On Petitions for Writs of Mandamus to the United States Bankruptcy Court for the District of Delaware (Related to Bankruptcy Nos. 00-03837 and 01-01139)
Before: Fuentes, Smith and Garth, Circuit Judges
The opinion of the court was delivered by: Leonard I. Garth, Circuit Judge.
Argued on December 12, 2003
We have before us two Emergency Petitions for a Writ of Mandamus. Both Petitions allege that a district court judge who has presided over five asbestos-related bankruptcies for the past two years has, through his association with certain advisors, created an appearance of partiality such that he must be disqualified from any further participation in those proceedings. The parties seeking the district court judge's disqualification originally moved for recusal in the Bankruptcy Court, but filed Petitions for Mandamus in our Court after the district court judge withdrew the recusal motions from the Bankruptcy Court and stayed discovery on those motions. The District Court has yet to rule on the recusal motions. As originally filed, both Petitions asked us to issue an order directing the district court judge either to: (a) recuse himself pursuant to 28 U.S.C. § 455; or (b) expedite consideration of (including discovery on) the recusal motions pending before him.
After carefully considering all of the written submissions from the parties and amicus curiae and following a sharply-contested hearing, we have decided to direct the district court judge to rule on the withdrawn recusal motions. In doing so, we will vacate the district court judge's order staying discovery on the recusal motions and direct that expedited discovery proceed without interruption. Because of certain temporal exigencies explained later in this opinion, we will direct that all discovery and the district court judge's ruling on the recusal motions be completed no later than January 31, 2004. We will retain jurisdiction over any further proceedings subsequent to the district court judge's ruling. See In re Sch. Asbestos Litig., 977 F.2d 764, 774-78 (3d Cir. 1992).
We emphasize at the outset of this opinion that we are not ruling on the merits of the disqualification relief sought by the Petitioners. Our decision to remand the recusal motions to the district court judge is prompted by our overarching concern that we do not have an adequately developed evidentiary record before us.
This case arises from five Chapter 11 asbestos-related bankruptcies involving the following corporate entities: Owens Corning, W.R. Grace & Co., USG Corporation, Armstrong World Industries, Inc., and Federal-Mogul Global, Inc. (collectively, the "Five Asbestos Cases").
The first Petition for Mandamus was brought by Kensington International Limited and Springfield Associates, LLC, two creditors of Owens Corning (collectively, " Kensington ").
The second Petition for Mandamus was filed by D.K. Acquisition Partners, L.P, Fernwood Associates, L.P., and Deutsche Bank Trust Company Americas, three creditors of W.R. Grace & Co. (collectively, " D.K. Acquisition Partners ").
In response to the Petitions for Mandamus, we received Answers from Owens Corning, the Unofficial Committee of Select Asbestos Claimants, the Baron & Budd Claimants, W.R. Grace & Co., Waters & Kraus, LLP, a Dallas firm which filed a response on November 10 on behalf of asbestos claimants, James J. McMonagle (Legal Representative for Future Claimants of Owens Corning), the Official Committee of Asbestos Creditors of Owens Corning, the Official Committee of W.R. Grace Asbestos Claimants, and Credit Suisse First Boston ("CSFB"). We also received Replies to these Answers.
In addition, we received written submissions from five amicus curiae. In no particular order, the amici are: Armstrong World Industries, Inc., the Official Committee of Unsecured Creditors of Armstrong World Industries, Inc. et al., the Washington Legal Foundation, USG Corporation, and the Official Committee of Unsecured Creditors of USG Corporation et al.
B. The Court-Appointed Consultants
On November 27, 2001, then-Chief Judge Becker of our Court*fn1 ordered that the Five Asbestos Cases, which were then pending in the District of Delaware, be transferred from the Bankruptcy Court to Senior District Court Judge Alfred M. Wolin of the District Court of New Jersey. Chief Judge Becker explained in his order that "these bankruptcy cases, which carry with them tens of thousands of asbestos claims, need to be consolidated before a single judge so that a coordinated plan for management can be developed and implemented." Shortly after receiving the Five Asbestos Cases, Judge Wolin re-referred them to the Bankruptcy Court, but retained jurisdiction over the asbestos-related claims and issues.
On December 28, 2001, Judge Wolin named five "Court Appointed Consultants" (the "Consultants") to assist him in the Five Asbestos Cases. The five individuals he named were David Gross, Judson Hamlin, William Dreier, John Keefe, and Francis McGovern, all of whom had prior experience with asbestos or mass tort litigation.*fn2 Pursuant to Judge Wolin's order, the Consultants were to "advise the Court and to undertake such responsibilities, including... mediation of disputes, holding case management conferences, and consultation with counsel, as the Court may delegate to them individually." The Consultants could also be delegated "certain authority to hear matters and to advise the Court on issues that may arise in these five large Chapter 11 cases." Judge Wolin's order provided that he could, "without further notice, appoint any of the Court-Appointed Consultants to act as a Special Master to hear any disputed matter and to make a report and recommendation to the Court on the disposition of such matter." In connection with his order, Judge Wolin announced at a Case Management conference that he would conduct ex parte meetings with the attorneys.
C. The G-I Holdings Bankruptcy
Two months earlier, the Bankruptcy Court for the District of New Jersey had appointed Judson Hamlin, one of the Consultants, to serve as the "Legal Representative of Present and Future Holders of Asbestos-Related Demands" in still another asbestos-related bankruptcy case captioned In re G-I Holdings Inc. The G-I Holdings case is not related to the Five Asbestos Cases and Judge Wolin has played no role in the G-I Holdings proceedings. The G-I Holdings bankruptcy does, however, share one common characteristic with the Five Asbestos Cases assigned to Judge Wolin: it too faced a wave of asbestos lawsuits. See Official Comm. of Asbestos Claimants of G-I Holding, Inc. v. Heyman, 277 B.R. 20, 24-28 (S.D.N.Y. 2002) (explaining that, "[b]eginning in the late 1970's, large numbers of claimants began to bring lawsuits [against G-I Holdings ] seeking compensation for bodily injury, death and related harms inflicted by asbestos and products containing asbestos"). We have also been told that many of G-I Holdings' significant creditors, as well as asbestos-claimant creditors, also have claims against the debtors in the Five Asbestos Cases.
Mr. Hamlin was not the only Consultant who participated in the G-I Holdings bankruptcy. Less than one month after Judge Wolin appointed the five Consultants, Mr. Hamlin filed an application in G-I Holdings seeking the Bankruptcy Court's approval to engage David Gross, another Consultant, as his local counsel. In connection with that application, Mr. Gross submitted an affidavit to the G-I Holdings Bankruptcy Court disclosing his appointment as a Consultant to Judge Wolin in the Five Asbestos Cases. Mr. Hamlin's application was met with no objection and the Bankruptcy Court approved Mr. Gross as Mr. Hamlin's counsel.
D. Kensington 's Recusal Motion
Almost two years later, Kensington filed a motion in the Bankruptcy Court seeking to recuse Judge Wolin from further participation in the Owens Corning bankruptcy. Kensington, which claims that it only recently learned about Messrs. Gross and Hamlin's participation in the G-I Holdings bankruptcy, asserted that Judge Wolin was precluded under 28 U.S.C. § 455 from continuing to preside over the Owens Corning bankruptcy by virtue of the fact that two of his Consultants had conflicts of interest. In connection with that motion, Kensington sought discovery of W.R. Grace & Co., Messrs. Hamlin and Gross, and their law firms. CSFB, an agent for banks holding approximately $1.6 billion in pre-petition claims against Owens Corning and certain of its subsidiaries, filed papers supporting Judge Wolin's recusal.
Three days later, the debtors in the W.R. Grace bankruptcy filed an application in the Bankruptcy Court to appoint Mr. Hamlin as the Legal Representative for Future Asbestos Claimants of W.R. Grace & Co. The application disclosed that Mr. Hamlin was already serving as a Consultant to Judge Wolin in the Five Asbestos Cases (including, of course, the W.R. Grace bankruptcy).
On October 23, 2003, Judge Wolin entered an order staying all discovery in connection with Kensington 's recusal motion. The order explained that recusal motions are often brought for improper purposes and that all discovery should be stayed until Kensington 's motion could be tested by the adversarial process. Judge Wolin also announced in his order that he intended to issue a Case Management Order in the near future governing further proceedings on the recusal motion.
E. Kensington 's Mandamus Petition
Dissatisfied with Judge Wolin's decision to sua sponte stay discovery on the recusal motion, Kensington filed an Emergency Petition for a Writ of Mandamus with us on October 28, 2003. Kensington 's petition asked us to issue a Writ of Mandamus "directing Judge Wolin either (a) to disqualify himself under 28 U.S.C. § 455, or (b) to withdraw his October 23[, 2003] order suspending briefing and discovery on the recusal ...