Justia Products Liability Opinion Summaries

Whittaker, Clark & Daniels, Inc. and three affiliates, with a history of manufacturing, storing, and distributing asbestos-containing talc, faced thousands of personal injury and environmental claims. After a $29 million verdict against Whittaker in South Carolina, a state court there appointed a receiver to administer Whittaker’s assets. Whittaker’s board, without consulting the receiver, authorized and filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the District of New Jersey. The Debtors’ estates were largely depleted by a 2004 asset sale to Brenntag, which expressly excluded liability for pre-sale asbestos and environmental claims. The Debtors, now essentially shells, sought to settle successor liability claims against Brenntag for $535 million, but some talc claimants had already asserted such claims against Brenntag in state courts.The South Carolina receiver and the Official Committee of Talc Claimants challenged the bankruptcy filing’s validity, arguing that only the receiver could authorize such a filing under the South Carolina court's order. The receiver’s motion to dismiss the bankruptcy petition as unauthorized was denied by the Bankruptcy Court, which found the South Carolina order did not divest Whittaker’s board of its authority. The United States District Court for the District of New Jersey affirmed. In parallel, the Committee contested whether certain “product-line” successor liability claims belonged to the Debtors’ estates or to individual creditors. The Bankruptcy Court, referencing Third Circuit precedent, held that such claims were property of the bankruptcy estates.The United States Court of Appeals for the Third Circuit affirmed both lower court decisions. It held that Whittaker’s Chapter 11 filing was valid, as the South Carolina court’s receivership order did not displace the board’s authority under New Jersey law, which governs corporate internal affairs. The court further held that successor liability claims based on product-line theory, even if nominally assertable by creditors outside bankruptcy, are property of the bankruptcy estate when they address a general injury to the debtor that results in secondary harm to all creditors. Accordingly, the judgments below were affirmed. View "In re Whittaker, Clark & Daniels Inc" on Justia Law

Whittaker, Clark & Daniels, Inc. and three affiliates, historically involved in the manufacture and distribution of asbestos-containing talc, faced thousands of personal injury and environmental claims. Over the years, the companies divested their operating assets, notably selling them to Brenntag North America in 2004 while expressly excluding pre-sale asbestos and environmental liabilities. As liabilities mounted, one plaintiff obtained a large jury verdict in South Carolina and successfully moved to put Whittaker into receivership, with a receiver appointed to administer its assets.Following the South Carolina receivership, Whittaker's board authorized a Chapter 11 bankruptcy filing in the United States Bankruptcy Court for the District of New Jersey without consulting the receiver. The receiver moved to dismiss the bankruptcy, arguing that under the receivership order, only he had authority to file such a petition. The Bankruptcy Court denied the motion, finding that the receivership order did not displace the board’s authority. The United States District Court for the District of New Jersey affirmed this ruling. While bankruptcy proceedings moved forward, the Debtors negotiated a $535 million settlement with Brenntag to resolve successor liability claims. However, the Official Committee of Talc Claimants argued that certain product-line successor liability claims belonged exclusively to talc creditors and not to the bankruptcy estate.The United States Court of Appeals for the Third Circuit reviewed two central issues. First, it held that the propriety of Whittaker’s bankruptcy petition did not affect the bankruptcy court’s subject matter jurisdiction and that, under New Jersey law, the board retained authority to file for bankruptcy because the South Carolina receiver had not obtained recognition or ancillary receivership in New Jersey. Second, the court held that product-line successor liability claims, like other derivative claims based on injury to the debtor and available to all creditors, are property of the bankruptcy estate under 11 U.S.C. § 541(a)(1). Accordingly, the Third Circuit affirmed the lower courts’ judgments. View "In re: Whittaker Clark & Daniels" on Justia Law

A group of companies that are frequently sued in asbestos litigation brought an action against several settlement trusts and a claims processing facility. These trusts were established as part of bankruptcy reorganizations by former asbestos manufacturers to handle and pay out current and future asbestos-related claims. The plaintiffs rely on information held by these trusts—specifically, data about claimants’ other asbestos exposures—to defend themselves in ongoing and anticipated lawsuits. In January 2025, the trusts announced new document retention policies that would result in the destruction of most existing claims data after one year, which the plaintiffs argued would severely impair their ability to defend against asbestos claims and seek contribution or indemnification from the trusts.Previously, the trusts notified claimants of the impending data destruction, and the plaintiffs, upon learning of this, requested that the trusts not implement the new policies. When the trusts refused, the plaintiffs filed suit in the Court of Chancery of the State of Delaware, seeking a declaratory judgment that the trusts have a duty to preserve the claims data and a permanent injunction to prevent the destruction of this information. The trusts moved to dismiss, arguing that the court lacked subject matter jurisdiction, that the plaintiffs lacked standing, and that the complaint failed to state a claim.The Court of Chancery denied the motions to dismiss. It held that it had subject matter jurisdiction because the plaintiffs sought injunctive relief and because the case fit within the court’s traditional equitable powers, including the authority to grant a bill of discovery to preserve evidence for use in litigation. The court found that the plaintiffs had standing, as they faced a concrete and imminent injury from the threatened destruction of data essential to their defense and contribution claims. The court also held that the complaint stated a claim for relief, allowing the case to proceed beyond the pleading stage. View "DBMP LLC v. Delaware Claims Processing Facility, LLC" on Justia Law

Whittaker, Clark & Daniels, Inc. and its affiliates, former processors and distributors of industrial chemicals including talc, faced thousands of asbestos-related tort claims after selling their operating assets in 2004. In 2023, following a $29 million jury verdict in South Carolina for a plaintiff diagnosed with mesothelioma, the South Carolina Court of Common Pleas appointed a receiver to manage Whittaker’s assets. The receiver was granted broad authority to administer Whittaker’s assets and protect its interests, but the order did not explicitly remove the board’s authority over corporate affairs.Whittaker’s board, without consulting the receiver, authorized a bankruptcy filing in the United States Bankruptcy Court for the District of New Jersey. The receiver moved to dismiss the bankruptcy, arguing that only he had authority to file. The Bankruptcy Court denied the motion, finding the board retained authority under New Jersey law, and the United States District Court for the District of New Jersey affirmed. Meanwhile, the Official Committee of Talc Claimants intervened in an adversary proceeding, contesting whether certain successor liability claims against a nondebtor (Brenntag) were property of the bankruptcy estate. The Bankruptcy Court granted summary judgment to the debtors, holding that these claims belonged to the estate, and certified the decision for direct appeal.The United States Court of Appeals for the Third Circuit affirmed both lower courts. It held that an improperly filed bankruptcy petition is not a jurisdictional defect but may be grounds for dismissal. The court determined that under New Jersey law, the board retained authority to file for bankruptcy because the South Carolina receiver had not been recognized by a New Jersey court. The court also held that successor liability claims based on a “product line” theory are general claims belonging to the bankruptcy estate, not to individual creditors, following its precedent in In re Emoral. View "In re Whittaker Clark & Daniels Inc." on Justia Law

“Old Consumer,” a wholly owned subsidiary of J&J, sold healthcare products such as Band-Aid, Tylenol, Aveeno, and Listerine, and produced Johnson’s Baby Powder for over a century. The Powder’s base was talc. Concerns that the talc contained asbestos resulted in lawsuits alleging that it has caused ovarian cancer and mesothelioma. With mounting payouts and litigation costs, Old Consumer, through a series of intercompany transactions, split into LTL, holding Old Consumer’s liabilities relating to talc litigation and a funding support agreement from LTL’s corporate parents, and “New Consumer,” holding virtually all the productive business assets previously held by Old Consumer. J&J’s goal was to isolate the talc liabilities in a new subsidiary that could file for Chapter 11 without subjecting Old Consumer’s entire operating enterprise to bankruptcy proceedings.Talc claimants moved to dismiss LTL’s subsequent bankruptcy case as not filed in good faith. The Bankruptcy Court denied those motions and extended the automatic stay of actions against LTL to hundreds of non-debtors, including J&J and New Consumer. In consolidated appeals, the Third Circuit dismissed the petition. Good intentions— such as to protect the J&J brand or comprehensively resolve litigation—do not suffice. The Bankruptcy Code’s safe harbor is intended for debtors in financial distress. LTL was not. Ignoring a parent company’s safety net shielding all foreseen liability would create a legal blind spot. View "In re: LTL Management LLC" on Justia Law

IImerys sought Chapter 11 bankruptcy protection in response to mounting asbestos and talc personal injury claims. Many of the claimants who will suffer harm from asbestos exposure traceable to the debtor will not manifest those injuries until long after the reorganization process has concluded. Cases involving asbestos liability, therefore, use trusts designed to compensate present and future asbestos claimants, coupled with an injunction against future asbestos liability to allow the debtor to emerge from bankruptcy without the uncertainty of future asbestos liabilities while ensuring claimants would not be prejudiced just because they had not yet manifested injuries at the time of the bankruptcy, 11 U.S.C. 524(g), The provision requires the appointment of a legal representative (FCR) to protect the rights of future claimants. The FCR participates in the negotiation of the reorganization plan and objects to terms that unfairly disadvantage future claimants.A group of insurance companies appealed the appointment of an FCR in the Ilmerys bankruptcy, arguing that the FCR had a conflict of interest because the FCR’s law firm also represented two of the insurance companies in a separate asbestos-related coverage dispute. The Third Circuit affirmed the appointment. The Bankruptcy Court did not abuse its discretion in appointing the FCR. it gave due consideration to the purported conflict and correctly determined that the interests of both the insurance companies and the future claimants were adequately protected. View "In re: Imerys Talc America, Inc" on Justia Law

After Old GM filed for bankruptcy, New GM emerged. This case involves one of the consequences of the GM bankruptcy. Beginning in February 2014, New GM began recalling cars due to a defect in their ignition switches. Many of the cars in question were built years before the GM bankruptcy. Where individuals might have had claims against Old GM, a ʺfree and clearʺ provision in the bankruptcy courtʹs sale order barred those same claims from being brought against New GM as the successor corporation. Various individuals nonetheless initiated class action lawsuits against New GM, asserting ʺsuccessor liabilityʺ claims and seeking damages for losses and injuries arising from the ignition switch defect and other defects. The bankruptcy court enforced the Sale Order to enjoin many of these claims against New GM. The court concluded that the bankruptcy court had jurisdiction to interpret and enforce the Sale Order; the ʺfree and clearʺ provision covers pre‐closing accident claims and economic loss claims based on the ignition switch and other defects, but does not cover independent claims or Used Car Purchasersʹ claims; the court found no clear error in the bankruptcy court's finding that Old GM knew or should have known with reasonable diligence about the defect, and individuals with claims arising out of the ignition switch defect were entitled to notice by direct mail or some equivalent, as required by procedural due process; because enforcing the Sale Order would violate procedural due process in these circumstances, the bankruptcy court erred in granting New GMʹs motion to enforce and these plaintiffs cannot be bound by the terms of the Sales Order; and the bankruptcy courtʹs decision on equitable mootness was advisory. Accordingly, the court affirmed in part, reversed in part, vacated in part, and remanded. View "In re Motors Liquidation Co." on Justia Law

In 1988 Sutherland received breast implants in North Carolina. She filed suit in North Carolina five years later, after learning that the silicone in her implants could be causing a variety of serious medical problems. The Silicone’s manufacturer, Dow Corning, filed for bankruptcy in Michigan, and Sutherland’s suit was transferred there. In 2012, 24 years after Sutherland received the implants, the district court concluded that Sutherland’s claim was barred by Michigan’s statute of limitations and granted summary judgment to the defendant. The Sixth Circuit reversed, reasoning that the district court should have applied North Carolina’s law instead of Michigan’s, and should have concluded that there was a genuine factual issue as to whether Sutherland’s claim was timely-filed under North Carolina law. View "Sutherland v. DCC Litig. Facility, Inc." on Justia Law

For more than 30 years, Grace has defended itself against asbestos-related lawsuits filed by building owners seeking redress for costs involved in removing Grace products. AMH owns a hospital complex that used Grace products in its construction and filed a class action lawsuit in South Carolina state court. Before resolution of that litigation, Grace filed a petition for Chapter 11 protection. After about 10 years, most property damage claims against Grace had been settled, contingent on approval of an 11 U.S.C. 524(g) trust and an injunction channeling property damage claims against Grace to that trust for payment. AMH did not settle. The Bankruptcy Court confirmed Grace’s reorganization, including a trust and channeling injunction, over AMH’s objections. The district court and Third Circuit affirmed, rejecting arguments that the reorganization plan did not meet the requirements of section 524(g), which provides a mechanism for handling overwhelming asbestos-related liabilities in Chapter 11 proceedings; that the plan failed to provide equal treatment as required by 11 U.S.C. 1123(a)(4), (C) ; that Grace did not show that the Plan was proposed in good faith under 11 U.S.C. 1129(a) and did not show that the Plan is feasible. View "In Re: W.R. Grace & Co." on Justia Law

Grace has manufactured and sold specialty chemicals and construction materials for more than 100 years. The company began facing asbestos-related lawsuits in the 1970s, based on several products and activities, including operation of a Montana vermiculite mine that released asbestos-containing dust into the atmosphere and sale of Zonolite Attic Insulation (ZAI). Montana and the Crown (Canada) have been sued for alleged failure to warn citizens of the risks posed by Grace’s products and activities. Montana settled its cases for $43 million in 2011. The Crown is a defendant in lawsuits arising from the use of ZAI. Montana and the Crown sought indemnification from Grace. Grace sought protection under the Bankruptcy Code, 11 U.S.C. 524(g), which allows a company to establish a trust to handle such liabilities. Montana and the Crown objected to confirmation of a Plan of Reorganization that will send all asbestos claims to two trusts, allowing protected parties to be “unconditionally, irrevocably and fully released.” The personal injury trust is funded by $ 1.5 billion from settlements with Grace’s insurers and former affiliates, an initial payment from Grace of $ 450 million, a warrant to acquire 10 million shares of Grace common stock at $ 17 per share, and annual cash payments from Grace of $100-110 million through 2033. The property damage trust is funded by an initial payment of 180 million dollars, and a subsequent payment of 30 million dollars. The two trusts have separate mechanisms for resolving claims. The bankruptcy court, the district court, and the Third Circuit confirmed the plan. View "In re: W.R. Grace & Co." on Justia Law