Third Circuit Court of Appeals removes Wolin from Owens Corning, W.R. Grace, USG cases

By Jeff Pines

Washington, May 17 - The Third U.S. Circuit Court of Appeals removed Judge Alfred Wolin from overseeing the asbestos-related Chapter 11 cases of Owens Corning, Inc., W.R. Grace & Co. and USG Corp.

In its opinion filed Monday, the court stated that "a reasonable person, knowing all of the relevant circumstances, would conclude that Judge Wolin's impartiality might reasonably be questioned in the Owens Corning, W.R. Grace & Co. and USG Corp. bankruptcies."

Instead the court appointed Judge Anthony Scirica to preside over the case.

The court's decision said: "We emphasize that our review of the record has not revealed the slightest hint of any actual bias or partisanship by Judge Wolin."

But the litmus test is the perception of bias not actual bias, the court said.

A cause for concern, however, was that the judge held ex parte conversations, or those without attorneys from both sides being present, on far more occasions than he had said he would. Though he said he would hold ex parte conversations sparingly, court records show he held more than 325 hours of discussions with attorneys from the five cases.

Another concern was that two of his advisors had alleged conflicts of interest as advisors to the future asbestos claimants in the G-I Holdings Inc. case.

The court decided the advisors "did, in fact, operate under a structural conflict of interests at the same time that they served as Judge Wolin's advisors." It added the advisors had a unique level of access and influence since they were educating him on the asbestos-related issues.

Wolin was originally assigned to judge five asbestos-related Chapter 11 cases. Armstrong World Industries Inc. and Federal-Mogul, Inc. are the other two cases.

He will continue to oversee the Federal-Mogul case, and a separate hearing will be held to determine whether he will continue judging the Armstrong case.

Kensington International Ltd. and Springfield Associates, LLC as agents for Owens Corning's pre-petition bank lenders petitioned Wolin to recuse himself arguing his advisors had conflicts of interest. D.K. Acquisition Partners LP, Fernwood Associates LP and Deutsche Bank Trust Co. Americas petitioned him to recuse himself in the Grace case and USG petitioned him in its own case. He refused.

They then petitioned the court of appeals to remove him.

Owens Corning's Chapter 11 case number is 00-03837. W.R. Grace's Chapter 11 case number is 01-01139 and USG's case number is 01-02094

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