Johns-Manville Corp. v. Chubb Indemnity Insurance

06-2103-bk
In re Johns-Manville Corporation, Debtor

UNITED STATES COURT OF APPEALS

F OR THE S ECOND C IRCUIT

August Term, 2009

(Argued: October 22, 2009 Decided: March 22, 2010)

Docket Nos. 06-2103-bk, 06-2118-bk, 06-2186-bk

I N RE J OHNS-M ANVILLE C ORPORATION, D EBTOR

J OHNS-M ANVILLE C ORPORATION, M ANVILLE C ORPORATION, M ANVILLE I NTERNATIONAL
C ORPORATION, M ANVILLE E XPORT C ORPORATION, J OHNS-M ANVILLE I NTERNATIONAL
C ORPORATION, M ANVILLE S ALES C ORPORATION f/k/a J OHNS-M ANVILLE S ALES
C ORPORATION, successor by merger to M ANVILLE B UILDINGS M ATERIALS
C ORPORATION, M ANVILLE P RODUCTS C ORPORATION AND M ANVILLE S ERVICE
C ORPORATION, M ANVILLE I NTERNATIONAL C ANADA, I NC., M ANVILLE C ANADA,
I NC., M ANVILLE I NVESTMENT C ORPORATION, M ANVILLE P ROPERTIES C ORPORATION,
A LLAN-D EANE C ORPORATION, K EN-C ARYL R ANCH C ORPORATION, J OHNS-M ANVILLE
I DAHO I NC., M ANVILLE C ANADA S ERVICE I NC., and S UNBELT C ONTRACTORS
I NC.,

Debtors,

T RAVELERS C ASUALTY AND S URETY C OMPANY, T RAVELERS P ROPERTY C ASUALTY
C ORP., T RAVELERS I NDEMNITY C OMPANY, C OMMON L AW S ETTLEMENT C OUNSEL,
S TATUTORY S ETTLEMENT C OUNSEL, and H AWAII S ETTLEMENT C OUNSEL,

Movants-Appellees,

– v.–

C HUBB I NDEMNITY I NSURANCE C OMPANY, A SBESTOS P ERSONAL I NJURY P LAINTIFFS,
C ASCINO A SBESTOS C LAIMANTS, P EARLIE B AILEY, S HIRLEY M ELVIN, G ENERAL L EE
C OLE, R OBERT A LVIN G RIFFIN, V ERNON W ARNELL, and L EE F LETCHER A NTHONY,
 Objectors-Appellants. *

Before:
C ALABRESI and W ESLEY, Circuit Judges. **

Appeals from a March 28, 2006 order of the United
States District Court for the Southern District of New York
(Koeltl, J.), affirming in part and vacating in part an
August 17, 2004 order of the United States Bankruptcy Court
for the Southern District of New York (Lifland, J.), which
granted Travelers’ motions for approval of a settlement
agreement and for entry of a “Clarifying Order.”

A FFIRMED IN PART, R EVERSED IN PART, and R EMANDED.

S ANDER L. E SSERMAN (Cliff I. Taylor, Stutzman,
Bromberg, Esserman & Plifka, PC; Douglas T.
Tabachnik, Law Offices of Douglas T.
Tabachnik, Manalapan, New Jersey, on the
brief), Stutzman, Bromberg, Esserman & Plifka,
PC, Dallas, Texas, for Objector-Appellant
Asbestos Personal Injury Plaintiffs.

J ACOB C. C OHN (William P. Shelley, on the brief),
Cozen O’Connor, Philadelphia, Pennsylvania,
for Objector-Appellant Chubb Indemnity
Insurance Company.

J ASON R. S EARCY (Joshua P. Searcy, on the brief),
Jason R. Searcy, P.C., Longview, Texas, for
Objector-Appellant Cascino Asbestos Claimants.

*
The Clerk of the Court is respectfully directed to amend the official
captions in these actions to conform to the caption listed above.

**
The Honorable Sonia Sotomayor, originally a member of the panel, was
elevated to the Supreme Court on August 8, 2009. The two remaining members of
the panel, who are in agreement, have determined the matter. See 28 U.S.C. §
46(d); 2d Cir. Local Rules, Internal Operating Procedure E; see also United
States v. Desimone, 140 F.3d 457, 458-59 (2d Cir. 1998).

2
 B ARRY R. O STRAGER (Andrew T. Frankel, Robert J.
Pfister, on the brief), Simpson Thatcher &
Bartlett, LLP, New York, New York, for
Movants-Appellees Travelers Casualty and
Surety Company, Travelers Property Casualty
Corp., and Travelers Indemnity Company.

R ONALD B ARLIANT (Kenneth S. Ulrich, Kathryn A.
Pamenter, Goldberg, Kohn, Bell, Black,
Rosenbloom & Moritz, Ltd.; Karen A. Giannelli,
Gibbons, Del Deo, Dolan, Griffinger &
Vecchione, PC, Newark, New Jersey, on the
brief), Goldberg, Kohn, Bell, Black,
Rosenbloom & Moritz, Ltd., Chicago, Illinois,
for Movant-Appellee Common Law Settlement
Counsel.

M ATTHEW G LUCK (Kent A. Bronson, on the brief),
Milberg Weiss Bershad & Schulman, LLP, New
York, New York, for Movants-Appellees
Statutory Settlement Counsel and Hawaii
Settlement Counsel.

P ER C URIAM:

For almost 30 years, the Johns-Manville Corporation

(“Manville”) and its insurers have sought to navigate the

monumental liability arising out of its production of a

once-valued substance — asbestos. These appeals are yet

another judicial stop on that long journey.

The matter is before us on remand from the Supreme

Court of the United States, which determined that the

bankruptcy court’s 1986 orders in Manville’s Chapter 11

proceedings — “whether or not proper exercises of bankruptcy

3
court jurisdiction and power” — are not subject to

collateral attack by either the parties to the 1986

proceedings or those in privity with them. Travelers Indem.

Co. v. Bailey, 129 S. Ct. 2195, 2205, 2207 (2009). The

Court directed us to address the parties’ remaining,

properly preserved arguments. See id. at 2207. As the

Bailey Court suggested, the primary current contention is

the argument of Chubb Indemnity Insurance Company (“Chubb”)

that “it was not given constitutionally sufficient notice of

the 1986 Orders, so that due process absolves it from

following them, whatever their scope.” Id. In our view,

Chubb is correct.

Every court that has played a role in this case has

acknowledged that the magnitude and complexity of the

underlying bankruptcy proceedings are unparalleled. Insofar

as the law of bankruptcy is concerned, the Manville Chapter

11 reorganization has few, if any, peers. The remaining

issues in this case, however, implicate bedrock concepts of

due process of law. Applying these principles, we conclude

that Chubb was not afforded constitutionally sufficient

notice of the proceedings that led to the entry of the 1986

orders by the bankruptcy court. As such, Chubb is not bound

4
by the bankruptcy court’s 2004 interpretation of those

orders. Accordingly, the district court’s order is reversed

as to Chubb, and the case is remanded for further

proceedings.

I. BACKGROUND

A. Facts

The immediate object of this appeal is a March 28, 2006

order of the United States District Court for the Southern

District of New York (Koeltl, J.), which affirmed in part

and vacated in part two August 17, 2004 orders from the

United States Bankruptcy Court for the Southern District of

New York (Lifland, J.). The due process issues that we must

resolve, however, require us to revisit the nascent stages

of Manville’s Chapter 11 proceedings in the early 1980s.

1. Manville’s Chapter 11 Petition

“From the 1920s to the 1970s, Manville was, by most

accounts, the largest supplier of raw asbestos and

manufacturer of asbestos-containing products in the United

States, and for much of that time Travelers was Manville’s

primary liability insurer.” Bailey, 129 S. Ct. at 2198

5
(internal citation omitted). 1 When the health effects

resulting from exposure to the substance became a matter of

public knowledge, Manville was “crushed by the weight of

[its] century-long entanglement with asbestos,” and it filed

a voluntary Chapter 11 petition in the Southern District of

New York on August 26, 1982. In re Johns-Manville Corp.

(“Manville I”), Nos. 82 B. 11656 et al., 2004 WL 1876046, at

*14 ¶ 52 (S.D.N.Y. Bankr. Aug. 17, 2004), aff’d in part and

vacated in part by In re Johns-Manville Corp. (“Manville

II”), 340 B.R. 49 (S.D.N.Y. 2006). Soon after the petition

was filed, the bankruptcy court recognized “that Manville’s

insurance policies were the bankruptcy estate’s most

valuable asset.” In re Johns-Manville Corp. (“Manville

III”), 517 F.3d 52, 56 (2d Cir. 2008). The value of those

policies was uncertain, however, because they were the

subject of a series of “contentious, costly and

time-consuming coverage dispute[s]” between Manville and a

number of asbestos-industry insurers in the California

Superior Court. Manville I, 2004 WL 1876046, at *14 ¶ 54.

1
We use the term “Travelers” to refer to Travelers
Casualty and Surety Company, Travelers Property Casualty
Corporation, and Travelers Indemnity Company, as well as
their respective affiliates, predecessors, successors,
assigns, officers, and directors. See Manville III, 517
F.3d at 55 n.3.

6
The insurers’ ability to honor the Manville policies,

whether at full value or not, was also complicated by

potential liability arising out of other asbestos litigation

in which they were involved. Id. ¶¶ 54-57.

Between October 1983 and July 1984, in order “[t]o

avoid the uncertainty of the insurance litigation and to

fund its plan of reorganization, Manville sought to settle

its insurance [coverage] claims.” Manville III, 517 F.3d at

56. The result of these negotiations, which were admirably

facilitated by the bankruptcy court, was a settlement that

ultimately yielded over $850 million paid by the insurers to

the Manville estate. Id. at 56 & n.8.

On May 25, 1984, Manville publicly announced that it

had agreed in principle to a settlement of its insurance

coverage disputes. Soon after the announcement, Manville

and a group of insurers — Travelers among them — executed a

settlement agreement (the “1984 Insurance Settlement

Agreement”).

The settlement[] provided that, in exchange for
cash payments [into a settlement fund], the
insurers would be relieved of all obligations
related to the disputed policies and the insurers
would be protected from claims based on such
obligations by injunctive orders of the Bankruptcy
Court.

7
MacArthur Co. v. Johns-Manville Corp., 837 F.2d 89, 90 (2d

Cir. 1988).

More specifically, the 1984 Insurance Settlement

Agreement contained three parts. First, the Settling

Insurers agreed that, if Manville voluntarily withdrew its

claims in the insurance coverage disputes, they would make a

series of payments into the Manville Personal Injury

Settlement Trust (“Manville Trust”). Manville III, 517 F.3d

at 57. 2 Travelers paid $80 million into the Manville Trust

pursuant to the agreement. Id. Second, the agreement

required that the order confirming Manville’s Chapter 11

reorganization would contain an injunction that: (1)

channeled “solely” to the Manville Trust all “Policy

Claims,” which the agreement defined as “any and all claims

. . . by any Person . . . based upon, arising out of or

related to any or all of the Policies” at issue in the

settlement; 3 and (2) barred “Policy Claims against any or

2
Chubb was not a party to the 1984 Insurance Settlement
Agreement. Rather, the “Settling Insurers” were “The
Travelers Indemnity Company on behalf of itself and each of
its Affiliates, The Home Insurance Company on behalf of
itself and each of its Affiliates and each Lloyd’s Syndicate
and British Company.”
3
The full definition of “Policy Claims” in the 1984
Insurance Settlement Agreement was identical to the
definition of that term in the orders that were ultimately

8
all members of the Settling Insurer Group.” Third, in order

to resolve the asbestos-related claims that were to be

channeled to the Manville Trust, the parties to the

settlement agreed that compensation from the Manville Trust

would only be available to claimants that executed “broad

releases” of liability as to the Settling Insurers relating

to “any and all claims . . . whether or not presently known

. . . based upon, arising out of or related to the

Policies.” 4

On August 2, 1984, Manville sought the bankruptcy

court’s preliminary approval of the 1984 Insurance

Settlement Agreement. Manville’s submission stated that:

The parties to the Agreement will request this
Court to order that[,] because these [insurance]
policies constitute property of the [Manville]
estate under Section 541 of the [Bankruptcy] Code
. . . , the property be liquidated by this
settlement, and that all claims by any person to
the res be channeled to that liquidated fund, and
that all persons be enjoined from suing the
Settling Insurers because the property of the
estate has been liquidated and will be in
possession of the Court.

entered by the bankruptcy court.
4
The administrators of the Manville Trust have used at
least three different versions of this release, but the
language relating to its scope has not been revised in a
material fashion. See Manville I, 2004 WL 1876046, at *16-
17 ¶¶ 67-68 & n.5.

9
In a separate “Application” that was simultaneously

submitted to the bankruptcy court, Manville proposed “notice

and service procedures with respect to the Insurance

Settlement Agreement and the hearing to be held by [the

bankruptcy court] to consider the fairness and approval

thereof.” The Application proposed that notice of the

settlement and hearing be provided by mail to several groups

of “interested” parties, as well as by publication in

approximately 91 newspapers throughout the United States and

Canada. Manville indicated that the “supplemental”

publication notice was appropriate “because of the

‘channeling’ mechanism and injunctive relief required by the

proposed Insurance Settlement Agreement and the effect

thereof on those who might assert an interest in the

insurance policies and the Debtors’ claims against the

Settling [Insurers].”

In response to Manville’s request, also on August 2,

1984, the bankruptcy court issued a “Notice of Hearing to

Consider Approval of Compromise and Settlement of Insurance

Litigation.” The Notice stated:

The proposed Insurance Settlement Agreement
provides [that] . . . [a]n order of the Bankruptcy
Court shall be obtained providing that all persons
shall be restrained and enjoined from commencing

10
 and/or continuing any suit, arbitration or other
proceeding of any type or nature for any and all
claims, demands, allegations, duties, liabilities
and obligations (whether or not presently known)
which have been, or could have been, or might be
asserted by any person against any and all the
Settling [Insurers] based upon, arising out of or
relating to any or all of the insurance policies
. . . .

On August 14, 1984, shortly after beginning the

approval process for the 1984 Insurance Settlement

Agreement, the bankruptcy court appointed a Future Claims

Representative (“FCR”) to represent future asbestos

claimants whose interest in the Manville Chapter 11

proceedings might vest after the settlement was approved and

Manville’s reorganization plan was confirmed. The

bankruptcy court defined the class of “Future Claimants” as

“those persons who have been exposed to asbestos or asbestos

products mined, manufactured or supplied by Manville pre-

petition and have manifested or will manifest disease post-

petition and who are not otherwise represented in these

proceedings.” The court then appointed the FCR, “nunc pro

tunc as of August 1, 1984,” to represent the Future

Claimants by “exercis[ing] the powers and perform[ing] the

duties of a Committee under Section 1103 of the Bankruptcy

Code.”

11
 Following the bankruptcy court’s approval of notice

procedures and the appointment of an FCR, it conducted

settlement-approval proceedings on an ongoing basis between

1984 and 1986. After receiving notice, several parties

objected to the settlement. In one pertinent example, the

“Committee of Asbestos-Related Litigants and/or Creditors”

challenged the definition of “Policy Claims” in the 1984

Insurance Settlement Agreement:

The [Settling] Insurers’ breach of covenants of
good faith and fair dealing and consumer
protection statutes (e.g., Calif. Insur. Code §
790.09(h)) clearly arise out of or relate to the
Policies [at issue in the Settlement]

. . .

But these claims are not direct actions for
proceeds; they are independent third party claims
against the [Settling] Insurers which are not
derivative of Manville’s rights. The [Manville]
Estate never has, or can ever have, any right in
these claim proceeds, for they are not contractual
— they are personal rights which the victims have
for the tortious conduct of the [Settling]
Insurers.

(Reply Memorandum of the Asbestos Committee Opposing the

Proposed Insurance Settlement Agreement on Legal Grounds, at

8-9 (May 13, 1985) (emphasis in original).) In support of

this contention, the Committee asserted that “[i]t is well-

established that the [Bankruptcy] Court has no jurisdiction

12
. . . to grant the discharge of and injunction against these

independent, non-derivative claims, as the [1984 Insurance

Settlement] Agreement requires.” (Id. at 10.)

In response to these and other objections to the

settlement, the parties executed a letter agreement on June

3, 1985, which indicated that it was to operate as an

amendment to the 1984 Insurance Settlement Agreement. One

portion of the letter agreement stated:

The Court has in rem jurisdiction over the
Policies and thus the power to enter appropriate
orders to protect that jurisdiction. The
channeling order is intended only to channel
claims against the res [of the Manville estate] to
the Settlement Fund and the injunction is intended
only to restrain claims against the res (i.e., the
Policies) which are or may be asserted against the
Settling Insurers.

(emphasis added). The letters were executed by Travelers’

counsel and indicated that “[t]he foregoing is confirmed on

behalf of the Travelers Indemnity Company . . . and each of

its Affiliates.”

After conducting periodic hearings and conferences

throughout 1984 and 1985, the bankruptcy court entered an

order on September 26, 1985 that “approved pursuant to Rule

9019 of the Rules of Bankruptcy Procedure” the 1984

Insurance Settlement Agreement “together with” the June 3,

13
1985 letter agreement. The order conditioned the final

approval of the settlement on “the result of a hearing” that

would resolve, inter alia, whether the “amounts paid in

settlement fall within the range of reasonableness.”

2. The Confirmation of the Manville Reorganization
Plan and Approval of the 1984 Insurance Settlement
Agreement

In August 1986, the bankruptcy court entered an order

setting the procedures that would be followed to confirm the

Manville Plan. The order directed Manville to provide

notice of the confirmation proceedings pursuant to an August

22, 1986 “Plan of Notification” of the confirmation

proceedings, which included a series of newspaper and

television advertisements and a direct mailing to interested

parties. The ongoing evidentiary hearing relating to the

1984 Insurance Settlement Agreement was concluded on

November 19, 1986. Several parties filed additional

objections to the Manville Plan itself, and the bankruptcy

court conducted the last hearing relating to the Manville

Plan on December 16, 1986. Two days later, on December 18,

the bankruptcy court granted final approval to the 1984

Insurance Settlement Agreement (the “Insurance Settlement

Order”), and it entered an order confirming the Manville

14
Plan on December 22 (the “Confirmation Order,” collectively,

with the Insurance Settlement Order, the “1986 Orders”).

The Insurance Settlement Order contained a series of

provisions that were required by the terms of the 1984

Insurance Settlement Agreement in order to: (1) enjoin

“Policy Claims” against Travelers and the other Settling

Insurers; and (2) “channel” asbestos claimants with Policy

Claims to the settlement proceeds housed in the Manville

Trust. See generally Manville I, 2004 WL 1876046, at *15 ¶

61. The term “Policy Claims” was defined in the Order as

any and all claims . . . (whether or not presently
known) which have been, or could have been, or
might be, asserted by any Person against any or
all members of [Manville] or against any or all
members of the Settling Insurer Group based upon,
arising out of or relating to any or all of the
Policies.

A “channeling injunction” directed that Policy Claims were

to be “transferred, and shall attach, solely” to the

Manville Trust. The Insurance Settlement Order also

provided the Settling Insurers with a release from all

“duties or obligations based upon, arising out of or related

to the Policies and . . . from any and all Policy Claims.”

Finally, the Order contained a permanent injunction that

prohibited “all Persons . . . from commencing and/or

15
continuing any suit . . . of any type or nature for Policy

Claims against any or all members of the Settling Insurer

Group.”

The Confirmation Order incorporated by reference the

Insurance Settlement Order, and this Court rejected

challenges to both of the 1986 Orders on direct appeal in

MacArthur Co. v. Johns-Manville Corp., 837 F.2d 89, 94 (2d

Cir. 1988). Congress subsequently used the bankruptcy

court’s orders as a model to add a provision relating to

channeling injunctions to the Bankruptcy Code. See Manville

III, 517 F.3d at 61 (citing 11 U.S.C. § 524(g)). As of

2004, the Manville Trust had paid more than $3.2 billion to

over 606,000 asbestos claimants. See Bailey, 129 S. Ct. at

2199.

3. The “Direct Actions”

Long after the 1986 Orders were entered by the

bankruptcy court, asbestos claimants began to file claims

against Travelers and other insurers in several states

across the country. “Because many of the suits at issue

[sought] to hold Travelers liable for independent wrongdoing

rather than for a legal wrong by Manville, they [were] not

direct actions in the terms of strict usage.” Bailey, 129

16
S. Ct. at 2200 n.2. Nevertheless, we again use the phrase

“Direct Actions,” for purposes of simplicity, to describe

these claims. See Manville III, 517 F.3d at 55 n.4. 5

Viewed broadly, they came in two flavors: (1) “Statutory

Direct Actions” based on states’ statutory regulation of

insurance practices; and (2) “Common Law Direct Actions,” in

which it was alleged that Travelers and others violated

“duties to disclose certain asbestos-related information

[that they] learned” as asbestos-industry insurers. Id. at

58.

In 2002, relying on the terms of the 1986 Orders,

Travelers sought an injunction from the bankruptcy court

against several then-pending Direct Actions. 6 The court

issued a temporary restraining order and referred the matter

to mediation before Mario Cuomo, former governor of New

5
The claims brought pursuant to Louisiana’s direct action
statute, La. Rev. Stat. 22:1269 (2009), are the only true
direct actions resolved by the 2004 Direct Action
Settlement. See Manville III, 517 F.3d at 62-63 (citing In
re Davis, 730 F.2d 176 (5th Cir. 1984) (per curiam)). There
is no dispute that these actions are enjoined by the 1986
Orders.
6
Travelers’ initial motion for a preliminary injunction
related to Direct Actions in the state courts of Louisiana,
Massachusetts, Texas, and West Virginia. In 2003, Travelers
filed two similar motions for injunctions of Direct Actions
in Texas and Ohio. See Manville III, 517 F.3d at 58 & n.11.

17
York. Id. The mediation ultimately allowed Travelers to

reach a tripartite settlement — the “2004 Direct Action

Settlement” — involving three categories of Direct Actions:

the Common Law Direct Actions, the Statutory Direct Actions,

and another set of Statutory Direct Actions separately

referred to as the Hawaii Direct Actions.

In November 2003, as part of the resolution of the

Statutory Direct Actions, Travelers agreed to pay up to $360

million into a fund that would be used to compensate

claimants with those sorts of claims. Manville I, 2004 WL

1876046, at *22 ¶ 96. In May 2004, Travelers agreed to

create a similar $70 million fund for present and future

claimants in Common Law Direct Actions, as well as a $15

million fund for the plaintiffs in the Hawaii Direct

Actions. Id. at *22-23 ¶¶ 101, 105. In order to gain

access to the funds established by Travelers, which are

separate from the Manville Trust created pursuant to the

1984 Insurance Settlement Agreement, the 2004 Direct Action

Settlement required that claimants release Travelers from

further liability “separate and apart from Travelers’

protection under the 1986 Orders.” Bailey, 129 S. Ct. at

2200. The Settlement was also conditioned upon the entry of

18
a “Clarifying Order” by the bankruptcy court. The

contemplated order was to state, in essence, that the Direct

Actions “are, and have always been, prohibited by the 1986

[O]rders.” Manville III, 517 F.3d at 58.

Travelers filed a motion seeking the bankruptcy court’s

approval of the Common Law Direct Action settlement in March

2004, and then sought approval of the latter two agreements

in June of the same year. The bankruptcy court approved an

extensive set of party-driven notice procedures, and

conducted hearings on July 6 and August 17, 2004 to resolve

objections to the settlement.

Among the objectors was Chubb, an asbestos-industry

insurer that was one of Travelers’ co-defendants in the

Common Law Direct Actions but not a party to the 1984

Insurance Settlement Agreement. Through its objections,

Chubb sought to preserve its ability to bring claims against

Travelers for contribution and indemnity relating to their

potential joint liability in the Common Law Direct Actions.

See Manville I, 2004 WL 1876046, at *33 ¶ 33; see also

Manville III, 517 F.3d at 60 n.17. Chubb contended that the

bankruptcy court lacked authority to enjoin it from doing

so, and presented two principal arguments in support of its

19
position. First, Chubb joined an argument presented by

certain individual asbestos claimants that the bankruptcy

court lacked subject matter jurisdiction to enjoin non-

derivative claims against Travelers, a third-party non-

debtor, in Manville’s Chapter 11 proceedings. Second, Chubb

asserted that Travelers was seeking injunctive relief that

could not “constitutionally be applied” to it because, in

the 1980s, Chubb “was in the position of a potential future

claimant with no knowledge of its potential future claims

[against Travelers] and for which no future claims

representative . . . was appointed to protect its rights.”

On August 17, 2004, the bankruptcy court issued

“Findings of Fact and Conclusions of Law” in which it

rejected, inter alia, Chubb’s two-pronged challenge to the

2004 Direct Action Settlement. On the same day, the

bankruptcy court entered the “Clarifying Order” that was

contemplated by settlement (collectively, with the

bankruptcy court’s “Findings of Fact and Conclusions of

Law,” the “2004 Orders”).

The 2004 Orders have three primary features that are

relevant to these appeals. First, based on its fact finding

that “Travelers learned virtually everything it knew about

20
asbestos from its relationship with Manville,” the

bankruptcy court “clarifie[d]” that all of the Direct

Actions “are within the scope of the [1986 Orders’]

prohibitions, and are — and always have been — permanently

barred.” Manville I, 2004 WL 1876046, at *30 ¶ 19. Second,

the bankruptcy court rejected Chubb’s arguments that it was

“unauthorized to bar the contribution or indemnity claims

[Chubb] may have against Travelers.” Id. at *33 ¶ 33. It

reasoned that those claims, too, were barred by the 1986

Orders, and that a “Judgment Reduction Provision” in the

2004 Orders “protects the interests of non-settling

defendants in the direct action claims so completely as to

render their objections to the settlements moot.” Id. at

*34 ¶ 38; see also id. at *33-34 ¶¶ 34-35. 7 Finally, in

7
The Judgment Reduction Provision states that:

Any judgment obtained against . . . any objecting
insurer [e.g., Chubb] . . . regardless of whether such
Insurer was a settling Manville insurer [in 1986], with
respect to any claim asserted in any lawsuit that is
enjoined as to Travelers and not enjoined as to said
Insurer shall be reduced by the greater of: (a) the
amount (if any) the Claimant has recovered or is
entitled to recover from the [Direct Action Settlement]
Fund . . . to the extent that the Insurer is entitled
to such a reduction for that amount under the
applicable state law; or (b) to the extent permitted
under the applicable state law, the amount or
percentage (up to 100%) that the Insurer would have
been able to recover from Travelers, whether by

21
response to claims by what it deemed “creative plaintiffs,”

the bankruptcy court approved a “Gate-keeping” Provision

that “vest[ed] the initial determination regarding whether

an asbestos suit against Travelers will violate the [1986

and 2004] orders” with the bankruptcy court rather than the

court in which the claims were filed. Id. at *35 ¶¶ 42, 44;

see generally id. at *34-35 ¶¶ 39-44.

B. Procedural History

Two groups of parties appealed the bankruptcy court’s

2004 Orders to the district court: (1) a number of insurers

that included Chubb; and (2) asbestos claimants separately

referred to as the Asbestos Personal Injury Plaintiffs and

the Cascino Asbestos Claimants (collectively, the “Objecting

Plaintiffs”). 8 See Manville II, 340 B.R. at 55. The

contribution, indemnity or otherwise under applicable
state law, had Travelers been joined in said lawsuit
and/or sued for indemnity and/or contribution in a
separate lawsuit.
8
The parties comprising the Asbestos Personal Injury
Plaintiffs and the Cascino Asbestos Claimants were discussed
in our prior decision, and those terms have the same meaning
here. See Manville III, 517 F.3d at 55 nn.1-2. Although
the groups filed separate opening briefs prior to Manville
III, the Cascino Asbestos Claimants declined to file
supplemental briefing following the Supreme Court’s remand
and did not present additional oral argument. Unless
otherwise stated, we find the substance of their remaining
arguments to be materially indistinguishable from those of
the Asbestos Personal Injury Plaintiffs.

22
district court affirmed the bankruptcy court’s 2004 Orders

in all respects except as to the Gate-keeping Provision.

The bulk of the district court’s decision related to

the Objecting Plaintiffs’ argument that “the injunction in

the [2004] Clarifying Order is broader than the 1986 Orders,

and that, even if the 1986 Orders contemplated Direct Action

Suits, the Bankruptcy Court had no jurisdiction in 1986 to

bar such suits.” Id. at 59. The district court rejected

this contention for three reasons. First, the court agreed

with the bankruptcy court that the language of the 1986

Orders barred all of the Direct Actions. See id. at 61.

Second, emphasizing the bankruptcy court’s factual findings

relating to Travelers’ relationship with Manville and the

nature of the Direct Actions, it held that “the Bankruptcy

Court had jurisdiction over Travelers’ insurance policies,

and could act to protect them from dissipation by direct

action claims by enjoining those claims and channeling them

into the Manville Trust.” Id. at 63. Third, the district

court concluded that it was “unlikely” that the 2004 Orders

“impermissibly bar[] suits involving Travelers’ conduct with

respect to insureds other than Manville and asbestos injury

completely unrelated to Manville.” Id. at 65. Based on

23
that reasoning, the district court held that the bankruptcy

court had “subject matter jurisdiction to enjoin the Direct

Action Suits pursuant to the 1986 Orders and the Clarifying

Order.” Id. at 67.

The district court also rejected Chubb’s argument that

it could not be bound by the 1986 Orders. See id. at 68.

The court held that, because Chubb was a “sophisticated

insurer with asbestos-related insurance policies,” the

bankruptcy court’s August 2, 1984 Notice relating to the

1984 Insurance Settlement Agreement “should have put Chubb

. . . on notice with regards to whatever asbestos-related

claims it may have against Travelers and the other settling

insurers.” Id.

The district court also rejected Chubb’s reliance on

Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997) and

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999). The court

reasoned that, “[u]nlike the class action settlements in

Amchem and Ortiz,” which involved exercises of in personam

jurisdiction over asbestos manufacturers, “the injunction

here is based on the Bankruptcy Court’s in rem power over

the Manville estate.” Manville II, 340 B.R. at 68-69.

Thus, in the district court’s view, “there is an exception

24
to the due process concerns raised by Chubb” because the

bankruptcy code creates “‘a special remedial scheme’” that

allows for the foreclosure of “‘successive litigation by

nonlitigants.’” Id. at 68 (quoting Ortiz, 527 U.S. at 846).

The district court reached a different conclusion,

however, with respect to the Gate-keeping Provision in the

2004 Orders. The court reasoned that, while the bankruptcy

court possessed contempt authority to sanction litigants

that violated the 1986 Orders, it lacked “jurisdiction to

screen, in the first instance, suits against a non-debtor

that purport to assert claims unrelated to the debtor or the

estate.” Id. at 66.

Following the district court’s decision, Chubb,

OneBeacon America Insurance Company, Continental Casualty

Company, 9 and the Objecting Plaintiffs appealed to this

Court. 10 In Manville III, we focused on whether the

9
OneBeacon America Insurance Company and Continental
Casualty Company withdrew their appeals prior to our
decision in Manville III. See Dkt. Nos. 06-2099-bk, 06-
2105-bk.
10
Travelers also filed an untimely appeal challenging the
district court’s vacatur of the Gate-keeping Provision. See
Dkt. No. 06-2320-bk. “Acknowledging its tardiness in filing
its notice of cross-appeal, Travelers [also] filed with the
District Court a motion to extend by one day the time
allotted to file a notice of cross-appeal,” pursuant to
Federal Rule of Appellate Procedure 4(a)(5)(A). In re

25
bankruptcy court possessed subject matter jurisdiction “to

enjoin the Direct Action Claims against Travelers.”

Manville III, 517 F.3d at 65. In finding that it did not,

we reasoned that “clarification cannot be used as a

predicate to enjoin claims over which [the bankruptcy court]

had no jurisdiction.” Id. at 61. In light of Travelers’

in-court concession that “both the statutory and common law

[direct action] claims seek damages . . . that are unrelated

to the policy proceeds” that are part of Manville’s

bankruptcy estate, we criticized the jurisdictional analysis

undertaken below for its failure to analyze separately the

state-law legal duties that serve as the basis for the

various types of Direct Actions. See id. at 63, 67

(emphasis omitted). In that regard, we distinguished

between true “direct action[s] against an insurer when the

insured is insolvent,” and claims that “seek to recover

directly from the debtor’s insurer for the insurer’s own

Johns-Manville Corp., 476 F.3d 118, 120 (2d Cir. 2007). The
district court denied Travelers’ motion, and Travelers
appealed that decision as well. See Dkt. No. 06-3317-bk.
In a consolidated opinion, we affirmed the district court’s
denial of Travelers’ motion for an extension of time and
dismissed as untimely Travelers’ cross-appeal. In re Johns-
Manville Corp., 476 F.3d at 124. Consequently, the district
court’s ruling regarding the Gate-keeping Provision is not
before us.

26
independent wrongdoing.” Id. at 64-65. While we concluded

that the 2004 Orders were “on sound jurisdictional ground”

to the extent that they “clarified” that the former type of

claims was enjoined, id. at 64 (citing Louisiana’s direct

action statute), we held that the bankruptcy court lacked

jurisdiction to enjoin claims that “aim to pursue the assets

of Travelers” and “make no claim against an asset of the

bankruptcy estate.” Id. at 65; see also Bailey, 129 S. Ct.

at 2208-09 (Stevens, J., dissenting) (“Recognizing the

distinction between insurer actions and independent actions,

the Court of Appeals held that the Bankruptcy Court had

improperly enjoined the latter in its 2004 order.”). In

short, we concluded that “a bankruptcy court only has

jurisdiction to enjoin third-party non-debtor claims that

directly affect the res of the bankruptcy estate.” Manville

III, 517 F.3d at 66. As such, we held that the bankruptcy

court erred by using the 2004 Orders as a “jurisdictional

bootstrap” to enjoin non-derivative claims against

Travelers, a non-debtor, that did not seek to collect from

Manville’s bankruptcy estate. Id. at 68.

The Supreme Court granted certiorari and reversed

Manville III in Bailey. The Bailey Court characterized

27
appellants’ jurisdictional argument as an impermissible

collateral attack, and held that the 1986 Orders mean what

they say. The Court reasoned that the Direct Actions — and,

presumably, claims by Chubb against Travelers for

contribution and indemnity — are “Policy Claims” under the

1986 Orders. See Bailey, 129 S. Ct. at 2203. This point

was “drive[n] home” by the bankruptcy court’s undisputed

factual findings relating to the extent of the knowledge

that Travelers obtained from Manville during their insurer-

insured relationship. Id. The Court acknowledged that

there are “certainly . . . statements in the record”

indicating that “some parties to the Manville bankruptcy

(including Travelers) understood the proposed [1986]

injunction to bar only claims derivative of Manville’s

liability,” but nevertheless held that the “plain terms” of

the 1986 Orders “unambiguously” bar the Direct Actions. Id.

at 2204. The 1986 Orders, in turn, “became final on direct

review over two decades ago” following MacArthur Co. v.

Johns-Manville Corp., 837 F.2d 89, 90 (2d Cir. 1988).

Bailey, 129 S. Ct. at 2203. The Court then held that the

bankruptcy court’s jurisdiction to enter the 1986 Orders was

not subject to collateral attack in these proceedings by

28
parties who were bound by the previous Orders, and that the

2004 Orders were a proper exercise of the bankruptcy court’s

authority to interpret the 1986 Orders. See id. at 2203.

The Supreme Court characterized Manville III as having

undertaken a “different jurisdictional inquiry” relating to

whether the bankruptcy court “had exceeded its jurisdiction

when it issued the orders in 1986.” Id. at 2205. This, the

Court reasoned, was error:

[O]nce the 1986 Orders became final on direct
review (whether or not proper exercises of
bankruptcy court jurisdiction and power), they
became res judicata to the “parties and those in
privity with them, not only as to every matter
which was offered and received to sustain or
defeat the claim or demand, but as to any other
admissible matter which might have been offered
for that purpose.”

Id. at 2205 (quoting Nevada v. United States, 463 U.S. 110,

130 (1983)). The Bailey Court emphasized, however, that its

holding was “narrow.” Id. at 2207. First, “owing to the

posture of this litigation,” the Court “[did] not resolve

whether a bankruptcy court, in 1986 or today, could properly

enjoin claims against nondebtor insurers that are not

derivative of the debtor’s wrongdoing.” Id. Second, it

declined to “decide whether any particular [party] is bound

by the 1986 Orders,” and instructed us to address Chubb’s

29
due process argument and other properly preserved objections

raised in these appeals. Id.

On remand, we accepted supplemental briefing from the

parties and conducted another oral argument. On October 21,

2009, on the eve of the second argument, the Objecting

Plaintiffs voluntarily withdrew their challenges to the

portions of the 2004 Direct Action Settlement relating to

the Statutory Direct Actions (including the Hawaii Direct

Actions). Remaining to be resolved, then, are the preserved

objections — including those of Chubb — to the portion of

the 2004 Direct Action Settlement relating to the Common Law

Direct Actions.

II. DISCUSSION

In an appeal from a district court order affirming a

decision of the bankruptcy court, we perform an independent,

de novo review of the bankruptcy court’s conclusions. E.g.,

O’Rourke v. United States, 587 F.3d 537, 540 (2d Cir. 2009).

The remaining appeals present one primary question: whether

it would offend the Due Process Clause to enforce the 1986

Orders against the Objecting Plaintiffs and Chubb. The

Objecting Plaintiffs forfeited this argument by failing to

raise it in their direct appeals from the district court’s

30
decision. Chubb, however, has raised this objection

consistently from the outset, and we conclude that it would

be inconsistent with fundamental notions of due process to

bind Chubb to the 1986 Orders. Accordingly, for the reasons

set forth below, we reverse as to Chubb but affirm as to the

Objecting Plaintiffs.

A. The Objecting Plaintiffs

The Objecting Plaintiffs argue on remand that they were

not adequately represented at the proceedings that led to

the entry of the 1986 Orders, and therefore they are not

bound by the bankruptcy court’s 2004 interpretation of those

Orders. This contention has been forfeited, however,

because the Objecting Plaintiffs have raised it for the

first time after the Supreme Court’s remand. See Sniado v.

Bank Austria AG, 378 F.3d 210, 213 (2d Cir. 2004).

Generally speaking, of course, this waiver principle is

prudential rather than jurisdictional. Id. Nevertheless,

we lack the authority to reach the merits of this due

process question because the Supreme Court instructed us to

address only properly preserved arguments on remand. See

Bailey, 129 S. Ct. at 2207. In other words, the Supreme

Court itself decided, in its discretion, that forfeited

31
arguments should not be considered. As a result, because

the Objecting Plaintiffs failed to raise this argument in

their initial appeals, and because it would be inconsistent

with the terms of the Supreme Court’s remand instructions to

reach it now, we hold that this argument by the Objecting

Plaintiffs has been forfeited.

The Asbestos Personal Injury Plaintiffs have preserved

a narrower objection couched in terms of due process. In

their opening appellate brief, they argued that the

bankruptcy court employed an improperly “truncated” approval

process in 2004 relating to the Direct Action Settlement,

which “[did] not meet due process standards as enunciated by

the United States Supreme Court.” They further contended

that the “expedited approval” of the 2004 Direct Action

Settlement did not “allow[] them an opportunity to ‘weigh

in’ on the proposed settlement.”

These assertions are meritless. In MacArthur, for

example, we rejected an argument that due process required

that an objector to the 1984 Insurance Settlement Agreement

receive notice of the settlement negotiations before terms

were reached by the parties to the agreement. See

MacArthur, 837 F.2d at 94. We did so because the appellant

32
was “provided with notice and a hearing before the

settlements were approved by the Bankruptcy Court.” Id.

The same is true here. The terms of a settlement regarding

the Common Law Direct Actions were reached in May 2004 as a

result of the mediation conducted by Governor Cuomo; on June

9, 2004, the bankruptcy court approved extensive notice

procedures relating to the settlement-approval process; and

the bankruptcy court conducted fairness hearings — at which

the Objecting Plaintiffs were represented — on July 6 and

August 17, 2004. See Manville I, 2004 WL 1876046, at *22 ¶

101, *24 ¶ 116, *30 ¶ 15. Under these circumstances, we

find no basis in the record for the Asbestos Personal Injury

Plaintiffs’ assertion that the Due Process Clause required

more. We therefore reject this narrower due process

argument as well, and hold that all of the Objecting

Plaintiffs are bound by the bankruptcy court’s 2004

interpretation of the 1986 Orders.

B. Chubb

In the proceedings that led to the entry of the 2004

Orders, Chubb objected to the Direct Action Settlement on

the grounds that: (1) the bankruptcy court lacked subject

matter jurisdiction to bar its contribution and indemnity

33
claims against Travelers, and (2) it could not, as a matter

of due process, be bound to the 1986 Orders’ terms. Both

the bankruptcy court and the district court rejected these

arguments, albeit for different reasons. Chubb raised the

same due process contention before this Court in its opening

appellate brief, but we did not reach the issue in Manville

III. See 517 F.3d at 60 n.17. In light of the Bailey

Court’s remand instructions, we must address this due

process question now.

The significance of this issue must be understood in

light of the Supreme Court’s opinion and our earlier

opinion. The Supreme Court did not decide whether the

bankruptcy court had jurisdiction to issue the broad orders

that it did in 1986. We had held in Manville III that the

bankruptcy court exceeded its jurisdiction in issuing those

orders, at least as those orders were interpreted in the

2004 Orders. But the bankruptcy court’s error did not

matter as far as the Supreme Court was concerned, because

most of the litigants, having failed to raise that claim of

error at the time of the 1986 Orders, were, the Bailey Court

held, barred from raising it later on. The same would be

true of Chubb if the 1986 Orders properly bound Chubb. If,

34
instead, the 1986 Orders could not bind Chubb because such a

holding would violate due process, then Chubb may challenge

the bankruptcy court’s jurisdiction. And that challenge

would necessarily be successful in our Court, pursuant to

our holding in Manville III — which the Supreme Court

neither embraced nor assailed — that the bankruptcy court

exceeded its subject matter jurisdiction in issuing the 1986

Orders (as interpreted).

With that context, we proceed to the question at hand.

For the following reasons, we hold that both the bankruptcy

court and the district court erred in rejecting Chubb’s due

process argument. Chubb, therefore, is permitted to

challenge the bankruptcy court’s jurisdiction to issue the

1986 Orders. And, because we adhere to our holding in

Manville III that the bankruptcy court exceeded its

jurisdiction in 1986, it follows that Chubb is not bound by

the terms of the 1986 Orders.

1. The Bankruptcy Court’s Ruling in Manville I

The bankruptcy court treated Chubb’s arguments as a

generalized assertion that the court was “unauthorized to

bar the contribution or indemnity claims [Chubb] may have

against Travelers.” Manville I, 2004 WL 1876046, at *33 ¶

35
33. The court offered two reasons for rejecting Chubb’s

position. First, it reasoned that the contribution and

indemnity claims at issue — like the Direct Actions — were

barred by the terms of the 1986 Orders. See id. at *33-34

¶¶ 34-35. Second, the bankruptcy court held that the

Judgment Reduction Provision in the 2004 Orders not only

“enforces the [1986 Orders] by clarifying that Policy Claims

arising from Travelers[’] alleged conduct may not be

surreptitiously collected by [Direct Action plaintiffs] from

other insurers,” but also “protects the interests of

non-settling defendants in the direct action claims so

completely as to render their objections to the settlements

moot.” Id. at *34 ¶¶ 36, 38. We are not persuaded.

With respect to due process, it is of no moment

whether the terms of the 1986 Orders have been, in effect,

read by the bankruptcy court to bar Chubb’s claims. Put

differently, the text of the orders that were ultimately

entered in 1986 does not speak to whether Chubb was afforded

due process during the proceedings that led to the entry of

those orders in the first place. In reasoning otherwise,

and by grouping together what should have been distinct

inquiries regarding subject matter jurisdiction and Chubb’s

36
due process rights, the bankruptcy court put the proverbial

cart before the horse by assuming that Chubb was bound by

the 1986 Orders. The Supreme Court impliedly recognized

this by remanding to us the due process question.

Similarly deficient is the bankruptcy court’s reference

to the Judgment Reduction Provision in the 2004 Orders.

This provision neither “completely” protects Chubb’s due

process rights with respect to the entry of the 1986 Orders,

nor renders Chubb’s objection “moot.” Id. at *33 ¶ 38.

Relying on the 2004 Judgment Reduction Provision as an

enforcement mechanism for the 1986 Orders — like the

bankruptcy court’s emphasis of the terms of the 1986 Orders

— ignores, rather than addresses, Chubb’s due process

argument. Indeed, the Judgment Reduction Provision is only

relevant to the extent that the 1986 Orders actually

prohibit Chubb from bringing non-derivative claims against

Travelers for contribution and indemnity. Chubb contests

this premise; the issue is therefore whether Chubb may be

bound at all by the 1986 Orders, whatever their meaning.

With respect to that contention, it is beside the point that

the 2004 Orders “enforc[e]” the 1986 Orders, id. at *34 ¶

38, or that the Judgment Reduction Provision may in some

37
circumstances ameliorate Chubb’s liability exposure in the

Common Law Direct Actions. 11 We therefore hold that the

bankruptcy court erred by relying on the terms of the 1986

Orders and the 2004 Judgment Reduction Provision to reject

Chubb’s due process argument.

2. The District Court’s Ruling in Manville II

11
Assuming, arguendo, that the Judgment Reduction
Provision could affect Chubb at all, the bankruptcy court
also erred by suggesting that the Provision “completely”
protects Chubb’s “interests.” Manville I, 2004 WL 1876046,
at *34 ¶ 38. The Provision contemplates two methods of
calculating judgment reduction: (1) the pro tanto method,
see, e.g., Singer v. Olympia Brewing Co., 878 F.2d 596, 600
(2d Cir. 1989); and (2) reducing the value of a judgment
against a non-settling insurer by the amount of Travelers’
proportionate share of liability. The Provision, however,
makes the availability of these judgment-reduction methods a
function of “applicable state law.” Some states permit only
pro tanto judgment reduction. See Manville II, 340 B.R. at
72 (citing West Virginia, Ohio, and Massachusetts as
examples). In such states, any judgment against Chubb in a
claim enjoined as to Travelers could only be reduced by the
amount that the plaintiff was entitled to receive from the
settlement funds established by the 2004 Orders, regardless
of Travelers’ actual proportion of the liability. See
Gerber v. MTC Elec. Techs. Co., 329 F.3d 297, 303 (2d Cir.
2003); Singer, 878 F.2d at 600. As Chubb points out, if the
settlement funds are exhausted, then the plaintiff in
question would not be entitled to receive any compensation
from the 2004 Direct Action Settlement. Under such
circumstances, the Judgment Reduction Provision would be
virtually meaningless to a non-settling insurer named as a
Direct Action defendant in a state where only pro tanto
judgment reduction is available. See Manville II, 340 B.R.
at 72. As such, the Provision does not “completely” protect
Chubb’s financial exposure, much less its due process
rights.

38
 Perhaps in recognition of the difficulties with the

bankruptcy court’s analysis, the district court analyzed

Chubb’s due process argument independently and rejected it

on three grounds. See Manville II, 340 B.R. at 68-69. The

court’s reasoning was based on our prior holding in

MacArthur, the nature of Chapter 11’s “special remedial

scheme,” Ortiz, 527 U.S. at 846, and the bankruptcy court’s

August 2, 1984 Notice of Hearing to Consider Approval of

Compromise and Settlement of Insurance Litigation. See

Manville II, 340 B.R. at 68-69. We consider each in turn.

First, MacArthur is inapposite. Chubb was not a party

to the 1986 proceedings and there is no indication in the

record of a privity relationship between Chubb and any of

the actual parties. 12 As a result, Chubb’s due process

12
Although Travelers’ arguments focused on publication
notice, it also briefly argued that Chubb had actual notice
of the proceedings. In the supplemental brief submitted to
this Court following the Supreme Court’s remand, Travelers
asserted that (1) Pacific Indemnity Company was a wholly
owned subsidiary of Chubb that was a party to the insurance
coverage disputes in the California state courts, and (2)
Chubb received actual notice of the 1986 Orders because the
August 2, 1984 Notice document was sent to Pacific Indemnity
Company. In an October 26, 2009 post-argument submission,
however, Travelers conceded that “[a] direct corporate
relationship between [Chubb] and Pacific Indemnity Company .
. . may not have existed.” Travelers also failed to provide
any legal authority for its position. In light of these
concessions, and because we, too, are unaware of any
authority supporting Travelers’ contention, we reject this

39
argument cannot be rejected on res judicata grounds. See,

e.g., Bailey, 129 S. Ct. at 2205 (reasoning that a final

decision is entitled to res judicata effect only as to “the

parties and those in privity with them” (internal quotation

omitted)); cf. Stephenson v. Dow Chem. Co., 273 F.3d 249,

257 (2d Cir. 2001) (“The injunction was part and parcel of

the judgment that plaintiffs contend failed to afford them

adequate representation. If plaintiffs’ inadequate

representation allegations prevail, as we so conclude, the

judgment, which includes the injunction on which defendants

rely, is not binding as to these plaintiffs.”), vacated in

part and remanded, 539 U.S. 111, 112 (2003).

Nor does the “law of the case” doctrine foreclose

Chubb’s due process argument. This doctrine “directs a

court’s discretion, it does not limit the tribunal’s power.”

Arizona v. California, 460 U.S. 605, 618 (1983). Because

MacArthur is readily distinguishable, it does not affect the

result here. In MacArthur, the appellant asserted that “it

was denied due process of law because it received notice of

the insurance settlements only after the settlements had

been negotiated.” MacArthur, 837 F.2d at 94. Here, Chubb

actual-notice argument.

40
asserts that it received no notice at all of the 1986 Orders

or the pre-confirmation fairness hearings relating to the

1984 Insurance Settlement Agreement. Moreover, the party

objecting to the settlement in MacArthur participated in the

proceedings that led to the entry of the 1986 Orders and was

well aware of its interest in the matter at that time. In

contrast, Travelers forthrightly acknowledged to the

bankruptcy court in 2004 that the Direct Actions — and,

consequently, Chubb’s contribution and indemnity claims —

were “unimaginable” at the time the 1986 Orders were

entered. Finally, in MacArthur, the appellant’s “rights as

an insured vendor [were] completely derivative of Manville’s

rights as the primary insured” on the insurance policies at

issue. Id. at 92 (emphasis added); see also Manville III,

517 F.3d at 62 (noting that, in MacArthur, we “reason[ed]

that the 1986 orders precluded suits against a significant

asset of the bankruptcy estate — Manville’s insurance

policies — and that MacArthur’s coverage claim clearly

affected that asset” (footnote omitted)). Chubb, however,

seeks to preserve its rights against a non-debtor relating

to funds that are not part of Manville’s bankruptcy estate.

Therefore, the discretionary “law of the case” doctrine does

41
not counsel us to affirm based on our prior holding in

MacArthur.

In addition to its citation to MacArthur, the district

court offered two more reasons for its rejection of Chubb’s

due process argument. The court reasoned that there is “an

exception to the due process concerns raised by Chubb ‘where

a special remedial scheme exists expressly foreclosing

successive litigation by nonlitigants, as for example in

bankruptcy or probate.’” Manville II, 340 B.R. at 68

(quoting Ortiz, 527 U.S. at 846). It also held that the

publication notice issued in 1984 was sufficient to “put

Chubb . . . on notice with regards to whatever

asbestos-related claims it may have against Travelers and

the other settling insurers.” Id. To consider the merits

of this reasoning, we must begin with an examination of the

Direct Actions, Chubb’s claims against Travelers for

contribution and indemnity, and the 1986 Orders as they were

interpreted by the bankruptcy court in 2004.

The gravamen of the Common Law Direct Actions, as the

bankruptcy court acknowledged, is that “the insurance

industry as a whole had a duty to warn the general public

about the dangers of asbestos.” Manville III, 517 F.3d at

42
60 n.17 (citing Manville I, 2004 WL 1876046, at *19-21); see

also id. at 58 (describing the Common Law Direct Actions).

The first time that this case was before us, Travelers

“candidly admit[ted]” that these actions “seek damages from

Travelers that are unrelated to the policy proceeds” that

are assets of Manville’s Chapter 11 estate. Id. at 63

(emphasis in original). Relatedly, we pointed out that the

Direct Actions were “quite unlike the claims in MacArthur,”

and that they did not “seek to collect on the basis of

Manville’s conduct.” Id. The Supreme Court made similar

observations in Bailey: “It is undisputed that many of the

[Direct Action] plaintiffs seek to recover from Travelers,

not indirectly for Manville’s wrongdoing, but for Travelers’

own alleged violations of state law,” and “many of the suits

at issue seek to hold Travelers liable for independent

wrongdoing rather than for a legal wrong by Manville.”

Bailey, 129 S. Ct. at 2200 & n.2. In short, whatever the

text of the 1986 Orders, many of the Direct Actions

referenced in the bankruptcy court’s 2004 Orders do not seek

to collect from the res of Manville’s Chapter 11 bankruptcy

estate.

Chubb’s contribution and indemnity claims are similar

43
in this regard. See Manville III, 517 F.3d at 60 n.17.

Chubb has been named as a defendant, along with other

asbestos-industry insurers, in the sort of Common Law Direct

Actions that the bankruptcy court held are barred against

Travelers by the 1986 Orders. See Bailey, 129 S. Ct. at

2202 n.3. Chubb, like the plaintiffs in the Direct Actions,

does not seek to collect from the proceeds of the policies

that Travelers issued to Manville. Rather, Chubb seeks to

preserve its ability to collect from Travelers itself —

through state-law claims for contribution and indemnity — a

portion of any liability that might be imposed on “the

insurance industry as a whole” in the Common Law Direct

Actions. Manville III, 517 F.3d at 60 n.17. These claims,

like the vast majority of the Direct Actions, are not

derivative of Manville’s liability and do not seek to

collect from the res of the Manville estate.

In Manville III, we held that the bankruptcy court

lacked subject matter jurisdiction to enjoin such claims

against non-debtor Travelers in Manville’s Chapter 11

proceedings. “[A] bankruptcy court only has jurisdiction to

enjoin third-party non-debtor claims that directly affect

the res of the bankruptcy estate.” Id. at 66. Our

44
reasoning was straightforward. The bankruptcy court’s power

derives, in part, from statutes enacted by Congress. See In

re Combustion Eng’g, Inc., 391 F.3d 190, 225 (3d Cir. 2004)

(“[T]he exercise of bankruptcy power must be grounded in

statutory bankruptcy jurisdiction.”). In the bankruptcy

code, “Congress has granted the . . . courts expansive

bankruptcy jurisdiction to adjudicate claims against a

debtor’s estate.” In re Millenium Seacarriers, Inc., 419

F.3d 83, 92 (2d Cir. 2005). This jurisdiction is in rem in

nature; it “permits a determination of all claims that

‘anyone, whether named in the action or not, has to the

property or thing in question.’” Id. (emphasis added)

(quoting Tenn. Student Assistance Corp. v. Hood, 541 U.S.

440, 448 (2004)).

In this case, the “thing in question” is the Manville

bankruptcy estate, and the insurance policies that Travelers

issued to Manville are the estate’s most valuable asset.

See MacArthur, 837 F.2d at 94. In Manville III, we held

that the bankruptcy court’s in rem jurisdiction was

insufficient to allow it to enjoin Direct Actions based on

state-law legal theories that seek to impose liability on

Travelers as a separate entity rather than on the policies

45
that it issued to Manville. Although we focused on the

Direct Actions in our analysis, Chubb’s contribution and

indemnity claims against Travelers are functionally

identical in this respect.

In Bailey, the Supreme Court reversed Manville III on

“narrow” grounds. Bailey, 129 S. Ct. at 2207. The Bailey

Court did not contradict the conclusion of our

jurisdictional inquiry. See id. (“We do not resolve whether

a bankruptcy court, in 1986 or today, could properly enjoin

claims against nondebtor insurers that are not derivative of

the debtor’s wrongdoing.”). Instead, it held that the

jurisdictional issue was not subject to collateral attack.

Following direct review in MacArthur, the 1986 Orders

“became res judicata to the parties and those in privity

with them . . . as to any . . . admissible matter [that]

might have been offered” to defeat the bankruptcy court’s

entry of the 1986 Orders. Id. at 2205 (internal quotation

marks omitted). The Bailey Court’s holding was grounded in

the “practical necessit[ies]” served by res judicata and

principles of finality. Id. at 2206. These necessities

were dispositive as to the parties to the 1986 proceedings

“and those in privity with them,” “whether or not [the 1986

46
Orders were] proper exercises of bankruptcy court

jurisdiction and power.” Id. at 2205, 2206 (emphasis

added).

On remand, we remain persuaded that the 1986 Orders, as

interpreted in 2004, exceed the bounds of the bankruptcy

court’s in rem jurisdiction. In 2004, the bankruptcy court

interpreted the 1986 Orders to enjoin not only claims that

are directed at the Travelers insurance policies in the res

of the Manville estate, but also non-derivative claims by

Chubb that seek to impose liability on Travelers separately.

The bankruptcy court, in essence, interpreted the 1986

Orders to have an in personam effect. 13 Tellingly, although

13
When a court exercises in personam authority, it
addresses a claim for liability, such as one involving a
claim for money damages, against a particular party. See
Restatement (Second) of Judgments § 2 cmt. b, at 36-37;
Black’s Law Dictionary 930 (9th ed. 2009) (defining
“personal jurisdiction”); see also Ret. Sys. of Ala. v. J.P.
Morgan Chase & Co., 386 F.3d 419, 426 (2d Cir. 2004) (“[A]n
in personam action involves a controversy over liability
rather than over possession of a thing.”). In contrast, the
bankruptcy court’s in rem authority is, for the most part,
limited to the resolution of claims against the property in
the bankruptcy estate. See Restatement (Second) of
Judgments § 2 cmt. b, at 37; see also Black’s Law Dictionary
929 (9th ed. 2009) (defining in rem jurisdiction as “[a]
court’s power to adjudicate the rights to a given piece of
property”). Here, because Chubb’s claims against Travelers
for indemnity and contribution seek to impose liability on
Travelers itself rather than the insurance policies that are
assets of the Manville bankruptcy estate, the bankruptcy
court’s 2004 interpretation of the 1986 Orders attributed to

47
Congress codified a version of the bankruptcy court’s 1986

channeling injunction at 11 U.S.C. § 524(g), see Manville

III, 517 F.3d at 67, the statute does not authorize

injunctions of these sorts of claims against non-debtor

third parties. Rather, section 524(g) only “limits the

situations where a channeling injunction may enjoin actions

against third parties to those where a third party has

derivative liability for the claims against the debtor.” In

re Combustion Eng’g, Inc., 391 F.3d at 234; see also id. at

235 n.47. Nevertheless, under Bailey, the parties who were

present or represented in the proceedings that led to the

entry of the 1986 Orders are barred from collaterally

attacking the bankruptcy court’s 2004 interpretation. But

that cannot be so as to Chubb, if making it subject to the

1986 Orders would violate due process. As a result, our due

process analysis must take into account the in personam

manner in which the 1986 Orders were interpreted by the

bankruptcy court in 2004. Viewed from this perspective, the

district court’s reasoning unravels.

The due process “exception” relied on by the district

court and discussed by the Supreme Court in Ortiz was

those prior judicial acts an in personam effect.

48
juxtaposed against the “‘principle of general application in

Anglo-American jurisprudence that one is not bound by a

judgment in personam in a litigation in which he is not

designated as a party or to which he has not been made a

party by service of process.’” Ortiz, 527 U.S. at 846

(quoting Hansberry v. Lee, 311 U.S. 32, 40 (1940)). Thus,

the Ortiz Court was discussing an in rem “exception” to the

due process principles associated with in personam

jurisdictional acts. Moreover, the Ortiz Court quoted from

Martin v. Wilks, 490 U.S. 755 (1989). The full sentence

from Martin reads:

[W]here a special remedial scheme exists expressly
foreclosing successive litigation by nonlitigants,
as for example in bankruptcy or probate, legal
proceedings may terminate preexisting rights if
the scheme is otherwise consistent with due
process.

Id. at 762 n.2 (emphasis added).

Relying on this authority, the district court reasoned

that the bankruptcy court acted on an in rem basis: “Unlike

the class action settlements in [Amchem Products, Inc. v.

Windsor, 521 U.S. 591 (1997)] and Ortiz, the injunction here

is based on the Bankruptcy Court’s in rem power over the

Manville estate, including the insurance policies.”

Manville II, 340 B.R. at 68-69. The contrast between in rem

49
bankruptcy proceedings and the in personam class action

settlements in Amchem and Ortiz was apt. But the court

placed the Manville proceedings — at least in their present

procedural posture — in the wrong category.

As we have already said, whatever the bankruptcy

court’s factual findings, Chubb’s claims for contribution

and indemnity seek to proceed against Travelers on an in

personam basis. See Manville III, 517 F.3d at 63 (“[T]he

factual determination was only half of the equation . . . .

Neither court looked to the laws of the states where the

claims arose to determine if indeed Travelers did have an

independent legal duty in its dealing with plaintiffs,

notwithstanding the factual background in which the duty

arose.”). The district court reasoned that, factually

speaking, the Direct Actions and Chubb’s claims fit within

the 1986 Orders’ injunction of claims “based upon, arising

out of, or relating to any or all of the” policies issued by

Travelers to Manville. See Manville II, 340 B.R. at 61. In

doing so, it appears to have taken the view that the “based

upon, arising out of, or relating to” language was

necessarily confined to in rem claims against the Manville

estate.

50
 But the bankruptcy court’s 2004 interpretation of the

1986 Orders is not so limited. Chubb does not, as a legal

matter, seek to collect from the insurance policies that

Travelers issued to Manville. Thus, contrary to the

district court’s ruling, the bankruptcy court was not

exercising its in rem power when it concluded that Chubb’s

claims were enjoined. 14 Therefore, the “special remedial

scheme” due process “exception” relating to in

rem bankruptcy proceedings is insufficient to sustain the

bankruptcy court’s action as to Chubb.

Finally, we are also unpersuaded by the district

court’s conclusion that Chubb’s due process rights were

satisfied by the bankruptcy court’s August 2, 1984 Notice of

Hearing to Consider Approval of Compromise and Settlement of

Insurance Litigation. Given the manner in which the 1986

Orders have been interpreted, we are placed in legal

territory that is undoubtedly sui generis as to the due

process question before us. But, because the 1986 Orders

14
Travelers seems to agree that the bankruptcy court did
more than resolve claims against the res of the Manville
estate. In its October 26, 2009 post-argument submission,
Travelers argued that the bankruptcy court’s notice
procedures relating to the 1986 Orders were “wholly
consistent” with the exercise of “both in rem jurisdiction
and in personam jurisdiction over all Chubb entities.”

51
purport to bind Chubb’s in personam claims, the better due

process analogy in terms of notice and representation

principles is to class action settlements, not in rem

bankruptcy proceedings. As a result, we find Amchem

Products, Inc. v. Windsor, 521 U.S. 591 (1997) and

Stephenson v. Dow Chemical Co., 273 F.3d 249 (2d Cir. 2001)

to be the pertinent authority.

In Amchem, a group of asbestos manufacturers sought to

achieve final resolution of their liability by attempting to

settle future, unfiled claims by potential asbestos

claimants. 521 U.S. at 600-01. Their chosen litigation

mechanism was a settlement-only class action pursuant to

Rule 23(b)(3) of the Federal Rules of Civil Procedure. The

manufacturers proposed a class of those who: (1) had not

already filed an asbestos claim against the defendants, and

(2) either had been exposed to asbestos or had family

members who had been exposed. Id. at 603. The lawyers

purporting to act on behalf of this class “had no attorney-

client relationship with such claimants,” id. at 601, but

the parties’ settlement applied to nearly all of the class’s

future claims. See id. at 604. For example, the agreement

sought to enjoin, and provided no compensation for, certain

52
types of claims that would otherwise have been available

under state law. See id. at 604.

The district court conducted fairness hearings,

certified the class, and ultimately approved the settlement.

Id. at 608. The Third Circuit vacated the district court’s

orders, holding that factual and legal differences created

“‘serious intra-class conflicts.’” Id. at 610 (quoting

Georgine v. Amchem Prods., Inc., 83 F.3d 610, 630 (3d Cir.

1996)).

The Supreme Court affirmed the court of appeals based

on deficiencies in the proposed class under Rule 23. First,

the Court held that the class could not satisfy the

predominance requirement of Rule 23(b)(3) because, inter

alia, “[d]ifferences in state law . . . compound[ed] the[]

disparities” in the interests of the class. Id. at 624.

Second, the Court held that the named plaintiffs could not

adequately represent the broad class of claimants because of

the conflict between the presently injured claimants’

interest in “generous immediate payments” and the exposure-

only claimants’ interest in “ensuring an ample, inflation-

protected fund for the future.” Id. at 626 (relying on

Federal Rule of Civil Proecdure 23(a)(4)). Finally, in

53
language that we find directly relevant, the Court observed

that

[i]mpediments to the provision of adequate notice
. . . rendered highly problematic any endeavor to
tie to a settlement class persons with no
perceptible asbestos-related disease at the time
of the settlement . . . . Even if they fully
appreciate the significance of class notice, those
without current afflictions may not have the
information or foresight needed to decide,
intelligently, whether to stay in or opt out.

Id. at 628. The Court declined to resolve this due process

issue in light of its holding that the proposed class could

not satisfy Rule 23, but it recognized “the gravity of the

question whether class action notice sufficient under the

Constitution and Rule 23 could ever be given to legions so

unselfconscious and amorphous.” Id.

In Stephenson, we relied on Amchem to address similar

concerns regarding representation and notice in settlement-

only class action proceedings. There, two veterans (the

“Stephenson plaintiffs”) commenced separate state-law

actions based on allegations that they were exposed to Agent

Orange during the Vietnam War. Both actions were filed well

after a broad settlement agreement had been approved

relating to a Rule 23(b)(3) class action against the same

defendants based on similar allegations. 273 F.3d at 255-

54
56. The previous settlement purported to resolve the claims

of individuals who had been exposed to Agent Orange but had

not yet manifested injuries. Id. at 252. The Stephenson

plaintiffs fit within the prior class, and their claims were

transferred by the Multidistrict Litigation Panel to the

Eastern District of New York, where the class action

settlement had been adjudicated. See id. at 256. The

district court characterized the Stephenson plaintiffs’

actions as impermissible collateral attacks on the prior

settlement, and it dismissed their claims pursuant to Rule

12(b)(6). Id.

We reversed, holding that the attack was permissible

because the plaintiffs were not adequately represented in

the prior litigation, and that the previous settlement was

not res judicata as to the Stephenson plaintiffs’ claims.

See id. at 261. Regarding the collateral attack, we

reasoned that the injunction that purported to bar the

claims was “part and parcel of the judgment that plaintiffs

contend failed to afford them adequate representation.” Id.

at 257. Consequently, the attack was permissible because it

sought “only to prevent the prior settlement from operating

as res judicata to their claims.” Id.

55
 With respect to whether the Stephenson plaintiffs’

claims were barred by the prior settlement and the doctrine

of res judicata, we relied on the due process concerns

raised by the Supreme Court in Amchem and Ortiz and held

that the plaintiffs were not adequately represented in the

prior litigation. Id. at 260-61. In doing so, we reasoned

that both plaintiffs fell within the earlier class

definition, but that (1) neither had learned of their claims

until after the settlement fund was exhausted, and (2) the

settlement made no provision for their claims. Id. at 260.

Although our holding was based on representational concerns,

we also pointed out that the plaintiffs “likely received

inadequate notice” of the class action settlement because

“Amchem indicates that effective notice could likely not

ever be given to exposure-only class members.” Id. at 261

n.8.

Because of the in personam manner in which the 1986

Orders have been interpreted, the due process issues

discussed in Stephenson and Amchem present grave

representation and notice problems with respect to Chubb.

As to representation, there is no indication in the record

that the sort of claims Chubb seeks to bring against

56
Travelers were contemplated, much less accounted for, during

the proceedings that led to the 1986 Orders. Neither

Travelers nor the district court have suggested otherwise,

and the terms of the bankruptcy court’s August 14, 1984

Order appointing the FCR make this point plain. The

bankruptcy court ordered the FCR to concern himself with

“persons who have been exposed to” Manville’s asbestos

products and who may subsequently “manifest disease post-

petition.” Chubb does not fall within that category, and

its interests relating to inchoate, non-derivative, post-

petition claims against Travelers were not spoken for in

those proceedings.

We also conclude that the interests of the asbestos

claimants who participated in the negotiations and hearings

leading up to the 1986 Orders diverged from Chubb’s future

interests in a manner that precluded the claimants from

adequately representing Chubb in those proceedings. In

Amchem, the Supreme Court found that single-class

representation was inadequate under Rule 23(a)(4) because

the interests of presently injured asbestos claimants

conflicted with those of the exposure-only claimants:

“[F]or the currently injured, the critical goal is generous

57
immediate payments. That goal tugs against the interest of

exposure-only plaintiffs in ensuring an ample,

inflation-protected fund for the future.” 521 U.S. at 626.

Although we do not rely on Rule 23 here, there is a similar

divergence of interests between Chubb and the groups of

asbestos claimants that participated in the negotiations

that led to the 1986 Orders. Chubb’s interest in the

Manville proceedings in the early 1980s was far more

attenuated than the exposure-only claimants at issue in

Amchem, who at least had cause for concern regarding the

same sort of harm as the presently injured claimants. More

importantly, like the currently injured claimants in Amchem,

asbestos claimants capable of bringing claims against

Manville’s insurance policies in 1986 were most likely

focused on maximizing the value of immediate payments from a

settlement fund. In contrast, Chubb’s interest, similar to

that of the exposure-only claimants in Amchem, would have

been more directed at creating an “inflation-protected fund

for the future,” which would guard against the event,

however improbable, that Chubb is found liable in a Common

Law Direct Action and wishes to shift a proportionate share

of the joint liability to Travelers. No such fund was

58
created in 1986 (or 2004). Given these divergent interests,

it cannot be said that counsel for the claimants at the

negotiations leading to the 1986 Orders sufficiently

represented Chubb.

With respect to notice, we need not break any new

ground relating to the constitutional requirements of an in

rem bankruptcy proceeding. Nor are we called upon to set

the outer bounds of the notice that would be required to

satisfy Chubb’s due process rights based on the manner in

which the 1986 Orders have been interpreted. Under the

unique circumstances of this case, there can be little doubt

that the publication notice employed by the bankruptcy court

in 1984 was insufficient to bind Chubb to the 2004

interpretation of the 1986 Orders.

The bankruptcy court’s August 2, 1984 Notice of Hearing

to Consider Approval of Compromise and Settlement of

Insurance Litigation indicated that the parties to the

Manville Chapter 11 proceedings were seeking an order

enjoining all claims, “whether or not presently known,”

against the Settling Insurers “based upon, arising out of or

relating to any or all of the insurance policies” that the

Settling Insurers had issued to Manville. In order to

59
comprehend that the contemplated channeling injunction would

bar Chubb’s in personam, non-derivative claims against

Travelers, the recipient of this Notice would have to

predict that the bankruptcy court would exceed its in rem

jurisdiction in entering the 1986 Orders. Such a recipient

would also have to be presumed to know — or to be able to

discern from the 1984 Notice document — the factual extent

of Travelers’ relationship with Manville, which ultimately

served as the lynchpin of the bankruptcy court’s 2004

interpretation of the 1986 Orders. See Bailey, 129 S. Ct.

at 2203. The bankruptcy court’s factfindings are presently

uncontested, and Chubb was undoubtedly a “sophisticated

insurer” in the early 1980s. Manville II, 340 B.R. at 68.

But we cannot attribute to Chubb the sort of prescience that

these predictions would have required, and the August 2,

1984 Notice was insufficient to communicate these issues.

To the extent that the Notice document could be

interpreted to suggest that the 1984 Insurance Settlement

Agreement would bar non-derivative claims against non-

debtors, the parties publicly clarified their intentions by

amending the agreement in a manner that indicated that Chubb

was not an interested party in Manville’s Chapter 11

60
proceedings. Specifically, when certain objectors to the

settlement argued that the terms of the proposed channeling

injunction exceeded the scope of the bankruptcy court’s in

rem jurisdiction, Travelers signed a letter agreement

indicating that the objectors were wrong. The June 3, 1985

letter agreement stated that it was intended to “clarif[y]

the intent of the parties with respect to certain provisions

of the [1984 Insurance] Settlement Agreement,” and that it

was an “amendment” to the Agreement. One portion of the

letter stated that “[t]he channeling order is intended only

to channel claims against the res to the Settlement Fund and

the injunction is intended only to restrain claims against

the res (i.e., the Policies) which are or may be asserted

against the Settling Insurers.”

Following this amendment to the 1984 Insurance

Settlement Agreement, Chubb could not have known that it was

an interested party in Manville’s bankruptcy proceedings or

that the 1986 Orders would bar its non-derivative in

personam claims against Travelers. In Amchem, the Supreme

Court was concerned that, even if the exposure-only

claimants “appreciate[d] the significance of class notice,”

they might “not have the information or the foresight needed

61
to decide, intelligently, whether to stay in or opt out.”

Amchem, 521 U.S. at 628. Similarly, even if Chubb received

the Notice document, it could not have anticipated from the

way the proceedings unfolded that its contribution and

indemnity claims — which were abstract, “unimaginable,” and

inchoate at the time — would be enjoined. Therefore, it

cannot be said that Chubb had constitutionally sufficient

notice of the 1986 Orders, as interpreted by the bankruptcy

court in 2004.

* * *

In conclusion, we hold that MacArthur does not

foreclose Chubb’s due process argument. We further hold

that Chubb was not adequately represented in the proceedings

that lead to the bankruptcy court’s approval of the 1984

Insurance Settlement Agreement and the Manville Plan, and

that it did not receive adequate notice of the 1986 Orders.

Accordingly, both the bankruptcy court and the district

court erred by rejecting Chubb’s due process argument.

Chubb is therefore not bound by the terms of the 1986

Orders. Consequently, it may attack the Orders collaterally

as jurisdictionally void. And, as we held in Manville III,

that attack is meritorious.

62
C. The Status of the Statutory and Hawaii Direct Action
Settlements

The 2004 Direct Action Settlement relates to three

categories of claims: the Common Law Direct Actions, the

Statutory Direct Actions, and the Hawaii Direct Actions.

Chubb only seeks to bring contribution and indemnity claims

against Travelers in the Common Law Direct Actions, and our

holding primarily relates to that portion of the broader

settlement. Following the stipulated dismissal of the

portions of these appeals relating to the Statutory and

Hawaii Direct Actions, the parties to those agreements have

requested that we sever them from the broader 2004 Direct

Action Settlement and affirm the district court’s rulings as

to those agreements.

In Manville III, however, we declined in light of our

holding to determine the prospective status of these

agreements or to resolve arguments relating to technical

objections and the 2004 Direct Action Settlement’s overall

fairness. See Manville III, 517 F.3d at 58 n.13, 68 n.26.

Prudence counsels the same course here. Moreover, there is

nothing in the 2004 Direct Action Settlement suggesting that

severance would be an option at this juncture, or that such

a remedial act would be undertaken by a court of appeals.

63
We therefore decline to address the parties’ remaining

arguments relating to, inter alia, the reasonableness of the

Common Law Direct Action Settlement and the bankruptcy

court’s award of attorneys’ fees, and we again “leave it to

the parties, with the aid of the bankruptcy court, to

determine the status of their settlements.” Manville III,

517 F.3d at 68 n.26.

III. CONCLUSION

For the foregoing reasons, the district court’s March

28, 2006 order is AFFIRMED as to the Objecting Plaintiffs

and REVERSED as to Chubb. The case is REMANDED for further

proceedings consistent with this opinion.

64