In re: Quigley Company, Inc., No. 11-2635 (2d Cir. 2012)
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This case required the court to address the scope of federal bankruptcy jurisdiction over suits against non-debtor third parties, as well as the scope of a stay issued pursuant to 11 U.S.C. 524(g)(4). Pfizer and Quigley appealed from a judgment in the district court reversing the Clarifying Order of the bankruptcy court and holding that the Law Offices of Peter G. Angelos (Angelos) could bring suit against Pfizer for claims based on "apparent manufacturer" liability under Pennsylvania law. The court determined that it had jurisdiction to hear the appeal; that the bankruptcy court had jurisdiction to issue the Clarifying Order; and that the Clarifying Order did not bar Angelos from bringing the suits in question against Pfizer. Accordingly, the court affirmed the judgment of the district court.
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11-2635 (L) In Re Quigley Company, Inc. United States Court of Appeals FOR THE SECOND CIRCUIT August Term 2011 Argued: September 27, 2011 Decided: April 10, 2012 Nos. 11-2635, 11-2767 _____________________________________ IN RE QUIGLEY COMPANY, INC. PFIZER INC., Appellant, QUIGLEY COMPANY, INC., Debtor-Appellant, -vLAW OFFICES OF PETER G. ANGELOS, Appellee. _____________________________________ Before: WALKER, STRAUB, and LIVINGSTON, Circuit Judges. 1 1 Appellant Pfizer Inc. and Debtor-Appellant Quigley Co., Inc. appeal from a May 2 23, 2011 judgment of the United States District Court for the Southern District of New 3 York (Holwell, J.), reversing an order of the United States Bankruptcy Court for the 4 Southern District of New York (Bernstein, C.J.). The bankruptcy court held that an 5 injunction issued in the bankruptcy proceedings of Quigley Co., Inc. applied to stay 6 certain suits against Pfizer Inc., Quigley s parent company. 7 reversed, holding that the injunction did not bar the suits from proceeding. The Court 8 of Appeals, Livingston, Circuit Judge, held that: (1) court of appeals had jurisdiction 9 to hear the appeal; (2) bankruptcy court had jurisdiction to issue injunction; and (3) 10 The district court injunction does not bar suits in question against Pfizer Inc. 11 12 13 14 SHEILA L. BIRNBAUM, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, New York, New York (Jay M. Goffman, George A. Zimmerman, Bert L. Wolff, on the brief) for Appellant. 15 16 17 MICHAEL L. COOK, SCHULTE ROTH & ZABEL LLP, New York, New York (Lawrence V. Gelber, on the brief) for Debtor-Appellant. 18 19 20 21 22 JEFFREY L. JONAS, BROWN RUDNICK LLP, Boston, Massachusetts (Edward S. Weisfelner, Brown Rudnick LLP, New York, New York; James W. Stoll, Thomas H. Montgomery, Brown Rudnick LLP, Boston, Massachusetts, on the brief) for Appellee. 23 24 25 26 27 THOMAS A PITTA, LOWENSTEIN SANDLER PC, Roseland, New Jersey (Jeffrey Prol, Adrienne L. Isacoff, Michael T.G. Long, on the brief) for amici curiae Hissey Kientz L.L.P. and Hissey, Kientz & Herron P.L.L.C. 2 1 2 3 LIVINGSTON, CIRCUIT JUDGE: 4 suits against non-debtor third parties, as well as the scope of a stay issued pursuant 5 to 11 U.S.C. § 524(g)(4). In reaching these questions, we are also called upon to clarify 6 our own jurisdiction to hear appeals from decisions of district courts reviewing 7 bankruptcy court orders. This case requires us to address the scope of federal bankruptcy jurisdiction over 8 Appellant Pfizer Inc. ( Pfizer ) and Debtor-Appellant Quigley Co., Inc. 9 ( Quigley ) (collectively Appellants ) appeal from a judgment entered May 23, 2011 10 in the United States District Court for the Southern District of New York (Holwell, J.) 11 reversing the Clarifying Order of the bankruptcy court (Bernstein, C.J.) and holding 12 that Appellee Law Offices of Peter G. Angelos ( Angelos ) may bring suit against Pfizer 13 for claims based on apparent manufacturer liability under Pennsylvania law. We 14 determine that we have jurisdiction to hear the appeal; that the bankruptcy court had 15 jurisdiction to issue the Clarifying Order; and that the Clarifying Order does not bar 16 Angelos from bringing the suits in question against Pfizer. Accordingly, we affirm the 17 district court. 18 BACKGROUND 19 Quigley was involved in the manufacture of refractories, which are materials 20 that retain their strength at high temperatures. In re Quigley Co., Inc., 449 B.R. 196, 21 198 (S.D.N.Y. 2011) ( District Court Opinion ). In the decades from the 1930's through 22 the 1970's, some Quigley products, including a product known as Insulag, which was 23 primarily used as an insulator in high heat environments, contained asbestos. Id. 3 1 Pfizer acquired Quigley in 1968, the latter becoming Pfizer s wholly-owned subsidiary. 2 Id. Post-acquisition, various marketing materials for Quigley products, including 3 Insulag, began to include the Pfizer name, logo, and trademark. Id. After the 4 hazardous effects of asbestos became widely known, more than 160,000 plaintiffs filed 5 asbestos-related suits against Quigley. Id. at 199. Many of these suits also named 6 Pfizer as a defendant. Id. Quigley filed for Chapter 11 bankruptcy in 2004. Id. 7 Important to the instant litigation are a number of insurance policies that 8 Quigley and Pfizer share ( Insurance Policies ) as well as the funds contained in a 9 certain insurance trust under which Quigley and Pfizer are joint beneficiaries 10 ( Insurance Trust ). Original Preliminary Injunction ( OPI ) at 3. As found by the 11 bankruptcy court, Pfizer and Quigley have used and may continue to use the policies 12 and the trust to satisfy settlements, judgments and defense costs related to . . . 13 Asbestos Related Claims. Id. The Insurance Policies and Insurance Trust cover 14 claims against Pfizer or Quigley on a first billed, first paid basis, irrespective of 15 amounts previously billed by or paid to Pfizer or Quigley. Id. Quigley contemplates 16 that the remaining limits under the Shared Insurance Policies and the amounts 17 contained in the Insurance Trust . . . will be used to fund [its] pre-negotiated plan of 18 reorganization. Id. 19 In 2004, the bankruptcy court granted Quigley s motion for a preliminary 20 injunction (the OPI), pursuant to 11 U.S.C. §§ 105(a) and 362(a), enjoining all parties 21 . . . from taking any action in any and all pending or future Asbestos Related Claims 22 against Pfizer during the pendency of Quigley s chapter 11 case. Id. at 5-6. The goal 4 1 of the OPI was to prevent depletion of the Shared Insurance Policies and the 2 Insurance Trust assets, which would cause immediate and irreparable injury to 3 Quigley s estate and impair Quigley s ability to implement its pre-negotiated chapter 4 11 plan and successfully reorganize under chapter 11. Id. at 4. The OPI allowed a 5 party asserting that it holds an Asbestos Related Claim solely against Pfizer based on 6 a product having no relation to Quigley to obtain relief from the injunction by 7 demonstrating to the bankruptcy court s satisfaction that such claim truly arose from 8 a product having no relation to Quigley and also that the Insurance Policies and 9 Insurance Trust could not be utilized to satisfy any portion of the defense costs, 10 settlements or judgments related to the claim and would not be diminished or 11 impaired by [its] prosecution. Id. at 6. 12 In 2007, the bankruptcy court modified the preliminary injunction to parallel 13 the more limited . . . injunction contemplated by Quigley s proposed reorganization 14 plan. In re Quigley Co., Inc., Bankruptcy No. 04-15739 (SMB), 2008 WL 2097016, at 15 *2 (Bankr. S.D.N.Y. May 15, 2008) ( Clarifying Order or CO ). As set out in the 16 bankruptcy court s order, the Amended Preliminary Injunction ( API ) tracked the 17 language of § 524(g)(4)(A)(ii) of the Bankruptcy Code. Section 524(g) authorizes 18 bankruptcy courts in asbestos-related bankruptcies to enter, in connection with 19 confirmation of a reorganization plan, an injunction channeling certain classes of 20 claims to a trust set up in accordance with the plan. The trust makes payments to both 21 present and future claimants, thereby helping to ensure that legitimate claimants 22 against the bankruptcy estate who develop symptoms of asbestos-related disease years 5 1 after the estate s assets would otherwise have been depleted are able to recover. The 2 API here, employing § 524(g)(4)(A)(ii) s language, provided as follows: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 [P]ursuant to sections 105(a) and 362(a) of the Bankruptcy Code, during the pendency of Quigley s chapter 11 case, all parties . . . are hereby stayed, restrained and enjoined from commencing or continuing any legal action against Pfizer alleging that Pfizer is directly or indirectly liable for the conduct of, claims against, or demands on Quigley to the extent such alleged liability of Pfizer arises by reason of 30 API at 2-3. The order further provided that nothing contained in this order shall 31 prohibit any party in interest from seeking relief from the automatic stay of section 32 362(a) of the Bankruptcy Code or the terms of this order by filing an appropriate 33 motion with the Court. Id. at 6. (I) Pfizer s ownership of a financial interest in Quigley, a past or present affiliate of Quigley, or a predecessor in interest of Quigley; (II) Pfizer s involvement in the management of Quigley or a predecessor in interest of Quigley; or service as an officer, director or employee of Quigley or a related party; (III) Pfizer s provision of insurance to Quigley or a related party; (IV) Pfizer s involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of Quigley or a related party, including but not limited to (aa) involvement in providing financing (debt or equity), or advice to an entity involved in such a transaction; or (bb) acquiring or selling a financial interest in an entity as part of such a transaction. 34 Beginning in 1999, Angelos brought multiple suits (the Angelos suits ) in 35 Pennsylvania against Pfizer on behalf of plaintiffs alleging they were injured by 6 1 exposure to asbestos. CO at *2. At least some of these suits sought to hold Pfizer 2 liable in connection with products containing asbestos and manufactured by Quigley 3 under an apparent manufacturer theory of liability as set out in Restatement 4 (Second) of Torts § 400. Id. The Angelos suits alleged that Pfizer s logo appeared on 5 Quigley s advertising and the packages of Quigley s asbestos-containing products. Id. 6 at *5. Under § 400, [o]ne who puts out as his own product a chattel manufactured by 7 another is subject to the same liability as though he were its manufacturer. Forry v. 8 Gulf Oil Corp., 237 A.2d 593, 599 (Pa. 1968) (quoting Restatement (Second) of Torts 9 § 400 (1965)) (internal quotation marks omitted). Angelos moved for partial summary 10 judgment against Pfizer on the issue of liability in many of these suits, and in response 11 Pfizer moved in the bankruptcy court to enforce the API against Angelos. CO at *2-3. 12 Angelos argued that the liability it sought to impose on Pfizer was based on Pfizer s 13 own conduct in permitting its label to be affixed to Quigley products containing 14 asbestos and to Quigley advertising, and therefore its suits were not barred by the API. 15 Id. at *3. 16 In its Clarifying Order, the bankruptcy court began by noting that all the actions 17 upon which Pfizer s liability is predicated in the Angelos suits were actually 18 undertaken by Quigley, and that consequently the relevant inquiry for determining 19 whether the API enjoins continuance of these suits is whether Pfizer s liability arises 20 by reason of its ownership or management of Quigley, as the API, mirroring 21 § 524(g)(4)(A)(ii), provides. Id. at *5. It then observed that the phrase arises by 22 reason of is ambiguous. On the one hand, the liability Angelos seeks to impose on 7 1 Pfizer arises by reason of the use of its name and logo by Quigley, not its ownership 2 or management of Quigley. Id. (internal quotation marks omitted). On the other hand, 3 [b]ut for Pfizer s ownership and/or management of Quigley, its name and logo would 4 never have been used on Quigley products. Id. 5 The bankruptcy court concluded that the API does cover § 400 liability. It 6 reasoned that the API plainly enjoins claims premised on successor and alter ego 7 liability, and that both of these types of liability will often involve conduct by the third- 8 party defendant that is more wrongful than [t]he use of the Pfizer name and logo. 9 Id. at *6. The bankruptcy court also noted the similarity between respondeat superior 10 liability and liability imposed under § 400, since it concluded that both forms of 11 liability are considered derivative under Pennsylvania law. Id. Suits alleging 12 respondeat superior liability are clearly covered by the API so, the bankruptcy court 13 reasoned, § 400 suits should be as well. Id.1 The bankruptcy court determined that 14 the API reaches the Angelos suits, and therefore it directed Angelos and the plaintiffs 15 in these suits to cease prosecution of them. Id. at *8. 16 Angelos appealed the CO to the United States District Court for the Southern 17 District of New York. The district court did not quarrel with the bankruptcy court s 18 determination that the conduct for which Angelos seeks to impose liability on Pfizer Additionally, the bankruptcy court discussed our then-recent decision in In re Johns-Manville Corp., 517 F.3d 52 (2d Cir. 2008) (hereinafter Manville III, to adhere to the numbering scheme employed by previous decisions discussing the long Manville line of cases), rev d sub nom. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 129 S. Ct. 2195 (2009), which it read to require that, to be enjoined under 11 U.S.C. § 524(g), a claim against a third party must be derivative. CO at *7. 1 8 1 was Quigley s. District Court Opinion at 203-04. However, the district court disagreed 2 with the bankruptcy court that the fact that Quigley would not have marked its 3 products with Pfizer s name and logo but for Pfizer s ownership of Quigley leads to the 4 conclusion that the API covers the Angelos suits. Instead, the district court viewed the 5 relevant inquiry as whether the liability Angelos seeks to impose on Pfizer arises, as 6 a legal matter, from its ownership of Quigley. Id. at 204-05. The district court found 7 support for this position in our decision in Manville III, which it read as requiring, in 8 cases interpreting the scope of an 11 U.S.C. § 524(g) injunction, a legal analysis . . . 9 under state law to determine whether [a defendant] had an independent legal duty in 10 dealing with the plaintiffs, notwithstanding the factual background in which [that] 11 duty arose. Id. at 205 (quoting Manville III, 517 F.3d at 63). The district court 12 explained that § 400 imposes an independent duty on those putting themselves out as 13 the apparent manufacturer of a product made by another not to hold themselves out 14 as sponsors of defective products. See id. at 207. Because Angelos seeks to bring 15 separate direct actions against Pfizer . . . because Pfizer breached an independent legal 16 duty not to employ its name and logo in the marketing of a defective product, the 17 Angelos suits, in the district court s view, fell outside the scope of the API. Id. 18 Accordingly, the district court reversed the bankruptcy court, permitting the Angelos 19 suits to go forward in Pennsylvania state courts. Id. at 209. 20 21 22 9 1 The district court entered judgment for Angelos on May 23, 2011. Quigley 2 moved for reconsideration, and the district court denied the motion.2 This appeal 3 followed. DISCUSSION 4 5 This Court s Jurisdiction 6 The parties do not dispute our jurisdiction to hear this appeal. Nevertheless, 7 [w]e have an independent obligation to consider the presence or absence of subject 8 matter jurisdiction sua sponte. Coll. Standard Magazine v. Student Ass n of State 9 Univ. of N.Y. at Albany, 610 F.3d 33, 35 (2d Cir. 2010) (per curiam) (internal quotation 10 marks omitted). We have made clear in the past that 28 U.S.C. § 158(d) is the 11 exclusive source of court of appeals jurisdiction over orders of district courts reviewing 12 bankruptcy court rulings. In re Lomas Fin. Corp., 932 F.2d 147, 150 (2d Cir. 1991). 13 Section 158(d)(1) provides that [t]he courts of appeals shall have jurisdiction of 14 appeals from all final decisions, judgments, orders, and decrees of United States 15 district courts and bankruptcy appellate panels reviewing decisions of bankruptcy 2 After entry of final judgment but before the decision on the motion to reconsider, Hissey Kientz L.L.P. and Hissey, Kientz & Herron P.L.L.C. (collectively Hissey ) gave notice of their intention to intervene, and moved to intervene on June 24, the same day the district court issued its decision denying Quigley s motion to reconsider. The district court granted the motion to intervene on June 27. On appeal, Appellants challenge the district court s grant of the motion to intervene, arguing that Hissey does not have standing. Because Hissey conceded at oral argument that its purposes in seeking to intervene would be vindicated if we were to treat it as an amicus curiae, we do so, and do not reach the standing question. The Clerk of Court is directed to amend the caption accordingly. 10 1 courts. See 28 U.S.C. § 158(a)-(b), (d).3 But a district court s order can be final for 2 purposes of appealability only if the order of the bankruptcy court below was also final. 3 See In re Fugazy Express, Inc., 982 F.2d 769, 775 (2d Cir. 1992) ( The district court s 4 own decision of an appeal from the bankruptcy court is not a final decision for purposes 5 of appeal to the court of appeals unless the order of the bankruptcy court was final. ). 6 Therefore, we may exercise jurisdiction over this appeal only if the order of the 7 bankruptcy court was final. 8 The standards for determining finality in bankruptcy differ from those 9 applicable to ordinary civil litigation. In re Sonnax Indus., Inc., 907 F.2d 1280, 1283 10 (2d Cir. 1990). This difference is due to the fact that a bankruptcy proceeding is 11 umbrella litigation often covering numerous actions that are related only by the 12 debtor s status as a litigant and that often involve decisions that will be unreviewable 13 if appellate jurisdiction exists only at the conclusion of the bankruptcy proceeding. 14 Id. Accordingly, we regard as final orders that finally dispose of discrete disputes 15 within the larger case. Id. (emphasis omitted) (internal quotation marks omitted). 16 Bankruptcy court orders lifting an automatic stay are final for purposes of 17 appealability. See, e.g., In re Chateaugay Corp., 880 F.2d 1509, 1511 (2d Cir. 1989). 18 So are orders denying relief from an automatic stay, see, e.g., In re Pegasus Agency, 19 Inc., 101 F.3d 882, 885 (2d Cir. 1996), so long as the bankruptcy court has not indicated 3 Section 158(d) also provides for jurisdiction for courts of appeals to hear appeals on the basis of certification. See U.S.C. § 158(d)(2). Because the instant appeal has not been certified, this provision is not relevant here. 11 1 that it contemplates further proceedings on the question of relief from the stay, see 2 Lomas, 932 F.2d at 151; In re Enron Corp., 316 B.R. 767, 770 (S.D.N.Y. 2004). 3 Here, the Clarifying Order that is the subject of this appeal did not grant or 4 deny relief from a stay; rather, it clarified that a stay applied to a particular party. But 5 in Lomas, we stated that whether a bankruptcy court order involve[s] an appeal from 6 a denial of a motion to lift the automatic stay . . . [or] involves an appeal from an order 7 holding . . . that the automatic stay applies to the action is not a distinction of 8 consequence to the finality issue. Lomas, 932 F.2d at 151 n.2. Furthermore, we have 9 no reason to believe that the bankruptcy court contemplates additional proceedings as 10 to the applicability of the stay to the Angelos suits. The bankruptcy court s resolution 11 of the dispute between Angelos and the Appellants as to whether the stay applies to 12 the Angelos suits is the equivalent of a decision from that court on a motion seeking 13 relief from a stay. Accordingly, we agree with the district court s well-reasoned 14 conclusion that the bankruptcy court s CO was final, see In re Quigley, No. M-47 (RJH), 15 2010 WL 356653 (S.D.N.Y. Jan. 27, 2010), and we thus have jurisdiction to hear this 16 appeal. 17 The Bankruptcy Court s Jurisdiction to Issue the Clarifying Order 18 While the parties do not dispute our jurisdiction to hear this appeal, they do 19 dispute the bankruptcy court s jurisdiction to enjoin the Angelos suits from going 20 forward. Amicus Hissey suggests that the Supreme Court s recent opinion in Stern v. 21 Marshall, 131 S. Ct. 2594 (2011), supports the view that the bankruptcy court s 22 exercise of jurisdiction contravened Article III of the Constitution. Angelos argues that 23 jurisdiction is lacking under the Bankruptcy Code. We disagree with both positions. 12 1 a. Article III and the Bankruptcy Court s Jurisdiction 2 Stern involved a dispute between the estates of Vickie Lynn Marshall (popularly 3 known as Anna Nicole Smith and herein referred to as Vickie ), the wife of the late J. 4 Howard Marshall, and Pierce Marshall ( Pierce ), J. Howard Marshall s son. Id. at 5 2601. After the death of her husband, Vickie filed for bankruptcy in federal court. 6 Pierce filed a proof of claim in that proceeding, charging that Vickie had defamed him 7 in connection with a suit she had previously filed alleging that her husband intended 8 to provide for her through a trust, and that Pierce had tortiously interfered with that 9 gift. Upon Pierce s filing of a proof of claim in the bankruptcy proceeding, Vickie 10 responded with a counterclaim for the alleged tortious interference. The bankruptcy 11 court issued a final judgment in favor of Vickie on her counterclaim, see id. at 2601, 12 and Pierce then challenged the bankruptcy court s jurisdiction to do so. 13 The Supreme Court held that the bankruptcy court s entry of final judgment on 14 Vickie s counterclaim violated Article III of the Constitution.4 Id. at 2608. Article III, 15 the Court reasoned, could neither serve its purpose in the system of checks and 16 balances nor preserve the integrity of judicial decisionmaking if the other branches of 17 the Federal Government could confer the Government s judicial Power on entities 18 outside Article III. Id. at 2609. The Court concluded that the entry of final judgment 4 Article III commands that [t]he judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. Art. III, § 1. The Article further provides for the judges of these courts to hold their offices during good behavior, without diminution of salary. Id. 13 1 on Vickie s counterclaim involve[d] the most prototypical exercise of judicial power: 2 the entry of a final, binding judgment by a court with broad substantive jurisdiction, 3 on a common law cause of action, when the action neither derive[d] from nor 4 depend[ed] upon any agency regulatory regime. Id. at 2615 (emphasis omitted). 5 Accordingly, the counterclaim had to be decided by an Article III court. 6 Whatever Stern s precise contours (a matter we need not reach) we conclude that 7 Stern has no application to the present case. The Supreme Court in Stern indicated 8 that its holding was a narrow one. See id. at 2620 ( We conclude today that Congress, 9 in one isolated respect, exceeded [Article III s] limitation in the Bankruptcy Act of 10 1984. ); see also In re Salander O Reilly Galleries, 453 B.R. 106, 115 (Bankr. S.D.N.Y. 11 2011) ( Stern is replete with language emphasizing that the ruling should be limited 12 to the unique circumstances of that case. ). Its facts, moreover, are far removed from 13 the instant situation. The CO and the API at issue here concern the stay of litigation 14 during the pendency of Quigley s bankruptcy, rather than the entry of final judgment 15 on a common law claim. Enjoining litigation to protect bankruptcy estates during the 16 pendency of bankruptcy proceedings, unlike the entry of the final tort judgment at 17 issue in Stern, has historically been the province of the bankruptcy courts. See 18 generally, e.g., In re Prudence Bonds Corp., 122 F.2d 258 (2d Cir. 1941) (discussing 19 stays of litigation imposed by a bankruptcy court). Accordingly, the bankruptcy court 20 was well within constitutional bounds when it exercised jurisdiction to enjoin the 21 Angelos suits. 22 14 1 b. Statutory Jurisdiction 2 Statutory jurisdiction is a separate matter. 28 U.S.C. § 1334 provides for 3 original jurisdiction in the district courts for all cases under title 11 and all civil 4 proceedings arising under title 11, or arising in or related to cases under title 11. 28 5 U.S.C. § 157(a), in turn, provides that district courts may refer all cases or proceedings 6 over which they have jurisdiction under 28 U.S.C. § 1334(a) or (b) to the bankruptcy 7 courts. The parties do not dispute that, if the district court had bankruptcy jurisdiction 8 because the Angelos suits aris[e] under title 11, or aris[e] in or [are] related to the 9 Quigley bankruptcy, the bankruptcy court s exercise of jurisdiction was proper.5 10 Bankruptcy jurisdiction is appropriate over third-party non-debtor claims that 11 directly affect the res of the bankruptcy estate. Manville III, 517 F.3d at 66; see also 12 In re Cuyahoga Equip. Corp., 980 F.2d 110, 114 (2d Cir. 1992) ( The test for 13 determining whether litigation has a significant connection with a pending bankruptcy 14 [sufficient to confer bankruptcy jurisdiction] is whether its outcome might have any 5 In the OPI, the bankruptcy court found that the proceeding before it was a core proceeding within the terms of 28 U.S.C. § 157(b)(2), thus enabling it to issue orders rather than merely to make proposed findings of fact and conclusions of law, see 28 U.S.C. § 157(b)(1), (c)(1). Angelos does not question this conclusion before us, or even cite 28 U.S.C. § 157 in its brief, and has thereby waived any objection to the bankruptcy court s determination. See, e.g., Norton v. Sam s Club, 145 F.3d 114, 117 (2d Cir. 1998) ( Issues not sufficiently argued in the briefs are considered waived and normally will not be addressed on appeal. ). Although Hissey s brief alludes to 28 U.S.C. § 157, an issue raised only by an amicus curiae is normally not considered on appeal ; we see no reason to depart from this general rule here. Olmsted v. Pruco Life Ins. Co. of N.J., 283 F.3d 429, 436 n.5 (2d Cir. 2002). 15 1 conceivable effect on the bankrupt estate. (internal quotation marks omitted)).6 The 2 application of this test to the claims at issue would at first glance appear 3 straightforward. The Insurance Policies and Insurance Trust are the joint property of 4 Pfizer and Quigley s estate. See In re Johns-Manville Corp., 600 F.3d 135, 152 (2d Cir. 5 2010) (per curiam) ( Manville IV ) ( [T]he insurance policies that Travelers issued to 6 Manville are the estate s most valuable asset. ); MacArthur Co. v. Johns-Manville 7 Corp., 837 F.2d 89, 92 (2d Cir. 1988) (agreeing with the [n]umerous courts [that] have 8 determined that a debtor s insurance policies are property of the estate ). If the 9 Angelos suits succeed or even if they merely require Pfizer to incur defense costs in 10 litigating against them the record is uncontradicted that Pfizer may submit a claim 11 to be paid out of insurance that is this joint property. Therefore, these suits could 12 directly affect Quigley s bankruptcy estate, and bankruptcy jurisdiction under 28 13 U.S.C. § 1334 is appropriate. See Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 639 14 F.3d 572, 579 (2d Cir. 2011) ( If [the plaintiffs are] successful in their claims against 15 [the defendant], the funds they recover will benefit the . . . bankruptcy estates. It is 16 not difficult to conclude that the conceivable effect test is satisfied. (citation omitted)). 17 Angelos objects that the impact of the Angelos suits on Quigley s bankruptcy 18 estate is too attenuated to confer bankruptcy jurisdiction. 6 We disagree. The We have also expressed the test for bankruptcy jurisdiction as an inquiry whether the third-party action has a significant connection with the bankruptcy case in question. In re Turner, 724 F.2d 338, 341 (2d Cir. 1983) (Friendly, J.) (internal quotation marks omitted). Any possible difference between these two standards is immaterial for our purposes, as the exercise of bankruptcy jurisdiction was proper if the Angelos suits satisfy either test. See Cuyahoga, 980 F.2d at 114. 16 1 bankruptcy court found in 2004, and Angelos does not contest, that the Insurance 2 Policies and Insurance Trust may be utilized by Pfizer and Quigley to satisfy 3 settlements, judgments or defense costs related to Asbestos Related Claims against 4 either of them, on a first billed, first paid basis, irrespective of amounts previously 5 billed by or paid to Pfizer or Quigley. 7 OPI at 10. The potential impact of the Angelos 6 suits on the bankruptcy estate is thus nothing but direct: at Pfizer s election, any 7 judgments, settlements, or litigation expenses arising out of the Angelos suits will be 8 paid by Quigley s estate. This case is thus different from Pacor, Inc. v. Higgins, 743 9 F.2d 984 (3d Cir. 1984), overruled on other grounds by Things Remembered, Inc. v. 10 Petrarca, 516 U.S. 124 (1994), on which Angelos relies. In Pacor, where the third party 11 had only a potential common law right of indemnification against the debtor, any 12 judgment received by the plaintiff . . . could not itself [have] result[ed] in even a 13 contingent claim against [the debtor], since Pacor would still be obligated to bring an 14 entirely separate proceeding to receive indemnification. Id. at 995.8 Here, Pfizer need 15 not rely on a separate action for indemnification; rather, it has a now-existent legal 7 This case thus differs from In re Combustion Engineering, Inc., 391 F.3d 190 (3d Cir. 2004). There, the bankruptcy court made insufficient findings of fact as to whether two third parties and the debtor were insured under the same program (and also as to the program s terms and operations) for the Third Circuit to conclude that claims against the third parties would in fact have an adverse effect on the debtor s estate. See id. at 232-33 & nn.42-43. 8 See also In re W.R. Grace & Co., 591 F.3d 164, 173 (3d Cir. 2009) ( [I]n order for a bankruptcy court to have related-to jurisdiction to enjoin a lawsuit, that lawsuit must affect the bankruptcy [] without the intervention of yet another lawsuit. (alteration in original) (quoting In re Federal-Mogul Global, Inc., 300 F.3d 368, 382 (3d Cir. 2002))). 17 1 right to utilize the assets of the Insurance Policies and Insurance Trust to satisfy 2 judgments or settlements or pay defense costs. See A.H. Robins Co. v. Piccinin, 788 3 F.2d 994, 1001-02 (4th Cir. 1986) (indicating that proceedings against third parties 4 who may be entitled to indemnification under [an insurance] policy [owned by the 5 debtor] or who qualify as additional insureds under the policy are covered by the 6 automatic stay); see also In re Brentano s, 27 B.R. 90, 92 (Bankr. S.D.N.Y. 1983) 7 (exercising jurisdiction where an indemnification agreement between the debtor and 8 a third party arranged that any judgment against the third party would automatically 9 result in liability for the debtor), cited in Pacor, 743 F.2d at 995.9 10 Angelos also objects that, under this Court s decision in Manville III, the 11 bankruptcy court did not have jurisdiction to enjoin the Angelos suits because they 12 allege violations of an independent legal duty owed by Pfizer to the plaintiffs, rather 13 than claims that are derivative under Pennsylvania state law. Again, we disagree. 14 Because Angelos s mistake as to the nature of the jurisdictional inquiry under 28 15 U.S.C. § 1334(a) and (b) stems from a misunderstanding of our case law s treatment 16 of derivative liability in the context of bankruptcy jurisdiction, however, we discuss our 17 previous cases addressing this subject in some detail. 9 We are unconvinced by Angelos s argument that the Angelos suits would not impact Quigley s estate because Pfizer would have to make a claim against the Insurance Policies or the Insurance Trust before any effect on Quigley s estate would occur. The parties entitled to contractual indemnity in A.H. Robins and In re Brentano s could presumably also have declined to insist on their contractual rights. 18 1 Our first case to address the role of derivative liability in the context of 2 bankruptcy jurisdiction was MacArthur Co. v. Johns-Manville Corp., 837 F.2d 89, part 3 of the long saga of litigation arising from the bankruptcy of the Johns-Manville 4 Corporation ( Manville ), a major national asbestos concern. 5 addressed the question whether the bankruptcy court had jurisdiction to enjoin claims 6 against Manville s insurers by an asbestos distributor (MacArthur) when the 7 distributor claimed to be coinsured with Manville under vendor endorsements 8 contained in the Manville policies. Id. at 91-93. We concluded that it did. Id. at 93. 9 After determining that the insurance policies in question constituted property of the 10 estate, we turned to MacArthur s argument that because its own rights are separate 11 from Manville s, its claims under the vendor endorsements are too remote from the 12 Chapter 22 proceeding to permit the Bankruptcy Court to exercise jurisdiction. Id. 13 at 92. We noted that [t]he vendor endorsements cover only those liabilities resulting 14 from the vendor s status as a distributor of Manville s products, that [t]he 15 endorsements are limited by the product liability limits of the underlying Manville 16 policies and are otherwise subject to all of the terms of the underlying policies, and 17 that MacArthur s rights as an insured vendor are completely derivative of Manville s 18 rights as the primary insured. Id. at 92. We reasoned that [s]uch derivative rights 19 are no different . . . from those of the asbestos victims who have already been barred 20 from asserting direct actions against the insurers, id. (citing In re Davis, 730 F.2d 176 19 In MacArthur, we 1 (5th Cir. 1984) (per curiam)),10 and consequently found the bankruptcy court s exercise 2 of jurisdiction proper. 3 MacArthur does not hold that third-party suits that affect the res of the 4 bankrupt estate but that are nonetheless not derivative, in some sense, of the debtor s 5 rights and liabilities fall outside federal bankruptcy jurisdiction. (Indeed, language to 6 this effect would have been dicta, as MacArthur found jurisdiction proper. Id. at 93.) 7 The primary thrust of the opinion in MacArthur focuses on the fact that the suits in 8 question would impact the res of the bankruptcy estate. See id. at 91-92. We viewed 9 the similarity of MacArthur s claims to direct actions against an insurer (over which 10 the Fifth Circuit in Davis had already approved bankruptcy jurisdiction) as relevant 11 to whether MacArthur s claims affected the bankruptcy estate, not as an independent 12 requirement for the exercise of jurisdiction. See id. at 92-93 ( [MacArthur] seek[s] to 13 collect out of the proceeds of Manville s insurance policies on the basis of Manville s 14 conduct. [MacArthur s] claims are inseparable from Manville s own insurance coverage 15 and are consequently well within the Bankruptcy Court s jurisdiction over Manville s 16 assets. ). The fact that MacArthur s rights under the vendor endorsements were 17 derivative of Manville s as opposed to non-derivative rights under separate insurance 18 policies indicated in that case that any proceeds Manville s insurers might owe 19 MacArthur would come from Manville s insurance policies. 10 A direct action in the insurance context is a suit, statutorily authorized in some states, in which [t]he injured party steps into the shoes of the tortfeasor and can assert any right of the tortfeasor-insured against the insurance company. Continental Ins. Co. v. Atlantic Cas. Ins. Co., 603 F.3d 169, 179 (2d Cir. 2010) (quoting Lang v. Hanover Ins. Co., 820 N.E. 2d 855, 858 (N.Y. 2004)) (internal quotation mark omitted). 20 1 Our next case to consider the role of derivative liability in the context of 2 bankruptcy jurisdiction was Manville III. In that case, plaintiffs sought to bring suits 3 against Travelers, Manville s primary insurer for a period of years. Manville III, 517 4 F.3d at 57. The plaintiffs in many of these suits did not claim against Manville s 5 insurance policies,11 but rather sought to hold Travelers liable for what they saw as its 6 independent tortious conduct. See id. at 57-58. For instance, some of these plaintiffs 7 alleged that they declined to file personal injury suits against Manville because 8 Travelers . . . suppressed information about asbestos hazards and intentionally 9 propagated an allegedly-fraudulent state of the art defense to frustrate claimants 10 rights. Id. at 57. Travelers argued that the suits were enjoined pursuant to two 11 orders issued by the bankruptcy court in 1986.12 Id. at 58. 12 We held that bankruptcy jurisdiction did not exist to enjoin the suits in question. 13 We began by distinguishing MacArthur and the Fifth Circuit s decision in Davis, noting 14 that the plaintiffs claims seek damages from Travelers that are unrelated to the 15 policy proceeds, quite unlike the claims in MacArthur and Davis where plaintiffs 16 sought indemnification or compensation for the tortious wrongs of Manville to be paid 11 The suits were thus not traditional direct actions. See Manville III, 517 F.3d at 55 n.4. 12 The Supreme Court reversed this Court s decision in Manville III on the ground that given the finality of the Bankruptcy Court s [1986] orders following the conclusion of direct review, res judicata barred the plaintiffs challenge, two decades later, to the bankruptcy court s jurisdiction to enter the orders in 1986. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 129 S. Ct. 2195, 2198 (2009). In Manville IV, we clarified that the Supreme Court did not contradict the conclusion of [Manville III s] jurisdictional inquiry, 600 F.3d at 152, and we reaffirmed the jurisdictional analysis, id. at 148. 21 1 out of the proceeds of Manville s insurance policies. Id. at 63. We also noted that, 2 unlike the claims in MacArthur, the claims at issue were not premised on Manville s 3 conduct. Id. We faulted the courts below for failing to examine whether the suits in 4 question sought to impose liability on Travelers on the basis of its independent legal 5 duty in its dealing with [the] plaintiffs, id., noting that such an examination would 6 have revealed that, while some of the claims were premised on a statute that provides 7 a direct action against an insurer when the insured is insolvent, the vast majority 8 were claims which sought to recover directly from [the] debtor s insurer for the 9 insurer s own independent wrongdoing, ma[d]e no claim against an asset of the 10 estate, and whose litigation [did not] affect the estate. Id. at 64-65. Accordingly, we 11 concluded that the bankruptcy court had no jurisdiction to enjoin claims against 12 Travelers that were predicated, as a matter of state law, on Travelers own alleged 13 misconduct and were unrelated to Manville s insurance policy proceeds and the res of 14 the Manville estate. Id. at 68. 15 Manville III did not work a change in our jurisprudence. After Manville III, as 16 before it, a bankruptcy court . . . has jurisdiction to enjoin third-party non-debtor 17 claims that directly affect the res of the bankruptcy estate. Manville III, 517 F.3d at 18 66; accord Cuyahoga, 980 F.2d at 114. As in MacArthur, the salience of Manville III s 19 inquiry as to whether Travelers liability was derivative of the debtor s rights and 20 liabilities was that, in the facts and circumstances of Manville III, cases alleging 21 derivative liability would affect the res of the bankruptcy estate, whereas cases alleging 22 non-derivative liability would not. Compare Manville III, 517 F.3d at 64 ( [T]he claims 22 1 involving Louisiana law are premised on a statute that provides a direct action against 2 an insurer when the insured is insolvent. The recovery is against the policy . . . . ), 3 with id. at 65 ( Here . . . Plaintiffs seek to recover directly from a debtor s insurer for 4 the insurer s own independent wrongdoing. . . . They raise no claim against Manville s 5 insurance coverage. ). 6 derivative/non-derivative inquiry as a means to assess whether the suits at issue would 7 affect the bankruptcy estate. It did not impose a requirement that an action must both 8 directly affect the estate and be derivative of the debtor s rights and liabilities for 9 bankruptcy jurisdiction over the action to exist. The Manville III panel thus quite properly used the 10 Our more recent decision in Manville IV made more explicit the fact that in 11 Manville III derivative liability was discussed not as an independent jurisdictional 12 requirement but as a factor demonstrating, in the circumstances of that litigation, that 13 the suits in question would have an effect on the bankruptcy res. We described our 14 holding in Manville III as indicating that the bankruptcy court s in rem jurisdiction 15 was insufficient to allow it to enjoin . . .[a]ctions based on state-law theories that 16 [sought] to impose liability on Travelers as a separate entity rather than on the policies 17 that it issued to Manville. Manville IV, 600 F.3d at 152. That is to say, Manville III 18 drew a distinction between suits alleging non-derivative liability on the one hand, and 19 suits affecting the res on the other. By identifying the suits in question as non- 20 derivative, the Manville III panel determined that they would not affect the 21 bankruptcy estate. 23 1 It thus appears from our case law that, while we have treated whether a suit 2 seeks to impose derivative liability as a helpful way to assess whether it has the 3 potential to affect the bankruptcy res, the touchstone for bankruptcy jurisdiction 4 remains whether its outcome might have any conceivable effect on the bankruptcy 5 estate. Cuyahoga, 980 F.2d at 114. This test has been almost universally adopted by 6 our sister circuits, see Celotex Corp. v. Edwards, 514 U.S. 300, 308 n.6 (1995) (collecting 7 cases),13 which in some instances have found bankruptcy jurisdiction to exist over non- 8 derivative claims against third parties.14 See In re Stonebridge Techs., Inc., 430 F.3d 9 260, 263-64, 267 (5th Cir. 2005) (per curiam) (finding bankruptcy jurisdiction over a 10 negligent misrepresentation suit against a third party where the alleged 11 misrepresentation was undertaken by defendant, not debtor); In re Dogpatch U.S.A., 12 Inc., 810 F.2d 782, 786 (8th Cir. 1987) (finding bankruptcy jurisdiction over 13 counterclaim for breach of contract where liability sought to be imposed arose from 14 contracting party s alleged breach, not debtor s). We see no reason to question these 15 decisions. One of the central purposes perhaps the central purpose of extending 16 bankruptcy jurisdiction to actions against certain third parties, as well as suits against 17 debtors themselves, is to protect[] the assets of the estate so as to ensure a fair 13 The Supreme Court, while noting the widespread approval of the conceivable effect test among the circuits, has not reached the question of whether to adopt this formulation as its own. See Celotex, 514 U.S. at 308 n.6. 14 By contrast, we are aware of no sister circuit cases finding a lack of bankruptcy subject matter jurisdiction where the third-party action in question could affect the bankrupt estate but was not derivative of the rights and obligations of the debtor. 24 1 distribution of those assets at a later point in time. In re Zarnel, 619 F.3d 156, 171 (2d 2 Cir. 2010). But whether the direct result of a suit against a third party will be the 3 removal of assets from the bankruptcy estate is separate from the question whether 4 the third party s alleged liability is derivative of the debtor s (although in certain suits, 5 as our case law indicates, the two questions may become intertwined). A suit against 6 a third party alleging liability not derivative of the debtor s conduct but that 7 nevertheless poses the specter of direct impact on the res of the bankrupt estate may 8 just as surely impair the bankruptcy court s ability to make a fair distribution of the 9 bankrupt s assets as a third-party suit alleging derivative liability.14 Accordingly, we 10 conclude that, where litigation of the Angelos suits against Pfizer would almost 11 certainly result in the drawing down of insurance policies that are part of the 12 bankruptcy estate of Quigley, the exercise of bankruptcy jurisdiction to enjoin these 13 suits was appropriate. 14 The Scope of the API 15 Having concluded both that we have jurisdiction to hear this appeal and that the 16 bankruptcy court had jurisdiction to enjoin the Angelos suits, we next address whether 17 the Angelos suits fall within the scope of the API and were, for that reason, actually 18 enjoined. 19 interpretation of its own order customary appellate deference. In re Casse, 198 F.3d As both parties acknowledge, we typically accord a bankruptcy court s 14 In neither circumstance, of course, is it necessarily the case that an injunction staying litigation during the course of bankruptcy proceedings is appropriate. A bankruptcy court s jurisdiction to enjoin an action does not require it to exercise that jurisdiction to enjoin a suit in a particular instance. 25 1 327, 333 (2d Cir. 1999). Angelos urges, however, and the district court agreed, that 2 such deference does not apply here since the language of the API tracks the statutory 3 language of 11 U.S.C. § 524(g)(4)(A)(ii). We recognize that, in the agency context, the 4 Supreme Court has held that judicial deference to an agency s interpretation of its own 5 regulations is inappropriate when those regulations do[] little more than restate the 6 terms of [a] statute, because the existence of a parroting regulation does not change 7 the fact that the question here is not the meaning of the regulation but the meaning 8 of the statute. Gonzales v. Oregon, 546 U.S. 243, 257 (2006). However, we need not 9 decide whether to apply this principle here, as the bankruptcy court clearly stated in 10 its CO that [t]he Amended Injunction provides the same protection as a channeling 11 injunction under § 524(g). CO at *3. Thus, the bankruptcy court itself believed that 12 it was interpreting the statute when it interpreted the API, and the meaning of the 13 statute is dispositive as to the meaning of the API. We review the bankruptcy court s 14 statutory interpretation, like all legal conclusions, de novo. See In re Casse, 198 F.3d 15 at 332.15 16 As already noted, § 524(g) was enacted to address the unique problem posed by 17 asbestos-related bankruptcies. Because symptoms of asbestos-related illness may not 18 manifest until decades after exposure, potential claimants against an asbestos 15 We recognize that the API was not entered under the bankruptcy court s authority conferred in 11 U.S.C. § 524(g), but rather pursuant to 11 U.S.C. §§ 105(a) and 362(a). API at 2. However, Angelos does not contest the bankruptcy court s authority under these provisions to issue the API. Accordingly, we examine only whether the API s terms encompass the Angelos suits. 26 1 manufacturer s bankruptcy estate may not know of their claims until years after the 2 estate has been depleted by other claimants whose symptoms became apparent earlier. 3 Section 524(g) addresses this difficulty by authorizing a bankruptcy court to enter, 4 along with confirmation of a reorganization plan, an injunction channeling certain 5 classes of claims to a trust set up in accordance with the reorganization plan, which 6 trust will then make payments to both present and future claimants. See 11 U.S.C. § 7 524(g)(1)-(2).16 8 To give bankruptcy courts power to channel all appropriate claims to the trust 9 and to provide an incentive for parent or affiliated companies of an entity undergoing 10 asbestos-related bankruptcy to contribute to the trust § 524(g) contains a provision 11 allowing the bankruptcy court to enter an injunction barring certain actions brought 12 against non-debtor third parties. Section § 524(g)(4)(A)(ii) provides as follows: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 [A]n injunction [under 11 U.S.C. § 524(g)] may bar any action directed against a third party who is identifiable from the terms of such injunction (by name or as part of an identifiable group) and is alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the debtor to the extent such alleged liability of such third party arises by reason of (I) the third party s ownership of a financial interest in the debtor, a past or present affiliate of the debtor, or a predecessor in interest of the debtor; (II) the third party s involvement in the management of the debtor or a predecessor in interest of the debtor, or service as an officer, director or employee of the debtor or a related party; (III) the third party s provision of insurance to the debtor or a related party; or 16 The requirements for a § 524(g) plan and trust are extensive but are relevant here only as described below. 27 (IV) the third party s involvement in a transaction changing the corporate structure, or in a loan or other financial transaction affecting the financial condition, of the debtor or a related party, including but not limited to 1 2 3 4 5 6 7 8 9 10 (aa) involvement in providing financing (debt or equity), or advice to an entity involved in such a transaction; or (bb) acquiring or selling a financial interest in an entity as part of such a transaction. 11 An injunction under the statute may thus properly bar an action against a third party 12 only when that party is alleged to be liable for the conduct of, claims against, or 13 demands on the debtor and to the extent that such liability arises by reason of one 14 of the four relationships between the third party and the debtor enumerated in 15 subsections (I) through (IV).17 16 The parties principal disagreement focuses on the meaning of the phrase by 17 reason of. Stated simply, Pfizer argues that liability arises by reason of any of the 18 four enumerated relationships when that relationship is a but for, factual cause of 19 the liability in question. Here, because Quigley, as a factual matter, would not have 20 applied the Pfizer name and logo to its asbestos-containing products absent Pfizer s 21 ownership interest in Quigley, Pfizer contends that its liability arises by reason of 22 that ownership interest and that the Angelos suits were properly enjoined. Angelos, 23 on the other hand, argues that, to fit within the parameters of 11 U.S.C. § 524(g), the 24 liability sought to be imposed must arise as a legal consequence of one of the four 25 enumerated relationships (or, stated differently, that the relationship, in light of the Given our conclusion that the Angelos suits do not arise by reason of the enumerated grounds, we need not address whether the suits seek to hold Pfizer directly or indirectly liable for the conduct of Quigley. 17 28 1 debtor s conduct or the claims asserted against it, must be a legal cause of or a legally 2 relevant factor to the third party s alleged liability). The API is inapplicable to the 3 Angelos suits, according to Angelos, because Pfizer s liability as an apparent 4 manufacturer under § 400 hinges on the presence of Pfizer s name and logo on 5 Quigley s products, while the fact of Pfizer s ownership of Quigley is legally irrelevant. 6 We agree with Angelos. Section 524(g) does not explicitly indicate whether the 7 phrase by reason of refers to legal or factual causation, or some combination of the 8 two. We conclude, however, that several factors favor the interpretation proffered by 9 the appellee. 10 In the first place, the statute lists four relationships between a third party and 11 a debtor that, when resulting in alleged liability on the third party s part for the 12 conduct of or claims against the debtor, may render an injunction appropriate. As a 13 matter of background legal principle, we deem it significant that each of these four 14 relationships is of a sort that could, legally, have given rise to actual liability in 15 appropriate circumstances prior to § 524(g) s enactment. For instance, 11 U.S.C. § 16 524(g)(4)(A)(ii)(I) provides a bankruptcy court with the power to enjoin an action that 17 arises by reason of the third party s ownership of a financial interest in the debtor, 18 a past or present affiliate of the debtor, or a predecessor in interest of the debtor. This 19 subsection thus authorizes a bankruptcy court to bar actions seeking to impose liability 20 on a third party in circumstances in which a plaintiff might have alleged that the third 21 party was responsible for claims against the debtor on a piercing the corporate veil 29 1 theory.18 See, e.g., Freeman v. Complex Computing Co., 119 F.3d 1044, 1052 (2d Cir. 2 1997) (noting that, under New York law, a plaintiff seeking to pierce the corporate veil 3 must prove [among other things] that . . . the owner has exercised such control that 4 the corporation has become a mere instrumentality of the owner ) (brackets omitted). 5 Similarly, § 524(g)(4)(A)(ii)(III) permits a bankruptcy court to enjoin a suit alleging 6 liability by reason of . . . the third party s provision of insurance to the debtor or a 7 related party, thus referring to statutory direct action liability, as discussed above. 8 Section 524(g)(4)(A)(ii)(IV) provides that litigation may be enjoined where plaintiffs 9 contend that a third party is liable for claims against the debtor by reason of the 10 third party s involvement in a transaction changing the corporate structure, or in a 11 loan or other financial transaction affecting the financial condition, of the debtor or a 12 related party. Here, too, such liability could arise, inter alia and given particular 13 facts, on an aiding and abetting theory, as when one party induces another to commit 14 a tort, see, e.g., Restatement (Second) of Torts § 876(b) (1979), or on a successor liability 15 theory, when a transaction results in the merger or consolidation of the two firms but 16 the purchaser is a mere continuation of the seller, or where the transaction was 17 entered into fraudulently for the purpose of escaping liability, Call Ctr. Techs., Inc. 18 v. Grand Adventures Tour & Travel Publ g Corp., 635 F.3d 48, 52 (2d Cir. 2011) (per 19 curiam) (internal quotation marks omitted). 18 A third party s involvement in the management of the debtor or a predecessor in interest of the debtor, or service as an officer, director or employee of the debtor or a related party, as provided in § 524(g)(4)(A)(ii)(II), could also give rise to liability on this basis. 30 1 Each of the four relationships enumerated in subsections (I) through (IV), then, 2 is a relationship between one party and another that, in appropriate circumstances, 3 has commonly given rise to the liability of the one party for the conduct of or claims or 4 demands against the other, long before § 524(g) came into being. This circumstance 5 does not conclusively establish that § 524(g)(4)(A)(ii) s channeling authority is limited 6 to situations in which the third party s relationship with the debtor is legally relevant 7 to its purported liability, so that a bankruptcy court is not authorized to bar litigation 8 when the relationship is merely a but for cause of the alleged liability. 9 background legal context against which § 524(g)(4)(A)(ii) was enacted, however, 10 suggests strongly that it was this sort of liability that Congress had in mind in 11 enacting the provision. Were Pfizer s view of the matter correct, we would find it 12 surprising that each enumerated relationship in § 524(g)(4)(A)(ii) just happens to 13 correspond to a previously-recognized relationship that may, in appropriate 14 circumstances, give rise to the legal liability of one party for the conduct of or claims 15 against another. The 16 Even brief consideration of another part of § 524(g) in which the by reason of 17 language is employed renders definite our conclusion in favor of Angelos s construction. 18 See United States v. Cunningham, 292 F.3d 115, 118 (2d Cir. 2002) ( [S]imilar 19 language contained within the same section of a statute must be accorded a consistent 20 meaning. ). Section 524(g)(3)(A)(ii) provides as follows: 21 22 23 No entity that pursuant to [a] plan [under § 524(g)] or thereafter becomes a direct or indirect transferee of, or successor to any assets of, a debtor or trust that is the subject of the injunction shall be liable with respect to 31 any claim or demand made against such entity by reason of its becoming such a transferee or successor. 1 2 3 4 Consider this provision s application to a case in which a company first succeeds to 5 significant assets of a bankrupt asbestos concern pursuant to, and after confirmation 6 of, a § 524(g) reorganization plan and thereafter hires new employees to administer 7 these assets, engaging in age discrimination in the hiring process. On Pfizer s reading 8 of the phrase by reason of, such a company could plead 11 U.S.C. § 524(g) as a barrier 9 to liability, since its discrimination would not have occurred, as a factual matter, but 10 for the company s succession to the assets of the bankrupt estate. Angelos s 11 construction of by reason of, in contrast, would not foreclose liability on a 12 discrimination suit, because even if the discrimination would not have taken place but 13 for the company s acquisition of the bankrupt s assets, any subsequent age 14 discrimination claim would not be levied by reason of the company s acquisition of 15 these assets, but by reason of the alleged discrimination itself. 16 We are confident that the Angelos reading of the statutory language at issue 17 here is the correct one. Section 524(g) is designed to facilitat[e] the reorganization and 18 rehabilitation of the debtor as an economically viable entity, as well as make[] it 19 possible for future asbestos claimants to obtain substantially similar recoveries as 20 current claimants. In re Combustion Eng g, Inc., 391 F.3d 190, 234 (3d Cir. 2004). 21 Needless to say, barring the prosecution of claims bearing only an accidental nexus to 22 an asbestos bankruptcy is less than tangentially related to that objective. Indeed 23 (although the question is not before us), we strongly suspect that the bankruptcy courts 32 1 would not even have jurisdiction to enjoin the discrimination suit hypothesized above, 2 since it would not have any effect whatsoever on the res of the bankruptcy estate. See 3 Cuyahoga, 980 F.2d at 114 ( The test for determining whether litigation has a 4 significant connection with a pending bankruptcy [sufficient to confer bankruptcy 5 jurisdiction] is whether its outcome might have any conceivable effect on the bankrupt 6 estate. (internal quotation marks omitted)). We are unpersuaded that Congress 7 intended with its use of the phrase by reason of to produce the peculiar results and 8 jurisdictional difficulties that Pfizer s construction of this phrase would bring about. 9 We conclude that the phrase by reason of, as employed in 11 U.S.C. 10 § 524(g)(4)(A)(ii), requires that the alleged liability of a third party for the conduct of 11 or claims against the debtor arises, in the circumstances, as a legal consequence of one 12 of the four relationships between the debtor and the third party enumerated in 13 subsections (I) through (IV). Pfizer does not argue that its ownership of Quigley is 14 pertinent in any legal sense to the claims asserted in the Angelos suits. Indeed, as the 15 District Court very aptly noted, Pfizer s ownership interest in Quigley is legally 16 irrelevant to the Angelos suits § 400 claims. 17 Consequently, the API, modeled as it is on 11 U.S.C. § 524(g)(4)(A)(ii), does not enjoin 18 the suits at issue. District Court Opinion at 204. 19 Finally, although not necessary to its holding, Manville III briefly addressed 11 20 U.S.C. § 524(g)(4)(A)(ii) s requirement that any injunctions imposed under § 524(g) may 21 only bar actions against third parties alleged to be directly or indirectly liable for the 22 conduct of, claims against, or demands on the debtor, suggesting that an injunction 33 1 is available only in situations where . . . a third party has derivative liability for the 2 claims against the debtor. 517 F.3d at 67-68 (quoting Combustion Eng g, 391 F.3d at 3 234) (internal quotation marks omitted). Angelos argues that the suits at issue may 4 not be enjoined pursuant to the API because § 400 liability is not derivative in nature 5 as a matter of Pennsylvania law. As explained supra note 17, because we conclude 6 that the Angelos suits do not attempt to fix on Pfizer liability arising by reason of 7 Pfizer s ownership of a financial interest in Quigley, 11 U.S.C. § 524(g)(4)(A)(ii)(I), we 8 do not reach this question. 9 10 CONCLUSION For the foregoing reasons, the judgment of the District Court is AFFIRMED. 34
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