Federal-Mogul Bankruptcy Judge Declines Recusal

Judge Alfred Wolin, Federal District Court of New Jersey, has refused the requests to recuse himself from several high-profile asbestos-related Chapter 11 bankruptcy cases he is handling, including the one involving Federal-Mogul Corp. The cases in question involve multi-billion dollar asbestos litigation and related bankruptcies of Owens Corning, W.R. Grace & Co., USG Corp., Armstrong World Industries Inc., and Federal-Mogul. In those cases, creditors accuse Judge Wolin has shown conflicts of interest and exhibited personal bias in favor of the plaintiffs. In particular, some of the lawyers and advisors he is using as assistants in the bankruptcy cases are also working as expert advocates for the plaintiffs in another asbestos-related case, G-1 Holdings. In December 2003, creditors went to the Court of Appeals for the Third Circuit and asked the court to order Judge Wolin removed from the five cases. Creditors for the companies said the advisors used their positions to influence Judge Wolin, then used Judge Wolin's decisions to influence the G-1 Holding case. They also say Judge Wolin knew from the outset that his advisors were conflicted. In addition, the creditors argue, Judge Wolin has held only two hours of open-court hearings but over 300 hours of closed-door private meetings with the team of advisors. Although Judge Wolin claimed the advisors and their identities had been disclosed, creditors claim they only came to know of their existence in recent reviews of the court's expense reports. Although some judicial observers have argued for the judge's removal, others say it would create a dangerous precedent and potentially set back the litigation by a year or more as a new judge takes over the case load. The Court of Appeals for the Third Circuit ultimately declined to force Judge Wolin off the cases. Instead, the panel instructed Judge Wolin to make his own decision. Yesterday, Judge Wolin handed down his decision and refused to remove himself from the cases. In his 100-page opinion, he said the motion came too far along in the proceedings to be considered. He argued the course now is to, "resolve all the outstanding claims, whatever their nature, and, should the faces and the law so indicate, to return the debtors to that which they do best - the conduct of their business." "The debtors who pay the bills for this litigation in the tens of millions of dollars similarly deserve closure as do all other claimants," said Judge Wolin. "To recuse this Court and invalidate the progress to date would represent a consummate waste of untold proportions." Some creditors have indicated they intend to appeal the judge's decision.