New York Appellate Division finds no common interest between Corning and asbestos claimants

2월 15, 2011



Andrea Rodeschini
O'Melveny & Myers LLP

Piper Hall
O'Melveny & Myers LLP

We attach an order entered today by the Appellate Division, First Department, denying Corning Incorporated's motion for leave to appeal to the Court of Appeals and clarifying the Appellate Division's prior order affirming the lower court's decision.  


In this case, Corning seeks insurance coverage for a contribution that Corning plans to make in connection with the Pittsburgh Corning Corporation bankruptcy's planned asbestos personal injury trust.  During the discovery phase of Corning's coverage action, one of Corning's insurers, Century, moved to compel communications between Corning and asbestos claimants that Corning claimed were privileged under the common interest privilege.  Corning argued that it shared a common legal interest with the asbestos claimants because they were working together to confirm a bankruptcy plan of reorganization.  Century argued that Corning and the asbestos claimants remained in adversarial positions because they continued to re-negotiate the terms of the bankruptcy plan and that the documents constituted necessary evidence in the coverage action.


The First Department unanimously affirmed the trial court's finding that Corning failed to establish that its communications with asbestos claimants in connection with an asbestos bankruptcy reorganization plan were protected by the common interest privilege.


In its motion for leave to appeal to the Court of Appeals, Corning contended that the First Department's decision presents an issue of immense statewide importance and threatens to overturn New York law on the common interest privilege by adopting a rule that categorically bars the application of the privilege to communications among current and potential future adversaries.


Century argued that Corning’s discovery appeal does not merit review by the Court of Appeals because the appeal involves fact-specific inquiries inappropriate for review by the Court of Appeals, the Appellate Division’s decision comports with previous decisions in the First Department and the Court of Appeals, that Corning seeks a ruling contrary to New York’s established policy against collusion, and that Corning’s claim that the previous appeal undermines the ability of parties to settle is frivolous.


The Appellate Division denied Corning's motion for leave to appeal to the Court of Appeals and ruled that the trial court did not abuse its discretion in finding that Corning had failed to meet its burden of proof to demonstrate a common interest between itself and asbestos claimants.


The New York appellate court's decision is of particular interest after a late 2010 decision by the US Bankruptcy Court for the District of Delaware held that certain communications between debtors and asbestos claimants in connection with another asbestos bankruptcy reorganization plan were protected by the common interest privilege.  That decision was in In re Leslie Controls, case no. 10-12199.


Tancred Schiavoni, Gary Svirsky, and Sarah Hargrove of O'Melveny & Myers LLP represent Century in this action.  Edward Tessler of Dickstein Shapiro LLP and Cheryl Heller of Ward Greenberg Heller & Reidy LLP represent Corning in this action.


If you have any questions, please feel free to contact Tanc Schiavoni, who represents Century, at 212-326-2267.


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