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Case 3:14-cv-00085-SMR-HCA Document 113-1 Filed 05/05/15 Page 2 of 13

IN THE UNITED STATES DISTRICT COURT


FOR THE SOUTHERN DISTRICT OF IOWA
DAVENPORT DIVISION
CHERI DAHLIN, ET AL.,
Plaintiffs,
vs.
ARCHER-DANIELS-MIDLAND
COMPANY, ET AL.,
Defendants.

C. A. D:14-CV-00085-CMR-HCA

DEFENDANTS LYONDELL CHEMICAL COMPANY,


EQUISTAR CHEMICALS, LP AND EQUISTAR GP, LLCS
BRIEF IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT
AND REQUEST FOR ORAL ARGUMENT
Defendants Lyondell Chemical Company, Equistar Chemicals, LP, and Equistar
GP, LLC, (collectively Defendants) are entitled to summary judgment against Plaintiffs Cheri
Dahlin, individually and on behalf of the Estate of Dean Dahlin (collectively, Plaintiffs)
because Plaintiffs claims were discharged in Defendants bankruptcy.
I.

INTRODUCTION

Plaintiffs bring tort claims against Defendants based on alleged exposure to


benzene at Defendants plant from 1990 to 1995. Defendants emerged from bankruptcy in 2010,
free of any pre-bankruptcy claims that were not submitted to the bankruptcy court. Specifically,
Plaintiffs were required to file a proof of claim with bankruptcy court before the bar date.
Defendants provided notice of the bar date that satisfied due process requirements, including
publishing the notice in national and regional newspapers. Plaintiffs failed, however, to file a
proof of claim with the bankruptcy court prior to the bar date. Therefore, Plaintiffs claims were
discharged when the bankruptcy court confirmed Defendants reorganization plan. Though a

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potentially harsh outcome, as a matter of law the Dahlin Plaintiffs are treated no differently than
other creditors affected by bankruptcy.
II.
A.

FACTUAL AND PROCEDURAL BACKGROUND

Defendants bankruptcy background.


Defendants Lyondell Chemical Company and Equistar Chemicals LP (along with

certain of their corporate affiliates, collectively, the Debtors or, as reorganized, the
Reorganized Debtors 1) filed a voluntary petition under chapter 11 of title 11 of the United
States Code in the United States Bankruptcy Court for the Southern District of New York (the
Bankruptcy Court) beginning on January 6, 2009, with additional Debtors commencing cases
on April 24, 2009 and May 8, 2009. Their bankruptcy cases were jointly administered under the
caption In re Lyondell Chemical Co., et al., Case No. 09-10023 (REG). 2
On April 16, 2009, the Bankruptcy Court entered an order, amended on May 14,
2009, establishing June 30, 2009 as the general deadline for claimants to file proofs of claim
against any of the Debtors (the Bar Date). (Ex. A, May 14, 2009 Amended Order Establishing
Deadline and Procedures for Filing Proofs of Claim.) Notice of the Bar Date (Notice) was
published in the Houston Chronicle, USA Today (National Edition), the Wall Street Journal
(National Edition and International Edition), the Financial Times (Worldwide Edition) and a
variety of regional newspapers, including the Clinton Herald, a six-day daily newspaper covering
several counties in Iowa (including Clinton County) and Illinois. (Ex. B, Affs. of Publication of
Notice of Claims Bar Date.) As noted below, Mr. Dahlin allegedly was exposed to benzene at or
near the Defendants Clinton Complex in Clinton County, Iowa. (2nd Am. Compl. 13, ECF

Equistar GP, LLC was an entity created pursuant to the Reorganization Plan on October 23, 2009 and was
part of the Reorganized Debtors as that term is defined in the Confirmation Order and Reorganization Plan.
2
Pursuant to Federal Rule of Evidence 201, Defendants request that the Court take judicial notice of
Defendants bankruptcy.

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No. 93.) Defendants had no knowledge of Plaintiffs claim or injury and the Plaintiffs did not
file a proof of claim by the Bar Date. (Ex. C, Aff. of John Franks.)
On April 23, 2010, the Bankruptcy Court entered an order (the Confirmation
Order) confirming the Third Amended and Restated Joint Chapter 11 Plan of Reorganization
for the LyondellBasell Debtors (the Reorganization Plan), which became effective by its terms
on April 30, 2010.

(Ex. D, Confirmation Order and Reorganization Plan.)

Pursuant to

Sections 11.4 and 11.5 of the Reorganization Plan and Paragraphs 34 and 35 of the Confirmation
Order, the Bankruptcy Court specifically discharged and terminated all existing debts and claims
of any kind against any of the Debtors or Reorganized Debtors, or any of their assets or
properties, and permanently enjoined and forbade pursuit of such discharged claims (such
provisions, together with chapter 11 sections 524(a) and 1141(d), the Discharge Injunction).
B.

Plaintiffs allegations.
Plaintiffs allege that Mr. Dahlin worked as a commercial truck driver for Dahlen

Transport, Inc. and A&R Logistics Inc. (2nd Am. Compl. 13, ECF No. 93.) While working
for Dahlen Transport, Inc. and A&R Logistics Inc. from 1990 to 1995, Mr. Dahlin allegedly
loaded benzene at the Clinton Complex in Clinton, Iowa and transported the benzene to the
Clinton Municipal Dock where he unloaded it. (Id.; Ex. E, Pls. Resp. to Interrog. No. 5.)
Plaintiffs claim that Mr. Dahlin was exposed to harmful levels of benzene while working at
Dahlen Transport, Inc. and A&R Logistics Inc. (2nd Am. Compl. 16, ECF No. 93.) Mrs.
Dahlin testified that her husband knew he was working with benzene, that he knew benzene was
harmful, and that he specifically knew that it could cause cancer. (Ex. F, Cheri Dahlin Depo at
122:18-123:15.)
On June 6, 2012, Mr. Dahlin was diagnosed with myelodysplastic syndrome,
transforming to acute myeloid leukemia (AML). (Id. at 17.) Mr. Dahlin died from AML on
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June 16, 2013. (Id.) Plaintiffs claim that Mr. Dahlins death was caused by the alleged benzene
exposure from 1990 to 1995. (2nd Am. Compl. 19, ECF No. 93.)
On June 4, 2014, Plaintiffs filed suit against Defendants and others, alleging
negligence,

product

liability,

wrongful

death,

loss

of

consortium,

and

punitive

damages/malicious acts. (Orig. Compl., ECF No. 1, Ex. A.) Plaintiffs lawsuit was removed to
this Court on July 14, 2014. (Notice of Removal, ECF No. 1.) (This lawsuit is the second filed
by Plaintiffs making such allegations. The first was filed in August 2012 in Harris County,
Texas, No. 2012-47115 in the 333rd District Court. Plaintiffs dismissed that claim without
prejudice after being notified of the bankruptcy bar.)
III.

LEGAL STANDARD

A motion for summary judgment is properly granted if, after examining all of the
evidence in the light most favorable to the nonmoving party, the court finds that no genuine
issues of material fact exist and that the moving party is entitled to judgment as a matter of law.
See FED. R. CIV. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
IV.

ARGUMENT AND AUTHORITIES

Plaintiffs claims against Defendants were discharged in Defendants bankruptcy.


Under section 1141(d)(1)(A), the confirmation of a plan of reorganization discharges the debtor
from any debt that arose before the date of such confirmation . . . . A debt is defined as
liability on a claim. Id. 101(12). [C]laim is defined as 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. Id. 101(5).
Congress intended the term claim to have the broadest possible definition . . . [including] all

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legal obligations of the debtor, no matter how remote or contingent. H.R. Rep. No. 95-595, at
649 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 5963.
A party with a pre-bankruptcy petition claim against the debtor must, after
adequate notice, file a proof of claim with the bankruptcy court prior to the bar date. See 11
U.S.C. 1141(d)(1). Failure to file a timely proof of claim will result in the claim against the
debtor being discharged when the bankruptcy court confirms the debtors reorganization plan.
See id. Courts are not unsympathetic to fairness concerns but in cases where the plaintiff fails
to file a timely proof of claim, bankruptcy norms must trump. See Placid Oil, 753 F.3d 151,
157-58 (5th Cir. 2014). Courts recognize that Congresss balancing of the equities in Chapter
11 in favor of reorganization . . . may be a harsh reality for the individual nondebtor . . . . See In
re FBI Distribution Corp., 330 F.3d 36, 49 n. 16 (1st Cir. 2003) (discussing bankruptcy policies
in a different context).
A.

Plaintiffs claims arose prior to Defendants bankruptcy.


Plaintiffs claims arose prior to Defendants bankruptcy. Federal courts of appeal

have adopted two 3 separate tests to identify when a claim arises. See in re Hoffinger, 307 B.R.
112, 120 (Bankr. E.D. Ark. 2004). The first test, the conduct test holds that a right to
payment arises when the conduct giving rise to the alleged liability occurred. Grady v. A.H.
Robins Co., 839 F.2d 198 (4th Cir. 1988). The second test, the prepetition relationship theory,
includes the conduct test and recognizes claims only for those individuals with some type of
prepetition relationship with the Debtor. Epstein v. Official Comm. Of Unsecured Creditors (In
re Piper Aircraft Corp.), 58 F.3d 1573, 1577 (11th Cir. 1995). The Eighth Circuit has not yet
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A third test, the accrual test, was overturned by an en banc panel of the Third Circuit. The accrual test
provided that a bankruptcy claim does not exist until a claim accrued under state law. Avellino & Bienes v. M.
Frenville Co. (In re M. Frenville Co.), 744 F.2d 332 (3d Cir. 1984). No other circuits adopted the accrual test and
the Third Circuit expressly overturned it because they were persuaded that the widespread criticism of Frenvilles
accrual test is justified, as it imposes too narrow an interpretation of a claim under the Bankruptcy Code. In re
Grossmans Inc., 607 F.3d 114, 121 (3d Cir. 2010).

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adopted either test. But under either test, Plaintiffs had a claim that required Plaintiffs to file a
proof of claim in Bankruptcy Court or face discharge. See In re Charter Int'l Oil Co., No. 84319-BK-J-GP, 2007 WL 879176 (Bankr. M.D. Fla. Mar. 14, 2007) (applying the prepetition
relationship test and holding that a plaintiff claiming exposure to benzene prior to bankruptcy but
injury manifestation after bankruptcy held a claim under section 101(4)).
In Grady v. A.H. Robins Co., the court analyzed when a claim arose under
bankruptcy law. 839 F.2d at 199. A manufacturer of an intrauterine contraceptive device filed
for bankruptcy and was sued two months later by a plaintiff claiming personal injury from a
device. Id. The automatic stay provision of the bankruptcy code provided that judicial action
against the debtor is stayed if the claim against the debtor arose before the commencement of
bankruptcy. Id. at 202. Citing Frenvilles accrual test, the plaintiff argued that her claim had not
arisen before the manufacturer had filed for bankruptcy, thus her lawsuit was not stayed. Id.
The Fourth Circuit disagreed based on the plain language of the bankruptcy code. Id. at 202-03.
In interpreting the predecessor to section 101(5), the court noted that it (similarly) defined a
claim as a right to payment whether or not such right is contingent. Id. Thus, the plaintiffs
right to payment occurred at insertion of the contraceptive device and was contingent on later
manifestation of injury. Id. The court held that the wrongful conduct, the insertion of the
device, occurred some years prior to the bankruptcy and therefore, stayed the plaintiffs lawsuit.
Grady, 839 F.2d at 203.
In In re Charter Intl Co., the court applied the prepetition test and concluded that
a plaintiffs prepetition benzene exposure was a claim under section 101(5). 2007 WL 879176 at
*4. The plaintiff loaded and transported petroleum products, including benzene, to and from
Charters refinery from 1971 to 1982. Id. Charter filed for chapter 11 bankruptcy protection in

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1984 and plaintiff was not diagnosed with chronic lymphocytic leukemia until 2005. Id. at *5.
Plaintiff filed suit in 2006 claiming that benzene exposure during the 1971 to 1982 time period
caused his injury. Id. at 2-3. The court held that the alleged wrongful conduct, plaintiffs
benzene exposure, gave rise to a right to payment at the time of plaintiffs exposure contingent
on manifestation of his injury. Id. at 4. Further, the court held that plaintiff had the requisite
prepetition relationship with Charter because the plaintiff had transported benzene to and from
Charters refinery. Id. Thus, plaintiff had a prepetition claim under section 101(5) that required
a proof of claim in bankruptcy court in order to be preserved. Id. at 5.
Here, the alleged wrongful conduct, Mr. Dahlins exposure to harmful amounts of
benzene, occurred, if at all, from 1990 to 1995. (2nd Am. Compl. 16., ECF No. 93; Ex. E,
Pls. Resp. to Interrog. No. 5.) Thus, under the prevailing case law described above, Mr. Dahlin
had a right to payment at the time of the wrongful exposure that was contingent on later
manifestation of injury. See Grady, 839 F.2d at 202-03. And like the plaintiff in Charter, Mr.
Dahlin had the requisite prepetition relationship with Defendants because he allegedly
transported benzene from the Clinton Complex to the Clinton Municipal Dock. Because Mr.
Dahlin had a claim within the meaning of the section 101(5), he was required by law to file a
proof of claim before the Bar Date in order to preserve his claim. (Ex. B, Affs. of Publication of
Notice of Claims Bar Date; Ex. A, May 14, 2009 Amended Order Establishing Deadline and
Procedures for Filing Proofs of Claim.) Plaintiffs did not file a proof of claim. (Ex. C, Aff. of
John Franks.) As discussed below, Plaintiffs had adequate notice of the Bar Date, and, therefore,
Plaintiffs claims are discharged.
B.

Plaintiffs had adequate notice of the Bar Date.


Plaintiffs had adequate notice of the Bar Date. A creditor, such as the Dahlins,

has a constitutional due process right to reasonable notice of the bar date to enable the creditor to
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participate in the bankruptcy. Placid Oil, 753 F.3d at 154. Reasonable notice is defined by the
Supreme Court as 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 v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Without
notice of a bankruptcy, the claimant will not have a meaningful opportunity to protect his or her
claim. See 11 U.S.C. 342(a). Inadequate notice therefore precludes discharge of a claim in
bankruptcy. Chemetron Corp v. Jones, 72 F.3d 341, 346 (3d Cir. 1995).
The reasonable notice required by the Due Process Clause depends on whether a
creditor is known or unknown. In re Mitchell, 403 B.R. 795, 798-99 (Bankr. N.D. Iowa)
revd and remanded on other grounds, 418 B.R. 282 (B.A.P. 8th Cir. 2009). A debtor must
provide actual notice to all known creditors in order to discharge their claims. See City of New
York v. New York, N.H. & H.R. Co., 344 U.S. 293, 29597 (1953). Known creditors include
both claimants actually known to the debtor and those whose identities are reasonably
ascertainable. Tulsa Profl Collection Servs., Inc. v. Pope, 485 U.S. 478, 489490 (1988). A
claimant is reasonably ascertainable if he can be discovered through reasonably diligent
efforts. Id. at 490. [I]n order for a claim to be reasonably ascertainable, the debtor must have
in his possession, at the very least, some specific information that reasonably suggests both the
claim for which the debtor may be liable and the entity to whom he would be liable. In re
Crystal Oil, 158 F.3d 291, 297 (5th Cir. 1998). In contrast, the debtor need only provide
unknown creditors with constructive notice by publication. In re Mitchell 403 B.R. at 798799. Publication in a national newspaper such as the Wall Street Journal is sufficient. In re
Crystal Oil, 158 F.3d at 29798.

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In Placid Oil, the court held that publication in a national newspaper satisfied due
process concerns for unknown creditors. 753 F.3d at 158. The plaintiff in Placid Oil was
exposed to asbestos prior to the defendants bankruptcy and died from mesothelioma after the
defendants bankruptcy was confirmed.

Id. at 153.

The court held that the defendants

knowledge of asbestos dangers combined with the knowledge of plaintiffs exposure were
insufficient to make the plaintiff a known creditor. Id. at 157. The defendant had no specific
knowledge of any actual injury to the [plaintiffs] prior to its bankruptcy plans confirmation.
Id. Therefore, as an unknown creditor, plaintiffs were only entitled to constructive notice. Id.
Plaintiffs in Placid Oil also challenged the adequacy of the constructive notice
because the notice published in the national newspapers failed to mention potential asbestos
claims. Id. at 158. The court disagreed because neither the Bankruptcy Code nor Rules require
bar date notices to apprise creditors of potential claims. Id. The defendants notice satisfied
due process because it informed claimants of the existence of the bankruptcy case, the
opportunity to file proofs of claim, relevant deadlines, consequences of not filing a proof of
claim, and how proofs of claim should be filed. Id. The court affirmed the bankruptcy courts
summary judgment in favor of defendant because plaintiffs claims were discharged by
constructive notice. Id. at 158-59.
Likewise, in In re Charter, the plaintiffs personal injury claims based on
prepetition benzene exposure were discharged because the plaintiff received due process by
notice published in national newspapers. 2007 WL 879176 at *7.

Because plaintiff was

unknown to the debtor, plaintiff was an unknown creditor. Id. at *6. The debtor published
notice in several national newspapers including the Wall Street Journal and several regional
newspapers including the newspaper that covered the location of the refinery. Id. at *2. The

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court concluded that plaintiff had received notice that satisfied constitutional due process
concerns. Id. at *7.
This case is similar to In re Charter and Placid Oil. The Dahlins are unknown
creditors, as Defendants had no knowledge of Plaintiffs prior to or at the time of the
Confirmation Order. (Ex. C, Aff. of John Franks.) Because Plaintiffs were unknown creditors,
constructive notice was sufficient to satisfy due process concerns. See Placid Oil, at 157. Notice
of the Bar Date was published in USA Today (National Edition), the Wall Street Journal
(National Edition and International Edition), the Financial Times (Worldwide Edition) and a
variety of regional newspapers, including the Clinton Herald, a six-day daily newspaper covering
several counties in Iowa (including Clinton County) and Illinois. (Ex. B, Affs. of Publication of
Notice of Claims Bar Date.) The notice published in the preceding newspapers satisfied due
process.
Further, Defendants Notice satisfied the due process requirements detailed in
Placid Oil. Id. at 158-59. The Notice informs claimants about the existing bankruptcy case and
it provided instructions detailing (1) who must file a claim, (2) what to file, and (3) where to file
the proof of claim. (Ex. B, Affs. of Publication of Notice of Claims Bar Date.) The statutory
definition of claim was included in the Notice. (Id.) The Notice also included the relevant
deadlines and a paragraph in all bold, capital letters that explained the consequences of failure to
file a proof of claim before the Bar Date. (Id.) Thus, Plaintiffs received constitutionally
sufficient constructive notice.
C.

Plaintiffs claims were discharged in Defendants bankruptcy.


As a matter of law, Plaintiffs claims were discharged in Defendants bankruptcy.

A bankruptcy claimant must file a proof of claim prior to the bar date or the claim will be
discharged when the bankruptcy court confirms the reorganization plan.
10

See 11 U.S.C.

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1141(d)(1). Plaintiffs claims arose prior to bankruptcy, at the time of Dean Dahlins alleged
harmful exposure to benzene. See Grady, 839 F.2d at 199 (applying conduct test and holding
that prepetition exposure to an intrauterine device was a claim under section 101(5)); see also In
re Charter Intl Co., 2007 WL 879176 at *7 (applying prepetition test and holding that plaintiffs
prepetition exposure to benzene was a claim under section 101(5)). Plaintiffs failed to file a
proof of claim despite constructive notice of the bar date. See Placid Oil, 753 F.3d at 158;
(Ex. A, May 14, 2009 Amended Order Establishing Deadline and Procedures for Filing Proofs
of Claim; Ex. B, Affs. of Publication of Notice of Claims Bar Date; Ex. C, Aff. of John Franks.)
Therefore, Plaintiffs claims against Defendants were discharged. See In re Charter Intl Co.,
2007 WL 879176 at *7 (discharging plaintiffs tort claim based on prepetition exposure to
benzene); (Ex. D, Confirmation Order and Reorganization Plan.).
V.

PRAYER

Defendants Lyondell Chemical Company, Equistar Chemicals, LP and Equistar


GP, LLC, respectfully request oral argument, and that the Court enter judgment in their favor,
enforce the Discharge Injunction, order that Plaintiffs take nothing as to Defendants, grant
Defendants their costs of suit, and grant all other relief to which they are entitled.

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Respectfully submitted,
BAKER BOTTS L.L.P.
/s/Tynan Buthod
Tynan Buthod
(Pro Hac Vice)
One Shell Plaza
910 Louisiana Street
Houston, Texas 77002-4995
Telephone: 713.229.1912
Facsimile: 713.229.2712
ty.buthod@bakerbotts.com
Of Counsel:
Kevin M. Reynolds
WHITFIELD & EDDY, P.L.C.
317 Sixth Avenue, Suite 1200
Des Moines, IA 50309-4195
Telephone: 515.288.6041
Facsimile: 515.246.1474
reynolds@whitfieldlaw.com
ATTORNEYS FOR DEFENDANTS,
LYONDELL CHEMICAL COMPANY,
EQUISTAR CHEMICALS, LP, AND
EQUISTAR GP, LLC

CERTIFICATE OF SERVICE
On May 5, 2015, I hereby certify that I have served all counsel of record electronically
through the ECF system or by any other manner authorized by Federal Rule of Civil Procedure
5(b)(2).

/s/Tynan Buthod
Tynan Buthod

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