cox court. (See, e.g., Petition App. at 26a; R. 2257-58;

R. 3222; R. 3516-17; R. 3463; R. 2385; R. 3018-19; R. 3291.)

Moreover, it would appear that Petitioners lack standing to raise

this argument, as Petitioners each claim to have suffered an

injury.'? (See Petition App. at 2a.)

Further, assuming arguendo (and contrary to controlling

law) that Petitioners were entitled to relitigate the adequacy of

the named plaintiffs in Cox, Petitioners’ claim is meritless. First,

Amchem was decided more than 18 months after Cox, and cannot

be applied retroactively to reopen the Cox Final Order and

Judgment.’ Second, nothing in Amchem even suggests that the

Cox Settlement has constitutional defects. Amchem concerned

a direct appeal from a judgment approving a nationwide class

action settlement that sought to resolve all claims arising

from alleged exposure to the defendants’ asbestos-containing

(Cont'd)

(“an error of law . . . does not deprive its decision of the right to full

faith and credit, so long as that court fully and fairly considered its

jurisdiction to adjudicate the issue”).

12. See Shutts, 472 U.S. at 804 (“One of these prudential limits on

standing is that a litigant must normally assert his own legal interests

rather than those of third parties”).

13. Compare Harper v. Virginia Dept of Taxation, 509 U.S. 86,

97 (1993) (holdings of the Supreme Court are controlling and must be

given “full retroactive effect in all cases still open on direct review”)

(emphasis added), with James B. Beam Distilling Co. v. Georgia, 501

U.S. 529, 541-42 (1991) (“Of course, retroactivity in civil cases must

be limited by the need for finality ... Public policy dictates that there

be an end of litigation ... that matters once tried shall be considered

forever settled as between the parties”) (citations omitted).

products, regardless of whether the class members had

contracted an asbestos-related disease. In reviewing the

proposed settlement, this Court discussed potential problems

with the proposed settlement, including, among other things,

that it: (1) provided compensation in a fixed range without

-any adjustment for future inflation; (2) capped the number

of claims eligible for payment in a given year; and (3) limited |

the number of opt outs in future years. 521 U.S. at 626-28.

The Court was also concerned that future claimants would

be denied their right to opt out of the settlement because

notice had been disseminated before they had incurred any

injury. Jd. at 628. The Cox Settlement has none of these

problems.

As the Trial Court found and the South Carolina Supreme

- Court affirmed, the issues presented in Amchem are irrelevant

to the Cox Settlement, as (i) the relief under the settlement

is provided regardless of inflation; (ii) there is no cap on the

number of claims eligible for payment in any year; (iii) there

are subsequent notice and opt out periods for future claimants,

and no limitation on the number of opt outs; and (iv) if future

eligible claimants are not afforded the relief provided by the

Cox Settlement because the fund is exhausted, those

claimants retain and may pursue their claims against Celanese

and Shell with any applicable limitations periods tolled."

(Petition App. at 62a-63a; see also R. 2280-2300.) Thus,

14. Contrary to Petitioners’ contention (Petition at 25-26), there

is no conflict of interest between commercial property owners and

single unit property owners because all eligible claimants are similarly

situated and receive identical relief: a replacement of leaking

polybutylene plumbing in any eligible unit, as well as reimbursement

for any damages allegedly caused by such leaks. (See Celanese App.

17a.) Moreover, the issue of whether non-leaking properties or units

should receive relief was extensively litigated in Cox, and the Cox

court determined that limiting relief to properties or units which are

leaking was proper. (/d. at 11a.) Thus, relitigation of this issue by

Petitioners is prohibited.

contrary to Petitioners’ claim (Petition App. at 2, 8), the South

Carolina Supreme Court’s decision does not conflict with this

Court’s holding in Amchem."°

4. The Fairness Of The Cox Settlement Was

Litigated And Decided

The record below shows that the fairness and reasonableness

of the Cox Settlement was fully litigated and finally decided by

the Cox court. For example, in concluding that the Cox

Settlement is “in all respects fair, reasonable, and adequate and

in the best interests of the Settlement Class” (Celanese App.

lla-13a, 25a), the Cox court made 73 separate findings of fact

and conclusions of law that discussed at length the various

aspects of the Settlement. (Celanese App. B.) Before ruling on

the issue, the court received extensive briefing on all of these

issues, including numerous objections, held numerous

adversarial hearings and received significant evidence.

All objections, even those which were untimely or subsequently

dropped or waived, were considered by the Cox court before it

rendered its decision. (Celanese App. 26a.) Thus, every issue,

regarding every aspect of the fairness or adequacy of the Cox

Settlement, was litigated and decided by the Cox court, and

relitigation is barred.

Rather than challenging this record, Petitioners have

attempted, as they did below, to collaterally attack the relief

provided under the Cox Settlement, claiming that the Settlement

provides less than $150 per unit.'® (Petition at 26.) Petitioners

15. Petitioners’ citation to Ortiz v. Fibreboard Corp., 527 U.S. 815

(1999) (Petition at 27), is equally unavailing. There, unlike in Cox, the parties

sought to certify a mandatory settlement class on a limited fund theory

under Fed. R. Civ. P. 23(b)(1)(B). In Ortiz, the Court rejected the settlement

because it failed to “‘ensur[e] an ample, inflation-protected fund for

the future’” id. at 856 (citation omitte’), which the Cox Settlement

does through, among other things, subsequent notices and opt-out

periods and retention of claims in the event of exhaustion of the funds.

16. Petitioners erroneously claim that the few polybutylene

plumbing-related cases which went to trial against Respondents resulted

(Cont'd)

are wrong. The relief provided to class members is a replacement

of leaking polybutylene plumbing in any eligible unit, as well

as reimbursement for any damages caused by the leaks,

regardless of the cost. (Celanese App. 17a.) As a result, the Cox

Settlement offers complete relief to class members, and is many

times higher than the per unit figure claimed by Petitioners here.

Il. THE SOUTH CAROLINA SUPREME COURT’S

DECISION DOES NOT CONFLICT WITH ANY

DECISION OF THIS COURT, ANY UNITED STATES

COURT OF APPEAL, OR ANY OTHER STATE

COURT OF LAST RESORT ON THE SAME

MATTER

Notwithstanding Petitioners’ arguments (Petition at 1-2, 9),

the South Carolina Supreme Court’s decision does not conflict

with any decision of this Court, any court of appeal, or any

other state court of last resort on the same matter.

A. The South Carolina Supreme Court’s Decision

Does Not Conflict With Any Decision Of Any

Court Of Appeal Or State Court Of Last Resort To

Address The Same Matter In the Context Of A Class

Action

The courts of appeal and state courts of last resort which

have recently addressed the issue in the class action context

have held uniformly that in determining full faith and credit the

permissible scope of review is limited to whether all relevant

matters set forth in the foreign judgment were fully litigated

and finally decided by the foreign court.

(Cont'd)

in large payouts to plaintiffs. (Petition at 26.) However, Petitioners ignore

that most of those cases were either reversed, in whole or in part, on

appeal, or were settled for amounts comparable to Cox relief and for far

less than the verdicts. See Gawara v. United States Brass Corp., 74 Cal.

Rptr.2d 663 (Cal. Ct. App..1998); Amstadt v. United States Brass Corp.,

919 S.W.2d 644 (Tex. 1996); United States Brass Corp. v. Andraus,

1993 WL 313208 (Tex. App. 1993).

1, The United States Court Of Appeals For The

Ninth Circuit

This very issue was addressed by the Ninth Circuit in

Epstein v. MCA, Inc., 179 F.3d 641 (9th Cir.), cert. denied, 528

U.S. 1004 (1999) where the court held that:

Limited collateral review would be appropriate,

therefore, to consider whether the procedures in the

prior litigation afforded the party against whom the

earlier judgment is asserted a “full and fair opportunity”

to litigate the claim or issue. This review would not,

however, include reconsideration of the merits of the

claim or issue.

Id. at 648-49 (citation omitted).

The factual scenario in Epstein is strikingly similar to the

one at issue here, and even Petitioners’ counsel concedes that

the facts are “almost on all fours” with this case. Specifically,

that action, like this action, concerned the determination of

whether a class action settlement approved by a state court was

entitled to full faith and credit. There, like here, the plaintiffs

argued that Shutts created a “largely unfettered right to challenge

collaterally the adequacy of representation in class actions.”

Id. at 647. In soundly rejecting this argument, the Ninth Circuit

held, like here, that:

Shutts does not support the broad collateral review that

the Epstein appellants seek. . . . Simply put, the absent

class members’ due process right[s] [are] protected not

by collateral review, but by the certifying court initially,

and thereafter by appeal within the state system and by

direct review in the United States Supreme Court. . . .

Due process requires that an absent class member’s

right[s] be protected by the adoption of the appropriate

procedures by the certifying court and by the

courts that review its determinations; due process

does not require collateral second-guessing of those

determinations and that review.

Id. at 648 (citations omitted). Thus, the Ninth Circuit held that

a court reviewing a class action settlement approved by a foreign

court may only determine whether the matters central to the

judgment, including the Shutts due process factors, were litigated

and decided by the foreign court.

2. The United States Court Of Appeals For The

Second Circuit

Contrary to Petitioners’ assertion (Petition at 16), the South

Carolina Supreme Court’s decision does not conflict with the

Second Circuit’s holding in Stephenson v. Dow Chemical Co.,

273 F.3d 249 (2d Cir. 2001), aff'd in part per curiam by an

equally divided Court, 539 U.S. 111 (2003).

There, unlike here, an absent class member whose injury

arose after the depletion of the settlement fund sought to

collaterally attack the prior court’s determination that the class

had been adequately represented. Jd. at 257-58. In permitting

the plaintiff to collaterally challenge the adequacy of

representation finding, the Second Circuit explained that “neither

this Court nor the district court has addressed specifically the

adequacy of representation for those members of the class whose

injuries manifested after depletion of the settlements funds.”'®

Id. Thus, consistent with decisions of this Court, the Second

Circuit held only that collateral review was appropriate where,

unlike in Cox, a matter central to the prior judgment was not

fully litigated and finally determined in the prior proceeding."’

Indeed, the Second Circuit noted that this outcome was entirely

consistent with Epstein without adopting the Ninth Circuit’s

holding. /d. at 258 n.6.

17. Petitioners’ claim notwithstanding (Petition at 9, 16), the South

Carolina Supreme Court’s decision does not conflict with State v.

Homeside Lending, Inc., 826 A.2d 997 (Vt. 2003). To the contrary, the

Vermont Supreme Court ruled that collateral review is appropriate where,

unlike in Cox, a matter central to the prior judgment had not been fully

litigated and decided. Jd. at 1017-29 (“We do not accept that the Alabama

court litigated the issues on which jurisdiction over the class members

depended. Indeed, the essential deficiency in the fairness proceeding is

that the court did not litigate them”’).

Moreover, Stephenson is inapposite. Unlike in Stephenson,

Petitioners here do not ciaim that they could not obtain relief

under the Cox Settlement. To the contrary, Petitioners here admit

that they could have obtained relief under the Cox Settlement,

but were simply dissatisfied with the relief offered. (See Petition

App. at 77a.) Further, the problem faced by the Second Circuit

in Stephenson does not exist here because the Cox Settlement

fund has not been exhausted. In any event, if future eligible

claimants are not afforded the relief provided by the Cox

Settlement because the fund is exhausted, those claimants retain

their rights against Celanese and Shell, and may pursue their

claims with any applicable statutes of limitations or repose tolled.

(Celanese App. 17a.)

3. The United States Courts Of Appeals For The

First And Third Circuits

Both the First and Third Circuits have found that class action

settlements approved by state courts are entitled to full faith

and credit when the relevant matters have been fully litigated

and finally decided by the state courts. For example, in

Nottingham Partners v. Trans-Lux Corp., 925 F.2d 29 (1st Cir.

1991), the First Circuit held that the Full Faith and Credit Act

barred the plaintiffs from collaterally attacking a class action

settlement approved by the Delaware Chancery Court because

“[t]he Delaware courts, affording all the prophylaxis which the

Due Process Clause commands, adjudicated the question of

whether appellants had a right, or should have been allowed, to

opt out of the settlement.” /d. at 33. The court ruled further that

if the plaintiffs “were still dissatisfied with the Delaware

judgment, their recourse was to the United States Supreme Court

by means of certiorari, not to the lower federal courts in the

vain pursuit of back-door relief.” Jd. See also Reppert v. Marvin

Lumber & Cedar Co., 359 F.3d 53, 57 (1st Cir. 2004) (finding

that a class action settlement approved by a Minnesota state

court was entitled to full faith and credit because the Minnesota

“court determined that the class had been adequately represented

and that the settlement was fair . . .”).

Likewise, in Grimes yv. Vitalink Communications Corp.,

17 F.3d 1553 (3d Cir. 1994), the Third Circuit ruled that a class

action settlement approved by a Delaware state court was entitled

to full faith and credit. There, like here, the plaintiffs collaterally

challenged the settlement, seeking to relitigate, among other

things, the adequacy of representation and fairness of the

settlement. However, the Third Circuit found that those issues

had been “conclusively determined in the Delaware proceeding,”

and thus relitigation was prohibited. Jd. at 1562-63.

4. The Ohio Court Of Appeals

The Ohio Court of Appeals’ decision in Fine v. America

Online, Inc., 743 N.E.2d 416 (Ohio Ct. App. 2000), cert. denied,

532 U.S. 942 (2001) is the only state court of appeal decision

Celanese located that addressed this issue in the context of a

class action judgment. There, like here, absent class members

sought to collaterally attack a class action settlement approved

by an Illinois state court, arguing that they were entitled to litigate

de novo the Illinois court’s findings of adequacy of notice and

representation. /d. at 420. However, the court found that

“m]odern constitutional jurisprudence requires that the absent

class members’ rights to due process be protected not by

substantive collateral review, but rather by the application of

appropriate procedures in the certifying court and by the courts

_that review its determinations.” /d. (citations omitted).

Accordingly, the court ruied that:

[T]he appropriate collateral review involves an

examination of procedural due process and nothing

more. As long as procedural safeguards are established

by the law and employed, absent class members’

objections to the determinations of the certifying court

may be properly remedied on appeal within the forum

state’s judicial system and to the United States Supreme

Court.

Id. at 421 (emphasis in original). As the court explained in

granting full faith and credit, “[t]o hold otherwise would create

a form of collateral review that is inconsistent with both the

spirit of the class-action mechanism and the principles at the

very core of the full faith and credit doctrine.” Jd.

B. The South Carolina Supreme Court’s Decision Does

Not Conflict With Any Other Decision Of Any Court

Of Appeal Gr State Appellate Court Outside The Class

Action Context

The South Carolina Supreme Court’s decision does not

conflict with any decision of any court of appeal or state court

of last resort on the same matter outside the context of a class_

action:

1. The United States Court Of Appeals For The

Fifth Circuit

The Fifth Circuit has held unequivocally that “a wide-

ranging de novo examination of jurisdictional questions may

be inconsistent with full faith and credit principles. The scope

of review that one court may conduct to determine a foreign

court’s jurisdiction to render a challenged judgment is limited.”

A.L.T. Corp. v. Small Business Admin., 801 F.2d 1451, 1460

n.17 (5th Cir. 1986). Consistent with this Court’s holdings,

the Fifth Circuit has ruled that this limited scope of review

consists only of whether the relevant matters set forth in the

foreign judgment were fully litigated and finally decided. Jd.

See also Fidelity Standard Life Ins. Co. v. First Nat’l Bank &

Trust Co., 510 F.2d 272, 273 (Sth Cir. 1975) (“Because the

jurisdictional issue was fully litigated in the original court, this

issue may not be relitigated by way of collateral attack”).

2. The United States Courts Of Appeals For The

Tenth And Eleventh Circuits

While the Tenth and Eleventh Circuits have not stated the

proper scope of review in determining full faith and credit, both

circuits have confirmed the settled rule that a foreign judgment

is entitled to full faith and credit where the relevant matters

were litigated and decided in the foreign court. See, e. g., Read

v. Dunn, 2000 U.S. App. LEXIS 16482, *7 (10th Cir. July 14,

2000) (ruling that “unless the defect appears on the face of the

record,” a reviewing court must give full faith and credit to a

foreign court’s judgment); Harbuck v. Marsh Block & Co., 896

F.2d 1327, 1329-30 (11th Cir. 1990) (in rejecting the plaintiff’s

request to “revisit” the foreign court’s finding of jurisdiction,

the court held that “[w]here the question of personal jurisdiction

has been fully and fairly litigated and finally decided in the state

court. . . that decision must be accorded full faith and credit in

the federal court’’).

3. State Courts Of Last Resort

From Celanese’s revicw, it appears that every state court of

last resort to have recently addressed the issue outside the context

of a class action has confirmed the settled rule that a foreign

judgment is entitled to full faith and credit where the relevant

matters were litigaied and decided in tiie foreign court. For

exaraple, in Northern Ind. Commuter Transp. Dist. v. Chicago

Southshore & S. Bend R.R., 685 N.E.2d 680 (Ind. 1997), the

Supreme Court of Indiana held that the “scope of review” on a

motion to accord full faith and credit to a foreign court judgment

is “‘limited’” to whether the relevant matters were ““fully

considered’ and ‘finally determined’ in the first state... .” Jd.

at 686 (citation omitted). As such, the court rejected a challenge

to the foreign court’s jurisdiction because the issue had been

“fully briefed and argued and conclusively decided” in the

foreign court, and thus a reviewing court was “not free to second

guess” the foreign court’s decision. /d. at 687-88. See also Smith

v. Mason, 964 P.2d 743, 746 (Mont. 1998) (“the doctrine of res

judicata precludes a second court from considering jurisdiction

so long as the first court fully and fairly considered the

issue... .”); Hamilton v. Patterson, 115 S.E.2d 68, 70 (S.C.

1960) (‘‘full faith and credit . . . precludes any inquiry into the

merits of the cause of action, the logic or consistency of the

decision, or the validity of the legal principles on which the

judgment is based”’) (citation omitted); Mayhew v. Caprito, 794

S.W.2d 1, 2 (Tex. 1990) (same).

CONCLUSION

Under established law, the Full Faith and Credit Clause

permits a reviewing court to conduct only a limited collateral

review to determine if the matters central to the foreign judgment

were fully litigated and finally decided in the foreign court. As

the South Carolina Supreme Court explained, “[w]ithout limited

review, a nationwide class action could be vulnerable to

collateral actions in the 49 other states in which it was not

litigated initially.” (Petition App. at 17a.) The record below

demonstrates conclusively that all relevant matters set forth in

the Cox Final Order and Judgment, including jurisdiction,

adequacy of notice, adequacy of representation and the fairness

and reasonableness of the settlement, were fully litigated and

finally decided after several adversarial proceedings and on a

voluminous record by the Tennessee court. Therefore, the South

Carolina Supreme Court held correctly that the Cox Final

Order and Judgment is entitled to full faith and credit, and that

Petitioners’ claims were properly dismissed. The South Carolina

Supreme Court’s decision is fully consistent with the established

authority of this Court and the other federal and state appellate

courts to have addressed similar issues, and thus further review

of this matter is not warranted. For these reasons, Celanese

respectfully requests that the Court deny the Petition for Writ

of Certiorari. -

Respectfully submitted,

JANE W. TRINKLEY PauL M. O’Connor III

Rosert L. WIDENER Counsel of Record

McNair Law Firm, P.A. SETH A. MoskowI!Tz

P.O. Box 11390 KasowI!Tz, BENSON, TORRES

Columbia, SC 29211 & FRIEDMAN LLP

(803) 799-9800 1633 Broadway

New York, NY 10019

(212) 506-1700

Attorneys for Respondent

Hoechst Celanese Corporation

APPENDIX

APPENDIX A — FINAL JUDGMENT OF THE

CHANCERY COURT FOR OBION COUNTY,

TENNESSEE AT UNION CITY, TENNESSEE

DATED AND FILED NOVEMBER 17, 1995

IN FHE CHANCERY COURT FOR OBION COUNTY,

TENNESSEE AT UNION CITY, TENNESSEE

Civil Action No. 18,844

CLASS ACTION

TINA COX, CHARLES HOMER CLOAR, MARY H.

CLOAR, MELODY ALFORD, COUNTRY VILLAGE

MOBILE HOME PARK, and PHYLLIS BIRMINGHAM,

individually and on behalf of all other individuals and entities

similarly situated,

Plaintiffs,

SHELL OIL COMPANY, d/b/a SHELL CHEMICAL

COMPANY, and HOECHST CELANESE CORPORATION,

Defendants.

FINAL JUDGMENT

This matter is before the Court on motion by the parties

for final approval of their proposed settlement as set forth in

the Settlement Agreement filed July 31, 1995, as amended

by an Amendment dated October 6, 1995, a Second

Amendment dated October 24, 1995, and a Third Amendment

Appendix A

dated November 9, 1995 (the “Agreement”’). Also before the

Court is the Application of Class Counsel for Award of

Attorneys’ Fees and Expenses, and Awards to the

Representative Plaintiffs (the “Application”).

A hearing on the motion and Application was held on

November 8 and 9, 1995, pursuant to the Court’s Order of

July 31, 1995, granting preliminary approval of the settlement

and the August 7, 1995, order conforming the class definition,

under procedures set forth in the August 24, 1995, Order

Approving Forms of Notice, Scheduling Fairness Hearing

and Setting Opt-out and Objection Dates. -

This Final Judgment is entered pursuant to a Final Order

Approving the Class Action Settlement, Attorneys’ Fees and

Expenses, and Awards to Representative Plaintiffs (the “Final

Order’) which is entered together herewith. The Court has

determined that the Class Action Settlement, as encompassed

within the Agreement, should be approved as fair, adequate,

and reasonable to the Settlement Class under Rule 23.05

of the Tennessee Rules of Civil Procedure, and that the

Application should be granted.

The Court has further determined that there is no just

reason for delay in the entry of final judgment in accordance

with the Final Order pursuant to Rule 54.02 of the Tennessee

Rules of Civil Procedure.

Accordingly, it is ORDERED that judgment is hereby

entered in accordance with the Final Order.

Appendix A

It is further ORDERED that the Settlement Class is

defined as follows:

All persons and entities that (1) own real property

or structures in the United States in which there

was installed between January 1, 1978 and July

31, 1995, polybutylene plumbing with acetal

insert or metal insert fittings or a polybutylene

yard service line; (2) own or previously owned

such real property or structures and have already

incurred any cost or expense, by reason of leakage

from, or from failure, repair, or removal of, all or

any portion of such polybutylene plumbing or yard

service line which was installed between January

1, 1978 and July 31, 1995; or (3) will own such

real property or structures during the term of

entitlement to relief under the Settlement

Agreement.

The definition of the Settlement Class excludes:

(1) All persons who, in accordance with the terms

of the Settlement Agreement, execute a timely

request for exclusion from the Settlement Class;

(2) the Defendants; the Released Manufacturers;

the parent and any subsidiary, affiliate and

controlled entity of any of them; and the officers

and directors of each of them; and (3) all parties

to Geno Cioe, et a!. v. Shell Oil Company, et al.,

Case No. 662214, and Robert L. Williams, et al.

v. Shell Oil Company, et al., Case No. 658403,

and related combined actions (Case Nos. 640245,

Appendix A

654709, 656787, 661372, 665521 and 665527) in

the Superior Court of the State of California in

and for the County of San Diego, and all members

of the certified classes in those lawsuits.

It is further ORDERED that the Court directs that the

settlement be consummated in accordance with the terms and

conditions of the Agreement.

It is further ORDERED that the Amended Complaint

and all claims and causes of action asserted therein are

dismissed with prejudice with costs to be paid from the

settlement fund in accordance with the terms of the

Settlement Agreement.

It is further ORDERED that, in the event that the

settlement does not become final (as more fully defined in

the Agreement) in accordance with the terms of the

Agreement, then this Final Judgment and the Final Order

shall be rendered null and void and be vacated, and the

Agreement shall be rendered null and void in accordance

with the provisions thereof.

It is further ORDERED that, without affecting the

finality of the Final Order and this Final Judgment, the Court

shall retain continuing jurisdiction over this action and the

settling Parties (as more fully defined in the Agreement),

including all members of the Settlement Class; the

administration and enforcement of the settlement; and

the benefits to the Settlement Class, including for such

purposes as supervising the implementation, enforcement,

construction, and interpretation of the Settlement Agreement.

Appendix A

It is further ORDERED that, subject and pursuant to

the terms and conditions of the Agreement, Plaintiffs and all

members of the Settlement Class are barred and permanently

enjoined from prosecuting (in any forum) against Shell Oil

Company and/or Hoechst Celanese Corporation any and all

claims, demands, causes of action of every kind and nature,

obligations, damages, losses, and costs, whether known or

unknown, actual or potential, suspected or unsuspected,

contingent or fixed, either arising out of or relating to any of

the facts, transactions, actions, or conduct alleged in this

action, or that were or could have been asserted or sought in

the action, other than any past, present, or future claim for

bodily injury (including wrongful death) and associated

emotional distress and mental anguish.

It is further ORDERED that, in accordance with the

above-described Application and the Funding Agreement

referred to in the Agreement, the defendants shall pay

Plaintiffs’ Class Counsel, as attorneys’ fees and expenses,

the sum of $45 million, plus interest at the rate applicable to

federal court judgments entered on July 31, 1995, for the

period from July 31, 1995, until the earlier of July 31, 1996,

or when paid.

It is further ORDERED that, in accordance with Section

25.1 of the Agreement and with the Funding Agreement

referred to in the Agreement, the defendants shall pay the

sum of $3,000.00 to each single Representative Plaintiff or

Representative Plaintiff married couple.

It is further ORDERED, pursuant to Rule 54.02 of the

Tennessee Rules of Civil Procedure, that the Court hereby

Appendix A

DIRECTS the entry of this judgment as a final judgment

based upon the Court’s finding that there is no just reason

for de'2™. notwithstanding the Court’s retention of jurisdiction

to oversee implementation and enforcement of the Agreement

as set forth above, and the Court’s continuing jurisdiction to

provide for supplemental notice (and related proceedings)

to potential members of the Settlement Class as to whom the

Court previously received requests for exclusion from the

Settlement Class.

Dated at Union City, Tennessee, this 17 day of November,

1995.

s/ W. Michael Maloan

W. MICHAEL MALOAN, CHANCELLOR

APPENDIX B — FINAL ORDER APPROVING THE

CLASS ACTION SETTLEMENT, ATTORNEYS’

FEES AND EXPENSES, AND AWARDS TO

REPRESENTATIVE PLAINTIFFS OF THE

CHANCERY COURT FOR OBION COUNTY,

TENNESSEE, UNION CITY, TENNESSEE

FILED NOVEMBER 17, 1995

IN THE CHANCERY COURT FOR

OBION COUNTY, TENNESSEE

AT UNION CITY, TENNESSEE

Civil Action No. 18,844

CLASS ACTION

OBION COUNTY

Paula Rice

Clerk and Master

D.C. & M.

TINA COX, CHARLES HOMER CLOAR, MARY H.

CLOAR, MELODY ALFORD, COUNTRY VILLAGE

MOBILE HOME PARK, and PHYLLIS BIRMINGHAM,

individually and on behalf of all other individuals and entities

similarly situated,

Plaintiffs,

SHELL OIL COMPANY, d/b/a SHELL CHEMICAL ~

COMPANY, and HOECHST CELANESE CORPORATION,

Defendants.

Appendix B

FINAL ORDER APPROVING THE CLASS ACTION

SETTLEMENT, ATTORNEYS’ FEES AND EXPENSES,

AND AWARDS TO REPRESENTATIVE PLAINTIFFS

This matter is before the Court on motion by the parties'

for final approval of their proposed settlement (the

“Settlement”) as set forth in the Settlement Agreement

filed July 31, 1995, as amended by an Amendment dated

October 6, 1995, a Second Amendment dated October 24,

1995, and a Third Amendment dated November 9, 1995

(the “Agreement”). Also before the Court is the Application

of Class Counsel for Award of Attorneys’ Fees and Expenses,

and Awards to the Representative Plaintiffs (the

“Application”). A duly noticed hearing on the motion

and Application was held on November 8 and 9, 1995,

(the “Fairness Hearing”) pursuant to the Court’s Order of

July 31, 1995, granting preliminary approval of the

Settlement and the Augusi 7, 1995, order conforming the

class definition (collectively the “Preliminary Approval

Order’), under procedures set forth in the August 24, 1995,

Order Approving Forms of Notice, Scheduling Fairness

Hearing and Setting Opt-out and Objection Dates.

Notice of the Fairness Hearing was given to potential

class members nationwide in accordance with the Preliminary

Approval Order and the Court approved notice program.

Voluminous pleadings and briefs were submitted by the

settling parties in support of the Settlement and in response

1. The parties are the named irdividual and representative Cox

plaintiffs, on behalf of the certified Settlement Class, and defendants

Shell Oil Company d/b/a Shell Chemical Company and Hoechst

Celanese Corporation.

Appendix B

to all objections and motions filed regarding the Settlement,

including the various objections and related papers filed by

objector Tony Martin, et al., and affiliated objectors through

their attorneys (the “Martin Objectors”). The parties,

numerous interested members of the Settlement Class, and

others appeared at the Fairness Hearing, either individually

or by their respective attorneys. The Court heard and

considered evidence in support of the proposed Settlement.

This evidence included live testimony, affidavits,

documentary and video presentations, as well as oral

representations by various attorneys. The attorneys for the

parties and others were heard. An opportunity to be heard

was given to all other persons requesting to be heard in

accordance with the Preliminary Approval Order. This

included a significant number of members of the Settlement

Class who, in some instances, had traveled great distances

from other states to appear and participate in the Fairness

Hearing, who were invited to and did make statements and

ask questions regarding the terms of the Settlement and the

relief it provides.

As more fully set forth below, the Court has determined

that the notice given to members of the Settlement Class

certified in the Preliminary Approval Order fully and

accurately informed the Settlement Class members of all

material elements of the proposed Settlement; was the best

notice practicable under the circumstances; was valid, due,

and sufficient notice to all Settlement Class members; and

complied fully with Rule 23 of the Tennessee Rules of Civil

Procedure, the United States Constitution, and any other

applicable law.

10a

Appendix B

OPINION

The Court has greatly benefited from the fine briefs and

oral arguments of the attorneys in this case, all of whom are

worthy adversaries, and appreciates the manner in which they

have conducted themselves in this most difficult, complex,

and hotly contested litigation. Great credit must be given to

Judge Richard Silver of Monterey County, California for his

initiative to coordinate a settlement conference with the Cox

and Spencer’ parties. The revised Cox Settlement is due, in

no small part, to his efforts. The Court also commends Judge

Hardaway of Greene County, Alabama, for his willingness

to join in this unprecedented effort by three state courts to

coordinate and settle competing national class actions. As to

the settling parties, the plaintiffs, the plaintiff class, Shell

Oil Co., and Hoechst Celanese Corp., the Court acknowledges

that if it were not for your recognition of this opportunity to

reach a global settlement of these issues, all of these efforts

would have been in vain. You have put aside your armor and

your hardened positions from years of battle and have finally

made peace.

Compromises are favored in the law. Neither this Court,

nor any court, has the resources to fully litigate all issues,

nor is it always fair to the parties to do so. The time, cost,

and lack of finality of protracted litigation require certain

matters to be settled. The polybutylene plumbing litigation’s

time has come. Closure is not only appropriate, but timely.

2. Spencer, et al v. Shell Oil, et al, Case No. CV 94-074, Circuit

Court of Greene County Alabama, Honorable Eddie Hardaway, Jr.,

presiding.

lla

Appendix B

The parties to this and to the many other individuai and group

cases that have comprised the polybutylene plumbing

litigation have fought long and hard with varying degrees of

success and defeat; however, the affected party, the consumer,

has seen very little benefit from these efforts. The Cox

settlement agreement is a compromise. In every compromise,

each side must abandon or set aside its ideal position and

reach an agreement that is fair and reasonable to all concerned

under the circumstances, and not insist on terms only

beneficial to one party. The Cox settlement is not perfect. I

would have preferred that the Agreement include no leak

requirements and a larger claims “window” for class

members. The Court has some concern the $75 million cap

on past damages may not adequately pay all past damages in

full; however, these concerns must be weighed in light of

the numerous unique advantages to the consumer that the

Cox settlement does provide. 7

The Court finds the Settlement is fair, adequate and

reasonable.The $950 million dollars is a minimum

contribution of the defendants to those who are affected by

polybutylene plumbing. When the Court initially gave

preliminary approval to the proposed Settlement, this factor

was the leading factor in granting that approval. As counsel

for the parties have confirmed at various times in open court

as the hearings have progressed in this matter, the initial

funding commitment (now increased to $950 million) may

ultimately be more if funds are expended and provided by

the defendants and if other responsible parties contribute to

the fund in the future. Due to the uncertainty of the size of

the class and how many claims will ultimately be filed, this

Court would not have approved a “limited fund” which

12a

Appendix B

provided less than full relief while demanding full release.

If the worst case does present itself, that is, if the class is as

large as six million people, all claims are presented, and the

fund is totally expended; the only prejudice to the consumer

will be the delay caused by the filing of claims and payment

of funds. The Agreement tolls statutes of limitations for class

members. The Agreement provides that any consumers not

fully reimbursed or compensated under the terms of the

Agreement would be able to pursue all legal and equitable

claims and remedies (including punitive damages)

individually and as a class.

The Court finds the notice program is excellent.

As specified in the findings below, the evidence supports

the conclusion that the notice program is one of the most

comprehensive class notice campaigns ever undertaken. The

Court is satisfied that all reasonable efforts have been made

to reach affected consumers. ~

The Court must also consider the complexity, the

expense, and the likely duration of these proceedings if

settlement were not reached and approved. The Court must

weigh the benefits of settlement against the likely outcome

of litigation. As the Court has already stated, much has been

spent and much has been done over the past years in group

and individual polybutylene pipe litigation across the country,

but not much has been accomplished for the benefit of the

consumer. The claims in Cox and Spencer each have their

own legal problems, which, if fully titigated, would delay

the ultimate resolution of these cases for many years to come.

If litigated, complex legal issues would be presented, such

as statutes of limitations and repose, choice of appropriate

13a

Appenaix B

state laws, liability, and measure of damages. All of these

issues, if litigated and appealed, could clog the courts across

the country for years to come. There is a question as to

whether some state courts would give full faith and credit to

another state court’s determination of these issues.

It is an important aspect of the Settlement that the

plaintiffs’ attorney’s fees and costs are paid by the defendants

in addition to the settlement fund, and are not deducted from

the settlement fund. In the absence of a comprehensive Class

Settlement now, as presented here in Cox, after the resolution

of the contentious issues described above, any ultimate

recovery available for consumers would be reduced by

attorney’s fees. These normally range from a third to forty

percent. None of this delay, risk, mounting transaction costs

and reduction of recovery by individual fees would be in the

long-term interest of the consumer. In Cox, the attorney’s

fees requested are much less: approximately five percent of

the settlement fund; moreover, unlike a typical contingent

fee, they are not paid from the fund. The request for fees in

the case is approved. The Court finds that they are reasonable

under the circumstances, and the Court is pleased to approve

them.

The Court is pleased with the reaction of the class

members to the proposed Settlement. The Court is greatly

comforted by the small number of individual opt-outs, the

removal of objections by Spencer class counsel and by Tony

Martin, who is represented by the Fleming group, and the

support expressed by the consumers who testified at the

Fairness Hearing. The Court finds that the Consumer

Plumbing Recovery Center (“CPRC”) claims facility

l4a

Appendix B

procedures which have been outlined to the Court and which

are provided for in the Agreement, appear to constituie a

simple, consumer-friendly and efficient method of adjusting

the claims in this case.

The discussions and negotiations that ultimately lead to

the settlement presented for Court approval were, from all

reports and from the Court’s own observation, intensive,

exhaustive, and often heated. The Court finds the Agreement

is the result of good faith, arms-length, and non-collusive

negotiations. The Agreement is fair, adequate, and reasonable

under the circumstances, and it is approved.

ADDITIONAL FINDINGS AND CONCLUSIONS

The entire matter of the proposed Settlement and the

Application having been fully heard and duly considered by

the Court, the Court further FINDS and CONCLUDES, in

addition to the findings and conclusions in the foregoing

Opinion, as follows:

1. The polybutylene plumbing litigation has been

pending, in various forms and in various courts around the

country, for more than a decade. It has included individual

cases, cases with large numbers of individual plaintiffs, and

putative nationwide or statewide class actions brought in

federal court and in many state courts.

2. The first nationwide polybutylene plumbing class

action was filed in September 1993 by lawyers who are now

members of the team of Cox Class Counsel. The action,

15a

Appendix B

Robert Beeman, et al. v. Shell Oil Company, et al.,

No. 93-047363, was filed in a state district court in Harris

County, Texas.

3. Over the course of many months of intensive

negotiations, involving a neutral mediator at many critical

junctures, a tentative settlement of the Beeman case was

achieved in October 1994. In February 1995, however, the

Texas state court denied preliminary approval of that

settlement without comment.

4. After the Court in this case certified the nationwide

class on June 13, 1995, Cox Class Counsel joined with the

plaintiffs’ attorneys in the Beeman action to prosecute this

case for the benefit of mobile and site-built homes with

polybutylene plumbing across the country.

5. Collectively, this combined team of Class Counsel

included highly qualified and well-regarded lawyers with

extensive class action and complex litigation experience, as

well as lawyers with vast experience in polybutylene

plumbing litigation.

6. Class Counsel then were able to negotiate a settlement

generally patterned after that originally arrived in Beeman,

although the minimum funding commitment was $100

million greater, other features were added, and only two of

the three Beeman defendants, Shell and Celanese, were

involved.

7. Because of the pendency of a nationwide class action

in Greene County, Alabama, and of other polybutylene actions

l6a

Appendix B

around the country, with many brought as class actions,

including an uncertified case for a putative statewide mobile

homeowner class in the Superior Court of Monterey County,

California,’ Judge Hardaway and this Court agreed that Judge

Silver in Monterey would further the cause of final resolution

of polybutylene plumbing litigation if he was appointed to

serve as a settlement judge for all three courts.

8. Judge Silver issued an October 12, 1995 Order Setting

Settlement Conference with the endorsement of this Court

and Judge Hardaway, to convene the coordinated settlement

process. Other state courts with proposed class actions were

asked, by the parties and/or by Judge Silver, to dismiss or

stay their proceedings in deference to the coordinated

settlement effort in order to give it an opportunity to succeed,

undistracted by collateral litigation.

9. Accordingly, from October 23, 1995, through

November 7, 1995, the day before the Fairness Hearing in

this Court, intensive and continuous global settlement

negotiations were conducted among Cox Class Counsel, the

Spencer counsel, and defendants’ counsel and representatives

through the mediation and supervision of Judge Silver.

10. As a result of these concentrated efforts, a

comprehensive settlement was reached, resulting in

significant enhancements to the Settlement as it was

originally presented to the Court and preliminarily approved

on July 31, 1995.

3. Meers, et al vs. Shell Oil, et al, Case No.M 30590, Superior

Court of the State of California, County of Monterey, Honorable

Richard M. Silver, presiding.

2 LSE AL EADIE NEIO LOM

17a

Appendix B

il. The resulting Settlement, documented and as

presented for final approval at the Fairness Hearing, provides

consumers with a recovery program consisting of

reimbursement of otherwise unreimbursed expenses for

repairs to and replacement of leaking polybutylene plumbing

systems and property damage caused by such leaks, as well

as an extensive program for replacement of such leaking

plurnbing systems.

12. Some of the features of this Settlement are these:

a. Free replacement of polybutylene plumbing

systems installed since January 1, 1978, if two or more

qualifying leaks occurred before August 21, 1995, or if only

one such leak occurs either in the two years following: that

date or during a period (of from 10 to 16 years, depending

on the typ. of structure) following installation of the system;

b. Reimbursement of the unreimbursed expenses of

plumbing repairs, replacements, and property damage from

January 1, 1978, to August 21, 1995, up to $75 miHion will

be distributed, pro rata if necessary, for these expenses; and

property damage after August 21, 1995, at 100 cents on the

dollar;

c. An unlimited funding potential, with the

defendants committed to to initially provide up to $950

million for the relief; if additional funds are required, the

defendants will either provide them, or litigation will be

resumed with all applicable statutes of limitations and repose

tolled in the interim;

18a

Appendix B

d. Provision for additional relief to eligible members

of the Settlement Class who experience special needs in

connection with qualifying leaks;

e. A comprehensive notice program, including

notice every three years through the life of the program, which

ends in 2009; and

f. The payment of class counsel’s attorneys’ fees and

expenses in addition to the $950 million reserved for relief

for the Settlement Class.

13. The Court is not aware of any other class action

settlement with successive notices as provided in the Cox

Settlement.

14. In reaching this Settlement, the defendants have

foregone very significant defenses and issues which could

have precluded or limited liability as to some or many class

members’ claims. These include the statutes of limitations.

and repose, selection of the appropriate states’ laws applicable

to various issues, the “economic loss” limitation on

recoveries of the type sought here, the lack of privity between

the members of the Settlement Class and the defendants, the

fact that many of the members of the Settlement Class

purchased their structures “as is,” and, of course, the risk

that plaintiffs would not be successful in proving their

allegations. In agreeing to this Settlement, the defendants

have displayed commendable corporate responsibility,

responsiveness, and good will toward consumers.

19a

Appendix B

15. The Court appointed Rust Consulting, Inc. and

Kinsella Communications Ltd. as class notice providers in

this case. Richard Redfern, president of Rust Consulting, and

Katherine Kinsella, president of the communications firm

bearing her name, testified at the Fairness Hearing. The Court

also considered Ms. Kinsella’s affidavit and the affidavit of

Jeffrey Dahl, Executive Vice President of Rust Consulting,

in connection with their activities as notice providers.

16. Cox Class Counsel and the notice providers worked

with Todd B. Hilsee, an experienced class action notice

consultant, to design a class notice program of unprecedented

reach, scope, and effectiveness. Mr. Hilsee was accepted by

the Court as a qualified class notice expert at an earlier

hearing to approve the commencement of the notice program.

He testified at the Fairness Hearing, and his affidavit was

also considered by the Court, as to the operation and outcome

of this program.

17. The above-mentioned individuals provided

documents, information, and affidavits at the outset of the

notice period that assisted the parties in designing, and the

court preliminarily approving for implementation, a

singularly comprehensive and creative notice program.

18. Beginning in August, 1995, and extending into

October, 1995, an extensive notice effort was undertaken in

this case to implement the Court approved notice program

specified in the Preliminary Approval Order.

19. Since not all Settlement Class members were known

or readily identifiable, the notice program implemented in

20a

Appendix B

this case combined multimedia publication (newspapers,

magazines, radio and television), individual mailed notice,

ongoing press and media outreach, and a toll-free telephone

information service. The purpose of the program was to make

potential Settlement Class members aware of the Action and

the Settlement, and to encourage them to identify themselves

to the notice providers, so they could receive further written

notices and information, and be placed on the notice

providers’ Settlement Class member database.

20. Commencing on or before August 21, 1995, which

is the Initial Notice Date as specified in the Agreement, more

than 5.6 million copies of the Court approved Notice of Class

Action and Proposed Settlement were mailed, by first class

mail-or overnight service, to Settlement Class members in

accordance with the Preliminary Approval Order.

21. During September, 1995, the Court approved

summary notice was published in Parade Magazine, USA

Weekend, People Magazine, and TV Guide in accordance with

the Preliminary Approval Order. The combined circulation

of these consumer publications and national magazines is

over 73 million. During August and September, 1995, Court

approved notice appeared twice in Friday editions of USA

Today, with combined circulation of over 4.7 million.

22. Also during September, 1995, the Court approved

summary notice appeared in 201 daily and weekly

newspapers in 13 targeted states (Alabama, Arizona,

California, Colorado, Florida, Georgia, Louisiana, Maryland,

Nevada, North Carolina, South Carolina, Texas, and Virginia)

and the District of Columbia. The combined circulation of

2la

Appendix B

these newspapers exceeds 23.6 million. In addition, the notice

appeared in Spanish in 38 Hispanic newspapers, with a

combined circulation over 3 million, in 29 media markets

during September, 1995. Moreover, the notice appeared in

247 daily, weekly, bimonthly, and monthly African-American

newspapers with a combined circulation of nearly 6 million.

23. Notices were also published in the October, 1995,

editions of various trade publications, comprising a total

circulation of 244,000.

24. A 30-second spot television notice was produced and

appeared 213 times from August 21, 1995, through

September 3, 1995, on national and cable television,

including on such networks as ABC, NBC, CBS, TNN, CNN,

and TNT. During the same period, a 30-second Spanish

language television notice appeared 18 times on the Univision

Network, a popular Spanish language network.

25. Apress release, a media advisory, a public service

announcement, a video news release, a radio news release,

and a press kit were all prepared and disseminated as part of

the notice program in this case. The press release went to

2,000 newspapers, wire services, magazines, and broadcast

points across the United States through PR Newswire.

The press release and media advisory were also disseminated

to 469 media outlets, specifically targeting consumer

reporters and media in the top 250 media markets and 84

local daily newspapers in the 13 targeted states and the

District of Columbia. 142 outlets, with a combined

circulation of more than 14.5 million, have confirmed using

the press materials to publish articles. It is estimated that the

22a

Appendix B

public service announcement was broadcast by radio stations

yielding nearly 2.9 million gross impressions; an additional

5.5 million impressions are estimated from the broadcast of

the radio news release. The video news release was used by

at least 21 outlets with combined viewership of more than

1.7 million. Finally, a two-column article was provided to

10,000 daily and weekly newspapers.

26. Court approved notice forms were disseminated

through various online computer services, including

CompuServe, Prodigy, and America Online, and with Legal

Link on the Internet.

27. The various forms of published notice provided

recipients with a toll free “800” telephone number to which

potential Settlement Class members could call to obtain

further information and to request the full notice packet to

be mailed to them. The telephone message was updated as

the notice program progressed, and commonly raised

questions were answered by live operators, in English or

Spanish as required by the caller. The parties prepared and

updated scripts and information by which the operators were

able to provide the general information commonly requested -

by callers.

28. The toll-free telephone facility established for notice

purposes in this case received more than one million

telephone calls in response to the published notice program.

29. Over 195,000 requests for a claim form have been

received by the notice providers.

23a

Appendix B

30. Mr. Hilsee demonstrated, by affidavit and in live

testimony at the Fairness Hearing, a number of significant

facts regarding the reach and effectiveness of the notice.

The national media campaign reached an extraordinarily high

percentage of United States adults aged 35 years and over:

approximately 114 million individuals, or 92.11 % of this

population. Each of these adults was exposed to the national

media notice an average of 4.01 times. The national media

campaign also reached approximately 151 million persons

in the United States aged 25 years and over, representing

90.88 % of this population. Each of the individuals in this

larger, secondary target group was reached an average of 3.76

times by the national media notice, a frequency that also

exceed the primary target reach in other class actions. These

_are higher reach and frequency statistics than have been found

adequate by courts in other class actions. These data do not

include the reach of the notice campaign through means other

than the national paid notice campaign, such as the television

and print notices targeted to Hispanic and African-American

media, the local newspaper notices, the non-paid media and

direct mail notices to millions of Settlement Class members.

31. Multifaceted notice programs like that implemented

in this case have been approved by other courts and utilized

successfully for similar purposes in large consumer or product

class actions such as this one, where most class members are

not individually identified at the outset. See, e.g., In re

Domestic Air Transportation Antitrust Litigation, 141 F.R.D.

534 (E.D. Pa. 1992); 148 F.R.D. 297 (E.D. Pa. 1992);

In re Silicone Gel Breast Implant Products Liability

Litigation, MDL 926 (N.D. Ala. 1994); Roberts v. Bausch &

Lomb, Inc., 94-C-1144-W (N.D. Ala. 1995).

24a

Appendix B

32. As other courts have done with respect to the less

comprehensive notice programs they approved, this Court

finds that the notice program described above, as designed

and implemented, met and exceeded the requirements of the

United States Supreme Court, Tennessee’s Rule 23, due

process and the Constitution, as construed in Phillips

Petroleum Co. v. Shutts, 472 U.S. 797 (1985) and its progeny.

33. Thus, the best notice practicable under the

circumstances has been provided to members of the

Settlement Class. That notice accurately and adequately

advised them of this action; the proposed Settlement and its

terms, features, and benefits; their rights and options; and

the applicable procedures and deadlines for exercising them.

34. A full opportunity has been provided to the members

of the Settlement Class to participate in the Fairness Hearing,

both orally and by way of written submission to the Court.

35. The Court previously found the requirements of

Rule 23 of the Tennessee Rules of Civil Procedure were met

and certified a nationwide class for litigation and

trial purposes in the Order of National Class Certification.

While such certification was and is contested by the

defendants, they have agreed to class certification for

settlement purposes, to promote a comprehensive, classwide

resolution of polybutylene pipe litigation.

36. The numerosity, typicality, commonality, and

adequacy requirements of Rule 23.01 of the Tennessee Rules

of Civil Procedure are satisfied as to the Settlement Class in

connection with the Settlement in this case.

25a

Appendix B

37. In accordance with Rule 23.02(3), common issues

of fact and law predominate and make certification of the

Settlement Class for settlement purposes efficient and

appropriate. The members of the Settlement Class have been

afforded the right and opportunity to exclude themselves from

the Settlement Class.

38. The settlement encompassed within the Agreement

is in all respects fair, reasonable, and adequate and in the

best interests of the Settlement Class.

39. The Court-zpproved notice program provided clear

and simple procedures and instructions for the submission

of objections by or on behalf of Settlement Class members.

For example, paragraph 10 of the Court-approved Notice of

Class Action and Proposed Settlement required objections

to be submitted, in writing, postmarked not later than October

20, 1995, and further stated, “if you do not comply with the

procedure and the deadline stated herein, you imay not be

entitled to be heard at the Fairness Hearing or to otherwise

contest the approval of the Settlement, or to appeal from any

orders or judgments of the Court entered thereon.”

All objections, however styled, that failed to comply with

the procedures and deadlines set forth in the notice program,

are hereby found to be procedurally deficient and are

disqualified in accordance with the foregoing statement.

40. The Court has also reviewed the Principles of

Agreement dated November 7, 1995, executed by the parties,

including the terms applicable to U.S. Brass Corp., Eljer

Manufacturing, Inc., and Eljer Industries, Inc. The terms of

the Principles of Agreement appear to be reasonable and in

26a

Appendix B

accordance with the efforts being made to seek a global

resolution of all litigation pertaining to the issues among the

parties. The prior Cox settlement was unclear as to

the effect of funds received from U.S. Brass Corp.,

Eljer Manufacturing, Inc., and Eljer Industries, Inc.

The revised settlement makes clear that amounts received

from U.S. Brass and/or Eljers will add to the minimum fund

of $950 million. If that settlement is perfected and approved

by the United States Bankruptcy Court, the minimum fund

would substantially increase.

41. In independently determining to approve the

Settlement and the Application, the Court has considered the

substance of all objections to the Settlement, whether timely,

qualified or not, including those by the Martin Objectors and

others that have since been withdrawn or stricken.

42. Certain objectors have asserted that the proposed

Settlement must be reduced by a proposed settlement of

claims against du Pont in the Spencer case pending in the

Circuit Court of Greene County, Alabama, which the

objectors characterized as a $120 million settlement.

43. The proposed du Pont settlement has not been

approved by the Spencer court, and this Court may not

speculate whether it will be approved by the Spencer court.

44. The proposed du Pont settlement in Spencer purports

to entitle a claimant to a rebate of 8% of monies the claimant

pays for replumbing his or her structure.

27a

Appendix B

45. The Settlement before this Court, in the minimum

amount of $950 million, provides for the assignment of

Settlement Class members’ claims against du Pont and others

to defendants Shell and Celanese.

46. Objectors are incorrect in asserting that the “credit”

arising from the assignment reduces the Defendants’

contribution to the Settlement. The original Cox settlement

was $850 million to be paid by the Defendants. The revised

Cox settlement requires the Defendants to pay a minimum

of $950 million to consumers with assignment of rights,

against du Pont, regardless of whether du Pont ultimately

participates in the settlement. The revised Cox settlement

substantially increases benefits to consumers.

47. Contrary to objectors’ assertions, all interest earned

on funds held by the CPRC will be for the benefit of the

Settlement Class and will not be credited against the

Defendants’ obligations under the Agreement.

48. Because of the structure of the Settlement, the

Defendants’ obligation to fund the CPRC on an ongoing,

as-needed basis, and the Defendants’ obligation to pay

reimbursement for Past Expenses in a reasonable time after

the close of the one year claim filing period on August 21,

1996, and any related opt out period that may be necessary

under § 4.5.1 of the Agreement, there is no significant ability

by the Defendants to delay payments due under the

Settlement.

49. Objectors are incorrect in asserting that, even before

the Defendants’ initial funding commitment was increased

¥ 28a

Appendix B

from $850 million to $950 million, the “net funding by

Shell and Celanese under . . . the agreement [was) only $547

million.”

50. The notice provided to the Settlement Class was

neither misleading nor defective.

51. The defendants are each responsible for one-half of

the settlement obligations as specified in the Settlement

Agreement unless and until the respective liabilities are

established by arbitration under the Funding Agreement.

52. The Cox Class Counsel have undertaken a

reasonable risk that each of the defendant companies will be

solvent and capable of fulfilling its obligations under this

agreement.

53. Had the plaintiffs settled at separate times with Shell

and Celanese, it is highly unlikely that there would ever have

been joint and several liability between them.

54. The Settlement is more favorable to the Settlement

Class than litigation if it is assumed that one of the defendants

will, some years from now, become unable to pay all claims,

since the class will receive payment under the Settlement

promptly, thereby reducing the number of claimants who

would be subjected to proving claims in a bankruptcy.

55. The Agreement provides broad ranging powers for

the enforcement of a defaulting defendant’s obligations,

including the full panoply of equitable powers this Court

possesses.

29a

Appendix B

56. The Agreement expressly provides that the default _

of one defendant does not exonerate the other defendant of

its obligations under the Agreement.

57. Past expenses will be compensated after expiration

of one year from August 21, 1995, the Initial Notice Date

under the Agreement.

58. Claimants will not, contrary to an objection, be

required to wait 14 years to receive their entitled

reimbursements or distributions under the Agreement.

59. The so-called exclusion of a “not water heater

leak’’—a leak occurring within six feet of piping measured

from the take-off at the unit’s hot water heater-does not apply

to any claim for reimbursement of repair costs and property

damage. Thus, the only exclusion is for eligibility for a

replumb, and even there, the exclusion applies only if

(1) it is the first leak in the unit and (2) it can be repaired

without cutting into the unit’s walls, ceilings, or floors.

60. Therefore, a replumb will be provided under the

Agreement even if the hot water heater leak is the first leak,

if to repair the leak would require cutting into the walls,

ceilings, or floors of the unit. Similarly, there will be a

replumb if the hot water heater leak is the second leak in the

system.

61. The claimant has the right to select the contractor

to do the replumbing and property damage repair work.

30a

Appendix B

62. Nothing in the Agreement abrogates the warranty

of work done by the contractors and suppliers of pipe and

other components in the replumb.

63. The Agreement permits special relief involving

unusual hardship, so long as the CPRC Ombudsman

and President concur that such relief should be provided.

This provision allows the CPRC to provide relief from a

breach of warranty arising out of replumbing work, where

the warrantor fails to provide or cannot provide corrective

relief. CPRC § VI, E.

64. There is no factual basis for the asserted objection

that there is any conflict of interest with respect to the Cox

Class Counsel.

65. The Cox Class Counsel maintained the highest

standards of professionalism and advocacy in protecting and

promoting the interests of the Class throughout the

prosecution and settlement of this case.

66. There is no factual basis for the asserted objection

that settlements in individual cases are improperly disparate

from the Cox Settlement.

67. There is no need to provide additional notice to the

entire Settlement Class by reason of the revised terms of the

Settlement since the Court approved the notices disseminated

to the Settlement Class. All changes have been to improve

the Settlement over that described in the notices, and none

of the changes has an adverse impact on any Class member.

3la

Appendix B

68. As class action jurisprudence has accumulated,

various federal and state courts, in Tennessee and elsewhere,

have articulated criteria and factors that courts may consider

in evaluating proposed settlements for final approval.

See, e.g., Third Nat'l Bank v. Scribner, 212 Tenn. 400, 410,

370 S. W.2d 482 (1963); Clark Equip. Co. v. International

Union, Allied Indus. Workers, 803 F.2d 878, 880 (6th Cir.

1986), cert. denied sub nom. Jones v. Clark Equip. Co., 480

U.S. 934 (1987); Williams v. Vukovich, 720 F.2d 909, 922

(6th Cir. 1983); Bailey v. Great Lakes Canning, Inc., 908

F.2d 38, 42 (6th Cir. 1990); In re Warner Communications

Sec. Litig., 618 F. Supp. 735 (S.D.N.Y. 1985) aff'd, 798 F.2d

35 (2d Cir. 1986); Girsh v. Jepson, 521 F.2d 153, 157 (3d

Cir. 1975). This Court has been guided, generally, by the

procedures and criteria recommended in the Manual for

Complex Litigation, 3d ed. (Federal Judicial Center 1995),

§§ 30.4, et seq., since the federal and Tennessee class action

provisions and criteria are consistent.

69. Factors that may be considered in assessing the

fairness, adequacy, and reasonableness of the proposed

settlement include: the plaintiffs’ likelihood of ultimate

success on the merits balanced against the amount and form

of relief offered in the settlement; the stage of the proceedings

at which the settlement is reached; the extent of cumulative

discovery or investigation; the nature of the settlement

negotiations; the costs, risks, and delays of establishing

liability and damages; the views of experienced counsel; the

reaction of the class members themselves; the comparison

of the settlement’s benefits with other settlements or with

the alternative of continuing litigation; and whether approval

of the settlement is in the class members’ and the public

32a

Appendix B

interest. As the above opinion and findings demonstrate,

consideration of these and other recognized factors, such as

the participation and recommendations of an experienced and

able settlement judge and the testing of the settlement’s merits

in the clash of adversary proceedings, demonstrate the

Settlement’s entitlement to approval.

70. Expert opinions have been submitted in support of

the proposed Settlement. (See Opinion of Professor David

Rosenberg, Affidavit of Professor Paul H. Rubin). In

approving the Settlement, the Court has considered these

opinions.

71. The Court will retain jurisdiction and address a

supplemental notice program, on a joint motion of the settling

parties, to advise all members of the Settlement Class on

whose behalf a purported or actual request for exclusion was

received of the enhanced Settlement, providing those

individuals with a new opportunity to request exclusion from

the Settlement Class in light of the enhanced Settlement.

72. There is no just reason for delay in the entry of a

final judgment and decree by reason of such supplemental

notice and related proceedings or of the retention by the Court

of continuing jurisdiction to oversee the implementation and

enforcement of the Agreement and Settlement. ;

73. The Application is fair and should be granted.

Based upon the foregoing, it is hereby ORDERED,

ADJUDGED, and DECREED:

33a

Appendix B

1. The Court has jurisdiction over all claims asserted in

the Action on behalf of all Settlement Class members and

over all parties to the Action, including all members of the

Settlement Class.

2. The Settlement Class is defined as follows:

All persons and entities that (1) own real property

or structures in the United States in which there

was installed between January 1, 1978 and July

31, 1995, polybutylene plumbing with acetal

insert or metal insert fittings or a polybutylene

yard service line; (2) own or previously owned

such real property or structures and have already

incurred any cost or expense, by reason of leakage

from, or from failure, repair, or removal of,

all or any portion of such polybutylene plumbing

or yard service line which was installed between

January 1, 1978 and July 31, 1995; or (3) will

own such real property or structures during the

term of entitlement to relief under the Settlement

Agreement.

The definition of the Settlement Class excludes:

(1) All persons who, in accordance with the terms

of the Settlement Agreement, execute a timely

request for exclusion from the Settlement Class;

(2) the Defendants; the Released Manufacturers;

the parent and any subsidiary, affiliate and

controlled entity of any of them; and the officers

and directors of each of them; and (3) all parties

34a

Appendix B

to Geno Cioe, et al. v. Shell Oil Company, et al.,

Case No. 662214, and Robert L. Williams, et al.

v. Shell Oil Company, et al., Case No. 658403,

and related combined actions (Case Nos. 640245,

654709, 656787, 661372, 665521 and 665527) in

the Superior Court of the State of California in

and for the County of San Diego, and all members

of the certified classes in those lawsuits.

3. All members of the Settlement Class who have not

timely elected to be excluded from the Settlement Class are

members thereof and are bound by this Order and the Final

Judgment being entered herewith.

4. Pursuant to Rule 23.01, Rule 23.02, and Rule 23.03

of the Tennessee Rules of Civil Procedure, the Court confirms

the certification of the Settlement Class provided in the

Preliminary Approval Order and maintains such certification

for purposes of final approval of the settlement.

-5. The Class Representatives and Plaintiffs’ Class

Counsel designated in paragraph 8 of the Court-approved

Notice of Class Action and Proposed Settlement to represent

the Settlement Class are hereby confirmed.

6. The Agreement and the Funding Agreement entered

into by the Defendants pursuant to the Agreement are hereby

made part of the record in this case and as such shall have

the full force and effect of an order of the Court.

7. Pursuant to Rule 23.05 of the Tennessee Rules of Civil

Procedure, the Court hereby grants final approval of the

35a

Appendix B

Agreement and the Settlement set forth in the Agreement

and finds that it is fair, adequate, and reasonable to the

members of the Settlement Class.

8. The objections that were filed, whether timely or not,

have been considered and are all overruled.

9. Accordingly, the Court directs that the Settlement be

consummated in accordance with the terms and conditions

of the Agreement.

10. Plaintiffs and all members of the Settlement Class

are barred and permanently enjoined from prosecuting

(in any forum) against Shell Oil Company and/or Hoechst

Celanese Corporation any and all claims, demands, causes

of action of every kind and nature, obligations, damages,

losses, and costs, whether known or unknown, actual or

potentizl, suspected or unsuspected, contingent or fixed,

either arising out of or relating to any of the facts,

transactions, actions, or conduct alleged in this action, or

that were or could have been asserted or sought in the action,

other than any past, present, or future claim for bodily injury

(including wrongful death) and associated emotional distress

and mental anguish.

11. The Complaint as amended, and all claims and

causes of action asserted therein are dismissed with prejudice

and costs, as provided in the Agreement, to be paid from the

settlement fund.

12. The Application is hereby granted. In accordance

with the Funding Agreement referred to in the Agreement,

36a

Appendix B

the defendants shall pay Plaintiffs’ Class Ccunsel, as

attorneys’ fees and expenses, the sum of $45 million plus

interest at the rate applicable to federal court judgments

entered on July 31, 1995, for the period from July 31, 1995,

until the earlier of July 31, 1996, or when paid. In addition,

in accordance with Section 25.1 of the Agreement and with

the Funding Agreement referred to in the Agreement, the

defendants shall pay the sum of $3,000.00 to each single

Representative Plaintiff or Representative Plaintiff married

couple.

13. In the event that the Settlement does not become

Final (as more fully defined in the Agreement) in accordance

with the terms of the Agreement, then this Order and the

Final Judgment and Decree being entered herewith shall be

rendered null and void and be vacated and the Agreement

shall be rendered null and void in accordance with the

provisions thereof.

14. Without affecting the finality of this Order or of the

Final Judgment being entered herewith, the Court shall retain

continuing jurisdiction over the Action and the settling Parties

(as more fully defined in the Agreement), including all

members of the Settlement Class; the administration and

enforcement of the Settlement; and the benefits to the

Settlement Class, including for such purposes as supervising

the implementation, enforcement, construction, and

interpretation of the Agreement.

15. Any disputes or controversies arising with respect

to the interpretation, enforcement, or implementation of the

Agreement shall be presented by motion to the Court.

37a

Appendix B

16. Pursuant to Rule 54.02 of the Tennessee Rules of

Civil Procedure, the Court hereby directs the entry of this

judgment based upon the Court’s finding that there is no just

reason for delay notwithstanding the Court’s retention ot

jurisdiction to oversee implementation and enforcement of

the Agreement and its continuing jurisdiction to provide for

supplemental notice (and related proceedings) to potential

members of the Settlement Class as to whom the Court

previously received requests for exclusion from the

Settlement Class.

s/ W. Michael Maloan

CHANCELLOR

ENTERED: November 17, 1995

38a

APPENDIX C — MINUTE ORDER:

RECOMMENDATION RE: SPENCER/COX

SETTLEMENT DATED NOVEMBER 8, 1995-

SUPERIOR COURT OF CALIFORNIA,

COUNTY OF MONTEREY

Date: November 8, 1995

Hon. Richard M. Silver

No. M 30590

HELEN MEERS et al

Plaintiffs,

SHELL OIL COMPANY, et al,

Defendants.

Minute Order:

RECOMMENDATION RE:

SPENCER/COX SETTLEMENT

RMS/bh

Pursuant to the joint order of SPENCER, COX, and

MEERS this court conducted a mandatory settlement

conference commencing October 23, 1996 and continuing

through November 7, 1996. At the beginning of the sessions

the court explained its role and the competing interests.

It is important to reiterate several of those points in this

minute order.

39a

Appendix C

This litigation has been ongoing for almost 10 years.

Two national class actions are new pending with the plaintiff

consumers represented by different counsel. A substantial

number of individual cases are pending in Texas. Settlements

representing small groups of consumer plaintiffs had been

reached in the past. Two settlements in San Diego County have

been recently consummated. If global agreement was not

reached, this litigation could continue for another 10 years.

The competing parties each had substantial disagreements with

settlements that had been reached in the two national class

actions. It was the stated purpose of these settlement discussions

to achieve global resolution of the two national! class actions

and the individual cases in Texas. Ifa fair and appropriate global

settlement couic be reached, I indicated I would recommend its

approval to each of the courts presidi1g over the national class

actions and also recommended that the courts presiding over

the numerous state class actions accord the settiement full faith

and credit.

In addition to the abwve I also defined my role. It was

important that everyone un<erstood that settlement, simply for

the purpose of settlement, was 2ot appropriate. Before I would

agree to recommend the settlement, it would have to meet a

class fairness standard, I felt this to be essentiai to insure that

the resolution of the differences did not turn on attorney fees

_and, just as significantly, to insure that there was a reasonable

relationship between the class settlement and the settlement of

the individual cases pending in Texas. Obviously these are also

matters to be considered by the judges in the required fairness

hearings. I reiterate these points to assure all courts that these

concerns were not overlooked and, in fact, guided all my

settlement discussions and my recommendations.

40a

Appendix C

I perceived several points of concern with respect to both

national class action settlements and the Texas settlement.

They related to the extent of the funding, definitions of the

class and qualifying leaks, monitoring performance, and

establishing an appropriate basis for differentiating individual

settlements in Texas. I also wanted to make sure that any

differences with the recent settlements in San Diego were

rationally distinguished. Of great concern was finally

reaching global settlement so that the consumer plaintiffs

across the nation could receive similar relief and begin to

receive it soon.

When the discussions started the animosity between

counsel and the parties was significant. It was clear that I

needed to deal with this issue in order to make significant

headway. For this reason I forced people to stay togethe~ and

continue to discuss the issues, notwithstanding the intensity —

of these discussions. There is no doubt that I disapproved of

some of the discussions. As people began to come together I

let it be known, in no uncertain words, that as we moved

forward into the next step in the negotiations that I would no

longer tolerate these animosities to control the discussions.

The change was significant, and we did move forward for

purposes of reaching global resolution.

All settlements, by definition, involve compromise.

In making these comments it is not my intent to suggest that

any counsel’s motivations were improper. Each had valid

arguments. In summary, it was my intent to aide in finding a

rational basis for compromise and at the same time make

sure that the settlement met class fairness requirements.

I believe it does do so for the following reasons:

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Appendix C

1. Funding: Under COX I questioned whether the fund

was sufficient to be a truly national class resolution. If it

was insufficient, then the litigation would only be delayed,

not ended, and benefits to class members who were not “iirst

in line” could be non-existent. Underfunding would also put

those individuals and the judicial system to a risk of 10 more

years of litigation. Under COX any funds paid by DUPONT

in Spencer would potentially reduce the fund. In addition

the agreement was unclear as to the disposition of any funds

received from ELGERS. This raised a possibility of

substantial potential reductions in the net “fund”. On the other

hand I also perceived that the funding demands by SPENCER

counsel and Fleming were best case scenarios and subject to

substantial contrary legal arguments. I also had significant

concerns with the SPENCER/DUPONT settlement in that

the 8% payment on replumbs would require a consumer to

completely replumb and pay and pay the costs, only to receive

a small amount in return. As a result my goal was, if possible,

merge the two settlements, or, as a minimum, achieve a

funding level that would most probably accommodate all

persons who have had qualifying leaks, pay persons

unreimbursed damages they have suffered, and provide an

extended “warranty” period of time, with sufficient probable

funding, for those persons suffering qualifying leak during

this period. Evaluating the numbers of people responding to

both notice programs, the number of individual claimants in

Texas, and the numbers of persons already having received

benefits through other settlements or relief, I believe the

funding under these combined settlements meets this goal

and that the probability of further litigation, as a result of

underfunding, is minimal. In fact, with the increased funding,

addition of the contingent ELGER’s funding, and the

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Appendix C

independent settlement of the substantial number of claims

in Texas, it appears to at least triple the net funds available.

I realize that there was no limit in San Diego. However you

cannot compare a settlement in a small area with a settlement

for the nation. I believe that the funding level here will most

probably satisfy this problem. Although all plaintiff’s counsel

would have liked more, it is unrealistic to believe that the

defendants would so agree and still give up the substantial

legal and factual arguments that are compromised in this

agreement. I believe this settlement represents a fair

compromise and greatly diminishes the chance that the fund

will run out before completion of its terms.

2. Class definitions and Time periods: COX had a

window period of one year. Other settlements had longer

periods of time. The definitions of qualifying leaks differ in

some of the settlements. COX does not count a hot water

leak within 6 feet of the water heater as a first leak toward a

replumb unless it requires cutting into a wall, others do.

Significantly, any such leak allows for a claim for damages.

There are significant factual disputes as to this issue.

The limitation is only as to a first leak; it only applies if no

cut into the wall is required; the evidence suggests that if the

system is defective there is a probability of multiple leaks.

This makes sense. The modified settlement does provide for

an extended window period from one year to two years.

The remainder of the time periods are consistent with past

settlements. With the modification of the extended window

period, I believe the definition of the class and the

qualifications are fair to the consumer class and represent a

fair compromise of the competing legal and factual disputes.

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Appendix C

3. Monitoring: The settlement as modified creates a new

plumbing claims group that will have plaintiff representations

from both COX and SPENCER and the defendants. If there

are disputes, they are to be resolved by the judges of the

national class action or a special master appointed by them.

This process insures prompt attention to replumbing and

payment of damages, an even handed evaluation of claims

and requests for treatment as “exceptional circumstances”,

and a fair method of resolution of disputes. Of significance

is the monitoring of the replumb procedures by plaintiffs

counsel and the court.

4, Plaintiff’s counsel take on the affirmative obligation

to seek the relief provided for in the ELGERS/US Brass

settlement and, in the event funding is insufficient, to

continue with the litigation. Although I had no doubt that

they would do so, I felt it important to affirmatively so

represent this in the agreement.

Many of the settlements in these actions have had some

differing provisions. In fact they are “trade-offs” depending

on the particular situation. I believe this settlement is as good

as or better than the settlemenits in San Diego. This settlement

pays for unreimbursed damages, San Diego does not.

The final date for submission of claims is significantly longer

in this settlement than in San Diego. This settlement includes

metal fittings; San Diego does not. Of great significance is

the fact that this settlement provides for ongoing monitoring

of claims by class counsel and court review in the event of

disputes, in addition to the ombudsmen process. | am

bothered by the failure to include that in San Diego. In that

settlement the ombudsmen review is very limited, and in good

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Appendix C

part limited to the information provided by defendants.

Review and monitoring by class counsel is also limited. The

increased window period here, although slightly less than

San Diego, is adequate and compensates for the qualifications

on leaks. Overall, the provisions of and improvements to

COX/SPENCER, as reflected in the this settlement, leads

me clearly to the above conclusion.

In addition to the above, it is important that I emphasize

certain points. One lawyer continually proposed that we

create a national class action in California and merge the

other two into this new action. Although I considered his

request, I continually told him I saw no basis or need for

this. I told him I was acting only as a settlement judge. This

role permitted me to monitor the settlement process and still

permit independent review at the fairness hearing by the other

respective courts. The Alabama and Tennessee courts are

perfectly capable of monitoring the global settlement and

are the proper courts to do so. The expenses associated with

a whole new notice program would be ill spent and not

necessary.

I was particularly sensitive to insuring independent

negotiation with the individual Texas claimants and the class

so that the former would not control the latter. Although I

was seeking global settlement, I made it clear that if an

appropriate settlement was reached with the class, and no

settlement could be reached in Texas, so be it. In fact Fleming

had little or no participation in negotiating the class

settlement. There was absolutely NO “private inventory sale”

conditioned on class settlement. No doubt I was also

concerned that, because of previous animosity, Fleming not

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Appendix C

be improperly “cut out”; however, in no way would I permit

him, nor did he ever try, to condition class settlement on his

settlement. It was I who always kept us concentrated on global

settlement.

I believe the individual settlement of his claims is rational

and reasonable and does not provide inappropriate

“betterments”. As indicated above, because of the law relating

to class action, monitoring this issue was one of my

responsibilities. His clients that will receive some greater

relief are all persons who have actively participated in the

litigation process. They are all named parties in lawsuits and

have participated in some significant way in the litigation,

i.e., had their units inspected and/or answered interrogatories

or been deposed. All settlements, including those negotiated

by attorneys in this case, have acknowledged greater

compensation for individuals who have been named class

representatives and/or actively participated in the litigation.

I also monitored the proceedings to insure there was no

wrongful “trade of rights” between clients. I had a specific

discussion concerning some of the precious demands with

counsel. It was understood that some demands were a “really

best case scenario” that would require extremely favorable

findings of disputed facts and law, and there was appropriate

room for compromise.

There appears to be a significant misunderstanding of

the modified agreements by some counsel. There is no

inappropriate switching of “opt outs”, nor would I allow it.

As noted above there are now substantial improvements

reflected in these settlements. With these improvements there

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Appendix C

is nothing wrong with merging the processes and allowing

individuals another opportunity to consider whether they

really want to “opt out”.

The fees and costs in this case are significant. Many

attorneys participated on all sides. The litigation was hard

fought and complex. The fees will be divided between many

attorneys and firms. I did not participate in the setting of

fees. They do not come out of the fund. Regardless of the

amount of fees, as I stated above, I set my own standards of

fairness for the class and acted as a buffer against any claim

that the class would suffer on account of fees.

It was my intent to try to resolve all disputes.

Unfortunately we could not achieve settlement with

DUPONT, primarily as a result of their dispute with SHELL

and HOECHST CELANESE. | trust and hope that matter

can also be settled. As a result all actions will remain pending

- against DUPONT, and it will be the responsibility of Judge

Hardaway to determine the appropriateness of the proposed

SPENCER/DUPONT settlement at a fairness hearing.

I commend all counsel for their efforts and hard work

and their willingness to ultimately put aside the strong

feelings that had separated them and-to-bring this matter to

resolution. I regret that settlement could not be reached with

Dupont. I commend the attorneys for Shell and Hoechst

Celanese and those corporations for their willingness to

proceed with the settlements with the class on the ‘ame terms

and conditions and not permit the difficulties w. 1 Dupont

to prejudice the class.

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Appendix C

All of the above will be reviewed by Judge Maloan and

Judge Hardaway at the fairness hearing and by each state

court judge who considers these matters. All I can say is that

I was fully aware of my responsibilities and do not make

this recommendation lightly. As I told all counsel, when |

put my “stamp of approval” on this settlement, and make

this recommendation, it reflects on my credibility. I would

not and do not make this recommendation “lightly”.

With the assumption that final settlement document will

be prepared reflecting the principles of agreement, for the

above reasons I recommend approval of the settlement and

that all concerned courts accord it full faith and credit.

A copy of the final principles of agreement and settlement

document, as reviewed by this court, will be presented to all

courts and counsel by the attorneys.

DATED: 11-8-95

s/ Richard M. Silver

RICHARD M. SILVER

Judge of the Superior Court

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.