In re Motions Seeking Access to 2019 Statements

• Decision Date: 27 March 2018
• Docket Number: Civ. No. 16–1078–LPS
• Citation: 585 B.R. 733
• Parties: IN RE: MOTIONS SEEKING ACCESS TO 2019 STATEMENTS.
• Court: U.S. District Court — District of Delaware

585 B.R. 733

IN RE: MOTIONS SEEKING ACCESS TO 2019 STATEMENTS.

Civ. No. 16–1078–LPS

United States District Court, D. Delaware.

Signed March 27, 2018

Peter John Sacripanti, Esq., John J. Calandra, Esq., and Darren Azman, Esq., of McDERMOTT WILL & EMERY LLP, New York, NY., Justin K. Edelson, Esq., of POLSINELLI PC, Wilmington, DE., Attorneys for Appellant Honeywell International Inc.

K. Elizabeth Sieg, Esq., of MCGUIREWOODS LLP, Richmond, VA., Christian J. Singewald, Esq., of WHITE & WILLIAMS LLP, Wilmington, DE., Attorneys for Appellant Ford Motor Company.

Mark Minuti, Esq., of SAUL EWING LLP, Wilmington DE., Adam H. Isenberg, Esq., of SAUL EWING LLP, Philadelphia, PA., Attorneys for Appellee Owens Corning Sales, LLC, f/k/a Owens Corning, and its Affiliated Reorganized Debtors.

Ann C. McMillan, Esq., Kevin C. Maclay, Esq., and Todd E. Phillips, Esq., of CAPLIN & DRYSDALE, CHARTERED, Washington DC., Anthony M. Saccullo, Esq., and Thomas H. Kovach, Esq., of A.M. SACCULLO LEGAL, LLC, Bear, DE., Attorneys for Appellees/Cross–Appellants Trust Advisory Committees.

James L. Patton, Jr., Esq., Edwin J. Harron, Esq., and Sharon M. Zieg, Esq., of YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, DE., Attorneys for Appellees/Cross–Appellants Future Claimants' Representatives.

Joseph D. Frank, Esq., and Reed Heiligman, Esq., of FRANKGECKER LLP, Chicago, IL., Attorneys for Appellee/Cross–Appellant The Combustion Engineering 524(g) Asbestos PI Trust Advisory Committee.

Nicholas E. Skiles, Esq., of SWARTZ CAMPBELL LLC, Wilmington, DE., Cory L. Andrews, Esq., and Mark S. Chenoweth, Esq., WASHINGTON LEGAL FOUNDATION, Washington DC. Attorneys for Amicus Curiae Washington Legal Foundation.

Raeann Warner, Esq., of JACOBS & CRUMPLAR, P.A., Wilmington, DE., Robert S. Peck, Esq., of CENTER FOR CONSTITUTIONAL LITIGATION, P.C., New York, NY., Attorneys for Amicus Curiae The American Association for Justice.

OPINION

STARK, U.S. District Judge:

This appeal relates to nine Delaware bankruptcy cases, each commenced in connection with the respective debtors' asbestos-related liabilities ("Consolidated Cases"). The appeal arises from the most recent attempt to access thousands of exhibits ("2019 Exhibits") that were submitted to the Bankruptcy Court pursuant to Federal Rule of Bankruptcy Procedure 2019 in connection with administering the nine asbestos bankruptcies. Consistent with a series of orders entered by the Bankruptcy Court in implementing Rule 2019 (the "2019 Orders"), the 2019 Exhibits are in the possession of the Clerk of the Bankruptcy Court, but are not available on the public docket.

Appellant Honeywell, joined by Ford (together, "Appellants") filed a request (A1–154)¹ in each of the Consolidated Cases seeking unlimited access to the 2019 Exhibits, even though all but one of the nine Consolidated Cases are closed.² Appellants contend that they, like any entity, are entitled to indefinite access to the 2019 Exhibits, to use them for any purpose, including, but not limited to, investigating potential fraud in the claims process and advancing Appellants' legislative and lobbying activities. Appellees—including various Trust Advisory Committees³ ("TAC") and the Future Claimants Representatives⁴ ("FCR") (collectively, "Appellees")—opposed the request, on grounds including that Appellants' admitted purposes for requesting access to the 2019 Exhibits are improper and, anyway, the 2019 Exhibits are useless for such purposes. (See A178)⁵

On November 8, 2016, the Bankruptcy Court entered its opinion and order in each of the Consolidated Cases, granting Appellants limited access to the 2019 Exhibits for the purpose of investigating potential fraud in the claims process; the Bankruptcy Court imposed additional limitations on access as well. In re Owens Corning , 560 B.R. 229 (Bankr. D. Del. 2016) (hereinafter, " Access Decision"). Because Appellants want unlimited access to the 2019 Exhibits, they have appealed the Bankruptcy Court's decision "to the extent that the Opinion and Order restrict Appellants' ability to access and use the 2019 Exhibits." (D.I. 16 at 1) Appellees have cross-appealed on the basis that the Bankruptcy Court should have denied Appellants access to the 2019 Exhibits altogether. (See D.I. 22)

For the reasons stated below, the Court will affirm the Bankruptcy Court's Access Decision.

I. BACKGROUND

A. The Parties and the 2019 Orders

Appellant Honeywell is a diversified technology and manufacturing company which has been a global supplier of automotive brake friction materials and aftermarket brake products. Honeywell is obligated to fund all distributions which the North American Refractory Company ("NARCO") Trust⁶ makes, up to capped amounts (which exceed $100 million annually), and all of the NARCO Trust's expenses. (A20, ¶¶ 3–5) Appellant Ford is an automobile manufacturing company. It has been named as a defendant in asbestos cases by plaintiffs claiming to have worked with or around chrysotile-containing brake pads. Ford joined Honeywell's motion for access.

Appellants filed a motion seeking access to all 2019 Exhibits submitted in the nine Consolidated Cases. All nine of the Consolidated Cases began in the 2000s. Under the version of Bankruptcy Rule 2019 in effect at that time, a 2019 Statement (when required) needed to contain certain identifying information (e.g., name and address, nature and amount of claim or interest, etc.) about the creditors and equity holders being represented by the entity preparing the 2019 Statement (e.g., a law firm). See Fed. R. Bankr. P. 2019 (amended 2011). Specifically, Rule 2019 provided:

every entity or committee representing more than one creditor ... shall file a verified statement setting forth (1) the name and address of the creditor ...; (2) the nature and amount of the claim or interest and the time of acquisition thereof unless it is alleged to have been acquired more than one year prior to the filing of the petition; (3) a recital of the pertinent facts and circumstances in connection with the employment of the entity ..., and (4) with reference to the time of the employment of the entity,... the amounts of claims or interests owned by the entity, ... the times when acquired, the amounts paid therefor, and any sales or other disposition thereof. The statement shall include a copy of the instrument, if any, whereby the entity ...is empowered to act on behalf of creditors ...

Compliance with Rule 2019 in mass tort cases presents significant logistical challenges, particularly for law firms that represent large rosters of clients. These firms were required to prepare statements (" Rule 2019 Statements") and Exhibits with the information listed in the Rule.

In 2004 and 2005, Bankruptcy Judge Judith K. Fitzgerald was assigned to nearly all of the asbestos bankruptcies filed within the Third Circuit, including the Consolidated Cases. In the course of administering these cases, Judge Fitzgerald determined that because the 2019 Exhibits contain personal-identifying information of potential asbestos claimants, disclosure of that information on the electronic docket posed a risk to privacy interests and presented the potential for identity theft. On August 25, 2004, Judge Fitzgerald entered the first in a series of the 2019 Orders,⁷ which together standardized disclosures required by Bankruptcy Rule 2019 for the asbestos cases filed in the Third Circuit.

Pursuant to the 2019 Orders, lawyers representing multiple claimants were required to file 2019 Statements, which included the name and address of the law firm but excluded any substantive information. The 2019 Statements were electronically filed and available on the public docket. These lawyers were also required to submit exhibits to the 2019 Statements, which contained substantive information about their clients (and potential clients) and their clients' claims (and potential claims). The 2019 Exhibits—which might include full social security numbers and names and extent of disease conditions—were submitted to the Clerk of the Bankruptcy Court on compact disc (CD). Unlike the 2019 Statements, the 2019 Exhibits were not electronically docketed.

The 2019 Orders did not, however, seal the 2019 Exhibits. Rather, the 2019 Orders regulated access to the 2019 Exhibits, in light of privacy concerns, and established a procedure by which a party seeking access to the 2019 Exhibits may request it. (See Flintkote D.I. 402, 10/6/04 Hr'g. Tr. at 55)

B. Appeals of the 2019 Orders

The procedures established by Judge Fitzgerald in her 2019 Orders have been reviewed and approved by several courts within the Third Circuit. See In re Kaiser Aluminum Corp. , 327 B.R. 554 (D. Del. 2005) ; In re Pittsburgh Corning Corp. , 2005 WL 6128987 (W.D. Pa. Sept. 27, 2005), aff'd, In re Pittsburgh Corning Corp. , 260 Fed.Appx. 463 (3d Cir. 2008). For instance, after the 2019 Orders were entered, certain insurers contended that the 2019 Orders, as implemented in the Kaiser and Flintkote bankruptcies, were erroneous. See Kaiser , 327 B.R. at 557. In the course of determining that the insurers did not have standing to challenge the 2019 Orders, former District Judge Farnan of this Court stated, "even if the Court concludes that Appellants have standing to challenge the Revised Rule 2019 Orders, the Court concludes that the Bankruptcy Court did not err in ... restricting access to the Rule 2019 information." Id. at 559. The Court added that "the Revised 2019 Orders issued by Judge Fitzgerald ... comport with the requirements of Rule 2019, while taking into consideration the complexities of mass tort litigation." Id. Judge Farnan emphasized that "the Bankruptcy Court is regulating access to the information because of privacy concerns" and found that the 2019 Orders "strike the appropriate balance between maintaining the public's right to access the Rule 2019 information and ensuring that the information is not misused." Id. at 560.

Insurers similarly appealed the 2019 Orders entered...