Team P17
No. 15-412
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM 2015
IN RE GIANT MOTORS,
Debtor
CONNIE ST. JOHNS,
Petitioner
v.
PHOENIX AUTOMOTIVE, INC.,
Respondent
On Writ of Certiorari
to the United States Court of Appeals
for the Thirteenth Circuit
BRIEF FOR PETITIONER
Team P17
Counsel for the Petitioner
Team P17
QUESTIONS PRESENTED
1.
Whether a district court has jurisdiction under 28 U.S.C. § 1334(b) over a state law claim
filed in state court if the defendant asserts that the state law claim is barred by a bankruptcy
court’s confirmation order.
2.
Whether bankruptcy court confirmation orders can, consistently with the Due Process
Clause, bar the claims of a party who was not given notice of the confirmation proceeding.
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TABLE OF CONTENTS
QUESTIONS PRESENTED ......................................................................................................... i
TABLE OF CONTENTS ............................................................................................................. ii
TABLE OF AUTHORITIES ...................................................................................................... iii
OPINIONS BELOW..................................................................................................................... v
STATEMENT OF JURISDICTION ........................................................................................... v
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED ............................... vi
STATEMENT OF FACTS ........................................................................................................... 1
SUMMARY OF THE ARGUMENT .......................................................................................... 3
ARGUMENTS............................................................................................................................... 4
I. This Case Falls Outside of the District Court’s Jurisdiction Under 28 U.S.C. § 1334(b). .. 4
A. The bankruptcy removal statute indicates that the District Court had removal
jurisdiction over this case only if the Petitioner’s claims, not Phoenix’s defenses, are
related to bankruptcy........................................................................................................... 4
1. The text of the bankruptcy removal statute indicates the Petitioner’s state law
claims are not removable notwithstanding Phoenix’s affirmative defense. ........... 4
2. Precedent from this Court indicates that state law claims brought in state court
are not made removable by a defendant’s assertion that the claims are barred by a
bankruptcy court order. ........................................................................................... 7
B. The widely adopted construction of § 1334(b) indicates that the case at bar is not
related to bankruptcy........................................................................................................... 9
1. A post-confirmation proceeding is related to bankruptcy if the proceeding
integrally affects the confirmed bankruptcy plan. ................................................ 10
2. This case does not integrally affect Giant’s confirmed bankruptcy plan.......... 13
3. A case requires more than interpreting a confirmed bankruptcy plan in order for
related to bankruptcy jurisdiction to exist. ............................................................ 15
C. Related to bankruptcy jurisdiction that is broad enough to encompass the case at bar
does not serve the purposes behind the 1978 Bankruptcy Reform Act. ........................... 16
II. The Bankruptcy Court’s Order Does Not Bar the Petitioner’s Suit. ................................ 19
A. Giant’s bankruptcy proceedings cannot deprive the Petitioner of property by barring
its claims against Phoenix because Giant deprived its victims of due process of law. .... 19
B. This Court unanimously held that courts cannot deprive a person of property without
providing an opportunity to be heard, even if that opportunity would not have changed
the ultimate outcome. ........................................................................................................ 21
CONCLUSION ........................................................................................................................... 23
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TABLE OF AUTHORITIES
Cases
Binder v. Price Waterhouse & Co. (In re Resorts Int’l, Inc.), 372 F.3d 154 (3d Cir.
2004) ................................................................................................................10, 11, 12, 15
Celotex Corp. v. Edwards, 514 U.S. 300 (1995) .........................................................10, 13, 15, 17
Craig’s Stores of Tex., Inc. v. Bank of La. (In re Craig’s Stores of Tex., Inc), 266 F.3d 388 (5th
Cir. 2001) ...........................................................................................................................15
Donaldson v. Bernstein, 104 F.3d 547 (3d Cir. 1997) ...................................................................12
Falise v. Am. Tobacco Co., 241 B.R. 48 (E.D.N.Y. 1999) ............................................................11
Grimes v. Grau (In re Haws), 158 B.R. 968 (Bankr. S.D.N.Y. (1993) ...................................11, 12
Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908) ...................................................5
Montana v. Goldin (In re Pegasus Gold Corp.), 296 B.R. 227 (D. Nev. 2003) ......................12, 13
Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189 (9th Cir. 2005) ....................15, 16
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) ....................................19, 20
Nelson v. Adams, USA Inc., 529 U.S. 460 (2000)....................................................................21, 22
Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) .................................................................9, 11
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) .................................................................21
Ray v. Norseworthy, 90 U.S. 128 (1875) .......................................................................................21
Rivet v. Regions Bank of La., 211 U.S. 149 (1998) .........................................................5, 6, 7, 8, 9
Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159 (7th Cir. 1994) ...................................................10
Constitutional Provisions
U.S. Const. amend. V.....................................................................................................................19
Statutes
11 U.S.C. § 101(5) (2012) ...............................................................................................................5
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28 U.S.C. § 1257 ..............................................................................................................................9
28 U.S.C. § 1334(b) (2012) .............................................................................................................4
28 U.S.C. § 1441 (2012) ..............................................................................................................6, 9
28 U.S.C. § 1452(a) (2012) ..........................................................................................................4, 9
28 U.S.C. § 2283 (2012) ..............................................................................................................7, 9
Rules
Fed. R. Civ. P. 8(c) ..........................................................................................................................5
Fed. R. Civ. P. 12(b) ........................................................................................................................5
Restatements and Uniform Acts
Restatement (Second) of Judgments (Am. Law Inst. 1982) ..........................................................20
U.C.C. § 1-201(b)(1) (Am. Law Inst. & Unif. Law Comm’n 1977) ...............................................6
Other Sources
Black’s Law Dictionary (10th ed. 2014) ......................................................................................5, 6
Ralph Brubaker, On the Nature of Federal Bankruptcy Jurisdiction: A General Statutory and
Constitutional Theory, 41 Wm. & Mary L. Rev. 743 (2000) ......................................16, 17
H.R. Rep. No. 95-595 (1977) reprinted in 13 Bankruptcy Reform Act, 1978: A Legislative History
(Alan N. Resnick & Eugene M. Wypyski eds., 1979) .......................................................17
Report of the Subcommittee on Civil and Constitutional Rights of the Committee on the Judiciary,
House of Representatives, 95th Congress, 2nd Session, on hearings on the court
administrative structure for bankruptcy cases (Comm. Print 1978) reprinted in 16
Bankruptcy Reform Act 1978: A Legislative History (Alan N. Resnick & Eugene M.
Wypyski eds., 1979) ....................................................................................................17, 18
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OPINIONS BELOW
The United States Bankruptcy Court for the District of Moot submitted proposed findings
of fact and conclusions of law to the United States District Court for the District of Moot. R. at 7.
The District Court adopted the Bankruptcy Court’s proposed findings, entered an order holding
that removal was proper, and entered judgment in favor of the defendant. R. at 7. On appeal, the
United State Court of Appeals for the Thirteenth Circuit affirmed the District Court’s order holding
that removal was proper, R. at 10–11, and its judgment in favor of the defendant. R. at 14. This
Court granted certiorari. R. at 1.
STATEMENT OF JURISDICTION
The formal statement of jurisdiction is waived pursuant to Competition Rule VIII.
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CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
The relevant constitutional and statutory provisions involved in this case are:
“Except as provided in subsection (e)(2), and notwithstanding any Act of Congress that
confers exclusive jurisdiction on a court or courts other than the district courts, the district courts
shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or
arising in or related to cases under title 11.” 28 U.S.C. § 1334(b) (2012).
“A party may remove any claim or cause of action in a civil action other than a proceeding
before the United States Tax Court or a civil action by a governmental unit to enforce such
governmental unit’s police or regulatory power, to the district court for the district where such
civil action is pending, if such district court has jurisdiction of such claim or cause of action under
section 1334 of this title.” 28 U.S.C. § 1452(a) (2012).
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a
presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in
the militia, when in actual service in time of war or public danger; nor shall any person be subject
for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any
criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without
due process of law; nor shall private property be taken for public use, without just compensation.”
U.S. Const. amend. V.
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STATEMENT OF FACTS
Giant Motors Inc. (“Giant”) filed a bankruptcy petition shortly following the 2008 financial
crisis. R. at 2. The bankruptcy court confirmed a bankruptcy plan that called for Giant’s liquidation
and the sale of its “good assets”—product lines, related intellectual property, dealer contracts, and
other needed assets—free and clear of any claims and interests (“Free and Clear Sale”) to a newly
created entity, Phoenix Automotive, Inc. (“Phoenix”). R. at 3–4. The order confirming Giant’s
bankruptcy plan contained a broad anti-suit injunction barring assertion of claims based on
successor or transferee liability against Phoenix. R. at 3. Phoenix paid for Giant’s assets with cash
as well as Phoenix stock, which were then distributed to Giant’s creditors. R. at 3 n.1, 4 n.3.
Unbeknownst to the bankruptcy court and the general public, most of the automobile
models Phoenix acquired from Giant contained an accelerator defect that could cause cars to
accelerate unexpectedly and had caused numerous accidents, personal injuries, and deaths. R. at
4. The accelerator defect was not revealed to the public until two years after the bankruptcy sale
when Phoenix issued a recall. R. at 4. Giant, however, learned about the accelerator defect a year
before it filed for bankruptcy but decided to conceal the defect and monitor the problem instead of
issuing a recall. R. at 5. Giant’s accident assessment team maintained a list of persons affected by
accidents that might have been caused by the accelerator defect. R. at 6. But Giant’s bankruptcy
schedules did not list those individuals as creditors and Giant did not provide those individuals
with notice—other than notice by publication—of either the proposed Free and Clear Sale or the
bankruptcy court’s confirmation hearing. R. at 6. The failure to notify the individuals who might
have been harmed by the accelerator defect was deliberate; Giant worried that news of a major
defect and its attempts to hide it would derail its restructuring plan. R. at 6.
After the accelerator defect became public knowledge, a class action against Phoenix was
commenced in Moot state court on behalf of the individuals who had been injured by the
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accelerator defect before Giant sold its assets to Phoenix (“Petitioner”) seeking to hold Phoenix
liable for their injuries because Phoenix continued to produce the defective automobile models
after it purchased those models from Giant. R. at 4. Under Moot law, the Petitioner would likely
prevail but for the bankruptcy court’s Free and Clear Sale order. R. at 4 n.4.
Phoenix removed the state court litigation to the United States District Court for the District
of Moot. R. at 4. The Petitioner challenged the District Court’s removal jurisdiction. R. at 5.
Phoenix argued that removal was proper because the case at bar was related to Giant’s
bankruptcy such that it fell within the District Court’s related to bankruptcy jurisdiction under
28 U.S.C. § 1334(b) and that it was entitled to summary judgment because the bankruptcy court’s
Free and Clear Sale order barred the removed lawsuit. R. at 5. The Petitioner replied that the
lawsuit was not barred by the bankruptcy court’s Free and Clear Sale order because the order was
not enforceable against them since they received no notice of the bankruptcy court proceeding as
a result of Giant’s deception. R. at 4–5.
The District Court held that it had related to bankruptcy jurisdiction over the Moot state
court lawsuit such that removal was proper. R. at 7. The District Court also entered summary
judgment in favor of Phoenix because, although Giant did not provide notice of its bankruptcy
proceedings to the members of the plaintiff class, their interests were adequately represented by
other parties to Giant’s bankruptcy, so the members of the plaintiff class had no judicially
cognizable due process claim. R. at 7. The Petitioner appealed to the United States Court of
Appeals for the Thirteenth Circuit which affirmed. R. at 7. The Thirteenth Circuit held that removal
was proper and that the bankruptcy court’s order was enforceable against the Petitioner such that
the order barred its lawsuit. R. 10–11, 13–14. This Court granted certiorari on both issues. R. at 1.
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SUMMARY OF THE ARGUMENT
The District Court did not have jurisdiction over the case at bar under 28 U.S.C. § 1334(b).
A district court has removal jurisdiction over claims and controversies—not affirmative
defenses—that are related to bankruptcy. The Petitioner asserted purely state law claims in its
Moot court suit; bankruptcy only became relevant when Phoenix asserted its affirmative defense.
This means that the Petitioner’s claims, taken alone, are not related to bankruptcy, so the District
Court lacked removal jurisdiction. Putting aside issues particular to removal, the District Court
lacked jurisdiction because, properly understood, related to bankruptcy jurisdiction exists over a
post-confirmation proceeding only if the proceeding affects the realization—making something a
reality—of a bankruptcy plan. The case at bar does not do so. What is more, a conception of related
to bankruptcy jurisdiction that is broad enough to encompass the case at bar does not serve the
purposes underlying Congress’s statutory jurisdictional grant.
Even if the District Court’s had jurisdiction over the case at bar, its granted summary
judgment erroneously, because the bankruptcy court’s Free and Clear Sale order does not bar the
Petitioner’s suit. The Due Process Clause of the Constitution indicates that a court cannot work a
deprivation of property upon people who do not receive due process of law. Giant’s failure to
provide notice of its bankruptcy to the members of the plaintiff class means that the bankruptcy
court proceeding did not afford them due process of law. As a result, the bankruptcy court’s order
cannot deprive the members of the plaintiff class of property by extinguishing their tort claims.
According to unanimous precedent from this Court, it makes no difference whether or not
providing notice to the members of the plaintiff class would have changed the ultimate outcome
of the bankruptcy court proceeding. Due process protects a party’s right to have its voice heard,
not merely its right to win.
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ARGUMENTS
I. This Case Falls Outside of the District Court’s Jurisdiction Under 28 U.S.C. § 1334(b).
“[T]he district courts shall have original but not exclusive jurisdiction of all civil
proceedings . . . related to cases under title 11.” 28 U.S.C. § 1334(b) (2012). The District Court’s
jurisdiction under this provision (“related to bankruptcy jurisdiction”) does not extend to the case
at bar. There are several reasons why this is so. First, according to 28 U.S.C. § 1452(a)
(“bankruptcy removal statute”) the District Court had removal jurisdiction over the case at bar only
if the Petitioner’s claims—not Phoenix’s defenses—are related to bankruptcy. They are not.
Second, the case at bar, taken as a whole, is not related to bankruptcy even under the broad, widely
adopted construction of § 1334(b) articulated by the Third Circuit. Finally, the purposes served by
Congress’s enactment of § 1334(b) are not implicated by the case at bar.
A. The bankruptcy removal statute indicates that the District Court had removal
jurisdiction over this case only if the Petitioner’s claims, not Phoenix’s defenses, are
related to bankruptcy.
Phoenix removed this case to federal court improperly—meaning that the District Court
lacked removal jurisdiction—because the claims asserted by the Petitioner, taken alone, are not
related to bankruptcy even though Phoenix’s affirmative defense references bankruptcy. The text
of the bankruptcy removal statute as well as precedent from this Court’s indicate that an affirmative
defense sounding in bankruptcy does not make removal proper.
1. The text of the bankruptcy removal statute indicates the Petitioner’s state
law claims are not removable notwithstanding Phoenix’s affirmative defense.
The bankruptcy removal statute lets a party remove to federal court only if there is a “claim
or cause of action,” not a defense, that falls within § 1334’s jurisdictional grant. 28
U.S.C. § 1452(a) (2012) (“A party may remove any claim or cause of action in a civil action . . .
to the district court for the district where such civil action is pending, if such district court has
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jurisdiction of such claim or cause of action under section 1334 of this title.”). Claims and causes
of action both refer to the reason why one party is entitled to relief from another. See 11 U.S.C.
§ 101(5) (2012) (“The term ‘claim’ means–(A) right to payment . . . or (B) right to an equitable
remedy for breach of performance if such breach gives rise to a right to payment . . . .”); see also
Cause of Action, Black’s Law Dictionary (10th ed. 2014) (“A group of operative facts giving rise
to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in
court from another person . . . .”); Claim, Black’s Law Dictionary (10th ed. 2014) (“A demand for
money, property, or a legal remedy to which one asserts a right; esp., the part of a complaint in a
civil action specifying what relief the plaintiff asks for.”).
In state court, the Petitioner asserted claims created by the tort law of Moot that require a
showing that Phoenix purchased the defective model lines and continued to produce them. R. at 4.
Bankruptcy enters the picture by way of Phoenix’s affirmative defense, R. at 4–5, and “[a] defense
is not part of a plaintiff’s properly pleaded statement of his or her claim.” Rivet v. Regions Bank
of La., 522 U.S. 470, 475 (1998). Imagine that the Petitioner originally filed suit in a district court
and—before filing its answer—Phoenix moved to dismiss for lack of subject matter jurisdiction.
See Fed. R. Civ. P. 12(b) (stating that a lack of subject matter jurisdiction defense can be made by
motion instead of in a responsive pleading). The bankruptcy issues associated with Phoenix’s
affirmative might never be litigated because its affirmative defense is waivable. See Fed. R. Civ.
P. 8(c) (“In responding to a pleading, a party must affirmatively state any avoidance or affirmative
defense . . . .”); cf. Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908) (“It is not
enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the
defense is invalidated by some provision of the Constitution of the United States. Although such
allegations show that very likely, in the course of the litigation, a question under the Constitution
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would arise, they do not show that the suit, that is, the plaintiff’s original cause of action, arises
under the Constitution.”). That the Petitioner could assert its Moot law claims without reference
to bankruptcy indicates that those claims are not related to bankruptcy.
The fact that the bankruptcy removal statute considers only claims and causes of action is
a marked departure from the language of the 28 U.S.C. § 1441, which considers entire civil actions.
See 28 U.S.C. § 1441 (2012) (“[A]ny civil action brought in a State court of which the district
courts of the United States have original jurisdiction may be removed . . . .” (emphasis added)). A
civil action is broader than a claim or a cause of action; it constitutes an entire judicial proceeding.
See Action, Black’s Law Dictionary (10th ed. 2014) (“A civil or criminal judicial proceeding.”);
see also U.C.C. § 1-201(b)(1) (Am. Law Inst. & Unif. Law Comm’n 1977) (“‘Action’, in the sense
of judicial proceeding, includes recoupment, counterclaim, set-off, suit in equity, and any other
proceeding in which rights are determined.”). But see Regions Bank, 522 U.S. at 478 (“In sum,
claim preclusion by reason of a prior federal judgment is a defensive plea that provides no basis
for removal under § 1441(b).”).
Moreover, it makes sense that claims and causes of actions that are related to bankruptcy
are removable whereas defenses sounding in bankruptcy are not. By removing claims made in
state court that are related to bankruptcy, a party asserts its right to have those claims decided by
a federal court, but by pleading a bankruptcy defense, a party asserts a different right: its right not
to be subjected to suit at all. See Regions Bank, 552 U.S. at 476 (“A case blocked by the claim
preclusive effect of a prior federal judgment differs from the standard case governed by a
completely preemptive federal statute in this critical respect: The prior federal judgment does not
transform the plaintiff’s state-law claims into federal claims but rather extinguishes them
altogether.”). Federal courts cannot vindicate the former right by deciding state court claims that
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are related to bankruptcy unless they have removal jurisdiction those claims. A federal court can,
however, vindicate the latter right by enjoining state court proceedings that contain claims that
conflict with a bankruptcy court judgment even if the court does not have removal jurisdiction
over those claims. See 28 U.S.C. § 2283 (2012) (“A court of the United States may not grant an
injunction to stay proceedings in a State court except . . . to protect or effectuate its judgments.”).
Consequently, bankruptcy courts do not need the power to snatch up state law cases and decide
them on their merits in order to enforce their judgments and, accordingly, Congress has not granted
them that power.
2. Precedent from this Court indicates that state law claims brought in state
court are not made removable by a defendant’s assertion that the claims are
barred by a bankruptcy court order.
In Regions Bank, this Court unanimously held that a state court proceeding was not
rendered removable by a defendant’s assertion that a bankruptcy court judgment ordering a Free
and Clear Sale barred the plaintiff’s state law claim. Regions Bank, 522 U.S. at 472–73, 477–78
(Ginsburg, J. for a unanimous Court). Regions Bank involved a partnership that owned the
Louisiana equivalent of a leasehold. Id. at 472. Two mortgages existed against that leasehold. Id.
The partnership filed for bankruptcy and “the bankruptcy trustee sought court permission to sell
the leasehold estate free and clear of all claims.” Id. The Bankruptcy Court approved the sale
application and later approved the sale of the leasehold at auction to a bank that held one of the
mortgagees against the leasehold (“Bank”) and directed the Recorder of Mortgages to cancel all
liens, mortgages, and encumbrances, which included both mortgages. Id. at 472–73. The Bank
subsequently sold the property. Id. at 473.
The second mortgagee brought suit in Louisiana state court against the Bank alleging that
the subsequent sale violated state law because property was transferred without first satisfying its
mortgage. Id. The Bank removed the case to federal court and argued that the district court had
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jurisdiction and that removal was proper because the bankruptcy court order extinguished the
plaintiff’s mortgage rights. Id. The plaintiff moved to remand arguing that removal was improper
because the District Court lacked jurisdiction. Id. The District Court denied the plaintiff’s motion
to remand, holding that removal was proper because of the bankruptcy court order’s effect on the
case. Id. The Fifth Circuit affirmed. Id.
This Court unanimously reversed. Id. at 472. It rejected the notion that district court
jurisdiction “may be predicated on a defendant’s assertion that a prior federal judgment has
disposed of the entire matter and thus bars plaintiffs from later pursuing a state-law-based case.
We reaffirm that removal is improper in such a case.” Id. The Court noted that a defense premised
on a federal court judgment “is properly made in the state proceeding, subject to this Court’s
ultimate review.” Id. The Court also noted that “under the relitigation exception to the AntiInjunction Act, 28 U.S.C. § 2283, a federal court may enjoin state-court proceedings ‘where
necessary . . . to protect or effectuate its judgment.’” Id. at 478 n.3.
The similarities between Regions Bank and the case at bar are striking. Both concerned a
Free and Clear Sale order entered by a bankruptcy court and a subsequent suit that was allegedly
barred by that order. Both suits asserted purely state law claims in state court proceedings. Both
state court proceedings were removed to district court. Both district courts held that they had
jurisdiction predicated on the bankruptcy court order.
There is no principled way to distinguish Regions Bank and the case at bar. While the Court
in Regions Bank characterized the bankruptcy court order as barring the state court proceeding by
way of claim preclusion, id. at 478, the crucial point was that the bankruptcy court judgment barred
the plaintiff’s state law claim. The Thirteenth Circuit made the same point by characterizing the
bankruptcy court order as being effective against the members of the plaintiff class. R. at 7 (“Since
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the free and clear sale order was effective against the plaintiffs, the [District] Court entered
judgment in Phoenix’s favor.”). Notwithstanding linguistic differences, the meanings are the same.
Similarly, the Regions Bank defendants argued that the District Court had federal question
jurisdiction over the case such that removal was proper under § 1441, see Regions Bank, 522 U.S.
at 473, 478 (“[C]laim preclusion by reason of a prior federal judgment is a defensive plea that
provides no basis for removal under § 1441(b).”),1 whereas Phoenix argued that the District Court
had related to bankruptcy jurisdiction over this case such that removal was proper under § 1452(a).
R. at 4–5. As argued in the previous section, § 1441 is much more capacious than § 1452. Compare
28 U.S.C. § 1441 (“[A]ny civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed . . . .”) with 28 U.S.C. § 1452(a) (“A
party may remove any claim or cause of action in a civil action . . . to the district court . . . if such
district court has jurisdiction of such claim or cause of action under section 1334 of this title.”).
What is more, the distinction between § 1441 and § 1452 does nothing to change the fact that a
state proceeding that refuses to give effect to a federal judgment may be enjoined by a federal court
and is subject to appellate review by this Court. 28 U.S.C. § 2283; see 28 U.S.C. § 1257 (2012)
(describing Supreme Court certiorari jurisdiction over state court decisions). Thus, Regions Bank
settles the issue and this Court should reverse.
B. The widely adopted construction of § 1334(b) indicates that the case at bar is not
related to bankruptcy.
Under the broad test articulated by the Third Circuit, the case at bar is not related to
bankruptcy. The Third Circuit interpreted § 1334(b) such that district courts have related to
bankruptcy jurisdiction over any civil proceeding whose outcome “could conceivably have any
effect on the estate being administered in bankruptcy.” Pacor, Inc. v. Higgins, 743 F.2d 984, 994
1
The general removal provision is now codified at 28 U.S.C. § 1441(a).
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(3d Cir. 1984).2 This Pacor test has been adopted by several circuit courts, including the court
below. R. at 9; see Celotex Corp. v. Edwards, 514 U.S. 300, 308 n.6 (1995) (listing cases). If the
Pacor test is taken literally, no post-confirmation proceedings are related to bankruptcy, because
“it is impossible for the bankrupt debtor’s estate to be affected by a post-confirmation dispute
because the debtor’s estate ceases to exist once confirmation has occurred.” Binder v. Price
Waterhouse & Co. (In re Resorts Int’l Inc.), 372 F.3d 154, 165 (3d Cir. 2004). The Third Circuit,
has not applied Pacor with that level of literalism and has held related to bankruptcy jurisdiction
exists over some post-confirmation proceedings. See id. at 167. But even under the Resorts
International application of the Pacor test to post-confirmation proceedings, there is not related to
bankruptcy jurisdiction over this case.
1. A post-confirmation proceeding is related to bankruptcy if the proceeding
integrally affects the confirmed bankruptcy plan.
Resorts International indicates that the related to bankruptcy inquiry is considerably
narrower after confirmation than it was beforehand: “At the post-confirmation stage, the claim
must affect an integral aspect of the bankruptcy process–there must be a close nexus to the
bankruptcy plan or proceeding.” Resorts Int’l, 372 F.3d at 167. The Third Circuit did not articulate
a precise rule for determining whether a proceeding affects an integral aspect of the bankruptcy
process, but it did provide some guidance: “Matters that affect the interpretation, implementation,
consummation, execution, or administration of the confirmed plan will typically have a close
nexus.” Id.
The Third Circuit’s interpretation is by no means the only test that has been articulated, and there is much to be said
in favor of the Seventh Circuit’s restrained interpretation of § 1334(b), see Zerand-Bernal Group, Inc. v. Cox, 23 F.3d
159, 162 (7th Cir. 1994) (Posner, C.J.) (holding that a post-confirmation product liability suit was not related to
bankruptcy because it was neither by nor against a debtor and the suit could not possibly affect the amount of property
available for distribution to creditors). But that sort of restrained view of related to bankruptcy jurisdiction is even
more favorable to the Petitioner’s position.
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A general principle connects those five exemplary matters: post-confirmation proceedings
are related to bankruptcy if they aid in the realization—making something a reality—of the
bankruptcy plan’s terms by giving them operative force. This mirrors the difference between
Pacor’s consideration of a well-defined formalism, the bankruptcy estate, and Resorts
International’s consideration of a practical, flexible notion, the bankruptcy process. Compare
Pacor, 743 F.2d at 994 with Resorts Int’l, 372 F.3d at 167.
Resorts International cites cases that exemplify this principle. One such case was not
related to bankruptcy even though it arguably furthered the purposes of the bankruptcy plan.
Resorts Int’l, 372 F.3d at 168 (citing Falise v. Am. Tobacco Co., 241 B.R. 48 (E.D.N.Y 1999));
see Falise, 241 B.R. at 59–60. Falise concerned a claim, brought by a trust created as part of the
bankruptcy of an asbestos manufacturer, against tobacco companies for their role in contributing
to asbestos-related-illnesses. Falise, 241 B.R. at 55–56 (“[The present litigation] is based on the
theory that Tobacco has hidden the dire effects of smoking and, particularly, of the synergistic
effects of simultaneous exposure to tobacco smoke and asbestos air-borne fibers.”). The Falise
court rejected the plaintiffs’ argument that related to bankruptcy jurisdiction exists because the suit
would further the purposes of the bankruptcy plan by infusing the trust with fresh capital: “The
mere lack of funds by the Trust is not enough to create jurisdiction under these provisions. If it
were, any litigation in which the Trust could possibly be enriched would give jurisdiction to the
bankruptcy court.” Id. at 59–60.
Resorts International provides a second case in this vein. Resorts Int’l, 372 F.3d at 168
(citing Grimes v. Grau (In re Haws), 158 B.R. 965 (Bankr. S.D. Tex. 1993)). In a postconfirmation proceeding, the trustee of a liquidating trust sought damages from the debtor’s
business partner for an alleged breach of the partner’s fiduciary duty to the debtor. In re Haws,
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158 B.R. at 967. Recovery from the debtor’s business partner would have furthered the purpose of
the liquidating trust by compensating creditors. See id. at 967 (stating that the trustee sought to
place property to which the debtor was legally entitled in a constructive trust for the benefit of
creditors). Nonetheless the case was not related to bankruptcy. Id.at 971.
Resorts International contrasts Falise and In re Haws with cases that were related to
bankruptcy. In one such case, the terms of a bankruptcy plan called for a corporation to make
payments to its unsecured creditors; if it could not do, the plan stated that the couple who were the
corporation’s sole officers and shareholders were to make the payments in their personal
capacities. Donaldson v. Bernstein, 104 F.3d 547, 550–51 (3d Cir. 1997) cited by Resorts Int’l,
372 F.3d at 165, 167. When the corporation could not pay its creditors, the subsequent suit against
the couple was related to bankruptcy even though the suit alleged that the couple was liable based
on a state law breach of fiduciary duty—specifically that the couple had diverted business away
from the debtor corporation to a different corporation they owned. Id. at 551–53. Related to
bankruptcy jurisdiction existed because the lawsuit sought to carry out the intent of the bankruptcy
plan. Id. at 553. Moreover, the suit implicated the integrity of the bankruptcy process because the
couple had, allegedly, fraudulently undermined the ability of another party, the debtor corporation,
from complying with the bankruptcy plan by making its monthly payments. Id.
In a final Resorts International example, a confirmed bankruptcy plan created a
reclamation services corporation (“RSC”) to perform short-term reclamation work associated with
the debtor’s mines and thereby maximize creditor recovery and preserve the jobs of the debtor’s
employees. Resorts Int’l, 372 F.3d at 168 (citing Montana v. Goldin (In re Pegasus Gold Corp.),
296 B.R. 227, 231–35 (D. Nev. 2003), rev’d on other grounds, 394 F.3d 1189 (9th Cir. 2005)).
The RSC filed suit against the state of Montana and claimed that the State breached a promise—
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made in the course of the bankruptcy plan negotiations—to give RSC preference in the bidding
for long-term reclamation work. See Pegasus Gold, 296 B.R. at 231–32. The suit was related to
bankruptcy because Montana’s breach undermined the purposes and objectives of the bankruptcy
plan by causing the RSC’s commercial failure and inability to employ the debtor’s employees. See
id. at 234–35. Moreover, the tort and contract claims alleged in the suit “significantly affected the
consummation of the confirmed plan by depriving Debtor[] of the means by which they would
fulfill their reclamation obligation and maintain their employees as conceived by the Plan.” See id.
at 235.
Falise and Haws, unlike Donaldson and Pegasus, only furthered the purposes of a
bankruptcy in a very general sense; the cases would help compensate creditors if they were
successful. If furthering that sort of amorphous “purpose” behind a bankruptcy plan renders a
proceeding related to bankruptcy, then bankruptcy jurisdiction is well-nigh limitless, which cannot
be the case. Celotex, 514 U.S. at 308 (“We also agree with that court’s observation that a
bankruptcy court’s ‘related to’ jurisdiction cannot be limitless.”).
In contrast to an essentially unbounded bankruptcy purpose, Donaldson enforced a
particular provision in a bankruptcy plan and defeated a couple’s attempt to game the bankruptcy
system by fraud. Pegasus Gold implicated the ability of a company created by a bankruptcy plan
to perform the task for which it was created. These cases demonstrate that, by cleaving close to a
plan’s terms instead of its grander purpose, related to bankruptcy jurisdiction under Resorts
International avoids the prospect of potentially perpetual post-confirmation related to bankruptcy
jurisdiction.
2. This case does not integrally affect Giant’s confirmed bankruptcy plan.
Giant’s bankruptcy plan has already been fully realized, so the litigation in the case at bar
cannot integrally affect its realization and it falls outside of related to bankruptcy jurisdiction. The
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bankruptcy plan calls for the creation of a new corporate entity, Phoenix. R. at 3. That has occurred.
R. at 3. The plan also calls for the sale of some of Giant’s assets to Phoenix. R. at 3. That has
occurred. R. at 3. The plan calls for the creation of a liquidation trust and the distribution of the
proceeds of the Phoenix sale to Giant’s creditors. R. at 3–4. That has occurred. R. at 3–4, 4 n.3.
Consequently, the aspects of Giant’s bankruptcy plan that might have been affected by an earlier
suit against Phoenix have already been fully realized such that they cannot be undermined by the
present litigation.
That the case at bar affects Phoenix’s business success does not establish related to
bankruptcy jurisdiction even though the confirmed bankruptcy plan created Phoenix for the
purpose of acquiring Giant’s assets and “returning its business operations to the marketplace as a
strong, viable enterprise.” R. at 3. Phoenix’s strength in the marketplace is just the sort of
amorphous purpose that Falise and Haws found wanting: every claim against Phoenix undermines
its business strength. This overbreadth problem cannot be solved by treating the claims in the case
at bar as somehow suis generis because nothing sets them apart as a special case. For instance,
Phoenix’s alleged liability depends on more than just actions taken by Giant before it filed its
bankruptcy petition: Phoenix would not be liable under Moot law but for its decision to continue
producing the model lines containing the accelerator defect. See R. at 4 (“Phoenix was liable for
those damages under the ‘product line’ theory because it was the successor of Giant and continued
to produce the model lines that had the defect.”). What is more, the Petitioner’s claims against
Phoenix are essentially collateral to Giant’s bankruptcy proceedings. Phoenix obtained Giant’s
assets in a bankruptcy sale, but the Petitioner’s tort claims against Phoenix would be no different
if Phoenix had purchased Giant’s assets in an ordinary, non-bankruptcy sale. See R. at 4.
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3. A case requires more than interpreting a confirmed bankruptcy plan in
order for related to bankruptcy jurisdiction to exist.
The fact that a case requires interpreting a bankruptcy plan means that the case is affected
by bankruptcy, but that is not the same thing as a case affecting bankruptcy, much less the estate
of the debtor. Along this line, this Court has indicated that “whatever test is used, [for related-tobankruptcy jurisdiction,] these cases make clear that bankruptcy courts have no jurisdiction over
proceedings that have no effect on the estate of the debtor.” Celotex, 514 U.S. at 308 n.6 (1995).
What is more, Resorts International underscores the distinction between claims that affect
bankruptcy and claims that are affected by bankruptcy through careful word choice. Resorts Int’l,
372 F.3d at 167 (“At the post-confirmation stage, the claim must affect an integral aspect of the
bankruptcy process . . . . Matters that affect the interpretation, implementation, consummation,
execution, or administration of the confirmed plan will typically have the requisite close nexus.”
(emphasis added)). The language points in a singular direction: proceedings causing an effect upon
bankruptcy are related to bankruptcy, not vice versa.
The court below erroneously took the opposite position. R. at 10–11. The authorities that
the court cited fail to counterbalance this Court’s precedent and the Third Circuit’s seminal case
concerning related to bankruptcy jurisdiction over post-confirmation proceedings. Notably, the
two circuit court cases cited by the court below are inapposite. R. at 10–11 (citing Montana v.
Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1194 (9th Cir. 2005) and Craig’s Stores of
Tex., Inc. v. Bank of La. (In re Craig’s Stores of Tex., Inc.), 266 F.3d 388, 390–91 (5th Cir. 2001)).
Craig’s Stores actually undermines the Thirteenth Circuit’s position, because it explicitly bases its
conclusion on the case’s effect upon bankruptcy, not vice versa. See Craig’s Stores, 266 F.3d at
391 (“In sum, the state law causes of action asserted by Craig’s against the Bank do not bear on
the interpretation or execution of the debtor’s plan and therefore do not fall within the bankruptcy
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court’s post-confirmation jurisdiction.” (emphasis added)). The Ninth Circuit’s opinion in Pegasus
Gold noted that resolving the post-confirmation proceeding before it would likely require
interpreting the terms of the bankruptcy plan but deemed it necessary to add that “these claims—
and the attendant remedies sought—could affect the implementation and execution of the Plan
itself.” Pegasus Gold, 394 F.3d at 1194.
The facts of the case at bar provide another indication that this Court should not adopt the
Thirteenth Circuit’s position on this issue. Not only does interpreting a bankruptcy order establish
related to bankruptcy jurisdiction under that view, see R. at 10–11, but the amount of interpretation
required is trivial if the case at bar is related to bankruptcy. There is no dispute about the terms of
the bankruptcy court’s Free and Clear Sale order in the case at bar; the controversy is about whether
those terms apply to the Petitioner. See R. at 5 (“The plaintiffs asserted that the confirmation order
was void as to them because they were given no notice of the sale proceeding.”). The real
interpretive work to be done in the case at bar concerns the Due Process Clause and whether it
allows the Free and Clear Sale order to affect the members of the plaintiff class. Yet the standard
applied by the court below concluded that related to bankruptcy jurisdiction existed over the case
at bar. This indicates that this Court should not depart from the established approach articulated
by Resorts International in order to adopt the lower court’s analysis.
C. Related to bankruptcy jurisdiction that is broad enough to encompass the case at
bar does not serve the purposes behind the 1978 Bankruptcy Reform Act.
The 1978 Bankruptcy Reform Act provides the genesis for the modern statutory grant of
related to bankruptcy jurisdiction. Ralph Brubaker, On the Nature of Federal Bankruptcy
Jurisdiction: A General Statutory and Constitutional Theory, 41 Wm. & Mary L. Rev. 743, 790–
91 (2000). The act was not meant to confer jurisdiction over post-confirmation proceedings like
the one at bar. Instead, the principal aim of the 1978 Bankruptcy Reform Act was to eliminate the
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need for extensive preliminary litigation about jurisdictional questions by simplifying federal
bankruptcy jurisdiction via expurgating outmoded distinctions like that between proceedings in
rem and proceedings in personam. See id. at 791–92 (“The primary vice of the 1898 Act’s
jurisdictional regime was that it engendered an excessive amount of preliminary litigation over
jurisdictional issues surrounding the bifurcation of bankruptcy jurisdiction.”); see also H.R. Rep.
No. 95-595, at 45 (1977) (“The most serious objection to the [present] division of jurisdiction is
the frequent, time-consuming, and expensive litigation of the question whether the bankruptcy
court has jurisdiction of a particular proceeding.”) reprinted in 13 Bankruptcy Reform Act, 1978:
A Legislative History (Alan N. Resnick & Eugene M. Wypyski eds., 1979) cited by Celotex, 514
U.S. at 308.
The potential for preliminary jurisdictional litigation was particularly problematic in the
bankruptcy context because of strategic incentives for some parties to use such litigation as a
dilatory tactic. H.R. Rep. No. 95-595, at 46 (“Generally, time is on the side of the defendant. . . .
[B]y merely litigating the issue of jurisdiction [a defendant] may gain most of the advantages he
would get if he won on the jurisdictional issue, viz., time and bargaining leverage against the
trustee.”). Delay was seen as particularly harmful in the bankruptcy context because “by the nature
of bankruptcy, assets are deteriorating in value. The faster a case is terminated, the more creditors
will receive. . . . Moreover, in a reorganization case, speed is essential to success: Creditors will
not wait for a company to reorganize, but will favor liquidation . . . .” Report of the Subcommittee
on Civil and Constitutional Rights of the Committee on the Judiciary, House of Representatives,
95th Congress, 2nd Session, on hearings on the court administrative structure for bankruptcy
cases 3–4 (Comm. Print 1978) reprinted in 16 Bankruptcy Reform Act, 1978: A Legislative History
(Alan N. Resnick & Eugene M. Wypyski eds., 1979).
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Thus, Congress granted the federal courts broad related to bankruptcy jurisdiction to
obviate the need for jurisdictional litigation and thereby speed the resolution of bankruptcy
proceedings. It did not want to expand the number of suits heard by bankruptcy courts for its own
sake. Congress anticipated that the expanded jurisdiction of bankruptcy courts would “bring some
suits into bankruptcy courts that are not heard there today; . . . the Judicial Conference has
estimated the number at less than 600 annually. The elimination of litigation over jurisdiction . . .
will more than offset the time required to handle [those] few cases . . . .” Id. at 4.
Having federal courts decide post-confirmation proceedings like the one at bar does not
help resolve bankruptcies expeditiously. Avoiding preliminary jurisdictional litigation in preconfirmation matters that need to be decided before a bankruptcy plan can be confirmed speeds
the resolution of a bankruptcy proceeding. Some post-confirmation disputes, like ones to enforce
obligations imposed by a bankruptcy plan, can cause delay because they implicate the realization
of a confirmed plan. But post-confirmation proceedings that are involve bankruptcy only
incidentally are irrelevant to the resolution of that bankruptcy, especially when the parties to such
proceedings were not parties to the bankruptcy.
The case at bar involves Giant’s bankruptcy only incidentally. By the time this case began,
the bankruptcy court had long since confirmed Giant’s bankruptcy plan and Phoenix had long
since purchased Giant’s assets. See R. at 4 (indicating that the accelerator defect in Giant’s cars
became public knowledge two years after Giant sold its assets to Phoenix). That Phoenix’s
purchase occurred in bankruptcy has no special significance to the Petitioner’s state law claims
and while the applicability of the bankruptcy court’s order is disputed, its terms are not. See R. at
4 (describing the Petitioner’s product line theory of liability); R. at 5 (presenting no argument made
by the Petitioner at the summary judgment phase other than its claim that the bankruptcy court’s
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Free and Clear sale order was not enforceable against the members of the plaintiff class). Phoenix
was not a party to Giant’s bankruptcy, see R. at 4 (stating that Phoenix was created for the purpose
of acquiring Giant’s assets), and Giant’s malfeasance prevented its victims from becoming parties
to its bankruptcy. See R. at 5–6 (describing Giant’s deception regarding the accelerator defect).
There is no reason why the case at bar speeds the resolution of Giant’s bankruptcy and none of the
parties to the case at bar were parties to Giant’s bankruptcy. Thus, there is no reason why the case
at bar is related to bankruptcy.
II. The Bankruptcy Court’s Order Does Not Bar the Petitioner’s Suit.
Under the Due Process Clause of the Fifth Amendment, a court cannot deprive a party of
life, liberty, or property without due process of law. See U.S. Const. amend. V. Consequently the
bankruptcy court’s Free and Clear Sale order cannot deprive the members of the plaintiff class of
their property by barring their tort claims without due process of law. Due process of law is
absolutely required, even if it would not change the ultimate outcome of a proceeding.
A. Giant’s bankruptcy proceedings cannot deprive the Petitioner of property by
barring its claims against Phoenix because Giant deprived its victims of due process
of law.
A judicial proceeding that does not provide an entity with due process of law cannot work
a deprivation of life, liberty or property upon that entity. See U.S. Const. amend. V (“No person
shall be . . . deprived of life, liberty, or property, without due process of law . . . .”). A proceeding
does not provide an entity with due process of law unless the entity is given notice “reasonably
calculated, under all the circumstances, to apprise interested parties of the pendency of the action
and afford them an opportunity to present their objections.” See Mullane v. Central Hanover Bank
& Trust Co., 339 U.S. 306, 314 (1950). Comparing the uncompromising, absolute language of the
Constitution and Mullane’s flexible inquiry concerning notice reveals that, although practical
considerations inform whether a given notice practice constitutes due process of law, the need for
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a notice practice that does constitute due process of law is absolute and unyielding. See
Restatement (Second) of Judgments §§ 1–2 (Am. Law Inst. 1982) (stating that the authority of a
court to render judgment requires adequate notice to the party against whom judgment is to be
rendered but applying no hard-and-fast rules regarding whether notice is adequate).
Notice by means of publication does not comport with due process of law when there is a
superior, reasonably practicable alternative. See Mullane, 339 U.S. at 317. Notice by publication
was not the best practicable means of providing notice of Giant’s bankruptcy proceedings to the
members of the plaintiff class; Giant knew most—if not all—of their names and addresses. R. at
5; see Mullane, 339 U.S. at 318 (“Where the names and post office addresses of those affected by
a proceeding are at hand, the reasons disappear for resort to means less likely than the mails to
apprise them of its pendency.”). As a consequence, the “notice” given to the members of the
plaintiff class by publication, R. at 6, did not constitute due process of law. See Mullane, 339 U.S.
at 315 (“But when notice is a person’s due, process which is a mere gesture is not due process.
The means employed must be such as one desirous of actually informing the absentee might
reasonably adopt to accomplish it.”) Giant did not provide notice in a way that would have been
chosen by someone who actually wanted to inform the members of the plaintiff class. Just the
opposite. Giant used means that would have been employed by one who wanted to keep the
members of the plaintiff class ignorant in an effort to actually keep them ignorant. R. at 6.
Consequently, Giant’s bankruptcy proceedings did not afford the members of the plaintiff
class due process of law and, as such, could not deprive them of life, liberty, or property. Barring
the tort claims of the members of the plaintiff class would constitute a deprivation of property. See
Mullane, 339 U.S. at 313 (“[T]his proceeding does or may deprive [the trust] beneficiaries of
property. It may cut off their rights to have the trustee answer for negligent or illegal impairments
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of their interests.”); see also Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811–12 (1985) (“If
the forum State wishes to bind an absent plaintiff . . . it must provide minimal procedural due
process protection.” (footnote omitted)). The Constitution’s demand that due process of law
accompany deprivations of property is no less forceful when a federal court sits in bankruptcy:
Beyond all doubt the property of a bankrupt may, in a proper case, be sold by order
of the bankrupt court free of incumbrance [sic], but it is equally clear that in order
that such a proceeding may be regular and valid . . . . [s]ecured creditors in such a
proceeding must have due opportunity to defend their interests and consequently
must be properly notified and summoned to appear for that purpose.
Ray v. Norseworthy, 90 U.S. 128, 135 (1875). More recent authority, viewing due process through
the lens of class actions, concurs:
If the forum State wishes to bind an absent plaintiff concerning a claim for money
damages or similar relief at law, it must provide minimal procedural due process
protection. The plaintiff must receive notice plus an opportunity to be heard and
participate in the litigation, whether in person or through counsel. . . . Additionally,
we hold that due process requires at a minimum that an absent plaintiff be provided
with an opportunity to remove himself from the class by executing and returning
an "opt out" or "request for exclusion" form to the court.
Phillips Petroleum, 472 U.S. at 811–12. Thus, the bankruptcy court’s Free and Clear Sale order
does not bar the Petitioner’s claims. This Court has been consistent and clear: due process is a
concept that is flexible but not optional.
B. This Court unanimously held that courts cannot deprive a person of property
without providing an opportunity to be heard, even if that opportunity would not
have changed the ultimate outcome.
A court cannot enter judgment without providing an opportunity to respond even if such
an opportunity would not have changed the ultimate resolution of the matter. See Nelson v. Adams,
USA Inc., 529 U.S. 460, 471–72 (2000) (Ginsburg, J. for a unanimous Court). In Nelson, one
corporation (“OCP”) brought a patent infringement suit against another, Adams. Id. at 462. Adams
prevailed and the district court held OCP liable for Adams’s legal costs. Id. at 462–63. Worried
about OCP’s solvency, Adams moved the district court for leave to amend its pleading to add
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OCP’s president and sole shareholder, Nelson, as a party from whom Adams’s legal costs could
be collected. Id. at 463–64. The district court simultaneously granted Adams leave to amend its
pleading, joined Nelson as a party, and amended its judgment such that Nelson was personally
liable for Adams’s legal costs. Id.
On appeal, the Federal Circuit affirmed the district court’s amended judgment because it
reasoned that:
[N]othing much turned on whether the party opposing Adams' [sic] claim for costs
and fees was OCP or Nelson. “[N]o basis has been advanced,” the panel majority
concluded, “to believe anything different or additional would have been done to
defend against the allegation of inequitable conduct had Nelson individually
already been added as a party or had he been a party from the outset.”
Id. at 471 (third alteration in the original). The conclusion of the Thirteenth Circuit’s panel majority
is almost an echo: “[The plaintiffs] have suffered no prejudice from the failure to receive notice.
They have pointed to no evidence or argument that they might have presented that was not already
presented to the court by a similarly situated party and rejected.” R. at 12.
This Court reversed Nelson, not because it necessarily disagreed with the Federal Circuit’s
assertion that Nelson had not been prejudiced, but because the Federal Circuit’s analysis proceeded
from a faulty premise—that whether or not Nelson was prejudiced was material:
We neither dispute nor endorse the substance of this speculation. We say instead
that judicial predictions about the outcome of hypothesized litigation cannot
substitute for the actual opportunity to defend that due process affords every party
against whom a claim is stated. As Judge Newman wrote in dissent [in the court
below]: “The law, at its most fundamental, does not render judgment simply
because a person might have been found liable had he been charged.”
Nelson, 529 U.S. at 471–72. The Due Process Clause protects a party’s right to have its voice
heard, not merely its right to win. See id. at 472. (“Our decision surely does not insulate Nelson
from liability. . . . Nelson seeks only the right to contest on the merits his personal liability for fees
originally sought and awarded solely against OCP. That right, we hold, is just what due process
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affords him.”). For the same reason, hypotheses about how Giant’s bankruptcy proceedings would
have played out had Giant provided notice to its victims cannot render the bankruptcy court’s order
enforceable or serve as a substitute for due process of law.
CONCLUSION
For the foregoing reasons, the Petitioner respectfully requests that this Court reverse the
judgment of the Court of Appeals for the Thirteenth Circuit and hold that (1) the District Court
did not have jurisdiction over the case at bar and (2) the bankruptcy court’s Free and Clear Sale
order is not enforceable against the Petitioner.
Respectfully submitted on this the 25th day of January, 2016.
Team P17
Counsel for the Petitioner
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