In re Dow Corning Corp.

Dow Corning Corporation (Dow) (debtor) produced silicone-gel breast implants until 1992, when the implants were taken off the market due to health risks. Thousands of breast-implant recipients sued Dow to recover for injuries allegedly caused by their implants. Dow subsequently filed a chapter 11 bankruptcy petition. Under Dow’s proposed reorganization plan, personal-injury claimants had the choice to settle or litigate their claims. The plan classified claims and interests into 33 classes and subclasses, including two classes of foreign claimants (i.e., claimants who were not United States citizens or resident aliens, or whose implantation procedures had not been performed in the United States). Class 6.1 consisted of claimants from countries that belonged to the European Union, had a common-law tort system, or met a per capita gross domestic product requirement. Class 6.1 claimants who chose to settle received settlement offers that were 60 percent of analogous domestic claimants’ settlement amounts. Class 6.2 consisted of claimants from countries other than the class 6.1 countries. Class 6.2 claimants who chose to settle received settlement offers that were 35 percent of analogous domestic claimants’ settlement amounts. Evidence about the classifications included expert testimony that tort recoveries in the United States greatly exceeded foreign tort recoveries. A comparative-law expert also testified about legal, economic, and cultural factors that affected tort recovery in countries around the world. Based on this evidence, the bankruptcy court concluded that the claims in each class were substantially similar, as required by 11 U.S.C § 1122(a), and that the plan had properly classified the foreign claimants. The bankruptcy court confirmed Dow’s plan, and the district court affirmed. The foreign claimants appealed, asserting that their claims were not worth less than domestic claimants’ claims and should not have been classified separately. Some foreign claimants also asserted that their claims were not substantially similar to other claims in their class because their claims were more valuable than claims originating from other countries within the same class. These foreign claimants also asserted that their higher-value claims were effectively receiving treatment inferior to the other claims in their class, in violation of 11 U.S.C. § 1123(a)(4)’s requirement that all claimants in a class be treated equally.