Free Answering Brief in Opposition - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
In re:

) )
)
No.

W. R. GRACE & CO., et al.,
Debtors.

) ) ) )
)

07-609 Hon. Ronald L. Buckwalter United States District Judge

MARGARET CHAKARIAN, et al., AND JOHN DOES 1-1000,
Appellants,
v.

) ) ) ) ) )
) ) )

W. R. GRACE & CO., et al.
Appellees.

)

On Appeal From The United States Bankptcy Court Delaware (Fitzgerald, J.) Case No. 01-01139, Adversary No. A-01-771
For The Distrct of

APPELLEES' BRIEF
David M. Bernick, P.C.
Janet S. Baer

Chrstopher Landau
KIRKLAND & ELLIS LLP

Laura Davis Jones James E. O'Neil
PACHULSKI, STANG, ZIEHL & JONES LLP

Salvatore F. Bianca
KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W.

Washington, DC 20005
(202) 879-5000

200 East Randolph Drive Chicago, IL 60601 (312) 861-2000

919 N. Market Street, 17th Floor Wilmington, DE 19899 (302) 652-4100

Counsel for Appellees

November 13, 2007

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TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES.......................................................................................................... ii
INTRODUCTION ...........................................................................................................................1

STATEMENT OF JURISDICTION................................................................................................2

STATEMENT OF THE ISSUE.......................................................................................................2
STATEMENT OF THE CASE AND FACTUAL BACKGROUND .............................................2

ARGUMENT...................................................................................................................................4

i. The Temporary Stay Order Is Valid. ...................................................................................4
A. The Stay Order Is Not A Temporary Restraining Order, So The Time Limitation On Such Orders Does Not Apply. ....................................4
B. There Is Nothing Improper About The Bankrptcy Court Allowing

For "Breathing Room" To Preserve The Status Quo Pending The Resolution Of The Injunction Motions. ...................................................................6
II. Even If

The Stay Order Were Invalid, This Court Should Not Consider The Merits Of The Underlying Injunction Motions................ ............ ................... ............... ......8

A. This Court May Not "Review" An Order That Does Not Exist. .............................8
B. If the Court Concludes that the Stay Order was Inappropriate,

the Stay Should Still Be Left Intact Until The Bankptcy Court
Reviews the Matter. .................................................................................................9
CONCLUSION............................................................................................................................. .12

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TABLE OF AUTHORITIES
Page(s) Cases
Alled Mktg. Group, Inc. v. CDLMktg., Inc., 878 F.2d 806 (5th Cir. 1989) ...................................................................................... 10, 11
Educational Testing Services v. Katzman, 793 F.2d 533 (3d Cir. 1986).............................................................................................. 10
Granny Goose Foods, Inc. v. Brotherhood of

Teamsters & Auto Truck Drivers Local No. 70,

415 U. S. 423 (1974)............................................................................................................ 5

Hoblock v. Albany County Bd. of Elections, 422 F .3d 77 (2d Cir. 2005)................... ......................... ................ ......... ........ ............... ...... 9

Hoechst Diafoil Co. v. Nan Ya Plastics Corp., 174 F.3d 411 (4th Cir. 1999) .............................................................................................. 9

In re Blutrich Herman & Miler, 227 B.R. 53 (Bank. S.D.N.Y. 1998) ................................................................................... 8
In re Renaissance Stone Works, L.L. c.,

2007 WL 2428658 (Bank. E.D. Mich. Aug. 28, 2007) ..................................................... 8

In re W R. Grace & Co., 2006 WL 1313190 (D. DeL. May 10, 2006)............................... .................... ......... ............ 6
Inverness Corp. v. Whitehall Laboratories,

819 F.2d 48 (2d Cir. 1987).......................................................................................... 10, 11
Meyer v. Lenox (In re Lenox), 902 F.2d 737 (9th Cir.1990) ............................................................................................... 7
Ortho Pharm. Corp. v. Amgen, Inc.,

882 F.2d 806 (3d Cir. 1989)............................................................................................ 6, 7
Polaroid Corp. v. Disney,

862 F.2d 987 (3d Cir. 1988).............................................................................................. 10

Rolo v. General Dev. Corp., 949 F.2d 695 (3d Cir. 1991)..............................................................................................11
Rosen v. Siegel,

106 F.3d 28 (2d Cir. 1997)................................................................................................ 10

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Page(s)

Singleton v. Wulf 428 U.S. 106 (1976)..................................................... ....................................................... 8
Strozyk v. Norfolk Southern Corp.,

358 F.3d 268 (3d Cir. 2004)................................................................................................8
TEC Eng'g Corp. v. Budget Molders Supply, Inc., 82 F.3d 542 (lst Cir. 1996)...............................................................................................11
United States v. Cohen, 152 F.3d 321 (4th Cir. 1998) .............................................................................................. 9

United States v. Hovsepian, 359 F .3d 1144 (9th Cir. 2004) ... ........... ...... ..................................... .............. ..................... 9
United States v. Marine Shale Processors,

81 F.3d 1329 (5th Cir. 1996) ............................................................................................ 10
United States v. Microsoft Corp.,
147 F .3d 935 (D. C. Cir. 1998)... ......... ............... ..................................................... .......... 10

Viacom Inc. v. Ingram Enters. Inc.,

141 F.3d 886 (8th Cir. 1998) .............................................................................................. 9
W R. Grace & Co. v. Chakarian (In re W R. Grace & Co.),

366 B.R. 295 (Ban. D. DeL. 2007) ................................................................................... 3

Statutes
11 U.S. C. § 1 05( a) ............................... ........... ......... .............. ............ ......... ........................ ............ 8

28 U.S. C. § 1292( a) .............. ......... .............. ........... ........................................................... ........... 10

28 U. S. C. § 1292( a)(l) .............. ....................... ................................... ...................... .............. 2, 4, 5

28 U.S. C. § 158............................................................................................................................... 2
28 U.S. C. § 158( a) .. ................................................ ...................... .............................................. 5, 6

28 U. S. C. § 158( a)(3)...................................................................................................................... 6

Other Authorities
Wright, Charles Alan, et al.,
Federal Practice & Procedure (2d ed. 1995) ..................................................................... 6

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Page(s)

Rules
Fed. R. Bank. P. 9023 ..................................................................................................................... 7
Fed. R. Ci v. P. 5 9( e) ....................................................................................................................... 7

Fed. R. Civ. P. 60(b) ....... .............................................. .............. ..................... ............................... 8
Fed. R. Civ. P. 65(b) .... ........... ....................... ..... .............. ..... ......................................................... 6

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INTRODUCTION
The Libby Claimants again ask this Court, sitting in its appellate capacity in bankptcy,
to review the merits of motions currently under review by the Bankptcy Court. However, even

assuming that this Court has jurisdiction over this appeal (an assumption that, in Grace's view, is

unwarranted), the appeal is limited to the propriety of an order the Bankrptcy Court actually
entered: the August 29, 2007 order temporarily staying appellants' lawsuits against the State of

Montana and BNSF while the Bankruptcy Court addresses the underlying injunction motions
(the "Stay Order"). i Whether or not the Stay Order is valid has nothing to do with whether the

Bankptcy Court may issue the underlying injunctions sought by Grace. The bottom line here,
is that the Libby Claimants cannot use this appeal as a Trojan horse to present this Court with the

merits of the underlying injunction motions before the Bankptcy Court addresses those issues
in the first instance.

The sole issue before this Court is one that the Court has already decided: whether the

Banptcy Court has the authority to enter the Stay Order. As this Court recognized in the
Libby Claimants' prior appeal regarding the same issue, it is "entirely appropriate" for the
Bankptcy Court to enter such an order.2 Thus, for the reasons explained below, the Stay Order
should be sustained. However, even if the Stay Order was inappropriate, the upshot is not that

this Court should proceed to address the merits of the underlying injunction motions, but instead
that the matter should be returned to the Bankruptcy Court.

i Amended Order Regarding Motions to Expand Preliminary Injunction (Adv. Pro. D.1. 466).
2 4/25/06 Hr'g Tr. (Dist Crt. App. D.1. 27) at 11:7-1 i.

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STATEMENT OF JURISDICTION
As explained in Grace's motion to dismiss (filed concurrently herewith), Grace believes
that this Court lacks jurisdiction over this appeal under 28 U.S.C. § 158, which governs appeals

from bankptcy courts to district courts, and that 28 U.S.c. § 1292(a)(1) does not apply.

STATEMENT OF THE ISSUE
The sole issue before this Court is whether the Bankptcy Court abused its discretion by

entering a temporary stay to give itself "breathing room" to preserve the status quo while
addressing the merits of

the underlying injunction motions.

STATEMENT OF THE CASE AND FACTUAL BACKGROUND

The factual and legal background for this appeal is set forth in the Debtors' motion to
dismiss, and wil be repeated only briefly here.

The Libby Claimants are plaintiffs in several lawsuits against the State of Montana and
Burlington Northern Santa Fe Railroad ("BNSF") involving alleged injuries relating to Grace's
operation of a mine in Libby, Montana. Although Grace is not a named defendant in most of the
Libby Claimants' lawsuits, those lawsuits necessarily challenge Grace's conduct, and the

prosecution of those lawsuits wil have a deleterious effect on Grace. Accordingly, Grace filed

motions in its own bankptcy proceeding seeking to expand the injunction covering lawsuits
against Grace to include appellants' Grace-based lawsuits against the State of Montana (the
"Montana Injunction Motion") and BNSF (the "BNSF Injunction Motion").3

3 Debtors' Motion to Expand Preliminary Injunction to Include Actions Against the State of Montana dated Aug. 22, 2005 (Adv. Pro. D.1. 359); Debtors' Motion to Expand Preliminary Injunction to Include Actions
Against BNSF dated March 26, 2006 (Adv. Pro. D.1. 398).

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On April 26, 2007, the Bankptcy Court issued a decision denying the Montana

Injunction Motion (the "Montana Injunction Denial Order").4 The Debtors and the State of

Montana subsequently filed motions for reconsideration (the "Reconsideration Motions").5 The
Bankptcy Court held a hearing on the Reconsideration Motions and the BNSF Injunction

Motion (collectively, the "Injunction Motions") on May 21, 2007, but did not resolve the issues.

Rather, at the conclusion of that hearing, the Bankptcy Court indicated that it would take the
Injunction Motions under advisement and then orally entered a temporary stay pending its ruling

on the underlying motions. That temporary stay was further addressed at a hearing on July 23,

2007.6 On August 29, 2007, the Bankptcy Court entered the Stay Order, which provided the
following:

ORDERED that pending the Court's ruling on the Injunction Motions, all actions commenced against the State of Montana and/or BNSF that arise out of alleged exposure to asbestos indirectly or directly caused by the Debtors (the "Montana

Actions"), shall be temporarily stayed pending the Court's ruling on the
Injunction Motions

(Adv. Pro. D.I. 466). The Libby Claimants now appeal entry ofthe Stay Order.

4 Order dated April

26, 2007 (Adv. Pro. D.1. 419). Reported as W R. Grace & Co. v. Chakarian

(In re W R. Grace & Co.), 366 B.R. 295 (Bank. D. DeL. 2007).

5 See Debtors' Motion to Alter and Amend the Court's Order Denying Its Request to Expand the Preliminary Injunction to Include Actions Against the State of Montana (Adv. Pro. D.1. 427); State of Montana's Motion for
Reconsideration of Court's Opinion and order Denying Debtors' Motion for Expansion of

Preliminary Injunction

(Adv. Pro. D.1. 426).
6 See 7/23/07 Hr'g Tr. (Bank. Case D.1. l6445) at 97:24-98:9 ("I really have not been looking at this either as
a temporary restraining order or as a preliminary injunction. I've really been looking at this as simply a stay of

litigation not under Rule 65 standards but more under 105 standards for that reason until I have an opportnity to take a look at the opinion and the reconsideration motions that have been fied, and I think it is still appropriate to keep that stay in place.")

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ARGUMENT
I. The Temporary Stay Order Is Valid.
A. The Stay Order Is Not A Temporary Restraining Order,
So The Time Limitation On Such Orders Does Not Apply.

The Libby Claimants argue that the temporary stay entered by the Bankruptcy Court is

invalid because it lasted more than 20 days, and a temporary restraining order ("TRO") cannot

last longer than 20 days. See Libby Claimants Br. at 12-16. That argument is a non sequitur.
The Bankptcy Court did not grant a TRO. As this Cour recognized in the Libby Claimants'

prior appeal, such an order is not a TRO and is within the court's authority to enter. See
4/25/06 Hr'g Tr. (Dist. Crt. App. D.I. 27) at 8:24-25 ("You are not here, in my opinion,
appealing a temporary TRO."). Thus, the procedural restrictions on TROs set forth in Rule 65(b)
simply do not apply.

Alternatively, the Libby Claimants attempt to characterize the Stay Order as
a preliminary injunction. See Libby Claimants Br. at 12-16. The Libby Claimants' position is

not surprising given their misplaced reliance on 28 U.S.C. § 1292(a)(1) -- a TRO is not
appealable under 28 U.S.c. § 1292(a)(1), whereas a preliminary injunction is appealable under
that provision. However, this Court has rejected the Libby Claimants' previous attempt to

characterize such a stay order as a preliminary injunction:

MR. COHN: That this appeal is properly before this Court. What we are dealing with is an injunction. The judge stayed all activity in the State Court litigation in Montana. So, we are as dead out

there as we would be if she gave us a piece of paper that was
headed preliminary injunction.

THE COURT: Yes, but it's really hard to call it an injunction.
What it is is a stay, and it does create a problem for you, there is no doubt about that, and the basis for appealing it to me would be if

I thought it was, you know, unduly burdensome to you in some way I would certainly listen to the arguments here and try to
fashion a remedy.
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MR. COHN: I--

THE COURT: But, I don't think it's a -- I don't think it's an injunction. So, that having been said, let's talk about the practicality in effect. She has put a stay on here, and hasn't set
a date as to when this -- she is going to resolve the underlying issue

MR. COHN: Correct, Your Honor, and-THE COURT: -- in the underlying case.
4/25/06 Hr'g Tr. (Dist. Crt. App. D.I. 27) at 4:17-5:13. Accordingly, the Stay Order is neither

a TRO nor a preliminary injunction.
Even if the Stay Order were a preliminary injunction, the Libby Claimants' argument

rests on the mistaken assumption that if the Stay Order does not meet the procedural

requirements for a TRO, then it cannot meet the procedural requirements for a preliminary

injunction. See Libby Claimants' Br. at 12-16. Congress imposed a 20-day time limit on

TROs -- but not on preliminary injunctions -- precisely because TROs are unappealable, and
because they are often issued ex parte and "without notice." Granny Goose Foods, Inc. v.
Teamsters & Auto Truck Drivers Local No. 70,415 U.S. 423, 438 (1974). Thus,

Brotherhood of

it makes sense that TROs are subject to different procedural requirements than preliminary

injunctions, and are of sharply limited duration.7 It simply does not follow that an appealable

preliminary injunction is subject to the same requirements and time limitations as
an unappealable TRO. To the contrary, as the leading treatise notes, preliminary injunctions
"normally last(J until the completion ofthe trial on the merits." Id. (emphasis added).

Finally, this Court also found that appeals of injunctions issued by the Bankptcy Court
to this Court are governed by 28 U.S.C. § 158(a) and not 28 U.S.c. § 1292(a)(1):
7 See 11A Charles Alan Wright, et at., Federal Practice & Procedure § 2947 at 125-26 (2d ed. 1995) ("(qare
should be taken to distinguish preliminary injunctions under Rule 65(a) from temporary restraining orders under Rule 65(b). The latter may be issued ex parte without an adversary hearing. . . and (is) oflimited duration.").

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MR. LANDAU: I do think that the first question before you really is, you know, what is your basis for hearing this appeal, and the other side has suggested that it's 1292, which is the basis -THE COURT: No, I don't agree with that at all.

MR. LANDAU: Okay
THE COURT: So, you don't have to argue that.

4/15/06 Hr'g Tr. (Dist. Crt. App. D.I. 27) at 12:1-9; see also In re W R. Grace & Co.,
2006 WL 1313190 (D. DeL. May 10, 2006) (dismissing Libby Claimants' prior appeal for failure
to meet requirements of 28 U.S.C. § 158(a)). Thus, even if the Stay Order were considered

a preliminary injunction, it is not appealable without leave of this Court under
28 U.S.C. § 158(a)(3). See Motion to Dismiss Appeal filed concurrently herewith.
B. There Is Nothing Improper About The Bankruptcy Court Allowing

For "Breathing Room" To Preserve The Status Quo Pending The Resolution
Of The Injunction Motions.

The Libby Claimants argue that a busy court may not issue a stay to preserve the status

quo pending resolution of the merits of an underlying injunction motion. However, even if the
Stay Order is characterized as a preliminary injunction, its issuance was appropriate because the

very purpose of a preliminary injunction is to preserve the status quo to allow just such
"breathing room." See Ortho Pharm. Corp. v. Amgen, Inc., 882 F.2d 806, 813 (3d Cir. 1989)

("(P)reservation of the status quo represents the goal of preliminary injunctive relief in any
litigation.") (internal quotation omitted; emphasis added). An order staying further litigation is
"appropriate whenever the policy of preserving the court's power to decide the case effectively
outweighs the risk of imposing an interim restraint before it has done so." Id. at 813-14. Indeed,

the "most compelling reason" in favor of issuing a preliminary injunction is the one given by the

Bankptcy Court here -- the need to "prevent the judicial process from being rendered futile" by
a party's action or inaction. Id. at 813 (internal quotation omitted).
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The Libby Claimants also argue that the Bankptcy Court cannot enter a temporary stay
while it reconsiders the Montana Injunction Denial Order because that order found their to be no
jurisdictions to enter an injunction. See Libby Claimants' Br. at 2-3. The Libby Claimants

simply ignore the fact that the Montana Injunction Denial Order is being reconsidered by the

Bankptcy Court because the jurisdictional finding is alleged to be contrary to Third Circuit
precedent governing jurisdiction of the very same Injunction the Debtors sought to expand to
include actions against the State of Montana. 8

The Libby Claimants' argument proves too much: under the Libby Claimants' reasoning,

a court could never reconsider its ruling that jurisdiction was lacking in a matter. As with any

order, the Bankptcy Court is free to reconsider its ruling and should not be bound to such
rulings during reconsideration. Rule 59(e) of the Federal Rules of Civil Procedure grants

bankptcy courts license to reconsider orders and judgments after their entry. See
Fed. R. Civ. P. 59(e) (made applicable to bankptcy proceedings by Rule 9023 of the
Federal Rules of Bankptcy Procedure); see also Meyer v. Lenox (In re Lenox), 902 F.2d 737,
739-40 (9th Cir. 1990) ("(B)ankptcy courts, as courts of equity, have the power to reconsider,

modify or vacate their previous orders so long as no intervening rights have become vested in
reliance on the orders."); In re Renaissance Stone Works, L.L.c., 2007 WL 2428658, *4
(Bankr. E.D. Mich. Aug.

28, 2007) ("Generally, bankptcy courts have inherent power, and

authority under 11 U.S.C. § 105(a), independent of any authority under Fed. R. Civ. P. 60(b),

sua sponte to reconsider, modify or vacate orders it previously entered.");

8 See Debtors' Motion to Alter and Amend the Court's Order Denying Its Request to Expand the Preliminary
Injunction to Include Actions Against the State of Montana (Adv. Pro. D.1. 427); State of Montana's Motion for

Reconsideration of Court's Opinion and Order Denying Debtors' Motion for Expansion of Preliminary Injunction (Adv. Pro. D.1. 426).

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In re Blutrich Herman & Miler, 227 RR. 53, 60 (Bank. S.D.N.Y. 1998) ("Notwithstanding the
usual jurisprudence under Rule 60(b), it is also well established that bankptcy courts, as courts
of equity, have the power to reconsider, modify or vacate previously-entered orders unless
intervening rights have vested in the interim in reliance on those orders."). Indeed, if the

Bankptcy Court did not enter the Stay Order, then Libby Claimants could have argued that the
Montana Injunction Denial Order can not be reconsidered because they relied upon the decision.

Thus, the Stay Order was necessary to preserve the status quo and allow the Bankptcy Court
the opportnity to reconsider the Montana Injunction Denial Order.

II. Even If

The Stay Order Were Invalid, This Court Should Not Consider The Merits Of The Underlying Injunction Motions.
Even if this Court were to conclude, notwithstanding all of the above, that the Stay Order

is invalid, the proper outcome would not be to address the merits of the underlying Injunction

Motions, but to send the issue back to the Bankptcy Court. Thus, the bulk of the
Libby Claimants' brief, where they challenge a hypothetical Bankruptcy Court decision granting
the Injunction Motions, is irrelevant and premature.
A. This Court May Not "Review" An Order That Does Not Exist.

Appellate courts "axiomatically. . . decline to pass on issues not decided by the lower
court." Strozyk v. Norfolk Southern Corp., 358 F.3d 268, 277 (3d Cir. 2004) (citation omitted);
id. ("It is the general rule, of course, that a federal appellate court does not consider an issue not
passed upon below.") (quoting Singleton v. Wulf 428 U.S. 106, 120 (1976)). Here, the

Bankptcy Court did not reach the merits of the Injunction Motions but expressly withheld
judgment on that score. See Stay Order (temporarily staying disputed actions "pending the

Court's ruling on the Injunction Motions").

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This appeal is thus nothing more than an attempt to get this Court, sitting in its appellate

capacity in bankruptcy, to consider the Injunctions Motions in the first instance. As this Court
previously recognized, the Libby Claimants cannot use an appeal for such a purpose:

MR. LAND AU: I guess our point then, and it sounds like
Your Honor may have already -- may agree with us on this, is that they certainly can't use their -- their grevance with the breathing room stay to try and get Your Honor in the first instance, to resolve the underlying injunction.
THE COURT: I agree with that, too, yes.
4/25/06 Hr'g Tr. (Dist. Crt. App. D.I. 27) at 13:7-13. If and when the Bankptcy Court were to

grant the proposed injunctions, the Libby Claimants would then be free to seek whatever review
is appropriate at that time.
B. If the Court Concludes that the Stay Order was Inappropriate,

the Stay Should Stil Be Left Intact Until The Bankruptcy Court Reviews the Matter.
Finally, even if this Court were to conclude that the Stay Order is inappropriate and send

the matter back to the Bankptcy Court, it does not necessarily follow that this Court should
vacate the Stay Order in the meantime. To the contrary, "it is prudent to maintain the status quo

pending the district court's reconsideration of its injunction ruling." Hoechst Diafoil Co. v.
Nan Ya Plastics Corp., 174 F.3d 411,424 (4th Cir. 1999) (leaving "the injunction intact pending
the district court's decision").9 To the extent that the Third Circuit's Educational Testing

9 See also Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 81 (2d Cir. 2005) ("(R)emand(ing) the case to

the district court for further proceedings and leav(ing) the preliminary injunction in place."); United States v. Hovsepian, 359 F.3d 1144, 1157 (9th Cir. 2004) ("We leave the injunction in place, however, pending the
conclusion of all proceedings in this case, in aid of the court's jurisdiction."); United States v. Cohen,

152 F.3d 321, 326 (4th Cir. 1998) (leaving defective injunction order intact on remand to permit further
fact-findings); Viacom Inc. v. Ingram Enters. Inc., 141 F.3d 886,892 (8th Cir. 1998) ("(L)eav(ing) the injunction

in place as a preliminary injunction, without prejudice to the district court revisiting the issue on remand."); Rosen v. Siegel, 106 F.3d 28, 33 (2d Cir. 1997) (same); United States v. Marine Shale Processors, 81 F.3d 1329, 1361

(5th Cir. 1996) ("We hold in place the injunctions and the conditions issued below and REMAN to allow the district court to exercise its discretion regarding their maintenance and for entry of explicit findings and conclusions."); AlledMktg. Group, Inc. v. CDLMktg., Inc., 878F.2d806, 814 (5thCir. 1989) (leaving the
(Continued. . . )

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Services v. Katzman, decision suggests that a reviewing court has no discretion to leave a

procedurally defective preliminary injunction in place, 793 F.2d 533, 546-47 (3d Cir. 1986), that

decision is distinguishable, because it is expressly based on "the congressional purpose of
affording prompt review of

preliminary injunction orders expressed in 28 U.S.C. § 1292(a)," id.

at 547, which by its plain terms does not apply to appeals from bankruptcy courts to district
courts.

The equities weigh in favor of allowing the Bankrptcy Court to address any procedural

infirmity in the Stay Order in the first instance. Vacating the Stay Order at this point would

leave Grace vulnerable to the very injury that the Bankruptcy Court sought to prevent. See
Marine Shale Processors, 81 F.3d at 1360 ("We have discretionary power to leave the injunction

in place, with or without the stay, while requesting the district court to issue a supplemental
opinion.") (citation omitted); United States v. Microsoft Corp., 147 F.3d 935, 944 (D.C. Cir.
1998) ("Appellate courts have. .. on occasion allowed a procedurally flawed injunction to
remain in place pending a proper hearing on remand if

the equities support such a disposition.").

Without the temporary stay, appellants would be free to pursue their Grace-based claims,

potentially mooting any future injunction in favor of Grace. See id. at 944-45. ("Silence at this

stage would risk considerable waste oflitigative resources.").

This Court may, of course, modify the Bankptcy Court's temporary stay so that it
expires within a reasonable time period, and/or remand with directions for the Bankruptcy Court

to resolve the merits ofthe underlying Injunction Motions within that time. See, e.g., TEC Eng'g
"preliminary injunction in place on the condition that the district court issue a supplementary opinion"); Inverness Corp. v. Whitehall Laboratories, 819 F.2d 48,51 (2d Cir. 1987) ("We leave the preliminary injunction intact until the (lower) court has had the opportnity to spell out its decision"); cf Polaroid Corp. v. Disney, 862 F.2d 987,

1006 (3d Cir. 1988) ("(R)emand(ing) with instructions that the court preliminarily enjoin Shamrock's tender

offer. .. until such time as the district court makes a final determination as to the appropriateness of an
injunction.").

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Corp. v. Budget Molders Supply, Inc., 82 F.3d 542, 546 (1st Cir. 1996) (leaving the preliminary
injunction in place as modified to expire two months from the issuance of

the court's mandate);

Alled Mktg., 878 F.2d at 814 (leaving the "prelimjnary injunction in place on the condition that

the district court issue a supplementary opinion making the findings of fact and conclusions of

law required by this opinion not later than two months after the issuance of this court's
mandate"); Rolo v. General Dev. Corp., 949 F.2d 695, 704 (3d Cir. 1991) (remanding with

"instructions to entertain promptly the Rolos's motion for a preliminary injunction");
Inverness Corp., 819 F.2d at 51 (leaving the "preliminary injunction intact until the district court
has had the opportnity to spell out its decision -- a chore which, of course, we expect it to

undertake with alacrity -- as it would be inequitable to punish Inverness for the district court's
failure to make specific findings").

11

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Page 17 of 17

CONCLUSION

For the foregoing reasons, as well as those set forth in Grace's motion to dismiss, this

Court should dismiss the appeal for lack of jurisdiction, or, in the alternative, affirm the
Stay Order.

Dated: November 13,2007

KIRKLAND & ELLIS LLP David M. Bernick, P.C.
Janet S. Baer

Salvatore F. Bianca 200 East Randolph Drive Chicago, IL 60601
Telephone: (312) 861-2000 Facsimile: (312) 861-2200
Chrstopher Landau

655 Fifteenth Street, N.W. Washington, DC 20005 (202) 879-5000
- and -

P A CIiI, S T

G, ZIEHL & JONES

LLi(
'ì

Laura vis Jones Bar No. 2436)
James E. O'Neil (BarNo. 4042) Timothy P. Cairns (Bar No. 4228) 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705 (Courier 19801)
Telephone: (302) 652-4100 Facsimile: (302) 652-4400
Co-Counsel for Appellees

12

Case 1:07-cv-00609-RLB

Document 10-2

Filed 11/13/2007

Page 1 of 4

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWAR
In re:
)

)

W. R. GRACE & CO., et aI.,
Debtors.

MARGARET CHAKAAN, et al., AN JOHN DOES 1-1000,
Appellants,
v.

) ) ) ) ) )

07-609 Hon. Ronald L. Buckwalter United States District Judge
No.

W. R. GRACE & CO., et al.
Appellees.

) ) ) ) ) ) ) ) ) )

Appeal from United States Bankrptcy Court for the District of Delaware
Case No. 01-01139 (Jointly Administered)
Adversary

No. A-01-771

Hon. Judith K. Fitzgerald
Chapter 11

CERTIFICA TE OF SERVICE
I, Timothy P. Cairns, hereby certify that on the 13th day of November, 2007, I

caused a copy of the following document to be served on the individuals on the attached service
list in the manner indicated:

APPELLEES' BRIEF

Timothy P. Cairns (Bar No. 4228)

~t, iI ( ~

91100-00I\DOCS_DE:I25703.87

Case 1:07-cv-00609-RLB

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Filed 11/13/2007

Page 2 of 4

W. R. Grace & Co. et al. Appeal Service List Case No. 07-cv-00609
Document Number: 132779

15 - Hand Delivery 14 - First Class Mail

Hand Delivery (Counsel to Personal Injury Claimants) Marla R. Eskin, Esquire Mark T. Hurford, Esquire Campbell & Levine, LLC 800 N. King Street, 3rd Floor

Wilmington, DE 19801
(Counsel to Debtors and Debtors in Possession) Laura Davis Jones, Esquire
James E. O'Neil, Esquire

Hand Delivery (Counsel to The Chase Manhattan Bank)

Pachulski Stang Ziehl & Jones LLP 919 North Market Street, 17th Floor Wilmington, DE 19801
Hand Delivery Vito i. DiMaio
Parcels, Inc.

Mark D. Collns, Esquire Deborah E. Spivack, Esquire Richards, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19801
Hand Delivery
(Counsel to Property Damage Claimants)

10th & King Streets Wilmington, DE 19801
Hand Delivery

(Counsel to Official Commttee of Unsecured Creditors) Michael R. Lastowski, Esquire Duane, Morrs & Heckscher LLP 1100 North Market Street, Suite 1200 Wilmington, DE 19801-1246
Hand Delivery (Counsel to DIP Lender) Steven M. Yoder, Esquire The Bayard Firm
222 Delaware A venue, Suite 900

Michael B. Joseph, Esquire Theodore J. Tacconell, Esquire Ferry & Joseph, P.A. 824 Market Street, Suite 904 P.O. Box 1351 Wilmington, DE 19899
Hand Delivery (United States Trustee) David Klauder, Esquire Office of the United States Trustee 844 King Street, Room 2311

Wilmington, DE 19801
Hand Delivery

(Counsel to Equity Commttee)
Teresa K. D. Currer, Esquire

Wilmington, DE 19801
Hand Delivery (Counsel to Maryland Casualty Company) Jeffrey C. Wisler, Esquire Connolly Bove Lodge & Hutz LLP
1220 Market Street, 10th Floor

Klett Rooney Lieber & Schorling
1000 West Street, Suite 1410

P.O. Box 1397 Wilmington, DE 19801

Wilmington, DE 19801

Case 1:07-cv-00609-RLB

Document 10-2

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Page 3 of 4

Hand Delivery (Counsel to Libby Plaintiffs) Adam G. Landis, Esquire
Kerr Mumford, Esquire

Hand Delivery (Counsel to David T. Austern, Future Claimant's Representative)

Landis Rath & Cobb LLP 919 North Market Street, Suite 600 Wilmington, DE 19801
Hand Delivery Ellen W. Slights Assistant United States Attorney The Nemours Building
1007 Orange Street, Suite 700

John C. Philips, Jr., Esquire Philips, Goldman & Spence, P.A. 1200 North Broom Street Wilmington, DE 19806

First Class Mail
(Counsel to Libby Plaintiffs) Jon L. Heberling, Esquire John F. Lacey, Esquire McGarey, Heberling, Sullvan & McGarey, P.c. 745 South Main Kalispell, MT 59904

P.O. Box 2046 Wilmington, DE 19899
Hand Delivery (Counsel to the State of Montana) Francis A. Monaco, Jr., Esquire Kevin Mangan, Esquire Womble, Carlyle Sandrdge & Rice, PLLC 222 Delaware Avenue, Suite 1501

First Class Mail
(Counsel to Debtors) David M. Bernick, P.C. Janet S. Baer, Esquire Kirkland & Ells LLP 200 East Randolph Drive Chicago, IL 60601

Wilmington, DE 19801
Hand Delivery (Counsel for BNSF Railway Company) Evelyn Meltzer, Esquire Pepper Hamilton LLP
Hercules Plaza, Suite 5100

First Class Mail
(Debtors) Mark Shelnitz W. R. Grace & Co. 7500 Grace Drive Columbia, MD 21044

1313 Market Street P.O. Box 1709 Wilmington, DE 19899
Hand Delivery (Counsel for Royal Indemnity Company) Ian Connor Bifferato, Esquire Bifferato, Gentilotti & Biden 1308 Delaware Avenue P.O. Box 2165

First Class Mail (Counsel to Official Commttee of
Unsecured Creditors)
Lewis Krger, Esquire

Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038-4982

Wilmington, DE 19899

First Class Mail (Counsel to Personal Injury Claimants) Elihu Inselbuch, Esquire Rita Tobin, Esquire
Caplin & Drysdale, Charered 375 Park Avenue, 35th Floor

New York, NY 10152

Case 1:07-cv-00609-RLB

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First Class Mail
First Class Mail (Counsel to Property Damage Claimants) Scott L. Baena, Esquire Bilzin Sumberg Dunn Baena Price & Axelrod LLP First Union Financial Center 200 South Biscayne Blvd, Suite 2500 Miami, FL 33131
(Counsel to Libby Claimants) Daniel C. Cohn, Esquire
Chrstopher M. Candon, Esquire

Cohn & Whitesell LLP
10 1 Arch Street

Boston, MA 02110

First Class Mail
(Counsel to David T. Austern, Future Claimant's Representative) Roger Frankel, Esquire Richard H. Wyron, Esquire Orrck Herrngton & Sutcliffe LLP Columbia Center 1152 15th Street, N.W. Washington, DC 20005-1706

First Class Mail (Counsel to Equity Commttee)
Philp Bentley, Esquire

Kramer Levin N aftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036

First Class Mail
(Counsel to Personal Injury Claimants) Peter Van N. Lockwood, Esquire Nathan D. Finch, Esquire
Caplin & Drysdale, Charered

First Class Mail (Counsel for State of Montana) Dale R. Cockrell, Esquire Christensen, Moore, Cockrell, Cummngs
& Azelberg, P.e.

One Thomas Circle, N.W. Washington, DC 20005

P.O. Box 7370 Kalispell, MT 59903

First Class Mail (Counsel to Official Commttee of
Unsecured Creditors) Willam S. Katchen, Esquire Duane Morrs LLP
744 Broad Street, Suite 1200

First Class Mail
(Counsel to BNSF Railway Company) Edward C. Toole, Jr., Esquire Anne Mare Aaronson, Esquire 3000 Two Logan Square
18th & Arch Streets Philadelphia, PA 19103

Newark, NJ 07102-3889

First Class Mail
(Counsel to DIP Lender) David S. Heller, Esquire J. Douglas Bacon, Esquire
Latham & Watkins

Sears Tower, Suite 5800 233 South Wacker Drive Chicago, IL 60606