Mass Tort Missiles and Counter-Missiles – The GM Chapter 11 Asbestos Claim Example
It’s interesting to watch the missiles and counter-missiles used by “repeat players” in “mass tort” litigation. A prime example arose in the asbestos personal injury claim portion of the General Motors chapter 11 case. There, GM (debtor) launched subpoenas seeking discovery of claimant-specific discovery from a wide set of asbestos trusts. As a counter-punch, the Asbestos Creditors Committee filed papers asserting the intention to take discovery against GM entities and to send subpoenas seeking claimant-specific information from a wide set of friction product defendants, and some other defendants. (Until the case ends, the docket is available online at http://www.motorsliquidationdocket.com/index.php3. The paper quoted below was Docket No. 6382. It also is online here.
The ACC explained the situation as follows:
“II. Discovery of Certain General Motors Co-Defendants
20. The Creditors’Committee has sought and this Court has permitted, discovery of electronic claims information concerning claims made by as many as 7500 individuals against seven asbestos personal injury trusts. These trusts are successors in liability to reorganized companies who made and distributed asbestos-containing products in industries other than the automotive industry. The Creditors’Committee represented that the information requested was vital to its efforts to prove, among other things, that GM was a “peripheral”defendant that suffered a temporary “spike”in asbestos-related expenditures because of the bankruptcies of those seven “traditional”asbestos defendants. See Reply of the Official Committee of Unsecured Creditors of Motors Liquidation Company in Further Support of Its Motion for and Order Pursuant to Bankruptcy Rule 2004 Directing Production of Documents by (I) the Claims Processing Facilities for Certain Trusts Created Pursuant to Bankruptcy Code Section 524(g) and (II) General Motors LLC and the Debtors, at 4.
21. The ACC strenuously opposed the Creditors’Committee’s discovery requests. It continues to believe that the UCC’s discovery is misplaced. More properly, the task of estimating the Debtors’aggregate liability for pending and future asbestos claims calls for discovery focused on their own products and activities involving asbestos and their own experience in receiving and resolving claims for asbestos-related diseases, all as affected by the economic and legal forces affecting its approach to the claims and that of other relevant actors. The UCC, however, is pressing its third-party discovery, and the Court has allowed it to issue subpoenas to the trusts, subject only to its eventual rulings on objections filed on behalf of individuals whose claims are the subject of the information demanded in those subpoenas. Now, therefore, the ACC is compelled to seek discovery designed to challenge the Creditors’ Committee’s various theories on their own terms.
22. The issue in estimating Old GM’s aggregate liability is what it would cost the Debtors to resolve all pending and future asbestos claims against them in the tort system if there were no bankruptcy. See, e.g., In re Armstrong World Indus., Inc., 348 B.R. 111, 123 (D.Del. 2006). The Creditors’Committee’s goal is to produce an unrealistically low estimate of that cost so as to maximize the share of the estates that will be distributed to non-asbestos creditors. It is therefore preparing to present an unrealistically narrow theory. The Creditors’ Committee would have the Court believe that the bankruptcy of other defendants is the key to understanding the patterns that emerge from Old GM’s claims data for the decade of the 2000s and to forecasting accurately the number and value of claims it would face in the future if it were not being liquidated. In actuality, though, Old GM’s claims experience was shaped by a full spectrum of interacting forces and cross-currents in the tort system, some exerting upward pressure on the number and value of claims and others tending in the opposite direction. To refute the Creditors’Committee’s simplistic view, the ACC wishes to take third-party discovery of the same kinds of claims data and payment information that their adversary is pursuing, but to do so from asbestos defendants who are still litigating asbestos claims in the tort system.
23. The ACC therefore seeks discovery from the following asbestos defendants
(“Certain Asbestos Defendants”):
Carlisle Cos., Inc.
Cooper Indus., Inc.
Dana Companies, LLC
Ford Motor Company
Georgia Pacific Corporation
Goodyear Tire & Rubber Company
Kelley Moore Paint Co., Inc.
Union Carbide Corporation
Volkswagen Group of America, Inc.
These defendants include manufacturers of friction products, as well as other companies whose experience in resolving asbestos claims may be compared and contrasted to that of Old GM.
24. Specifically, the ACC seeks the information these co-defendants maintain in electronic form about (i) the plaintiffs in all asbestos personal injury cases filed against GM prior to the Petition Date in which any plaintiff alleged that he or she suffered from mesothelioma (“Mesothelioma Claimants”) who have brought asbestos personal injury claims against the co-defendant, (ii) information about the claims of the Mesothelioma Claimants, including claim status, and (iii) the amounts that these co-defendants have paid to settle or otherwise resolve claims of the Mesothelioma Claimants. This discovery would be subject to the current Confidentiality Order and Anonymity Protocol, with appropriate modifications as needed.”
Until the case ends, the docket is available online at http://www.motorsliquidationdocket.com/index.php3. [Docket No. 6382]
The paper is:
Application of the Official Committee of Unsecured Creditors Holding Asbestos-Related Claims (the “Asbestos Claimants Committee”or “ACC”) for an Order Pursuant to Bankruptcy Rule 2004 Authorizing the Taking of Document Discovery and Deposition Testimony from the Debtors and from General Motors, LLC, its Subsidiaries and Affiliated Companies (the “Application”) [Docket No. 6382].