Asbestos Plaintiff's Motion to Strike Ford Motion for Acces to Garlock Trial Materials

8/12/2019 Asbestos Plaintiff's Motion to Strike Ford Motion for Acces to Garlock Trial Materials

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1000853

UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA

Charlotte Division

__________________________________________)

In Re: ) Chapter 11)

GARLOCK SEALING TECHNOLOGIES ) Case No. 10-31607LLC, et al.

1 )

)Debtors. ) Jointly Administered __________________________________________)

MOTION OF THE OFFICIAL COMMITTEE OF ASBESTOS PERSONAL INJURY

CLAIMANTS TO STRIKE FORD MOTOR COMPANY’S MOTION FOR ACCESS TO

RULE 2019 FILINGS AND TO UNSEAL THE EVIDENCE OF

“DEMONSTRABLE MISREPRESENTATION”

The Official Committee of Asbestos Personal Injury Claimants (the “Committee”), by

and through undersigned counsel, respectfully moves this Court for an order striking Ford Motor

Company’s (“Ford”) Motion for Access to Rule 2019 Filings and to Unseal the Evidence of

“Demonstrable Misrepresentation,” dated March 14, 2014 [Dkt. No. 3377] (“Ford’s Motion”)

because this Court lacks subject matter jurisdiction to consider it.

Preliminary Statement

Ford’s Motion seeks an order granting access to sealed portions of the record of the

estimation proceeding. See Ford’s Motion at 1.2 So, too, does an appeal noticed by Legal

Newsline (the “Appeal”) and pending in the United States District Court for the Western District

of North Carolina (the “District Court”). The Appeal divests this Court of jurisdiction over the

issues presented in the Appeal and also over all other matters related to the Appeal. Although

Ford is not a party to the Appeal, Ford’s Motion unquestionably presents issues that are pending

1 Debtors consist of Garlock Sealing Technologies LLC (“Garlock”), Garrison LitigationManagement Group, Ltd., and The Anchor Packing Company (collectively, the “Debtors”).

2 Ford’s Motion also requests access to confidential Rule 2019 Exhibits submitted in this

case. Id. at 1.

Case 10-31607 Doc 3389 Filed 03/19/14 Entered 03/19/14 19:52:10 Desc Main Document Page 1 of 9



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before the District Court in Legal Newsline’s Appeal. The Bankruptcy Court therefore lacks

subject matter jurisdiction over Ford’s Motion and should strike it.

Jurisdiction and Venue

1. The Bankruptcy Court may exercise adjudicatory authority over this Motion to

Strike pursuant to 28 U.S.C. §§ 157 and 1334 and the District Court’s standing Order of

Reference for bankruptcy matters. This is a core matter pursuant to 28 U.S.C. § 157(b)(1).

Venue is proper in this district pursuant to 28 U.S.C. § 1409.

Background

2.

Last July, in the midst of the estimation hearing, Legal Newsline, a third-party

online news outlet, filed in this Court its first motion asserting a public right of access to the

hearing on estimation of pending and future mesothelioma claims against Garlock (the

“Estimation Hearing”). Motion of Legal Newsline to Open Proceedings to the Public, dated

July 30, 2013 [Dkt. No. 3065] (“Legal Newsline’s First Motion”).

3. On July 31, 2013, this Court issued an order denying Legal Newsline’s First

Motion. Order Denying Motion of Legal Newsline to Open Proceedings to the Public, dated

July 31, 2013 [Dkt. No. 3069] (the “July 31 Order”).

4. On August 13, 2013, Legal Newsline filed its notice of appeal and thereby

commenced the Appeal of the July 31 Order. Notice of Appeal by Legal Newsline, dated August

13, 2013 [Dkt. No. 3080] (the “Notice of Appeal”).

5. The Appeal is pending in the District Court.

6. On March 3, 2014, Legal Newsline filed its Second Motion in the Bankruptcy

Court, again asserting a public right of access to the Estimation Hearing.




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7. On March 14, 2014, the Committee filed its Motion to Strike Legal Newsline’s

Second Motion for lack of subject matter jurisdiction. Motion of the Official Committee of

Asbestos Personal Injury Claimants to Strike Legal Newsline’s Second Motion for Access to the

Estimation Hearing [Dkt. No. 3379].

8. Also on March 14, 2014, Ford’s Motion was filed in the Bankruptcy Court,

asserting a public right of access to the Estimation Hearing.

9. The Committee now moves to strike Ford’s Motion for lack of subject matter

jurisdiction.

10.

The Bankruptcy Court has shortened the response time for the Committee’s

Motion to Strike Legal Newsline’s Second Motion and has set that matter down for hearing on

March 27, 2014. Order, dated March 18, 2014 [Dkt. No. 3382]. Simultaneously herewith, the

Committee has applied to shorten the response time for its instant Motion to Strike Ford’s

Motion so that it, too, may be heard on March 27.

The Pendency of Legal Newsline’s Appeal Divests the Bankruptcy

Court of Subject Matter Jurisdiction Over Ford’s Motion

11. The filing of a notice of appeal divests the trial court of jurisdiction over the

issues involved in that appeal, and confers jurisdiction over those issues upon the appellate court.

E.g., Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58-59 (1982); Levin v. Alms &

Assocs., Inc., 634 F.3d 260, 263 (4th Cir. 2011). “This rule applies with equal force to

bankruptcy cases.” In re Legend Radio Grp., Inc., 248 B.R. 281, 284 (W.D. Va. 1999). Thus,

when Legal Newsline filed its Notice of Appeal of this Court’s Order, this Court was divested of

jurisdiction to adjudicate any issues involved in the Appeal.

12. The central issue before the District Court in the Appeal is the same issue that

Ford’s Motion purports to place before this Court: the extent, if any, to which the public has a




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right of access to the Estimation Hearing. Specifically, Ford’s Motion argues that the public has

a right of access to certain testimony and exhibits received by the Bankruptcy Court during

closed portions of the Estimation Hearing that underlie certain findings made by this Court in its

Order Estimating Aggregate Liability. See generally Memorandum of Law in Support of Ford’s

Motion, dated March 14, 2014 [Dkt. No. 3378]. Likewise, Legal Newsline’s First Motion—the

subject of the Appeal—contends that the Bankruptcy Court was wrong to close the courtroom for

those very same portions of the Estimation Hearing because the public had a right of access to

“all aspects” of the Estimation Hearing. Notice of Appeal at 1.

13.

Ford’s Motion and the Appeal both turn on the presumption that court

proceedings should be open to the public and on whether countervailing interests overcome that

presumption with respect to evidence received in closed portions of the Estimation Hearing. See

Memorandum of Law in Support of Ford’s Motion at 11-13; Memorandum of Law in Support of

Legal Newsline’s First Motion at 5-6, dated July 30, 2013 [Dkt. No. 3066]. Central to Ford’s

Motion, then, are the very issues that the Appeal has placed squarely within the exclusive

jurisdiction of the District Court.

14. Plainly, the key issues in the Appeal and in Ford’s Motion are the same. Even if

the issues were not identical, this Court would still lack jurisdiction over Ford’s Motion, because

the Notice of Appeal divested this Court of jurisdiction not only over the issues expressly

appealed, but more broadly over “all matters relating to the appeal.” See Grand Jury

Proceedings Under Seal v. United States, 947 F.2d 1188, 1190 (4th Cir. 1991); In re Whispering

Pines Estates, Inc., 369 B.R. 752, 759 (B.A.P. 1st Cir. 2007) (“[I]t is imperative that a lower

court not exercise jurisdiction over those issues which, although not themselves expressly on

appeal, nevertheless so impact the appeal so as to interfere with or effectively circumvent the




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appeal process.”); see also Levin, 634 F.3d at 264 (applying rule broadly and concluding that

filing notice of appeal involving whether underlying claims were arbitrable divested the trial

court of jurisdiction over not only the issue of arbitrability, but over the entire litigation of the

underlying claims while the appeal was pending).

15. Ford’s Motion is, at the very least, a “matter related to the appeal.” Notably, both

Ford’s Motion and the Appeal seek the same relief: the public disclosure of evidence that this

Court has thus far kept under seal. If this Court were to grant or deny the relief requested in

Ford’s Motion, it would intrude upon the exclusive jurisdiction of the District Court to pass on

the same issues and grant or deny the same relief on Legal Newsline’s Appeal. “In order to

assure the integrity of the appeal process, it is imperative that the lower court take no action

which might in any way interfere with the jurisdiction of the appeal court.” In re Kendrick

Equipment Corp., 60 B.R. 356, 358 (Bankr. W.D. Va. 1986) (emphasis added).

16. That Ford is not a party to the Appeal does not alter the conclusion that the Court

lacks subject matter jurisdiction over Ford’s Motion. See In re TFT-LCD (Flat Panel) Antitrust

Litig., 2013 WL 6055079, at *1-2 (N.D. Cal. Nov. 13, 2013) (finding no jurisdiction over motion

because issues involved in the motion were related to issues involved in an appeal, even though

movant was not a party to that appeal).3

3 In In re TFT-LCD (Flat Panel) Antitrust Litigation, a non-party creditor, LFG, moved thecourt to release $28.2 million in an escrow account, which represented an attorney’s fee that thecourt awarded in the underlying antitrust litigation. See 2013 WL 6055079, at *1 (N.D. Cal. Nov. 13, 2013). The court denied LFG’s motion, finding lack of jurisdiction. See id. at *2. Thecourt reasoned that a pending appeal seeking to reverse the court’s attorneys’ fee awards,divested the court of jurisdiction “over the matters being appealed.” Id. LFG was not a party tothe appeal, but the $28.2 million award that it called into question was one of those undergoingreview in the appeal. See id. Because “[t]he validity of the attorneys’ fees award [wa]s directlyattacked on appeal”— albeit by other litigants—the court recognized that entertaining LFG’smotion “would alter the questions currently before the [appellate court].” Id. So, too, Ford’s




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17. Upon the filing of Legal Newsline’s Notice of Appeal, this Court was divested of

jurisdiction over all matters related to the appeal. See Grand Jury Proceedings Under Seal, 947

F.2d at 1190. It is irrelevant whether those matters involve the appellant. See In re TFT-LCD

(Flat Panel) Antitrust Litigation, 2013 WL 6055079, at *1-2; cf. Taylor v. KeyCorp, 680 F.3d

609, 616 (6th Cir. 2012) (district court had no jurisdiction over non-party’s motion to intervene

after party to underlying litigation filed a notice to appeal from final judgment thereon); Nicol v.

Gulf Fleet Supply Vessels, Inc., 743 F.2d 298, 299 (5th Cir. 1984) (same).

18. Additionally, both Ford’s Motion and the Appeal assert a public right of access to

the Estimation Hearing, not a right that turns on the identity of the person seeking access. It

follows that any ruling by the Bankruptcy Court on the merits of Ford’s Motion would

impermissibly affect the Appeal before the District Court. “During the pendency of an appeal,

the Court may act to preserve the status quo, but may not take actions that alter any substantial

rights on appeal.” See In re TFT-LCD (Flat Panel) Antitrust Litig., 2013 WL 6055079, at *1.

19. This Court was divested of subject matter jurisdiction over the issues in Ford’s

Motion when Legal Newsline filed its Notice of Appeal. If this Court were to consider the

merits of Ford’s Motion, it would encroach upon the exclusive jurisdiction of the District Court

to consider those same merits, and related matters, in the posture of the Appeal and would run

the risk of issuing a decision in conflict with that of the District Court. Ford’s Motion is thus out

of order, and the Court should strike it.

Ford Has Not Given Due Notice of Ford’s Motion

20. In addition to the jurisdictional flaws, Ford’s Motion is defective for failure to

give proper notice to potentially affected persons. This defect applies not only to Ford’s central

Motion has the potential to alter the status quo with respect to issues involved in Legal Newline’s Appeal.




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request for access to sealed evidence received in the Estimation Hearing, but also to its request

for access to Rule 2019 Exhibits submitted to the clerk but held off the docket in this case.

21. Ford’s Motion is vague as to the scope of the materials to which Ford seeks

access pursuant to its request to unseal evidence from the Estimation Hearing. Potentially,

however, that scope is very broad. The Estimation Hearing generated many types of materials

from thousands of claimants, hundreds of law firms, and many other persons whose interests

were safeguarded by various confidentiality orders entered by this Court. These orders each

contain requirements for providing notice prior to any modification of the orders. See, e.g.,

Order Authorizing the Debtors to Issue Questionnaire to Holders of Pending Mesothelioma

Claims and Governing the Confidentiality of Information Provided in Responses ¶ 18, dated

June 21, 2011 [Dkt. No. 1390] (“Any person who seeks relief from any provision of this Order

shall do so by motion in the Bankruptcy Court on notice to the Estimation Parties, any

Intervenors, and Mesothelioma Claimants determined by prior order of the Bankruptcy Court to

be potentially affected by the relief sought.” (emphasis added)).

22. Ford has not made any effort to provide notice to claimants, law firms, trusts, and

other absent persons whose rights and interests stand to be prejudiced by Ford’s Motion. This

Court should thus strike Ford’s Motion for failure to afford the potentially affected persons

notice and an opportunity to be heard. “An elementary and fundamental requirement of due

process in any proceeding . . . is notice reasonably calculated, under all the circumstances, to

apprise interested parties of the pendency of the action and afford them an opportunity to present

their objections.” Mullane v. Hanover , 339 U.S. 306, 314 (1950).

23. Ford filed Ford’s Motion on the ECF system and thereby provided notice to

persons registered to receive service by that medium. But the population of persons who




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provided information in reliance on the protective orders that Ford is seeking to override extends

far beyond the few entities that have so registered.

24. No doubt, there are practical problems involved in making valid service upon

affected persons insofar as identifying information for many of those persons is not public.4 This

does not, however, obviate those persons’ rights to notice and an opportunity to be heard. If

Ford’s Motion or any similar request ever comes within the proper jurisdiction of this Court, a

mechanism should be created for providing valid notice and an opportunity to be heard to such

persons without publicly revealing their identities. Because it would be Ford’s responsibility as

the movant to provide these persons with notice, the expense of doing so would be for Ford’s

account.

4 The names and addresses of law firms that have filed Rule 2019 Statements are availableon the public docket. The Certificate of Service attached to Ford’s Motion, however, indicatesthat Ford failed to issue notice to those firms.




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CONCLUSION

For the foregoing reasons, the Court should strike Ford’s Motion, and grant such other

and further relief as justice may require.

Dated: March 19, 2014 Respectfully submitted,

CAPLIN & DRYSDALE, CHARTERED

By: /s/ Trevor W. Swett III Trevor W. Swett IIIJames P. WehnerTodd E. PhillipsOne Thomas Circle, N.W.

Washington, DC 20005Telephone: (202) 862-5000E-mail: [email protected]; [email protected];[email protected]

Elihu Inselbuch600 Lexington Avenue, 21st Floor New York, NY 10022Telephone: (212) 379-6000E-mail: [email protected]

Co-Counsel for the Official Committee of

Asbestos Personal Injury Claimants

MOON WRIGHT & HOUSTON, PLLC

Travis W. Moon227 West Trade Street, Suite 1800Charlotte, NC 28202Telephone: (704) 944-6560E-mail: [email protected]

Co-Counsel for the Official Committee of

Asbestos Personal Injury Claimants


Documents

Asbestos Plaintiff's Motion to Strike Ford Motion for Acces to Garlock Trial Materials