A law firm's representation of two insurance companies in an asbestos-coverage case did not disqualify a partner in the firm from opposing the same insurers in the Imerys Talc America bankruptcy case, a federal appeals court held on Thursday, Reuters reported. The U.S. Court of Appeals for the Third Circuit upheld the appointment of Young, Conaway, Stargatt & Taylor’s James Patton as the Future Claimants’ Representative (FCR) in the talc case, over the objections of CNA’s Continental Casualty and AIG’s National Union Fire Insurance Co. The decision resolves a longstanding split in the lower courts about who is qualified to serve as an FCR. The 3rd Circuit agreed with the insurers that the bar should be set high. An FCR “must be more than merely disinterested, and instead be able to fulfill the heightened duties owed by fiduciaries,” Circuit Judge Cheryl Ann Krause wrote. However, the panel also found that the bankruptcy judge had properly applied that standard in appointing Patton. “The decision is important because it is the first by a Court of Appeal to recognize that the fiduciary duty standard … applies to future claimants’ representatives in mass tort cases,” an attorney for the insurers, Tancred Schiavoni of O’Melveny & Myers, wrote in an email. The high standard will “contribute to reform” of the FCR’s role, he said. In a statement, Imerys Talc America said it was pleased with the result, which “maintains stability in the case.” The parties are currently in mediation, after the debtor’s reorganization plan failed to get enough votes for confirmation last fall.
