Opinion ID: 6496837
Heading Depth: 3
Heading Rank: 2

Heading: Legislative History and Acquiescence

Text: The legislative history and acquiescence arguments on which some courts have relied likewise provide little support for the “disinterested person” standard. See, e.g., In re Duro Dyne Nat’l Corp., No. 18-15563, 2019 WL 4745879, at  (D.N.J. Sept. 30, 2019). Whatever one thinks of using legislative history to interpret statutes, it is of little help here. It appears that Congress drafted § 524(g) to codify the trust-and-channeling injunction mechanisms pioneered in the Johns-Manville and UNR Industries bankruptcies and that it was satisfied with the protection they provided to future claimants. See H.R. REP. NO. 103-835, at 41 (explaining that § 524(g) was crafted “in order to strengthen the Manville and UNR trust/injunction mechanisms and to offer similar certitude to other asbestos trust/injunction mechanisms that meet the same kind of high standards with respect to regard for the rights of claimants, present and future, as displayed in the two pioneering cases”). It also appears that the Johns-Manville and UNR courts applied something like the disinterested standard to their choice of proto-FCRs. 11 Neither, however, was explicit about doing so. 11 In Johns-Manville, the court scheduled a hearing to address the role of the representative for future claimants, and noted that while it was “consider[ing] in preliminary fashion several formulations of legal representation: guardian ad litem, amicus curiae and examiner,” it was not precluded from adopting another model altogether. In re Johns-Manville Corp., 36 B.R. 743, 758–59 (Bankr. S.D.N.Y. 1984) (footnote omitted). Following that hearing, the court appointed a representative for future claimants that would exercise the same powers as creditors’ committees, a decision affirmed by 22 And the congressional report accompanying the bill, while gesturing generally to the Johns-Manville and UNR bankruptcies, never specifically called out their FCR appointment processes. See id. at 40–41 (omitting mention of the FCR position in its discussion of the new § 524(g)). As for the legislative acquiescence argument, legislative silence does not often tell us much, and here it tells us nothing. It is true that—against the backdrop of certain courts importing § 101(14)’s “disinterested person” test into § 524(g)— Congress amended § 524 on three occasions 12 without clarifying the test for FCRs. But that silence does not portend acquiescence because there was only a smattering of district and bankruptcy court cases on point, not the “longstanding interpretation” and “almost perfect consistency” in the decisions of the Courts of Appeals, Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 200–01 (1974), or the “virtual the district court. See In re Johns-Manville Corp., 52 B.R. 940, 942–43 (S.D.N.Y. 1985). By opting for this model of representation, in which the representative had no authority to bind future claimants, id. at 943, the court implicitly rejected the previously proposed guardian ad litem model, see 36 B.R. at 758 n.7 (explaining that future claimants “would be bound by the actions of [a guardian ad litem] by virtue of the doctrine of equitable virtual representation” if it relied on that model). The UNR Industries court similarly entrusted its future claimants’ representative with a creditors’ committee’s powers. In re UNR Indus., Inc., 46 B.R. 671, 676 (Bankr. N.D. Ill. 1985). In soliciting nominations for that representative, it called for someone who was a “disinterested party to serve as Legal Representative for putative asbestos disease victims.” Id. Without further explanation, it is difficult to determine if the UNR court deliberately chose disinterestedness as the standard, so much as invoked it as a default. 12 See Small Business Reorganization Act of 2019, Pub. L. No. 116-54, § 4(a)(9)(A)–(C), 133 Stat. 1086, 1087 (2019); Bankruptcy Technical Corrections Act of 2010, Pub. L. No. 111-327, § 2(a)(19), 124 Stat. 3557, 3559 (2010); Bankruptcy Abuse and Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, §§ 202, 203(a), 119 Stat. 43, 194 (2005). 23 unanimity” among the federal courts over decades, Monessen Sw. Ry. Co. v. Morgan, 486 U.S. 330, 338 (1988), as have been present when past courts have assumed legislative acquiescence. In addition, the amendments to § 524 were specific and targeted, and as the Supreme Court has cautioned, “when ‘Congress has not comprehensively revised a statutory scheme but has made only isolated amendments . . . [i]t is impossible to assert with any degree of assurance that congressional failure to act represents affirmative congressional approval of [a court’s] statutory interpretation.’” AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341, 1351 (2021) (alterations in AMG Cap. Mgmt.) (quoting Alexander v. Sandoval, 532 U.S. 275, 292 (2001)). In short, § 524’s history as concerns the “disinterested person” standard is at best inconclusive.