The plaintiff, Lynda Berry, filed an asbestos lawsuit in Louisiana against Graphic Packaging International for mesothelioma due secondary exposure from her husband’s work at the Manville Forest Products (MFP) mill from 1961-2010. The plaintiff’s petition included claims against Manville for asbestos it produced, and claims against Graphic for negligently maintaining the premises. Graphic filed an emergency motion for enforcement of the bankruptcy confirmation orders of the Johns-Manville Corporation and MFP. Graphic argued it was a successor of MFP, and as such, the plaintiff must first pursue her asbestos claims against the Manville Personal Injury Trust. The plaintiff argued her claims were not discharged or enjoined by the MFP confirmation order, MFP was not a beneficiary of the Manville confirmation order or channeling injunction, Graphic waived its right to enforce the bankruptcy confirmation orders and injunction, and she did not receive due process.
The bankruptcy court granted Graphic’s motion for an order enjoining the plaintiff’s state law claims against Graphic as successor to MFP. In so holding, the court stated: “Ms. Berry’s lawsuit against MFP is merely an attempt to side-step the Manville Trust in order to recover more than other similarly situated asbestos victims by suing Manville and its subsidiaries directly. This is not merely unfair to the other victims, it is an attempt to sue on rights she does not have.” The court found that the plaintiff held a future asbestos claim, subject to the injunction in the Manville Plan and Confirmation Order.
The court provided a detailed description of the history of Johns-Manville, asbestos, and asbestos litigation. On August 26, 1982, Manville and 20 of its subsidiaries filed for protection under chapter 11 of the Bankruptcy Code; MFP was one of these original Manville debtors. After MFP confirmed its reorganization plan, it changed its name to Riverwood International Corporation, which later merged with Graphic in 2003.
Pursuant to the plain language of MFP’s bankruptcy confirmation order, any direct claim the plaintiff had against MFP was a pre-petition claim, subject to discharge by MFP’s Plan. MFP’s confirmation order discharged MFP from all unsecured, pre-confirmation debts, and likewise enjoined all entities whose debts were discharged from pursuing any litigation to collect such discharged debt. Further, the federal courts developed four tests to determine when a pre-petition bankruptcy claim arose — the “accrual test,” “conduct test,” “pre-petition relationship test,” and, occasionally, the “fair contemplation test.” The court examined holdings in other bankruptcy cases involving future tort claimants to determine which approach to use, and applied the pre-petition relationship test as set forth by the Second Circuit — a sufficient relationship was formed when the claimant was exposed to asbestos as a result of the debtor’s allegedly tortious conduct. The relevant inquiry was when the injured party was exposed to the product — in this case, from 1961-2010. Although the plaintiff argued a continuing theory of exposure, the substantial injury-producing exposures were, by the plaintiff’s own admission, more likely to have occurred prior to the confirmation date of August 26, 1982.
Addressing the plaintiff’s due process claims, the court found that MFP complied with the due process requirements outlined in prior case law. Further the Manville Plan preserved her claim by channeling that claim into the Trust. In so finding the court provided detailed summary of the design, purpose, and administration of the Trust. Finally, the court found that Graphic did not waive its right to rely on the confirmation orders because bankruptcy discharge was not an affirmative defense that could be waived.