Korean Claimants v. Debtor's Representatives (In re Settlement Facility Dow Corning Trust)
- Case Type:
- Case Status:
- 15-2548 (6th Circuit, Nov 23,2016) Not Published
Affirmed entry of consent order by the District Court. Found that District Court has jurisdiction to enter consent order related to clarification of "marshaled reoveries." Found that clarification did not amount to an impermissible modification of the Distribution Agreement. Found that argument regarding eligibility requirements for Distribution Agreement should have been brought prior to confirmation and were now barred.
- Procedural context:
Appeal of entry of a Consent Order from the United States District Court for the Eastern District of Michigan.
In 1995, Dow Corning Corporation declared Chapter 11 bankruptcy while facing thousands of lawsuits related to silicone-gel breast implants. Dow Corning’s Reorganization Plan established a settlement fund for claimants who agreed to settle their suits. A number of claimants from Korea objected to a consent order entered on December 3, 2015, which clarified certain procedures for distributing part of the settlement fund. The bankruptcy court confirmed the Reorganization Plan in 1999. Pursuant to the Plan, Dow Corning and the Claimants’ Advisory Committee executed a Distribution Agreement that details the procedure for distributing the settlement fund. That Agreement also created a Trust to administer and evaluate claims for recovery from the fund. To be eligible for a payment from the Fund, claimants had to show, among other things, that they received a silicone-gel breast implant between January 1, 1976 and January 1, 1992, and that they “marshaled recoveries” from the manufacturers of their implants by trying to collect from those manufacturers before seeking money from the Fund. The Trust began evaluating Class 7 claims in 2006 and determined that over 6,000 claimants had failed to marshal recoveries because they did not previously assert claims against another settlement program. The claimants appealed the denial of their claims on the basis that they were not eligible for that settlement program, so the effort would have been futile. Various entities created for the purposes of Dow Corning’s bankruptcy—specifically, the Claimants’ Advisory Committee, the Debtor’s Representatives and Dow Corning itself (together, the “Dow Corning Parties”)—thereafter agreed that the Trust should consider a claimant’s registration status in determining whether she met the marshaling requirement. On May 22, 2015, the Dow Corning Parties submitted to the district court a proposed Consent Order that specified, among many other things, the manner in which the marshaling requirement would apply to claimants who were ineligible for relief under the other program. The district court entered the Consent Order over the objections of the Korean Claimants, who then brought the appeal.
- McKeague, Griffin, and Kethledge