In re Johns-Manville Corp., Case Nos. 82 B 11656 (CGM) through 82 B 11676 (CGM) inclusive

CourtUnited States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
Decision Date30 June 2016
Docket NumberCase No. 82 B 11659 (CGM),Case Nos. 82 B 11656 (CGM) through 82 B 11676 (CGM) inclusive



Case Nos. 82 B 11656 (CGM) through 82 B 11676 (CGM) inclusive
Case No. 82 B 11659 (CGM)


June 30, 2016


Chapter 11



United States Trustee
271 Cadman Plaza East, Suite 4529
Brooklyn, NY 11201
Counsel to the United States Trustee
By: Alicia Leonhard

Davis Polk & Wardwell, LLP
450 Lexington Avenue
New York, NY 10017
Counsel for Graphic Packaging International, Inc.

By: James I. McClammy
Rebecca L. Martin

Kean Miller, LLP
400 Convention Street #700
P.O. Box 3513
Baton Rouge, LA 70802
Co-Counsel for Graphic Packaging International, Inc.

By: J. Eric Lockridge

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Montgomery McCracken Walker & Rhoads LLP
1105 North Market Street
Wilmington, DE 19801
Counsel for Lynda Berry
By: Natalie D. Ramsey
Mark A. Fink

Dean Omar & Branham, LLP
3900 Elm Street
Dallas, TX 75226
Co-Counsel for Lynda Berry
By: Charles W. Branham, III


Before the Court is Graphic Packaging International's ('Graphic") emergency motion for enforcement of the confirmation orders of the Johns-Manville Corporation ("Manville") and the Manville Forest Products Corporation ("MFP"). By its motion, Graphic seeks to enjoin the lawsuit of plaintiff, Lynda Berry ("Ms. Berry"), brought in Louisiana state court against Graphic for alleged asbestos liability. See Graphic's Emergency Mot. 2, Feb. 29, 2016, ECF No. 4204.1 Graphic argues that as it is a successor of MFP, a bankruptcy debtor and a wholly-owned subsidiary of Manville, Ms. Berry must first pursue her asbestos claims against the Manville Personal Injury Trust (the "Trust"). Mem. Law Supp. Emergency Mot. 12, Feb. 29, 2016, ECF No. 4205 ("Graphic's Mot."). In response, Ms. Berry argues that her lawsuit should not be enjoined as her claims were not discharged or enjoined by the MFP confirmation order ("MFP Confirmation Order"), MFP is not a beneficiary of the Manville confirmation order ("Manville Confirmation Order") or channeling injunction, and Graphic has waived its right to enforce the bankruptcy Confirmation Orders and injunction. Resp. and Obj. of Berry 1, Mar. 4, 2016, ECF

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No. 4212 ("Berry's Opp'n"). Ms. Berry also argues that she did not receive due process. Id. at 14-17.

After a hearing before this Court, held on March 8, 2016, Ms. Berry requested an evidentiary hearing with regard to due process. Tr. Mar. 8, 2016 Hrg. 20:20-23, Mar. 8, 2016, ECF No. 4225 ("Tr."). This Court ordered supplemental briefing on the matter. Tr. 26:1-7. For the reasons and to the extent stated below, the Court grants Graphic's motion for an order enjoining Ms. Berry's state law claims against Graphic as a successor to MFP.


This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a) and the Standing Order of Reference signed by Chief Judge Loretta A. Preska dated January 31, 2012. This is a "core proceeding" under 28 U.S.C. § 157(b)(2)(A), matters concerning the administration of the estate, and § 157(b)(2)(I), proceedings to determine the dischargeability of debt.

As provided in both the MFP and Manville Confirmation Orders, paragraphs 10 and 28 respectively, this Court retains jurisdiction to clarify its prior confirmation orders, to enforce its injunctions, and to adjudicate matters having to do with the administration of the confirmed chapter 11 plans of MFP and Manville. See Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (citations omitted).


After over thirty years of handling the ongoing Manville bankruptcy case, this Court is keenly aware that "[f]undamentally, the story of asbestos health litigation is the story of Johns-Manville." In re Johns-Manville Corp., 2004 Bankr. LEXIS 2519, at *5 (Bankr. S.D.N.Y. Aug. 17, 2004), aff'd in part, vacated in part, 340 B.R. 49 (S.D.N.Y. 2006), vacated sub nom. Johns-

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Manville Corp. v. Chubb Indem. Ins. Co. (In re Johns-Manville Corp.), 517 F.3d 52 (2d Cir. 2008), rev'd and remanded sub nom. Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009). As documented by this Court, Manville's story began in 1868, when "Henry Ward Johns had obtained a patent for an asbestos insulation product," leading to the establishment of his business, the H.W. Johns Company. In re Johns-Manville Corp., 2004 Bankr. LEXIS 2519, at *6 (citations omitted). H.W. Johns sold its asbestos products through the Manville Covering Company. Id. The two companies merged in 1901, becoming the "H.W. Johns-Manville Company." Id. at 6-7.

Manville was "a diversified manufacturing, mining and forest products company," and by the 1970s was "the world's largest miner, processor, manufacturer and supplier of asbestos and asbestos-containing products." GAF Corp. v. Johns-Manville Corp. (In re Johns-Manville Corp.), 26. B.R. 405, 407 (Bankr. S.D.N.Y 1983), aff'd sub nom. Johns-Manville Corp. v. Asbestos Litig. Grp. (In re Johns-Manville Corp.), 40 B.R. 219 (S.D.N.Y. 1984); see also In re Johns-Manville Corp., 2004 Bankr. LEXIS 2519, at *7 (citations omitted). Manville was not only a leading producer of asbestos products, these products "were used pervasively in a variety of industries for several decades throughout the United States." Manville Corp. v. Equity Sec. Holders Comm. (In re Johns-Manville Corp.), 66 B.R. 517, 521 (Bankr. S.D.N.Y. 1986). Although asbestos products were widespread, the asbestos industry consisted of about thirty manufacturing firms that made asbestos products. John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum. L. Rev. 1343, 1365 (1995).

Manville eventually became "the prime supplier of asbestos fiber products," In re Johns-Manville Corp., 2004 Bankr. LEXIS 2519, at *7, and a Fortune 500 company. In re Johns-Manville Corp. 97 B.R. 174, 176 (Bankr. S.D.N.Y. 1989). Manville was "deemed a paradigm of

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success in corporate America by the financial community." In re Johns-Manville Corp., 36 B.R. 727, 729 (Bankr. S.D.N.Y 1984). Such was Manville's success in the asbestos industry that Manville's bankruptcy filing was surprising. Id. In fact, it was "the spectre of proliferating, overburdening litigation to be commenced in the next 20-30 years, which litigation would be beyond [Manville's] ability to manage, control, and pay for, which . . . prompted this filing." In re Johns-Manville Corp., 36 B.R. 743, 745 (Bankr. S.D.N.Y. 1984), aff'd, 52 B.R. 940 (S.D.N.Y. 1985).

The term "asbestos" describes "a group of naturally occurring fibrous minerals known for their properties of relative indestructibility and resistance to heat and fire." John P. Burns et al., Special Project: An Analysis of the Legal, Social, and Political Issues Raised by Asbestos Litigation, 36 Vand. L. Rev. 573, 578 (1983) (footnote omitted), cited in Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178, 1192 n.6 (2d Cir. 1995). The documented use of asbestos dates back to the ancient Greeks and Romans and was used with increasing frequency after the industrial revolution in the 1870s. Id. at 578 (citing James W. Mehaffy, Asbestos-Related Lung Disease, 16 Forum 341, 341-42 (1980)). Despite its prevalent use, the dangers of asbestos were not widely known until the 1960s when latent asbestos injuries began to manifest throughout the nation. In re Asbestos Prods. Liab. Litig., 771 F. Supp. 415, 418 (J.P.M.L. 1991) (quoting Judicial Conf. of the U.S., Report of the Judicial Conference Ad Hoc Committee on Asbestos Litigation 1-3 (1991)).

The health risks caused by asbestos were finally given broad acknowledgment on the legal front in 1973, when the United States Court of Appeals for the Fifth Circuit issued its landmark decision in Borel. Borel v. Fibreboard Paper Prod. Corp., 493 F.2d 1076 (5th Cir. 1973). In Borel, the Fifth Circuit upheld a jury verdict finding asbestos manufacturers, including

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Manville, strictly liable for personal injuries of the plaintiff resulting from exposure to asbestos. See id. at 1086. The Fifth Circuit's decision found that "[a]sbestosis has been recognized as a disease for well over fifty years," with some of the earliest known cases dating back to the 1920s. Id. at 1083 (footnotes omitted).

Since the Fifth Circuit's decision in Borel, asbestos litigation has grown to gargantuan proportions. Patrick M. Hanlon & Anne Smetak, Asbestos Changes, 62 N.Y.U. Ann. Surv. Am. L. 525, 526-27 (2007). The judiciary has repeatedly called for Congress to create a national scheme to resolve all asbestos claims. See John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum. L. Rev. 1343, 1389 (1995) (footnotes omitted); see also Amchem Prods. v. Windsor, 521 U.S. 591, 598 (1997) (discussing the March 1991 Report of the Judicial Conference Ad Hoc Committee on Asbestos Litigation, appointed by the Chief Justice in September of 1990); In re Asbestos Prods. Liab. Litig., 771 F. Supp. at 418. As recently as 2003, the Supreme Court again recognized the need for national legislation to deal with the "elephantine mass of asbestos cases lodged in state and federal courts." Norfolk & W. Ry. Co. v. Ayers, 538 U.S. 135, 166 (2003) (internal quotation marks omitted) (quoting Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999)). Congress has not heeded the call.

Although original asbestos litigation involved an individual plaintiff and asbestos producer, this landscape changed by the 1980s. After years of litigating individual cases, asbestos producers coalesced into an industry-wide consortium, presenting a unified litigation front. Coffee, supra, at 1364-66. The original asbestos consortium was known as the Asbestos Claims Facility. Id. at 1365 & n.83. The Asbestos Claims Facility evolved into the Center for Claims Resolution ("CCR") after several of the original members...

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