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UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION

In re Chapter 11

BESTWALL LLC,1 Case No. 17-31795 (LTB)

Debtor.
______________________________________

THE OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS’ POST-HEARING

BRIEF REGARDING ESTIMATION-RELATED MOTIONS

The Official Committee of Asbestos Claimants (the “Committee”) submits this

supplemental brief (the “Brief”) in further opposition to the Debtors’ PIQ Motion and Trust

Discovery Motion and in further support of the Committee’s Estimation Shaping Motions, as

permitted by the Court following the January 21-22, 2021 hearing. In support hereof, the

Committee states as follows:

ARGUMENT

To be clear, the intention and the purpose of the Shaping Motions is to ensure that the

parties, and the Court, arrive at an orderly and timely estimation proceeding. If the court grants

the relief requested in the PIQ Motion or the Trust Discovery Motion without simultaneously

granting the Shaping Motions—or even grants the PIQ Motion or Trust Discovery Motion at all—

then there would be significant discovery-related litigation on one of the key aspects of the

Debtor’s revisionist liability estimation theory: how and why the Debtor chose to settle cases. The

Committee needs access to the information the Debtor had when settling these cases to allow the

Committee to challenge the Debtor’s claim that the Debtor would have settled differently if it had

1
The last four digits of the Debtor’s taxpayer identification number are 5815. The Debtor’s address is 133 Peachtree
Street, N.W., Atlanta, GA 30303.

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perfect information, and demonstrate that the plaintiffs may have settled differently if each of them,

likewise, had perfect information when settling.

I. THE PIQ MOTION VIOLATES APPLICABLE DISCOVERY RULES AND

SHOULD BE DENIED

The Court should deny the PIQ Motion.

a. The Debtor cannot proceed under Rule 2004. Any discovery sought by the Debtor
must be conducted under Federal Rules Rule 9014, 9016, and the Federal Rules of
Civil Procedure, or under the discovery rules of the applicable state court forum.

The estimation proceeding ordered by the Court (as well as the underlying state court

litigation commenced by pending claimants, the Debtor’s motion for estimation, and the

competing plan process) is a contested matter; therefore, discovery must proceed under Rule 9014,

9016, and the Federal Rules of Civil Procedure. The “Pending Proceeding Rule” prevents the

Debtor from seeking discovery from the asbestos personal injury victims using Rule 2004. It is

well established that, where an adversary proceeding, a contested matter, or litigation is pending

in another forum, a litigant cannot use Rule 2004 but instead must seek discovery pursuant to the

Federal Rules of Civil Procedure or the rules of that other forum. See In re Ramadan, No. 11-

02734-8-SWH, 2012 WL 1230272, at *2 (Bankr. E.D.N.C. Apr. 12, 2012) (noting rule invoked

“once an adversary proceeding or contested matter has been commenced in a bankruptcy case”

where discovery goes “squarely to issues” involved in the pending litigation, and “where the party

requesting the Rule 2004 examination could benefit their pending litigation outside of the

bankruptcy court against the proposed Rule 2004 examinee.” (citations omitted)) and additional

cases cited in earlier briefing.

b. If the Court were to permit the discovery under Rule 2004, the Debtor would be
required to (1) proceed by subpoena, (2) personally serve each individual who is
the subject of such discovery, (3) limit the Debtor to a request for deposition and/or
documents, (4) render a determination of relevance, including whether the Debtor
has made a showing that the information and/or documents are not within its

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possession or otherwise as readily available to it as the claimant; and (5) render a

determination on the burdensome nature of the requested discovery.

(1) Rule 2004 requires the issuance of a subpoena on the subject of the subpoena.

Specifically, Rule 2004 provides for the attendance of an entity for examination and the production

of documents to be compelled as provided in Rule 9016. Rule 9016 provides that Civil Rule 45

applies in cases under the Code; Rule 45 addresses the requirements for a subpoena.

(2) The language of Civil Rule 45 and the majority view is that a subpoena requires

personal, in-hand service on the subject of the subpoena. As discussed in prior briefing and the

cases cited therein, service cannot be accomplished by serving counsel, let alone counsel that

represents such claimant in a different case or matter or counsel that has not identified itself as

counsel for a claimant that may or will pursue a claim.

(3) Neither Rule 2004 nor Civil Rule 45 contemplate sworn written responses to questions.

See Fed. R. Bankr. P. 2004 (referring only to compelling attendance and producing documents);

Fed. R. Civ. P. 45 (incorporated by Bankruptcy Rule 9016 and authorizing subpoena issuance to

“command[] attendance at a deposition” and “to produce documents, electronically stored

information, or tangible things or to permit the inspection of premises.”); see also Local Rule

2004-1 (discussing only “depositions and examinations”).

(4) The Debtor introduced no evidence that its files for pending claims do not already

contain some, most or even all of the information and documents that it has sought through the

PIQ, or is not equally available to it. The Debtor cannot shift the burden of collecting information

to the claimants or their counsel where it has not demonstrated that it does not have or could not

as readily obtain the requested information.

(5) If the Court were to determine that the Debtor could provide written discovery to the

non-party claimants under an applicable discovery rule, the Court should restrict such written

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discovery to 25 written interrogatories, including all discrete subparts, the limits provided for

written discovery directed to a party under F.R.C.P. 7033. The burden associated with the Debtor’s

propose form, which provides for a minimum of 537 interrogatories including subparts, is

extraordinary. “Even if the information sought [in discovery] is relevant, discovery is not allowed

. . . where compliance is unduly burdensome.” Insulate Am. v. Masco Corp., 227 F.R.D. 427, 432

(W.D.N.C. 2005).2

II. THE TRUST DISCOVERY MOTION SHOULD BE DENED BECAUSE THE

DEBTOR HAS FAILED TO DEMONSTRATE THE RELEVANCE OF SUCH
INTRUSIVE AND HIGHLY SENSITIVE DISCOVERY

The Debtor has presented no evidence that supports the critical underpinning of its Trust

Discovery Motion. The Debtor’s premise for seeking discovery of alternative exposures and

“undisclosed” recoveries from 11 asbestos personal injury trusts is that knowledge of such

alternative exposures and/or recoveries would have altered the Debtor’s (or more precisely its

predecessor, Georgia-Pacific’s) settlement posture would be markedly different had such

information been known at the time of settlement.

a. The evidence demonstrates that the Debtor did not consider alternative exposures
or sources of recovery for claims settled under group settlement agreements.

For the 60-70% of claims settled by Georgia-Pacific and the Debtor through group

settlement agreements (sometimes called inventory or docket settlement agreements), the evidence

shows that the Debtor did not even ask, let alone consider, other exposures or recoveries. The

required documentation included only an affidavit of exposure to a Georgia-Pacific product, a

2
The Debtor’s suggestion that it could proceed by bar date, would still would not make the individual asbestos personal
injury claimants parties to the specific contested matter—the estimation proceeding, and the claimants cannot be
parties to the estimation proceeding without implicating 28 U.S.C. § 157.

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medical diagnosis, a copy of a complaint, and a signed release running in favor of Georgia-Pacific.

See, e.g., Ex. 27, at BW-CH11-00142449 (PEO).

b. The evidence demonstrates that the Debtor had the information it asserts was
withheld in cases in which it explored other exposures and sources of recovery.

For the claims for which other exposures were considered, the evidence demonstrates that

the Debtor and its predecessor had specific knowledge of other exposures. The Debtor’s eight

hand-selected cases, selected from its 40-year litigation history, do not demonstrate the need for

wide-ranging trust discovery on alternative exposure or additional claims. The Debtor’s files

contain the very information the Debtor claimed it needed from the Trusts, namely work and

experience histories reflecting potential other sources of exposure. See, e.g., Ex. 56, Exhibits for

Hearing on January 21-22, 2021, BW-CH11-00096385, p. 132-133 (reflecting in-depth testimony

by plaintiff’s husband regarding his work); Dkt. No. 1351, Ex. S (plaintiff’s complaint identifying

multiple defendants).

Finally, even if the Debtor had demonstrated that it had considered and did not have the

information it seeks, the Debtor could still not demonstrate the relevance of the information it

seeks. Settlement and trust payments may not properly be used to as a setoff to the Debtor’s

liability under a speculative exercise that seeks to value a previously settled claim and then deducts

other recoveries which could not have been considered in the tort system. Setoff is only available

as “against any judgment,” Lewin v. Am. Exp. Lines, Inc., 224 F.R.D. 389, 396 (N.D. Ohio 2003)

(emphasis added). It is for this reason that the Court denied the Debtor’s motion for trust discovery

in the Specialty Products case. Hr’g Tr. 45:5-18 (Bankr. D. Del. July 25, 2011).

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III. AS A FULL PAY CASE, GRANTING THE METHODOLOGY SHAPING

MOTIONS WILL PROVIDE THE COURT AND THE PARTIES WITH AN
ESTIMATE BEST TAILORED TO AID THE PARTIES IN ATTEMPTING TO
REACH A CONSENSUAL SETTLEMENT

As a full pay case, the only purpose for conducting an estimation is to provide the Debtor,

Georgia-Pacific, the FCR, and the Committee with information that might assist the parties in

reaching agreement on the amount necessary to fund a trust that will replace the Debtor in the tort

system as the entity responsible for Old Georgia-Pacific’s present and future asbestos liability for

pre-1979 joint compound products. Therefore, the only estimation methodology that would

accomplish that goal is an estimation that seeks to assess what the Debtor’s liability would have

been had it not filed for bankruptcy.3

A revisionist liability estimation methodology—as proposed by the Debtor—is intended to

convince the Court that the Debtor’s liability is less than what would be suggested by its actual

history in the tort system—including less than its conduct in the tort system after Georgia-Pacific

decided to pursue a divisional merger/bankruptcy.

The Debtor’s use of Dr. Peterson ’s testimony declining to comment on the purpose of the

legal liability approach in Garlock and this case to suggest that Dr. Peterson did not understand

the model4 twists Dr. Peterson’s testimony. Dr. Peterson filed a rebuttal report in the Garlock case

demonstrating his understanding of the approach. The purpose is a different query. The

Committee offered Dr. Peterson’s testimony to address the methodology that this Court should use

3
Further, the approach proposed by the Committee and FCR is consistent with general bankruptcy jurisprudence and
the approach other courts have followed, “look[ing] at how a claim would have been valued in the state court system
had the debtor never entered bankruptcy.” In re Armstrong World Indus., Inc., 348 B.R. 111, 123 (D. Del. 2006)
(citing Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 722 (D. Del. 2005)); see also Raleigh v. Ill. Dep’t
of Revenue, 530 U.S. 15, 20 (2000); Official Comm. of Asbestos Claimants v. Asbestos Prop. Damage Comm. (In re
Federal-Mogul Global Inc.), 330 B.R. 133, 155-57 (D. Del. 2005); In re W.R. Grace & Co., 346 B.R. 672, 674 n.10
(Bankr. D. Del. 2006); In re Eagle-Picher Indus., Inc., 189 B.R. 681, 683 (Bankr. S.D. Ohio 1995).
4
Argument by Mr. Gordon, January 22, 2021 (from 40:25-53:15).

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in this case. Dr. Peterson testified that legal liability is not an established methodology, and that

the methodology he employs has been used in most bankruptcy cases because it is “empirical,

practical, and transparent in applying the actual processes of asbestos tort litigation to determine

the demonstrable values of asbestos injury claims.” See Peterson Decl. ¶¶ 11, 23 [Dkt. 1449-1].

IV. THE LOOKBACK SHAPING MOTION FOCUSES ESTIMATION ON THE

DEBTOR’S MOST RECENT LITIGATION AND SETTLEMENT

a. The Proposed Five-Year Lookback Period is Based on Identified, Specific and

Indisputable Developments in the Tort System and in Georgia-Pacific’s Tort History.

The Committee proposes that all parties would be subject to the five-year lookback for

purposes of the tort system history in which claims were settled, tried, dismissed or withdrawn.

Such a timeframe eliminates many issues that would otherwise be the subject of significant

discovery and dispute.

The Debtor’s characterization in rebuttal of the Committee’s selection of the five years

before the Debtor’s bankruptcy as the appropriate historical time frame for estimating the Debtor’s

asbestos liabilities as arbitrary is misleading and takes the Committee’s words out of context. The

Committee admitted that it could have selected one of several different dates or time periods that

provided a shorter period for consideration. However, the purpose of the Committee’s proposal is

to focus on the time period closest to the Debtor’s bankruptcy filing, and the reasons for selecting

a period of five years was detailed in the Debtor’s pleadings and argument and includes:

 Widespread circulation of at least 9 articles published from November 2006 to (at

least) April 2012 detailing Dr. Bates’ (and Bates-White’s) theories on plaintiff trust
claiming and the impact of asbestos trusts on asbestos litigation;
 The issuance of Dr. Bates’ and Dr. Gallardo-Garcia’s expert reports in Garlock
(issued February 15, 2013) and Dr. Bates’ rebuttal report (April 23, 2013) that
addressed certain allegations regarding trust claiming;
 The Order Estimating Aggregate Liability. In re Garlock Sealing Technologies
LLC, et al., No. 10- 31607 (Bankr. W.D.N.C. Jan. 10, 2014) [[Dkt. No. 3296];
 Georgia-Pacific’s retention of Schiff Hardin, Garlock’s special asbestos counsel, in
2014;

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 Bestwall’s own contention that medical science-related issues have changed in

recent years; and
 The existence of numerous presentations and articles regarding Judge Hodge’s
findings in Garlock;
 The creation and opening of many of the largest asbestos trusts replacing the
defendants which sought bankruptcy protection in the early 2000s by 2016 (see
Demonstrative Slide 52);
 Georgia-Pacific’s retention of Robinson Bradshaw in January 2017;
 Changes to state law and state court procedural rules requiring disclosure of
asbestos trust claims as part of state tort litigation; and
 The decision and related planning by Georgia-Pacific’s to engage in a divisive
merger as part of an overall plan to file a bankruptcy case for Bestwall.
To be plain, five years is the longest period that the Committee believes that the Court should use

for purposes of considering the Debtor’s/Georgia-Pacific’s history in the tort system. 5

b. The Court should disregard the Debtor’s effort to conflate estimation related discovery
directed to individuals with Georgia-Pacific’s historical conduct, which was important
evidence available to and used by plaintiffs in litigation during the five-year period.

Georgia-Pacific’s conduct in connection with its distribution of asbestos-containing

products and conduct in asbestos litigation, including its failure to warn, its delay in identifying all

products containing asbestos, its manipulation of medical science, its historical market share,

inconsistent discovery disclosures, and other conduct factored into Georgia-Pacific’s/the Debtor’s

trial risk. This information was available to (or hidden from) state court litigants during the

lookback period, and critical to an estimate of the Debtor’s liability.

V. THIS COURT LACKS SUBJECT MATTER JURISDICTION TO ADDRESS

MEDICAL SCIENCE ISSUES ON AN AGGREGATE BASIS AND SHOULD
DECLINE THE DEBTOR’S EFFORT TO TRY THOSE ISSUES IN CONNECTION
WITH AN ESTIMATION PROCEEDING

The so-called “chrysotile defense” and the medical science addressing the dangers of

chrysotile as compared to other types of asbestos are issues routinely addressed in the tort system.

5
For example, January 10, 2014—the date Judge Hodge’s issued his estimation decision—could be selected as the
start date for the lookback period. Likewise, the date Georgia-Pacific retained Schiff Hardin, Garlock’s asbestos trial
counsel, would similarly be an appropriate start date.

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The resolution of those issues by courts and juries are taken into consideration by both plaintiffs

and defendants in assessing their settlement and trial positions. In short, it is “baked in” to the

Debtor’s asbestos resolution history.

Moreover, this court lacks jurisdiction to determine whether chrysotile contributes to

asbestos disease and/or its relative impact on causation. Pursuant to 28 U.S.C. § 157(b)(5), each

plaintiff is entitled to an individual determination of causation. No one court can determine this

issue once and for all and for all claimants. Moreover, it is axiomatic that “[b]ecause asbestos

claims arise under state law, the claims must be valued in accordance with substantive state tort

law.” See Armstrong World Indus., 348 B.R. at 123. Any consideration of medical science would

require a court to consider how each court addresses these issues. The asbestos personal injury

claims are state law claims, subject to state law defenses and counterclaims. As set forth in the

Committee’s briefing, the Debtor’s effort to present medical science testimony is effectively

mounting a state-law counterclaim and, if brought individually in the bankruptcy court, would

squarely implicate whether this Court is authorized to issue any final judgment.

V. THE GROUP SETTLEMENT MOTION SHOULD BE GRANTED FOR THE

REASONS SET FORTH ABOVE.

The Committee’s response to the Debtor’s opposition to the Group Settlement Motion is

addressed in connection with the Committee’s above response regarding the Trust Discovery

Motion.

VI. THE SHAPING MOTIONS WILL RESULT IN AN ORDERLY, FOCUSED AND

TIMELY ESTIMATION PROCEEDING.

A timely estimation hearing will require that the Court establish reasonable and rational

guidelines. The Debtor is seeking, in the name of “presenting its case,” an unfettered fishing

expedition into its past settlement history, a redo of its extensive briefing and motion practice

regarding the dangers of chrysotile, extensive discovery regarding pending claims and pursuit of

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a methodology for estimating claims that is detached from the tort system. None of those efforts

will or could assist in this Court’s goal to aid the parties in negotiating a consensual resolution.

The claimant representatives have a monumental task ahead of catch-up. The Debtor has complete

access to and knowledge of its asbestos litigation history. This Court is not an alternative to the

tort system nor a venue to pretend that the Debtor’s past was not its past. The Committee asks that

the Court focus the parties on the information and estimation approach that has the best chance of

accomplishing the goals of this estimation in this unique and full pay case.

Dated: January 29, 2021

HAMILTON STEPHENS STEELE ROBINSON & COLE, LLP

+ MARTIN, PLLC
/s/ Glenn C. Thompson
Glenn C. Thompson (Bar No. 37221)
Kenneth B. Dantinne (Bar No. 47677)
525 North Tyron Street, Suite 1400
Charlotte, North Carolina 28202
Telephone: (704) 344-1117
Facsimile: (704) 344-1483
gthompson@lawhssm.com
kdantinne@lawhssm.com
Natalie D. Ramsey (DE Bar No. 5378)
Davis Lee Wright (DE Bar No. 4324)
1201 North Market Street, Ste. 1406
Wilmington, Delawware 19801
Telephone: (302) 516-1700
nramsey@rc.com
dwright@rc.com

Linda W. Simpson (Bar No. 12596)

JD THOMPSON LAW
Post Office Box 33127
Charlotte, North Carolina 28233
Telephone: (828) 489-6578
lws@jdthompsonlaw.com

Counsel to the Official Committee of

Asbestos Creditors

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