Kane v. Johns-Manville Corp.

843 F.2d 636 (2nd Cir. 1988)

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Nature of the Case

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Facts

Kane (D), on behalf of himself and a group of other personal injury claimants, appeals from an order of the District Court affirming an order of the Bankruptcy Court. P was the world's largest miner of asbestos and a major manufacturer of insulating materials and other asbestos products. Scientific studies began to confirm that exposure to asbestos fibers over time could cause a variety of respiratory diseases, including certain forms of lung cancer. Asbestos-related diseases have an unusually long latency period. An individual might not become ill from an asbestos-related disease until as long as forty years after initial exposure. P became the target in the 1960s and 1970s of a growing number of products liability lawsuits. By the early 1980s, P had been named in approximately 12,500 such suits brought on behalf of over 16,000 claimants. Epidemiological studies revealed that approximately 50,000 to 100,000 additional suits could be expected. P estimated its potential liability at approximately $ 2 billion. On August 26, 1982, P filed Chapter 11. The future claimants were persons who had been exposed to asbestos prior to the August 1982 petition date but had not yet shown any signs of disease at that time. An Asbestos Health Committee was appointed to represent all personal injury claimants, but the Committee took the position that it represented the interests only of 'present claimants,' persons who, prior to the petition date. The Committee declined to represent the future claimants. A number of parties moved the Bankruptcy Court to appoint a legal guardian for the future claimants. Additionally, the Court invited any person who had been exposed to asbestos but had not developed an illness to participate in the proceedings, and two such persons appeared. The cornerstone of the Second Amended Plan of Reorganization is the Asbestos Health Trust (Trust), a mechanism designed to satisfy the claims of all asbestos health victims, both present and future. The Plan seeks to ensure that health claims can be asserted only against the Trust and that Ps operating entities will be protected from an onslaught of crippling lawsuits that could jeopardize the entire reorganization effort. The Bankruptcy Court would issue an injunction channeling all asbestos-related personal injury claims to the Trust. The Injunction applies to all health claimants, both present and future, regardless of whether they technically have dischargeable 'claims' under the Code. P was directed to undertake a comprehensive notice campaign to inform persons with present health claims of the pendency of the reorganization and their opportunity to participate. This produced a large number of present asbestos claimants. In all, 52,440 such claimants submitted proof-of-claim-and-voting forms. Of these, 50,275 or 95.8% approved the Plan, while 2,165 or 4.2% opposed it. In addition to these Class-4 claimants, all other classes of creditors also approved the Plan. Class 8, the common stockholders, opposed the Plan. The Court entered an order confirming the Plan on December 22, 1986. D and others appealed. The District Court affirmed the Bankruptcy Court's confirmation order. D appealed. The Legal Representative of the future claimants challenges D's standing to bring this appeal.