## Facts

- A.H. Robins manufactured and marketed the Dalkon Shield intrauterine device from 1971 to 1974, then stopped production due to safety concerns.
- Robins filed a Chapter 11 reorganization petition on August 21, 1985 in the Eastern District of Virginia amid extensive Dalkon Shield litigation.
- Rebecca Grady had a Dalkon Shield inserted years earlier but believed it had fallen out.
- On August 21, 1985, Grady was hospitalized with abdominal pain, fever, and chills; imaging showed the Dalkon Shield remained in place, and it was surgically removed on August 28, 1985.
- Grady later developed pelvic inflammatory disease and, on November 14, 1985, underwent a hysterectomy; she attributed these injuries to the Dalkon Shield.
- On October 15, 1985, Grady filed a tort action against Robins in federal court in California.
- Grady sought a bankruptcy-court determination that her tort claim was post-petition and not subject to the automatic stay; the bankruptcy/district court ruled the claim arose pre-petition and was stayed.

## Issues

1. For purposes of the automatic stay in 11 U.S.C. § 362(a)(1), when does a tort “claim” arise where the debtor’s alleged misconduct occurred before the bankruptcy petition but the injury manifested and suit was filed after the petition?

## Decision

- The Fourth Circuit affirmed the order applying the automatic stay to Grady’s tort action.
- The court held Grady’s right to payment was a contingent pre-petition claim because it was based on Robins’ pre-petition conduct (manufacturing and marketing the Dalkon Shield and placing it into the stream of commerce for insertion).
- Post-petition manifestation or discovery of injury did not convert the claim into a post-petition claim for § 362(a)(1) purposes.

## Legal Principles

- The Bankruptcy Code defines “claim” broadly to include rights to payment that are “contingent” and “unmatured,” supporting inclusion of remote or not-yet-realized liabilities in the bankruptcy case.
- For § 362(a)(1), a tort claim may be treated as arising at the time of the debtor’s pre-petition conduct that created the potential liability, even if harm becomes apparent only after the petition.
- Treating mass-tort liabilities tied to pre-petition conduct as pre-petition claims serves collective administration in Chapter 11 and avoids disparate treatment based solely on when symptoms appear or suits are filed.

## Conclusion

The court classified Grady’s Dalkon Shield tort claim as a contingent pre-petition claim because it stemmed from the debtor’s pre-petition conduct, and it therefore fell within the automatic stay barring prosecution of her separate tort action outside the Chapter 11 process.


Grady v. A.H. Robins Co., 839 F.2d 198 (4th Cir. 1988)