In the case of Williams Sr. et al. v. Placid Oil Co., recently weighed by the U.S. Court of Appeals for the Fifth Circuit, an asbestos manufacturer’s bankruptcy effectively derailed the plaintiff’s claim for damages.
In a split decision, the appellate court held that because the plaintiff was an “unknown creditor” a the time the company sought bankruptcy protection through discharge, the plaintiff was not entitled to direct notice of right to claim. What makes this matter even more frustrating is that even if the plaintiff had been made aware of the right to sue, it’s unclear what kind of case she might have had, as she did not even know she was sick until decades later.
Our Boston mesothelioma lawyers agree with the sole dissenting justice in this case, who reasoned that it is unconstitutional for the right to pursue a wrongful death claim to be discharged in a bankruptcy that occurred 15 years before the plaintiffs even knew she was sick. The dissenting justice lamented the fact that constitutional concerns were not raised by the plaintiff upon appeal; only issues regarding whether adequate notice was given prior to the bankruptcy discharge.
Cases like this reveal how many competing legal principles there are in these cases. if other courts reached differing conclusions on this issue, it’s possible the matter could go before the U.S. Supreme Court. However, speculation of that may be a bit premature.
In this case, the lawsuit was brought by the surviving relatives of a woman who was diagnosed with and later died from mesothelioma, a form of terminal cancer caused by exposure to asbestos. It’s a latent disease, meaning it does not manifest until many years, usually decades, following exposure.
Here, family members suspected the woman became ill after years of laundering her husband’s clothing. The articles of clothing were covered in asbestos dust, which she would have breathed as she washed the clothes.
Her loved ones filed a lawsuit against the father’s former employer. However, many years prior, the company had become aware of its liability for asbestos claims, and filed for bankruptcy. During that process, it was required to give “known creditors” actual notice of its discharge, so that they could file an adversary proceeding to preserve their claim. For unknown creditors, the company published notice in The Wall Street Journal. The plaintiffs insist they never saw that notice.
However, they indicated they were known creditors because the company knew of the dangers its asbestos products caused, and should have anticipated the potential danger to employees and spouses.
However, the court rejected this argument, finding that a “known creditor” under federal bankruptcy law is defined as someone for whom there is ascertainable risk of injury – not foreseeable risk of injury.
Therefore, the court ruled, adequate notice had been given and the plaintiff’s claims were effectively discharged in the bankruptcy without a challenge.
The dissenting justice countered his colleagues had misinterpreted the bankruptcy court case law, and that the Constitutional right to due process was clearly violated, given that the parties were not only unknown to the debtor, but also to the creditors themselves. Therefore, even if adequate notice was given (i.e., in a national publication), it’s reasonable to conclude the plaintiffs would not have noted themselves as potential targets of that notice, were it ever noticed.
“Requiring constructive notice to such unknown – and unknowing – future claimants fails to comport with the guarantee of due process,” the justice wrote.
If you or a loved one is diagnosed with mesothelioma in Boston, call for a free and confidential appointment at (617) 777-7777.
Williams Sr. et al. v. Placid Oil Co., May 27, 2014, U.S. Court of Appeals for the Fifth Circuit
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Consider Clinical Trials When Faced with Late-Stage Mesothelioma, June 6, 2014, Boston Mesothelioma Lawyer Blog