In re Dow Corning Corp.
| Decision Date | 29 January 2002 |
| Docket Number | No. 00-2524.,No. 01-1001.,No. 00-1349.,No. 00-2523.,No. 00-2517.,No. 00-2520.,No. 00-2525.,No. 00-2518.,No. 00-2521.,No. 00-2516.,No. 00-2522.,No. 00-1102.,00-2516.,00-2517.,00-2518.,00-2520.,00-2521.,00-2522.,00-2523.,00-2524.,00-2525.,01-1001.,00-1102.,00-1349. |
| Citation | 280 F.3d 648 |
| Parties | In re DOW CORNING CORPORATION, Debtor. Class Five Nevada Claimants (00-2516); Janet S. Lacy, individually and on behalf of her minor child, Andrea Lane Atherton; Jama Nmi Russano, individually and as guardian for Richard Todd Russano; Michael Nmi Russano; Andrea Lane Atherton, Claimant, a minor; Richard Todd Russano, a minor; (00-2517); 1,300 Australian Tort Claimants (00-2518); Martha S. Jacobs (00-2520); Helen D. Schroeder (00-2521); Beatrix Shishido (00-2522); Pennsylvania Coordinated Silicone Breast Implant Litigation (00-2523); Karen L. Hustead (00-2524); Certain Foreign Claimants (00-2525); Hartford Accident and Indemnity Company; Hartford Fire Insurance Company; Nutmeg Insurance Company; First State Underwriters Agency of New England Reinsurance Corporation; Twin City Fire Insurance Company; Excess Insurance Company; First State Insurance Company (01-1001); United States of America (01-1102); New Zealand Claimants (01-1349), Plaintiffs-Appellants, v. Dow Corning Corporation, Debtor; Official Committee of Tort Claimants; The Dow Chemical Company; Corning, Incorporated; Official Committee of Physician Creditors; Hartford Accident and Indemnity Company; Hartford Fire Insurance Company; Nutmeg Insurance Company; First State Underwriters Agency of New England Reinsurance Corporation; Twin City Fire Insurance Company; Excess Insurance Company; First State Insurance Company; Certain Lloyds of London Underwriters; Certain London Market Insurance Companies, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
John A. White, Jr. (argued and briefed), White Law Chartered, Reno, Nevada, David B. Goroff (argued and briefed), Foley & Lardner, Chicago, Illinois, Stephen H. Weiner (argued and briefed), Sybil Shainwald (briefed), Law Offices of Sybil Shainwald, New York, New York, Jeffrey Clair (argued and briefed), United States Department of Justice, Civil Division, Appellate Section, Washington, D.C., William K. Flynn (briefed), Strauss & Troy, Cincinnati, Ohio, Ralph E. Brubaker (briefed), Conyers, Georgia, John P. Kopesky (briefed), Sheller, Ludwig & Badey, Philadelphia, Pennsylvania, Lewis J. Saul, Lewis Saul & Associates, Washington, D.C., Alan S. Levin (briefed), Incline Village, Nevada, for Appellants.
George H. Tarpley (argued and briefed), David L. Ellerbe (briefed), Neligan, Tarpley, Stricklin, Andrews & Foley, Dallas, Texas, James C. Schroeder (briefed), Mayer, Brown & Platt, Chicago, Illinois, H. Jeffrey Schwartz, Mark A. Phillips, Mark D. Tucker (briefed), Benesch, Friedlander, Coplan & Aronoff, Columbus, Ohio, Jill K. Schultz, Nixon Peabody (briefed), Rochester, New York, Richard McDermott, Leisa J. Hamm, Margaret M. Anderson (briefed), Lord, Bissell & Brook, Chicago, Illlinois, Jeff H. Galloway (briefed), Hughes, Hubbard & Reed, New York, New York, Kenneth H. Eckstein, Jeffrey Trachtman (briefed), Kramer, Levin, Naftalis & Frankel, New York, New York, for Appellees.
Martha S. Jacobs (briefed), Tempe, Arizona, Helene D. Schroeder (briefed), Alexandria, Virginia, Beatrix Shishido (briefed), Mililani, Hawaii, Karen L. Hustead (briefed), Hesperia, California, pro se.
Before MARTIN, Chief Circuit Judge; DAUGHTREY and MOORE, Circuit Judges.
Years after Dow Corning Corporation filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, and following extensive and vigorous negotiations, the third proposed plan of reorganization for Dow was submitted to the bankruptcy court. The bankruptcy court confirmed the Amended Joint Plan of Reorganization for Dow and the district court affirmed the bankruptcy court's Confirmation Order. Certain claimants who voted against the Plan appealed. The first principal issue presented here is whether a bankruptcy court may enjoin a non-consenting creditor's claims against a non-debtor to facilitate a reorganization plan under Chapter 11 of the Bankruptcy Code. For the following reasons, we AFFIRM the district court's conclusion that, under certain circumstances, a bankruptcy court may enjoin a non-consenting creditor's claim against a non-debtor to facilitate a Chapter 11 plan of reorganization. However, the factual findings of the bankruptcy court do not demonstrate that such an injunction is appropriate in this case. Therefore, we REMAND to the district court. The second issue presented is whether the Plan's classification of foreign claimants complies with the Bankruptcy Code's classification requirements. For the following reasons we AFFIRM the bankruptcy court's determination regarding the Plan's classification.
For nearly thirty years, Dow was the predominant producer of silicone gel breast implants, accounting for almost fifty percent of the entire market. In addition, Dow supplied silicone raw materials to other manufacturers of silicone gel breast implants.
In the 1980s, certain medical studies suggested that silicone gel may cause auto-immune tissue diseases such as lupus, Scleroderma and rheumatoid arthritis. In 1992, the Food and Drug Administration ordered that silicone gel implants be taken off the market and Dow ceased manufacturing and marketing its silicone implants. Soon thereafter, tens of thousands of implant recipients sued Dow and its two shareholders, the Dow Chemical Company and Corning, Incorporated, claiming to have been injured by auto-immune reactions to the silicone in their implants. Other manufacturers and suppliers of silicone gel implants were named as co-defendants with Dow and its shareholders.
The Judicial Panel on Multidistrict Litigation consolidated the breast implant litigation for administration of pre-trial matters. See In re Silicone Gel Breast Implants Prods. Liab. Litig., 793 F.Supp. 1098 (1992). The consolidated litigation led to a proposed $4.225 billion global settlement, which the multidistrict litigation court approved in 1994. See Lindsey v. Dow Corning Corp. (In re Silicone Gel Breast Implant Prods. Liab. Litig.), No. CV 92-P-10000-S, Civ. A. No. CV94-P-11558-S, 1994 WL 578353, at *1 (N.D.Ala. Sept.1, 1994). However, hundreds of thousands more women than anticipated filed claims with the global settlement fund and the settlement collapsed in 1995.
Later that year, Dow filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. In order to reduce its exposure to claims, immediately after it filed for bankruptcy, Dow sought to transfer all of the breast implant actions, including actions against its shareholders, to the Eastern District of Michigan. Likewise, other breast implant manufacturers also requested that the cases against them be transferred to the Eastern District of Michigan. Because of Dow's bankruptcy, the court granted Dow's request as to the claims against Dow, but denied the transfer of the claims against Dow's shareholders and the other breast implant manufacturers. See In re Dow Corning Corp., 187 B.R. 919, 931-32 (E.D.Mich.1995). We reversed the district court, holding that the district court had jurisdiction over Dow's shareholders and the other breast implant manufacturers, and remanded the requested transfers for analysis under abstention principles. See In re Dow Corning, 86 F.3d 482, 493-94 (6th Cir.1996). On remand, the district court declined to exercise jurisdiction over Dow's shareholders and the other breast implant manufacturers based on its interpretation of abstention principles. See In re Dow Corning Corp., No. 95-CV72397-DT, 1996 WL 511646, at *3 (E.D.Mich. July 30, 1996). On a motion for a Writ of Mandamus, we reversed the district court's ruling with respect to Dow's shareholders. See In re Dow Corning Corp., 113 F.3d 565, 571-572 (6th Cir.1997). The district court then transferred all breast implant claims against Dow's shareholders to the Eastern District of Michigan.
The trustee in bankruptcy appointed several committees to represent the differing interests of Dow's claimants during the development of Dow's plan of reorganization. The Tort Claimants' Committee vigorously opposed Dow's first two proposed reorganization plans. Dow then entered into mediation with the committees, and on February 4, 1999, Dow and the Tort Claimants' Committee submitted the Amended Joint Plan of Reorganization to the bankruptcy court. On November 30, the bankruptcy court confirmed the Plan. In the following weeks, it issued seven separate opinions relating to its Confirmation Order.1 The district court affirmed the bankruptcy court's Confirmation Order on November 13, 2000. In re Dow Corning Corp., 255 B.R. 445 (E.D.Mich.2000). A timely appeal to this Court followed.
Because the bankruptcy court's opinions and the district court's opinion provide a detailed examination of the Plan, we discuss only the portions of the Plan that bear upon our decision.
Under the Plan, a $2.35 billion fund is established for the payment of claims asserted by (1) personal injury claimants, (2) government health care payers, and (3) other creditors asserting claims related to silicone-implant products liability claims. The $2.35 billion fund is established with funds contributed by Dow's products liability insurers, Dow's shareholders and Dow's operating cash reserves. As a quid pro quo for making proceeds available for the $2.35 billion fund, section 8.3 of the Plan releases Dow's insurers and shareholders from all further liability on claims arising out of settled personal injury claims, and section 8.4 permanently enjoins any party holding a claim released against Dow from bringing an action related to that claim against Dow's insurers or shareholders. Plan §§ 8.3, 8.4.
Under the Plan, claimants who...
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