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In re Chemtura Corp.

United States District Court, S.D. New York

February 10, 2014

In re: CHEMTURA CORPORATION, et al., Reorganized Debtors. CARLE GABAUER, et al., Appellants,
v.
CHEMTURA CORPORATION, et al., Appellees

For Carl Gabauer, Leroy Hummell, James McCurdy, Isaiah Peagler, Herbert Rose, Louis Shoemaker, Kenneth Titone, Frederick Towns, John Williams, Appellants: Elihu Inselbuch, Caplin & Drysdale, New York, NY; Jeffrey A. Liesemer, PRO HAC VICE, Caplin & Drysdale, Chartered, Washington, DC; Kenneth B. McClain, PRO HAC VICE, Humphrey, Farrington, McClain & Edgar, P.C., Independence, MO.

For Chemtura Corporation, Appellee: Craig A. Bruens, Kirkland & Ellis LLP, New York, NY; Derek Preston Alexander, Debevoise & Plimpton LLP(919 Third Ave), New York, NY; Michael E. Wiles, Debevoise & Plimpton, LLP (NYC), New York, NY; Miriam Natasha Labovitz, Debovise & Plimpton LLP, New York, NY.

OPINION

Page 428

MEMORANDUM OPINION AND ORDER

JESSE M. FURMAN, United States District Judge.

In this bankruptcy appeal, a group of people who were exposed to a disease-causing chemical that was manufactured and sold by the reorganized debtors challenge an order of the Bankruptcy Court enjoining them from bringing state tort actions. For the reasons that follow, the Order of the Bankruptcy Court is affirmed.

BACKGROUND

Chemtura Corporation, a chemical producer and supplier, and its affiliates filed for Chapter 11 bankruptcy in March 2009, and Chemtura Canada Co./Cie. (together with Chemtura Corporation, " Chemtura" or " Appellees" ) joined the consolidated proceedings in August 2010. (Appellees' Br. (Docket No. 14) 2; Appellants' Br. (Docket No. 7) 4). Among the liabilities that Chemtura faced at the time of its bankruptcy filing were tort claims related to its production and sale of diacetyl, a butter-flavoring ingredient used in food products. (Appellees' Br., App'x A (" Decision" ), at 26:18-21). Exposure to diacetyl can lead to lung disease, and Chemtura manufactured and sold the chemical until 2005.

Page 429

( Id., at 26:9-12). At the time that Chemtura Corporation filed its petition for bankruptcy, it faced approximately fifteen diacetyl lawsuits involving approximately fifty plaintiffs. ( Id., at 26:18-21).

During the bankruptcy proceedings, Chemtura filed a motion requesting that the Bankruptcy Court set a date (the " Bar Date" ) by which all creditors -- including diacetyl claimants -- were to file their proofs of claim. (Bankr. Docket No. 872).[1] On August 17, 2009, the Bankruptcy Court held a hearing, during which it considered, among other things, the adequacy of the program by which potential diacetyl claimants would be notified of the Bar Date. (Appellees' Br., App'x H). Concluding that the notice program was appropriate, the Bankruptcy Court set a Bar Date of October 31, 2009. (Decision, at 27:20-28:9). Pursuant to the notice program, Chemtura mailed direct notice of the Bar Date to all known creditors and publication of both general notices and " site-specific" notices for unknown creditors. (Decision, at 26:21-23, 28:6-9).

Most important for purposes of this appeal, Chemtura published a " site-specific" notice (the " Notice" ) in the Home News Tribune, a newspaper circulated in Middlesex County, New Jersey. (Decision, at 37:22-23; Appellees' Br., App'x G (" Notice" )). To the extent relevant here, the Notice advised that the Bankruptcy Court had

set a deadline for submitting claims against [Chemtura]. From 1998 to 2005 Chemtura Corporation sold diacetyl to food flavoring companies throughout the United States. Among other things, diacetyl was used by these food flavoring companies to make butter flavoring. If you have any claim against Chemtura Corporation related to exposure to diacetyl . . . that was supplied, sold or distributed by Chemtura Corporation directly or indirectly to . . . Firmenich, located at 250 Plainsboro Rd., Plainsboro, New Jersey 08536 . . . you MUST file a proof of claim form . . . by October 30, 2009 . . . [ or ] you will forever lose your rights to recover on your claim in the future.

(Notice (emphases in original)). The Notice also explained that " [i]f you . . . [were] exposed to diacetyl . . . and if that exposure directly or indirectly caused injury that becomes apparent either now or in the future, you may have a ...


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