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Publication Notice Satisfies Due Process for Unknown Future Asbestos Claimants

By: Colleen Angus-Yamada

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

           Almost thirty years after the Bankruptcy Court for the Southern District of New York confirmed the Chapter 11 plans of Johns-Manville Corporation (“Manville”) and Manville Forest Products (“MFP”), pursuant to which creditors were enjoined from pursuing asbestos claims against them, a plaintiff sought to recover from Graphic Packaging International (“Graphic”), a purported successor of MFP.  In In re Johns-Manville Corp.,[1] the Bankruptcy Court enjoined Ms. Berry from pursuing asbestos claims arising from her exposure to asbestos on her husband’s work clothes.[2] According to the Bankruptcy Court, because Graphic is a successor of MPF, a bankruptcy debtor and a wholly-owned subsidiary of Manville, Ms. Berry must first pursue her asbestos claims against the Manville Personal Injury Trust (the “Trust”) in accordance with the Chapter 11 Plan (the “Manville Plan”).[3]  

           In enjoining Ms. Berry’s claims, the Bankruptcy Court considered and dismissed Ms. Berry’s allegation that she had received inadequate due process. Ms. Berry argued that since she was indirectly exposed to asbestos through her husband she was unaware that she may later develop an asbestos injury and that she had a potential claim against Graphic.[4] Moreover, she asserted that she did not have direct notice of MFP’s bankruptcy until she was diagnosed with mesothelioma in 2015, well after the plan was confirmed.[5] The Court found that while Ms. Berry did not receive actual notice of the bankruptcy case or discharge, she had received adequate due process[6] because MPF complied with the due process requirements articulated in Mullane v. Cent. Hanover Bank & Trust Co.,[7] which requires that notice be reasonably calculated to apprise interested parties of the pendency of the action and afford them the opportunity to object.[8] The court emphasized that MPF provided publication notice of the bankruptcy proceedings and the bar date,[9] and that such notice is sufficient in a bankruptcy proceeding where the identity of the creditor is unknown and not reasonably ascertainable.[10] A debtor only needs to make “reasonably diligent efforts” to uncover the identities of the creditors.[11] For creditors who are not “reasonably ascertainable,” publication notice can suffice.[12] Furthermore, the Court noted that Manville’s extensive publicity campaign regarding the confirmation of the Manville Plan, which included national television and radio advertisements, newspaper advertisements in the six leading U.S. and Canadian newspapers, was designed to inform as many future asbestos claimants as possible of the impact of the Manville reorganization upon whatever rights they might have against the Debtor.[13]

           The Court concluded that the publication notice was reasonably calculated to provide notice to all claimants, including unknown claimants like Ms. Berry.[14] Ms. Berry’s claim that publication notice is insufficient for due process would put every discharge in any bankruptcy case at risk of collateral attack by claimants alleging they were unaware they had a claim against the debtor’s bankruptcy estate.[15] The main implications of this holding are that future asbestos claimants will likely be enjoined from suing Graphic and other similar successors and wholly owned subsidiaries of Manville directly. Additionally, in general, with respect to unknown future creditors, due process can be satisfied with publication notice.

[1] In re Johns-Manville Corp., 552 B.R. 221, 224 (Bankr. S.D.N.Y. 2016). 

[2] See id. at 225.

[3] See id. at 230. The Court noted that Ms. Berry’s future asbestos claim is subject to the injunction in the Manville Plan and Confirmation Order, which channels direct and indirect claims against Manville to the Manville Trust and enjoins all persons holding future asbestos claims from suing Manville and Manville's subsidiaries.

[4] See id. at 241.

[5] See id. In addition, Ms. Berry argued that MPF’s disclosure statement did not provide notice that any future asbestos claim would be channeled to the Trust.

[6] See id. at 240.

[7] See 339 U.S. 306 (1950).

[8] See id. at 314.

[9] In re Johns-Manville Corp., 552 B.R. at 241. 

[10] See id.

[11] See id.

[12] See id.

[13] See id. at 243; see also In re Johns-Manville Corp., 68 B.R. 618, 626 (Bankr. S.D.N.Y. 1986).

[14] See id. at 243.

[15] See id