Writ of Certiorari - Scotus

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1 of 50 DOCUMENTS View Original Source Image of This Document OWENS CORNING, Petitioner, v. PATRICIA WRIGHT AND KEVIN WEST, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Respondents. No. 12-301 SUPREME COURT OF THE UNITED STATES 2012 U.S. Briefs 72717; 2012 U.S. S. Ct. Briefs LEXIS 3750 September 7, 2012 On Petition for a Writ of Certiorari to the United States Court of Appeals for the Third Circuit. Petition for Writ of Certiorari COUNSEL: [**1] ROBERT N. HOCHMAN *, MICHAEL W. DAVIS, KARA L. MCCALL, TACY F. FLINT, SIDLEY AUSTIN LLP, Chicago, IL, * Counsel of Record. [*i] QUESTION PRESENTED Whether this Court should expressly overrule Chevron Oil. Co. v. Huson, 404 U.S. 97 (1971), and hold that new rules of law in civil cases should be given full retroactive effect in all non-final cases, thus bringing the civil rule on retroactivity into conformity with the criminal rule, and ameliorating the confusion and inconsistencies that have arisen in the lower courts' attempts to follow Chevron Oil's unclear guidance. [*ii] PARTIES TO THE PROCEEDING The parties to the proceeding are reflected in the caption, except that the defendant to Respondents' claims is Owens Corning Sales, LLC. Respondents incorrectly named Owens Corning as the defendant rather than Owens Corning Sales, LLC. RULE 29.6 STATEMENT Owens Corning is the parent corporation of Owens Corning Sales, LLC. Owens Corning has no parent corporation. No company owns 10 percent or more of the stock of Owens Corning. [*iii]
PETITION FOR A WRIT OF CERTIORARI
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Owens Corning respectfully petitions for a writ of [**5] certiorari to review the judgment of the United States Court of Appeals for the Third Circuit. In Chevron Oil. Co. v. Huson, 404 U.S. 97 (1971), this Court announced a multifactor test for determining whether a judicial decision that announces a new rule of law in a civil case should be applied retroactively or only prospectively in cases that have yet to reach final judgment. After Chevron Oil was decided, this Court overruled a similar standard for determining whether a new rule of law in criminal cases should be applied retroactively or only prospectively to non-final cases that remain open on direct review. Griffith v. Kentucky, 479 U.S. 314 (1987), rejected the prior view that if a new judicial ruling reflected a "clear break" with prior precedent, then it could be applied prospectively only. Under Griffith, a new rule of law in criminal cases "is to be applied retroactively to all cases, state, or federal, pending on direct review or not yet final, with no exception for cases in which the new rule constitutes a 'clear break' with the past." Id. at 328. In Harper v. Virginia Department of Taxation, 509 U.S. 86 (1993), [**6] the lower court was asked to determine whether a new rule that had been announced by this Court should be applied in a pending case. The lower court had applied Chevron Oil's three-part test, which asks (1) whether the decision was genuinely a "new principle of law," (2) whether retrospective application would "'further or retard [the] operation'" of the new rule of law, and (3) whether retroactive application would produce inequities. Chevron Oil, 404 U.S. at 106-07. Under that test, the lower court held, the new rule should be [*2] applied only prospectively and not to cases pending at the time the new rule had been announced. This Court reversed and adopted a rule broadly requiring retroactive application of new judicial interpretations of law: When this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule. 509 U.S. at 97. Nonetheless, several courts of appeals have noted [**7] that this Court in Harper did not expressly overrule Chevron Oil. Specifically, Harper rejected so-called selective prospective application: the prospective-only application of a new rule that this Court had announced in a prior decision and applied to the parties in the prior case. See Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 752 (1995) ("[T]his Court, in Harper v. Virginia Dept. of Taxation, 509 U.S. 86, 97 (1993), held that, when (1) the Court decides a case and applies the (new) legal rule of that case to the parties before it, then (2) it and other courts must treat that same (new) legal rule as 'retroactive,' applying it, for example, to all pending cases, whether or not those cases involve pre decision events."). Harper thus did not necessarily displace the Chevron Oil test in a case of so-called pure prospective application: when a court has to decide whether to apply a new rule to the parties in the case in which the new rule is itself announced. As a result, the courts of appeals have taken divergent positions on whether Chevron Oil's three-part test still governs the decision whether to apply a new [**8] decision retro-actively [*3] in "all cases ... as to all events," or whether equitable considerations and the purposes motivating the new rule may support prospective-only application. Four circuits (the Second, Ninth, Tenth, and Eleventh) have ruled that the Chevron Oil test survived Harper, at least in some form. Shah v. Pan Am. World Servs., Inc., 148 F.3d 84, 91 (2d Cir. 1998); Nunez-Reyes v. Holder, 646 F.3d 684, 690-92 (9th Cir. 2011) (en banc); Educ. Credit Mgmt. Corp. v. Mersmann (In re Mersmann), 505 F.3d 1033, 1051-52 (10th Cir. 2007) (en banc); Glazner v. Glazner, 347 F.3d 1212, 1216-19 (11th Cir. 2003) (en banc). Two circuits (the Fourth and Fifth) have observed that the reasoning of Harper cannot be squared with prospective application of judicial rulings at all, but have noted that this Court has not expressly overruled Chevron Oil, thus leaving open the possibility of prospective-only application on uncertain grounds. Fairfax Covenant Church v. Fairfax Cnty. Sch. Bd., 17 F.3d 703, 710 (4th Cir. 1994); Hulin v. Fibreboard Corp., 178 F.3d 316, 329-33 (5th Cir. 1999). [**9] One circuit (the Sixth) has squarely held that Harper overruled Chevron Oil, and "adopted a strict rule requiring
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retroactive application of new decisions to all cases still subject to direct review." In re Federated Dep't Stores, Inc., 44 F.3d 1310, 1317 (6th Cir. 1995). As the Tenth Circuit has observed, the current state of the law charts "a confusing path for courts to navigate." Mersmann, 505 F.3d at 1051. The decision below reflects the confusion among the courts of appeals and threatens to severely undermine the principle of Harper favoring retroactive application of new decisions. Until 2010, the Third Circuit had interpreted the word "claim" in the Bankruptcy Code, 11 U.S.C. 101 et seq, in a [*4] uniquely narrow fashion. According to the rule announced in Avellino & Bienes v. M. Frenville Co. (In re M. Frenville Co.), 744 F.2d 332 (3d Cir. 1984), there was no "claim" that could be discharged in bankruptcy until the plaintiff possessed a "right to payment." Id. at 336. The Frenville rule prevented the discharge in bankruptcy of claims, like those presented [**10] in this case, where the debtor's products (here, roofing shingles) were sold prior to the bankruptcy filing, and are alleged to have had a latent defect that did not become manifest until after the bankruptcy plan was confirmed. In 2010, the Third Circuit overruled Frenville, which had been universally criticized and rejected by other courts. Under its new rule, a "claim" arises at the time that an individual is "exposed" to the debtor's product or conduct that ultimately gives rise to an injury, even if no injury manifests until after the bankruptcy plan is confirmed. Jeld-Wen, Inc. v. Van Brunt (In re Grossman's Inc.), 607 F.3d 114, 125 (3d Cir. 2010) (en banc). The Grossman's court applied its new rule to the parties before it. Id. Grossman's was decided after petitioner's bankruptcy was confirmed. In the decision below, the Third Circuit was asked to apply Grossman's retroactively, which would result in the discharge of respondents' claims because they purchased their allegedly defective shingles before petitioner's bankruptcy plan was confirmed. The Third Circuit refused, ruling that because petitioner's bankruptcy was confirmed prior to the [**11] change Grossman's wrought in Third Circuit law, respondents lacked notice that their claims would be discharged. Without adequate notice, the Third Circuit reasoned, respondents lacked an opportunity to be heard regarding treatment of their claims in the bankruptcy [*5] plan, and thus due process required that the Frenville rule should continue to apply to their claims. Pet. App. lla-16a. That is, according to the Third Circuit, the retroactive application of a change in the interpretation of a federal statute violates due process whenever a claimant can be said to have relied on the prior rule of law to her detriment. This is precisely the sort of equitable consideration that this Court has ruled should no longer determine whether a change in the law should apply retroactively. Reynoldsville Casket Co., 514 U.S. at 759 (rejecting a party's claim of "simple reliance (of the sort at issue in Chevron Oil) as a basis for creating an exception to Harpers rule of retroactivity"). This decision represents both the need and an opportunity for this Court to clarify that retroactive application of changed interpretations of federal law is the rule, and [**12] that prospective-only application has been rejected in civil cases just as it has been rejected in criminal cases. OPINIONS AND ORDERS BELOW The opinion of the court of appeals is reported at 679 F.3d 101, and is reproduced in the appendix at Pet. App. la-16a. The memorandum opinion of the district court is reported at 450 B.R. 541, and is reproduced in the appendix at Pet. App. 17a-46a. STATEMENT OF JURISDICTION The judgment of the court of appeals was entered on May 18, 2012. Petitioner timely filed a petition for rehearing on June 1, 2012. The court of appeals entered an order denying the petition for rehearing on June 12, 2012. Pet. App. 47a-48a. This Court has jurisdiction pursuant to 28 U.S.C. 1254(1). STATUTES INVOLVED: [*6] STATUTORY PROVISIONS INVOLVED This case concerns the discharge of claims under the Bankruptcy Code, 11 U.S.C. 101 et seq. "Claim" is defined, as relevant here, as:
[a] right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, [**13] legal, equitable, secured, or unsecured. 11 U.S.C. 101(5)(A). A claim is "discharged" as follows: Except as otherwise provided in this subsection, in the plan, or in the order confirming the plan, the confirmation of a plan-(A) discharges the debtor from any debt that arose before the date of such confirmation, and any debt of a kind specified in section 502(g), 502(h), or 502(i) of this title, whether or not-(i) a proof of the claim based on such debt is filed or deemed filed under section 501 of this title; (ii) such claim is allowed under section 502 of this title; or (iii) the holder of such claim has accepted the plan; and (B) terminates all rights and interests of equity security holders and general partners provided for by the plan. 11 U.S.C. 1141(d)(1). [*7] STATEMENT OF THE CASE A. Respondents' Shingles. Respondent Patricia Wright had Owens Corning "Oakridge" shingles installed on the roof of her house in late 1998 or early 1999. Respondent Kevin West had Owens Corning "Oakridge" shingles installed on the roof of his house in 2005. Both respondents [**14] knew at the time of installation that the shingles were manufactured and sold by Owens Corning. In 2009, both respondents made warranty claims, alleging that their shingles had cracked, which caused leaking. After receiving Wright's warranty claim, Owens Corning offered to reimburse her for part of the costs of replacement of her roof, but she refused to accept the payment and thereafter filed this lawsuit. Owens Corning denied West's warranty claim on the ground that the cracking in his shingles was caused by a shifting of the roof deck. Wright filed suit in November 2009, and West was added to the suit as a named plaintiff on March 11, 2010. B. Owens Coming's Bankruptcy. In 2000, Owens Corning and several related entities voluntarily filed for bankruptcy relief under Chapter 11 in the United States Bankruptcy Court for the District of Delaware. On July 10, 2006, Owens Corning issued its Sixth Amended Joint Plan of Reorganization for Owens Corning and Its Affiliated Debtors and Debtors-in-Possession (As Modified) ("Reorganization Plan"), and a confirmation hearing was held on September 18, 2006. On September 26, 2006, the bankruptcy court issued its order confirming the Reorganization [**15] Plan ("Confirmation Order"), as well as its Findings of Fact and Conclusions of Law in support of its Confirmation Order. The [*8] district court affirmed the bankruptcy court's Confirmation Order on September 28, 2006. Confirmation of a debtor's reorganization plan generally discharges all claims against the debtor, as long as proper
notice is given. See generally 11 U.S.C. 1141. To that end, 1141(d)(1)(A) of the Bankruptcy Code provides in relevant part that "the confirmation of a plan discharges the debtor from any debt that arose before the date of such confirmation ... whether or not (i) a proof of the claim ... is filed ...; (ii) such claim is allowed ... or; (iii) the holder of such claim has accepted the plan ...." Consistent with the general rule, Owens Coming's Reorganization Plan and Confirmation Order provided for release and discharge of all "claims" against Owens Corning. "Claim" was broadly defined, following the language of the Bankruptcy Code, as "'[a] right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, [**16] secured, or unsecured.'" Pet. App. 3a n.2 (emphases added) (alteration in original). Warranty claims were specifically anticipated in the Reorganization Plan: "The Debtors (or, as the case may be, the Reorganized Debtors) shall have the right after the Confirmation Date to fulfill any pre-Petition Date or pre-Confirmation Date warranty claims based on the Debtors' (or as the case may be, the Reorganized Debtors') business judgment notwithstanding discharge of the Claims and release of the Debtors pursuant to the Bankruptcy Code and the Plan..." Pet. App. 23a (emphasis added) (omission in original). [*9] Pursuant to the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, Owens Corning published notice of the bankruptcy proceedings, including the claim bar dates as well as the confirmation and the resulting discharge. Publication notice was repeatedly provided and broadly disseminated pursuant to a notice plan approved by the Bankruptcy Court after hearing. In March 2002, Owens Corning twice published Notice of Entry of Bar Date in USA Today, The Wall Street Journal (U.S., Asia, and Europe Editions), and The New York Times (U.S. and International [**17] Herald Tribune), once published notice in approximately 250 regional or local newspapers where the Debtors had significant business operations at the time of publication, and once published notice in approximately 35 trade publications in the primary lines of business in which the Debtors operated. In June 2006, Owens Corning published Notice of Hearing to Consider Disclosure Statement in The Wall Street Journal (U.S., Asia, and Europe editions), USA Today (U.S. and international editions), The New York Times (U.S. and International Herald Tribune), and The Toledo Blade (Owens Coming's corporate headquarters is located in Toledo, Ohio). In late July and early August 2006, Owens Corning published in similarly broad fashion the Notice of Confirmation Hearing, Objections to the Plan, Establishing Procedures for Voting, and Setting the Record Date for Voting Purposes to all unknown creditors and persons of interest. And, finally, at the end of November 2006 Owens Corning published in similarly broad fashion the Notice of Entry of Order of Confirmation, the Effective Date, and Bar Date for Certain Administrative Claims. Pet. App. 24a-25a. [*10] The first of these [**18] published notices, the Notice of Entry of Bar Date published in March 2002, specifically identified holders of claims related to roofing shingles as persons who needed to file a claim. Pet. App. 24a & n.4. C. Respondents' Claims And District Court Ruling. Wright initiated this lawsuit on November 24, 2009. Pet. App. 17a. As noted above, West joined this lawsuit in March 2010. Respondents have asserted a variety of claims--including breach of contract, breach of express and implied warranty, unfair trade practices, fraudulent and negligent misrepresentation, negligence, strict products liability, and unjust enrichment--all stemming from the allegedly defective shingles, which they say cracked because of the defects and caused their roofs to leak. When the claims were filed, Frenville provided the governing rule in the Third Circuit for what "claims" could be discharged in bankruptcy. Under Frenville, a plaintiff did not possess a "claim" within the meaning of the bankruptcy code until he or she could proceed with a suit on the claim, 744 F.2d at 335, and possessed a right to payment for the claim, id. at 336. Under this so-called "accrual [**19] test," claims for latent defects in products, and other claims in
which injury manifests long after exposure to or purchase of a product, were not discharged under the Frenville standard unless the injury manifested prior to the confirmation of a bankruptcy plan. Here, under Frenville's accrual test, respondents' "cause of action did not accrue until the defects in the roofing shingles manifested in 2009," Pet. App. 5a, roughly three years after the Owens Corning Confirmation Order. [*11] In June 2010, the Third Circuit overruled Frenville's accrual test, which was a unique and widely criticized interpretation of the Bankruptcy Code. Grossman's, 607 F.3d at 120 (citing cases), 121 (expressly overruling Frenville). Grossman's replaced the accrual test with a standard based on when the plaintiff was exposed to the product that ultimately gave rise to the injury, even if the injury did not manifest until after the seller's bankruptcy. Id. at 125. Under Grossman's, exposure to or purchase of the product giving rise to the claim would be sufficient, even if the plaintiff had not yet suffered any injury and had no right to sue prior [**20] to confirmation of the debtor's bankruptcy plan. Id. After the Third Circuit issued its opinion in Grossman's, petitioner filed a motion for summary judgment asserting that all of respondents' claims had been discharged by the bankruptcy court's Confirmation Order. Specifically, petitioner asserted that it was undisputed that respondents had been exposed to the products giving rise to their claims before the Confirmation Order was entered in 2006. Wright had purchased her shingles before 2000, while West had purchased his shingles in 2005. Since, under Grossman's, respondents each held "claims" within the meaning of the Bankruptcy Code when the bankruptcy court entered its Confirmation Order, those claims were discharged pursuant to the Reorganization Plan and the Confirmation Order. The district court granted petitioner's motion. After initially rejecting respondents' argument that Grossman's should be understood as changing the law only as to asbestos claims (which was the type of claim at issue in Grossman's), Pet. App. 34a-35a, the district court considered whether Grossman's should be applied retroactively. The district court recognized [*12] that [**21] this Court's decision in Harper rejected the Chevron Oil test for determining retroactive application of a change in law, including its concern for whether retroactive application would create an injustice or undue hardship on a party. Id. at 36a-37a. The district court observed that Harper requires that "'a rule of federal law, once announced and applied to the parties to the controversy, must be given full retroactive effect by all courts adjudicating federal law,'" including other litigants in cases not yet final at the time the new rule was announced. Id. at 37a (quoting Harper, 509 U.S. at 96). In light of Harper's clear principle, the district court considered it "obvious that . . . under the relevant caselaw [it] must apply Grossman's retroactively" to Wright's claim. Pet. App. 39a. Wright's claim had, within the meaning of the Bankruptcy Code, arisen prior to the filing of petitioner's bankruptcy petition. That was likewise true of the claim at issue in Grossman's. West, however, had not purchased his shingles until after the filing of petitioner's bankruptcy petition, but still before the Confirmation Order. The district [**22] court recognized that that precise issue had not been considered in Grossman's, but nonetheless concluded that the rationale of Grossman's required likewise treating such pre-confirmation exposure to the debtor's product as a "claim" within the meaning of the Bankruptcy Code. Id. at 40a-41a. Thus, "[b]ecause [both of respondents'] claims arose pre-confirmation, they were discharged pursuant to the confirmation order." Id. at 42a. Finally, the district court considered whether the notice provided to respondents was adequate to satisfy due process; if it had not been, then the claims would not be deemed discharged. E.g., Chemetron [*13] Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995). It concluded that respondents, who had purchased their shingles through the third-party contractors who installed them, were unknown creditors. Pet. App. 44a-46a. For unknown creditors, publication notice is sufficient. See Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 317 (1950). The district court concluded that the extensive publication notice provided by Owens Corning was sufficient. Pet. App. 45a-46a. D. The Court of Appeals [**23] Opinion. The Court of Appeals reversed. It first held "that a claim arises when an individual is exposed pre-confirmation to a product or other conduct giving rise to an injury that underlies a 'right to payment' under the" Bankruptcy Code. Pet.
App. 11a. Applying this test to respondents, it agreed with the district court that both respondents held "claims" as of the Confirmation Date. Id. at 8a-11a. The court also acknowledged that the Grossman's test for "claim" had been applied retroactively in Grossman's, and therefore likewise should be applied retroactively here. Id. at 10a. However, the court limited the retroactive effect of the Grossman's rule only to the question whether respondents had a "claim" when petitioner's bankruptcy plan was confirmed. It refused to treat respondents' latent defect claims the way every other "claim" in bankruptcy was treated under the plan, including those of all other unknown creditors who received only publication notice: as discharged. It characterized its ruling as based on due process, by which it meant adequate notice that respondents' claims would be discharged in bankruptcy. Pet. App. 15a-16a. But the panel identified [**24] no flaw in the extensive publication notice Owens Corning provided. [*14] To the contrary, it acknowledged "that for unknown claimants, like [respondents], notice by publication in national newspapers is sufficient to satisfy the requirements of due process," and specifically stated that "the Debtors' notices were sufficient as to most unknown claimants." Id. at 12a-13a. Rather, the flaw that supposedly deprived respondents of due process was the then-governing law of the Third Circuit: respondents' "situation differed significantly from that of the typical unknown claimant" because [a]t the time [respondents] received their notices, Frenville was the law in our Circuit . . . . On reading the notices, [respondents] could only understand that their rights would not be affected in any way by the referenced proceedings, and thus, correctly, would not have taken any action to ensure that their interests were represented. Pet. App. 13a. Because the law had changed, and only because the law had changed, the panel concluded that "a re-do" was warranted for respondents and claimants in analogous cases. Id. at 13a-16a. In sum, the panel ruled that [**25] respondents hold claims under Grossman's, but that they are relieved from the effects of Grossman's because they were justified in relying on the then-governing but now rejected Frenville test. Grossman's was thus given prospective-only effect in the only sense that matters: whether the "claims" at issue in this case had been discharged in bankruptcy. According to the court of appeals, the treatment of their "claims" would not follow Grossman's--instead, the "outcome of the Frenville test" would control. Pet. App. 15a-16a. TITLE: PETITION FOR A WRIT OF CERTIORARI [*15] REASONS FOR GRANTING THE PETITION The rationale for prospective-only application of new rules in civil cases has been fully undermined, but this Court has not yet expressly brought to a close the prospective-only application of new civil rules as it has in criminal cases. This Court should accept review in this case to so rule. I. THE COURTS OF APPEALS ARE SHARPLY DIVIDED REGARDING THE POSSIBILITY OF AND STANDARDS FOR PROSPECTIVEONLY APPLICATION OF NEW RULES IN CIVIL CASES. The ruling in the decision below brings to five the number of circuits that have decided that [**26] changes in judicial interpretation of federal law may, even after Harper, be applied prospectively only. The decision below joins Shah v. Pan American World Services, Inc., 148 F.3d 84, 91 (2d Cir. 1998), Nunez-Reyes v. Holder, 646 F.3d 684, 690-92 (9th Cir. 2011) (en banc), Educ. Credit Mgmt. Corp. v. Mersmann (In re Mersmann), 505 F.3d 1033, 1051-52 (10th Cir. 2007) (en banc), and Glazner v. Glazner, 347 F.3d 1212, 1216-19 (11th Cir. 2003) (en banc). But even among those five courts, how a court should decide whether to make a ruling prospective-only has been the subject of differences of opinion. The Second Circuit has ruled that the Chevron Oil test remains unchanged by Harper when a court is deciding, in
the case announcing a new rule, whether that new rule should be applied retroactively or prospectively only. Shah, 148 F.3d at 91 (because the Supreme Court had announced a new rule in Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), but did not decide whether it should be applied retroactively, the Second Circuit applied [*16] "the [**27] three factor retroactivity analysis of Chevron Oil"). The Ninth Circuit has concluded that Chevron Oil remains largely intact when a court is deciding whether to apply a newly announced rule retroactively in the case in which the rule is announced. However, that court has concluded that Chevron Oil does not apply when the new rule of law concerns the court's jurisdiction. Nunez-Reyes, 646 F.3d at 690 ("we first explain that the three-factor Chevron Oil test remains good law, at least in cases, such as this one, where we announce a new rule of law not affecting our jurisdiction"). The Eleventh Circuit has ruled that in a case announcing a new rule, the decision whether to apply that rule prospectively remains governed by Chevron Oil, but the test has been modified by Harper. Glazner, 347 F.3d at 1218-19. Specifically, the Eleventh Circuit has observed that "both the second and third factors of the Chevron Oil test have traditionally been subjective in nature" but that such subjective analysis is "incompatible" with Harper. Id. at 1219. According to the Eleventh Circuit, "the second and third prongs of Chevron [**28] Oil are properly viewed today as objective inquiries that examine the impact of a newly announced rule on the entire class of persons potentially affected by the new rule, rather than the impact on any specific litigant." Id. The Tenth Circuit has also concluded that the Chevron Oil test has been modified, but it perceives that the law has changed in a different way from the Eleventh Circuit's understanding. According to the Tenth Circuit, after Harper, "whether a federal law is applicable to a particular case does not turn on 'whether litigants actually relied on an old rule or how they would suffer from retroactive application of [*17] a new one.'" Mersmann, 505 F.3d at 1051 (quoting Harper, 509 U.S. at 95 n.9). The decision below not only permits prospective-only application of a new rule, but, in direct conflict with the Tenth Circuit's reading of Harper, it permits prospective-only application of the new rule precisely because of the reliance interests of litigants on the old rule. Specifically, the Third Circuit concluded that giving the new rule full retroactive effect was inappropriate because when petitioner published [**29] its extensive notice for the benefit of all unknown claimants, "Frenville was the law in our Circuit . . . . On reading the notices, [respondents] could only understand that their rights would not be affected in any way by the referenced proceedings, and thus, correctly, would not have taken any action to ensure that their interests were represented." Pet. App. 13a. Put simply, the Third Circuit concluded that giving full retroactive effect to Grossman's would violate due process because the respondents were entitled to rely on the correctness of the now-rejected Frenville rule. The divisions among the courts that consider prospective application of new rules still appropriate is only one level of the confusion that currently prevails in the law. Both the Fourth and Fifth Circuits have reasoned that the rationale of Harper leaves no meaningful room for prospective application of new rules. Yet because this Court has not expressly declared Chevron Oil overruled in all circumstances, these courts have left open the possibility of prospective-only application of a new rule without identifying when or how it would be appropriate. As the Fifth Circuit put it: [**30] Evidently, the Supreme Court has concluded that the . . . Chevron Oil departure[] from traditional retroactivity doctrine proved unsatisfactory. [*18] The Court's most recent decisions substantially reject those departures and return to the general rule of adjudicative retroactivity, leaving only an indistinct possibility of the application of pure prospectivity in an extremely unusual and unforeseeable case. Hulin, 178 F.3d at 333. Similarly, the Fourth Circuit has reasoned that "[r]etroactive application of decisions is ... the rule inherent in the judicial function." Fairfax Covenant Church, 17 F.3d at 709. After observing that "every indication in [Harper] is that its logic would ... forbid all types of prospectivity," the court continued:
It might not be reading too much into Harper . . . if we were to conclude that Chevron [Oil], adopting the test for determining when cases may be enforced prospectively, has lost all vitality. We are struck, however, by the notable absence in Harper of any statement that Chevron [Oil] is overruled for use in civil cases involving a question of 'pure' prospectivity [**31] or that all prospective decisionmaking is prohibited. Id. at 710. The Sixth Circuit alone has openly acknowledged the incompatibility between the Chevron Oil test and the rationale of this Court's decision in Harper. It reads Harper as "adopt[ing] a strict rule requiring retroactive application of new decisions to all cases still subject to direct review." Federated Dep't Stores, 44 F.3d at 1317. [*19] II. THIS CASE PRESENTS AN EXCELLENT VEHICLE FOR CLARIFYING THAT RETROACTIVE APPLICATION OF NEW RULES IS REQUIRED IN CIVIL CASES. Only this Court can lift the cloud of confusion that prevails over this area of the law. The Courts of Appeals are plainly awaiting further guidance from this Court. This case provides an excellent opportunity for this Court to do so. First, this case squarely presents an issue of pure prospective application of a new rule. As both the district court and court of appeals observed, West purchased his shingles after respondent filed its bankruptcy petition. Pet. App. 10a, 40a. The new rule announced in Grossman's considered only whether a "claim" arose for purposes of the Bankruptcy [**32] Code if the plaintiff purchased or was exposed to a product prior to the filing of the bankruptcy petition. See Grossman's, 607 F.3d at 125 (holding "that a 'claim' arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a 'right to payment' under the Bankruptcy Code"). It was only in the decision below that the Court of Appeals extended Grossman's to cover plaintiffs, like West, who purchased or were exposed to their products after the filing of the petition but before confirmation of the bankruptcy plan. Pet. App. 11a. At least as to West, this is a case of pure prospective application. As to Wright, who purchased her shingles prior to the filing of respondent's bankruptcy petition, the ruling below could be understood as an example of selective prospective application, which no other court of appeals has considered still viable after Harper. However, Wright's claim, too, may be understood as an example of pure prospective application, [*20] because the Third Circuit in Grossman's did not decide whether the plaintiffs claim had been discharged. See Grossman's, 607 F.3d at 127-28. [**33] This case was the first time the Third Circuit squarely addressed that question in light of the change in circuit law wrought by Grossman's. That the panel in this case also purported to apply Grossman's retroactively to respondents, Pet. App. 10a, but still concluded that discharge was inappropriate, id. at 13a-14a, only further highlights the urgency of this Court's review. The panel purported to give Grossman's retroactive effect, but did so in word only, and failed to provide the "full retroactive effect" required by Harper. 509 U.S. at 97. According to the panel, it provided retroactive effect to Grossman's when it declared that respondents' claims were "claims" within the meaning of the Code and the Plan. Pet. App. 10a-11a. But having recognized that respondents had "claims," the panel refused to find them discharged only because of supposed reliance on the rejected Frenville test. Id. at 13a-14a. The Third Circuit thus disguised an anti-retroactivity ruling as a notice and due process ruling. It is clear that the rule is not an actual notice or due process ruling because the Third Circuit itself recognized that the extensive publication [**34] notice was adequate for unknown creditors like respondents. Pet. App. 12a-13a. That ruling was no doubt correct because due process in the bankruptcy discharge context requires only adequate notice of the pendency of bankruptcy proceedings and the resulting discharge. See id. at lla-12a (citing Mullane, 339 U.S. at 314; Chemetron Corp., 72 F.3d at 346). There is no doubt that the publication notices of the pendency of the bankruptcy proceeding were adequate, [*21] and that the notice clearly stated that anything deemed a "claim" under the Plan would be discharged. Pet. App. 3a-4a. Indeed, petitioner actually singled out claims based on roof shingles in its notice. Id. at 3a.
Put bluntly, the panel's decision will have no effect on the form of notice provided in connection with any bankruptcy plan. If petitioner's bankruptcy had post-dated either the Grossman's decision or the panel decision in this case, it would not have provided a definition of "claim" or a form of notice that differs at all from the one that was actually provided in this case. Yet the claims of those whose harms had yet to manifest themselves would, [**35] nonetheless, be discharged. The panel's refusal to discharge respondents' claims thus has nothing to do with notice and everything to do with the change in the law. The rejection of Frenville's definition of "claim" is all that is at issue. As the court of appeals freely acknowledged, for respondents and claimants like them, the outcome of the Grossman's test does not apply; instead, "the outcome of the Frenville test will continue to apply." Pet. App. 15a. The panel's decision to recharacterize the retroactivity question as a question of notice and due process, if allowed to stand, would open the door to similar efforts in the future to reframe retroactivity questions in similar terms, further undermining the rule in favor of retroactive application of new rules of law announced by courts. Retroactive application of a new judicial rule will frequently involve issues of a party's reliance on the prior, but overruled, rule of law. For example, in Reynoldsville Casket, this Court considered whether a new rule that caused a state statute of limitations to shrink should be applied retroactively in a non-final case filed after the new [*22] rule was announced. 514 U.S. at 751. [**36] The party whose claim was timely when filed, but whose claim would now be deemed untimely and extinguished, "note[d] the possibility of recharacterizing Chevron Oil as a case in which the Court simply took reliance interests into account in tailoring an appropriate remedy for a violation of federal law." Id. at 752. This Court rejected the effort, ruling that "this type of justification--often present when prior law is overruled--is the very sort that this Court, in Harper, found insufficient to deny retroactive application of a new legal rule (that had been applied in the case that first announced it)." Id. at 753-54. As Reynoldsville Casket makes clear, the label is unimportant; the operation of judicially declared law is what matters. Declaring that reliance interests support prospective-only application of a new rule, as the Third Circuit did, is no different than declaring that reliance interests would make retroactive application of a new rule inconsistent with due process. III. THIS COURT SHOULD RECOGNIZE A CLEAR RULE OF RETROACTIVE APPLICATION OF NEW DECISIONS. A clear rule requiring retroactive application of new [**37] rules announced by courts follows logically from this Court's rulings. Moreover, such a clear rule would offer substantial practical advantages over the Chevron Oil test, which fails to provide adequate guidance to lower courts. The rationale of Harper strongly supports a strict rule of retroactive application of new rules announced by courts. The decision traces the evolution of this Court's reasoning in criminal cases, which culminated in Griffith's ruling requiring strict retroactive [*23] application of new rules announced by courts. In the criminal context, the Court had experimented with prospective-only rulings, and had developed a test that considered reliance interests, which was later used as a model for civil cases in Chevron Oil. Harper, 509 U.S. at 94-95 (discussing Linkletter v. Walker, 381 U.S. 618 (1965)). The Linkletter test had prevailed in criminal cases in the face of "the fundamental rule of 'retrospective operation' that has governed '[j]udicial decisions . . . for near a thousand years.'" Harper, 509 U.S. at 94 (alteration and omission in original) (quoting Kuhn v. Fairmount Coal Co., 215 U.S. 349, 372 (1910) [**38] (Holmes, J., dissenting)). Griffith, this Court explained, overruled Linkletter for two reasons. First, we reasoned that "the nature of judicial review" strips us of the quintessentially "legislat[ive]" prerogative to make rules of law retroactive or prospective as we see fit. Second, we concluded that "selective application of new rules violates the principle of treating similarly situated [parties] the same."
Harper, 509 U.S. at 95 (alterations in original) (citation omitted) (quoting Griffith, 479 U.S. at 323). After tracing the post-Griffith decisions considering retroactivity in civil cases (Am. Trucking Ass'ns, Inc. v. Smith, 496 U.S. 167 (1990) (plurality opinion), and James B. Beam Distilling Co. v. Georgia, 501 U.S. 529 (1991) (plurality opinion)), which had produced divided rulings, the majority in Harper resolved the case presented to it based on the accepted view that once a new rule has been applied retroactively to the parties in the case in which it was announced, the principle against selective prospective application of [*24] new rules requires retroactive [**39] application in all future cases. Harper, 509 U.S. at 95-97. Fundamentally, the nature of judicial review opposes prospective-only application of new rules at all. Griffith made this clear, albeit in a criminal case. But the principles that the Griffith Court pointed to are just as relevant in civil cases. As the Griffith Court explained, it is a "settled principle that [courts] adjudicate[] only 'cases' and 'controversies,'" 479 U.S. at 322; likewise, that principle is just as settled for civil cases. Similarly, it is just as true that "the nature of judicial review requires that [courts] adjudicate specific cases, and each case usually becomes the vehicle for announcement of a new rule" in civil as in criminal cases. Id. In civil cases, no less than in criminal cases, "it is the nature of judicial review that precludes [a court] from '[s]imply fishing one case from the stream of appellate review, using it as a vehicle for pronouncing [a new rule of law], and then permitting the stream of similar cases subsequently to flow by unaffected by that new rule.'" Id. at 323 (second alteration in original) (quoting [**40] Mackey v. United States, 401 U.S. 667, 679 (1971)). In civil cases no less than in criminal cases, "the principle that this Court does not disregard current law, when it adjudicates a case pending before it on direct review, applies regardless of the specific characteristics of the particular new rule announced." Id. at 326. As Justice Scalia has observed, the difference between retroactive and prospective lawmaking is the difference between the judicial and the legislative power. Harper, 509 U.S. at 107 (Scalia, J., concurring). That is true whether the law at issue is civil or criminal. There is thus no reason to perpetuate an artificial distinction between the civil and the criminal rule [*25] regarding retroactive application of newly announced judicial rules. Harper did not try to defend the distinction; indeed, by going to such lengths to discuss the rationale of Griffith, it made clear that the distinction was groundless. Separate from the logic of Griffith and Harper, the Chevron Oil standard is not functioning as an effective guide to distinguishing cases in which prospective application is appropriate from cases [**41] in which the general rule of retroactive application should prevail. Consider, for example, two of the courts of appeals that have adhered to Chevron Oil since Harper. Both the Ninth Circuit in Nunez-Reyes and the Tenth Circuit in Mersmann ruled en banc that a change in circuit law that they were announcing would not be applied retroactively. Nunez-Reyes, 646 F.3d at 690-92; Mersmann, 505 F.3d at 1051-52. Yet both cases generated dissents on that issue, even though both dissents likewise applied the Chevron Oil standard. Nunez-Reyes, 646 F.3d at 699-702 (Ikuta, J., concurring in part and dissenting in part); Mersmann, 505 F.3d at 1053-54 (Hartz, J., concurring in part and dissenting in part). Also, Chevron Oil requires that the decision being applied prospectively be a genuinely new rule. But is a court of appeals decision changing circuit law to bring it into conformity with every other circuit to have decided an issue really an unexpected and novel decision that merits prospective application? Nunez-Reyes, 646 F.3d at 699 (Ikuta, J., concurring in part and dissenting in part). [**42] Or what of overruling a decision that had been criticized by other circuits and even by a panel decision in circuit? Mersmann, 505 F.3d at 1053 (Hartz, J., concurring in part and dissenting in part). Such rules "could be the source of only a cautious reliance." Id. The answers to these [*26] questions are highly significant in this case because the new rule that the Third Circuit applied prospectively only here displaced an old rule that had been universally criticized. Grossman's, 607 F.3d at 120. Similarly, the second factor of Chevron Oil is hardly one that lends itself to ready application in this case concerning the discharge of a claim in bankruptcy. That factor looks to whether retroactive application of the new rule would advance or retard the purpose of the rule. Chevron Oil, 404 U.S. at 106-07. But what is the "purpose" of the Grossman's rule? It would most readily appear to advance the general policy of the Bankruptcy Code to provide debtors a fresh start. Long-tail claims like those involving latent defects could severely hamper a debtor's ability to emerge from bankruptcy in a financial position to [**43] succeed. But the Third Circuit chose instead to emphasize the policy
favoring notice and an opportunity to be heard by creditors prior to the confirmation of a bankruptcy plan. Pet. App. 13a-14a. While petitioner disagrees with the Third Circuit's choice, nothing in Chevron Oil indicates which choice is the correct one. Finally, it is readily apparent that the inquiry into whether retroactive application of a new rule would produce "inequity," Chevron Oil, 404 U.S. at 107, does not give rise to even application. Again, this case highlights the point. What is more inequitable: the supposed inequity of discharging the respondents' claims just as every other unknown creditor with a latent defect would have had their claims discharged in a bankruptcy in every other circuit, or the inequity of requiring petitioner to bear the costs of claims despite a bankruptcy plan that clearly discharged them under the correct interpretation of law? There may be better and worse answers to the question--and petitioner strongly believes that the equities [*27] favor it--but the answer, once again, is not to be found in Chevron Oil. Such uncertainties would vanish if the [**44] Court adopted a clear rule requiring retroactive application of new decisions in civil cases. Such a rule would maintain the limits and integrity of the judicial function and ensure even-handed application of the law. CONCLUSION For the foregoing reasons, the petition for a writ of certiorari should be granted. Respectfully submitted, ROBERT N. HOCHMAN *, MICHAEL W. DAVIS, KARA L. MCCALL, TACY F. FLINT, SIDLEY AUSTIN LLP, One South Dearborn, Chicago, IL 60603, (312) 853-7000, rhochman@sidley.com. * Counsel of Record September 7, 2012 APPENDIX [*1a] APPENDIX A UNITED STATES COURT OF APPEALS THIRD CIRCUIT No. 11-2026 PATRICIA WRIGHT; KEVIN WEST, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Appellants v. OWENS CORNING Argued Nov. 17, 2011 Opinion Filed: May 18, 2012 Before: RENDELL, AMBRO, and NYGAARD, Circuit Judges. OPINION OF THE COURT AMBRO, Circuit Judge. This appeal concerns the application of our recent decision in JELD-WEN, Inc. v. Van Brunt (In re Grossman's Inc.), 607 F.3d 114 (3d Cir.2010), establishing a new test for determining when a "claim" exists under the Bankruptcy Code, [**45] 11 U.S.C. 101 et seq. Plaintiffs Patricia Wright and Kevin West (collectively, the "Plaintiffs") filed a
Page 13 2012 U.S. Briefs 72717, *1a; 2012 U.S. S. Ct. Briefs LEXIS 3750, **45
putative class action seeking damages related to defects in roofing shingles [*2a] manufactured by Owens Corning. n1 The District Court granted Owens Coming's motion for summary judgment, determining that the Plaintiffs' claims were discharged under the confirmed reorganization plan (the "Plan") of Owens Corning and certain of its subsidiaries (collectively, the "Debtors"). Specifically, the Court held that, based on Grossman's, the Plaintiffs held "claims" under the Code, and that the published notices of the Debtors' Chapter 11 bankruptcy cases afforded them procedural due process. We agree that the Plaintiffs held claims under the Code, but, under the circumstances before us, disagree that they were afforded procedural due process. Hence their claims were not discharged. We thus affirm in part and reverse in part the Court's judgment, and remand the case for further proceedings. n1 The Plaintiffs incorrectly named Owens Corning as the defendant rather than Owens Corning Sales LLC. Nonetheless, we continue to refer to the defendant as "Owens Corning." [**46] I. Background The Plaintiffs' story presents the challenge of administering unknown future claims in bankruptcy. In late 1998 or early 1999, Wright hired a contractor, who installed shingles manufactured by Owens Corning on her roof. In 2005, West similarly hired a contractor, who likewise installed shingles manufactured by Owens Corning on his roof. They both discovered leaks in 2009, and determined that the shingles had cracked. Each sent warranty claims to Owens Corning. It rejected Wright's claim in part and West's claim in full. In November 2009, Wright filed a class action against Owens Corning alleging fraud, negligence, strict liability, and breach of warranty. West later was added as a named plaintiff. [*3a] Meanwhile, back in October 2000, the Debtors filed their Chapter 11 bankruptcy petitions. In November 2001, the Bankruptcy Court set a claims bar date of April 15, 2002. All claimants were required to file proofs of claim on or before that date. It also approved a bar date notice, which was published twice in The New York Times, The Wall Street Journal, and USA Today, among other publications. The notice directed claimants to file proofs of claim if they held [**47] claims n2 that arose prior to the filing of the Debtors' bankruptcy cases. It specifically identified claims relating to "the sale, manufacture, distribution, installation and/or marketing of products by any of the Debtors, including without limitation . . . roofing shingles. . . . " n2 The notice defined "claim" as it is defined in the Bankruptcy Code: "[a] right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured . . . . " 11 U.S.C. 101(5). The Debtors' bankruptcy proceedings resulted in the filing of the Plan in June 2006. Soon after, the Bankruptcy Court approved notices of the confirmation hearing for the Plan, including a generic notice to most unknown claimants. n3 This notice was published [*4a] in The New York Times, The Wall Street Journal, and USA Today, among other publications. It stated, in bold, that the Plan might affect the rights of holders of claims against the Debtors. n3 For notice purposes, claimants are divided into "known" and "unknown." A "known" claimant (or creditor) "is one whose identity is either known 'or reasonably ascertainable by the debtor.'" Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir.1995) (quoting Tulsa Prof'l Collection Serv., Inc. v. Pope, 485 U.S. 478, 490, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988)). In contrast, "[a]n 'unknown' creditor is one whose 'interests are either conjectural or future or, although they could be discovered upon investigation, do not in due course of business come to knowledge [of the debtor].'" Id. (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950)) (second alteration in original). On appeal, the parties do not contest that the Plaintiffs were unknown claimants. [**48] Two other notices of the Debtors' bankruptcy proceedings also were published. In June 2006, notice of the hearing
to consider the disclosure statement was published in The New York Times, The Wall Street Journal, USA Today, and the Toledo Blade. In November 2006, notice of the Plan's date of confirmation, September 26, 2006 (the "Confirmation Date"), was published in the same four publications. The Plan provided for the discharge of all claims relating to the Debtors under the Bankruptcy Code that arose before the Confirmation Date. n4 The order confirming the Plan (the "Confirmation Order") likewise provided that all claims arising before the Confirmation Date were discharged. n4 Section 1141 of the Bankruptcy Code provides that "confirmation of a plan . . . discharges the debtor from any debt that arose before the date of such confirmation, . . . whether or not (i) a proof of the claim based on such debt is filed . . . ; (ii) such claim is allowed . . . ; or (iii) the holder of such claim has accepted the plan." 11 U.S.C. 1141(d)(1)(A). "Debt" is defined as liability on a claim. Id. 101(12). When the Plaintiffs filed [**49] their class action, there was little dispute as to the effect of Owens Coming's bankruptcy on the Plaintiffs' claims against it. Based on our much-maligned decision in Avellino v. M. Frenville Co. (In re M. Frenville Co.), 744 F.2d 332 (3d Cir.1984), a "claim" under the Bankruptcy Code did not arise until a cause of action accrued under applicable non-bankruptcy law--that is, when [*5a] a claimant possessed a right to payment. In this context, the Plaintiffs' cause of action did not accrue until the defects in the roofing shingles manifested in 2009, years after the Confirmation Date. n5 Thus, at the time they filed the class action, the Plaintiffs were correct to conclude that they did not hold "claims" under the Code based on the action. But subsequently we overruled Frenville with our en banc decision in Grossman's, in which we rejected Frenville's "accrual test," and in its place established the rule that a "'claim' arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a 'right to payment' under the Bankruptcy Code." 607 F.3d at 125. n5 This assumes that the applicable law comes from either Illinois or Pennsylvania, the states where the Plaintiffs reside. Under either's law, as with most states' laws, a right to payment does not accrue until a product defect is evident and an individual suffers actual damages. See Hermitage Corp. v. Contractors Adjustment Co., 166 Ill.2d 72, 209 Ill.Dec. 684, 651 N.E.2d 1132, 1135 (1995); Gibson v. Commonwealth, 490 Pa. 156, 415 A.2d 80,83(1980). [**50] Based on Grossman's, Owens Corning filed its motion for summary judgment, arguing that the Plaintiffs' claims were discharged under the Plan and Confirmation Order. Before the District Court, the Plaintiffs argued that Grossman's is limited to asbestos-related cases, it does not apply retroactively, and they were not afforded due process because the notices of the bankruptcy proceedings were insufficient. The Court rejected these arguments, holding that the Plaintiffs' claims were discharged under the Plan and Confirmation Order. [*6a] On appeal, the Plaintiffs advance two arguments. First, they argue that the District Court applied Grossman's too rigidly, creating the unworkable result that persons who did not anticipate future tort actions at the time of a bankruptcy proceeding nonetheless possess claims under the Bankruptcy Code that are discharged. The test set out in Grossman's, they assert, requires that the debtor and claimant anticipate a future tort action at the time of the bankruptcy proceedings for a claim to exist. Second, they claim that the District Court's due process analysis fell short because it based its ruling on our precedent holding that [**51] unknown claimants generally are entitled to notification by publication. II. Jurisdiction and Standard of Review The District Court had jurisdiction under 28 U.S.C. 1332(a) and (d)(2). We have jurisdiction to review the Court's final order under 28 U.S.C. 1291. We review a district court's grant of summary judgment de novo. MBIA Ins. Corp. v. Royal Indem. Co., 426 F.3d 204, 209 (3d Cir.2005). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Orsatti v. New Jersey State Police, 71 F.3d 480, 482 (3d Cir.1995) (quoting Fed.R.Civ.P. 56(c)). "All reasonable inferences from
the record must be drawn in favor of the nonmoving party," and we "may not weigh the evidence or assess credibility." MBIA Ins., 426 F.3d at 209. For there to be a genuine issue of material fact, the non-moving party must produce evidence "such that a reasonable jury could return [**52] a [*7a] verdict for" it. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). III. Grossman's and "Claims" under the Bankruptcy Code A. Waiver In addressing whether the Plaintiffs held claims under the Bankruptcy Code, we first confront the effect of their failure to advance to the District Court their argument on appeal regarding Grossman's. Before the District Court, the Plaintiffs contended only that Grossman's is limited to asbestos-related claims and should not apply retroactively. They advance neither argument to us. We generally follow "a well established principle that it is inappropriate for an appellate court to consider a contention raised on appeal that was not initially presented to the district court." Lloyd u. HOVENSA, 369 F.3d 263, 272-73 (3d Cir.2004). Yet this principle "is one of discretion rather than jurisdiction," Selected Risks Ins. Co. v. Bruno, 718 F.2d 67, 69 (3d Cir.1983), and we may consider an argument raised for the first time on appeal in "exceptional circumstances," such as the when the "public interest . . . so warrants." Barefoot Architect, Inc. v. Bunge, 632 F.3d 822, 834-35 (3d Cir.2011) [**53] (quoting Rogers v. Larson, 563 F.2d 617, 620 n. 4 (3d Cir.1977)); see also Tri-M Grp., LLC v. Sharp, 638 F.3d 406, 416 (3d Cir.2011) (noting that "'the matter of what questions may be taken up and resolved for the first time on appeal is one left primarily to the discretion of the courts of appeals, to be exercised on the facts of individual cases'") (quoting Council of Alter. Pol. Parties v. Hooks, 179 F.3d 64, 69 (3d Cir.1999)). The principle also is best applied to issues that are fact-dependent or the resolution of which on a basis not argued to the district court will [*8a] surprise the parties. Barefoot Architect, 632 F.3d at 835. We believe that the "public interest" weighs heavily toward our consideration of whether the Plaintiffs held claims under the Bankruptcy Code. What constitutes a claim has the potential to affect a wide range of proceedings, the issue is purely legal, the scope of Grossman's is generally at issue in this case, and addressing whether the Plaintiffs held claims will clarify the test we established in Grossman's. This is an appropriate situation for us to exercise our discretion. [**54] B. "Claims" Under the Bankruptcy Code Consideration of the treatment of unknown future claims involves two competing concerns: the Bankruptcy Code's goal of providing a debtor with a fresh start by resolving all claims arising from the debtor's conduct prior to its emergence from bankruptcy; and the rights of individuals who may be damaged by that conduct but are unaware of the potential harm at the time of the debtor's bankruptcy. In overruling Frenville's "accrual test," we recognized that it had been "universally rejected" based on its conflict with the Code's broad definition of the term "claim." Grossman's, 607 F.3d at 120-21 (quoting Cadleway Props., Inc. v. Andrews (In re Andrews), 239 F.3d 708, 710 n. 7 (5th Cir.2001)). To repeat, in its place we adopted the rule that a "'claim' arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a 'right to payment' under the Bankruptcy Code." Id. at 125. This rule reflects the Code's expansive treatment of claims even if, as we acknowledged, that treatment is to the "disadvantage [of] potential claimants, such as tort claimants, [**55] whose injuries [*9a] were allegedly caused by the debtor but which have not yet manifested and who therefore had no reason to file claims in the bankruptcy." Id. at 122. The rule is an amalgam of the two tests that other Courts of Appeals generally follow--the conduct test and the pre-petition relationship test. Under the former, a claim arises "when the acts giving rise to [the] liability were performed, not when the harm caused by those acts was manifested." Id. See Watson v. Parker (In re Parker), 313 F.3d 1267 (10th Cir.2002); Grady v. A.H. Robins Co., 839 F.2d 198 (4th Cir.1988). Under the pre-petition relationship test, "a claim arises from a debtor's pre-petition tortious conduct where there is also some pre-petition relationship between the debtor and the claimant, such as a purchase, use, operation of, or exposure to the debtor's product." Grossman's, 607
F.3d at 123. See Epstein v. Official Comm. of Unsecured Creditors (In re Piper Aircraft Corp.), 58 F.3d 1573, 1576 (11th Cir.1995); Lemelle v. Universal Mfg. Corp., 18 F.3d 1268 (5th Cir.1994); United States v. LTV Corp. (In re Chateaugay Corp.), 944 F.2d 997 (2d Cir.1991). [**56] Cf ZiLOG, Inc. v. Corning (In re ZiLOG, Inc.), 450 F.3d 996 (9th Cir.2006) (adopting a "fair contemplation" test, which is similar to the pre-petition relationship test). Drawing on the tests' similarities, we noted that in the typical case "there seems to be something approaching a consensus among the courts that a prerequisite for recognizing a 'claim' is that the claimant's exposure to a product giving rise to the 'claim' occurred pre-petition, even though the injury manifested after the reorganization." Grossman's, 607 F.3d at 125. Consistent with that consensus, the Grossman's test requires that a claimant be exposed to a debtor's product or conduct pre-petition. It requires individuals to recognize that, by being [*10a] exposed to a debtor's product or conduct, they might hold claims even if no damage is then evident. As applied to the Plaintiffs, we easily conclude that Wright held a claim. She purchased shingles manufactured by Owens Corning in late 1998 or early 1999. Her exposure to Owens Coming's products predated its bankruptcy petition. We applied the test announced in Grossman's retroactively to the claimants in that case. [**57] Id.; see also In re Rodriguez, 629 F.3d 136 (3d Cir.2010) (retroactively applying Grossman's to Chapter 13 bankruptcy proceedings begun in 2007). We thus apply the Grossman's test retroactively to Wright to conclude that she held a claim. Whether West held a claim is less obvious. He purchased his shingles in 2005, after Owens Corning filed its bankruptcy petition but before the Plan was confirmed. In Grossman's, we were not confronted with post-petition, pre-confirmation exposure, and thus based our test on pre-petition exposure. We, however, noted that the Eleventh Circuit Court has extended the pre-petition relationship test to post-petition, pre-confirmation relationships. Grossman's, 607 F.3d at 124 (citing In re Piper, 58 F.3d at 1577). It reasoned that "changing the focal point of the relationship from the petition date to the confirmation date" would be more consistent with the policies underlying the Bankruptcy Code, including its broad definition of the term "claim" to afford debtors a fresh start. In re Piper, 58 F.3d at 1577-78 n. 5. Indeed, the Code provides that confirmation of a plan "discharges [**58] the debtor from any debt that arose before the date of such confirmation." 11 U.S.C. 1141(d)(1)(A) (emphasis added). See also id. 348(d) (providing, in the context of conversion from a Chapter 11 or Chapter 13 proceeding to a Chapter 7 proceeding, that claims [*11a] other than priority claims arising after the petition date, but before conversion, are treated as pre-petition claims in the Chapter 7 proceeding); id. 502(e) (providing that "a claim for reimbursement or contribution . . . that becomes fixed after the commencement of a case" is a pre-petition claim for purposes of allowance). Not extending our test to post-petition, but pre-confirmation, exposure would unnecessarily restrict the Bankruptcy Code's expansive treatment of "claims" that we recognized in Grossman's. It also would separate artificially individuals who are affected by a debtor's products or conduct pre-petition from those who are affected after the debtor's filing of its bankruptcy petition but before confirmation of a plan. We thus restate the test announced in Grossman's to include such exposure and hold that a claim arises when an individual is exposed [**59] pre-confirmation to a product or other conduct giving rise to an injury that underlies a "right to payment" under the Code. As West's exposure to Owens Coming's shingles occurred pre-confirmation, he also held a claim. IV. Due Process Though the Plaintiffs held claims under the Bankruptcy Code, those claims may not have been discharged by the Plan and Confirmation Order. Discharge of the claims of future unknown claimants raises questions regarding due process. n6 Notice is [*12a] "[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality . . . . " Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). Lack or inadequacy of notice of a bankruptcy prevents a claimant from having the opportunity to participate meaningfully in a bankruptcy proceeding to protect his or her claim. See 11 U.S.C. 342(a) ("There shall be given such notice as is appropriate . . . of an order for relief . . . under [the Bankruptcy Code]."). Inadequate notice accordingly "precludes discharge of a claim in bankruptcy." Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir.1995). [**60] n6 Having determined that the Plaintiffs held "claims" under the Code based on Grossman's, the District Court
first held that the claims were discharged pursuant to the Confirmation Order before considering whether the notices afforded the Plaintiffs due process, a concept rooted in fairness and applicable to bankruptcy through the Fifth Amendment of our Constitution. See SLW Capital, LLC v. Mansaray-Ruffin (In re Mansaray-Ruffin), 530 F.3d 230, 245 (3d Cir.2008). However, if a claimant is not afforded due process, a plan of reorganization and confirmation order that purport to discharge claims will not do so. See Grossman's, 607 F.3d at 127 ("A court therefore must decide whether discharge of the . . . claims would comport with due process, which may invite inquiry into the adequacy of the notice . . . . "); Jones v. Chemetron Corp., 212 F.3d 199, 209 (3d Cir.2000) ("[I]f a potential claimant lacks sufficient notice of a bankruptcy proceeding, due process considerations dictate that his or her claim cannot be discharged by a confirmation order."). As the District Court noted, we generally hold that for unknown claimants, [**61] like the Plaintiffs, notice by publication in national newspapers is sufficient to satisfy the requirements of due process, particularly if it is supplemented by notice in local papers. Id. at 348-49. But whether adequate notice has been provided depends on the circumstances of a particular case. Grossman's, 607 F.3d at 127. Due process requires "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane, 339 U.S. at 314, 70 S.Ct. 652; see also SLW Capital, LLC v. [*13a] Mansaray-Ruffin (In re Mansaray-Ruffin), 530 F.3d 230, 239 (3d Cir.2008) ("The level of process due to a party prior to the deprivation of a property interest . . . is highly dependent on the context. As the Supreme Court has repeatedly emphasized, '[t]he very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.'" (quoting Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189, 196, 121 S.Ct. 1446, 149 L.Ed.2d 391 (2001)) (alteration in original)). [**62] Though the Debtors' notices were sufficient as to most unknown claimants, the Plaintiffs' situation differed significantly from that of the typical unknown claimant. At the time the Plaintiffs received their notices, Frenville was the law in our Circuit (though we refrain from saying "good" law). As noted, under the Frenville test the Plaintiffs did not hold "claims" under the Bankruptcy Code. On reading the notices, the Plaintiffs could only understand that their rights would not be affected in any way by the referenced proceedings, and thus, correctly, would not have taken any action to ensure that their interests were represented. Not until we overturned Frenville and established our new test for determining when a claim exists under the Code did the Plaintiffs unexpectedly hold "claims" that arguably could be discharged in the proceedings addressed in the notices. By that time, however, the bar date had passed, the Confirmation Order had been entered, and the Confirmation Date had occurred, each of which affected the Plaintiffs' newfound claim status without an opportunity for them to be heard. Due process affords a re-do in these special situations to be sure all [**63] claimants have equal rights. We thus hold that, for persons who have "claims" under the Bankruptcy Code based solely on the retroactive [*14a] effect of the rule announced in Grossman's, those claims are not discharged when the notice given to those persons was with the understanding that they did not hold claims. n7 n7 Given our reliance on the exceptional circumstances created by the retroactive application of Grossman's, we express no opinion on the broader issue of whether discharging unknown future claims comports with due process. See generally Laura B. Bartell, Due Process for the Unknown Future Claim in Bankruptcy--Is This Notice Really Necessary?, 78 AM. BANKR. L.J. 339 (2004). In this vein and consistent with our statements that whether due process has been provided depends on the circumstances of a particular case, our holding is not a bright-line rule that all persons with unknown future claims once governed by Frenville could not have been provided due process regardless of the adequacy of notice to those future claimants. For example, in some bankruptcy proceedings a future claims representative is appointed to represent and protect the interests of persons with future unknown claims. These representatives are appointed, in part, to address the broader issue of whether discharging unknown future claims comports with due process. See, e.g., id. at 340. Indeed, future claims representatives have been appointed by courts notwithstanding their conclusion that those unknown persons did not hold "claims" under the Bankruptcy Code. See, e.g., New Nat'l Gypsum Co. v. Nat'l Gypsum Co. Settlement Trust (In re Nat'l Gypsum Co.), 219 F.3d 478, 480-81 (5th Cir.2000); In re Amatex Corp., 755 F.2d 1034, 1043 (3d Cir.1985). Because a future claims representative was not appointed in these bankruptcy cases,
we leave open whether, when such a representative provides persons with unknown future claims an opportunity to participate in the bankruptcy case through that representation, they are afforded due process through otherwise adequate notice to the future claims representative. See, e.g., Jones v. Chemetron Corp., 212 F.3d 199, 209 (3d Cir.2000) ("[I]f a potential claimant lacks sufficient notice of a bankruptcy proceeding, due process considerations dictate that his or her claim cannot be discharged by a confirmation order. Such due process considerations are often addressed by the appointment of a representative to receive notice for and represent the interests of a group of unknown creditors." (internal citations omitted)). [**64] [*15a] Because we now explicitly extend the Grossman's test to include post-petition, pre-confirmation exposure to a debtor's conduct or product, there are two groups of persons holding "claims" based on the Grossman's test who, at the time they were given notice of a bankruptcy proceeding, would understand that they did not hold claims. The first group comprises those who hold claims based on Grossman's rejection of the Frenville test--that is, persons exposed to a debtor's conduct or product pre-petition. As to these persons, due process calls for the outcome of the Frenville test to apply for bankruptcy cases in which reorganization plans are proposed and confirmed prior to June 2, 2010, when Grossman's was decided. After that date, persons exposed to a debtor's conduct or product pre-petition are deemed to understand that they held claims. In contrast, because the Grossman's test is limited to pre-petition exposure, persons exposed to a debtor's conduct or product post-petition, but pre-confirmation, would continue to conclude that they did not hold claims. Hence the second group is comprised of persons who hold claims based on our decision [**65] today extending the Grossman's test. Due process requires that the outcome of the Frenville test will continue to apply to their claims in bankruptcy cases where reorganization plans are proposed and confirmed prior to the date of today's decision. **** Because at the time of the Confirmation Date Frenville controlled the status of their "claims," the Plaintiffs were not afforded due process. Accordingly [*16a] their claims were not discharged by the Plan and Confirmation Order, and they retained their cause of action against Owens Corning. In this context, the District Court correctly determined that the Plaintiffs held "claims" under the Bankruptcy Code. But it should not have held that those claims were discharged, and thereby granted summary judgment to Owens Corning, in the circumstances before us. We thus affirm in part and reverse in part the District Court's judgment, and remand the case to that Court for further proceedings. The shadow of Frenville fades, but more slowly than we would like. [*17a] APPENDIX B UNITED STATES DISTRICT COURT W.D. PENNSYLVANIA Civil Action No. 09-1567 PATRICIA WRIGHT AND KEVIN WEST, ON BEHALF OF THEMSELVES [**66] AND ALL OTHERS SIMILARLY SITUATED, Plaintiffs, v. OWENS CORNING, Defendant. March 21, 2011 MEMORANDUM OPINION CONTI, District Judge. On November 24, 2009, plaintiff Patricia Wright ("Wright") instituted this putative class action by filing a complaint against defendant Owens Corning ("Owens Corning" or "defendant"). (ECF No. 1.) On March 11, 2010, Wright filed an amended complaint and included Kevin West ("West," and together with Wright, "plaintiffs") as an
additional named plaintiff. (ECF No. 22.) On June 29, 2010, plaintiffs filed a second amended complaint, which is the subject of the instant memorandum opinion. (ECF No. 49.) Waiting the court's determination is defendant's motion for summary judgment filed on July 19, 2010. (ECF No. 55.) Defendant's motion requests the court grant summary judgment in its favor with respect to [*18a] all plaintiffs' claims because those claims were discharged in defendant's bankruptcy proceedings. After considering defendant's motion for summary judgment, plaintiffs' brief in opposition (ECF No. 69), the joint statement of material facts (M.S.") (ECF No. 76), and the parties' other submissions, defendant's motion will [**67] be granted because plaintiffs' claims were discharged. I. Factual background A. Wright's purchase of Owens Corning shingles and warranty claim In late 1998 or early 1999, Wright installed Owens Corning "Oakridge" shingles on her roof. (J.S., Part I, P 1.) Wright did not purchase the shingles directly from Owens Corning; instead, she hired a contractor to purchase and install the shingles on her roof. (Id. P 24.) Wright believed that the shingles she purchased through her contractor were protected by a 40-year warranty that provided non-prorated coverage for the first fifteen years. (J.S., Part II, P 10.) Before the shingles were installed on the roof of her home, Wright obtained an Owens Corning product information brochure for Oakridge Shadow Premium Architectural Series Shingles at Lowe's or Home Depot which set forth the warranty period and non-prorated period. (Id. P 11.) Wright alleges she did not receive a warranty registration card for the shingles. (Id. P 12.) In or around January 2009, Wright learned about problems associated with her Owens Corning shingles when she noticed water leaking in the four-seasons [*19a] room of her home. (Id. P 13.) [**68] n1 A roofing contractor inspected Wright's roof and advised her that all the shingles were cracked. (Id. P 14.) Wright contacted Owens Corning by telephone in or about January 2009 regarding her leaking roof, and received a warranty claim packet from defendant dated January 13, 2009. (Id. PP 15-16.) Rosso Roofing completed the Owens Corning warranty claim form for a portion of the roof and submitted it to Owens Corning on Wright's behalf. (Id. P 17.) During the warranty claims process, Owens Corning sent Wright a copy of a limited warranty on its roofing shingles. (Id. P 18.) Owens Corning did not provide the limited warranty to Wright until she instituted the warranty claims process, and the product information brochure was the only product documentation Owens Corning provided Wright at or before the purchase and installation of the shingles. (Id. P 19.) n1 Defendant disputes that the shingles were the cause of the leaking water, but does not consider the issue to be material to the determination of the instant motion. (J.S., Part II, P 13.) Owens Corning refused to fully replace Wright's shingles; instead, defendant offered Wright $ 3,412.50 in compensation, [**69] plus a $ 500 credit toward the purchase of shingles. (Id. P 20.) Wright replaced her roof in 2009 for $ 12,875. (Id. P 21.) B. West's purchase of Owens Corning shingles and warranty claim In August 2005, West paid Howard Magnuson, a professional roofing installer, $ 10,824.50 to replace his roof with Owens Corning Oakridge Pro 30 shingles. (Id. P 1.) In June 2009, West learned that he had problems with his Owens Corning roofing shingles when he noticed water leaking through the [*20a] roof into his family room. (Id. P 2.) n2 In July 2009, West made a warranty claim, alleging that, inter alia, his shingles were cracked and caused leaking in his family room ceiling. (J.S., Part I, P 26; Part II, P 3.) n3 West provided Owens Corning with pictures of the allegedly defective shingles and an estimate for replacement and repair which resulted in the creation of claim number 292-525 by Owens Corning. (J.S., Part II, P 4.) Owens Corning provided West with a shingle warranty claim form and packet dated July 21, 2009. (Id. P 5.) Owens Corning denied West's warranty claim in correspondence dated July 24, 2009, stating that the cracking problem with West's shingles [**70] was caused by deck movement. (Id. P 6.) West was
advised by a roofing inspector that the shingles on his roof, including the main, middle, and front porch roofs, exhibited signs of cracking and degranulation. (Pls.' App. (ECF No. 69), Ex. B at 162.) n2 Defendant disputes that the shingles were the cause of the leaking water, but does not consider the issue to be material to the determination of the instant motion. (J.S., Part II, P 2.) n3 Defendant avers that plaintiffs did not buy their shingles directly from Owens Corning and they did not contact Owens Corning until 2009. (J.S., Part I, PP 24, 27.) C. The reorganization plan, confirmation order, and published notice On October 5, 2000, Owens Corning and several related entities (the "debtors") voluntarily filed for bankruptcy relief under Chapter 11 in the United States Bankruptcy Court for the District of Delaware. (J.S., Part I, P 3.) On July 10, 2006, Owens Corning issued its sixth amended joint plan of reorganization (the "reorganization plan"). (Id. P 4.) On September [*21a] 18, 2006, the bankruptcy court held a confirmation hearing, and on September 26, 2006, the bankruptcy court issued [**71] an order confirming the reorganization plan (the "confirmation order"). (Id. PP 12-13.) The bankruptcy court entered findings of fact and conclusions of law with respect to its confirmation order ("FOF/COL"). (Id. P 19.) Section 14.9 of the reorganization plan titled "Discharge of the Debtors" provides, inter alia: (a) Except as otherwise provided herein or in the Confirmation Order, all consideration distributed under the Plan and the treatment of the Claims thereunder shall be, and shall be deemed to be, in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities (other than Demands) . . . relating to any of the Debtors or the Reorganized Debtors or their respective Estates . . . and upon the Effective Date, the Debtors and the Reorganized Debtors shall (i) be deemed discharged under Section 1141(d)(1)(A) of the Bankruptcy Code and released from any and all Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities or Interests or other rights [**72] of an equity security holder of any nature whatsoever, including, without limitation, liabilities that arose before the Confirmation Date . . . . (b) As of the Confirmation Date, except as otherwise provided herein or in the Confirmation Order, all Persons shall be precluded from asserting against each of the Debtors, the Reorganized Debtors and their respective Related Persons any [*22a] other or further Claims or other obligations, suits, judgments, damages, debts, Demands, rights, remedies, causes of action or liabilities or Interests or other rights of an equity security holder relating to any of the Debtors or the Reorganized Debtors or their respective Estates based upon any act, omission, transaction or other activity of any nature that occurred prior to the Confirmation Date . . . . [T]he Confirmation Order shall be a judicial determination of discharge of all such Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities (other than Demands) or Interest or other rights of an equity security holder against the Debtors or the Reorganized Debtors or their respective Estates and . . . such discharge [**73] shall void any judgment obtained against any of the Debtors or the Reorganized Debtors or their respective Estates at any time, to the extent that such judgment relates to a discharged Claim or terminated OCD interest. (Def.'s App. (ECF No. 55), Ex. E at 162-63 (emphasis added).) Section 5.16(c) of the reorganization plan titled "Releases by Holders of Claims and Interests" provides, inter alia: Effective as of the Confirmation Date, but subject to the occurrence of the Effective Date, for good and valuable consideration, to the fullest extent permissible under applicable law, each Person that has held, currently holds or may hold a Claim or other obligation, suit, judgment, damages, debt, right, remedy, cause of action or liability that is discharged or an Interest or other right of an equity security holder that
is terminated, and each of their respective Related [*23a] Persons, shall be deemed to completely and forever release, waive, void, extinguish and discharge all Released Actions . . . . (Id. at 130 (emphasis added).) Section 14.11(a) of the reorganization plan titled "Special Provisions for Warranty Claims, Distributorship [**74] Indemnification Claims, Product Coupon Claims and Mira Vista Claims" provides, inter alia: The Debtors (or, as the case may be, the Reorganized Debtors) shall have the right after the Confirmation Date to fulfill any pre-Petition Date and pre-Confirmation Date warranty claims based on the Debtors' (or, as the case may be, the Reorganized Debtors') business judgment notwithstanding discharge of the Claims and release of the Debtors pursuant to the Bankruptcy Code and the Plan . . . . (Id. at 164.) Section I, part D, of the confirmation order titled "Effects of Confirmation" provides: In accordance with section 1141(a) of the Bankruptcy Code and Section 14.14 of the Plan, subject to Section I.C of this Confirmation Order and notwithstanding any otherwise applicable law, immediately upon the entry of this Confirmation Order, the terms of the Plan and this Confirmation Order shall be binding upon all Person, including the Debtors, the Reorganized Debtors, any and all holders of Claims, Demands or Interests (irrespective of whether such Claims or Interests are impaired under the Plan or whether the holders of such Claims or Interests [**75] accepted, rejected or are deemed to have accepted or rejected the Plan), any and all non-Debtor parties to executor contracts and unexpired [*24a] leases with any of the Debtors and any and all Persons who are parties to or are subject to the settlements, compromises, releases, waivers, discharges and injunctions described herein, and in the Findings and Conclusions or in the Plan and the respective heirs, executors, administrators, trustees, affiliates, officers, directors, agents, representatives, attorneys, beneficiaries, guardians, successors or assigns, if any, of any of the foregoing. (Def.'s App., Ex. G at 8-9.) Owens Corning published notice of the bankruptcy proceedings, including the confirmation and the resulting discharge, on several occasions: (1) notice of the general bar date twice in the national and (if applicable) international editions of The New York Times, The Wall Street Journal and USA Today; once in approximately 250 regional or local newspapers in the areas in which the Debtors had significant business operations at the time of publication; and once in approximately 35 trade publications in the primary lines of business in which the Debtors [**76] operated (Def.'s App., Ex. J at 78); n4 (2) on June 16 through June 21, 2006, notice of the hearing to consider the disclosure statement in The Wall Street Journal (U.S., Asia, and Europe editions), USA Today (U.S. and international editions), The New York Times (U.S. and International Herald Tribune), and the Toledo Blade (J.S., Part I, P 23); (3) on August 1, 2006, general publication notice in the United [*25a] States to all unknown creditors and parties of interest in the international edition of USA Today (Def.'s App., Ex. L at 2-3); and (4) on November 28, 2006, notice of the entry of the confirmation order, the effective date, and the bar date for certain administrative claims in USA Today, The Wall Street Journal, The New York Times, and the Toledo Blade (J.S., Part I, P 23). n4 Owens Corning avers in the joint statement of material facts that notice with respect to the general bar date was published in March 2002. The exhibit to which Owens Corning refers, however, does not list any date with respect to that notice. (See Def.'s App., Ex. J at 78.) II. Standard of review Federal Rule of Civil Procedure 56 provides in relevant [**77] part: (a) Motion for Summary Judgment or Partial Summary Judgment. A party may move for summary
judgment, identifying each claim or defense--or the part of each claim or defense--on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion. ... (c) Procedures. (1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or [*26a] (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact. FED. R. CIV. P. 56(a), (c)(1)(A), (B). [**78] Rule 56 of the Federal Rules of Civil Procedure "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Marten v. Godwin, 499 F.3d 290, 295 (3d Cir.2007) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). An issue of material fact is in genuine dispute if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see Doe v. Abington Friends Sch., 480 F.3d 252, 256 (3d Cir.2007) ("A genuine issue is present when a reasonable trier of fact, viewing all of the record evidence, could rationally find in favor of the non-moving party in light of his burden of proof) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548). "[W]hen [**79] the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." [*27a] Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). In deciding a summary judgment motion, a court must view the facts in the light most favorable to the nonmoving party and must draw all reasonable inferences, and resolve all doubts in favor of the nonmoving party. Woodside v. Sch. Dist. of Phila. Bd. of Educ, 248 F.3d 129, 130 (3d Cir.2001); Doe v. Cnty. of Centre, PA, 242 F.3d 437, 446 (3d Cir.2001); Heller v. Shaw Indus., Inc., 167 F.3d 146, 151 (3d Cir.1999). A court must not engage in credibility determinations at the summary judgment stage. Simpson v. Kay Jewelers, Div. of Sterling, Inc., 142 F.3d 639, 643 n. 3 (3d Cir.1998). [**80] III. Discussion
Plaintiffs assert a multitude of claims in their second amended complaint. Owens Corning does not address the efficacy of those claims in its summary judgment motion; rather, it argues that plaintiffs' claims are barred as a matter of law because Jeld-Wen, Inc. v. Van Brunt (In re Grossman's Inc.), 607 F.3d 114 (3d Cir.2010) ("Grossman's"), changed the landscape of bankruptcy law in the Third Circuit regarding when a "claim," as that word is defined in the Bankruptcy Code, 11 U.S.C. 101 et seq. ("Bankruptcy Code"), exists for purposes of a bankruptcy case. It is important to review briefly the applicable caselaw that existed pre-Grossman's to appreciate how that decision is determinative in this case. The court will discuss the decision in Grossman's and consider whether those principles should retroactively apply to Owens Coming's 2006 bankruptcy proceedings, and whether plaintiffs' claims [*28a] were discharged under the Grossman's framework. Finally, the court must determine whether Owens Coming's published notice satisfied the requirements of due process with respect to the named plaintiffs. [**81] A. In re M. Frenville Co. The Court of Appeals for the Third Circuit in Avellino & Bienes v. M. Frenville Co. (In re M. Frenville Co.), 744 F.2d 332 (3d Cir.1984) ("Frenville"), considered "whether the automatic stay provision [of the Bankruptcy Reform Act of 1978, 11 U.S.C. 362(a)(1) (" 362")] applie[d] to situations in which the acts of the debtor occurred before the filing of the bankruptcy petition yet the cause of action stemming from those acts arose post-petition." Frenville, 744 F.2d at 333. The court recognized that "[i]n most cases, the claim or cause of action will arise simultaneously with the underlying act. But to the extent that the harm is separated from the underlying conduct, at least for purposes of 362(a), Congress has focused on the harm, rather than the act." Id. at 335. Under that theory, the court of appeals reasoned that unless the plaintiff "could have proceeded with its suit before bankruptcy petitions were filed in July 1980, or had a claim against [the defendants] which arose before that date, the automatic stay [was] inapplicable." Id. The court turned [**82] to the language of the Bankruptcy Code defining "claim," and determined that, despite Congress' "very broad" definition of that word, the phrase "right to payment" in 11 U.S.C. 101 (" 101") n5 indicated Congress did not intend to [*29a] "'confer the status of a claimant upon a petitioning creditor who has no right to payment.'" Id. at 336 (quoting In re First Energy Leasing Corp., 38 B.R. 577, 581 (Bankr.E.D.N.Y.1984)). Focusing on the term "right to payment," the court turned to New York state law to determine when the plaintiffs' claim for indemnification or contribution against third parties accrued--either pre-petition or post-petition. Under state law, the plaintiffs' indemnity claims against the defendants did not accrue until after the third parties filed their suit, which occurred after the bankruptcy proceedings. The court held in Frenville that the plaintiffs' indemnification claim against the defendant "arose post-petition even though the conduct upon which [its] liability was predicated . . . occurred pre-petition." Grossman's, 607 F.3d at 119. The existence of a valid claim under the [**83] Frenville "accrual test" depended on "(1) whether the claimant possessed a right to payment; and (2) when that right arose" as determined by applicable state law. Kilbarr Corp. v. Gen. Servs. Admin. (In re Remington Rand Corp.), 836 F.2d 825, 830 (3d Cir.1988); see Grossman's, 607 F.3d at 119. n5 Section 101(5) defines a "claim" as a (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 11 U.S.C. 101(5). The accrual test articulated in Frenville and followed within the Third Circuit was considered by other circuits to be "universally rejected," Cadleway Props., Inc. v. Andrews (In re Andrews), 239 F.3d 708, [*30a] 710, n. 7 (5th
Cir.2001), and described as "one [**84] of the most criticized and least followed precedents decided under the current Bankruptcy Code." Firearms Imp. & Exp. Corp. v. United Capitol Ins. Co. (In re Firearms Imp. & Exp. Corp.), 131 B.R. 1009, 1015 (Bankr.S.D.Fla.1991); see Grossman's, 607 F.3d at 120 (citing numerous circuit, district and bankruptcy court decisions declining to follow Frenville). B. Grossman's In June 2010, the Court of Appeals for the Third Circuit, sitting en banc, issued the Grossman's decision, which overturned Frenville and established a new test to determine when a claim exists for purposes of a bankruptcy proceeding. n6 This court must consider whether the principles in Grossman's with respect to a claim's existence are limited to asbestos-type claims, or whether those principles were meant to apply universally to any type of claim existing prior to a debtor's bankruptcy or confirmation of a reorganization plan. The court must also consider whether the new test in Grossman's is to be retroactively applied to this case. n6 Pursuant to the Third Circuit Court of Appeals' internal operating procedure 9.1, no panel can overrule the holding in a precedential opinion or a previous panel unless the court considers the matter sitting en banc. See Jeld-Wen, Inc. v. Van Brunt (In re Grossman's), 607 F.3d 114, 116-17 (3d Cir.2010). [**85] In 1977, the plaintiff in Grossman's, Mary Van Brunt, remodeled her home, and purchased products that allegedly contained asbestos. Grossman's, 607 F.3d at 117. She purchased the products from Grossman's, a home improvement and lumber retailer. Id. In April 1997, Grossman's filed for Chapter 11 bankruptcy protection under 11 U.S.C. 1101 et seq. Id. [*31a] In 2006, "Ms. Van Brunt began to manifest symptoms of mesothelioma, a cancer linked to asbestos exposure." Id. In 2007, Ms. Van Brunt, along with her husband, filed an action for tort and breach of warranty in a New York state court against JELD-WEN, Grossman's successor-in-interest, "and fifty-seven other companies who allegedly manufactured the products that Ms. Van Brunt purchased from Grossman's in 1977." Id. "After the Van Brunts filed their suit, JELD-WEN moved to reopen the Chapter 11 case, seeking a determination that their claims were discharged by the Plan." Id. at 118. The United States Bankruptcy Court of the District of Delaware concluded that "the 1997 Plan of Reorganization did not discharge the Van Brunts' asbestos-related claims [**86] because they arose after the effective date of the Plan." Id. The bankruptcy court's holding relied on Frenville's accrual test, and the district court affirmed the bankruptcy court's order with respect to that issue. Id. n7 n7 The district court held that, under New York state law, "the Van Brunts' breach of warranty claims accrued prepetition and were discharged as part of the Grossman's bankruptcy," because the applicable four-year statute of limitations began to run "when delivery of the product [was] tendered . . . . " Jeld-Wen, Inc. v. Van Brunt (In re Grossman's), 400 B.R. 429, 432 (D.Del.2009). In this case, plaintiffs' claims for breach of implied warranty under Pennsylvania law may have been discharged even under the Frenville accrual test--because delivery of the roofing shingles were tendered more than four years prior to this action. See 13 PA. CONS.STAT. 2725(a) and (b); Antz v. GAF Materials Corp., 719 A.2d 758, 760 (Pa.Super.Ct.1998). On appeal, the court recognized that "'[s]ignificant authority [contrary to Frenville] exist[ed] in other circuits,'" id. at 120 (quoting Jones v. Chemetron [*32a] Corp., 212 F.3d 199, 205-06 (3d Cir.2000)), [**87] and considered whether Frenville's accrual test was still sound. Id. Courts declined to follow Frenville because its holding conflicted "with the Bankruptcy Code's expansive treatment of the term 'claim.'" Id. at 121. The House and Senate Reports concerning the Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, 92 Stat. 2549 (1978), made explicit that "'[b]y this broadest possible definition [of the term 'claim'] . . . the bill contemplates that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case . . . [and] permits the broadest possible relief in the bankruptcy court.'" Id. (quoting H.R.Rep. No. 95-595, at 309, 1978 U.S.C.C.A.N. 5963, 6266); see FCC v. NextWave Pers. Commc'ns Inc., 537 U.S. 293, 302, 123 S.Ct. 832, 154 L.Ed.2d 863 (2003) (noting the word
"claim" has the broadest available definition). The court of appeals in Grossman's rejected Frenville's reliance on the term "right to payment" in the Bankruptcy Code because it failed "to give sufficient weight to the words modifying it: 'contingent,' 'unmatured,' and 'unliquidated.'" Id. [**88] In other words, the court's decision in Frenville did not acknowledge that a "claim" "can exist under the Bankruptcy Code before a right to payment exists under state law." Id. (emphasis added). Under that analysis, the court explicitly overruled Frenville and its accrual test because Frenville imposed "too narrow an interpretation of a 'claim' under the Bankruptcy Code." Id. The court of appeals recognized that its decision to overrule Frenville left a void in the court's jurisprudence about when a claim exists under the Bankruptcy Code. Id. Mindful of "Congress' intent to provide debtors with a fresh start" after claims are [*33a] discharged pursuant to confirmation of a reorganization plan, see 11 U.S.C. 1141(d)(1)(A), the court established a new test to determine when such an event occurs. Id. at 122. The court considered settled caselaw in other circuits, including the "conduct test" and the "pre-petition relationship test." Id. The conduct test enabled "individuals to hold a claim against a debtor by virtue of their potential future exposure to 'the debtor's product,' regardless of whether the claimant [**89] had any relationship or contact with the debtor." Id. at 123 (quoting Epstein v. Official Comm. of Unsecured Creditors (In re Piper Aircraft Corp.), 58 F.3d 1573, 1577 (11th Cir.1995)). The court in Grossman's acknowledged that the conduct test was too broad and could encompass claimants "'who did not use or have any exposure to the dangerous product until long after the bankruptcy'" proceedings. Id. (quoting Alan N. Resnick, Bankruptcy as a Vehicle for Resolving Enterprise-Threatening Mass Tort Liability, 148 U. PA. L. REV. 2045, 2071 (2000)). The en banc panel found that the decision issued by the Court of Appeals for the Eleventh Circuit in Piper was persuasive. The test articulated in Piper, the prepetition relationship test, n8 or the "Piper test," logically balanced the Bankruptcy Code's definition of "claim," and the parties' expectations during bankruptcy proceedings. The Court of Appeals for the Eleventh Circuit stated: [*34a] [A]n individual has a 101(5) claim against a debtor manufacturer if (i) events occurring before confirmation create a relationship, such as contact, exposure, impact, or [**90] privity, between the claimant and the debtor's product; and (ii) the basis for liability is the debtor's prepetition conduct in designing, manufacturing and selling the allegedly defective or dangerous product. n8 Under the pre-petition relationship test, a claim arises from a debtor's conduct "where there is . . . some pre-petition relationship between the debtor and the claimant, such as a purchase, use, operation of, or exposure to the debtor's product." Grossman's, 607 F.3d at 123 (citing Epstein v. Official Comm. of Unsecured Creditors (In re Piper Aircraft, Corp.), 58 F.3d 1573, 1576 (11th Cir.1995)). Piper, 58 F.3d at 1577. Cognizant of the Piper test, the court concluded in Grossman's that "a prerequisite for recognizing a 'claim' is that the claimant's exposure to a product giving rise to the 'claim' occurred pre-petition, even though the injury manifested itself after the reorganization." Grossman's, 607 F.3d at 125. The court held that "a 'claim' arises when an individual is exposed pre-petition to a product or other conduct giving rise to an injury, which underlies a 'right to [**91] payment' under the Bankruptcy Code." Id. Applying its holding to the Van Brunts, the court decided that "their claims arose sometime in 1977, the date Mary Van Brunt alleged that Grossman's product exposed her to asbestos." Id. Plaintiffs' argument that the holding in Grossman's is limited to asbestos-related cases is unconvincing. The court's decision did not include any language limiting its holding in that way. n9 (See Pls.' Br. (ECF [*35a] No. 69) at 2.) Notably, the court recognized that, after overruling Frenville, it was tasked with filling a void in its jurisprudence about when a claim arises. To limit its holding to asbestos cases would undoubtedly fall short of filling that void. n10 Indeed, one recent decision by the Court of Appeals for the Third Circuit applied the holding in Grossman's irrespective of the
existence of a product claim. See In re Rodriguez, 629 F.3d 136, 142 (3d Cir.2010) (holding that, under Grossman's, a mortgagee's right to collect successfully escrow payments existed pre-petition, and thereby constituted a "claim" under 101(5)). n11 Because the holding in Grossman's applies to claims--like those [**92] asserted by plaintiffs--involving, inter alia, breach of warranty and product liability regarding roofing shingles, the court must decide whether the holding in Grossman's can be retroactively applied to this case. n9 Plaintiffs point to footnote eleven in the Grossman's decision to support their argument that Grossman's only applies to asbestos-related claims. In footnote eleven, the court of appeals declined to "decide when a 'claim' arises in the context of an environmental cleanup case involving conflicting statutory frameworks." Grossman's, 607 F.3d at 125-26 n. 11. It does not follow that the court refused to articulate a standard for all other claims. The court singled out one area of the law which had competing statutory frameworks. In other situations, there is no principled basis for not extending the new rule. n10 It deserves reiterating that the Frenville decision involved an indemnity claim. If the court of appeals in Grossman's intended to carve out a rule for asbestos-related claims, overruling Frenville would not have been necessary. n11 Plaintiffs cite In re G-I Holdings, Inc., Nos. 01-30135, 01-8790, 2010 WL 5690394 (Bankr.D.N.J. Dec.14, 2010), for the proposition that Grossman's does not apply to claims outside the asbestos context. Plaintiffs' reliance on G-I Holdings is misplaced. In that case, the court did not need to address the issue raised here because it reasoned that Grossman's was inapplicable. The plaintiff filed its proof of claim before the bar date, "and the claim was included in the Plan that was confirmed." Id. at 666. The claim in issue in G-I Holdings was also arguably "an environmental cleanup claim." which Grossman's declined to address. See Grossman's, 607 F.3d at 125 n. 11. Here, plaintiffs did not initiate their lawsuit until 2009--approximately three years after Owens Coming's reorganization plan was confirmed by the bankruptcy court--and their claims cannot be classified as environmental cleanup claims. [**93] [*36a] 1. Retroactively applying Grossman's In Harper v. Virginia Department of Taxation, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993), the Supreme Court of the United States held that [w]hen [the] Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate [the] announcement of the rule. Id. at 97, 113 S.Ct. 2510. In reaching its decision, the Court opined that "[n]othing in the Constitution alters the fundamental rule of 'retrospective operation' that has governed '[j]udicial decisions . . . for near a thousand years.'" Id. at 94, 113 S.Ct. 2510 (quoting Kuhn v. Fairmont Coal Co., 215 U.S. 349, 372, 30 S.Ct. 140, 54 L.Ed. 228 (1910)). In the civil context, the Court had previously carved out a limitation to this rule if "the denial of retroactive effect to 'a new principle of law,'" id., would avoid "'injustice or hardship'" without retarding the operating [**94] of the new rule in question. Chevron Oil Co. v. Huson, 404 U.S. 97, 107, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971) (abrogated by Harper, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993)). n12 [*37a] The Court in Harper took issue with this exception and noted its ruling made clear that "'the Chevron Oil test cannot determine the choice of law by relying on the equities of the particular case' and that the federal law applicable to a particular case does not turn on 'whether [litigants] actually relied on [an] old rule [or] how they would suffer from retrospective application' of a new one." Harper, 509 U.S. at 95 n. 9, 113 S.Ct. 2510 (quoting James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991)); see Atl. Coast Demolition & Recycling, Inc. v. Bd. of Chosen Freeholders of Atl. Cnty., 112 F.3d 652, 672 (3d Cir.1997) (Harper "overruled Chevron Oil's equitable balancing test as the determinant of whether a new principle of law will be applied retroactively"). The Court "reasoned that 'the nature of judicial review'
strips [the Court] of [**95] the quintessentially 'legislat[ive]' prerogative to make rules of law retroactive or prospective as [the Court] see[s] fit." Id. at 95, 113 S.Ct. 2510 (quoting Griffith v. Kentucky, 479 U.S. 314, 323, 107 S.Ct. 708, 93 L.Ed.2d 649 (1987)). n12 Under the Chevron Oil framework, courts were to consider whether a ruling should apply in a purely prospective fashion. Kolkevich v. Attorney General, 501 F.3d 323, 338 n. 9 (3d Cir.2007). The Chevron Oil test required courts to consider three factors: (1) whether the decision to be applied nonretroactively established a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed; (2) whether retrospective operation would further or retard the new rule's operation; and (3) whether the equities cut in favor of prospective application. Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971); see Kolkevich, 501 F.3d at 338 n. 9. In light of those principles, the Court concluded that "a rule of federal [**96] law, once announced and applied to the parties to the controversy, must be given full retroactive effect by all courts adjudicating federal law," id. at 96, 113 S.Ct. 2510, and extended "'to other litigants whose cases were not final at the time of the [first] decision.'" Id. (quoting Beam, 501 U.S. at 544, 111 S.Ct. 2439 (White, J., opinion concurring in judgment)). [*38a] Courts have not hesitated to extend Beam and Harper's principles to decisions outside the Supreme Court's purview. See United States v. Goodner Bros. Aircraft, Inc., 966 F.2d 380, 385 (8th Cir.1992) (applying the principles from Beam, the court gave retroactive effect to a decision from a sister circuit to the parties before it because "full retroactivity is the normal rule in civil cases" and Chevron Oil was a test for prospectivity); Sterling v. Block, 953 F.2d 198, 199 (5th Cir.1992) (because the holding in the court of appeal's prior decision was applied retroactively to the parties in that case, it applied retroactively in the case sub judice); Ashley v. Cunningham, No. 99-506, 2002 WL 655486, at *2 (D.Del. Apr. 10, 2002) [**97] (applying a new rule of law handed down by the Court of Appeals for the Third Circuit retroactively after considering Harper); see also Laborers' Int'l Union of North Am. v. Foster Wheeler Corp., 26 F.3d 375, 386 n. 8 (3d Cir.1994) (noting that, although Beam and Harper "dealt with decisions issued by the Supreme Court, given the ratio decidendi of both cases . . . there [was] no cogent basis for distinguishing decisions handed down by the inferior federal courts"). The court of appeals in Grossman's applied its new rule of law to the Van Brunts and concluded that their personal injury claims existed when they purchased the products containing asbestos from Grossman's in 1977. Grossman's, 607 F.3d at 125. Similarly, the court of appeals' December 2010 decision in Rodriguez applied Grossman's retroactively to bankruptcy proceedings in 2007, and determined that the claim of the mortgagee ("Countrywide") for unpaid escrow payments existed pre-petition. Rodriguez, 629 F.3d at 142. The mortgagors (the "Rodriguezes") in Rodriguez filed for relief under Chapter 13 of the Bankruptcy Code on October 10, 2007. [**98] Id. at 137. On [*39a] December 2, 2007, the Rodriguezes "filed a motion in the Bankruptcy Court to enforce the automatic stay pursuant to 11 U.S.C. 362(a) [(" 362(a)")] . . . . " Id. On January 15, 2008, Countrywide filed its proof of claim. In re Rodriguez, 391 B.R. 723, 725 (Bankr.D.N.J.2008). n13 After reviewing the court's definition of "claim" in Grossman's, the court determined in Rodriguez that Countrywide's right to collect "funds to satisfy an escrow item for which there [was] a deficiency," existed pre-petition--despite the claim's contingent or remote nature--for purposes of 101(5), and that claim was not barred by the automatic stay provisions of 362(a). n13 The bankruptcy court's findings of fact concerning the date Countrywide filed its proof of claim differs from the date listed in the court of appeals' decision. See In re Rodriguez, 629 F.3d at 138. While those decisions did not explicitly rely upon Harper or Beam, it is obvious that this court under the relevant caselaw must apply Grossman's retroactively to this case, which was not final at [**99] the time Grossman's was decided. n14 n14 Plaintiffs assert that Owens Coming's bankruptcy case is not "open" and Harper and its progeny do not
apply. Plaintiffs' argument falls flat because in Grossman's and Rodriguez, the court of appeals retroactively applied the new rule of law to bankruptcy proceedings that were complete, i.e., were not open. This court sees no distinction between the bankruptcy proceedings in those cases and the proceedings relevant to Owens Corning that warrants a different result. Wright's claims in this case existed pre-petition (i.e., at or before the time Owens Corning filed its Chapter 11 bankruptcy petition in 2000) because she purchased and installed in 1999--pre-petition--the Owens Corning shingles which gave rise to her claim [*40a] asserted in 2009. Wright's purchase of the shingles occurred before 2000, and the conduct giving rise to the injury, i.e., the alleged manufacturing defects in the shingles, existed at the time she purchased and installed the shingles. Whether she was unaware of the defects until the injury manifested itself in 2009 is irrelevant under the Grossman's standard. Wright's claims arose from [**100] the pre-petition relationship between Wright and Owens Corning. West's claims present a more challenging issue: whether the post-petition purchase and installation of Owens Corning shingles in 2005 gave rise to a claim that existed pre-confirmation in 2006. The court of appeals in Grossman's was not confronted with the issue whether a claim arising from a post-petition, pre-confirmation relationship can be discharged under a court's reorganization plan. Grossman's established the test to determine when a claim exists. That test is logically extended to determine whether a claim arises pre-confirmation. Here, under that test, it is clear that for purposes of the Bankruptcy Code West's claims arose in 2005. The court in Grossman's relied upon the Piper test to formulate a cogent standard for determining when a claim arises. See Morgan Olson, LLC v. Frederico (In re Grumman Olson Indus., Inc.), 445 B.R. 243, 252 n. 7 (Bankr.S.D.N.Y.2011) (new Grossman's test "is essentially the same test adopted in Piper"). The Piper test, however, is not limited to pre-petition relationships. The Court of Appeals for the Eleventh Circuit explained that its [**101] "modified test" changed "the focal point of the relationship from the petition date to the confirmation date," so that the test would "encompass . . . injuries occurring post-petition but pre-confirmation, consistent with the policies underlying [*41a] the Bankruptcy Code." Piper, 58 F.3d at 1577-78 n. 5. Indeed, the Bankruptcy Code provides, in relevant part, that the confirmation of a plan of reorganization "discharges the debtor from any debt that arose before the date of such confirmation . . . ." 11 U.S.C. 1141(d)(1)(A); see Grossman's, 607 F.3d at 122; see also Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir.1995) (generally, confirmation of a debtor's reorganization plan discharges all pre-confirmation claims against the debtor). To that end, the panel in Grossman's directed courts to consider, inter alia, whether a claimant has "a colorable claim at the time of the bar date," in determining "[w]hether a particular claim has been discharged by a plan of reorganization . . . . " Grossman's, 607 F.3d at 127. West's relationship to Owens Corning product occurred [**102] pre-confirmation. Applying the principles delineated in Grossman's, Piper, and the policies underlying the Bankruptcy Code, the court concludes that West's claims arose in 2005 at the time he purchased and installed the allegedly defective product. 2. Discharge under the Reorganization Plan Because plaintiffs' claims existed pre-petition--Wright's claims--or pre-confirmation--West's claims, the court must decide whether their claims were discharged under the reorganization plan. n15 The reorganization plan provides that "all consideration distributed under the Plan . . . shall be deemed to be, [*42a] in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims . . . relating to any of the Debtors or the Reorganized Debtors or their respective Estates . . . . " (Def.'s App., Ex. E at 162.) n16 [A] 11 Persons shall be precluded from asserting against each of the Debtors, the Reorganized Debtors and their respective Related Persons any other or further Claims . . . relating to any of the Debtors or the Reorganized Debtors or their respective Estates based upon any act, omission, transaction or other activity of any nature that [**103] occurred prior to the Confirmation Date . . . .
(Id. at 163.) n15 The court in Grossman's did not reach the issue whether the Van Brunt's claims were discharged. Grossman's, 607 F.3d at 127 ("Whether a particular claim has been discharged by a plan of reorganization depends on factors applicable to the particular case and is best determined by the appropriate bankruptcy court or the district court."). n16 Notably, the reorganization plan adopted the Bankruptcy Code's definition of "claim" under 101(5). (See Def.'s App., Ex. E at 11-12.) In the confirmation order, the bankruptcy court, consistent with 11 U.S.C. 1141(a), unequivocally provided that all claims arising before the confirmation date were discharged. (See Def.'s App., Ex. G at 8-9.) Because plaintiffs' claims arose pre-confirmation, they were discharged pursuant to the confirmation order. n17 n17 Plaintiffs suggest that a claims representative should have been appointed during Owens Coming's bankruptcy proceedings to protect the interests of future unknown creditors who did not receive adequate notice. (See Pl.'s Supplemental Mem. (ECF No. 81) at 9.) While federal courts are not required to appoint representatives for all potential litigants, Jones v. Chemetron Corp., 212 F.3d 199, 210 (3d Cir.2000) (in a Chapter 11 reorganization, a bankruptcy court is not required to sua sponte appoint a representative to deal with future interests if no request is made), it is noteworthy that Owens Corning and the debtors subject to the bankruptcy proceedings clearly contemplated the types of claims asserted by plaintiffs and the method by which to provide a remedy. Section 14.11(a) of the reorganization plan provides the debtors the right, after the confirmation date, to fulfill any pre-petition date and pre-confirmation date warranty claims notwithstanding discharge of the claims and release of the debtors pursuant to the Bankruptcy Code and the reorganization plan. Pursuant to that section, Owens Corning offered Wright a settlement figure, albeit not the full cost to replace the shingles. Section 14.11(a) is evidence that the parties to the bankruptcy contemplated instances where warranty claims of future unknown creditors could be resolved, even though the claims were discharged in the bankruptcy. [**104] [*43a] C. Published notice and due process Finding that the plaintiffs' claims were discharged in 2006 does not complete the inquiry; the court must determine whether the notice by Owens Corning of the bankruptcy proceedings was sufficient to protect the plaintiffs' rights under the Due Process Clause of the Fourteenth Amendment to the Constitution. "For notice purposes, bankruptcy law divides claimants into two types, 'known' and 'unknown.'" Chemetron, 72 F.3d at 346 (citing Charter Crude Oil Co. v. Petroleos Mexicanos (In re Charter Co.), 125 B.R. 650, 654 (Bankr.M.D.Fla.1991)). Known creditors are entitled to actual written notice, while due process for unknown claimants is generally satisfied through notification by publication. Id. A known creditor is "one whose identity is either known or 'reasonably ascertainable by the debtor.'" Id. (quoting Tulsa Prof'l Collection Serv., Inc. v. Pope, 485 U.S. 478, 490, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988)). An unknown creditor is an individual "whose interests are either conjectural or future, or although they could be discovered upon investigation, do not in due course [**105] of business come to knowledge [of the debtor]." [*44a] Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 317, 70 S.Ct. 652, 94 L.Ed. 865 (1950). "A creditor's identity is 'reasonably ascertainable' if that creditor can be identified through 'reasonably diligent efforts.'" Id. (quoting Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 n. 4, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983)). Reasonable diligence does not require a debtor to conduct "'impracticable and extended searches . . . in the name of due process.'" Id. (quoting Mullane, 339 U.S. at 317, 70 S.Ct. 652). To that end, "[a] debtor does not have a 'duty to search out each conceivable or possible creditor and urge that person or entity to make a claim against it.'" Id. (quoting Charter, 125 B.R. at 654). Efforts beyond a careful examination of a debtor's own books and records are
generally not required. Id. at 347. For unknown claimants or creditors, it is well established that "constructive notice of the bar claims date by publication satisfies the requirements of due process." Id. at 348 (holding that notice published [**106] in the New York Times and the Wall Street Journal was sufficient to satisfy due process owed to unknown creditors); see Brown v. Seaman Furniture Co., 171 B.R. 26, 27 (Bankr.E.D.Pa.1994) (notice by publication satisfies due process with respect to potential creditors when the notice appears in national publications and in newspapers of general circulation in areas where the debtor did business). Here, plaintiffs, in their supplemental briefing following oral argument, raise a question about whether they were known creditors to Owens Corning during the bankruptcy proceedings and were therefore entitled to something more than constructive notice via publication. (See Pl.'s Supplemental Mem. (ECF No. 81) at 13.) It is undisputed that the [*45a] shingles were purchased through third-party contractors and plaintiffs first contacted Owens Corning in 2009. Plaintiffs do not point to any evidence suggesting how Owens Corning, through a reasonably diligent search of its books or records, could have discovered plaintiffs' identities prior to the confirmation of the reorganization plan. It is impractical to suggest Owens Corning search out every conceivable [**107] third-party contractor who purchased shingles to determine on which homes those shingles were installed and discover the identity of those home-owners. The kind of searches suggested by plaintiffs go beyond what is required under Mullane, Chemetron, and their progeny. See Mullane, 339 U.S. at 317, 70 S.Ct. 652; Chemetron, 72 F.3d at 346; see also 3 ALAN N. RESNICK & HENRY J. SOMMER, COLLIER ON BANKRUPTCY 342.02[3] (16th ed. 2010) (citing Chemetron). Owens Corning published notice of the bankruptcy proceedings, including the bar claims date and the entry of the confirmation order, in The New York Times, The Wall Street Journal and USA Today, as well as 250 regional or local newspapers in areas where Owens Corning had significant business operations at the time of publication, and in approximately 35 trade publications in the primary lines of business operated by Owens Corning. See supra pp. 6-7. Under Chemetron, the published notice in this case satisfied Owens Coming's duty to unknown creditors, including plaintiffs, because all relevant matters regarding the bankruptcy proceedings were [**108] [*46a] published in local, national, and international publications. n18 n18 Plaintiffs rely upon Pettibone Corp. v. Payne (In re Pettibone Corp.) 151 B.R. 166 (Bankr.N.D.Ill.1993), for the proposition that a confirmation order cannot discharge claims of creditors when notice is deficient. The bankruptcy court held in Pettibone that the notice was deficient because it only addressed claims arising pre-petition, but was silent on claims--including those asserted by the plaintiff--that concerned post-petition, pre-confirmation injuries. Id. at 170-71. In this case, under Grossman's, plaintiffs' claims existed pre-confirmation and, unlike in Pettibone, there was notice by publication of the confirmation process. In Pettibone, the bankruptcy court did not consider the plaintiffs claim to have existed pre-petition; rather, it may have been a post-petition claim. The notice sent in Pettibone only went to pre-petition claimants. Plaintiffs do not demonstrate why the publication notice in this case was constitutionally deficient. Without more, this court, while it is possible to argue more extensive notice could have been undertaken, i.e., searching for names and addresses of conactors to find purchasers like plaintiffs, cannot discern that the notice sent by publication was constitutionally deficient. [**109] IV. Conclusion Because plaintiffs' claims against Owens Corning arose prior to the time the confirmation order was entered in 2006, those claims were discharged. The published notice was sufficient to satisfy the requirements of due process. No reasonable jury could conclude that there is any genuine issue of material fact for this case to proceed to trial. Owens Coming's motion for summary judgment must be granted. An appropriate order shall follow. [*47a] APPENDIX C
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 11-2026 PATRICIA WRIGHT; KEVIN WEST, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Appellants v. OWENS CORNING Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil Action No. 2-09-cv-01567) District Judge: Honorable Joy Flowers Conti Before: McKEE, Chief Judge, SLOVITER, SCIRICA, RENDELL, AMBRO, FUENTES, SMITH, FISHER, CHAGARES, JORDAN, HARDIMAN, GREENAWAY, Jr., VANASKIE, and NYGAARD **, Circuit Judges ** Vote limited to panel rehearing. PETITION FOR REHEARING EN BANC The petition for rehearing filed by Appellee having been submitted to the judges who participated [**110] in the decision of this Court, and to all the other available [*48a] circuit judges in active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the circuit judges of the circuit in regular active service not having voted for rehearing by the court en banc, the petition for rehearing is DENIED. By the Court, /s/ Thomas L. Ambro. Circuit Judge Dated: June 12, 2012 PDB/cc: All Counsel of Record

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