Jones v. Chemetron Corp.

Chemetron Corporation (defendant) filed a Chapter 11 bankruptcy petition. The bankruptcy court confirmed Chemetron’s reorganization plan in July 1990. In 1992, Phyllis Jones and others, including a baby who was in utero when Chemetron’s reorganization plan was approved (collectively, injured parties) (plaintiffs), sued Chemetron in state court in Ohio. The injured parties claimed that they were injured when they were exposed to dangerous substances that Chemetron deposited at a dump in their residential neighborhood. Chemetron moved to dismiss on the ground that the bankruptcy court retained jurisdiction over the relevant issues when it confirmed the reorganization plan. The injured parties then moved the bankruptcy court to allow their claims or, in the alternative, for an adversarial proceeding to determine that their claims were not discharged by the reorganization. Among other things, the injured parties contended that, under Ohio law, their claims accrued after the bankruptcy court confirmed Chemetron’s reorganization. Chemetron responded that the federal common law of bankruptcy governed when the injured parties’ claims accrued. The bankruptcy court ruled that Ohio law applied and that, under Ohio law, the injured parties’ claims accrued before the confirmation of Chemetron’s reorganization because, with reasonable investigation, the injured parties could have discovered the causal connection between their injuries and Chemetron’s conduct. The injured parties appealed.