Free Appellee's Brief - District Court of Delaware - Delaware

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Daniel K. Hogan (DE #2814) THE HOGAN FIRM 1311 Delaware Avenue Wilmington, Delaware 19806 Telephone: 302-656-7540 Facsimile: 302-656-7599

STUTZMAN, BROMBERG, ESSERMAN & PLIFKA, A Professional Corporation Sander L. Esserman (TX Bar No. 06671500) David A. Klingler (TX Bar No. 11574300) 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 Telephone : (214) 969-4900 Facsimile: (214) 969-4999

COUNSEL FOR APPELLEES BARON & BUDD, P.C., AND SILBER PEARLMAN, LLP (in appeal from Flintkote order But not the corresponding order in Kaiser Aluminum)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

CERTAIN UNDERWRITERS AT LLOYD'S LONDON and CERTAIN LONDON MARKET INSURANCE COMPANIES, Appellants, v. BARON & BUDD, P.C., and SILBER PEARLMAN, LLP, Appellees.

Civil Action No. 04-CV-1496 Hon. Joseph J. Farnan, Jr. Appeal from Bankruptcy Case No. 02-10429 (Hon. Judith K. Fitzgerald) Consolidated with the appeal in In re The Flintkote Co., et al., Bankr. Case Nos. 04-11300 & 04-12440 (Hon. Judith K. Fitzgerald) D. Del. Case No. 04-CV-1521

IN RE: KAISER ALUMINUM CORP., et al. Debtors.

Chapter 11 Case Nos. 00-3837 ­ 3854 (JKF) (Jointly Administered)

Dated: April 6, 2005 BRIEF OF APPELLEES BARON & BUDD, P.C., AND SILBER PEARLMAN, LLP REGARDING FLINTKOTE APPEAL

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TABLE OF CONTENTS
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TABLE OF CONTENTS ........................................................................................................ .ii TABLE OF AUTHORITIES ................................................................................................... iv I. II. RESTATEMENT OF THE ISSUES PRESENTED............................................................1 RESTATEMENT OF THE CASE AND THE FACTS. ......................................................2 A. Nature of the Case, Course of Proceedings, and Disposition Below................................................................................2 Statement of the Facts. ..............................................................................8

B.

III. ARGUMENT ...............................................................................................................10 A. B. Summary of Argument............................................................................10 Appellants Lacks Standing to be Heard on This Appeal. ....................15 1. 2. Appellants Are Not "Persons Aggrieved." ...............................17 Appellants' position in this appeal is analogous to their position in Combustion Engineering. ............................21 This appeal is premature because Appellants have not exhausted their options before the bankruptcy court for obtaining access to the 2019 Statement exhibits. ........................................................................................25 Appellants' standing to maintain this appeal cannot be predicated on, or buttressed by, alleged rights or interests of third parties. .............................................................28 Apart from prudential limitations, Appellants do not meet the "irreducible constitutional minimum" requirements for standing...........................................................29

3.

4.

5.

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C.

The Bankruptcy Court Properly Applied Rule 2019 with Flexibility Suited to the Requirements of a Complex, Mass Tort-Related Reorganization. .................................................................31 1. Rule 2019 seeks only to protect the real parties in interest from unauthorized representation in the reorganization process...........................................................................................38 The option of disclosing exemplar retention agreements is consistent with Rule 2019. ................................40 The manner in which the 2019 Order provides for access to the 2019 Statement exhibits is appropriate and consistent with 11 U.S.C. § 107(a). ......................................41

2.

3.

IV. CONCLUSION. ............................................................................................................47

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TABLE OF AUTHORITIES Page(s) A. CASES Abbott Labs v. Gardner, 387 U.S. 136 (1967) .................................................................27 Allen v. Wright, 468 U.S. 737 (1984) .................................................................... 18-19, 29 AMTRAK v. Pennsylvania PUC, 342 F.3d 242 (3d Cir. 2003) ....................................................................................................................30 AT&T Communications of N.J., Inc. v. Verizon N.J. Inc., 270 F.3d 162 (3d Cir. 2001) ..............................................................................30 Babbitt v. United Farm Workers Nat'l Union, 442 U.S. 289 (1979) ..........................................................................................................26 Baron & Budd, P.C. v. Unsecured Asbestos Claimants Comm., 321 B.R. 147 (D.N.J. 2005) ............................................................................ 17, 24, 34-37 Belitskus v. Pizzingrilli, 343 F.3d 632 (3d Cir. 2003) .......................................................15 Bennett v. Spear, 520 U.S. 154 (1997) .............................................................................18 Califano v. Sanders, 430 U.S. 99 (1977) ...........................................................................27 In re Caringi, 19 B.R. 12 (Bankr. M.D. Pa. 1982) ...........................................................20 In re Cedar Shore Resort, Inc., 235 F.3d 375 (8th Cir. 2000)............................................20 In re CF Holding Corp., 145 B.R. 124 (Bankr. D. Conn. 1992) ................................ 33-34 In re Charter Co., 876 F.2d 866 (11th Cir. 1989) ..............................................................34 In re Chateaugay Corp., 104 B.R. 626 (Bankr. S.D.N.Y. 1989) ......................................34 In re Columbia Gas Sys., Inc., 33 F.3d 294 (3d Cir. 1994) ...............................................47 In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir. 2004)............................ passim Davis v. Cox, 356 F.3d 76, 93 n.15 (1st Cir. 2004) ...........................................................21 Depoister v. Mary M. Holloway Found., 36 F.3d 582 (7th Cir. 1994) ..............................21
Page(s)

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Duncan Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774 (9th Cir. 1999) .............................................................................................21 In re Federal-Mogul Global, Inc., 282 B.R. 301 (Bankr. D. Del. 2002) .......................................................................................................37 In re 50-Off Stores, Inc., 213 B.R. 646 (Bankr. W.D. Tex. 1997) ....................................44 In re Fondiller, 702 F.2d 441 (9th Cir. 1983) ..............................................................17, 19 General Motors Acceptance Corp. v. Dykes (In re Dykes), 10 F.3d 184 (3d Cir. 1993) ................................................................................... 13, 17-18 Gibbs & Bruns LLP v. Coho Energy Inc. (In re Coho Energy Inc.), 395 F.3d 198 (5th Cir. 2004) .......................................................................................19, 21 In re Gucci, 193 B.R. 417 (Bankr. S.D.N.Y. 1996)...........................................................37 In re Handy Andy Home Improvement, 199 B.R. 376(Bankr. N.D. Ill. 1996) .................................................................................46 Harker v. Troutman (In re Troutman Enters.), 286 F.3d 359 (6th Cir. 2002) ....................................................................................................................21 In re Ionosphere Clubs, Inc., 101 B.R. 844(Bankr. S.D.N.Y. 1989) ................................25 International Primate Prot. League v. Administrators of Tulane Educ. Fund, 500 U.S. 72 (1991) ............................................................................19 Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636 (2nd Cir. 1988) ........................................................................... 14, 19, 28-29 Ex parte Levitt, 302 U.S. 633 (1937) .................................................................................18 Lewis v. Casey, 518 U.S. 343 (1996).................................................................................19 Lopez v. Behles (In re American Ready Mix, Inc.), 14 F.3d 1497 (10th Cir. 1994) ..................................................................................... 20-21 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ........................................................30

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In re Marlar, 252 B.R. 743 (Bankr. 8th Cir. 2000), aff'd, 267 F.33d 749 (8th Cir. 2001) ..................................................................................21 Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270 (1941) ..........................................................................................................27 McConnell v. FEC, 540 U.S. 93 (2003)....................................................................... 29-30 McGuirl v. White, 86 F.3d 1232 (D.C. Cir. 1996) ............................................................21 National Org. for Women, Inc. v. Scheidler, 510 U.S. 249(1994).....................................15 Nixon v. Warner Comm., Inc., 435 U.S. 589 (1978)..........................................................44 O'Brien v. Vermont (In re O'Brien), 184 F.3d 140 (2d Cir. 1999) ...................................21 In re Oklahoma P.A.C. First Ltd. P'ship, 122 B.R. 387 (Bankr. D. Ariz. 1990) ......................................................................................................34 In re Orion Pictures Corp., 21 F.3d 24 (2d Cir. 1994) ............................................... 44-46 Peachlum v. City of York, Pa., 333 F.3d 429 (3d Cir. 2003) ............................................26 In re Pacor, Inc., 743 F.2d 984 (3d Cir. 1984) .................................................................37 In re Phar-Mor, Inc., 191 B.R. 675 (Bankr. N.D. Ohio 1995) ..........................................44 Philadelphia Federation of Teachers, American Federation of Teachers, Local 3, AFL-CIO v. Ridge, 150 F.3d 319 (3d Cir. 1998) ....................................................................................................................26 In re Public Serv. Co., 88 B.R. 546 (Bankr. D.N.H. 1988) ..............................................25 In re PWS Holding Corp., 228 F.3d 224 (3d Cir. 2000) ...................................................18 Ryker v. Current (In re Ryker), 301 B.R. 156 (D.N.J. 2003) ............................................15 Schlesinger v. Reservists to Stop the War, 418 U.S. 208 (1974) ................................16, 31 Sierra Club v. Morton, 405 U.S. 727 (1972) .....................................................................31 Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26 (1976)........................................30

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Page(s)

Singleton v. Wulff, 428 U.S. 106 (1976) .....................................................................14, 28 Storino v. Borough of Point Pleasant Beach, 322 F.3d 293 (3d Cir. 2003) ...............14, 28 In re Timbers of Inwood Forest Associates, Inc., 793 F.2d 1380 (5th Cir. 1986), aff'd en banc, 808 F.2d 363, aff'd 484 U.S. 365 (1988) .......................................20 Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d 737 (3d Cir. 1995) .......... 13, 16, 18-19, 24 In re United Artists Theatre Co., 315 F.3d 217 (3d Cir. 2003) .........................................47 United States v. AVX Corp., 962 F.2d 108 (1st Cir. 1992) ................................................15 United States ex rel. Chapman v. Fed. Power Comm'n, 345 U.S. 153 (1953) ...........................................................................................15 United States v. Continental Airlines (In re Continental Airlines), 150 B.R. 334 (D. Del. 1993)..................................................................32, 42, 44 Vermont Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000).................................................................. 2, 14, 29-30 In re Vestra Indus., Inc., 82 B.R. 21 (Bankr. D.S.C. 1987)...............................................34 In re Vertientes, Ltd., 845 F.2d 57 (3d Cir. 1988) .............................................................44 Warth v. Seldin, 422 U.S. 490 (1975) .............................................................. 15-16, 18, 28 Westwood Cmty. Two Assoc., Inc. v. Barbee (In re Westwood Cmty. Two Assoc., Inc.), 293 F.3d 1332 (11th Cir. 2002) ........................................... 20-21 White v. Univision of Va. Inc. (In re Urban Broad. Corp.), No. 04-1262, 2005 WL 563890 (4th Cir., Mar. 11, 2005) .................................................21 Whitmore v. Arkansas, 495 U.S. 149 (1990) .....................................................................30 Wilson v. Valley Elec. Membership Corp., 141 B. R. 309 (Bankr. D. La. 1992) ......................................................................................................5, 33

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B. STATUTES 11 U.S.C. § 67(c) (repealed 1978) ..............................................................................17, 20 11 U.S.C. § 107(a) ............................................................................................41-42, 44-46 11 U.S.C. § 524(g) .............................................................................................................11 11 U.S.C. § 1125................................................................................................................40 28 U.S.C. § 155..................................................................................................................37 11 U.S.C. § 1334................................................................................................................37

C. RULES FED. R. BANKR. P. 2014 .....................................................................................................31 FED. R. BANKR. P. 2015 .....................................................................................................31 FED. R. BANKR. P. 2016 .....................................................................................................31 FED. R. BANKR. P. 2019 ............................................................................................. passim FED. R. BANKR. P. 9018 .....................................................................................................45 D. CONSTITUTIONAL PROVISIONS U.S. CONST. art. I, § 6, cl. 2 ...............................................................................................16 U.S. CONST. art. III, § 2 .............................................................................................. 18, 29 E. TREATISES Erwin Chemerinsky, FEDERAL JURISDICTION § 2.3.1 (1989) ............................................26 9 Lawrence P. King, et al., COLLIER ON BANKRUPTCY § 2019.02 (15th ed. 2004) ............................................................................................ 38-39 9 Lawrence P. King, et al., COLLIER ON BANKRUPTCY § 2019.04 (15th ed. 2004) .........................................................................................5, 33, 35

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9 Lawrence P. King, et al., COLLIER ON BANKRUPTCY § 2019.05[2](15th ed. 2004)................................................................................................39 F. LEGISLATIVE MATERIALS H.R. Rep. No. 595 (1975), reprinted in 1978 U.S.C.C.A.N. 6179 ....................................20 G. ONLINE SOURCES Bankruptcy Statistics for 2003 Calendar Year by Chapter, accessible at http://www.uscourts.gov/bnkrpctystats/statistics.htm. .................................................3

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The law firms of Baron & Budd, P.C. and Silber Pearlman, LLP (collectively, "Appellees") file this brief in connection with the appeal in the Flintkote reorganization case1 by Certain Underwriters at Lloyd's, London, and Certain London Market Insurers (collectively, the "London Market Insurers" or "Appellants") from the "Revised Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019" (the "2019 Order", D.I. 337) issued by the United States Bankruptcy Court for the District of Delaware, Honorable Judith K. Fitzgerald, on October 22, 2004.2 I. RESTATEMENT OF THE ISSUES PRESENTED. 1. Whether, because (a) the 2019 Order does not "directly and pecuniarily"

affect Appellants' rights and, (b) they are therefore not "persons aggrieved", Appellants have standing to be heard in this appeal3 in light of longstanding Third Circuit precedent reaffirmed in In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir. 2004), that

1

This case involves consolidated appeals from identical orders entered by the bankruptcy court, Honorable Judith K. Fitzgerald, in two separately administered bankruptcy cases: In re The Flintkote Co., et al., Bankr. Case No. 04-11300, and In re Kaiser Aluminum Corp., et al., Bankr. Case No. 02-10429. Baron & Budd, P.C., and Silber Pearlman, LLP, are appellees with respect to the subject orders entered in both cases, but this brief is submitted on their behalf only in connection with the appeal of the order in Flintkote. As to the appeal from the order in Kaiser Aluminum, Appellees are represented by separate counsel. A true copy of the 2019 Order in Flintkote is appended hereto for the Court's convenient reference. Specific docket numbers cited herein refer to the corresponding items docketed these consolidated appeals (i.e., D.I. ___) or in the underlying Flintkote bankruptcy case (i.e., Bankr. D.I. ___) unless otherwise indicated. As used herein, "this appeal" refers to the appeal of the 2019 Order issued in Flintkote. Similarly, references to the "Underlying Bankruptcy Case" are to the jointly administered Flintkote case. (The Flintkote Co. is debtor in Bankruptcy Case No. 04-11300 and its Canadian subsidiary, Flintkote Mines Limited a/k/a Flintkote Mines Limitee, is debtor in Bankruptcy Case No. 04-12440. These cases are jointly administered as Case No. 04-11300. 1

2

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conditions appellate standing in bankruptcy on "person aggrieved" status with respect to the order from which appeal is taken? 2. Whether, because Appellants have failed to avail themselves of the

procedure set forth in the 2019 Order for obtaining access to the disclosure they seek through this appeal, this appeal is premature under the ripeness doctrine? 3. Whether Appellants' standing to be heard is further compromised by their

speculative assertions of future developments in the administration of the Underlying Bankruptcy Case4 and their advocacy of alleged rights of third parties? 4. Apart from prudential concerns, whether Appellants meet even the

"irreducible constitutional minimum" standing requirements under Article III of the United States Constitution? Vermont Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 771 (2000). 5. Whether the bankruptcy court properly applied Rule 2019, with

flexibility suited to the particular requirements of a complex, mass tort-related bankruptcy case? II. RESTATEMENT OF THE CASE AND THE FACTS. A. Nature of the Case, Course of Proceedings, and Disposition Below. Appellees are law firms that each represent numerous personal injury tort victims asserting claims against The Flintkote Co., et al. (collectively, "Debtors" with "Debtor" referring only to The Flintkote Co.), debtors in the Underlying Bankruptcy Case.

4

References herein to the "Underlying Bankruptcy Case" shall mean the jointly administered Flintkote case. The Flintkote Co. is debtor in Bankruptcy Case No. 0411300 and Flintkote Mines Limited a/k/a Flintkote Mines Limitee is debtor in Bankruptcy Case No. 04-12440. These cases are jointly administered as Case No. 04-11300. 2

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Debtors seek to reorganize in bankruptcy, largely to address their vast asbestos-related liabilities to Appellees' clients and other tort victims.5 Appellants are some of Debtor's liability insurers. Upon information and belief, substantial insurance coverage litigation involving several of Debtor's liability insurers, representing a significant asset of Debtor's estate, remains pending in a California state court.6 The unlikely lightning rod for these consolidated appeals is Federal Rule of Bankruptcy Procedure 2019, an obscure rule implicated in less than one percent of all bankruptcy cases. It applies only in reorganization cases ­ i.e., cases brought under chapters 9 (municipalities) and 11 (reorganizations) of the Bankruptcy Code.7 In such cases, Rule 2019 requires limited disclosure by "entities", generally law firms,
5

According to the Affidavit of David J. Gordon ­ the sole trustee of The Flintkote Trust, which purportedly holds all the stock of Debtor in trust for the sole benefit of Long Beach Memorial Medical Center ­ in Support of First Day Motions, D.I. 2 docketed on May 1, 2004, Debtor was "primarily engaged" for most of the twentieth century "in the manufacture, processing and distribution of building materials" some of which contained asbestos. ¶¶ 8, 15. Flintkote Mines Limited is Debtor's whollyowned Canadian subsidiary. ¶ 16. A true copy of this affidavit as docketed is attached to the accompanying Declaration of David A. Klingler ("Klingler Declaration") as Exhibit 1. The Affidavit of Kurt W. Melchior in Support of Application for an Order Authorizing the Debtor to Employ Nossaman Guthner Knox & Elliott LPP as Special Insurance Counsel in Matters Related to Pru-Re Pursuant to 11 U.S.C. § 327(e) and Disclosure of Compensation Pursuant to 11 U.S.C. § 329, included at Bankr. D.I. 9, describes at ¶ 2 thereof the "Pru-Re Litigation" instituted by several of Debtor's excess liability insurers before the San Francisco Superior Court on May 2, 2002. The insurers sought declaratory relief and the Debtor answered and counterclaimed, seeking compensatory and punitive damages, pre-judgment interest and attorneys' fees. A true copy of this affidavit as docketed is attached to the accompanying Klingler Declaration as Exhibit 2. Calendar year 2003 saw the filing of 1,177,292 Chapter 7 cases (70.9% of all bankruptcy cases), and only 9,404 Chapter 11 cases (0.6% of all bankruptcy cases). The number of Chapter 9 cases filed in 2003 appears to have been negligible ­ less

6

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representing more than one creditor for the purpose of assuring that such agents (i.e., lawyers) are authorized to do so by their respective principals (i.e., clients). Rule 2019 is entitled "Representation of Creditors and Equity Security Holders in Chapter 9 Municipality and Chapter 11 Reorganization Cases." It provides, in toto, as follows: (a) Data required In a chapter 9 municipality or a chapter 11 reorganization cases, except with respect to a committee appointed pursuant to § 1102 or 1114 of the [Bankruptcy] Code, every entity or committee representing more than one creditor or equity security holder and, unless otherwise directed by the court, every indenture trustee, shall file a verified statement setting forth (1) the name and address of the creditor or equity security holder; (2) the nature and amount of the claim or interest and the time of acquisition thereof unless it is alleged to have been acquired more than one year prior to the filing of the petition; (3) a recital of the pertinent facts and circumstances in connection with the employment of the entity or indenture trustee, and, in the case of a committee, the name or names of the entity or entities at whose instance, directly or indirectly, the employment was arranged or the committee was organized or agreed to act; and (4) with reference to the time of the employment of the entity, the organization or formation of the committee, or the appearance in the case of any indenture trustee, the amounts of claims or interests owned by the entity, the members of the committee or the indenture trustee, the times when acquired, the amounts paid therefore, and any sales or other disposition thereof. The statement shall include a copy of the instrument, if any, whereby the entity, committee, or indenture trustee is empowered to act on behalf of creditors or equity security holders. A supplemental statement shall be filed promptly, setting forth any material changes in the facts contained in the statement filed pursuant to this subdivision. (b) Failure to comply; effect On motion of any party in interest or on its own initiative, the court may (1) determine whether there has been a failure to than 100. See Bankruptcy Statistics for 2003 Calendar Year by Chapter, accessible at http://www.uscourts.gov/bnkrpctystats/statistics.htm.

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comply with the provisions of subdivision (a) of this rule or with any other applicable law regulating the activities and personnel of any entity, committee, or indenture trustee or any other impropriety in connection with any solicitation and, if it so determines, the court may refuse to permit that entity, committee, or indenture trustee to be heard further or to intervene in the case; (2) examine any representation provision of a deposit agreement, proxy, trust mortgage, trust indenture, or deed of trust, or committee or other authorization, and any claim or interest acquired by any entity or committee in contemplation or in the course of a case under the Code and grant appropriate relief; and (3) hold invalid any authority, acceptance, rejection, or objection given, procured or received by any entity or committee who has not complied with this rule or with § 1125(b) of the Code. Strict compliance with the literal terms of Rule 2019 is often impractical and can be varied. 2004). 9 Lawrence P. King, et al., COLLIER
ON

BANKRUPTCY § 2019.04 (15th ed.

Mass tort-driven reorganizations like Debtors' and, for that matter Kaiser

Aluminum's, are cases in point. Personal injury law firms with expertise in the particular tort(s) involved, such as Appellees, may represent hundreds or even thousands of tort victims with claims against a debtor's estate. See, e.g., Wilson v. Valley Elec.

Membership Corp., 141 B. R. 309 (Bankr. E.D. La. 1992) (attorney representing thousands of class members not required to file 2019 statement). Invariably, by the time a mass tort debtor files bankruptcy, a number of its tort victims have already died from their afflictions; others are elderly and/or infirm. The only practical way for most mass tort victims to participate in a bankruptcy reorganization case is through their personal injury counsel. Among sitting bankruptcy judges, Judge Fitzgerald is perhaps uniquely familiar with the complexities and issues arising in mass tort insolvencies, including issues relating to Rule 2019. As Chief Bankruptcy Judge in the Western District of

Pennsylvania and sitting by designation in the Underlying Bankruptcy Case and a

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number of other mass tort insolvencies in the District of Delaware, she presides over at least 13 major, active mass tort bankruptcies.8 Applying her extensive expertise, Judge Fitzgerald issued the 2019 Order on October 22, 2004, directing how entities within the purview of Rule 2019 were to comply with the rule in the Underlying Bankruptcy Case.9 The 2019 Order states that compliance with its terms shall be deemed to be full compliance with Rule 2019 for all purposes in the Underlying Bankruptcy Case. It requires the following: (i) any entity representing more than one creditor or equity security holder (except for official committees) must file a Rule 2019 Statement ["Rule 2019 Statement"] with the Clerk; the docket entry concerning filed Rule 2019 Statements is to state that exhibits accompanying the statements have not been scanned into the docket but are available upon motion to and order of the bankruptcy court; exhibits to the Rule 2019 Statements are to be submitted to the Clerk on compact discs in lieu of electronic filing; each 2019 Statement is to be verified and shall include as exhibits:

(ii)

(iii)

(iv)

8

In the Western District of Pennsylvania, Judge Fitzgerald presides over Mid-Valley (03-35592), Global Industrial Technologies (02-21626), North American Refractories Company (02-20198), and Pittsburgh Corning Corp. (00-22876). Her Delaware docket includes, in addition to the Flintkote and Kaiser Aluminum reorganization cases, Owens Corning (00-3837) Armstrong World Industries (004471), W.R. Grace & Co. (01-1139), USG Corp. (01-2094), U.S. Mineral Products Co. (01-2471), ACandS, Inc. (02-12687), and Combustion Engineering (03-10495). The bankruptcy court contemporaneously issued identical orders relating to Rule 2019 compliance in the other mass tort bankruptcies before it where plans of reorganization had not been confirmed. Appeals are pending with respect to the 2019 orders issued in Owens Corning and Pittsburgh Corning. The appellants in the ACandS appeal have just recently withdrawn their appeal from the 2019 order issued in that case. 6

9

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(A)

a blank, unredacted exemplar or an actual copy of each form of agreement or instrument, if any, whereby the filing entity is empowered to act on behalf of creditors or equity security holders in the Underlying Bankruptcy Case; and an Excel spreadsheet in a prescribed format containing the following data: (1) the name and personal address of each creditor or equity security holder represented by the filing entity; reserved space for social security numbers or other identifiers as may be required by a further order of the bankruptcy court; identification of the form of exemplar referenced above executed by the creditor or equity holder and the date of such execution; the amount of and creditors' liquidated claims and a notation that any unliquidated claims are unliquidated; the date of acquisition of the creditor's claim unless acquired more than one year prior to the commencement of the Underlying Bankruptcy Case; for personal injury claimants, the type of disease giving rise to the claim, and for other claimants, the nature of the claim or interest; and a recital of pertinent facts circumstances surrounding employment of the entity. and the

(B)

(2)

(3)

(4)

(5)

(6)

(7)

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Under the 2019 Order, Rule 2019 Statements were to have been filed no later than December 21, 2004 (sixty days after the date of the 2019 Order).10 Appellees have filed 2019 Statements in compliance with the 2019 Order and have submitted the required Exhibits on compact disks as directed.11 B. Statement of the Facts. Appellants "do not dispute that the [2019 Order] `generally' requires the asbestos claimants' law firms to submit the four items of information specified in Rule 2019(a)."12 Brief of Appellants (D.I. 13, hereinafter Appellants' Brief) at 9. However, the

information specified in Rule 2019(a) ­ information germane to a proper Rule 2019 inquiry that Appellants acknowledge is "`generally' require[d]" by the 2019 Order ­ is not what Appellants covet or what motivates their appellate exertions. Appellees, in common with all personal injury law firms of any significant size, employ standard retention agreements when they undertake to represent a client.
10

At a hearing on December 16, 2004, in the Pittsburgh Corning chapter 11 case, the bankruptcy court orally ruled that this deadline would be extended in all the cases in which 2019 Orders had been issued for two weeks, through January 4, 2005. Baron & Budd, P.C.'s statement was docketed on December 17, 2004 (Bankr. D.I. 446) and Silber Pearlman, LLP's on January 20, 2005 (Bankr. D.I. 602). The brief delay in the docketing of Silber Pearlman's statement was occasioned by a notice from the clerk on January 13, 2005 (Bankr. D.I. 640) of unspecified defects in the exhibits accompanying its previously filed statement, which were swiftly rectified. True copies of Appellees' respective statements as docketed are attached to the Klingler Declaration as Exhibits 3 and 4, respectively. Appellants evidently refer to the following four items of information: (1) each creditor's name and address; (2) the nature and amount of each creditor's claim and the time of its acquisition unless it is alleged to have been acquired more than one year pre-petition; (3) a recital of the pertinent facts and circumstances relating to the employment of the law firm; and (4) with reference to the time of the employment of the law firm, the amounts of claims owned by the law firm, the times when acquired,

11

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Contained within each retention agreement is a power of attorney or other authorization pursuant to which the law firm is empowered to act on behalf of the client. These are the so-called "representation provisions" expressly referred to in Rule 2019(b); these provisions establish counsel's authority to act for the client. The retention agreements also address other matters that have nothing to do what vetting and validating counsel's agency to act on behalf of multiple clients. Much of this irrelevant and extraneous content is confidential, as might well be expected in the context of contractual undertakings between lawyers and clients. Mindful that only a small portion of most standard retention agreements ­ typically a power of attorney ­ has any relevance to the proper inquiry under Rule 2019, the 2019 Order affords Appellees and other filers of 2019 Statements the option of submitting unredacted exemplars of their form retention agreement.13 The submission of exemplars, while fairly serving the purpose of Rule 2019, does little to satiate Appellants' appetite for insinuating themselves into the fiduciary relationships between Appellees and their respective clients. Appellants cavalierly maintain that the

bankruptcy court erred by not requiring the actual retention agreements signed by each client (many thousands in some cases) to be furnished for Appellants' inspection. Appellants further contend that the bankruptcy court erred by denying them instantaneous access, via that court's electronic docketing system, to the exhibits accompanying Appellees' 2019 Statements. In keeping with the 2019 Order, the exhibits

13

the amounts paid therefore, and any sales or other disposition thereof. See, generally, Fed. R. Bankr. P. 2019(a). If counsel submits exemplars in lieu of copies of the actual retention agreements, the 2019 Order requires counsel to specify which clients signed which form(s) of agreement.

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were initially provided by compact disk only to the clerk of the bankruptcy court, the Debtors, and the United States Trustee. Appellants mischaracterize this procedure as "erroneously seal[ing] the law firms' disclosure statements away from public view ... allowing access only upon motion to an order of the bankruptcy court." Appellants' Brief at 15. The 2019 Statement exhibits are hardly "sealed" when Appellants have the option, under the express terms of the 2019 Order, to file a motion requesting a separate order from the bankruptcy court permitting them access to the exhibits. The 2019 Order provides that It is further ORDERED that the docket entry of the [2019] statement that is filed shall state that Exhibits (as described below) have not been scanned into the docket but are available upon motion to and order of the Court. 2019 Order at 2 (emphasis added). Appellants thus challenge the 2019 Order on appeal without having exhausted their options before the bankruptcy court.14 III. ARGUMENT A. Summary of Argument. This appeal challenges the bankruptcy court's reasoned and eminently reasonable ruling designed to assure compliance with Bankruptcy Rule 2019 ­ a rule mandating limited disclosure for a specific, narrow, and salutary purpose ­ without compelling the immediate, widespread dissemination of confidential and irrelevant information to

14

In the Owens-Corning bankruptcy, a financial creditor and one of the debtors' insurers successfully availed themselves of this prerogative under the identical 2019 order issued in that case. Upon hearing, the bankruptcy court permitted these parties to access the exhibits, but required them to maintain the confidentiality of the material pending further order of the bankruptcy court. See In re Owens-Corning , et al., D.I. 14117 therein, attached as Exhibit 5 to the Klingler Declaration.

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Appellants, which are tactical adversaries of Appellees' clients, and the public at large.15 Appellants are little interested in the legitimate, ministerial process of vetting the authority of personal injury counsel (and others who represent more than one creditor or equity holder) to participate in the underlying bankruptcy reorganization on behalf of their various clients. That is the raison d'être for Rule 2019, but it is not what drives this appeal. As non-creditor bystanders16 in the Underlying Bankruptcy Case, Appellants' agenda is opportunistic and their purpose ulterior. Without regard for the objective that Rule 2019 disclosure is intended to accomplish, Appellants marshal the rule in an effort to compel immediate disclosure to them and the public at large of confidential, nondebtor information. Appellants' invocation of Rule 2019 is in furtherance of their own tactical, and undoubtedly improper, purposes. As tactical adversaries of Appellees' clients, Appellants relish any opportunity intrude upon in the attorney-client relationships between Debtors' tort victims and their respective counsel. Appellants are little

concerned with Rule 2019's narrow purpose of validating counsel's authority to act on behalf of multiple creditors.

15

The adversarial posture between Debtors' tort creditors, including Appellees' clients, and Debtors' liability insurers, which include Appellants, is self-evident. Appellants are bystanders in the sense their rights and obligations will not be affected by any plan of reorganization that might be confirmed. Judge Fitzgerald requires that all plans in mass tort reorganizations include insurance neutrality provisions effectively reserving all disputed insurance coverage issues to adjudication in coverage litigation. Moreover, since any plan likely to emerge in the Underlying Bankruptcy Case will include injunctive relief pursuant to 11 U.S.C. § 524(g), no plan could be confirmed without this Court's imprimatur. See 11 U.S.C. § 524(g)(3)(A) (the order confirming such a plan must be "issued or affirmed by the district court"). 11

16

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Judge Fitzgerald, whose familiarity with the complexities of mass tort bankruptcies is widely recognized, properly discerned the rationale underlying Rule 2019. The bankruptcy court's 2019 Order limits the disclosure and dissemination of information to what Rule 2019 requires in light of its purpose. In formulating the 2019 Order, Judge Fitzgerald was appropriately mindful of the fact that the propriety of counsel's agency ­ what Appellants refer to in their brief as "empowerment" ­ is the sole concern of Rule 2019. Appellants' interest in examining the "empowering documents" ­ Appellants' self-serving characterization of the retention agreements ­ for each of Appellees' respective clients has little if anything to do with the portion thereof that does the actual empowering (i.e., the power of attorney). Appellants' are voyeuristically and opportunistically driven; they want to examine and, wherever possible, trespass upon and disrupt the fiduciary relationships between mass tort victims and their counsel. At best, this appeal is doubtful on the merits. The threshold question confronting this Court, however, is whether the merits should even be reached. The ripeness of the appeal is questionable, since Appellants' have not exhausted their remedies before the bankruptcy court as provided in the 2019 Order. Appellants' lack of standing to appeal, however, poses an insurmountable hindrance to consideration of the merits. Appellants' efforts to demonstrate that they meet the prerequisites for appellate standing are perfunctory, conclusory, unpersuasive, and ultimately futile in light of the Third Circuit's Combustion Engineering decision. Their dubious standing credentials are not lost on Appellants, who come close to acknowledging their lack of appellate standing under the controlling legal authority.

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Combustion Engineering17 reiterates, in the context of a mass tort bankruptcy, the longstanding prudential rule that only parties "whose rights or interests are `directly and adversely affected pecuniarily' by and order or decree of the bankruptcy court" (i.e., "persons aggrieved") have standing to appeal therefrom. 391 F.3d at 214 (quoting General Motors Acceptance Corp. v. Dykes (In re Dykes), 10 F.3d 184, 187 (3d Cir. 1993)). Combustion Engineering and its progenitors in the case law foreclose appellate standing here precisely because Appellants are not "persons aggrieved" by the 2019 Order. Any direct and pecuniary affect that the 2019 Order might have on Appellants' rights is so doubtful as to be ethereal. Indeed, the 2019 Order can have no effect on Appellants' unless a host of contingencies were to occur: (1) a plan of reorganization must first be conceived, then approved by creditors, and finally confirmed; (2) payment must be sought from Appellants under the respective policies of insurance they issued to Debtor; and (3) Appellants must thereafter be found to be liable as a direct consequence of either (i) their inability to inspect the retention agreements between Appellees and their respective clients, or (ii) restrictions on dissemination of the Rule 2019 Statement exhibits set forth in the 2019 Order. See Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d 737, 742 (3d Cir. 1995) (insurer is not "person aggrieved" where "its interest is too contingent to have been `directly affected' by [challenged bankruptcy court order]."). The notion that Appellants will somehow be able to avert liability on their policies upon the confirmation of a yet-to-be-drafted plan of reorganization but for the bankruptcy court's 2019 Order is too attenuated and fraught with conjecture to be credited.
17

Appellants are thoroughly familiar with Combustion Engineering. They were appellants in that case, too, and the Third Circuit held that their standing to appeal the

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Appellants' run afoul of another prudential limitation. They try to buttress their own doubtful standing by trumpeting the alleged interest of the public at large. Litigants generally must assert their own legal rights and interests, and cannot rest claims to relief on the legal rights or interests of third parties. See, e.g., Singleton v. Wulff, 428 U.S. 106, 113 (1976); Storino v. Borough of Point Pleasant Beach, 322 F.3d 293, 298 (3d Cir. 2003) ("In general, a litigant may assert only his own legal rights or interests, and can not rest a claim to relief on the legal rights or interests of third parties."); Kane v. JohnsManville Corp. (In re Johns-Manville Corp.), 843 F.2d 636, 643 (2d Cir. 1988) (court declined to permit a current asbestos disease claimant to assert rights of future asbestos claimants in addition to his own). Even if prudential limitations did not foreclose Appellants' standing to be heard on appeal, their ability to surmount even the "irreducible constitutional minimum" requirements is highly suspect. Vermont Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 771 (2000). Particularly in the absence of even a draft plan, Appellants cannot establish an (i) injury, (ii) fairly traceable to Appellees' allegedly unlawful conduct, (iii) that is likely to be redressed by the relief they seek from this Court. Stated differently, Appellants are not able to show how they, as non-creditor insurers of the Debtor, have suffered (or will suffer) a concrete injury by not being afforded (i) an opportunity to examine executed retention agreements for each of Appellees' respective clients, and (ii) immediate, unfettered access to the 2019 Statement exhibits that Appellees have provided in compliance with the 2019 Order.

confirmed plan of reorganization was significantly constrained and strictly limited to those provisions of the plan that "aggrieved" them. 391 F.3d at 218-20.
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The judgment of the bankruptcy court should be affirmed.

This appeal is

premature and, in any event, Appellants lack standing to be heard. Even if the Court were to consider the merits, this appeal lacks essential merit and affirmance is appropriate. B. Appellants Lack Standing To Be Heard on This Appeal. The law of standing is a "complicated specialty of federal jurisdiction ..." United States ex rel. Chapman v. Fed. Power Comm'n, 345 U.S. 153, 156 (1953). "In essence, the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Warth v. Seldin, 422 U.S. 490, 498 (1975). All limitations on standing are "founded in concern about the proper ­ and properly limited ­ role of courts in a democratic society." Id. (citations omitted). Whether a party has standing to be heard is always a threshold consideration. Id. The issue of standing is so fundamental that it may be raised for the first time on appeal.18 Belitskus v. Pizzingrilli, 343 F.3d 632, 639 (3d Cir. 2003) (citing Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 255 (1994), and stating "[t]he fact that the Commonwealth asserts this argument for the first time on appeal is immaterial, as standing represents a jurisdictional requirement which remains open to review at all stages of the litigation"). Defects in standing cannot be waived; indeed, the parties or the court are obliged to raise them whenever they become evident. United States v. AVX Corp., 962 F.2d 108, 116 n.7 (1st Cir. 1992); Ryker v. Current (In re Ryker), 301 B.R. 156, 160 (D.N.J. 2003) (recognizing that "[s]tanding is subject to review at all stages of litigation because a lack

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of standing undermines the jurisdiction of not only the bankruptcy court, but also the district court acting as an appellate tribunal"). The burden of alleging facts needed to establish standing falls on the party seeking to invoke the jurisdiction of the court and the exercise of the court's remedial powers ­ here, Appellants. Id. at 518. Time and again, both the United States Supreme Court and the United States Court of Appeals for the Third Circuit have reminded officious litigants that standing is a prerequisite to being heard in federal court. See, e.g., Warth v. Seldin, 422 U.S. at 495 (holding that low and moderate-plaintiffs did not have standing to challenge as exclusionary a zoning ordinance of Penfield, New York, that allocated 98% of the town's vacant land to single-family detached housing with additional requirements relating to lot size, setback, floor area, and habitable space); Schlesinger v. Reservists to Stop the War, 418 U.S. 208 (1974) (holding that an association of military reservists and concerned citizens did not have standing to challenge the membership of Members of Congress in the Armed Forces Reserve as an alleged violation of the Incompatibility Clause19); Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d at 744 (holding that liability insurer lacked standing to challenge the reinstatement of tort claims after the discovery of additional insurance coverage, where such claims had previously been withdrawn based, in part, on a perceived lack of funds available for their satisfaction). More recently, in Combustion

18

19

In the present case, of course, the question is whether Appellants have the requisite appellate standing. The Incompatibility Clause provides that "No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased during such time, and no Person holding any Office under the United States, shall be a Member of either House during his Continuance in Office." U.S. CONST. art. I, § 6, cl. 2.). 16

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Engineering, the Third Circuit reminded these same Appellants of the indispensability of standing. 1. Appellants Are Not "Persons Aggrieved".

In Combustion Engineering, the Third Circuit's discussion of standing in the context of a mass tort bankruptcy was extensive, consuming ten pages of the 49-page reported opinion. As they must, Appellants concede, at page 7 of their brief, that

"[s]tanding to appeal in a bankruptcy case is limited to `persons aggrieved' by an order of the bankruptcy court." Combustion Engineering, 391 F.3d at 214. That concession is very nearly the whole ball of wax. Even the case Appellants seem to find most

heartening on their merits arguments, Baron & Budd, P.C. v. Unsecured Asbestos Claimants Comm., 321 B.R. 147 (D.N.J. 2005), forecloses their standing to be heard here, acknowledging, as it does, the "`restrictive approach to bankruptcy appellate standing' characterized by application of the `persons aggrieved'" mandated by the Third Circuit. Id. at 160 n.4 (quoting Combustion Engineering, 391 F.3d at 214 n.21). In Combustion Engineering, the court notes the origin of the "person aggrieved" test ­ the Bankruptcy Act of 189820 ­ and states that it "... now exists as a prudential standing requirement that limits bankruptcy appeals to persons `whose rights or interests are "directly and adversely affected pecuniarily" by an order or decree of the bankruptcy court." Id. (citing Dykes, 10 F.3d at 187 and In re Fondiller, 707 F.2d 441, 443 (9th Cir.

20

11 U.S.C. § 67(c) (1976) ("A person aggrieved by an order of a referee may ... file with the referee a petition for review ....") (repealed 1978).

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1983)).21 The burden that must be borne by those who, like Appellants, seek to appeal from a bankruptcy court order is real, significant, and cannot be ignored: "P]ersons aggrieved" must show the order of the bankruptcy court "diminishes their property, increases their burdens, or impairs their rights." Id. (quoting In re PWS Holding Corp., 228 F.3d 224, 249 (3d Cir. 2000) (citing Dykes, 10 F.3d at 187)) (emphasis added). "Appellate standing in the bankruptcy context is more restrictive than Article III standing,[22] which `need not be financial and need only be "fairly traceable" to the alleged illegal action.'" Id. at 215 (citing Travelers Ins. Co. v. H.K. Porter Co., 45 F.3d 737, 741 (3d Cir. 1995). "This more stringent appellate standing requirement rests on the `particularly acute' need to limit appeals in bankruptcy proceedings, which often involve a `myriad of parties ... indirectly affected by every bankruptcy court order[.]" Id. (citing

21

Prudential limitations to standing, in contrast to constitutional limitations that are discussed in part III.B.5. infra, are borne of prudence ­ "judicially self-imposed limits on the exercise of federal jurisdiction ..." Allen v. Wright, 468 U.S. 737, 751 (1984). The "person aggrieved" prudential limitation is a specialized prudential rule uniquely applicable to bankruptcy appeals, but there are three prudential limitations afforded general application. "First, ... when the asserted harm is a `generalized grievance' shared in substantially equal measure by all or a large class of citizens, that harm alone normally does not warrant exercise of jurisdiction." Warth, 422 U.S. at 499, citing Schlesinger, 418 U.S. at 220-21 (1974); Ex parte Levitt, 302 U.S. 633, 634 (1937). "Second, [a] plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties." Warth, 422 U.S. at 499 (citations omitted). Finally, "a plaintiff's grievance must fall within the zone of interests protected or regulated by the statutory provision or constitutional guarantee invoked in the suit." Bennett v. Spear, 520 U.S. 154, 162 (1997). "Article III standing" generally refers to the Constitution's requirement that Federal courts confine their adjudicative activities to actual "cases" and "controversies." U.S. CONST. art. III, § 2. 18

22

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Travelers, 45 F.3d at 741, citing Kane v. Johns-Manville Corp., 843 F.2d 636, 642 (2d Cir. 1988). Rigor with respect to appellate standing in bankruptcy springs from the nature of bankruptcy litigation which almost always involves the interests of persons who are not formally parties to the litigation. In the course of administration of the bankruptcy estate disputes arise in which numerous persons are to some degree interested. Efficient judicial administration requires that appellate review be limited to those persons whose interests are directly affected. In re Fondiller, 707 F.2d 441, 443 (9th Cir. 1983) (citations omitted and emphasis added). Another salient point emphasized by the Third Circuit in Combustion Engineering is that "[s]tanding is not dispensed in gross, but rather is determined by the specific claims presented." 391 F.3d at 215 (citing Lewis v. Casey, 518 U.S. 343, 358 n.6 (1996) and International Primate Prot. League v. Adm'rs of Tulane Educ. Fund, 500 U.S. 72, 77 (1991)).23 Stated differently, a party may have standing to complain of some matters but not others. All this is as it should be, particularly in the context of bankruptcy. "Because bankruptcy cases typically affect numerous parties, the `person aggrieved' test demands a higher causal nexus between act and injury ...." Gibbs & Bruns LLP v. Coho Energy Inc. (In re Coho Energy Inc.), 395 F.3d 198, 202-03 (5th Cir. 2004). The notion that anyone not "directly and adversely affected" may appeal any order or decree issued in the administration of a chapter 11 case is irreconcilable with chapter 11's fundamental

23

"Typically, the standing inquiry requires careful judicial examination of a complaint's allegations to ascertain whether the particular plaintiff is entitled to an adjudication of the particular claims asserted." International Primate Prot. League, 500 U.S. at 77 (quoting Allen v. Wright, 468 U.S. 737, 752 (1984)).

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purpose, which, of course, is reorganization.24 While acknowledging that "person aggrieved" status is the threshold on which their standing depends, Appellants' frank expression of distaste for being required to surmount that hurdle sounds like a concession they cannot. Noting the roots of the "person aggrieved" test in the Bankruptcy Act, Appellants grudgingly concede that "courts nonetheless continue to apply it as a `prudential standing limitation for bankruptcy appeals'" since the Act's repeal in 1978. Then they "question whether using a repealed statute as the basis for limited access to the appellate courts is appropriate. Appellants' Brief at 7, n.3 (emphasis added).25

24

See, e.g., In re Caringi, 19 B.R. 12, 14 (Bankr. M.D. Pa. 1982). A number of courts, surveying the legislative history, have observed that chapter 11's purpose is "`to restructure a business's finances so that it may continue to operate, provide its employees with jobs, pay its creditors and produce a return for its stockholders.'" See, e.g., In re Cedar Shore Resort, Inc., 235 F.3d 375, 379 (8th Cir. 2000), quoting H.R. Rep. No. 595 (1975), reprinted in 1978 U.S.C.C.A.N. 6179. In the absence of requiring "person aggrieved" status, anyone could appeal from any order, subject to constitutional limitations. One disaffected party lacking a stake on most issues could filibuster a reorganization to the point of torpor. That would be incompatible with the expectation that a chapter 11 debtor's reorganization will proceed with reasonable expedition. In In re Timbers of Inwood Forest Assocs., Inc., 793 F.2d 1380, 1405 (5th Cir. 1986), aff'd en banc, 808 F.2d 363, aff'd 484 U.S. 365 (1988), the Fifth Circuit observed that "delay was an overriding concern of Congress in recodifying the ... reorganization provisions in 1978" and stressed the importance of "limiting the delay of the reorganization process." 793 F.2d at 1406. Appellants correctly recognize that their rhetorical inquiry "is not an issue for this Court." Id. In lamenting the continuing application of pre-Code law, however, Appellants do not acknowledge that the Bankruptcy Code of 1978, 11 U.S.C. § 101 et seq., contains neither an explicit grant nor a limitation on appellate standing, prompting reliance on pre-Code law. See Lopez v. Behles (In re American Ready Mix, Inc.), 14 F.3d 1497, 1500 (10th Cir. 1994); Westwood Cmty. Two Assoc., Inc. v. Barbee (In re Westwood Cmty. Two Assoc., Inc.), 293 F.3d 1332, 1334-35 (11th Cir. 2002) (stating "no evidence exists that Congress intended to alter the definition [of who may appeal a bankruptcy order] set forth in [the Act].).

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Appellants' perfunctory acknowledgement that "courts nonetheless continue to apply" the person aggrieved test with respect to appellate standing in bankruptcy is an understatement of epic proportion. Every regional United States Courts of Appeals applies the test (or its functional equivalent) to determinations of standing in bankruptcy appeals. See Davis v. Cox, 356 F.3d 76, 93 n.15 (1st Cir. 2004); O'Brien v. Vermont (In re O'Brien), 184 F.3d 140, 142 (2d Cir. 1999); In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir. 2004); White v. Univision of Va. Inc. (In re Urban Broad. Corp.), No. 04-1262, 2005 WL 563890, *6 (4th Cir., Mar. 11, 2005)26; Gibbs & Bruns LLP v. Coho Energy Inc. (In re Coho Energy Inc.), 395 F.3d at 202-03 (5th Cir. 2004); Harker v. Troutman (In re Troutman Enters.), 286 F.3d 359, 364 (6th Cir. 2002); Depoister v. Mary M. Holloway Found., 36 F.3d 582, 585 (7th Cir. 1994); In re Marlar, 252 B.R. 743, 748 (Bankr. 8th Cir. 2000), aff'd, 267 F.33d 749 (8th Cir. 2001); Duncan Spradling & Metzger v. Baum Trust (In re P.R.T.C., Inc.), 177 F.3d 774, 777 (9th Cir. 1999); In re American Ready Mix, Inc., 14 F.3d at 1500; In re Westwood Cmty. Two Assoc., Inc., 293 F.3d at 1334-35; McGuirl v. White, 86 F.3d 1232, 1234-35 (D.C. Cir. 1996). 2. Appellants' position in this appeal is analogous to their position in Combustion Engineering.

In Combustion Engineering, the Third Circuit specifically addressed the appellate standing of four groups of appellants. 391 F.3d 215. One such group was these

Appellants, the so-called "London Market Insurers", who raised several objections to plan confirmation on appeal. While upholding the London Market Insurers' appellate standing
26

to challenge discrete provisions of the plan that did directly and pecuniarily

A true copy of this recent opinion, as to which reported publication is pending, is attached to the Klingler Declaration as Exhibit 6.

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affect their rights under the subject insurance policies and settlement, the Third Circuit was resolute in not permitting challenges to plan provisions by persons who were not aggrieved thereby. One of the London Market Insurers' objections concerned the so-called "superpreemptory" provision to the plan, which the bankruptcy court ­ Judge Fitzgerald ­ had added.27 This provision provided, in effect, that nothing in the plan would impair the insurers' pre-petition rights under the various insurance policies and settlements.28 Id. at 216. Another judge of this Court, concluding that the London Market Insurers lacked standing, modified the super-preemptory provision on the motions of the Unsecured Creditors' Committee and the Future Claimants Representative. Id. As modified, the super-preemptory provision referred to the rights of insurers, "if any, in respect of any claims (as defined by section 101(5) of the Bankruptcy Code)." The district judge also added a "neutrality provision to provide reciprocal protections for the debtor's prepetition rights under the subject insurance policies." Id.

27

The others were (1) the so-called "Objecting Insurers", which had raised several challenges to plan confirmation; (2) the "Indemnified Insurers", which had entered into pre-petition settlement agreements with the debtor, and (3) "Certain Cancer Claimants" who had challenged some of the plan's injunctive provisions. The Third Circuit held that the "Objecting Insurers" had "limited appellate standing" to challenge certain discrete aspects of the order appealed from but lacked standing as to remaining issues that did "not directly and pecuniarily affect their rights under the insurance policies and settlements." Id. at 219-20. "Indemnified Insurers", who the court concluded were not "persons aggrieved", were held to lack appellate standing altogether. Id. at 223. Finally, the Certain Cancer Claimants were held to have appellate standing except as to injunctive provisions relating to a debtor affiliate against whom they held no independent claims. Id. at 223-24. As drafted by the bankruptcy court, the super-preemptory provision provided that nothing in the plan "shall in anyway [sic] operate to, or have the effect of, impairing insurers' legal, equitable or contractual rights, if any, in any respect." Id. at 217. 22

28

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The Third Circuit concluded that "the ... London Market Insurers have limited appellate standing to chall