fourteen one zero nine zero dow corning corp and others versus claimants and advisory committee and others are pure arguments not to exceed fifteen minutes per good morning my name is deborah greenspan i'm here representing the appellant's in this matter i'd like to reserve three minutes for rebuttal that's ok district court issued an order that authorized the payment of contingent second priority payments at a point in time in this case where there are we have we are part way through a fifteen year settlement program we have over eighty thousand people who still have the right to bring first priority payments that are not contingent and whose have the right to under the plan to be assured that their first priority payments would actually be paid before contingent second priority payments may issue we submit that the court decision is errors as a matter of law in four respects first the court misinterpreted and misapplied in fact rewrote the standard that is set forth in the plan that governs the determination of whether the contingent second priority payments may be issued the court further erred and violated the plan requirements by elevating one type of second priority payments allowing them to be distributed while the other two categories of second priority payments were not even considered in the order and were not addressed in any manner third the court erred by assuming the bail ability of two sources of funding that are not to be considered available assets in this circumstance the first the first source that the court relied on was the litigation fund the second was a two hundred million dollar amount that is the subject of this dispute that is currently under advisement with the district court finally the court erred in refusing to even consider the evidence submitted by the appellants in this matter the court admitted the declarations the expert declarations into the record but then advised in the opinion that she simply would not consider that information at all this violates the plan and it violates the appellant's right to be heard and to submit relevant information for the court consideration oh absolutely some point in your adversary's brief it seemed to me that they said well the four hundred million you know that might have been a problem but we're not relying on it and the part about the other two categories not getting paid they're saying that doesn't that they might be wrong but that doesn't matter do i read their briefs right and if so why are those points relevant to the you sort of concede them  e i believe that the the claimants advisory committee takes the position that while the court may have referenced the litigation fund the four hundred million dollar lakeisha fund the calculation that the court cited in its  count that litigation fund but the court nevertheless said it is proper to consider that find in making this determination and so we don't know exactly whether to what extent the court considered that additional money as a integral component of the analysis in terms of the other two categories the second priority payments i believe with the claimants advisory committee says that they don't dispute that the class sixteen payments should be made at the same time as premium payments which is the category that the court authorized but they say they wouldn't they wouldn't dispute a determination to go ahead and pay those payments but they say that there's really no basis to pay the increase severity payments the third category because no one really knows what they are and while i understand their position that doesn't square with what the plan requires which is that all second priority payments have the same priority they need to be given the same consideration but do you have an interest in pushing those other two categories that is why i mean if you're claiming you're underwater already why would you want these other payments to be made i don't know when is requesting that they be made the the  concern is that we get to the end of the program those payments if they are to be made at all they may not be paid on the same basis which is in violation of the plan so they need to be can take into consideration in this process let me ask you one other have to get into the math weeds  their basic position as i understand it is there's there's like one hundred twenty million cushion that's the difference between the one point ninety five and the one and the one point three billion and then there's some discussion that eighty three has been paid out and that leaves sixty eight well the math doesn't work it would leave a much lesser number and then they have a little footnote about twenty eight million or thirty one million has been paid out and they sort of want to add that back in my following the math right and if so where does that twenty eight or thirty one come in that makes the buy a come out right right i believe and i'm sure counsel for the c d c will clarify this but i believe that what they're describing is there is a there's a settlement fund cap of one point nine five billion and in order to determine how much the total assets that are available for consideration there are accounting for the twenty seven to thirty one million that has already been paid in the litigation fund so this is just you could do the math in two different ways and they have simply elected back to the really basis here they say there's this pot let's call it sixty eight as they say and that's adequate to cover everything and then we get into the adequate assurance versus adequate provision which of what their position is that they are saying that there has been an estimate that leaves a question and that's fine and that's enough and that's good enough and i think that our concern in our in our position is that that isn't really what the plan says so the plan creates two categories of payments it has all all claims these are first priority payments and then it has these contingent second priority payments and the plan says that in many places that these first priority payments are supposed to be protected they're supposed to be preserved and we're supposed to assure their payment and there are many provisions that state that and then the plan says if there is enough money we can pay these contingent second priority payments in the way it does that is it sets forth the standard it says that second priority payments may not be distributed until the district court determines that all allowed in allowable claims have either been paid or adequate provision has been made to assure such payment so will these people be paid at the end of the process yes if it turns out is they say there would be suppressive persons and they would be paid correct so they dispute it and i'm trying to characterize the dispute in the difference in our positions here the language is clear the words that are used are not mysterious words they have a plain meeting they have plain dictionary definitions and that is really what contract interpretation principles tell us to do when we're int right so there are two sections of the settlement facility agreement that speak to the standard for authorization for the second priority payments that is in section seven zero one c four and seven three  there is a section that you are citing i believe that is talking about the fact that these two payments could potentially be paid at the same time but if they are you still need to give priority to the first priority payment so if you run into a funding cap problem and you are paying both first and second party payments at the same time you have to defer the second priority payments in order to make sure you've paid the first priority payments timely you can delay the second priority payment so there are two different types of provisions that provision doesn't speak to the standard for authorisation the standard says the other payments have to be paid or adequate provision has to be made to assure such payments nobody disagrees about the meaning of the word assure that means guarantee that everybody agrees that that's what it means the issue is really is there some sort of modification of the term so you look to the next part of the phrase adequate provision will a provision is to make an arrangement to provide for something that's what that means so what would be a provision in this context it would be one example would be that the trustee has already cut the checks to be paid they're ready to go out the door but they haven't actually been paid that would be a provision to assure the payments there are many other examples of what could be a provision but a provision is an act to provide it's not it is not some other kind of process so this this this phrase tells us that we that the court has to determine that these claims have been paid that's easy to determine if that had in fact occurred or that there's an adequate provision there has been an arrangement made to assure the payments so what did the district court do the district court said well i understand that a sure means guarantee but i think that we should really modify that term and in the court concluded that the that there's that the term should be modified because there is something called the premium payment provision and the intent of that provision is to authorize the second priority payments to be paid at the same time as first priority payments so that was the first step that the court took there is no excuse me there is no premium payment provision but the court took the section judge chris that you're referring to that talks about the timing of payments and creating cold they act and said that there was a purpose to their provision that overrides this plain meaning of the term assure in the authorization provision then the court  said that it's more appropriate to to consider the phrase to be adequate assurance than a sure and finally went on to characterize its own task in the following way the court says that its job is to determine to determine whether there are sufficient provisions to also pay first priority payments that's in the district court's decision that is how the district court characterized her task so we have phrase that says adequate provision must be made to assure that's been translated in this decision to mean sufficient provisions to also pay first priority payments it's as if the first priority payments are a secondary type of payment argument on the other side is doesn't matter you use you make very good points strictly reading the plan we need to do that the other side says would be it'll work out fine anyway but that's not the charge that was given to the girl i so that's the point is that you're saying enforce the charge that's correct your honor thank you you'll have your time  rebuttal good morning jeffery trackman for the claims advisory committee i want to step back and explain a few reasons why we believe this court should be looking at this appeal through a lens of extensive deference which is actually what the panel that denied the stay has already held this is not we found other appeals that deal with threshold eligibility for benefits this is not like that this is intensely factual determination and the plan express intrust it to the discretion of the district court we have to remember dow corning agreed in the plan documents to the specific neutrals who were going to do this the evaluation of the adequacy of the fund they agreed to the method that should be  they worked they agreed that the procedures could be streamlined to approve a recommendation neutrals loses the finance committee of the finance committee which is which are neutrals that are charged with weighing all the interest in the case they work with the independen assessor who is also a neutral and of course the court is a neutral and we are the claimants advisory committee is a fiduciary charged with weighing the interests of future and current points dow corning has a different interest here which is not to pay the money so that everything they say has to be that in salt but we work together in this process year after year were they wrong when they said that it's just it's a question of pay me now or pay me later that these people will get if your estimates turn out to be right  they will after fifteen years and really more like twenty years away thing i mean we went out with this plan in one thousand nine hundred ninety nine and claimants this was a provision of the plan that was heavily marketed that the that there would be these premiums because people had waited so long in the bankruptcy and they're going to an extra twenty percent on the disease claims an extra twenty five percent on the rapture claims and the dow corning expert testified that that would likely be around the seventh and they were warned though it may take a few years this is not like del conch eel where all the clincher s'posed be paid and then they can give the leftover money it was always into subpoenaed and in fact the expert was cross examined at confirmation  whether a delay of this as much as seven years would undermine this as an attractive part of the plan because he was using this to predict that there be a higher acceptance rate for this settlement then the r s p b this was this was there just ignoring reality of how this was presented the assumption was we would go for a few years we would do projections we would be pretty sure that be enough money but not a virtual guarantee of virtual guarantee would require everyone to wait till twenty nineteen and people are dying and people are falling out of touch with the facility and this is this is the case with every issue they appeal everything because they're trying to stall paying the money and we're only paying half because everybody knew there was plenty of money to pay half adequate means adequate provision well no she she she said i think maybe i misunderstood i think she said that assurance means guarantee look we assurance to assure my wife's standard of living i would kind of interpret that to me you know i want t bills or i want an insurance policy if i say i want adequate assurance that he your interpretation say i think it's a couple of issues one issue is there are times when the word is used in the context of a promise and there are times when it's used in the context of a projection and so the finance committee and the district court thought that the more relevant authority were the cases under bankruptcy code three sixty five b one c which talks about adequate adequate assurance of the future performance of the suit contract and in those cases it's far less than a guarantee in fact that sometimes viewed as a fifty one percent now we would we would not have agreed to pay this money based on fifty one percent we are concerned about protecting the the first priority claims do come first we  we we would require a very high level of expectation of adequacy but just not virtually guaranteed you know it's like ninety five versus ninety nine point nine nine nine percent so you're in a sense are you telling me you're  the plan uses different combinations of words and the disclosure statement which is not formally part of the plan but the disclosure statement was how dow corning and the and the committee communicate with thousands of tort claims ok so you're pushing a lot of this back to you might say intent of the framers well yeah there was marketed the p r in the end the agreements beyond the words so let me let me ask you this a bout it when we say that people would get paid if they have to wait somewhat longer is that with some type of interest because everything talks about net present value that is if you pay if you pay  claims the individual claimant that's something to according bargained for and we honor it but it means that the way comes out of the pocket of the claimants every year of delay devalues every payment every claimant the net present value has to do with valuing the funding stream that dow corning has to pay back to the effective date so actually the delay has led us to have more nominal dollars and we can actually pay more claims so at the delay makes it every year of delay makes it less likely that we're going to bust the ca p and that's why the talk about the sixty eight million net present value question that was assuming payment in two thousand and thirteen well we're now paying it in two thousand and fourteen so it's around the seventy four million net present value c and the other half is going to be paid further down the road tell me again quickly why you get this twenty eight or thirty one million extra for something that's already been paid i could because we have a two point three five net present value fund and a sub fund of one point nine five net present out with a one nine one eight three and that's one hundred twenty million and with the money is all being paid into one trust and so we're looking at is a running total of qualified transfers that go into the trust and because the trust has paid out a certain amount to pay for litigation which ended up being very much less expensive everybody thought to resolve that amount is credited against the four hundred read it back right so effectively doesn't that implicate the issue of whether the four hundred should be available or not well that's a separate issue truly every no because you just said it's credited against the four hundred that's right so the four hundred really three seventy one or three seventy that's what's left in funding obligations to be applied to litigation the question of whether we need that to pay the settlement claims i mean that you know one other point because you set up the neutrals everybody agrees are going to have this neutral did they agree that the neutral was unassailable because they say in effect ok he's neutral but it's just projections and map and statistics and we have some guys that we want the judge to consider as to why that's not right and i usually judges do that if they have a claim that the aggrieved methodology had been horribly botched ok that they just didn't apply it correctly it was lazy it was wrong they could come in and show that but that's not what their their evidence was offered to show their coming in to say that this methodology that's been applied for years and years with them at the table and they they never complained they never objected they were asked a lot of questions they asked for more information but they never said come up and say hey wait a second this whole thing that we're going through year after year the basic methodology is fundamentally flawed it could never support a projection that could could support claims they never said that and the judge made a finding that they never said that and they blithely say well we did we challenge the complaint they it and now they're coming in and trying to offer a declaration that says this basic methodology is fundamentally flawed for one reason because it doesn't consider epidemiology well  not necessary for this type of projection to consider epidemiology but if it was available it would be used the fact is there is none and their expert said we don't have any epidemiology what we have is epidemiology for individual symptoms  dry eyes aches and pains there is no epidemiology the says the combination of symptoms that constitute a covered condition there is no epidemiology like that and to say well we have this many claimants with this symptom and this many claims with that symptom and try to turn that into projections of who's going to have claims and who's going to have a proof of claim and who's going to be able to get it's junk science it's complete speculation so it's useless the other thing they say is lacking is there should be an error rate analysis and this gets into some technical stuff but we have a declaration of mark's part explaining why this type of projection there are so many variables you just don't do error rate analysis but it does not follow that our methodology is unreliable because we have one thing that you don't often have we have year after year of being able to check the results and fine tune against the prior years and it is fair to say that the district court didn't consider these attacks or are you saying that the district court's opinion in effect refuted the attacks even though they were i think the district court looked at that evidence and said this is not going to be helpful because it's attacking a methodology that they've already agreed to i'm not going to open the door this is not good no vote litigation this is the application of a settlement and i think the normal discretion that a judge would have to regulate what evidence comes in but it is order that she wouldn't would she did not engage with the individual merits of those debates but if you if you go beyond if you it's harmless error if you have answers i'm sorry if you look at it and you have answers we have the answers it's all in the record and and it's at best harmless error because the the evidence being offered was i mean i can go through a list of other issues that they are playing with numbers and playing games and it's it's certainly it's very misleading but they did not choose to engage some of these things until the reply brief amount i think the court has specific questions about the merits of the  competing evidence i'd be happy to address them to other ones i'm not sure i need to do them you know we haven't come back to these up because really there's no question that there's enough money to pay the half amount they've they've created these other straw man arguments and we sort of skipped over the mano if you want to hear from us about them but i mean these other categories of second parody payment you say there's no question that there's enough if we believe that the standard we're applying doesn't make a difference because if we buy that part then there is adequate provision to guarantee you know if you say virtual guarantee there's always some small risk there's always some small risk you know i do think that's an issue presented for the court what standard is appropriate but the fact is maybe maybe there been so many things in the financial system that were  it together in the disclosure statement actually went to all the women and you know if it's really that big a difference between those two standards and then the disclosures that was materially misleading the disclosures i mean this  sounds like a risk plan description does the disclosure statement prevail over the don't know strictly speaking the plan prevails of the disclosure statement and they'll point to the disclaimers and qualifications and there's a place on page ninety five in the risk section where it just says assured i don't think anybody actually read that paragraph they probably did read the other one but the point is they didn't see this as so clearly different as a standard and i think you have to look at it in full context of what was intended that we were inducing people to settle and telling them that this is not like one of these cases we're going to pay only at the end we're going to pay you once we're we're pretty sure we have enough money that was that was the spirit of it  pretty sure versus the sure as you're in t is back to where we are look at it it really comes down to in the end a way in the interest of thousands of claimants who've been waiting for years for this money who were induced on that  basis to settle against a very small risk that the end of the day a few claimants will have their claims reduced at the end and every fiduciary those claimants would be the first priority claim there could if not be others as well but it could  and we've been would you agree that the claim that they want to pay you now if they're paid five years from now they'll get the same amount not some increased amount that's correct i want to respond to a couple of the questions that came up during mr trackman is argument first the court does say in the opinion the court will not consider the exhibits an expert testimony submitted by the debtors representatives in the shareholders since the settlement facility agreement provides that the court consider the recommendation of the finance committee based on the independent assessors analysis and projections so the court specifically says she did not consider that information to the plaintiff why do you say she was wrong to not consider that because for her discretion so we put it in context because the plan does not say as she indicates here that the decision of the district court whether the standard has been met should be based solely on the information of the independent assessor in the finance committee it says the finance committee is supposed to make a motion the finance committee is supposed to submit the report of the independent assessor but it does not restrict the district court's inquiry at all in fact it charges the district court with making a determination that these payments are assured and i'd like to go back to the comment that mr trackman made he said that he doesn't think it should be ninety nine percent but it could be ninety five percent assurance but there's no place in the report of the independent assessor or in the submission of the finance committee that quantified risk at all that is one of the criticisms that is one of the points that we made and that our expert made was that if you're going to try to meet a standard that has such a high threshold  says is sure we have to protect these first priority payments then at least the report should quantify for the judge what the risks are in the uncertainties are the report did not attempt to do that in terms of this idea that we know there's enough money or everybody is pretty sure that there's enough money or there are going to be very many more additional claims that sort of flies in the face of this of the plan in the structure of the plan the plan gave claimants until june of twenty nine thousand to make their disease claims in the concept there was not that people were waiting that they had a disease claim in year one they just waited fifteen years it was that their disease claims would manifest during this period of time and they should have the right to bring these claims so what drives the claims what drives the claims is the development of these medical conditions so that is why we considered the inquiry into these medical conditions and how common they are in the population to be relevant to the court's determination because that is you can't have a claim unless you have those can disagree with  what we were told by your colleague that there is no epidemiology that would be helpful there is epidemy out there are several different conditions where there is epidemiology there are some standard well known defined diagnoses that are eligible and then there are also i think you can see that there are some but he just essentially said that i'm helpful at this stage and i think that it is in i would say it's not on helpful it gives you an a sense of what is out there that could become a claim and if there had been some analysis of the claims that had come in fairly recently before the finance committee made its recommendation into you know what were the conditions that were diagnosed how what were the common conditions that we were seeing in the population that is an analysis that also could have been done and you could have derived that from the claim population that was not ditto you were at the table you were in your client were at the table when all this was decided yes i sometime ago i'm sorry i'm late aren't you late in raising this now or you were at the table and now you're oh let me respond to this that we have to make it really quickly because i should look at our attention there it is incorrect to say that there's an agreed methodology in the plan the plan simply says we should have a report that tells you how many pending claims there are how much they've been paid how many are sitting there waiting to be paid and then it says projection of future claims it doesn't say how to project the future claims it doesn't say don't consider the medical conditions that question of a question you might have answered this before but standard of review that that question has been addressed by this court about at least three times in the last couple of years there have been a couple of different appeals where this precise issue has arisen and what has emerged is that if the if the issue is a question of interpretation of the plan that this is a did novo review and that this is something that this court is eminently qualified and does every day but i also submit that if you were to even say that it was an abuse of discretion standard under these circumstances where we believe there's a clear error of law in interpreting the plan that you would meet the views of discretion standard as well finally counsel your adversary said something about a stay having been denied by another panel of this court so what is what's happening on the ground are these payments being made they are settlement facility could attempt to recoup those payments i think they would be unsuccessful in getting one hundred percent of those payments back but we understand that some are held by law firms have not yet been distributed to individuals some