Asbestos judge "heavily biased," USG claims; but asbestos claimants say advisors' role well known

By Jeff Pines

Washington, Jan. 15 - Judge Alfred Wolin should recuse himself from USG Corp.'s Chapter 11 case, according to a brief from the company's attorneys filed with the U.S. Bankruptcy Court for the District of Delaware. The U.S. Court of Appeals for the Third Circuit has given Wolin until Jan. 31 to make a decision on whether he will recuse himself.

USG argued it is "indisputable that Judge Wolin and his advisors held extensive, substantive" discussions about the case amongst themselves and with others who were and were not parties to the case."

The motion argues that these ex parte discussions led to the judge making decisions that were "heavily biased."

In addition, the motion is timely, the company's attorneys said, because a motion to disqualify can be brought at any time under section 455 (b) of the bankruptcy code.

But the asbestos claimant's committee argues the other side of the coin. In a filing with the U.S. Bankruptcy Court for the District of Delaware, the committee asked that the motion to recuse in the Owens Corning, W.R. Grace & Co. and USG bankruptcy cases be denied.

The asbestos claimants argue that research mandated by the Third Circuit Court shows there is no merit to the recusal motions.

Because Kensington International Ltd. and Springfield Associates, LLC waited two years to file the recusal motions, the court should deny them just on their lack of timeliness, the asbestos claimants added.

At issue, is that two advisors to the judge, C. Judson Hamlin and David R. Gross, are also representative and counsel respectively for future claimants in G-I Holdings' pending bankruptcy case. The creditors' committees believe their dual responsibilities may have prejudiced the court.

Asbestos litigation is extremely complex and there is a small circle of experts, the asbestos committee said. In addition, Hamlin's and Gross' roles were publicized and their creditors' committee counsel knew of their roles in the G-I Holdings case.

Furthermore, the court should ignore the concerns over ex parte discussions affecting impartiality because, "all parties knew from the outset that the court would function via ex parte meetings, and the parties, without exception, availed themselves of opportunities to meet with the court," the asbestos committee said.

In another related filing, Armstrong World Industries, Inc.'s official committee of unsecured creditors filed its own motion.

The committee itself has no position on the merits of whether the judge should be recused, but if he recuses himself from other asbestos cases, it believes he should recuse himself from the Armstrong case as well.

Unlike most other cases, the asbestos litigation has two judges because of its sheer size and complexity. Wolin is in charge of the cases while Judge Judith Fitzgerald handles issues of bankruptcy law unless Wolin decides otherwise. Fitzgerald was appointed earlier this month after her predecessor's term expired.

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