Opinion ID: 1902510
Heading Depth: 2
Heading Rank: 1

Heading: The Federal Cases

Text: In 1982, Johns-Manville Corporation (Johns-Manville), a manufacturer of asbestos-related products, filed for bankruptcy primarily because of numerous asbestos-related claims brought against it. As a result of the Johns-Manville bankruptcy, the Manville Personal Injury Settlement Trust (Manville Trust) was created to compensate persons injured by asbestos-containing products manufactured by Johns-Manville. See In re Johns-Manville Corp., 68 B.R. 618 (S.D.N.Y. 1986), aff'd sub nom, Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir.1988) ( Manville I ). In 1990, a class action for all of the Manville Trust beneficiaries, which included the parties in this case, was created to supersede all litigation pending against the trust in both federal and state courts. The class was created because it became apparent the trust was inadequately funded to compensate all possible beneficiaries. In 1991, a settlement regarding the distribution of Manville Trust funds was reached. See In re Joint E. & S. Dists. Asbestos Litig., 129 B.R. 710 (E.D.N.Y. & S.D.N.Y.1991) ( Manville II ). The Court of Appeals for the Second Circuit, however, vacated approval of the settlement. See In re Joint E. & S. Dists. Asbestos Litig., 982 F.2d 721 (2d Cir.1992) ( Manville III ). Following the remand, the Trust Beneficiaries again reached a settlement. Pursuant to this settlement agreement, the Manville Trust was recapitalized and all claims against the Trust were to be removed from the various tort systems and processed according to administrative procedures called the Trust Distribution Process (TDP). Pursuant to the TDP, numerous categories of diseases resulting from exposure to asbestos were created and a monetary value placed on each category of disease. The TDP also enumerated the methods by which a co-defendant's set-off would be calculated in litigation involving the Trust Beneficiaries. The Stipulation of Settlement, however, explicitly excluded claims arising in Maryland with respect to the appropriate set-off provisions. The Stipulation of Settlement provided: Section H.3 of the TDP, which deals with calculation of set-off, shall not apply by operation of this Stipulation with respect to asbestos health claims arising under Maryland law. The parties consent to trial by the Courts of the issue of appropriate set-off rules that should be developed with respect to Manville or the Trust in connection with claims arising under Maryland law.... In re Joint E. & S. Dists. Asbestos Litig., 878 F.Supp. 473, 578 (E.D.N.Y. & S.D.N.Y.1995)( Manville IV ). The Court of Appeals for the Second Circuit vacated the lower court's approval of the settlement with respect to the Maryland set-off issue. It stated that by refusing to resolve the disagreement as to the Maryland set-off issue, the trial court abstained from deciding the issue left unresolved by the Settlement. In re Joint E. & S. Dists. Asbestos Litig., 78 F.3d 764, 775 (2d Cir.1996)( Manville V ). The court held such an abstention was inappropriate and remanded the case back to the district court for a determination of the Maryland set-off issue. On remand the federal district court, attempting to predict what the Maryland Court of Appeals would decide if faced with the Maryland set-off issue, held that in determining the appropriate set-off, the courts were to exclude the Trust from calculations of other settling defendants' pro rata shares, and ... credit amounts settled by the Trust to joint tortfeasors who have not settled. In re Joint E. & S. Dists. Asbestos Litig., 929 F.Supp. 1, 9 (E.D.N.Y. & S.D.N.Y.1996)( Manville VI ). The federal district court, however, rendered this judgment on 10 June 1996, after the Maryland trial court rendered its judgment from which the instant appeal arose.