In re GEO Specialty Chemicals Ltd.
OPINION
Before the Court is a Motion to Reopen Chapter 11 Case For The Limited Purpose of Enforcing the Chapter 11 Plan Discharge and Injunction filed by GEO Specialty Chemical Inc. and GEO Specialty Chemicals, Ltd. (collectively “GEO” or the “Reorganized Debtors”). GEO is seeking an order reopening its chapter 11 case pursuant to 11 U.S.C. § 350(b), enforcing the Chapter 11 Plan Discharge and Injunction
JURISDICTION
This Court has jurisdiction over this matter pursuant to 28 U.S.C.§ 1334 and the Standing Order of Reference from the United States District Court for the District of New Jersey dated July 23, 1984 and amended September 18, 2012. This matter constitutes a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(I) and (J). See District Court Opinion and Order Denying Motions to Withdraw the Reference, In re GEO Specialty Chemicals, Inc., et al., 16-8405/16-8463 (JLL), ECF Nos. 11, 12.
FACTUAL BACKGROUND
A. General Background
GEO, originally founded in 1992, develops manufactures, sells, and markets specialty chemical products sold to major industrial customers for various end-use applications, including water treatment, paints and coating products, construction, industrial rubber, oil and gas production, electronics, and resins used to meet health, safety and environmental regulations. (Mem. of Law in Supp. of Reorganized Debtors Mot., ECF No. 1320). On March 18, 2004, GEO along with its wholly, owned subsidiary, GEO Specialty Chemicals Limited, filed voluntary petitions under chapter 11 of the Bankruptcy Code,
In October 2015, several years after GEO emerged from bankruptcy, GEO’s alleged participation in an antitrust conspiracy came to light when Frank Reichl, an employee of General Chemical Corporation (“GenChem”), one of GEO’s competitors, pled guilty under the Sherman Act 15 U.S.C. § 1 for his role in a conspiracy concerning the marketing and sale of liquid aluminum sulfate (“LAS”), a water treatment chemical.
The Antitrust Action is brought by thirteen named plaintiffs on their own behalf, and on behalf of all entities and persons who purchased LAS from one or more of the Defendants during the period from January 1,1997 through February 2011. In general, the Plaintiffs allege that GEO conspired with other manufacturers of LAS to fix the price of LAS by not competing for each other’s business as well as historical customers and territories. On June 16, 2017, in a related criminal proceeding before Judge Linares, GEO pled guilty to its role in the conspiracy and was sentenced to pay a $5 million fine.
The Plaintiffs in the Antitrust Action are separated into two groups. The first group, the Direct Purchaser Plaintiffs (“DP Plaintiffs”), represents a proposed class of persons and entities who purchased LAS directly from GEO, one or more of Defendants including GEO, from January 1, 1997 through at least February 2011. The named Plaintiffs and Class include public bodies and private water companies which use LAS in their water and treatment process, and paper and pulp manufacturers which use LAS to remove impurities from the water used to make paper. See Consolidated Amended Complaint, In re: Liquid Aluminum Sulfate Antitrust Litigation, No. 16-md-2687, ECF No. 220 (“DP Complaint”). The DP Plaintiffs have asserted a single claim against Defendants pursuant to the Sherman Act. Id. The second group, the Indirect Purchaser Plaintiffs (“IP Plaintiffs”), represents a purported class of entities and persons who purchased LAS through intermediary distributors, resellers, retailers, wholesalers, and chemical supply companies. See Consolidated Class Action Complaint, In re: Liquid Aluminum Sulfate Antitrust Litigation, No. 16-md-2687, ECF No. 242 (“IP Complaint”). The IP Plaintiffs have asserted claims against the Defendants pursuant to several state antitrust and consumer protection statutes. Id.
B. The Alleged Conspiracy
The Plaintiffs allege that during the period from January 1, 1997 through at least February 2011 (the “Class Period”), Defendants and their co-conspirators entered into and engaged into a conspiracy to suppress and eliminate competition in the sale and marketing of LAS by agreeing to allocate customers and territories and fix, stabilize and maintain the price of LAS sold to direct purchasers and distributors in the United States. IP Complaint, ¶ 5. LAS is a water treatment chemical that removes impurities and other substances from water. DP Complaint, ¶ 58. Municipalities and private water companies routinely purchase LAS through a publically advertised bidding process. Id. ¶ 56. Plaintiffs allege that Defendants agreed to “stay away” from each other’s “historical” customers and territories. IP Complaint, ¶ 6. Plaintiffs allege that Defendants routinely met and communicated with each other to conspire and ensure compliance with the conspiracy:
Plaintiffs allege that GEO was an active participant in the conspiracy prior to, during, and following GEO’s emergence from Bankruptcy. Plaintiffs allege that the conspiracy originated following a “price war” that occurred in the “mid-1990s” between GenChem and GEO in which each company bid aggressively for the accounts of the other company. DP Plaintiffs’ Compl., ¶ 72. However, the “price war” ended in 1997 when executives from GEO and GenChem met and came to an agreement that they would no longer fight for each other’s customers. Id. ¶ 73. Important for purposes of this Decision, Plaintiffs assert that GEO reaffirmed and continued its participation in the conspiracy after in emerged from Bankruptcy from December 20, 2004, through at least 2011.
IP Plaintiffs’ Complaint contains the following allegations specific to GEO:
31.Around March 18, 2004, GEO filed a voluntary Chapter 11 petition in the United States District Court for the District of New Jersey. Effective December 20, 2004 GEO was discharged from bankruptcy under a plan of reorganization. GEO participated in the conspiracy alleged herein throughout the Class Period through the actions of many of GEO’s senior executives.
32. After its discharge from bankruptcy, GEO reaffirmed its participation in the conspiracy, in part by continuing to engage in the conduct described herein with respect to LAS. Specific post-discharge actions taken by GEO in furtherance of the conspiracy are alleged herein and are consistent with the actions taken by GEO in furtherance of the conspiracy are alleged herein and are consistent with the actions taken by all Defendants and GEO throughout the Class Period [from January 1, 1997 to present].
33. Regardless of whether GEO participated in the conspiracy throughout the Class Period or joined and/or reaffirmed membership in the conspiracy immediately after its discharge from bankruptcy, this complaint seeks to recover damages from GEO only for GEO’s post-discharge conduct, and in no way seeks to violate any orders by the Bankruptcy Court. GEO’s post-discharge conduct, however, renders it jointly and severally hable for all damages resulting from the conspiracy during the entire Class Period. Thus, by operation of law, the damages arising from GEO’s post-discharge conduct includes damages incurred by Plaintiffs and the Class prior to GEO’s discharge from bankruptcy. This complaint also seeks to recover damages from the remaining Defendants for GEO’s pre-dis-charge conspiratorial conduct. Therefore, Plaintiffs plead only a single class period as to all Defendants, but damages as to GEO are governed by the principles of conspiracy law and joint and several liability as noted above.
IP Pis’. Compl., ¶¶ 31-33.
DP Plaintiffs’ Complaint contains the following allegations specific to GEO:
31. On or about March 18, 2004, GEO filed a voluntary Chapter 11 petition in theUnited States Bankruptcy Court for the District of New Jersey. Effective December 20, 2004, GEO emerged from bankruptcy under a plan of reorganization. GEO participated in the conspiracy alleged herein throughout the Class Period through the actions of GEO’s senior executives. After emerging from bankruptcy, GEO reaffirmed its participation in the conspiracy through specific post-discharge actions taken by GEO in furtherance of the conspiracy, as alleged below. GEO also reaffirmed its participation in the conspiracy in part by continuing to engage in the conduct described herein with respect to [LAS].
DP Pis’. Compl., ¶ 31.
Plaintiffs further allege that Brian C. Steppig, who held high-level executive positions at GEO, including serving as National Sales Manager from 1997 through August 2006 and as Director of Sales and Marketing from August 2006 through at least 2011—was instrumental in the conspiracy, and on February 17, 2016 was indicted by the United States for his role in this conspiracy. TP Pis’. Compl., ¶¶ 41, 82, 92. Plaintiffs also describe the participation of Alex Avraamides, who held high-level positions at GenChem and GEO at different periods from 1994 to 2011, and Kenneth A. Ghazey, who held executive positions at GEO from early 2005 through the date the complaint was filed. IP Complaint Id. ¶¶43, 45. The Complaints also describe several alleged meetings between GEO and its competitors in 2005 and 2008,. as well as numerous post-discharge communications between GEO and competitors. Id. ¶¶ 92-96. For example, it is alleged that in 2005, Avraamides met with an alleged co-conspirator’s CEO, Milton Sundbeck, and confirmed the conspiracy by agreeing that it would “be[ ] better business for everyone to work together instead of competing and ruining the market price.” Id. ¶ 92(c). In addition, Plaintiffs allege that in mid-2008, GenChem employees met with Scot Lang and Brian Steppig from GEO as a “get to know you meeting” designed to introduce Gupta to senior staff at GemChem’s “friendly ‘competitor’” GEO, and to discuss unlawful market and supply agreements. Id. ¶ 92(d). IP Plaintiffs’ Complaint further alleges that GEO Defendants used internal communications and phrases therein as code for complying with the conspiracy during the Class Period. Id. ¶ 100-102. For example, on December 20, 2005, Ghazey sent Avraamides an email about their plans, which stated: “[Ljook forward to ... having some peace in the valley.” Id. ¶ 100. Thus, according to Plaintiffs, GEO repeatedly participated in post-discharge bid rigging and customer allocation from 2005 through at least 2011. Id. ¶¶ 99-116, 131—141, 146-148, 173.
C. Related Criminal Proceedings
On June 16, 2016, GEO plead guilty to “one count of violating 15 U.S.C. § 1 [ (the Sherman Antitrust Act)] in connection with a conspiracy to rig bids and allocate customers for, and to fix the price of, liquid aluminum sulfate supplied to municipalities and pulp and paper manufacturers in the United States from at least as early as 1997 and continuing until approximately February 2011." Plea Agreement, In re: Liquid Aluminum Sulfate Antitrust Litigation, No. 2:16-cr-00290, Taylor Decl. Ex. D. On that same date, Judge Linares conducted a Sentencing Hearing. See Hearing Transcript, Taylor Deck, Ex. A. At the Hearing Stuart Welburn, GEO’s outside counsel and designated corporate representative testified that during the period from at least 1997 through February 2011 “employees of GEO, while actively engaged in the management, direction, control or transaction of the [LAS] business on behalf .of GEO, knowingly and
On February 17, 2016, Brian C. Steppig, one of GEO’s key executives, was indicted by the United States for criminal violations of the Sherman Act. See Indictment, USA v. Opalewski, et al., 2:16-cr-00065 (JLL), ECF No. 1. The Indictment notes that at relevant times, from approximately 1997 to 2011 Mr. Steppig was employed by GEO and held positions in which he was responsible for the sale and marketing of water treatment chemicals, including LAS, Id. The Indictment alleges that Mr. Steppig and one Vincent J. Opalewski (“Opalewe-ski”), who was an employee of one of GEO competitors, “entered into and engaged in a combination and conspiracy to suppress and eliminate competition in the sale and marketing of aluminum sulfate by agreeing to rig bids and allocate customers for, and to fix, stabilize, and maintain the price of liquid aluminum sulfate sold to municipalities and pulp and paper companies in the United States.” Id. ¶ 14. The Indictment further alleges that Mr. Steppig “participated in the conspiracy from at least as early as 1998 and continuing until approximately February 2011.” Id. As of the date of the hearing, the criminal action against Mr. Steppig remained pending before the United States District Court for the District of New Jersey.
D. GEO’s Bankruptcy
On March 18, 2004 (the “Petition Date”) GEO along with its wholly owned subsidiary GEO Specialty Chemicals. Limited, filed voluntary petitions under chapter 11 of the Bankruptcy Code. In re GEO Specialty Chemicals Inc., No. 04-19148, ECF No. 1. In re Specialty Chemicals, Limited, No. 04-19149, ECF No. 1. (“GEO or Debtors”). By order dated March 18, 2004 the Chapter 11 cases were administratively consolidated. ECF No. 35. On May 17, 2004, GEO filed its schedules and statements of financial affairs. ECF Nos. 237, 238, 239, 240, 241, 242, 243, 245. GEO amended its schedules on July 6, 2004. ECF No. 427. Nowhere in GEO’s disclosures did it mention any potential conspiracy, or antitrust litigation or liability, or schedule any creditor with respect to the same.
The bar date for filing general unsecured proofs of claim against the debtors was September 2, 2004 (the “General Bar Date”). On April 20, 2004 and July 12, 2004, GEO through its claims and noticing agent, Trumbull Group LLC (“Trumbull”), provided notice of the General Bar Date to all known creditors reasonably ascertainable by GEO through a review of its books and records. See Affidavit of the Trumbull Group, LLC. ECF No. 454. On July 21, 2004, notice of the General Bar Date was published in The Wall Street Journal and the Newark Star-Ledger. See Affidavit by the Trumbull Group, LLC f/k/a Trumbull Associates, LLC, Regarding Publication of Debtor’s Notice of Bar Date for Filing Proofs of Claim or Interest, ECF No. 493.
On November 22,2004, the Debtors filed their Disclosure Statement With Respect to Third Modified Joint Plan of Reorganization Under Chapter 11, Title 11, United States Code of GEO Specialty Chemicals, Inc., and GEO Specialty Chemicals, Ltd., ECF No. 874, (the “Disclosure Statement”) and Third Modified Joint Plan of Reorganization Under Chapter 11, Title 11, United States Code of GEO Specialty Chemicals, Inc., and GEO Specialty Chem-ieals, Ltd., Debtors. ECF No. 887 (the “Plan”)
Section 12.10 of the Plan discharges GEO from all claims or potential claims as follows:
(a) ... Upon the Effective Date, the Debtors, and each of them, shall (i) be deemed discharged and released under Section 1141(a)(1)(A) of the Bankruptcy Code from any and all Claims, including, but not limited, demands and liabilities that arose before the Effective Date, and all debts of the kind specified in Section 502 of the Bankruptcy Code, whether or not (A) a Proof of Claim based upon such debt is filed or deemed filed under Section 501 of the Bankruptcy Code, (B) a Claim based upon such debt is Allowed under Section 502 of the Bankruptcy Code, or (C) the holder of a Claim based upon such debt accepted the Plan.
(b) As of the Effective Date, except as provided in the Plan or in the Confirmation Order, all Persons shall be precluded from asserting against the Debtors or the Reorganized Debtors, any other or further Claims, debts, rights, causes of action, liabilities, or equity interests relating to the Debtors based upon any act, omission, transaction, or other activity of any nature that occurred prior to the Effective Date. In accordance with the foregoing, except as provided in the Plan or the Confirmation Order, the Confirmation Order shall be a judicial determination of discharge of all such Claims and other debts and liabilities against the Debtors and termination of all GEO Interests, pursuant to Sections 524 and 1141 of the Bankruptcy Code, and such discharge shall void any judgment obtained against the Debtors at any time, to the extent that such judgment relates to a discharged Claim or terminated Interest.
Section 12.11 of the Plan provides for an injunction against any attempt to collect the discharged claims:
(a) Except as provided in the Plan or in the Confirmation Order, as of the Effective Date, all Persons that have held, currently hold, may hold, or allege that they hold, a Claim or other debt or liability that is discharged ... pursuant to the terms of the Plan, are permanently enjoined from taking any of the following actions against the Debtors, the Reorganized Debtors, and their respective subsidiaries or their property on account of any such discharged Claims, debts, or liabilities or terminated Interests or rights, (i) commencing or continuing, in any manner or in any place, any action or other proceeding; (ii) enforcing, attaching, collecting, or recovering in any manner any judgment, award, decree, or order; (iii) creating, perfecting or enforcing any lien or encumbrance; (iv) asserting a setoff, right of subrogation, or recoupment of any kind against any debt, liability or obligation due to the Debtors or the Reorganized Debtors; or (v) commencing or continuing any action, in each such case in anymanner, in any place, or against any Person that does not comply with or is inconsistent with the provisions of the Plan.
On January 13, 2005, GEO served notice of the Confirmation Order via U.S. Mail on Debtors’ known creditors. ECF No. 1073. The Notice of Confirmation included notice that anyone asserting a claim against the Debtors that arose subsequent to March 18, 2004 (the Petition Date) but prior to December 31, 2004 (the Effective Date of the Plan) was required to file its claim on or before February 14, 2005 (the “Administrative Bar Date”). Notice was also published in The Wall Street Journal on January 17, 2005 and in- the Newark Star-Ledger on January 19, 2005, 'ECF No. 1082. The final decree was issued and GEO’s bankruptcy proceeding was closed on June 28, 2006. ECF No. 1315. It is undisputed that GEO’s Plan and other filings in the bankruptcy case did not disclose antitrust violations or potential antitrust claimants.
PROCEDURAL HISTORY
On October 21, 2016, the Reorganized Debtors filed the instant Motion to Reopen the Chapter 11 Case for the Limited Purpose of Enforcing the Plan’s Discharge and Injunction. Motion to Reopen, In re GEO Specialty Chemicals, Inc., et al., Case No. 04-19148, ECF No. 1320. In response to the Motion, on November 8, 2016, the DP Plaintiffs filed a Motion to Withdraw the Reference to the District Court. ECF No. 1324.
On January 6, 2017, Judge Linares issued an Opinion and Order denying both Motions. (“Withdraw Opinion”) In re Geo Specialty Chemicals, Inc., Case No. 04-19148, ECF No. 1350. The District Court noted that reference withdrawal can be either mandatory or permissive. Id. at *4 (citing 28 U.S.C. § 157). With respect to mandatory withdrawal, the Court first found that the question of whether Plaintiffs’ claims are dischargeable constitutes a “core” proceeding within the meaning of 28 U.S.C. §§ 157(b)(2)(I) and (J). Id. at * 4-5. The Court noted that Bankruptcy Court is not being asked to decide whether GEO is jointly and severally liable under anticon-spiracy law, rather, “the Bankruptcy Court has only been asked to review whether the movants’ claims for damages accrued prior to the effective date of the Plan of Reorganization and therefore barred. Id. at 5. Thus, the Court concluded that mandatory withdrawal did not apply. Id. Second, the Court found that permissive withdrawal was not appropriate in this Case. Id. at 6. In reaching this conclusion, the Court noted that “[t]he issue to be decided by the Bankruptcy court is the interpretation and application of its own Discharge Order. Such a determination is a core proceeding which is best left for the Bankruptcy Court’s determination. Id. at 8. Accordingly, the Court denied Plaintiffs’ Motions to withdraw the reference. On January 18, 2017, this Court entered an Order scheduling a Hearing on GEO’s Motion to Reopen. ECF No. 19.
GEO’s Motion to Reopen seeks entry of an order (i) reopening its Chapter 11 Bankruptcy Case, (ii) enforcing the Chapter 11 plan discharge and injunction ordered by this Court in its Order Confirming the Third Modified Joint Plan of Reorganization, (iii) directing dismissal of all claims asserted by plaintiffs in the Consolidated Amended Complaint in In re Aluminum Sulfate Antitrust Litigation, Civil Action No. 16-md-26S7 (JLL)(JAD), pending in the United States District Court for the District of New Jersey, and similar claims asserted by plaintiffs in other jurisdictions, which arose or are attributable to conduct or events occurring prior to December 31, 2004, the Effective Date of GEO’s Third Modified Joint Plan of Reorganization. Motion to Reopen, supra, ECF No. 1320, ¶ 21.
First, GEO argues that cause exists to reopen its Chapter 11 Case pursuant to 11 U.S.C. § 350(b) of the Bankruptcy Code. Id. ¶22, GEO notes that Section 350(b) authorizes a bankruptcy court to reopen a case in order to “accord relief to the debt- or, or for other cause.” Id. GEO asserts that such relief is especially appropriate when necessary to enforce prior orders of the bankruptcy court and to resolve disputes regarding the impact of such orders. Id. (citing Texaco Inc. v. Sanders (In re Texaco Inc.),
Second, GEO argues that all antitrust claims that arose prior to December 31, 2004 (the “Effective Date” of GEO’s Plan) were discharged by GEO’s Plan and Confirmation Order. Id. ¶ 25 (citing Confirmation Order, ¶3; Plan of Reorganization, §§ 1.14 and 12,10). GEO cites to the definition of “Claim” under § 101(5) of the Bankruptcy Code and as used in the Plan (“claim” means: [any] right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured:) as well as the discharge provisions contained in the Confirmed Plan in accordance with Sections 524 and 1141(d)(1) of the Bankruptcy Code. Id, ¶¶ 26-28. GEO argues that federal antitrust claims accrue at the time the anti-competitive acts are committed. Id. ¶29 (citing Zenith Radio Corp. v. Hazeltine Research, Inc.,
Third, GEO argues that Plaintiffs do not have a basis to seek relief from this Court pursuant to Fed. R, Civ. P. 60(b) to pursue pre-confirmation claims. Id. ¶ 35. GEO asserts that an order confirming a plan is a “final order” and, as such, the appropriate remedy for obtaining relief from its-provisions is to seek relief under Rule 60(b), which is made applicable to bankruptcy cases by Fed. R. Bankr. P. 9024. Id. (citing In re Midlands Utility, Inc.,
Fourth, GEO asserts that the only basis for this Court to afford Plaintiffs relief would be a finding that Plaintiffs were not provided notice of the Bar Dates for filing proofs of claim, or the existence of potential antitrust claims against GEO, thus depriving them of their constitutional right to due process. Id. ¶ 41 (citing In re Grossman’s Inc.,
GEO argues that here, known creditors were notified of the actual bar dates. Id. ¶ 52. GEO further asserts that unknown creditors received notice of the bar dates through publication sufficient under Mullane. Id. ¶¶ 45, 52-55 (citing Mullane,
DP Plaintiffs’ Opposition
On November 8, 2016, DP Plaintiffs filed Opposition to GEO’s Motion to Reopen.
DP Plaintiffs’ took the position that the District Court was the more proper forum to address the Motion to Reopen because GEO had already filed a similar motion to dismiss in the District Court based upon the discharge injunction; GEO’s alleged co-conspirator, General Chemical Corporation had also filed its own motion to dismiss based upon the same issue; and because the District Court presided over GEO’s criminal case and is presiding over other related criminal proceedings including a criminal action against Brian Step-pig, an executive of GEO. Id. at 8-9.
With respect to the merits, DP Plaintiffs argue that the discharge injunction does not apply to their antitrust claims because GEO pled guilty to participating in a criminal bid-rigging and price-fixing conspiracy involving the sale of liquid aluminum sulfate from at least as early as 1997 and continuing until approximately February 2011, more than six years after GEO emerged from bankruptcy. Id. at 1, 10. DP Plaintiffs assert that under the Sherman Act a participant in an antitrust conspiracy is jointly and severally liable for the acts of each co-conspirator. Id. at 10 (citing In re Wellbutrin,
DP Plaintiffs argue that Kleen Products LLC v. Int’l Paper Co.,
Second, DP Plaintiffs argue that claims as to GEO’s pre-bankruptcy participation in the conspiracy were not discharged because class members did not receive constitutional due process. Id. at 14. DP Plaintiffs assert that at no time during GEO’s bankruptcy proceedings did it disclose in its bankruptcy proceedings, in its schedules of assets and liabilities, its claims bar date notice, its disclosure statement or its plan of reorganization that it had been engaged in a criminal antitrust conspiracy since 1997 and continued to engage in such conspiracy during the bankruptcy case. Id. DP Plaintiffs contend that because GEO failed to provide constitutionally adequate notice to the victims of its crime, it cannot use the Plan of Reorganization and the Confirmation Order to block Plaintiffs from seeking damages. Id. (citing Grossman’s,
DP Plaintiffs acknowledge that while a vast, open-ended investigation may not be required to ascertain known creditors, (citing Chemetron,
DP Plaintiffs contend that GEO’s suggestion that those individuals actually administering the bankruptcy case had no knowledge of the antitrust conspiracy ignores the requirements under the Bankruptcy Code and applicable case law. Id. at 19, DP Plaintiffs contend that pursuant to 11 U.S.C. § 521 and Fed R. Bankr. P. 1007(b), the debtor is required to disclose all known liabilities, including known potential liabilities, by listing such liabilities in debtor’s schedules of assets and liabilities. Id. at 19 (citing DePasquale v. Morgan Stanley Smith Barney, LLC,
Third, DP Plaintiffs argue that GEO’s Plea Agreement judicially estops GEO from now asserting a bankruptcy defense to claims arising prior to the Effective Date of its Plan. Id. at 23. DP Plaintiffs assert that the “basic principle of judicial
DP Plaintiffs note that in the Plea Agreement GEO admitted that it violated Section 1 of the Sherman Act “from at least as early as 1997 and continuing until approximately February 2011.” Id. at 23 (citing Plea Agreement, Ex. D ¶ 1). DP Plaintiffs state that as part of the Plea Agreement, GEO agreed to a sentencing recommendation that did not include a restitution order, even though GEO understood that the District Court could order GEO to pay restitution. Id. DP Plaintiffs assert that in support of that recommendation, GEO pointed to “the availability of civil causes of action, in the District Court of New Jersey and elsewhere, which potentially provided for a recovery of a multitude of actual damages.” Id (citing Ex. D ¶ 16). DP Plaintiffs assert that the Plea Agreement did not include any reservation of rights to assert a bankruptcy discharge defense in connection with obtaining a recommendation not to impose restitution. Id. at 23. Further, DP Plaintiffs assert that at the Sentencing Hearing GEO did not reveal to the District Court that it intended to raise a bankruptcy discharge defense in subsequent civil litigation. Id. at 24. Instead, DP Plaintiffs assert that GEO’s Counsel, James H, Mutchnik, Esq. of Kirkland & Ellis, LLP, represented to the District Court that the recommended sentence was designed to leave GEO with “sufficient funds” available to “make sure that any injuries that [victims] suffered are taken care of’ through civil litigation. Id. (citing Plea Hearing Transcript, 22:20-22). Thus, DP Plaintiffs contend that by approving a Plea Agreement that did not constitute a restitution order, the District Court and GEO understood that funds would be paid to compensate victims through civil litigation. Id. at 24. Therefore, DP Plaintiffs argue that GEO has taken irreconcilable positions by representing to the District Court that “any injuries that [victims] suffered would be compensable through civil litigation, while now arguing that as a result of the bankruptcy discharge it cannot be liable for damages arising during the first seven years of the conspiracy. Id. at 24-25.
DP Plaintiffs further contend that there is a rebuttable presumption of bad faith on the part of GEO because it benefited from the misrepresentation to the District Court by receiving a generous sentencing involving no restitution. DP Plaintiffs assert that estoppel is appropriate here because it is narrowly tailored to GEO’s misconduct. DP Plaintiffs note that in similar circumstances, courts have held that a debtor is estopped from raising a bankruptcy discharge
IP Plaintiffs’ Opposition
On November 8, 2016, IP Plaintiffs filed Opposition to GEO’s Motion to Reopen. IP Plaintiffs’ Opposition Brief, In re GEO Specialty Chemicals, Inc., et al., Case No. 04-19148, EOF No. 1327. Initially, IP Plaintiffs argue that the issues raised in the instant motion were placed before Judge Linares in the.Antitrust Litigation through motions to dismiss filed by both GEO and one of GEO’s .• co-defendants, GenChem, who like GEO, wept through a Chapter 11 reorganization, and seek a determination from Judge Linares that said parties are not liable for any pre-discharge conduct. As such, to avoid inconsistent rulings and encroachment on the District Court’s jurisdiction, this Court should exercise its broad discretion and decline to entertain GEO’s motion. Id. at 3.
IP Plaintiffs further argue that this Court should not reopen GEO’s bankruptcy case because GEO cannot gain any substantive relief through its Motion. Id. at 11. IP Plaintiffs assert that the antitrust claims were not contemplated by the Plan or Confirmation Order and have no place in the bankruptcy proceeding. IP Plaintiffs further assert that if the antitrust claims are pre-petition claims, which IP Plaintiffs dispute, since IP Plaintiffs were not afforded adequate notice of the Plan or Confirmation Order, their claims cannot be enjoined. Accordingly, GEO cannot receive the relief it seeks—enforcement of the discharge injunction against class plaintiffs by reopening this case. Id. at 11. IP Plaintiffs’ state that reopening the case at this time would be “futile.'®” Id. (citing Janocha, No. 06-20191,
Second, with respect to the merits.of enforcing the discharge injunction, IP Plaintiffs argue that its claims against GEO are post-confirmation claims which cannot be affected by the Plan, Confirmation Order, or bankruptcy case. Id. at 14. IP Plaintiffs contend that if a claim arises after confirmation of a plan in bankruptcy, that claim is not discharged. Id. at 15 (citing Kleen Prods.,
IP Plaintiffs argue that GEO reaffirmed its participation in the conspiracy immediately after its December 2004 bankruptcy discharge, as evidence by the allegations set forth in the Consolidated Complaint. They argue that since GEO undertook overt acts to reaffirm and reconstitute its participation in and furtherance of the conspiracy post-confirmation, the claims asserted against GEO in the Antitrust Litigation accrued post-confirmation, resulting in GEO’s joint and several liability on those claims for all acts connected with the antitrust conspiracy. Id. at 16.
Third, IP Plaintiffs argue that GEO’s argument concerning Rule 60 should be rejected and that the IP Plaintiffs do not need to seek relief under Rule 60 to proceed in the Antitrust Litigation, Id. at 17. IP Plaintiffs argue that they would only need to seek relief under Rule 60 if they intended to seek relief from the Confirmation Order; however, because the antitrust claims were not contemplated under the Plan and are not enjoined by the Confirmation Order, IP Plaintiffs have no need to seek such relief. Id.
Fourth, IP Plaintiffs argue that the publication notice by GEO was ineffective as to the Antitrust Class Plaintiffs because GEO has admitted that it knew about the conspiracy it originated, in which it actively participated, and from which it benefit-ted, GEO either knew or could very easily have ascertained who was injured by its conspiratorial conduct; therefore, the notices did not satisfy due process requirements. IP Plaintiffs assert that the class plaintiffs in the Antitrust Litigation were entitled to actual notice because GEO knew about their claims and notice by publication was wholly inadequate. Id. at 18. IP Plaintiffs note that “[inadequate notice [ 3 ‘precludes discharge of a claim in bankruptcy.’ ” Id. (citing Wright v. Corning,
GEO’s Reply to Plaintiffs’ Opposition
On December 5, 2016, GEO filed a Reply Brief in further support of its Motion to Reopen. Reply Brief, In re GEO Specialty Chemicals, Inc., et al., Case No. 04-19148, ECF No. 1345.
First, GEO argues that the Bankruptcy Court is the appropriate forum for adjudicating the issues concerning GEO’s Plan and Confirmation Order. Id. at 2. GEO argues that while Plaintiffs contend that antitrust law establishes joint and several liability for the acts of co-conspirators, and the issue of whether their pre-confirmation damage claims were discharged should be decided by the Antitrust Court, the issue of when Plaintiffs’ claims arose based upon GEO’s alleged joint and several liability for the acts of its co-conspirators is purely one of bankruptcy law, most appropriately decided by the Bankruptcy Court because it goes to the heart of the bankruptcy process and policies underlying a reorganized debtor’s right to a fresh start. Id. at 3 (citing Lear Corp. v. Lacava (In re Lear Corp.), No. 12 Civ.2626 (KFB),
Second, GEO argues that assuming Plaintiffs’ interpretation of antitrust law is correct, it is not the timing of participation in a conspiracy,, but rather the fact of participation, that establishes joint and several liability. Id. at 2 (citing In re K-Dur Antitrust Litig.,
Third, GEO contends that the notice it provided satisfied the due process requirements as to the Antitrust Plaintiffs. Id. at 8. GEO asserts a claimant’s right to receive actual notice of the bankruptcy bar date turns on whether the claimant is deemed to be “known” or “unknown” at the time of the bankruptcy proceeding. Id. at 9. GEO acknowledges that “known” claimants are entitled to receive actual notice of a proof of claim bar date, and that notice by publication is sufficient to satisfy the due process rights of “unknown” claimants. Id. (citing Chemetron,
Fourth, GEO argues that this Court should reject Plaintiffs’ argument that GEO is judicially estopped from asserting a bankruptcy defense to claims arising pri- or to the Effective Date of its Plan. Id. at 14. GEO contends that there is nothing in the Plea Agreement or the comments made by GEO’s counsel or its corporate representative at the Sentencing Hearing that support the imposition of judicial es-toppel. Id. Rather, GEO contends that the Provisions of the Plea Agreement, and any comments made during the Sentencing Hearing, represent nothing more that GEO’s awareness of the possibility that it may face financial exposure in the instant civil antitrust cases. Id. GEO argues that the cases cited by the Plaintiffs are distinguishable. Id. at 15-16 (distinguishing Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. GMC,
Lastly, GEO disputes Plaintiffs’ remaining arguments with respect to reopening the bankruptcy case. Id. at 17. GEO contends that the length of time the case has been closed does not prevent courts from granting relief when the relief sought is justified by the underlying facts. Id. (citing e.g., Travelers Indemnity Co. v. Bailey,
Finally, GEO asserts that reopening the case would not be futile because Plaintiffs’ contention that they are only asserting post-confirmation claims is without merit as Plaintiffs’ claims seek recovery of pre-confirmation damages arising from GEO’s alleged joint and several liability for the acts of its co-conspirators, which claims existed at the time GEO’s Plan was confirmed and have been fully discharged. Reopening the Chapter 11 case will allow the Bankruptcy Court to provide GEO with the relief which it is entitled under the Plan, Confirmation Order, and Section 524(a)(2) of the Bankruptcy Code. Id. at 18.
February 28, 2017 Hearing
This Court conducted Oral Argument on the Motion to Reopen on February 28, 2017.
i GEO’s Arguments
GEO identified three main issues to be decided by this Court: (1) whether to reopen the case so that this Court can determine the scope of the 2004 discharge; (2) whether Plaintiffs’ claims against GEO for pre-confirmation damages caused by pre-confirmation acts of the antitrust co-conspirators are pre-confirmation claims discharged by GEO’s plan; and (3) if Plaintiffs’ claims are pre-petition claims, whether GEO’s process for notifying creditors of the bankruptcy and the claims bar date comport with the constitutionally required principles relating to due process such that Plaintiffs’ claims were, in fact, discharged by the Plan and Confirmation Order.
GEO admitted that its Plan and Disclosure Statement did not deal with any antitrust claims and that they were not addressed in any way during the course of the bankruptcy proceedings. However, GEO stated that such claims were unknown to the senior officers of GEO and those responsible for administering the bankruptcy case and the proofs of claim program. GEO asserted that appropriate notice of bar dates was provided to unknown antitrust claimants through publication notice in the Wall Street Journal and Newark Star Ledger.
GEO argued that the antitrust claims fall within the meaning of “claim” as that
Next, GEO discussed the Kleen case. GEO conceded that Kleen had similar facts and that the Seventh Circuit was deciding an issue of first impression. In that case involving a class action, the Court granted a motion to certify a class, which included the holders of pre-confir-mation damages claims based on tjie Debtor’s joint and several liability for pre-confirmation acts of the Debtor’s co-conspirators, based upon its finding that the debtor had rejoined the antitrust conspiracy following its emergence from chapter 11, thereby triggering joint and several liability for pre and post confirmation acts of the co-conspirators. GEO argued, however, that Kleen was wrongly decided and that this Court should not follow it. First, GEO stated that the decision was based on a false premise that , debtor rejoined the conspiracy following its emergence from bankruptcy. GEO asserted that, as in this case, the debtor in Kleen could not have rejoined a conspiracy because it never withdrew from the initial conspiracy which began pre-confirmation. Second, GEO asserts that Kleen incorrectly determined that the debtor should not receive a “windfall” at the expense of other defendants who did not file for bankruptcy. GEO argued that this finding amounted to a “policy determination” that was not in the Kleen court’s purview to make. GEO further argued that this determination cannot be reconciled with the definition of the term “claim” as it is used in the Bankruptcy Code. GEO stated that if Congress wanted to preclude a reorganized debtor from getting the benefit of a discharge for pre-confirmation damages based on joint and several liability, then it could have provided for such an exception to discharge in the Bankruptcy Code. GEO noted that Congress has provided several such exceptions to discharge for corporate Chapter 11 debtors in Section 1141(d)(6) of the Bankruptcy Code. GEO argued that it is not the role of the Court to legislate, but rather to apply the plain meaning of the terms used in the Bankruptcy Code. Thus, GEO concluded that the antitrust conspiracy claims were pre-confirmation claims in the Kleen case and are likewise pre-confirmation claims in this case.
Next, GEO turned to its second substantive point-its notice procedures satisfied
Lastly, GEO addressed Plaintiffs’ argument that judicial estoppel prevented GEO from receiving the benefit of the discharge as to these claims based on statements made by representatives of GEO to Judge Linares at the criminal Sentencing Hearing. GEO noted that judicial estoppel requires that there be an irreconcilable conflict between statements made in a previous proceeding and the position that is now being taken. GEO argued that there is no irreconcilable conflict in this case because all that GEO’s representative said to Judge Linares at the sentencing hearing was that GEO had financial stress and that it was necessary for it to marshal its resources to be able to deal with the civil litigation that had been filed at the time. GEO argues that there was nothing in the statements made to Judge Linares to indicate that GEO was waiving any of the rights or benefits
At the February 28, 2017 hearing GEO acknowledged that with respect to post-confirmation claims for damages if in fact it is ultimately found to be liable and damages were incurred post-confirmation— that is after the Effective Date of the Plan, December 31, 2004-such claims are not within the bankruptcy discharge.
ii. DP Plaintiffs ’ Arguments
Counsel for DP Plaintiffs introduced the issue in this case as “Can a debtor that fails to disclose its liabilities use the discharge to claim notice to unknowing creditors adversely affected by that lack of notice?” DP Plaintiffs argue that the answer is “No.” DP Plaintiffs assert that GEO, in the course of its bankruptcy, hid from this Court and its pre-confirmation creditors, its participation in an antitrust conspiracy that started in 1997, continued through the bankruptcy case, and that went on for another seven years after-wards. DP Plaintiffs assert that the policy that honest debtors are entitled to a fresh start does not apply in this case.
In their first point, DP Plaintiffs asserted that GEO is seeking an order from this Court declaring all antitrust claims which arose or are attributable to conduct or events occurring prior to the Effective Date of this Plan, have been discharged under Section 1141(d), and also seems to be suggesting that if there are damages on a joint and several liability theory, those claims are discharged even if the basis for such liability is post-confirmation conduct. DP Plaintiffs argued that under antitrust law, a claim arises when the act of the misconduct occurs and so every single time a conspirator engages in misconduct, upon every single act, a new claim is created. Therefore, DP Plaintiffs assert that each antitrust conspiratorial act committed by GEO gave rise to a new claim, and to the extent GEO continued to engage in conspiratorial conduct following the discharge, if the injury occurred post-effective date, it is not a claim affected by the bankruptcy discharge. DP Plaintiffs also acknowledged that Frenville governs the analysis in this case. DP Plaintiffs noted that in Wright v. Owens Coming, the Third Circuit determined that if a claim was not a bankruptcy claim under Frenville, it is not discharged even under Grossman. DP Plaintiffs asserted that while it disagrees with GEO’s articulation of antitrust law, the impact of post-confirmation antitrust liability and the consequences of antitrust law, these are issues properly before the District Court and that this Court is only considering the effect of the Discharge. This Court must only decide whether the discharge applies to GEO’s prepetition conduct.
Next, DP Plaintiffs turned to the due process issue. First, DP Plaintiffs argued that Fed. Rule Civ. Proc. 60 does not apply here because Plaintiffs are not attempting to undo or alter the Plan; rather, they are arguing that they are not bound by the Plan because due process was not satisfied. DP Plaintiffs assert that it is GEO’s burden to establish due process was satisfied in accordance with the Mullane case, which requires “notice reasonably calculated under the circumstances to apprise interested parties of the pendency of the action...”
Third, DP Plaintiffs addressed the policy argument that GEO raised with respect to the Bankruptcy Code’s fresh start policy. DP Plaintiffs argue that the constitutional underpinnings of due process override the fresh start policy in this case because GEO actively concealed a conspiracy from its creditors. DP Plaintiffs urge that this case is the most extreme version of the due process considerations because it is the debtor hiding the liabilities and not allowing creditors to even have an opportunity to determine they have claims. DP Plaintiffs
Lastly, DP Plaintiffs argued that judicial estoppel applies because GEO’s counsel represented to Judge Linares at the Sentencing Hearing that it should receive a smaller fine because it needed to pay civil litigants, while now GEO asserts that half of Plaintiffs’ claims are barred by the bankruptcy discharge.
iii. IP Plaintiffs ’ Arguments
IP Plaintiffs adopted the arguments made by the DP Plaintiffs and asserted that the IP Plaintiffs as downstream users of the products sold by GEO to the DP Plaintiffs and then repacked and sold in some form to the IP Plaintiffs, were equally harmed. Regarding notice, the IP Plaintiffs urged that GEO knew who they were selling the product to, and could determine who their purchasers were selling to, the end purchasers. The IP Plaintiffs noted that their Complaint plead that the conspiracy utilized by GEO applied not only to purchasers who bought directly but also to “resellers” of the product, citing ¶ 147 of the IP Plaintiffs’ Complaint. IP Plaintiffs agreed with the DP Plaintiffs on all points, but also emphasized that GEO is attempting to utilize the discharge injunction to not just discharge pre-confirmation claims but to inoculate itself from future behavior that GEO admits was a criminal activity. IP Plaintiffs highlight the fact that GEO admitted to engaging in a criminal conspiracy before coming to the bankruptcy court and that they continued that conspiracy through the bankruptcy proceedings and post-confirmation. IP Plaintiffs asserted that even if this Court were to accept GEO’s position that proper notice was given, the Court should rule that nothing in the Confirmation Order or Discharge curtails the remedies available to both direct purchasers and indirect purchasers for GEO’s post-discharge criminal conduct.
GEO’s Response
In reply, GEO first addressed IP Plaintiffs’ argument that GEO is attempting to inoculate itself from post-bankruptcy misconduct. GEO clarified that it is not arguing that it should be relieved from post-confirmation damages; rather, its. argument is limited to damages that were suffered as a result of actions that were taken by GEO or by co-conspirators pre-confir-mation and subject to discharge. GEO stated that the “baseline” for determining which injuries fall under the discharge is the Effective Date of the confirmed plan. Second, GEO addressed the argument that Brian Steppig’s knowledge should be imputed to GEO for purposes of establishing GEO’s criminal liability. GEO argues that although Brian Steppig was covered by the Debtor’s key employee retention program, he is only one employee and as such, his knowledge alone, which knowledge was not disclosed to senior management, is insufficient to cause GEO to lose the benefit of its discharge. Further, GEO asserts that there is no collateral estoppel effect here with respect to GEO’s criminal liability because the issue in this case involves different issues. The issue here is whether GEO should lose the benefit of its discharge with respect to these particular
Next, GEO addressed DP Plaintiffs’ argument that every new overt anticompeti-tive act gives rise to a new cause of action. GEO argues that this principle applies to the running of the statute of limitations, which has nothing to do with the accrual of a claim for purposes of bankruptcy law. GEO asserts that a claim for joint and several liability arises when the defendant first participates in the conspiracy. GEO also argued that Polyurethane does not apply to the issue of the discharge under a confirmed plan because that case dealt with a Section 363 sale. Lastly, GEO reasserted its point that the people at GEO responsible for administering the proof of claim program went through the process of carefully reviewing GEO’s books and records and did not discover the existence of these claims, so such claims are unknown claims and notice by publication satisfied the due process requirement. GEO further noted that the IP Plaintiffs were not customers of GEO and are suggesting that GEO should have been able to determine, based on who they sold the product to, who &e direct purchasers were selling the product to, knowledge that persons responsible for the proof of claim program at GEO did not have.
District Court July 20, 2017 Opinion
On July 20, 2017, while this decision was pending, the District Court issued an Opinion and Order on several motions in the Antitrust Litigation. In re Liquid Aluminum Sulfate Antitrust Litigation, No. 16-md-2687(JLL),
The Court disagrees with Movants [GEO and GenChem] that Plaintiffs’ various complaints make allegations that would require this Court to consider Plaintiffs unknown creditors. Indeed, Plaintiffs have pled that any of the victims of the alleged conspiracies would be the purchasers of [LAS]. (DPP Compl. ¶ 5). Said differently, Defendants knew that Plaintiffs were creditors since Plaintiffs make up the [LAS] market Defendants allegedly conspired to monopolize. (Id.). Defendants had a duty to make a reasonable and diligent inquiry regarding all possible known creditors and not merely rely on their books and records. See, e.g., In re XO Commc’ns, Inc.,301 B.R. 782 , 793-94 (Bankr. S.D.N.Y. 1995) (“Reasonable diligence in fettering out known creditors will, of course, vary in different contexts ... A debtor is obligated ... to undertake more than a cursory review of its records and files to ascertain its known creditors. Known creditors are defined as creditors that a debtor knew of, or should have known of, when service notice of the bar date.” (emphasis added).
As discussed, Defendant Reichl has already pled guilty to his participation in the alleged conspiracy. (DPP Compl. ¶¶ 7, 35). Moreover, Defendants Steppig and Opalewski have both been indicted for their alleged participation in the alleged conspiracy. (See Cr. No. 16-65). Indeed, Plaintiffs have sufficiently pled that Defendant GEO and GCC Defendants were aware of their alleged conspiracy, took overt steps to keep the conspiracy a secret, and failed to provide all Plaintiffs with sufficient notice regarding their Bankruptcies consistent with due process. (DPP Compl. 4-6; IPP Compl. 24-31; Shreveport Compl. 26-29; FI. Compl. 14-26). Hence, the Court is satisfied that Plaintiffs have all shown, at this juncture, that Defendants knew or should have known that Plaintiffs were known creditors. Because Plaintiffs fall under the definition of known creditors under the Code, they were entitled to actual notice. All Plaintiffs have sufficiently pled that not a single one of them was ever apprised of the two Bankruptcy proceedings. Thus, the Court concludes that the discharge orders will not bar Plaintiffs’ ability to recover damages prior to the effective date of said orders from Defendant GEO and GCC Defendants.
Id.
The District Court noted that Brian Steppig was indicted for his alleged participation in the conspiracy and that Plaintiffs “sufficiently pled that Defendant GEO and [GenChem] were aware of their alleged conspiracy, took overt steps to keep the conspiracy a secret, and failed to provide all Plaintiffs with sufficient notice regarding their Bankruptcies consistent with due process.” Id.
Lastly, the District Court found that even if the Court were to conclude that due process was satisfied, “Defendants’ alleged post-discharge conduct subjects them to joint and several liability for the entirety of the alleged conspiracy.” Id. at *13 (citing In re K-Dur Antitrust Litig.,
The Court here noted:
Moreover, even if this Court were to conclude that due process was satisfied, which it does not, Defendant GEO and GCC Defendants’ alleged post-discharge conduct subjects them to joint and several liability for the entirety of the alleged conspiracy. This is because a party is jointly and severally liable for all the damages caused from the beginning ofthe conspiracy until its conclusion. In re K-Dur Antitrust Litig., 338 F.Supp.2d 517 , 538-39) (“Although Plaintiffs’ complaints allege that [defendant] joined the conspiracy ... after it was formed, a co-conspirator is liable for all acts committed in furtherance of a conspiracy, regardless of when it entered the conspiracy.”)(citing Lefco v. United States,74 F.2d 66 , 68-69 (3d Cir. 1934)). A party who withdraws from a conspiracy and later rejoins it remains jointly and severally liable for all of the conspirators’ conduct. See Hyde v. United States,225 U.S. 347 , 370-72,32 S.Ct. 793 ,56 L.Ed. 1114 (1912).
Both Bankruptcy Defendants allegedly continued to be involved in the conspiracy during the Bankruptcy periods and thereafter. For example, in 2006 GCC Defendants allegedly won an account that historically belonged to Defendant GEO. Thereafter, top executives at both companies agreed to let Defendant GEO take one of GCC Defendants’ accounts of the same size to “mak[e] the playing field even again.” (DPP Compl. ¶ 111). Another example took place in 2009 when GCC Defendants submitted a low bid for an account held by a distributor that Defendant GEO supplied, but said bid was withdrawn when Defendant Steppig complained to Defendant Gupta. (DPP Compl. ¶ 110). The various Defendants also continued to have private meetings and conference calls far after the Bankruptcies were over. (DPP Compl. ¶¶ 76-80). Accordingly, even if the Bankruptcies precluded recovery of damages for pre-discharge conduct, the Bankruptcy Defendants’ post-discharge conduct renders them jointly and severally liable for the entire conspiracy. This is because the Defendants continued to allegedly participate in the conspiracy. By doing so Defendant GEO and GCC Defendants subjected themselves to potential liability for the entire length of the conspiracy and for any and all damages supposedly caused by their co-conspirators. Thus, Defendant GEO and GCC Defendants’ Motions to Partially Dismiss based on their Bankruptcies (ECF Nos. 244, 251) are hereby denied.
Id.
Following the issuance of the July 20, 2017 Opinion, this Court directed the parties to submit a response with respect to how the Opinion affects GEO’s pending Motion to Reopen before this Court.
IP Plaintiffs’Letter
On August 1, 2017, IP Plaintiffs filed a Letter in response to the District Court’s July 20, 2017 Opinion. ECF No. 1365. IP Plaintiffs take the position that Judge Li-nares’s finding that Plaintiffs’ claims are not subject to the discharge order obviates GEO’s Motion to Reopen and that this Court should deny the motion. Id. at 1 (citing In re Janocha,
GW’s Letter
On August 2, 2017, GEO filed its Letter in response to the Opinion. EOF No. 1366. GEO takes the position that this Court should proceed to issue its opinion and order deciding the issues before it notwithstanding the District Court’s July 20, 2017 Opinion.
First, GEO argues that the District Court’ Opinion has no effect on the issues pending before this Court, GEO argues that the District Court’s order denying GEO’s motion to dismiss claims asserted in the Antitrust case has no preclusive effect on this Court as an order denying a motion to dismiss is an interlocutory order. Id. at 2 (citing Anderson v. Comm’r,
Second, GEO argues that the District Court’s Opinion did not address the issue of whether Plaintiffs are required to seek relief from the Confirmation Order under Rule 60(b). Id. at 3. GEO asserts that this issue was not raised before the District Court because only those affirmative defenses established from the face of the pleadings themselves may be raised on a motion to dismiss. Id. (citing Rycoline Prods. v. C &W Unlimited,
Next, GEO takes the position that this Court should independently decide the issue of notice because the District Court did not make any factual findings on this issue. GEO states that because the District Court was addressing the issue on a motion to dismiss, there was no opportunity for GEO to develop the record or a need
GEO states that should either side file an appeal of this Court’s decision on GEO’s Motion to Enforce, “factual findings of this Court will form the basis of further proceedings in connection with such an appeal.” GEO contends that a District Court reviewing said findings on appeal would do so under a “clearly erroneous” standard, which is “significantly deferential to the findings of the bankruptcy court. Id. at 4 (citing Concrete Pipe and Prods. v. Construction Laborers Pension Trust,
Lastly, GEO argues that the District Court’s statement that GEO may be liable for previously discharged claims on the basis of joint and several liability is not binding upon this Court because it was dictum. Id. at 5 (citing Friedman’s Liquidating Trust v. Roth Staffing Cos. LP (In re Friedman’s Inc.),
On August 3, 2017, DP Plaintiffs filed a Letter in response to the District Court’s Opinion. ECF No. 1367. DP Plaintiffs take the position that this Court should either give the Opinion preclusive effect, or at least find its holding persuasive and deny the Enforcement Motion. DP Plaintiffs note that even though GEO filed the enforcement motion in this case, GEO separately raised a similar argument concerning the effect of the plan and confirmation order in a motion to dismiss the complaint in the Antitrust Action. DP Plaintiffs assert that in denying the motion to dismiss, Judge Linares rejected the virtually identical argument that GEO raised in this case—that the order confirming GEO’s plan of reorganization and the plan discharged any claims for antitrust violations arising prior to the Effective Date of the Plan. DP Plaintiffs note that Judge Li-nares found that the Plan and Confirmation Order did not, and could not discharge such claims because the DP Plaintiffs did not receive constitutionally adequate notice as actual creditors. DP Plaintiffs argue that this holding that GEO cannot rely on its asserted bankruptcy discharge has a preclusive effect or provides persuasive support for the argument made by the DP Plaintiffs on the instant Motion to Reopen. DP Plaintiffs note that the only possible element of collateral estoppel in question is “finality.” DP Plaintiffs assert that a final judgment is 'not necessary for purposes of collateral estoppel. Id. (citing Henglein v. Colt Industries Operating Corp.,
GEO’s Letter of August 7, 2017
On August 7, 2017 GEO filed a Letter, ECF No. 1368, requesting an opportunity to respond to DP Plaintiffs’ Letter:
[T]o address the mischaracterizations and misstatements in the DPPs letter, including, among other things, (i) their incorrect assertion that the issues before this Court, as reflected in the record created in this proceeding, were actually litigated in the District Court, (ii) the irrelevance of the cases they have citedon the question of finality of the District Court’s order, (iii) their unwarranted “presumption” that the District Court’s decision represents precedent that should be followed by this Court, and (iv) their erroneous contention that none of the conditions specified in 28 U.S.C. § 158(d) would warrant a direct appeal to the United States Court of Appeals for the Third Circuit from this Court’s order on GEO’s Motion to Enforce.
Id. at 1.
GEO’s Responsive Letter
On August 14, 2017, GEO filed a Responsive Letter. ECF No. 1370. First, GEO argues that the due process issue was not “actually litigated” before the District Court because the District Court had no opportunity to review evidence describing GEO’s claims noticing procedures. Id. at 1. Rather, the District Court was required to accept Plaintiffs’ allegations in the DP Plaintiffs’ complaint as true under a motion to dismiss standard, and the District Court merely held that “at this juncture,” Plaintiffs have “sufficiently plead” that “Defendants knew or should have known that Plaintiffs were known creditors.” Id. at 2 (citing Order Denying Motion to Dismiss at p. 28.) Second, GEO argues that the District Court’s Order denying the Motion to Dismiss was not a “final order’ for collateral estoppel purposes. GEO argues that the cases cited by Plaintiffs are inapposite and have no application to the facts of this case. Id. at 2-3. GEO asserts that the common thread in all of the cases is that an order is not final for purposes of issue preclusion unless disputed facts related to such issues have been fully adjudicated. Id. at 2-3 (citing Henglein v. Colt Industries Operating Corp.,
LEGAL STANDARDS
Motion to Reopen Standard
Section 350(b) of the Bankruptcy Code provides that “[a] case may be reopened
Here, cause would exist to reopen this Bankruptcy Case if it is determined that Plaintiffs’ prosecution of their causes of action could violate the Plan’s discharge injunction. Otherwise, reopening the case is futile and the motion must be denied. See In re Janocha, No. 06-20191 (JAD),
Collateral Estoppel
According to the United States Supreme Court, collateral estoppel, like the related doctrine of res judicata, “has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation.” Parklane Hosiery Co., Inc. v. Shore,
The Supreme Court has also held that pursuant to the full faith and credit statute, 28 U.S.C. § 1738, whenever federal courts examine questions of claim or issue preclusion, they must apply the governing law in the appropriate forum state, based on “concerns of comity and federalism.” Marrese v. Am. Acad., of Orthopaedic Surgeons,
In New Jersey, the doctrine of collateral estoppel is considered to be “that branch of the broader law of res judicata which bars relitigation of any issue which was actually determined in a prior action, generally between the same parties, involving a different claim or cause of action,” Sacharow v. Sacharow,
[t]he doctrines of collateral estoppel, issue preclusion, res judicata, and the like serve the important policy goals of finality and repose; prevention of needlesslitigation; avoidance of duplication; reduction of unnecessary burdens of time and expenses; elimination of conflicts, confusion and uncertainty; and basic fairness.... If an issue between the parties was fairly litigated and determined, it should not be relitigated.
First Union Nat’l Bank v. Penn Salem Marina, Inc.,
The Third Circuit Court of Appeals has further explained that “[a] party asserting collateral estoppel must show that
(1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) ■ the court in the prior proceeding issued a final judgment on the merits; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom the doctxine is asserted was a party to or in privity with a party to the earlier proceeding.”
Mullarkey v. Tamboer (In re Mullarkey),
“The application of the collateral estoppel doctrine is not automatic, and should not be applied if there are sufficient countervailing interests.” Mullarkey,
For example, the principles of collateral estoppel apply in discharge proceedings in bankruptcy court. In re Docteroff,
Section 1141 of the Bankruptcy Code describes the effect of confirmation of a plan in a chapter 11 case. Pursuant to § 1141(a):
(a) Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder, or general partner has accepted the plan.
11 U.S.C. § 1141(a).
A bankruptcy court’s order of confirmation is treated as a final judgment with res judicata effect. In re G-I Holdings, Inc.,
Further, section 1141 (d)(1)(A) provides
Except as otherwise provided in this subsection, in the plan, or in the order confirming the plan, the confirmation of a plan—
(A) discharges the debtor from any debt that arose before the date of such confirmation, and any debt of a kind specified in section 502(g), 502(h), or 502(i) of this title, whether or not—
(i) a proof of the claim based on such debt is filed or deemed filed under section 501 of this title;
(ii) such claim is allowed under section 502 of this title; or .
(iii) the holder of such claim has accepted the plan; and
(B) terminates all rights and interests of equity security holders and general partners provided for by the plan.
11 U.S.C.A. § 1141(d)(1)
Accordingly, the confirmation of a plan of reorganization “discharges the debtor from any debt that arose before the date of such confirmation....” In re Grossman’s Inc.,
The Definition of Claim Under the Bankruptcy Code
The term “claim” is defined in the Bankruptcy Code at § 101(5):
(5) The term “claim” means—
(A), right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
(B) right to an. equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unma-tured, disputed, undisputed, secured, or unsecured.
11 U.S.C. § 101(5).
For many years in the Third Circuit, the test for determining when a “claim” arose was governed by the test set forth in Avellino & Bienes v. M. Frenville (Matter
- In 2010, the Third Circuit abandoned the Frenville test finding that it imposed “too narrow an interpretation of a ‘claim’ under the Bankruptcy Code,” and held that “a ‘claim’ arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a ‘right to payment’ under the Bankruptcy Code”. Grossman’s,
However, the Third Circuit reversed on appeal. Recognizing the significant authority contrary to Frenville existing in other circuits, the Court acknowledge that “[t]he accrual test in Frenville does not account for the fact that a ‘claim’ can exist under the Code before a right to payment exists under state law.” Id. at 121. Accordingly, the court expresses overruled the Fren-ville accrual test, and. replaced it with the following:
We agree and hold that a “claim” arises when an individual is exposed pre-petition to a product or other conduct giving rise to an .injury, which underlies a “right to payment” under the Bankruptcy Code. See 11 U.S.C. § 101(5), Applied to the Van Brunts, it means that their claims arose sometime in 1977, the date Mary Van Brunt alleged that Gross-man’s product exposed her to asbestos.
Id. at 125.
Importantly, although this holding clearly expanded the scope of what constitutes a “claim” under the Code, the court also made clear that a debtor who fails to satisfy due process by providing inadequate notice to potential creditors cannot received
Any application of the test to be applied cannot be divorced from fundamental principles of due process. Notice is “[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality,...” Mullane,339 U.S. at 314 ,70 S.Ct. 652 . Without notice of a bankruptcy claim, the claimant will not have a meaningful opportunity to protect his or her claim. See 11 U.S.C. § 342(a) (“There shall be given such notice as is appropriate ... of an order for relief ... under [the Bankruptcy Code],”). Inadequate notice therefore “precludes discharge of a claim in bankruptcy.” Chemetron,72 F.3d at 346 .
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Whether a particular claim has been discharged by a plan of reorganization depends on factors applicable to the particular case and is best determined by the appropriate bankruptcy court or the district court.
Id. at 125-27 (3d Cir. 2010) (footnote omitted).
Ultimately, the court declined to decide the due process issue and thus remanded the matter to the district court for further proceedings. Id. at 128.
More recently, the Third Circuit revisited the Grossman’s exposure test in Wright v. Owens Corning,
On appeal to the Third Circuit, the plaintiffs advanced two arguments. First, plaintiffs argued that the district court had applied Grossman’s “too rigidly, creating the unworkable result that persons who did not anticipate future tort actions at the time of a bankruptcy proceeding nonetheless possess claims under the Bankruptcy Code that are discharged,” and second, that “the District Court’s due process analysis fell short because it based its ruling on precedent holding that unknown claimants are entitled to notification by publication.” Id. at 104.
Turning to the issue of whether plaintiffs’ held dischargeable claims, the Third Circuit noted that thé treatment of unknown future claims involves two important and competing concerns. Id. at 106. Importantly, these are the same concerns raised by the parties in connection with this Motion to Reopen: (1) the goal of providing a debtor with a fresh start by resolving all claims arising from the debt- or’s pre-petition conduct prior to its émer-gence from bankruptcy; and (2) the rights of individuals who may be damaged by that conduct but are unaware of the potential harm at the time of a debtor’s bankruptcy.
But that was not the end of the court’s analysis. Next, the court turned to the question of satisfying the due process requirement. The court noted that while notice by publication in national newspapers supplemented by notice in local papers is generally sufficient to satisfy the requirements of due process for unknown creditors, “whether adequate notice has been provided [ultimately] depends on the circumstances of a particular case.” Id. at 108 (citing Grossman’s,
Because at the time of the Confirmation Date Frenville controlled the status of their “claims,” the Plaintiffs were not afforded due process. Accordingly their claims were not discharged by the Plan and Confirmation Order, and they retained their cause of action against Owens Coming. In this context, the District Court correctly determined that the Plaintiffs held “claims” under the Bankruptcy Code. But it should not have held that those claims were discharged, and thereby granted summary judgment to Owens Coming, in the circumstances before us. We thus affirm in part and reverse in part the District Court’s judgment, and remand the case to that Court for further proceedings. The shadow of Frenville fades, but more slowly than we would like.
Id. at 109.
Since Owen’s Coming was decided, courts have had occasion to apply it to the “special situations” involving pre-Gross-man’s bankruptcy plans and groups of claimants who held claims under Gross-man’s but not Frenville. The Third Circuit in In re W.R. Grace & Co. touched upon the issue in the context of an appeal of the bankruptcy court’s decision to confirm the debtors’ plan or reorganization of a manufacturer of asbestos-related products and its affiliates, which among things, created § 524(g) channeling injunctions and trusts for certain asbestos claimants as well as claimants with contribution and indemnification claims,
The Bankruptcy Court for the District of Delaware, by the Honorable Kevin J. Carey, succinctly described the rule emanating from Owens Coming as follows:
To assuage due process concerns, the Wright , Court also decided that the Frenville test should continue to apply to two groups of claimants:
(1) persons who hold claims based upon exposure to a debtor’s conduct or product pre-petition, if the reorganization plan was proposed and confirmed prior to the date Gross-man’s was decided (June 2, 2010), and
(2) persons who hold claims based upon exposure to a debtor’s conduct or product post-petition, but pre-confirmation, if the reorganization plan was proposed and confirmed prior to the date Wright was decided (May 18, 2012).
In re New Century TRS Holdings, Inc. No. 07-10416 (KJC),
Thus, when faced with the issue of enforcing a plan injunction under a pre-Grossmcm’s plan, a court must first look to whether the claimant’s cause of action meets the definition of claim under Gross-man’s. If it does, then the court must determine whether due process requirements have been met. For those “special cases” involving pre-Grossman’s bankruptcy plans, the due process analysis first involves an examination of whether the claim meets the Frenville accrual test. In such cases, if the cause of action is not a “claim” under Frenville, but is a “claim” under Grossman’s, then due process mandates that the claimant receive actual notice of its “newfound claim status”—notice by publication may not be sufficient. See Owens Corning,
Due Process
Due process requires “notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Owens Corning,
If claimants were “known” creditors, then due process entitled them to actual notice of the bankruptcy proceedings. Absent such notice, their suit may proceed. If claimants were “unknown” creditors, however, then notice by publication was sufficient to satisfy the requirements of due process and their claims are barred, absent some other basis for relief...
As characterized by the Supreme Court, a “known” creditor is one whose identity is either known or “reasonably ascertainable by the debtor.” Tulsa Professional Collection Serv., Inc. v. Pope,485 U.S. 478 , 490,108 S.Ct. 1340 , 1347,99 L.Ed.2d 565 (1988). An “unknown” creditor is one whose “interests are either conjectural or future or, although they could be discovered upon investigation, do not in due course of business come to knowledge [of the debtor].” Mullane v. Central Hanover Bank & Trust Co.,339 U.S. 306 , 317,70 S.Ct. 652 , 659,94 L.Ed. 865 (1950),1 1314 A creditor’s identity is “reasonably ascertainable” if that creditor can be identified through “reasonably diligent efforts.” Mennonite Bd. of Missions v. Adams,462 U.S. 791 , 798 n. 4,103 S.Ct. 2706 , 2711 n. 4,77 L.Ed.2d 180 (1983).
Reasonable diligence does not require “impracticable and extended searches .., in the name of due process.” Mullane,339 U.S. at 317 ,70 S.Ct. at 659 . A debtor does not have a “duty to search out each conceivable or possible creditor and urge that person or entity to make a claim against it.” In re Charter Co.,125 B.R. 650 , 654 (M.D.Fla.1991)...
The requisite search instead focuses on the debtor’s own books and records. Efforts beyond a careful examination of these documents are generally not required.2 Only those claimants who are identifiable through a diligent search are “reasonably ascertainable” and hence “known” creditors.
Id. at 345-47.
Therefore, the determination of the whether a creditor is “known,” and thus entitled to receive actual notice of the bar date, depends on whether the identity of the creditor and its claims are reasonably ascertainable by the debtor. See Chemetron,
Judicial Estoppel
Judicial estoppel precludes a party from arguing a position inconsistent with a position that the party took in a previous proceeding. In re Princeton-New York Investors, Inc.,
ANALYSIS
1. Collateral Estoppel and the Effect of the District Court’s Opinion
By way of this Motion, the Reorganized Debtors seeks to reopen the Chapter 11 Case and enforce the Chapter 11 Plan Discharge and Injunction against Plaintiffs’ antitrust claims that arose prior to the Effective Date of GEO’s plan, December 31, 2004, arguing that such claims arose prepetition and were thus discharged under GEO’s Confirmed Plan. As a threshold matter, Plaintiffs argue that collateral estoppel applies to the District Court’s July 20, 2017 Opinion as to those issues, or, alternatively, that the unique procedural posture of this Motion—where D.N.J. Local Rule 40.1 (c) requires assignment of any appeal to Judge Linares—in effect renders the District Court Order stare decisis.
As previously noted, collateral estoppel or issue preclusion, prevent parties from litigating an issue that has already been actually litigated. Peloro v. U.S.,
In In re Brown,951 F.2d 564 , 569 (3d Cir. 1991), we made the point clearly: “[ujnlike claim preclusion, the effectiveness of issue preclusion, sometimes called collateral estoppel, does not require the entry of a judgment, final in the sense of being appealable.” We also cited section 13 of the Second Restatement of Judgments, which states that “for purposes of issue preclusion, ... ‘final judgment’ includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.” Id.; see also Hawksbill Sea Turtle v. Federal Emergency Mgmt. Agency,126 F.3d 461 , 474 n. 11 (3d Cir.1997); Restatement (Second) of Judgments § 27 cmt. k.
Id.
Here, it is clear that the issues decided by Judge Linares in the July 20, 2017 Opinion were (1) whether Plaintiffs’ claims in the Antitrust Action that arose prior to confirmation of the debtors’ reorganization plan constitute prepetition “claims” within the meaning of the Bankruptcy Code and GEO’s Confirmed Plan; (2) whether GEO’s publication notices satisfied Due Process sufficient to discharge such pre-petition
Despite these findings, GEO argues that this Court should continue to decide the very same issues because the District Court’s Opinion is not “final” for collateral estoppel purposes. Specifically, GEO contends that the District Court’s Opinion relied upon the Complaint and that it did not make findings based upon a “complete factual record.” This argument must fail. It is undisputed that GEO did not provide actual notice to potential antitrust claimants and that GEO’s bankruptcy schedules, Plan, and Disclosure Statement did not reveal such potential claims, notwithstanding GEO’s 2016 Guilty Plea, in which it admitted to engaging in “a conspiracy to rig bids and allocate customers for, and to fix the price of, liquid aluminum sulfate supplied to municipalities and pulp and paper manufacturers in the United States from at least as early as 1997 and continuing until approximately February 2011.” Plea Agreement, .supra, ¶ 1. These facts are well-documented in the public records including the bankruptcy docket, with which the District Court is undoubtedly familiar. Thus, GEO’s suggestion that the “record” set forth before this Court puts it in a better position than the District Court to decide these issues is entirely without merit. Rather, in this Court’s view, virtually all of the evidence and facts relied upon by the parties in connection with this Motion were also available to the District Court.
Debtors cite Anderson v. Comm’r for the notion that “an issue is conclusively established in future litigation through the doctrine of collateral estoppel only when it is determined by a final judgment.”
Here, GEO has been fully heard before the District Court, and the District Court issued a reasoned extensive opinion. As stated by the District Court, “Plaintiffs have sufficiently pled that Defendant GEO and GCC Defendants were aware of their alleged conspiracy, took overt steps to keep the conspiracy a secret, and failed to provide all Plaintiffs with sufficient notice regarding their Bankruptcies consistent with due process.” In re Liquid Aluminum Sulfate Antitrust Litig., No. CV 16-MD-2687 (JLL),
Further, IPPs argue the July 20, 2017 District Court Order, considering the procedural posture of this case, and in light of U.S. District Court for the District of New Jersey, L. Civ. R. 40.1(c), which governs the “Allocation and Assignment of Cases,”
The Merits
Assuming arguendo, that collateral es-toppel does not apply, this Court would nonetheless concur with the. District Court’s finding that Plaintiffs’ pre-Effec-tive Date antitrust claims are not barred by GEO’s Plan and Confirmation Order.
The District Court succinctly described the test for applying a discharge injunction as follows: “1) whether the claim arose prior to the confirmation of the reorganization plan, and if so, 2) whether Due Process
Here, the first prong of Gross-man’s is arguably satisfied because GEO first participated in the alleged conspiracy prepetition, as early as January 1, 1997. However, even if a claim arises prepetition or pre-confirmation, “[discharge of the claims of future unknown claimants raises questions regarding due process” and “’’[inadequate notice ... precludes discharge of a claim in bankruptcy. Owens Corning,
Accordingly, “[w]hen a party conceals the necessary facts upon which a claim is about to be made, that party cannot benefit from publication by notice. Due process does not allow a debtor who has actively concealed facts necessary to the presentation of certain claims to notify by publication those persons adversely affected by the active concealment”. Tillman ex rel. Estate of Tillman v. Camelot Music, Inc.,
The Second Circuit’s decision in Motors Liquidation is instructive. In re Motors Liquidation Co.,
If a debtor reveals in bankruptcy the claims against it and provides potential claimants notice consistent with due process of law, then the Code affords vast protections. Both § 1141(c) and § 363(f) permit “free and clear” provisions that act as liability shield. These provisions provide enormous incentives for a struggling company to be forthright. But if a debtor does not reveal claims that it is aware of, then bankruptcy law cannot protect it. Courts must “limit[ ] the opportunity for a completely unencumbered new beginning to the ‘honest but unfortunate debtor.’ ” Grogan v. Garner,498 U.S. 279 , 286-87,111 S.Ct. 654 ,112 L.Ed.2d 755 (1991) (quoting Local Loan Co. v. Hunt,292 U.S. 234 , 244,54 S.Ct. 695 ,78 L.Ed. 1230 (1934)).
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New GM argues in response that because plaintiffs’ claims were “contingent,” those individuals were “unknown” creditors as a matter of law. But contingent claims are still claims, 11 U.S.C. § 101(5), and claimants are entitled to adequate notice if the debtor knows of the claims. Moreover, as discussed above, the only contingency was Old GM telling owners about the ignition switch defect-a contingency wholly in Old GM’s control and without bearing as to Old GM’s own knowledge. New GM essentially asks that we reward debtors who conceal claims against potential creditors. We decline to do so. See Grogan,498 U.S. at 286-87 ,111 S.Ct. 654 .
Id. at 159-160.
Accordingly, the Second Circuit held that “[i]ndividuals with claims arising out of the ignition switch defect were entitled to notice by direct mail or some equivalent, as required by procedural due process.” Id. at 161.
Here, like the Motors Liquidation debtor, GEO knew about the conspiracy it originated and knew or should have known about any contingent antitrust claims. Specifically, GEO has admitted, pleading guilty to criminal charges violating the Sherman Act, “that from at least as early as 1977 and continuing until approximately February of 2011, [GEO] and its co-conspirators entered into and engaged in a combination and conspiracy to suppress and eliminate competition in the sale and marketing of [LAS] by agreeing to rig bids and allocate customers for, and to fix, stabilize and maintain the price of [LAS] sold to municipalities and pulp and paper companies in the United States.” Plea Hearing, 8:7-15; 18:8-11. GEO further admitted that “employees of GEO, while actively engaged in the management, direction, control or transaction of the [LAS] business on behalf of GEO, knowingly and intentionally conspire[d] and agree [d] with certain employees of the co-conspirator company not to compete for each other’s historical business by rigging bids, allocat-mg
This Court rejects GEO’s argument that the standard for ascertaining known claimants is limited to the perspective of “the persons responsible for administering a bankruptcy case” and that all is required is a “diligent review of the debtor’s books and records maintained in the ordinary course of business.” Motion, supra, at 21 (citing In re Penn Central Trans. Co.,
Although some courts have held, regardless of the circumstances, that the reasonably ascertainable” standard requires only an examination of the debtor’s books and records, without an analysis of the specific facts of each case, see e.g., In re Best Products Co.,140 B.R. 353 , 358 (Bankr.S.D.N.Y.1992); In re Texaco, Inc.,182 B.R. 937 , 955 (Bankr. S.D.N.Y.1995), we do not construe it so narrowly. Situations may arise when creditors are “reasonably ascertainable,” although not identifiable through the debtor’s books and records. See, e.g., Tulsa Professional Collection Serv., Inc. v. Pope,485 U.S. at 491 ,108 S.Ct. at 1348 (hospital’s claim against deceased patient’s estate possibly reasonably ascertainable), We need not address this possibility precisely because as we discuss, plaintiffs’ claims in this case are so speculative that the identities of the plaintiffs could not be ascertained with “reasonably diligent efforts”. Mennonite,462 U.S. at 798 n. 4,103 S.Ct. at 2711, n.4 .
Chemetron,
CONCLUSION
Given this Court’s determination that GEO’s Plan and Confirmation Order do not bar Plaintiffs’ Claims asserted in the Antitrust Action that arose prior to the Effective Date of GEO’s Plan of Reorganization, there is no basis to find “cause” to reopen GEO’s Bankruptcy Cáse pursuant to 11 U.S.C. 350(b). Accordingly, GEO’s Motion to Reopen its Bankruptcy Case and Enforce the Discharge Injunction is DENIED.
An Order shall be submitted in accordance
Notes
. Citations to the record reflect the electronic case filing (ECF) docket numbers in the Main Bankruptcy Proceeding, In re GEO Specialty Chemicals, Inc., et al., Case No. 04-19148, unless otherwise indicated.
. All references here are to the Bankruptcy code, 11 U.S.C. § 101 et seq., unless stated otherwise.
.See DOJ-Office of Public Affairs, Former Executive Admits Guilt in Conspiracy Affecting Water Treatment Chemicals (Oct. 27, 2015), available at: https://www.justice.gov/opa/pr/ former-executive-admits-guilt-conspiracyaffec ting-water-treatment-chemicals,
. The pertinent allegations contained in the two Complaints are substantially similar and, for purposes of this Motion, the DP Plaintiffs and IP Plaintiffs will often be referred to collectively as "Plaintiffs''.
. GEO subsequently amended, modified, and supplemented the Plan. See ECF Nos. 795, 869-872, 887-890, 983.
. DP Plaintiffs also filed a Motion to Seal certain documents including their complaint, brief, and supporting exhibits. Motion to Seal, In re GEO Specialty Chemicals, Inc., et al., Case No. 04-19148, ECF No. 1325. The Motion to Seal, which was unopposed, was granted by Order dated February 28, 2017. ECF No. 1361. However, the parties later agreed that the DP Complaint would be unsealed. In addition, a copy of the unredacted version of the IP Complaint was filed on March 3, 2017. ECF No. 1363.
. DP Plaintiffs’ Opposition Brief was originally filed under seal, but was later re-filed under the public docket.
. The statute states, in relevant part, that "The ... judicial proceedings of any court of any [State, Territory, or Possession of the United States] shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.” 28 U.S.C. § 1738 (West 2011).
. In finding that due process was satisfied, the district court expressly relied upon the standards set forth in Chemetron. See Wright v. Owens Corning,
. L. Civ. R. 40.1(c) provides: "[w]hen a civil action: (1) relates to any property included in a case already pending in this Court ... such action shall be assigned to the same Judge to whom the pending related action is assigned”.
. At oral argument, GEO and Plaintiffs agreed that Frenville governs the claim accrual analysis. See Feb. 20, 2017 Hearing Transcript, 16:2-25; 41:16-25; 42:1-7.
. In so ruling the Court does not reach or comment on the issue of the debtors' liability under applicable antitrust law or whether such liability is joint and several among the defendants. As well, the District Court will ultimately determine whether GEO engaged in post-discharge conspiratorial conduct and the extent of GEO's liability pursuant to antitrust law, which is clearly the province of the District Court in the Consolidated Action.