505 B.R. 427
S.D.N.Y.2014Background
- Chemtura Corporation and affiliates filed Chapter 11 in 2009; claims included tort suits alleging injuries from diacetyl exposure (used as a butter-flavoring) sold through 2005.
- Bankruptcy court set an October 31, 2009 bar date for filing proofs of claim after approving a notice program (direct notice to known creditors; publication and site-specific notices for unknown claimants).
- A site-specific notice was published in the Home News Tribune naming Firmenich (a Plainsboro, NJ plant) as a purchaser of Chemtura’s diacetyl and stating that exposure that causes injury now or in the future may give rise to a claim and that claimants must file by the bar date or lose rights.
- After the bar date and confirmation, nine former Firmenich employees (Firmenich Claimants) sued in New Jersey state court for diacetyl-related injuries that manifested after the bar date.
- Chemtura moved in bankruptcy court to enforce the discharge injunction; the Bankruptcy Court concluded the claimants had been provided constitutionally adequate notice and enjoined their suits. The district court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether future-manifesting diacetyl claims were barred by the bankruptcy discharge due to inadequate notice | Claimants lacked constitutionally adequate notice because they had no diagnosis or reason to know of claims before the bar date | Notice (site-specific publication plus explanation that future injuries give rise to claims) was reasonably calculated to inform potential Firmenich claimants | Held: Notice was adequate; claims discharged and injunction upheld |
Key Cases Cited
- Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (due process requires notice reasonably calculated to apprise interested parties of proceedings)
- In re Johns-Manville Corp., 600 F.3d 135 (2d Cir. 2010) (party cannot be bound where it could not have anticipated it was affected by bankruptcy orders)
- In re Ionosphere Clubs, Inc., 922 F.2d 984 (2d Cir. 1990) (standard of appellate review for bankruptcy court rulings)
- In re Vebeliunas, 332 F.3d 85 (2d Cir. 2003) (mixed questions of fact and law reviewed de novo)