Asbestos Bankruptcies in Asbestos Cases

Decisions in our library in which the court ruled on a defendant's bankruptcy: 249 cases, by state. Each line gives what the court held, in our words; the law differs from state to state and changes, so read the opinion and talk to a lawyer before relying on any of them.

Other federal courts

• O'brien v. National Gypsum Co. (1991). Circumstantial evidence can suffice to prove exposure to a particular defendant's asbestos product. A very rare disease with asbestos as its only known cause, plus testimony that products were used interchangeably at the only exposure site, supports a jury finding of liability.
• Lac D'Amiante du Quebec v. American Home Assur. (1988). Under Burford abstention, a federal court should decline to adjudicate, even in a declaratory action, a suit against an insurer already in a state's insurance liquidation proceeding, because doing so would disrupt the state's complex regulatory scheme for liquidating insolvent insurers.
• Gideon v. Johns-Manville Sales Corp. (1985). Under Texas law an asbestos plaintiff has one cause of action covering all harm from the injury, so expert testimony that cancer is probable is admissible and fear of probable future disease is recoverable. Liability requires proof that each defendant's product was unreasonably dangerous and a producing cause, and for Raymark and Standard that proof was insufficient.
• Rocco v. Johns-Manville Corp. (1985). Under the Pennsylvania Joint Tortfeasors Act, settlement payments by defendants not determined to be joint tortfeasors do not reduce a verdict, while a pro rata release of a joint tortfeasor who later files for bankruptcy still reduces the verdict. Pennsylvania delay damages may be assessed against a non-settling defendant only on its proportionate share of the verdict.
• Halphen v. Johns-Manville Sales Corp. (1984). Under Louisiana strict products liability law, a manufacturer is presumed to know the defects in its product, so the state-of-the-art defense fails; foreseeability applies only to the injury, not to the defect.
• Wedgeworth v. Fibreboard Corp. (1983). The automatic bankruptcy stay under 11 U.S.C. § 362(a) protects only the debtor, not its co-defendants, and a discretionary stay tied to the end of the bankruptcy was indefinite and unjustified without a clear showing of hardship. On rehearing, the court held the district court did not abuse its discretion in refusing to let the plaintiffs add the debtors' insurers.

Pennsylvania

• Vitcavich v. Owens Corning/fibreboard Asbestos Personal Injury Trust (2023). Claimants against a Section 524(g) asbestos trust may litigate only the tort claims the trust distribution procedures authorize. Those claims accrue when the trust issues its authorization letter and are subject to the two-year Pennsylvania limitations period.
• In re All Matters Related TO North American Refractories Company (2022). A bankruptcy court approves a compromise after weighing the Martin factors: probability of success, collection difficulty, litigation complexity and expense, and the paramount interest of creditors. Under Delaware trust law, a court disturbs trustees' discretionary decisions only for abuse of discretion.
• In re All Matters Related TO North American Refractories Company (2022). A right of public access under 11 U.S.C. §107 or the common law applies only to documents filed with the court or otherwise made judicial records, and parties may redact exhibits they choose to introduce without making the unredacted versions public.
• Data v. AO Smith Corporation (2021). Under Pennsylvania law a plaintiff must show frequent, regular and proximate exposure to the specific defendant's asbestos product, and mere presence of the product or de minimis exposure is not enough. Under maritime law the plaintiff must show exposure to the product and that it was a substantial factor in causing the injury, and the bare-metal defense is not available.
• Roverano v. John Crane, Inc. (2020). Pennsylvania's Fair Share Act does not displace the common-law rule that liability among strictly liable defendants is apportioned equally, and percentage apportionment is impossible for an indivisible asbestos injury. Bankruptcy trusts that were joined as defendants or that released the plaintiff may be listed on the verdict sheet, for apportioning liability only, on appropriate requests and proofs.
• Shook v. Avon Products, Inc. (2019). A defendant removing under bankruptcy "related to" jurisdiction must show the action itself affects the debtor's rights or liabilities without further litigation; contingent indemnification agreements and shared insurance are not enough. Remand was also supported on equitable grounds.
• Roverano v. John Crane, Inc. (2017). The Fair Share Act applies to strict liability asbestos cases, so a fact-finder must allocate liability among strictly liable tortfeasors in proportion to their liability rather than per capita. Settlements with bankrupt entities may be considered in that allocation because the Act bars use of the allocation against them and so does not conflict with the Bankruptcy Code.
• Wagner v. Standard Steel, Lcc (2017). A bankruptcy court order approving a Section 363(f) asset sale free and clear of all interests and claims bars later successor-liability tort claims against the asset purchaser, even for claims that had not yet arisen at the time of sale. The Frenville line of cases on discharge of claims does not apply to an asset purchase sale.
• Abbott v. the Boeing Company (2015). Claims by a worker diagnosed with mesothelioma years after the defendant employer's completed bankruptcy did not arise under, arise in, or relate to that bankruptcy, so 28 U.S.C. § 1334 gave no basis for federal jurisdiction over the removed state-law claims.
• In re All Matters Related TO North American Refractories Company (2015). A party seeking a preliminary injunction must show irreparable harm; a purely monetary loss, even if unrecoverable, is not irreparable unless it causes special or serious harm to the movant. Honeywell also did not show a likelihood of success in interpreting the trust documents under Delaware law, because the record on the circumstances of the Trust's creation was insufficient.
• In re Mid-Valley, Inc. (2014). A challenge to the validity of a final confirmation order's channeling injunction is generally barred once the appeal period has run. An injunction protecting a listed non-debtor 'only to the extent' of indemnified claims is read to cover only the protected part of a claim with mixed exposures, so apportionment may be needed.
• Mt. McKinley Ins. Co. v. Pittsburgh Corning Corp. (2014). An excess insurer has no standing to object to an asbestos reorganization plan when insurance-neutrality language preserves its policy rights and the plan does not materially increase the quantum of liability or administrative burdens, distinguishing In re Global Industrial Technologies.
• In re Pittsburgh Corning Corporation (2013). A plan that creates an asbestos personal injury trust and channeling injunction can be confirmed under §524(g) and §1129 when the trust is adequately funded, treats present and future claims equitably, and covers non-debtor parties only for claims derivative of the debtor. A plan that is "insurance neutral" and leaves coverage rights to non-bankruptcy proceedings does not harm non-settling insurers.
• In re Pittsburgh Corning Corporation (2013). A Chapter 11 plan may create an asbestos personal injury trust and a §524(g) channeling injunction protecting nondebtor shareholders and insurers whose alleged liability derives from the debtor, if the plan is fair and equitable to present and future claimants. The plan here was 'insurance neutral', so a non-creditor insurer and a non-creditor co-defendant lacked standing and their objections failed on the merits.
• In re Pittsburgh Corning Corporation (2011). A § 524(g) channeling injunction may protect non-debtor affiliates only for claims derivative of the debtor, and the plan must define its scope clearly. Insurance neutrality language must follow Combustion Engineering without ambiguous qualifications.
• Larson v. Bondex Int'l (In re Asbestos Products Liability Litigation) (2010). Under Utah law a plaintiff need only submit evidence sufficient to raise a genuine issue of material fact, not prove her case, to defeat summary judgment. Conflicts in her recollection and in the defendants' corporate witnesses' testimony are for the jury to weigh.
• DiDio v. Philadelphia Asbestos Corp. (1994). Under Giffear, asymptomatic pleural thickening is not compensable and claims for fear and risk of cancer cannot support recovery where cancer is not present. A bankruptcy filing automatically stays an appeal against the debtor, and a severance of cross-claims makes the judgment on the main claim final and appealable.
• Manzi v. HK Porter Co. (1991). Pleural thickening is not an injury as a matter of law that triggers the limitations period and bars later suits; whether it is a compensable injury is a jury question, so a plaintiff whose jury finds no compensable injury may sue later if he develops a compensable asbestos disease.
• Christman v. Dravo Corp. (1983). Under 33 U.S.C. § 905(a), an employee or his representative may sue the employer at law only if the employer failed to secure payment of compensation; an employer that has secured insurance but contests a particular claim remains protected by the Act's exclusivity provision.

Rhode Island

• Podedworny v. American Insulated Wire Corp. (2014). A bankruptcy plan may condition a corporate debtor's discharge under 11 U.S.C. § 1141(d); where the plan deferred discharge until the Hercules Policy was exhausted, the automatic stay stayed in place and the statute of limitations stayed tolled.
• Sweredoski v. Alfa Laval, Inc. (2013). Crane could present evidence of the settled defendants' fault at trial to obtain a judgment reduction, but bankrupt entities reorganized under 11 U.S.C. § 524(g) were not 'joint tortfeasors' under the contribution act and public policy disfavored apportioning fault to them. Trust claim forms were not discoverable because they were not relevant to causation against the sole remaining defendant.

South Carolina

• Nicolas v. Johnson & Johnson (2019). An indemnification agreement between a defendant and a bankrupt non-party does not automatically create 'related to' bankruptcy jurisdiction; where indemnification would require a further lawsuit, it is speculative and insufficient. Bankruptcy Rule 9027's 90-day removal period governs removal under section 1452.

Tennessee

• Nye v. Bayer Cropscience, Inc. (2011). A non-manufacturing seller may be sued in strict liability under Tenn. Code Ann. 29-28-106(b) when the manufacturers cannot be served because of bankruptcy stays or channeling injunctions. The learned intermediary doctrine does not apply to an employee's claim over asbestos products bought by his employer, and the employee, not the employer, is the consumer who must be warned.
• Nye v. Bayer Cropscience, Inc. (2009). Tennessee has not extended the learned intermediary or sophisticated buyer doctrine beyond medical products, so a jury may not be told that a seller cannot be liable for failure to warn because the employer already knew the danger. Combining that instruction with a proper sole-cause instruction confused the jury.
• Clay v. Johns-Manville Sales Corp. (1983). Tennessee's 1979 amendment excluding asbestos-related disease actions from the ten-year products limitations statute applies, because the vested rights doctrine no longer bars it. A deceased witness's prior deposition is admissible under Rule 804(b)(1) when a party in the earlier case had a like motive to cross-examine, read generously as a 'predecessor in interest'.

Texas

• United Refining Co. v. Dorrion (2023). Under the Bankruptcy Code's broad definition of claim and the Fifth Circuit's prepetition-relationship test, a worker's asbestos exposure by the debtor before the bankruptcy filing created a contingent prepetition claim that was discharged, even though mesothelioma appeared decades later, if notice was adequate.
• United Refining Company v. Dorrion (2023). Under the prepetition-relationship test followed in the Fifth Circuit, a former employee exposed to asbestos before the debtor's bankruptcy filing held a contingent prepetition claim that was discharged by a confirmed plan, even though mesothelioma appeared decades later, where adequate notice was given.
• In re United Refining Company (2021). A claim based on prepetition asbestos exposure is a prepetition bankruptcy claim even if the disease appears after confirmation, and with no official record the Confirmation Order's findings of proper notice are accepted as uncontroverted evidence that the claim was discharged.
• Bradshaw v. Johnson & Johnson (2019). Federal 'related-to' bankruptcy jurisdiction under 28 U.S.C. § 1334(b) requires that the outcome could conceivably affect the bankruptcy estate; the removing party did not show this through contractual indemnity, shared insurance, or unity of identity.
• In re Placid Oil Company (2012). An asbestos claim arises for bankruptcy purposes when exposure occurs, so a pre-confirmation exposure created a dischargeable claim. Publication notice of the bar date was enough for unknown, speculative claimants, with no need for actual notice or a future claims representative.
• In re Placid Oil Company (2011). An asbestos claim arises for bankruptcy purposes when exposure occurs, if there was a prepetition relationship between the debtor and the claimant. Publication notice of the bar date was enough for unknown creditors whose claims were not reasonably ascertainable.
• Broyles v. US Gypsum Co. (2001). A state-law dispute that is only "related to" a bankruptcy case, could not otherwise have been brought in federal court, and can be timely decided in state court requires mandatory abstention under 28 U.S.C. § 1334(c)(2), even when it was removed. Enforcement of a settlement of a tort suit is a non-core proceeding.
• In re National Gypsum Co. (2000). A channeling-order exhaustion requirement is judged by an equitable futility standard. Claimants need not exhaust a trust process that can pay only a few percent of tort-system values, so an unfunded trust cannot resolve their claims and the channeling order ends.
• Todd Shipyards Corporation v. Perez (2000). The Texas Supreme Court denied Todd Shipyards' petition for review, leaving in place the court of appeals' reversal of summary judgment for Todd and in favor of Garcia's daughters; Justices Hecht and Owen dissented from the denial.
• Perez v. Todd Shipyards Corp. (1999). A surviving family's gross negligence claim for exemplary damages under the Texas Constitution and Labor Code is not derivative of the decedent's rights. Because the children had no pre-petition relationship with the debtor, they held no bankruptcy 'claim' that was discharged before the plan was confirmed.
• Carter v. Johns-Manville Sales Corp. (1983). Under Texas law, a strict liability failure-to-warn claim requires that the danger was reasonably foreseeable to a manufacturer held to the knowledge of an expert, so unforeseeability defeats it. Unforeseeability is irrelevant to a strict liability design defect claim, which weighs the product's dangers against its utility.

Washington

• Rublee v. Carrier Corporation (1st Division, 2017). Under Restatement (Second) of Torts § 400, assumed to be adopted in Washington, a defendant is liable as an apparent manufacturer only if the evidence satisfies a reliance or enterprise test. Under the objective reliance test, a reasonable purchaser in the position of the actual (industrial) purchaser is the relevant viewpoint.
• Rublee v. Carrier Corp. (1st Division, 2016). Under Restatement (Second) of Torts § 400, apparent manufacturer liability was assessed from the viewpoint of a reasonable purchaser in the position of the actual purchaser, and the evidence failed under the objective reliance, actual reliance and enterprise liability tests.
• Sprague v. Pfizer, Inc. (2015). Applying Washington law as it predicted, Restatement (Second) of Torts § 400 applies only to defendants in the chain of distribution who "put out" the product; a parent-subsidiary relationship and shared logos alone do not make the parent an apparent manufacturer.
• Jensen v. Metropolitan Life Insurance Company (2013). A non-diverse defendant is fraudulently joined only if the plaintiff obviously fails to state a cause of action against it under state law; the removing defendant bears a high burden, and doubts are resolved in favor of remand.
• Abbay v. Aurora Pump Company (1st Division, 2011). Where a pleading's wording can fairly be read in more than one way, the plaintiff may clarify its meaning in summary judgment briefing, and grammar rules did not require reading the relative clause as limited to its nearest noun.
• Herring v. Texaco, Inc. (2007). A debtor need not give actual notice of its bankruptcy to a claimant's union when the debtor had no knowledge of the particular claimant's claim. An unknown creditor is only entitled to publication notice, and notice to the union would not be actual notice to the claimant.

West Virginia

• In re Celotex Corp. (1997). A contribution action against a debtor's contractual indemnitee is "related to" the bankruptcy case under the Pacor test, giving federal subject matter jurisdiction. Stream-of-commerce allegations without conduct purposefully directed at the forum cannot support personal jurisdiction over a successor, and a forfeited error is corrected on civil appeal only if the Olano plain-error requirements are met.