In Re Quigley Co., Inc.
449 B.R. 196
| S.D.N.Y. | 2011Background
- Quigley filed for Chapter 11, leading to a channeling injunction under §524(g) shielding certain asbestos-related claims against Quigley and Pfizer.
- Pfizer, as parent and sponsor, had its branding on Insulag packaging; plaintiffs alleged Pfizer was an apparent manufacturer liable under Pennsylvania law §400.
- Appellant-law firm sued in Pennsylvania state court; Pfizer moved in Bankruptcy Court to enforce the Amended Injunction.
- Bankruptcy Court held §524(g) channeling injunction enjoined the Pennsylvania §400/§402A claims against Pfizer, finding liability arose by reason of ownership and/or sponsorship.
- District Court granted review; it concluded §400 claims against Pfizer are not derivatively tied to Quigley’s ownership and are not enjoined; court then reversed, allowing pathway to pursue in state court.
- The central issue is whether §524(g) channeling injunction extends to non-debtor claims rooted in sponsor liability under state law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §524(g) channeling injunction cover Pfizer's §400/§402A claims? | Angelus asserts no §524(g) jurisdiction over independent sponsor claims. | Pfizer contends the §524(g) injunction encompasses sponsor liability arising from its ownership/management of Quigley. | Injunction does not cover these non-derivative claims. |
| Are §400/§402A claims against Pfizer derivative of Quigley’s liability and thus enjoinable? | Pfizer claims liability arises via ownership/sponsorship, making it derivative. | Appellant argues liability can arise independently from Pfizer’s sponsorship of Insulag. | Claims are not derivative; not enjoined. |
| Whether Pfizer’s liability arises by reason of ownership or by independent sponsorship under state law. | Pfizer’s branding on Insulag links liability to ownership. | Branding is a direct sponsor liability, not mere ownership. | Liability does not arise by reason of ownership; independent sponsor liability arises, outside §524(g). |
| Does Manville III/IV constrain bankruptcy courts from enjoining non-derivative third-party claims? | Manville III prohibits enjoining non-derivative third-party claims. | Distinguishs claims as derivative under §524(g). | Court’s jurisdiction limited to derivative claims; here not derivative. |
| What is the proper interpretation of §524(g)(4)(A)(ii) in this context? | The §524(g) scope includes third-party liability arising from ownership/management. | The statute requires liability to arise by reason of ownership; here not satisfied. | Statutory interpretation favors non-coverage of these claims. |
Key Cases Cited
- In re Johns-Manville Corp., 97 B.R. 174 (Bankr.S.D.N.Y. 1989) (origin of asbestos channeling and Manville framework I)
- Johns-Manville IV, 600 F.3d 135 (2d Cir. 2010) (restricts bankruptcy court jurisdiction over non-derivative third-party claims)
- In re Manville Corp., 517 F.3d 52 (2d Cir. 2008) (Manville III; derivative vs non-derivative claims guidance)
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (insufficient to confer jurisdiction; claims must affect estate directly)
- Travelers Indem. Co. v. Bailey, 129 S. Ct. 2195 (Supreme Court 2009) (limits non-debtor releases; remand affirmed scope discussion)
- In re Combustion Eng’g, Inc., 391 F.3d 190 (3d Cir. 2004) (shared insurance not sufficient for related-to jurisdiction)
- Forry v. Gulf Oil Corp., 428 Pa. 334 (Pa. 1968) (adopts Restatement §400; apparent manufacturer liability)