In re Dow Corning Corp.

Decision Date29 July 1997
Docket NumberBankruptcy No. 95-20512.
Citation211 BR 545
CourtU.S. Bankruptcy Court — Eastern District of Michigan



Barbara J. Houser, David M. Bernick, Dallas, TX, for Dow Corning Corporation.

Lenard M. Parkins, Edward F. Blizzard, Houston, TX, for Official Committee of Tort Claimants.

Ogden N. Lewis, Donald S. Bernstein, Sheryl L. Toby, New York City, for Official Committee of Unsecured Creditors.

Stanley K. Joynes, Randall L. Frank, Richmond, VA, for Proposed Official Committee of Physician Claimants.

James L. Stengel, Richard F. Broude, New York City, for Dow Chemical Company.

Debra D. Mccullough, New York City, for Corning, Inc.

Larry J. Nyhan, James F. Conlan, Chicago, IL, for Baxter Healthcare.


ARTHUR J. SPECTOR, Bankruptcy Judge.

I. Introduction

On February 15, 1996, Dow Corning Corporation (the "Debtor") filed two motions. One was styled a "Motion . . . to Estimate the Tort Claims and to Establish Estimation Hearing Procedures". The other was a "Motion for the Appointment of an Independent Panel of Scientific Experts Under Federal Rule of Evidence 706."

The Official Committee of Tort Claimants ("TCC") filed a motion of its own on March 5, 1996. This motion seeks judicial approval of a tort-claims estimation procedure which differs markedly from that proposed by the Debtor. Predictably, each party objected to the other's estimation motion.1 The TCC also objected to the Debtor's request that a panel of experts be appointed.2

The disposition of those motions constitute core proceedings within the jurisdiction of this Court. 28 U.S.C. §§ 1334, § 157(a), (b)(2)(A) and (B). This Opinion sets forth the Court's findings of fact and conclusions of law. See F.R.Civ.P. 52(a) (incorporated by F.R.Bankr.P. 7052); F.R.Bankr.P. 9014.

A. Pre-petition History

Dow Corning Corporation, which is the result of a joint venture between The Dow Chemical Company and Corning Glass Works (now Corning, Incorporated), was formed in 1943 for the purpose of developing and producing products based on silicone chemistry. At present, Dow Holdings, Inc. (a wholly owned subsidiary of Dow Chemical) and Corning are the sole shareholders of the Debtor, each owning 50% of the common stock.

Because they are spelled so similarly, "silicone" is frequently mistaken for "silicon." However, silicone is a man-made substance that was discovered shortly before World War II. See Hall v. Baxter Healthcare Corp., 947 F.Supp. 1387, 1401 n. 30 (D.Or.1996); Marcia Angell, M.D., Science on Trial: The Clash of Medical Evidence and the Law in the Breast Implant Case 36 (1996). Silicone is a synthetic polymer (or chain) primarily composed of two of the earth's most common elements, silicon and oxygen. Angell, supra at 36. "Repeating silicon and oxygen atoms are bonded together" to form the polymer's "backbone." Stuart R. Kerr, III, UV Silicone Release Coatings: State of the Art, Adhesives Age, July 1, 1996. Attached to each silicon atom are side chains of hydrogen and carbon. Id. By varying the polymer's length and configuration, silicone can be given almost any consistency ranging from liquid to solid. Angell, supra at 36. Due to its pliability, as well as its possession of certain other physical characteristics, silicone has proven to be a very versatile product.

The Debtor, along with its subsidiaries, produces thousands of silicone-based products, the great majority of which are directed toward non-medical uses. However, silicone has also been found to be useful in the medical products industry. "Physicians have used silicone products in the human body for various purposes since the 1950s." Hall v. Baxter Healthcare, 947 F.Supp. at 1401. Examples of medical devices that contain silicone include various types of implants, artificial joints, heart valves, shunts, disposable needles and implantable contraceptives. Id.; Angell, supra at 36. The Debtor has either produced, provided component parts for, or supplied raw materials for many of these medical products.3

Silicone was first used to enlarge women's breasts shortly after World War II in Japan. The implanted silicone was not contained in a packet, but instead was injected directly into the breast. Angell, supra at 35-36. The effects of the direct silicone injections were more often than not disastrous for the women who received them. Id. at 36. Typically, these women not only suffered disfigurement but also had to endure extremely painful complications. Id. at 38. At the time, silicone was generally considered to be inert inside the human body and was not itself considered to be the problem. Id. at 36. Concerns about the possible toxicity of silicone when placed inside the human body did not arise until a much later date.

In 1961, two plastic surgeons, Drs. Thomas Cronin and Frank Gerow, developed the idea of placing silicone gel inside a sealed packet that would then be surgically implanted inside the woman's breasts. Id. at 38-39. The doctors collaborated with the Debtor to create implants "consisting of a rubbery silicone envelope containing silicone gel." Id. at 39. Despite various innovations and improvements since that time, this is still the basic design of the breast implant. The intent of the design was to eliminate both the migration of silicone throughout the body and the uneven and irritating nature of the scarring that resulted from direct silicone injections. Id.

Silicone gel-filled packets were first placed inside a woman for purposes of breast augmentation in 1962. In 1964, the Debtor introduced silicone-gel breast implants to the market. Id. They were immediately considered a great improvement over silicone injections. Id. at 40. Nonetheless, it has long been known that silicone-gel breast implants can lead to certain problems separate and distinct from any pathogenic effect that they might have. The body's natural reaction to the presence of a foreign body inevitably leads to the formation of scar tissue that encapsulates the invader. Problems can arise when the scar tissue that surrounds the implant contracts. If contracture occurs, the scar tissue squeezes in on the implant, which can cause it to become hard and misshapen. Id.

Silicone-gel breast implants have also been shown to leak or "bleed" over time and under certain conditions are susceptible to rupture. The primary concern with both leakage and rupture is that once the silicone escapes the rubbery envelope, it may not stay contained within the encasing scar capsule, thus enabling silicone to escape into the body. Id. at 41. Another non-pathogenic problem is that breast implants make it difficult to perform mammographies because they obstruct the passage of x-rays through the breast tissue, id. at 42, thereby creating a potential impediment to the early detection of breast cancer. Heidi Li Feldman, Science and Uncertainty in Mass Exposure Litigation, 74 Tex. L.Rev. 1, 19 (1995). But through proper manipulation of the breast implant, mammography can still be performed. Angell, supra at 42.

Around 1977, a jury awarded a silicone-gel breast implant recipient $170,000 for complications that developed after her implants ruptured. See V. Mueller & Co. v. Corley, 570 S.W.2d 140 (Tex.Civ.App.1978); see also Deborah R. Hensler and Mark A. Peterson, Understanding Mass Personal Injury Litigation: A Socio-Legal Analysis, 59 Brook. L.Rev. 961, 992 (1993). Purportedly, this was the first successful breast implant lawsuit against the Debtor. Package inserts soon began warning implant recipients of the potential non-pathogenic side effects. Angell, supra at 42. As a result, complaints about these side effects have never been a source of great legal difficulty for the Debtor.4

In the 1980s, a few reports surfaced suggesting that silicone gel may be pathogenic — i.e., that it can cause systemic disease in humans. This period also saw the beginning of a slow trickle of lawsuits alleging that silicone gel leaking from breast implants can cause much more grievous harm to the recipient than the non-pathogenic complications mentioned above. Id. at 52. The lawsuits were initially brought by women alleging that silicone gel had caused them to develop an auto-immune connective tissue disease such as lupus, scleroderma or rheumatoid arthritis. Gina Kolata, A Case of Justice, or a Total Travesty?, New York Times (June 13, 1995). Ultimately, many lawsuits alleged that the presence of silicone gel in the plaintiff's body resulted in more "general symptoms like aches and pains, fatigue, insomnia, memory loss and headaches." Id. The various symptoms proved hard to classify and eventually the term "silicone disease" was coined. Id.

The first suit to successfully assert that silicone gel caused connective tissue disease was the 1984 case of Maria Stern, in which the jury awarded the plaintiff a verdict of $2 million. Stern v. Dow Corning Corp., et al., No. C-83-2348-MHP (N.D.Cal.1984); Angell, supra at 52. After this lawsuit the Debtor modified its package inserts to include an acknowledgment that there were "reports of suspected immunological responses to silicone mammary implants. . . ." Angell, supra at 57. However, the Debtor's new package insert warning also added that "convincing evidence does not exist to support a causal relationship between exposure to silicone materials and the acquisition or exacerbation of a variety of rheumatic and connective tissue disorders." Id.

In March of 1992, the Debtor ceased marketing silicone gel for breast implantation. Two months later, the Food and Drug Administration ordered that implants containing the gel be taken off the market. Subsequent to the FDA's action and the attendant publicity, the volume of lawsuits against breast implant manufacturers began to increase dramatically. In 1992, more than 3,000 such...

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