604 B.R. 1
E.D. Pa.2019Background
- Ellen and Yuri Kleiner sued Johnson & Johnson, Rite Aid, and others in Pennsylvania state court, alleging J&J's talcum powder caused Ellen Kleiners' ovarian cancer; trial was scheduled for January 6, 2020.
- Imerys Talc America (a former defendant) was voluntarily dismissed from the state action on Feb 4, 2019; Imerys filed Chapter 11 nine days later in the District of Delaware.
- J&J removed the Kleiner case to federal court under 28 U.S.C. § 1334(b), asserting the case is "related to" Imerys' bankruptcy because of indemnity provisions and purported shared insurance.
- J&J relied on supply agreements containing indemnification clauses and an Imerys indemnification demand; J&J did not sue Imerys in the Kleiner litigation nor submit the relevant insurance policies to the record.
- The plaintiffs moved to remand, arguing the state-law products-liability suit does not "related to" the Imerys bankruptcy and, alternatively, that the court should abstain and remand in the exercise of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the federal court has "related to" jurisdiction under §1334(b) because J&J may seek indemnity from non-party debtor Imerys | The state-law suit between non-debtors will not affect Imerys' bankruptcy; indemnity is contingent and not automatic | The supply agreements and an Imerys indemnity demand create rights/obligations that could impact Imerys' estate; shared insurance could deplete debtor resources | No related-to jurisdiction: possible indemnity is contingent, not an automatic liability that affects the bankruptcy estate |
| Whether shared insurance creates related-to jurisdiction | Plaintiffs: record is insufficient to show shared insurance would deplete debtor assets | J&J: shared insurance and tenders to insurers could reduce funds available to Imerys' estate | Record insufficient to base jurisdiction on shared insurance; plaintiff's assertions not proved |
| Whether the court should abstain/remand even if jurisdiction exists | Remand is appropriate given state-law predominance, pending trial, and comity | J&J seeks federal control to centralize/transfer to Delaware bankruptcy venue | Court exercises discretion to remand on abstention/comity grounds; remand granted |
| Whether a plaintiff-specific judgment would automatically bind Imerys (res judicata/effect on estate) | Plaintiffs: judgment against J&J/Rite Aid would not automatically create liability for Imerys | J&J: identity of interest and contractual ties make claims effectively against Imerys | Outcome would not automatically bind Imerys; collateral estoppel/res judicata do not apply to bind non-party debtor |
Key Cases Cited
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (establishes "related to" test: conceivable effect on debtor's estate; contingent indemnity does not alone create jurisdiction)
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (discusses breadth of bankruptcy-related jurisdiction and congressional intent)
- In re Combustion Eng'g, Inc., 391 F.3d 190 (3d Cir. 2004) (cautions that shared-insurance jurisdictional claims require a developed factual record)