[1]     

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

, [5]     

Decided: February 21, 1996

, [6]      IN RE: JOINT EASTERN AND SOUTHERN DISTRICT ASBESTOS LITIGATION " />

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In Re Joint Eastern and Southern District Asbestos Litigation, 78 F.3D 764 (2d Cir. 02/21/1996)

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

No. 692-696 -- August Term, 1995

Docket Nos. 95-5004(L), -5006, -5010, -5014

78 F.3d 764, 1996.C02.0000075 <http://www.versuslaw.com>

Decided: February 21, 1996

IN RE: JOINT EASTERN AND SOUTHERN DISTRICT ASBESTOS LITIGATION

[7]    

Argued: November 6, 1995

[8]    

IN RE: JOHNS-MANVILLE CORPORATION,

[9]    

Debtor.

BERNADINE K. FINDLEY, as Executrix of the Estate of Hilliard Findley, UMA LAIL CALDWELL, as Executrix 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, PLAINTIFF CLASS, FUTURE CLAIMANTS, LESLIE GORDON FAGEN, as legal representative of future claimants, on behalf of future claimants of the Manville Personal Injury Settlement Trust and THE SUBCLASS OF PRESENT CLAIMANTS,

Plaintiffs-Appellees,

MARYLAND PLAINTIFFS,

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, have or may have in the future contribution and/or indemnification claims against the Manville Trust (except for those distributors whose claims for contribution and/or indemnification are based on their distribution of asbestos-containing products of Manville Corp. (the Manville distributors subclass), shall be referred to as "the co-defendant Manufacturers subclass", and MANVILLE DISTRIBUTOR SUBCLASS REPRESENTATIVES E.J. BARTELLS CO. AND J.T. THORPE CO., ON BEHALF OF THEMSELVES AND THE MANVILLE DISTRIBUTOR SUBCLASS,

Claimants-Appellants,

MACARTHUR SUBCLASS,

Claimant-Appellee, v.

ROBERT FALISE, LOUIS KLEIN, JR., CHRISTIAN E. MARKEY, JR., and FRANK MACCHIAROLA, not individually but solely in their capacities as Trustees of the MANVILLE PERSONAL INJURY SETTLEMENT TRUST,

Defendants-Appellees,

DONALD M. BLINKEN, DANIEL FOGEL, FRANCIS H. HARE, JR., JOHN C. SAWHILL, not individually but solely in their capacities as Trustees of the Manville Personal Injury Settlement Trust,

Defendants,

SUBCLASS 1, consisting of the distributors of Johns-Manville products, excluding MacArthur Co. and its affiliated companies, which shall be referred to as "the Manville distributors subclass", SUBCLASS 2, consisting of MacArthur Company and its affiliated companies, which shall be referred to as "the MacArthur subclass", 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, have or may have in the future contribution and/or indemnification claims against the Manville Trust (except for those distributors whose claims for contribution and/or indemnification are based on their distribution of asbestos-containing products of Manville Corp. (The Manville distributors subclass), shall be referred to as "the co-defendant Manufacturers subclass", SUBCLASS 4, consisting of all future beneficiaries of the Manville Trust who may file or bring asbestos claims against the trust in the future, which shall be referred to as "the future claimants subclass." When a claim is filed or brought the person bringing that claim will shift from this subclass to the applicable subclass encompassing present claimants against the Trust, SUBCLASS 5, "Present Claimants Subclass", SUBCLASS 6, "Pre-November, 1990 judgments and settlements subclass",

Claimants-Appellees,

SUBCLASS OF FUTURE CLAIMANTS,

Plaintiff-Intervenor-Appellee.

Docket No. 95-5016

IN RE: JOINT EASTERN AND SOUTHERN DISTRICT ASBESTOS LITIGATION

IN RE: JOHNS-MANVILLE CORPORATION,

Debtor.

JOSEPH F. AMATO, JR., FRANK E. BEAVERS, ALVIN J. BOWLES, JR., LEONARD D. BROWN, RAYMOND BUTLER, GROVER CLAYTOR, RAY H. COOK, DOROTHY M. COOPER, Personal Representative of the Estate of Edmond Cooper, JULIA CORNWELL, Personal Representative of the Estate of George Allen Cornwell, LEONARD S. CRAWFORD, FRANK PIERCE CROSBY, JR., HELEN M. DAVIS, Personal Representative of the Estate of Francis Davis, FRANK EBERHARDT, JR., DOUGLAS E. ELLINGER, ELIZABETH FINELLI, Personal Representative of the Estate of Nicholas Finelli, RUSSELL J. GARNER, WILLIAM L. GOULART, SR., CLIFTON F. HESS, REX E. HOLLIS, REUBEN HURST, FRANK A. KEELAN, PRISCILLA P. KILLEEN, Personal Representative of the Estate of James Killeen, ROGER LILLER, TOMMY JUNIOR LINKOUS, HARRISON O. McLEOD, RAY MERRILL, JOHN W. MYERS, MYRTLE V. PESSAGNO and BARBARA WRENN, Personal Representatives of the Estate of Elwood T. Pessagno, CARL POORE, BOB A. REED, SAMUEL SAYLOR, RICHARD P. STEPP, RICHARD H. STUART, ANNA SUGRUE, Personal Representative of the Estate of John N. Sugrue, HAROLD E. TEWELL, DAVID A. THOMAS, DONALD THOMPSON, STANLEY LEE WARD, JAMES M. WHITTLES, JAMES E. WILSON and WHITNEY L. WINEGARD,

Claimants-Appellants.

SUBCLASS 1, consisting of the distributors of Johns-Manville products, excluding MacArthur Co. and its affiliated companies, which shall be referred to as "the Manville distributors subclass", 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, have or may have in the future contribution and/or indemnification claims against the Manville Trust (except for those distributors whose claims for contribution and/or indemnification are based on their distribution of asbestos-containing products of Manville Corp. (the Manville distributors subclass), shall be referred to as "the co-defendant Manufacturers subclass", and MANVILLE DISTRIBUTOR SUBCLASS REPRESENTATIVES E.J. BARTELLS CO. AND J.T. THORPE CO., ON BEHALF OF THEMSELVES AND THE MANVILLE DISTRIBUTOR SUBCLASS,

Claimants-Appellees.

Before: KEARSE, WINTER, and CABRANES, Circuit Judges.

Appeals from a judgment entered in the United States District Courts for the Eastern and Southern Districts of New York, Jack B. Weinstein, District Judge, and Burton R. Lifland, Bankruptcy Judge, approving class action settlement. See 878 F. Supp. 473 (E.D.N.Y. and S.D.N.Y. 1995). Affirmed in part; vacated and remanded in part.

ELIHU INSELBUCH, New York, New York (James Sottile, IV, Christian R. Pastore, Caplin & Drysdale, New York, New York, Ness, Motley, Loadholt, Richardson & Poole, Charleston, South Carolina, Wartnick, Chaber, Harowitz Smith & Tigerman, San Francisco, California, Wilentz Goldman & Spitzer, Woodbridge, New Jersey, Baron & Budd, Dallas, Texas, Rose, Klein & Marias, Los Angeles, California, on the brief), for Plaintiffs-Appellees.

TIMOTHY J. HOGAN, Baltimore, Maryland (Peter G. Angelos, Baltimore, Maryland, on the brief), for PlaintiffsIntervenors-Appellees Maryland Plaintiffs in the consolidated appeals, and for Claimants-Appellants Amato et al., in No. 95-5016.

BERT W. REIN, Washington, D.C. (Wiley, Rein & Fielding, Washington, D.C., Michael P. Murphy, Hodgson, Russ, Andrews, Woods & Goodyear, Buffalo, New York, on the brief), for Plaintiff-Intervenor-Appellant United States Fidelity and Guaranty Company.

FRANCIS J. LAWALL, New York, New York (John B. Glendon, Charles H. Carpenter, Pepper, Hamilton & Scheetz, New York, New York, on the brief for Claimants-Appellants Manville Distributors in the consolidated appeals, and for Claimants-Appellees Manville Distributors in No. 95-5016; Robert S. Hillman, Louis G. Close, Jr., Gardner M. Duvall, Whiteford, Taylor & Preston, Baltimore, Maryland, on the brief for Intervenor-Appellant Porter Hayden Co.).

ANNE E. COHEN, New York, New York (Roger E. Podesta, Sandra L. Cobden, Debevoise & Plimpton, New York, New York, on the brief), for Claimants-Appellants Owens-Corning Fiberglass Corporation and the Subclass of Co-defendant Manufacturers in the consolidated appeals, and for Claimants-Appellees Owens-Corning Fiberglass Corporation and the Subclass of Co-defendant Manufacturers in No. 95-5016.

JOHN H. FARICY, Jr., Minneapolis, Minnesota (James J. Higgins, Boyar, Higgins & Suozzo, Morristown, New Jersey, on the brief), for Claimant-Appellee MacArthur Subclass.

JAMES L. STENGEL, New York, New York (Richard J. DeMarco, Jr., Laurie Strauch Dix, Steven J. Fink, Donovan Leisure Newton & Irvine, New York, New York, David T. Austern, Fairfax, Virginia, on the brief), for Manville Personal Injury Settlement Trust.

KEARSE, Circuit Judge:

This opinion deals with several asbestos-litigation appeals from a final judgment of the United States District Courts for the Eastern and Southern Districts of New York, Jack B. Weinstein, District Judge of the Eastern District and sitting by designation in the Southern District, and Burton R. Lifland, Chief Bankruptcy Judge of the Southern District (collectively the "Trial Courts" or "Courts"), approving the settlement of a non-opt-out class action brought by beneficiaries of the Johns-Manville Personal Injury Trust (the "Trust"), which include persons claiming asbestos-related injuries from products manufactured by the Johns-Manville Corporation ("the Corporation" or "Manville"), as well as other manufacturers and distributors of asbestos with claims for contribution and indemnification against Manville. The consolidated appeals, Nos. 95-5004(L), -5006, -5010, and -5014, present two principal challenges. First, claimant-appellant Owens-Corning Fiberglass Corporation, suing individually and as a representative of the subclass of Co-defendant Manufacturers (collectively "Codefendant Manufacturers"), along with the claimant-appellant subclass of Manville Distributors (collectively "Manville Distributors") and intervenor-appellant Porter-Hayden Company, contend that the Trial Courts erred in failing to decide what set-off rules are to be applied to claims brought by Trust beneficiaries in Maryland. Second, plaintiff-intervenor-appellant United States Fidelity and Guaranty Company ("USF&G"), an alleged insurer of a member of claimant-appellee MacArthur Subclass, contends that the settlement prejudices USF&G by creating a $10 million fund for the MacArthur Subclass, out of which that subclass can litigate insurance claims against USF&G. In No. 95-5016, which was argued with, but is not technically consolidated with, the other appeals, claimants-appellants Joseph F. Amato, Jr., et al., on behalf of themselves and some of the other claimants who reside in the District of Columbia, challenge the Trial Courts' denial of their motion to opt out of the class and the settlement agreement.

For the reasons that follow, we vacate the judgment to the extent that it fails to determine what set-off rules are to be applied in Maryland cases, and we remand for resolution of that issue. In all other respects, we affirm.

I. BACKGROUND

Much of the background of the present appeals is described in our prior opinions in this litigation, familiarity with which is assumed. The Trust, created in 1988 pursuant to the bankruptcy-court-approved Second Amended and Restated Plan of Reorganization of Manville, assumed liability for all health claims brought against Manville and "Other Asbestos Obligations" of Manville. Further litigation of those claims against Manville was enjoined by the bankruptcy court in order to protect the value of Manville's equity, most of which was contributed to the Trust. See Kane v. Johns-Manville Corp.


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