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In Re Joint Eastern and Southern District Asbestos Litigation (Two Cases). In Re Johns-Manville Corporation, Debtor (Two Cases). Bernadine K. Findley, as of the Estate of Hilliard Findley, Uma Lail Caldwell, as of the Estate of Odell Caldwell, Joseph C. Jones, James William Barnette, Jr., on Behalf of Themselves, and All Others Similarly Situated as Beneficiaries of the Manville Personal Injury Settlement Trust, Edward Lindley, Class, Future Leslie Gordon Fagen, as Legal Representative of Future on Behalf of Future of the Manville Personal Injury Settlement Trust and the Subclass of Present Maryland Plaintiffs-Intervenors-Appellees, United States Fidelity and Guaranty Company, Plaintiff-Intervenor-Appellant, Porter-Hayden Co., a Member of the Distributor Subclass, Intervenor-Appellant, Owens-Corning Fiberglass Corporation and Subclass 3, Consisting of All Beneficiaries of the Manville Trust Who, as Former Producers, Manufacturers, Distributors, And/or Installers of Asbestos and Asbestos-Containing Products, H

Citations: 78 F.3d 764; 34 Fed. R. Serv. 3d 357; 1996 U.S. App. LEXIS 2765Docket: 95-5004

Court: Court of Appeals for the Second Circuit; February 20, 1996; Federal Appellate Court

Narrative Opinion Summary

The case involves multiple parties seeking benefits from the Manville Personal Injury Settlement Trust, a legal entity established under a bankruptcy reorganization plan to manage asbestos-related claims. The plaintiffs represent various subclasses of claimants, including present and future victims, distributors, and manufacturers with potential contribution or indemnification claims. The legal proceedings, overseen by Judges Weinstein and Lifland, culminated in a non-opt-out class action settlement. The core issues on appeal included the applicability of Maryland's set-off rules for asbestos claims, the denial of the D.C. Plaintiffs' motion to opt out, and the creation of the MacArthur Fund for insurance litigation. The Trial Courts abstained from determining Maryland's set-off rules, a decision deemed inappropriate upon appeal, leading to a remand. The court affirmed the denial of the opt-out motion, reasoning that the equitable focus of the settlement did not warrant such an exception. USF.G's objections were dismissed due to lack of standing, as it failed to demonstrate a concrete legal interest affected by the settlement. The appellate court affirmed most aspects of the lower courts' rulings, except for the remand on the Maryland set-off issue, underscoring the importance of jurisdictional clarity and adequate representation in class action settlements under bankruptcy law.

Legal Issues Addressed

Class Action Settlements under Bankruptcy Reorganization Plans

Application: The court addressed a non-opt-out class action settlement involving the Manville Personal Injury Settlement Trust, established under a bankruptcy reorganization plan to manage asbestos-related claims.

Reasoning: The Trust was created in 1988 under a bankruptcy plan, assuming liability for health claims against Manville and halting further litigation to protect the Trust's assets.

Jurisdiction and Opt-Out Rights in Class Actions

Application: The court denied the motion to opt out by the D.C. Plaintiffs, emphasizing the equitable restructuring focus of the Trust and the adequacy of representation under Rule 23.

Reasoning: The Trial Courts correctly denied this motion to opt out. The Supreme Court in Shutts ruled that due process mandates an opportunity for absent plaintiffs in class actions to opt out, but this ruling was limited to cases primarily seeking monetary judgments.

Set-Off Rules in Asbestos Litigation

Application: The Trial Courts deferred the decision on the applicability of Maryland's set-off rules to the Maryland courts, highlighting the complexity of such state-specific legal issues in asbestos-related claims.

Reasoning: The Trial Courts abstained from deciding which Maryland contribution and set-off rules should apply, asserting that they merely recognized the applicability of Maryland law.

Standing of Insurers in Settlement Disputes

Application: USF.G lacked standing to object to the settlement due to the absence of a concrete injury or legal interest as an insurer denying coverage for the claims in question.

Reasoning: USF G has no concrete interest in the litigation since it is neither a health claimant nor a supplier of asbestos products. Its potential interest stems solely from its obligation to insure Western MacArthur, who has not had any claims paid by USF G.