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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.
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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
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