WASHINGTON, D.C. - (Mealey's) The U.S.
Supreme Court on June 24 denied a bid for certiorari by Pfizer Inc. of a
ruling removing the protection for Pfizer of a bankruptcy injunction barring
asbestos personal injury claims entered in the case of a defunct Pfizer
subsidiary (Pfizer Inc. v. Law Offices of Peter G. Angelos, No. 12-300,
U.S. Sup.; See January 2013, Page 13) (lexis.com
subscribers may access Supreme Court briefs for this case).
The Supreme Court's refusal to review the ruling, a
decision that the U.S.
solicitor general recommended, means that state court lawsuits filed against
the pharmaceutical giant by a prominent asbestos plaintiffs' law firm can
The dispute arises out of Pfizer's acquisition in 1968 of
Quigley Co. Inc., a former manufacturer of insulation and other products for
the steel industry and foundries. After the acquisition, some of
Quigley's asbestos-containing products began to include Pfizer's name and
trademark. When Quigley filed for Chapter 11 protection in 2004 in the
U.S. Bankruptcy Court for the Southern District of New York, both Quigley and
Pfizer were facing 160,000 asbestos personal injury claims. The
Bankruptcy Court issued an injunction enjoining most asbestos-related claims
against the companies under Section 524(g) of the U.S. Bankruptcy Code.
The Law Offices of Peter G. Angelos began filing asbestos
personal injury lawsuits against Pfizer and others in Pennsylvania in 1999. The Angelos firm
moved for summary judgment against Pfizer in many of the actions on the theory
that Pfizer is liable as the "apparent manufacturer" of the products under
Restatement (Second) of Torts Section 400 (1965), as incorporated into the
common law of Pennsylvania,
which imposes liability in certain circumstances on the apparent manufacturer
of a defective product. Pfizer responded by filing a motion in the
Bankruptcy Court to enforce the injunction against the Angelos firm's lawsuits.
In 2008, the Bankruptcy Court held that the Angelos
firm's Section 400 claims were subject to the injunction because they arose out
of Quigley's conduct and could be asserted against a trust established under
Quigley's proposed Chapter 11 plan of reorganization. The court, finding
that Pfizer's Section 400 liability arose from ownership of Quigley and fell
within the realm of Section 524(g), directed the Angelos firm to stop
prosecuting the claims against Pfizer.
But in May 2011, the U.S. District Court for the Southern
District of New York reversed the ruling, holding that the Section 400 claims
do not arise out of Pfizer's ownership of Quigley and, therefore, do not fall
within the scope of Section 524(g) or the injunction (In re Quigley Company,
Inc., No. 10-1573, S.D. N.Y.; See June 2011, Page 10). The court
said, "Pfizer's liability arises out of its sponsorship of a defective product,
not its corporate affiliation . . . with the manufacturer." Because
Quigley's injunction does not cover claims based on Pfizer's name being on
Quigley's products, the Angelos firm "is free to pursue its § 400 claims in Pennsylvania state
courts," the court ruled.
In April 2012, the Second Circuit U.S. Court of Appeals
affirmed the District Court's ruling, holding that under Section
524(g)(4)(A)(ii)(I) of the Bankruptcy Code, the Angelos firm's lawsuits "do not
attempt to fix on Pfizer liability 'arising by reason of' Pfizer's 'ownership
of a financial interest in'" Quigley and that, therefore, the actions are not
barred by Quigley's injunction.
Pfizer filed a petition for writ of certiorari
with the Supreme Court, presenting the following question: "Whether the
Second Circuit erred by failing to apply as written a federal statute, 11
U.S.C. § 524(g)(4)(A)(ii), by limiting its scope in a manner that is contrary
to its plain terms and that frustrates the congressional purposes of the
The Supreme Court invited the solicitor general to file a
brief in the case expressing the views of the United States. The United
States said in its amicus curiae brief that the question presented
is: "Whether, for purposes of 11 U.S.C. 524(g)(4)(A)(ii), a corporate
parent's potential liability in tort arises 'by reason of' its relationship
with a subsidiary-debtor when the actions of the corporate parent that resulted
in potential liability were motivated in part by that relationship, but the
relationship is not legally relevant to the determination whether liability
The United States argued that further review was not
warranted because the Second Circuit correctly held that, based on Section
524(g)(4)(A)(ii), a corporate parent's liability does not arise "by reason of"
its relationship with a subsidiary-debtor unless that relationship is legally
relevant to the plaintiff's allegation that the parent is liable. Certiorari
also should be denied because the phrase "by reason of" in Section
524(g)(4)(A)(ii) has never been construed by the Supreme Court or any circuit
court, the United States
Pfizer is represented by Sheila L. Birnbaum, Jay M.
Goffman, Bert L. Wolff and Paul A. LaFata of Skadden, Arps, Slate, Meagher
& Flom in New York.
The Angelos firm is represented by James W. Stoll,
Jeffrey L. Jonas and Thomas H. Montgomery of Brown Rudnick in Boston
and Edward S. Weisfelner of Brown Rudnick in New York.
The United States is represented by Solicitor General
Donald B. Verrilli Jr., Acting Assistant Attorney General Stuart F. Delery,
Deputy Solicitor General Malcolm L. Stewart, Assistant to the Solicitor General
Jeffrey B. Wall and Michael S. Raab and Jeffrey Clair of the Department of
Justice in Washington.
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