Dow Corning Trust v. Claimants' Advisory Committee

628 F.3d 769, 2010 WL 5128712
CourtCourt of Appeals for the Sixth Circuit
DecidedDecember 17, 2010
Docket09-1827, 09-1830
StatusPublished
Cited by15 cases

This text of 628 F.3d 769 (Dow Corning Trust v. Claimants' Advisory Committee) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dow Corning Trust v. Claimants' Advisory Committee, 628 F.3d 769, 2010 WL 5128712 (6th Cir. 2010).

Opinions

KETHLEDGE, J., delivered the opinion of the court, in which SUTTON, J., joined. BATCHELDER, C.J. (pp. 774-79), delivered a separate opinion concurring in part and dissenting in part.

OPINION

KETHLEDGE, Circuit Judge.

Normally our task in construing a contract or similar document is to identify not merely a reasonable interpretation, but the best one. In some cases, however, some other court or entity is better-positioned to determine what interpretation is best. In those cases, we might ask whether that court’s interpretation is reasonable, and if so leave matters there.

This is such a case. At issue in these now-consolidated appeals are two orders [771]*771interpreting different provisions of a single bankruptcy plan. The court that entered those orders is more familiar with the plan and the circumstances surrounding it than we are, so we ask primarily whether its interpretations of the two provisions are reasonable. We conclude that its interpretation of one provision is reasonable, but that, for technical grammatical reasons, its interpretation of the other provision is not.

I.

In 1995, Dow Corning had pending against it thousands of lawsuits relating to breast implants it had manufactured. Dow Corning filed bankruptcy under Chapter 11 that year to facilitate settlement of those claims. We have already described those bankruptcy proceedings in prior opinions. See, e.g., In re Dow Coming Corp., 456 F.3d 668 (6th Cir.2006). Here, we describe only the facts relevant to these consolidated appeals.

Dow Coming’s Amended Joint Plan of Reorganization (the Plan) took effect in June 2004. The Plan establishes a $1.95 billion fund — administered by the Settlement Facility-Dow Corning Trust — for claimants who choose to settle rather than litigate their claims. Each of the orders before us today involves a Plan definition that affects payments made pursuant to the Plan.

The first order concerns tissue expanders, which are devices implanted in the body and then gradually filled with saline solution in the weeks that follow. Then-purpose is to expand the patient’s skin around the device; and upon accomplishing that purpose, they are typically (if not always) removed. Dow Corning has manufactured more than 250 kinds of tissue expanders, three of which are specifically designed to be implanted in the breast. The question presented in the first appeal is whether those three types of tissue ex-panders are “Breast Implants” as defined by the Plan. The district court held they were, thereby opening the door to settlement payments based on a claimant’s use of them.

The second order concerns the Plan’s definition of total disability, which is set forth in a Plan document that the parties call Annex A. Claimants who meet the Plan’s definition of total disability receive larger settlement payments than they otherwise would under the Plan. Dow Corning and the Claimants’ Advisory Committee (the Committee) disagree as to what this definition means: Dow Corning takes a narrower view of the definition, the Committee a broader one. The district court held that the broader view is the correct one.

Dow Corning appealed both orders.

II.

A.

The parties dispute the standard of review. At issue in each appeal is the district court’s interpretation of a definition set forth in the Plan. We review for abuse of discretion a bankruptcy court’s interpretation of a plan that the court had confirmed. See Dow Coming, 456 F.3d at 676. But these appeals involve a decision by a district court, not a bankruptcy one, so the Dow Coming standard does not apply by its terms here. Dow Coming would take us to the other extreme: It argues that our review should be de novo, citing our rule that, “[i]n a bankruptcy case on appeal from a district court, we owe no special deference to the district court’s decision[.]” In re Eagle-Picher Indus., Inc., 447 F.3d 461, 463 (6th Cir.2006). But that rule does not apply by its terms either, because the district court here did not sit merely as an appellate court. It [772]*772decided the issues before us in the first instance.

So we look to the underpinnings for each standard. On the one hand, the district court was not “interpreting] its own prior language or intent” when it interpreted the Plan, Dow Coming, 456 F.3d at 677, so that particular rationale for deference is not present here. But other rationales are. The district court judge who entered the orders at issue — Judge Denise Page Hood — has presided over this bankruptcy case continuously since 1995. She was present on the bench for two days of the Plan’s confirmation hearings. And she has adjudicated the case directly since 2001, which is when she withdrew the reference to the bankruptcy court. (The bankruptcy judge who had entered the confirmation order departed the bench that year.) Thus, Judge Hood has presided over this case for fifteen years, and acted as the court of fust resort for nine. There is simply no denying that she is much more familiar with this Plan — and with the parties’ expectations regarding it — than we are.

So a measure of deference is in order. The question is how to characterize it. The district court’s orders involve interpretation of the Plan; and “[i]n interpreting a confirmed plan, courts use contract principles[.]” Id. at 676. Contractual interpretation is not discretionary, so it is awkward to say that we review the court’s interpretation for abuse of discretion. We need to convert the language of discretion to fit the task at hand.

A basic principle of contractual interpretation is that “[a] term is deemed ambiguous when it is capable of more than one reasonable interpretation.” Id. (internal quotation marks omitted). Our court is reasonably well-equipped to determine whether a plan provision is ambiguous— we construe contracts all the time — though in this case we should be mindful that our blind spots with respect to how one provision might interrelate with others are likely much larger than are the district court’s. On the whole, however, the determination whether a plan provision is ambiguous is not a point on which we substantially defer.

That point arrives, instead, when we determine that a provision is ambiguous. Then, under the law of virtually any jurisdiction, we open the eleanroom of textual interpretation to whatever extrinsic evidence awaits outside. Here, each party has amassed a formidable dump of such evidence; and each side argues, in great detail, that its evidence shows that the other’s interpretation would confound everyone’s expectations as to what the Plan was supposed to mean. This is where we start to defer in earnest. The district court in this case, like the bankruptcy courts in others, is far-better equipped, not least in terms of background knowledge, to sort through that evidence and determine what is important.

Thus, to summarize: For purposes of plan interpretation, an ambiguous provision can reasonably be read more than one way. To determine which of the reasonable readings is best, the court normally may assess extrinsic evidence. That assessment is best left to the district court here. Thus, if the court assessed extrinsic evidence in choosing among reasonable interpretations of the Plan, we will not disturb its choice.

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628 F.3d 769, 2010 WL 5128712, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dow-corning-trust-v-claimants-advisory-committee-ca6-2010.