Dow Corning Corp. v. Claimant's Advisory Committee (In Re Settlement Facility Dow Corning Trust)

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0580n.06
Case No. 13-2456
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Jul 31, 2014
In re SETTLEMENT FACILITY DOW ) DEBORAH S. HUNT, Clerk
CORNING TRUST. )
_____________________________________ )
) ON APPEAL FROM THE UNITED
DOW CORNING CORPORATION, ) STATES DISTRICT COURT FOR
) THE EASTERN DISTRICT OF
Interested Party-Appellant, ) MICHIGAN
)
v. )
)
CLAIMANTS’ ADVISORY COMMITTEE, )
)
Interested Party-Appellee. )
BEFORE: SUTTON and GRIFFIN, Circuit Judges; SARGUS, District Judge.*
SUTTON, Circuit Judge. “The issue is, what [are breast implants]?” Frigaliment
Importing Co. v. B.N.S. Int’l Sales Corp., 190 F. Supp. 116, 117 (S.D.N.Y. 1960) (Friendly, J.).
We considered this question once before but could only agree that the words were ambiguous,
their meaning tied up in intrinsic and extrinsic evidence surrounding the parties’ intent. The
district court on remand weighed this evidence and found that, when the parties said “breast
implants,” they also meant “tissue expanders.” We affirm.
*
The Honorable Edmund A. Sargus, Jr., United States District Judge for the Southern District of
Ohio, sitting by designation.
Case No. 13-2456
In re Settlement Facility Dow Corning Trust
I.
Dow Corning manufactures and distributes various medical devices, including “breast
implants” and “tissue expanders.” For purposes of this dispute, “[b]reast [i]mplant[s]” are “all
silicone gel and saline-filled breast implants with silicone elastomer envelopes manufactured and
either sold or otherwise distributed by [Dow Corning].” R. 700-4 at 15. “Tissue expanders”
come in hundreds of varieties, but three Dow Corning models are designed for implantation in
the breast, where they are filled with saline in order to stretch the patient’s skin before (typically)
being removed after several weeks.
Not all of these products worked the way they should. By 1995, thousands of breast-
implant patients had filed lawsuits against Dow Corning stemming from their use of the
company’s devices. Dow Corning eventually filed a Chapter 11 bankruptcy petition. The
company agreed to a plan of reorganization that establishes a more than $2 billion fund for
patients willing to settle their claims. The plan describes what claims are eligible for payment,
how claims will be paid, how much money claimants can receive, and so on. The plan
empowers the district court “to resolve controversies and disputes regarding interpretation and
implementation of th[e] Plan and the Plan Documents.” Id. at 85.
The parties asked the district court to determine whether the plan’s breast-implant
coverage extended to tissue expanders. As the trial court initially saw it, Dow Corning’s three
models of breast-implanted tissue expanders met every element of the reorganization plan’s
“[b]reast [i]mplant” definition. Each model has a silicone envelope that is implanted in the
breast and gradually filled with saline solution. In the court’s view, “breast implants” thus
unambiguously included “tissue expanders.”
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In re Settlement Facility Dow Corning Trust
On appeal, we agreed—in part. After acknowledging that the court’s resolution of the
“breast implant” question reasonably construed the reorganization plan’s words, we identified
another, more technical reading of “breast implant” that might exclude “tissue expanders” from
its scope. On this basis, we reasoned that the definition was ambiguous, vacated the district
court’s order, and remanded the case to allow the court to consider other evidence about the
meaning of the phrase. In re Settlement Facility Dow Corning Trust, 628 F.3d 769, 772–73 (6th
Cir. 2010).
On remand, the district court considered the question anew. After accounting for this
other possibility, it still concluded that the parties intended “[b]reast [i]mplant” to include “tissue
expanders.” R. 924 at 9.
II.
Typically, we review “with significant deference” a bankruptcy court’s interpretation of a
settlement plan that the court itself confirmed. In re Dow Corning Corp., 456 F.3d 668, 676 (6th
Cir. 2006). In the last go-round, we noted that this characterization of the standard of review
does not capture the precise setting of this case. For it was the bankruptcy court, not the district
court, that confirmed this plan, making it inappropriate to give “significant” deference to the
district court’s reading of the plan. On the other hand, fresh review did not make complete sense
either because the district court had presided over the plan and its settlement language for nearly
fifteen years. In re Settlement Facility Dow Corning Trust, 628 F.3d at 771–72. We therefore
adopted something of a middle ground. We decided for ourselves whether the term “breast
implant” was ambiguous. But in recognition of the district court’s longstanding familiarity with
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the case, we noted that, “if the court assessed extrinsic evidence in choosing among reasonable
interpretations” of the settlement plan, we would give some deference to that choice. Id. at 772.
On remand, the district court invited the parties to submit supplemental briefs describing
the extrinsic evidence relevant to the meaning of “breast implant” in the settlement plan. The
court then “sort[ed] through [the] evidence,” “determine[d] what [was] important,” determined
what was less important, and on these grounds took the measure of the parties’ words. Id. When
the parties used the phrase “breast implant,” the court held, they adopted the broader meaning of
it: “Breast [i]mplant[s]” are “all silicone gel and saline-filled breast implants with silicone
elastomer envelopes,” which include “tissue expanders” sharing these qualities. R. 924 at 3, 9
(emphasis added). Based on our review of the record, that is a reasonable assessment of the
extrinsic evidence.
Dow Corning’s arguments to the contrary fall short. It first claims that the district court
did not properly assess the extrinsic evidence because it “refused to consider” expert evidence
that breast implants and tissue expanders are distinct. App. Br. at 29. Eugene Jakubczak, a
medical device expert, testified that “medical professionals [and regulatory agencies] considered
tissue expanders to be a product separate and distinct from a breast implant.” R. 51 at 15. But
this evidence returns us to the already answered question that prompted the remand: Is there a
technical definition of “breast implant” that renders its meaning ambiguous? See In re
Settlement Facility Dow Corning Trust, 628 F.3d at 773. It does not answer the question posed
for remand: Did the parties use “the words ‘breast implant’ . . . in a technical or more ordinary
sense”? Id. (emphasis added).
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In re Settlement Facility Dow Corning Trust
What of Dow Corning’s other extrinsic evidence? The company leans heavily on the
confirmation-hearing testimony of Frederick Dunbar, an economist who did not mention tissue
expanders by name in his estimate of the value of future breast-implant claims. On this basis,
Dow Corning argues that the district court “ignor[ed]” evidence that the parties treated breast
implants and tissue expanders differently from the start. But the district court did not ignore
Dunbar’s testimony. It considered the testimony “relevant and credible,” R. 924 at 6; it just did
not give the testimony the weight Dow Corning ascribes to it. Breast-implanted tissue
expanders, it turns out, represent only a small fraction of the possible claims against Dow
Corning, which itself might explain the omission. More to the point, Dunbar based his estimate
on the experience of manufacturers in other settlement agreements that did authorize payments
for tissue-expander claims. That is to say, the value of tissue-expander claims was already baked
into Dunbar’s estimate, making it unnecessary to discuss these products separately during the
Dow Corning bankruptcy hearings.
Dow Corning adds that the district court erred when it relied on a different settlement
plan involving different parties to help define the words in this plan. The present settlement plan,
it turns out, is not the only agreement concerning breast-implant defects in the federal courts.
One previous agreement—what the parties call the “Revised Settlement Program”—resolved
breast-implant claims against several non-Dow-Corning manufacturers. And that agreement
included breast-implanted tissue expanders in the broader “breast implant” settlement category.
See, e.g., R. 40 at 12 (“[T]issue expanders were considered breast implants for purposes of . . .
the [Revised Settlement Program].”). Does this separate agreement tell us anything about the
parties’ intent in this case? Dow Corning says no, but the district court said yes for two reasons.
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In re Settlement Facility Dow Corning Trust
For one, the present settlement agreement refers to the Revised Settlement Program.
According to the Dow Corning plan: “The settlement process for Breast Implant Claims is based
largely on the criteria and procedures used to resolve breast implant claims in the . . . ‘Revised
Settlement Program,’” R. 700-3 at 13 (emphasis added); and “The settlement program is
designed to resemble, to the greatest extent possible, the claims process in the Revised Settlement
Program,” id. at 92 (emphasis added). The district court could fairly give this separate program
a role in its reading of the Dow Corning plan when the parties did the same.
For another, a close look at these passages suggests that the parties intended to import the
Revised Settlement Program’s substantive provisions into the Dow Corning reorganization plan.
The plan assures claimants that Dow Corning will allow settlement “under a procedure,
including Claim payment levels and eligibility criteria, modeled on the Revised Settlement
Program.” Id. at 12 (emphasis added). Nor did Dow Corning stop there. It also promised
claimants that “this Plan offers increased compensation and eligibility options as compared to
the Revised Settlement Program.” Id. at 14 (emphasis added). Patients with breast-implanted
tissue expanders met the eligibility criteria for breast-implant-claim payment under the Revised
Settlement Program, making it reasonable for the district court to read today’s settlement plan—
offering better coverage—the same way.
Dow Corning insists that the district court erred because its second ruling on the “breast
implant” issue contradicts its first. In its first opinion on this topic, the court said that “tissue
expanders made by Dow Corning did not trigger the 50% reduction in benefits as did breast
implants, lending credibility to [Dow Corning’s] claim that even under the [Revised Settlement
Program] tissue expanders were not considered ‘Breast Implants.’” R. 673 at 10. The district
court’s second opinion, Dow Corning argues, treated this evidence differently. As an initial
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matter, this is an odd argument for Dow Corning to make, as it sought a ruling from the district
court that was 180 degrees away from its first ruling. That possibility was the whole point of the
remand. At any rate, there is less material tension here than Dow Corning suggests. To say that
some evidence “lend[s] credibility” to an argument does not establish that the district court found
Dow Corning’s argument conclusive or even persuasive. The first time around, moreover, the
statement was dicta. The district court was careful to explain in its first opinion that it did not
“consider[] the [extrinsic] evidence involving the [Revised Settlement Program],” because it
believed the parties’ “[b]reast [i]mplant” definition to be unambiguous. R. 673 at 11. Only in its
second opinion did the district court rely on (or make any findings concerning) the Revised
Settlement Program. On remand, the district court fairly did what we asked and reasonably
construed the operative terms of the settlement agreement in the process.
III.
For these reasons, we affirm.
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