NEW YORK - (Mealey's) Personal injury suits seeking to hold Pfizer Inc. liable for asbestos-containing products manufactured by bankrupt subsidiary Quigley Co. Inc. under an "apparent manufacturer" theory of liability are not barred by an injunction issued in Quigley's Chapter 11 case, the Second Circuit U.S. Court of Appeals held April 10 (In re Quigley Company, Inc. [Pfizer Inc. and Quigley Company, Inc., v. Law Offices of Peter G. Angelos, Nos. 11-2635, 11-2767], 2nd Cir.).
(Opinion. Document #48-120423-012Z.)
‘By Reason Of’
"We are confident that the Angelos reading of the statutory
language at issue here is the correct one.
Section 524(g) is designed to 'facilitat[e] the reorganization and
rehabilitation of the debtor as an economically viable entity,' as well as
'make it possible for future asbestos claimants to obtain substantially
similar recoveries as current claimants,'" the Second Circuit said, citing In
re Combustion Eng'g, Inc. (391 F.3d 190, 234 [3d Cir. 2004]). "Needless to say, barring the prosecution of
claims bearing only an accidental nexus to an asbestos bankruptcy is less than
tangentially related to that objective."
The panel said the phrase "by reason of" as used in Section
524(g)(4)(A)(ii) of the Bankruptcy Code requires that the alleged liability of
a third party for the claims against a debtor arises "as a legal consequence of
one of the four relationships between the debtor and the third party" that are
outlined in Section 524(g), none of which covers Pfizer.
"Pfizer does not argue that its ownership of Quigley is
pertinent in any legal sense to the claims asserted in the Angelos suits. Indeed, as the District Court very aptly
noted, Pfizer's ownership interest in Quigley is 'legally irrelevant' to the
Angelos suits' § 400 claims," the Second Circuit held. "Consequently, the [injunction], modeled as
it is on 11 U.S.C. § 524(g)(4)(A)(ii), does not enjoin the suits at issue."
Pfizer is represented by Sheila L. Birnbaum, Jay M. Goffman,
George A. Zimmerman and Bert L. Wolff of Skadden, Arps, Slate, Meagher &
Flom in New York. Quigley is represented
by Michael L. Cook of Schulte Roth & Zabel in New York. The Angelos firm is represented by Jeffrey L.
Jonas, James W. Stoll and Thomas H. Montgomery of Brown Rudnick in Boston and
Edward S. Weisfelner of Brown Rudnick in New York.
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