                                        PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  ____________

                      No. 13-1467
                     _____________

                  In re: EMORAL, INC.,
                                   Debtor

                DIACETYL PLAINTIFFS,
                                  Appellants
                   ______________

   APPEAL FROM THE UNITED STATES DISTRICT
    COURT FOR THE DISTRICT OF NEW JERSEY
              (D.C. Civil No. 2-12-cv-07085)
      District Judge: Honorable Stanley R. Chesler
                      ____________

                Argued: October 10, 2013
                     ____________

 Before: FUENTES, COWEN and BARRY, Circuit Judges

             (Opinion Filed: January 24, 2014)
                      ____________

Nancy Isaacson, Esq. (Argued)
Greenbaum, Rowe, Smith & Davis
75 Livingston Avenue
Suite 301
Roseland, NJ 07068

Kenneth B. McClain, Esq.
Humphrey, Farrington & McClain
221 West Lexington
P.O. Box 900, Suite 400
Independence, MO 64051-0000

Counsel for Appellants
Christopher Landau, Esq. (Argued)
Liam P. Hardy, Esq.
Kirkland & Ellis
655 15th Street, N.W.
Suite 1200
Washington, DC 20005

Paul Basta, Esq.
Kirkland & Ellis
601 Lexington Avenue
New York, NY 10022

Counsel for Appellee

                        ____________

                 OPINION OF THE COURT
                      ____________

BARRY, Circuit Judge

       This appeal requires us to determine whether personal
injury causes of action arising from the alleged wrongful
conduct of a debtor corporation, asserted against a third-party
non-debtor corporation on a “mere continuation” theory of
successor liability under state law, are properly characterized
as “generalized claims” constituting property of the
bankruptcy estate. We conclude that they are, and will,
therefore, affirm the order of the District Court.
                                I.

        In August of 2010, Aaroma Holdings LLC
(“Aaroma”), f/k/a Duane Street, LLC, purchased certain
assets and assumed certain liabilities of Emoral, Inc.
(“Emoral”), f/k/a Polarome International, Inc., a manufacturer
of diacetyl, a chemical used in the food flavoring industry. At
the time of the transaction, the parties were aware of potential
claims against Emoral arising from exposure to diacetyl,
although those individuals who came to be known in this
litigation as the “Diacetyl Claimants” or the “Diacetyl
Plaintiffs” (herein, “Diacetyl Plaintiffs”) apparently had never
                               2
themselves been employed by Emoral. The Asset Purchase
Agreement specifically provided that Aaroma was not
assuming Emoral’s liabilities related to “the Diacetyl
Litigation,” and that it was not purchasing Emoral’s
corresponding insurance coverage. (App. at 326-27.)

       When Emoral filed for bankruptcy protection in June
of 2011, disputes arose between the bankruptcy trustee (the
“Trustee”) and Aaroma, including, for example, the Trustee’s
claim that Emoral’s sale of assets to Aaroma constituted a
fraudulent transfer. On September 21, 2011, the Trustee and
Aaroma entered into a Settlement Agreement (the
“Agreement”) resolving the claims.        As part of the
Agreement, Aaroma agreed to pay $500,000 and take certain
specific actions, and the Trustee agreed to release Aaroma
from any “causes of action . . . that are property of the
Debtor’s Estate” as of the date of the Agreement. (Id. at
1079-80.)

        At a hearing before the Bankruptcy Court regarding
approval of the settlement, the Diacetyl Plaintiffs objected to
the releases contained in the Agreement to the extent that
those releases might bar them from bringing claims against
Aaroma, as a successor to Emoral, for personal injuries
related to diacetyl. A representative for the Trustee stated its
view that the Diacetyl Plaintiffs’ successor liability claims
against Aaroma “do[] not belong to the Estate” and that the
Trustee, therefore, “can’t release [them].” 1 (Id. at 1277.)
Counsel for Aaroma argued, however, that whether or not the
Diacetyl Plaintiffs’ causes of action were property of the
estate (and therefore covered by the release) was not an issue
before the Bankruptcy Court at that time. (Id. at 1280-81.)
Ultimately, the parties added the following language to the
order approving the settlement to address concerns expressed
by the Diacetyl Plaintiffs: “Nothing contained in this Order
or in the Aaroma Settlement Agreement will operate as a

1
  The Trustee’s representative stated: “I would like to sell
someone the Brooklyn Bridge, but I don’t own it so I can’t
sell it. I cannot, the Trustee cannot release claims that he
doesn’t own. It was never contemplated that he would be
releasing claims he doesn’t own.” (Id. at 1278.)
                              3
release of, or a bar to prosecution of any claims held by any
person which do not constitute Estate’s Released Claims as
defined in the Aaroma Settlement Agreement.” (Id. at 1206,
1355.) By order of October 7, 2011, the Bankruptcy Court
approved the settlement. The ultimate question, however, of
whether the Diacetyl Plaintiffs’ causes of action constituted
“Estate’s Released Claims,” as defined in the Agreement, was
not resolved.

        The Diacetyl Plaintiffs filed individual complaints
against Aaroma in the Superior Court of New Jersey (see,
e.g., id. at 1227-45) alleging personal injury and product
liability claims and asserting that Aaroma was a “mere
continuation” of Emoral and, therefore, liable. (Id. at 1233.)
In April 2012, Aaroma filed in the Bankruptcy Court a
“Motion to Enforce Court Order Approving Settlement with
Bankruptcy Trustee and Compelling Dismissal of State Court
Actions,” arguing that the Diacetyl Plaintiffs’ claims were
barred by the Agreement’s language as to release. The
Diacetyl Plaintiffs opposed the motion, arguing that it was the
understanding of the parties that their claims were not
released under the Agreement. (Id. at 1324-26.) They cited,
for example, the statement made on behalf of the Trustee
during the hearing before the Bankruptcy Court prior to the
approval of the settlement that their claims “do[] not belong
to the Estate” and that the Trustee, therefore, “can’t release
[them].” (Id.) In the motion to enforce the order approving
the settlement, however, the Trustee did not take a position,
stating that it was an issue of law for the Bankruptcy Court to
determine. (Id. at 1341.)

        Following oral argument, the Bankruptcy Court, in a
lengthy opinion, denied Aaroma’s motion, holding that the
Diacetyl Plaintiffs’ personal injury causes of action were not
property of the estate because the Diacetyl Plaintiffs alleged
“a particular injury not generalized injury suffered by all
shareholders or creditors of Emoral.” (Id. at 1387.) The
Bankruptcy Court stated that “While successor liability has
been imposed derivatively, this Court finds that the
underlying injury that is alleged to be the basis and premise of
the state court actions is personal harm . . . to the individual
plaintiffs” and that “Emoral has not suffered any personal
                               4
harm nor have the creditors as a general whole.” (Id.)

        Aaroma appealed to the District Court, and the District
Court reversed, emphasizing that the Diacetyl Plaintiffs had
no cause of action against Aaroma (which, it was not
disputed, neither manufactured nor sold diacetyl) except on a
successor liability theory. (Id. at 7-8.) The District Court
held that the cause of action for successor liability was a
“generalized” claim belonging to the estate because the facts
giving rise to the cause of action were not specific to the
Diacetyl Plaintiffs but common to all creditors, and because,
if the Diacetyl Plaintiffs were to succeed in establishing that
Aaroma constituted a “mere continuation” of Emoral, this
would benefit the creditors of Emoral generally. (Id. at 7-9.)
It stated:

       [T]he potential liability of Aaroma to the
       Diacetyl Plaintiffs does not arise out of the
       alleged misfeasance of Aaroma as to these
       creditors individually but rather out of its
       alleged continuation of the general business
       operation of the actual alleged wrongdoer,
       Emoral. Put slightly differently, for purposes of
       determining whether the cause of action belongs
       to the Estate, the critical distinction between the
       personal injury claim against Emoral and the
       successor liability claim against Aaroma is that
       establishing the former would benefit only the
       allegedly injured Diacetyl Plaintiffs whereas
       establishing the latter -- that Aaroma is the
       “mere continuation” of Emoral and thus should
       be charged with all its liabilities – would benefit
       creditors of Emoral generally.

(Id. at 8-9.) Accordingly, the District Court reversed and
remanded to the Bankruptcy Court for entry of an order
consistent with the District Court’s opinion. The Diacetyl
Plaintiffs now appeal, arguing that they have standing to
assert their personal injury causes of action against Aaroma,
and that the District Court erred in conflating these claims
with their successor liability theory.

                               5
                              II.

       We have jurisdiction to review the order of the District
Court pursuant to 28 U.S.C. §§ 158(d) and 1291. The District
Court had jurisdiction to review the Bankruptcy Court’s
decision pursuant to 28 U.S.C. § 158(a). We “exercise the
same standard of review as the District Court when it
reviewed the original appeal from the Bankruptcy Court,”
and, thus, review the Bankruptcy Court’s factual findings
under a clearly erroneous standard and exercise plenary
review over legal issues. In re Rodriguez, 629 F.3d 136, 138
(3d Cir. 2010) (quoting In re Handel, 570 F.3d 140, 141 (3d
Cir. 2009)).

                              III.

       The basic legal framework applicable to this case is
not in dispute. After a company files for bankruptcy,
“creditors lack standing to assert claims that are ‘property of
the estate.’” Bd. of Trustees of Teamsters Local 863 Pension
Fund v. Foodtown, Inc., 296 F.3d 164, 169 (3d Cir. 2002).
The “estate,” as defined in the Bankruptcy Code, includes “all
legal or equitable interests of the debtor in property as of the
commencement of the case.” 11 U.S.C. § 541(a)(1). This
includes causes of action, which are considered property of
the bankruptcy estate “if the claim existed at the
commencement of the filing and the debtor could have
asserted the claim on his own behalf under state law.”
Foodtown, 296 F.3d at 169 n.5. In order for a cause of action
to be considered “property of the estate,”

       the claim must be a “general one, with no
       particularized injury arising from it.” On the
       other hand, if the claim is specific to the
       creditor, it is a “personal” one and is a legal or
       equitable interest only of the creditor. A claim
       for an injury is personal to the creditor if other
       creditors generally have no interest in that
       claim.

Id. at 170 (citing St. Paul Fire & Marine Ins. Co. v. PepsiCo,
Inc., 884 F.2d 688, 701 (2d Cir. 1989) and Koch Refining v.
                               6
Farmers Union Cent. Exch., Inc., 831 F.2d 1339, 1348-49
(7th Cir. 1987)).

        A cause of action that is “property of the estate” is
properly pursued by the bankruptcy trustee because it inures
to the benefit of all creditors. This promotes the orderly
distribution of assets in bankruptcy, and comports with “the
fundamental bankruptcy policy of equitable distribution to all
creditors that should not be undermined by an individual
creditor’s claim.” Koch Refining, 831 F.2d at 1344. As the
Second Circuit has held, when examining “common claims
against the debtor’s alter ego or others who have misused the
debtor’s property in some fashion,” where a claim is “a
general one, with no particularized injury arising from it, and
if that claim could be brought by any creditor of the debtor,
the trustee is the proper person to assert the claim, and the
creditors are bound by the outcome of the trustee’s action.”
St. Paul Fire & Marine Ins. Co., 884 F.2d at 701.

       To determine whether the Diacetyl Plaintiffs’ cause of
action against Aaroma constitutes property of Emoral’s
bankruptcy estate, we must examine the nature of the cause of
action itself. While the Diacetyl Plaintiffs focus on the
individualized nature of their personal injury claims against
Emoral, we cannot ignore the fact, and fact it be, that their
only theory of liability as against Aaroma, a third party that is
not alleged to have caused any direct injury to the Diacetyl
Plaintiffs, is that, as a matter of state law, Aaroma constitutes
a “mere continuation” of Emoral such that it has also
succeeded to all of Emoral’s liabilities.

       The parties do not dispute that under both New Jersey
and New York state law, 2 an acquiring company is generally
“not liable for the debts and liabilities of the selling company
simply because it has succeeded to ownership of the assets of
the seller,” except in limited circumstances. Lefever v. K.P.
Hovnanian Enters., Inc., 160 N.J. 307, 310 (N.J. 1999). One

2
  There is no dispute that either New Jersey or New York law
applies and that the two states’ relevant applicable legal
standards are identical, rendering a choice-of-law analysis
unnecessary.
                                7
exception to the general rule against successor liability is
where the purchasing company “is a mere continuation of the
seller.” Id. To establish liability based on a “mere
continuation” theory, as the Diacetyl Plaintiffs seek to do
against Aaroma, a plaintiff must “establish that there is
continuity in management, shareholders, personnel, physical
location, assets and general business operation between
selling and purchasing corporations following the asset
acquisition.” Ramirez v. Amsted Indus., Inc., 86 N.J. 332,
342 (N.J. 1981).

        The Diacetyl Plaintiffs fail to demonstrate how any of
the factual allegations that would establish their cause of
action based on successor liability are unique to them as
compared to other creditors of Emoral. Likewise, they fail to
demonstrate how recovery on their successor liability cause
of action would not benefit all creditors of Emoral given that
Aaroma, as a mere continuation of Emoral, would succeed to
all of Emoral’s liabilities. Thus, the Diacetyl Plaintiffs’ cause
of action against Aaroma is “general” rather than
“individualized.” See Foodtown, 296 F.3d at 169-70.

        Although we have not before squarely addressed this
issue, other courts applying New York and New Jersey law
have held that state law causes of action for successor
liability, just as for alter ego and veil-piercing causes of
action, are properly characterized as property of the
bankruptcy estate. In In re Keene Corp., 164 B.R. 844, 849
(Bankr. S.D.N.Y. 1994), for example, plaintiffs alleged that
they had claims for asbestos-related injuries against Keene,
the debtor corporation, and brought various lawsuits against
certain third-party non-debtor defendants, alleging that Keene
wrongfully transferred assets to those defendants which
prevented plaintiffs from collecting damages from Keene.
164 B.R. at 848. Invoking successor liability, plaintiffs
argued that by acquiring the assets of Keene, defendants also
assumed the asbestos-related liabilities. The court, applying
New York law with respect to successor liability, held that
plaintiffs’ causes of action constituted property of the estate:

       [T]he remedy against a successor corporation
       for the tort liability of the predecessor is, like
                               8
       the piercing remedy, an equitable means of
       expanding the assets available to satisfy creditor
       claims. The class action plaintiffs that invoke it
       allege a general injury, their standing depends
       on their status as creditors of Keene, and their
       success would have the effect of increasing the
       assets available for distribution to all creditors.

Id. at 853. Accordingly, the court held that the successor
liability causes of action should be asserted by the trustee on
behalf of all creditors.

        Likewise, in In re Buildings by Jamie, Inc., 230
B.R.36, 43 (Bankr. D.N.J. 1998), the court, applying New
Jersey law, concluded that a debtor’s individual creditors
lacked standing to bring an alter ego veil-piercing cause of
action seeking recovery from non-debtor third-party
defendants, because that cause of action constituted property
of the bankruptcy estate. It held that because New Jersey law
permits a corporation to pierce its own veil and because
recovery on the alter ego claim would benefit the estate as a
whole, 3 the cause of action was “properly characterized as a
general claim as to which the trustee alone has standing as
representative of the estate.” 230 B.R. at 44. The court
discussed our holding in Phar-Mor, Inc. v. Coopers &
Lybrand, 22 F.3d 1228, 1240 n.20 (3d Cir. 1994), in which
we observed that it “may seem strange” to allow a
corporation to pierce its own veil, “since it cannot claim to be
either a creditor that was deceived or defrauded by the
corporate fiction, or an involuntary tort creditor.” Id.
However, we recognized that, in New Jersey and in other
states, “piercing the corporate veil and alter ego actions are
allowed to prevent unjust or inequitable results; they are not
based solely on a policy of protecting creditors.” Id. Thus,
because a veil-piercing cause of action is “based upon
preventing inequity or unfairness, it is not incompatible with
the purposes of the doctrine[] to allow a debtor corporation to

3
 In Buildings by Jamie, there was no question that recovery
on the alter ego claim “would necessarily inure to the benefit
of all creditors,” because the plaintiff creditors constituted the
entire body of creditors. 230 B.R. at 44.
                                9
pursue a claim based upon such a theory.” Id.

        As we observed in Phar-Mor, so, too, here it “may
seem strange” to hold that a cause of action for successor
liability against Aaroma is property of Emoral’s bankruptcy
estate. As a practical matter, it is difficult to imagine a
factual scenario in which a solvent Emoral, outside of the
bankruptcy context, would or could bring a claim for
successor liability against Aaroma. See Buildings by Jamie,
230 B.R. at 42 (similarly acknowledging in the veil-piercing
context that “from a practical standpoint, principals of a
solvent debtor will not be compelled to pierce the veil of the
very entity they use as a conduit for their personal business,”
as this would “effectively extinguish their limited liability and
expose them to the personal liability that the corporate form is
employed to avoid”).

        Just as the purpose behind piercing the corporate veil,
however, the purpose of successor liability is to promote
equity and avoid unfairness, and it is not incompatible with
that purpose for a trustee, on behalf of a debtor corporation, to
pursue that claim. See Phar-Mor, Inc., 22 F.3d 1240 n.20; see
also Baker v. Nat’l State Bank, 161 N.J. 220, 227-28 (N.J.
1999) (discussing successor liability and holding that it
requires a “fact specific and equitable analysis”); Walensky v.
Jonathan Royce Int’l, Inc., 264 N.J. Super. 276, 284 (N.J.
App. Div. 1993) (holding that “the doctrine of successor
liability exists to protect against [] inequities”). As in Keene
Corp. and Buildings by Jamie, the Diacetyl Plaintiffs’ cause
of action against Aaroma would be based on facts generally
available to any creditor, and recovery would serve to
increase the pool of assets available to all creditors.
Therefore, the District Court appropriately classified that
cause of action as a generalized claim constituting property of
the estate. See also In re OODC, LLC, 321 B.R. 128, 136
(Bankr. D. Del. 2005) (holding that the bankruptcy trustee
had standing to pursue successor liability claims because the
claims were general and common to all creditors, noting that
“most other courts have found that the trustee in bankruptcy
has standing to bring successor liability (or alter ego) suits on
behalf of all creditors”).

                               10
        The Diacetyl Plaintiffs concede that there is no
relevant caselaw directly supporting their position that
individual personal injury claims asserted on a successor
liability theory should not be considered property of the
bankruptcy estate. They attempt to distinguish Keene Corp.
and related caselaw, however, by drawing a distinction
between, on one hand, a successor liability claim as a primary
cause of action, and, on the other hand, successor liability as
an equitable remedy to satisfy an individual damage claim.
We are not aware of any applicable legal authority drawing
such a distinction and, indeed, we note that any cause of
action asserting successor liability necessarily contemplates
some underlying damage or liability for which the claimant is
seeking recourse from a third party.

        The Diacetyl Plaintiffs also argue that Foodtown
supports their position because we held in that case that a
pension fund’s claim against third party affiliates of a debtor
employer did not constitute property of the debtor’s
bankruptcy estate. See 296 F.3d at 170. Their reliance on
Foodtown is misplaced. In Foodtown, a plaintiff pension
fund sought to recover $9.3 million in ERISA withdrawal
liability owed by the debtor to the pension fund by bringing
an alter ego veil-piercing claim and claims for breach of
fiduciary duty against third parties. The cause of action at
issue, however, did not constitute a general claim for
successor liability based on a mere continuation theory, but
instead a specific claim for liability pursuant to ERISA. We
observed in Foodtown that “[w]ith regard to alter ego liability
in cases involving claims to pension benefits protected by
ERISA . . . there is a federal interest supporting disregard of
the corporate form to impose liability.” Id. at 169 (citation
and internal quotation marks omitted). Moreover, crucial to
our holding in Foodtown was the fact that the cause of action
did not arise until after the debtor’s bankruptcy filing, and
thus could not be considered property of the estate. We
distinguished the cause of action in Buildings by Jamie,
which “was based on a general injury suffered by a corporate
debtor prior to its bankruptcy filing” from the cause of action
in Foodtown, which “ar[ose] from a statutorily imposed
withdrawal liability that occurred after the filing of the
bankruptcy petition.” Id. at 171. The Diacetyl Plaintiffs’
                              11
cause of action is distinguishable from the claim in Foodtown
for the same reason.

                             IV.

        Because the Diacetyl Plaintiffs’ cause of action for
successor liability against Aaroma belongs to the bankruptcy
estate, it falls within the “Estate’s Released Claims” within
the meaning of the Agreement between the Trustee and
Aaroma. The District Court, therefore, properly reversed the
Bankruptcy Court’s denial of Aaroma’s motion to enforce the
order approving the settlement, and we will affirm the order
of the District Court. We recognize that, in so doing, we
leave the Diacetyl Plaintiffs, who allege that they have
suffered serious personal injuries resulting from exposure to a
harmful chemical, albeit not at the hands of Aaroma, with no
apparent recourse against Aaroma. We note, however, that
our holding has no bearing on any remedy the Diacetyl
Plaintiffs may be seeking directly against Emoral in the
bankruptcy proceeding or against any of the numerous other
defendants the Diacetyl Plaintiffs have named in the actions
pending in the Superior Court of New Jersey.




                              12
COWEN, Circuit Judge, dissenting

       I agree with the Bankruptcy Court that the Diacetyl
Plaintiffs’ claims against Aaroma constitute “individualized
claims” belonging to the Diacetyl Plaintiffs themselves.
Because the majority instead concludes that such claims are
“generalized claims” belonging to the bankruptcy estate, I
must respectfully dissent.

       It is undisputed that “creditors lack standing to assert
claims that are ‘property of the estate.’” Bd. of Trs. of
Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296
F.3d 164, 169 (3d Cir. 2002). A cause of action or claim, in
order to be considered property of the estate, “must be a
‘general one, with no particularized injury arising from it.”
Id. at 170 (quoting St. Paul Fire & Marine Ins. Co. v.
PepsiCo, Inc., 884 F.2d 688, 701 (2d Cir. 1989)). “[W]here a
claim ‘is a general one, with no particularized injury arising
from it, and if that claim could be brought by any creditor of
the debtor, the trustee is the proper person to assert the claim,
and the creditors are bound by the outcome of the trustee’s
action.’” (Majority Opinion at 8 (quoting St. Paul, 884 F.2d
at 701); see also id. at 7-8 (quoting Foodtown, 296 F.3d at
170).) “On the other hand, if the claim is specific to the
creditor, it is a ‘personal’ one and is a legal or equitable
interest only of the creditor.” Id.

       Because the Diacetyl Plaintiffs’ claims against Aaroma
“could [not] be brought by any creditor of the debtor,” they
constitute individualized claims belonging to the Diacetyl
Plaintiffs themselves—and not to the debtor or the
bankruptcy estate. Initially, it is uncontested that the
underlying personal injury claims against Emoral are




                             1
individualized in nature. In fact, personal injury and product
liability causes of action under state law represent
quintessential examples of an individualized claim, i.e., “a
‘personal’ [claim that is] a legal or equitable interest only of
the creditor.” Id. The majority insists that “we cannot ignore
the fact . . . that [the Diacetyl Plaintiffs’] only theory of
liability as against Aaroma, a third party that is not alleged to
have caused any direct injury to the Diacetyl Plaintiffs, is
that, as a matter of state law, Aaroma constitutes a ‘mere
continuation’ of Emoral such that it has also succeeded to all
of Emoral’s liabilities.” (Id. at 8-9 (emphasis omitted).)
Nevertheless, the Court also cannot ignore the claims or
allegations underlying this theory or remedy of successor
liability. As the Bankruptcy Court explained in its thorough
and well-reasoned ruling, “the underlying injury that is
alleged to be the basis and premise of the state court actions is
personal harm by exposure to Diacetyl by the individual
plaintiffs or harm to the individual plaintiffs.” (A1387.) The
successor liability theory alleged by the Diacetyl Plaintiffs is
inextricably tied to—and cannot be considered separate or
apart from—their underlying personal injury and product
liability allegations.     Because the Diacetyl Plaintiffs’
underlying allegations are clearly individualized in nature,
their claims against Aaroma—which seek to hold this third
party liable for their alleged injuries as the “mere
continuation” of Emoral—must also be considered as
individualized claims. In short, “any creditor of the debtor”
could not allege that the third party should be held
responsible on this specific theory of successor liability for
injuries allegedly suffered as a result of exposure to a product



                               2
made and sold by the debtor itself. For instance, a trade
creditor of the debtor could not make such a claim.

       I believe that the prior case law, beginning with our
own ruling in Foodtown, weighs in favor of this approach to
the Diacetyl Plaintiffs’ claims.

         “In Foodtown, a plaintiff pension fund sought to
recover $9.3 million in ERISA withdrawal liability owed by
the debtor [Twin] to the pension fund by bringing an alter ego
veil-piercing claim and claims for breach of fiduciary duty
against third parties.” (Majority Opinion at 13.) This Court
determined that “Twin’s withdrawal liability is not property
of the estate” because “the claim did not arise until after the
filing of the bankruptcy petition.” Foodtown, 296 F.3d at 170
(footnote omitted). We, however, did not stop there. On the
contrary, we went on to conclude that “[t]he claim for
withdrawal liability is also not a legal or equitable interest of
the debtor.” Id.; cf., e.g., Philadelphia Marine Trade Ass’n—
Int’l Longshoremen’s Ass’n Pension Fund v. Comm’r of
Internal Revenue, 523 F.3d 140, 147 n.5 (3d Cir. 2008) (“We
note that this portion of the opinion is an alternative holding,
not a dictum: ‘Where a decision rests on two or more
grounds, none can be relegated to the category of obiter
dictum.’” (quoting Woods v. Interstate Realty Co., 337 U.S.
535, 537 (1949))). In doing so, the Foodtown Court
specifically focused on the creditor’s underlying withdrawal
liability allegations, referring, for example, to “Twin’s
withdrawal liability” and “Appellees’ evasion of withdrawal
liability.” Foodtown, 296 F.3d at 170. The alleged evasion



                               3
of liability, in turn, did not injure either Twin or the creditors
in general:

               In this case, the injury is not insolvency
       stemming from Appellees’ actions. Here, the
       injury is the Appellees’ evasion of withdrawal
       liability. Withdrawal liability is not owed to
       Twin; rather, it is owed to the pension fund.
       Because the liability is owed only to the fund,
       the claim is personal to the Appellant.
       Moreover, absent a general creditors’ interest, a
       trustee can only collect money that may be
       owing to the bankrupt entity. Here, there is no
       general creditors’ interest in the statutorily
       imposed withdrawal liability owed to the fund.
       Rather, the action to recover the withdrawal
       liability has the character of an action for
       damages flowing from an alleged illegality
       against the fund. The alleged illegality may
       have caused other injuries in addition to those
       caused to the fund, but the direct injury to the
       fund—the evasion of its statutory entitlement—
       defines the nature of plaintiff’s claim as a
       personal one. . . .

Id. (citing Steinberg v. Buczynski, 40 F.3d 890, 892 (7th Cir.
1994); Apostolou v. Fisher, 188 B.R. 958, 968 (N.D. Ill.
1995)). In fact, we did not specifically address the elements
of the pension fund’s alter ego and veil piercing causes of
action until we considered the claims on their merits, after
concluding that this creditor had standing to pursue such


                                4
claims in the first place. See id. at 167-73. Likewise, even
though our opinion in Foodtown referred to a federal interest
in disregarding the corporate form in ERISA and MPPAA
cases, id. at 169, we actually applied New Jersey law to
conclude that the creditor stated claims for alter ego liability
and for piercing the corporate veil, id. at 171-73.

        We thereby adopted in Foodtown an expansive
approach to the question of whether a creditor’s cause of
action against a third party constitutes an individualized claim
and, at the very least, exhibited a preference for allowing a
third party claim to be decided on the merits. As a practical
matter, I do not see how the same court that was willing to
permit the pension fund’s third party claims to go forward
could reach the opposite result with respect to the Diacetyl
Plaintiffs’ own third party claims against Aaroma. Just as we
relied on the individualized nature of the underlying
withdrawal liability allegations to permit a creditor to pursue
its claims against several third parties, we likewise should
allow the Diacetyl Plaintiffs’ claims against Aaroma to go
forward given the individualized nature of their own
underlying personal injury and product liability allegations.

      The Court in Foodtown turned for support to the
Seventh Circuit’s opinion in Steinberg, which addressed what
we called “a similar case.” Id. at 171. The Steinberg court
determined that a bankruptcy trustee lacked standing to
pursue an adversary proceeding against the debtor’s
shareholders “seeking to pierce the corporate veil and hold
them personally liable for the corporation’s debt to the
pension fund,” where the pension fund had already obtained a


                               5
monetary judgment against the debtor corporation prior to
bankruptcy. Steinberg, 40 F.3d at 891. Like Foodtown, the
Seventh Circuit’s opinion distinguished between the claims of
the debtor corporation and the claims belonging to its creditor
pension fund:

       The point is simply that the trustee is confined
       to enforcing entitlements of the corporation. He
       has no right to enforce entitlements of a
       creditor. He represents the unsecured creditors
       of the corporation; and in that sense when he is
       suing on behalf of the corporation he is really
       suing on behalf of the creditors of the
       corporation. But there is a difference between a
       creditor’s interest in the claims of the
       corporation against a third party, which are
       enforced by the trustee, and the creditor’s own
       direct—not derivative—claim against the third
       party, which only the creditor himself can
       enforce. . . .

Id. at 893. A trustee has standing to pursue an action to
pierce the corporate veil on behalf of the bankrupt corporation
only if the corporation was injured by the shareholders’
disregard of corporate formalities. Id. at 892; see also, e.g.,
Foodtown, 296 F.3d at 170-71 (citing Steinberg). I do not see
how Aaroma’s alleged “mere continuation” of Emoral could
have harmed Emoral itself. To paraphrase Foodtown, “the
injury [alleged by the Diacetyl Plaintiffs] is not insolvency
stemming from [Aaroma’s] actions.” Foodtown, 296 F.3d at
170.


                              6
        The Second Circuit recently considered the question of
standing in In re Bernard L. Madoff Investment Securities
LLC, 721 F.3d 54 (2d Cir. 2013), petition for cert. filed, 82
U.S.L.W. 3264 (U.S. Oct. 9, 2013). A trustee appointed
under the Securities Investor Protection Act sought to bring
claims on behalf of the victims of a multi-billion-dollar Ponzi
scheme against several financial institutions for their alleged
role in this fraudulent scheme. Madoff, 721 F.3d at 57-58.
The trustee focused on “a passage in St. Paul—stating that a
trustee may bring a claim if the ‘claim is a general one, with
no particularized injury arising from it, and if that claim could
be brought by any creditor of the debtor’”—and asserted that
“the third-party claims here are common to all customers
because all customers were similarly injured by Madoff’s
fraud and the Defendants’ facilitation.” Id. at 70 (quoting St.
Paul, 884 F.2d at 701). The Second Circuit nevertheless
determined that the trustee’s theory “is flawed on many
levels.” Id. Relying, inter alia, on the Seventh Circuit’s
reasoning in Steinberg, the Madoff court thereby rejected the
trustee’s “broad reading” of St. Paul. Id. at 70-71. “As
illustrated by St. Paul, when a creditor seeks relief against
third parties that pushed the debtor into bankruptcy, the
creditor is asserting a derivative claim that arises from harm
done to the estate” and that accordingly belongs to the
bankruptcy estate. Id. at 70. In addition, the Madoff trustee
“seeks to assert claims on behalf of thousands of customers
against third-party financial institutions for their handling of
individual investments made on various dates in varying
amounts,” id. at 71. Because these alleged wrongful acts
could not have harmed all of the customers in the same way,



                               7
the claims could not be considered to be “common” or
“general” in nature. 1 Id.

             1
                  The majority turns for support to two
bankruptcy court decisions that “have held that state law
causes of action for successor liability, just as alter ego and
veil-piercing causes of action, are properly characterized as
property of the bankruptcy estate.” (Majority Opinion at 10.)
However, I believe that both opinions—which clearly are not
binding on this Court—are distinguishable on a number of
different grounds. Unlike our ruling in Foodtown, neither
Buildings by Jamie nor Keene really looked to the underlying
injury or injuries alleged by the creditors. In turn, Buildings
by Jamie did not involve either personal injury or product
liability claims. The Foodtown Court distinguished this New
Jersey bankruptcy case because, among other things, “the
trustee [in Buildings by Jamie] had standing to pursue an
alter ego action on behalf of the corporate debtor to recover
on a defaulted loan.”         Foodtown, 296 F.3d at 171.
“Furthermore, the In re Buildings by Jamie court held,
consistent with our decision here, that under New Jersey law
an alter ego action is an equitable remedy that may only be
asserted by a corporation when it suffers harm.” Id. As the
majority acknowledges, the plaintiff creditors actually
constituted the entire creditor body in this New Jersey
bankruptcy proceeding. Buildings by Jamie, 230 B.R. at 44.
I also note that “the plaintiffs’ counsel conceded that the
creditors’ claims belonged to the bankruptcy estate and
acknowledged, therefore, that the creditors would not be
named as co-plaintiffs with the trustee in the adversary
complaint.” Id. (citation omitted). For its part, the New York

                              8
        The majority admits that “we leave the Diacetyl
Plaintiffs, who allege that they have suffered serious personal
injuries resulting from exposure to a harmful chemical, albeit
not at the hands of Aaroma, with no apparent recourse against
Aaroma.” (Id. at 14.) I do not believe that either federal
bankruptcy law or state law mandates such a drastic and harsh
result. After all, the plaintiffs in this case are not trade
creditors seeking to recover from the successor a specific
amount of money owed by the debtor; they are men and
women allegedly suffering from severe lung problems caused
by exposure to a chemical made and sold by the debtor. Their
state law claims accordingly implicate important state


bankruptcy court in Keene construed the creditors’
complaints as invoking the “fourth exception” for successor
liability, i.e., “‘the transfer of assets is for the fraudulent
purpose of escaping liability.’” Keene, 164 B.R. at 852-53
(citations omitted); see also, e.g., RDM Holdings, Ltd. v.
Cont’l Plastics Co., 762 N.W.2d 529, 707 (Mich. Ct. App.
2008) (“Con-Plastics’ role as an alleged successor is tied
solely to plaintiffs’ allegations concerning the fraudulent
transfer of assets; however, we find that this aspect of the
successor liability claim was subsumed under the UFTA
[Uniform Fraudulent Transfer Act] claim, which was properly
dismissed on the basis of res judicata. . . . For the same
reasons, we will not permit plaintiffs to pursue any fraudulent
transfer allegations against Con-Coatings under the guise of a
successor liability claim.”). In any event, I find Keene’s
reasoning with respect to successor liability and other third
party theories to be at odds with the more liberal approach set
forth by this Court in Foodtown.

                              9
interests, such as providing adequate compensation to
individuals seriously injured by defective products. Cf., e.g.,
Foodtown, 296 F.3d at 169 (“With regard to alter ego liability
in cases involving claims to pension benefits protected by
ERISA, as amended by the MPPAA, there is ‘a federal
interest supporting disregard of the corporate form to impose
liability.’” (quoting Lumpkin v. Envirodyne Indus., Inc., 933
F.2d 449, 460-61 (7th Cir. 1991))). The Diacetyl Plaintiffs
additionally have not obtained any judgment against Emoral
(or Aaroma) for a specified amount, and their claims
accordingly have not been denominated. I further note that
the Bankruptcy Court granted the Diacetyl Plaintiffs relief
from the automatic stay to permit them “to litigate their
products liability action against [Emoral] to judgment and to
seek recovery from applicable insurance policies insuring the
Debtor for their alleged injuries.” (12/11/12 Order at 2.) The
Bankruptcy Court, in turn, ordered that their recovery against
Emoral “shall be limited to the extent of the insurance
coverage provided to the Debtor and shall be paid from such
insurance, if at all, and not from any other assets of the
Debtor’s estate.” 2 (Id. at 2-3.) Given the circumstances, it is
not surprising that a representative of the Trustee stated, at the

              2
                I agree with the majority that its holding has
no bearing on any remedy the Diacetyl Plaintiffs may have
against Emoral the bankruptcy proceeding or against any of
the other defendants named in the state court proceedings.
Specifically, it appears the Diacetyl Plaintiffs’ insurance
proceed claims are currently pending before the New Jersey
Superior Court, and our ruling today has no effect whatsoever
on such claims.

                               10
hearing held by the Bankruptcy Court to decide whether to
approve the Trustee’s $500,000 settlement with Aaroma, that
the Diacetyl Plaintiffs’ successor liability claim against
Aaroma “does not belong to the Estate” and that the Trustee
accordingly “can’t release it.” (A1277.)

        Because the claims against Aaroma belong to the
Diacetyl Plaintiffs, the Bankruptcy Court properly determined
that “the Diacetyl plaintiffs’ right to assert those claims [was]
not affected by the settlement agreement [or] the settlement
approval order” (A1388). See, e.g., id. at 175 (“Because
Appellant’s cause of action is based on withdrawal liability
under ERISA and is not considered property of the estate,
Twin’s release does not affect Appellant’s claims.”). For the
foregoing reasons, I would vacate the District Court’s order,
which reversed the order of the Bankruptcy Court denying
Aaroma’s motion to enforce the settlement approval order
and to compel dismissal of the Diacetyl Plaintiffs’ state court
actions against Aaroma, and would remand for further
proceedings.




                               11
