Tag Archives: Bankruptcy opinions

New opinions — employment and bankruptcy

FOP Lodge 1 v. City of Camden — employment discrimination — reversal in part — McKee

Camden, NJ, adopted a policing policy they called “directed patrols,” which required officers to make brief passes through specific areas. During these passes officers were to interact with community members and try to get their names and addresses. The local police union filed suit, arguing the policy violated NJ state law barring policing quotas, that officers suffered retaliation for not complying with and protesting against it, and other claims. The district court dismissed on all counts. Today, the Third Circuit affirmed on all grounds except for claims brought under NJ’s employee-whistleblower statute, on which it reversed and remanded.

Joining McKee were Ambro and Scirica. Arguing counsel were Gregg Zeff for the police union and John Eastlack Jr. of Weir & Partners for the city.

 

In re: Energy Future Holdings Corp. — bankruptcy — reversal — Ambro

The introduction to this opinion reads:

We address what happens when one provision of an indenture for money loaned provides that the debt is accelerated if the debtor files for bankruptcy and while in bankruptcy it opts to redeem that debt when another indenture provision provides for a redemption premium. Does the premium, meant to give the lenders the interest yield they expect, fall away because the full principal amount is now due and the noteholders are barred from rescinding the acceleration of debt? We hold no.

A confession: I haven’t the foggiest what that means.

Joining Ambro were Smith and Fisher. Arguing counsel, bankruptcy specialists all, were Philip Anker of Wilmer Cutler for one appellant, Gregory Horowitz (a Stapleton clerk) of Kramer Levin for other appellants, and Andrew McGaan of Kirkland & Ellis for the appellees.

New opinion — a bankruptcy affirmance

In re: Net Pay Solutions — bankruptcy — affirmance — Hardiman

The Third Circuit today upheld a district court’s rulings in a bankruptcy case denying the debtor’s motions to avoid five preferential transfers. The debtor made five tax payments for its clients the day before it went out of business, and it sought to recover the funds in bankruptcy, but the court held that four were minimal as to each creditor and the fifth did not involve the debtor’s property because it was only held in trust.

Joining Hardiman was Smith; Sloviter had been on the panel before she assumed inactive status. Arguing counsel were Markian Slobodian as debtor’s trustee and Ivan Dale for the government.

New opinions — a rare criminal reversal and a bankruptcy reversal

US v. Lopez — criminal — reversal — Vanaskie

Criminal defendants don’t win too many Third Circuit appeals, especially by published opinion and most especially under plain-error review. But it happened today. The court vacated Victor Lopez’s conviction for being a felon in possession of a firearm, holding that the prosecution violated Doyle v. Ohio by impeaching Lopez with his post-Miranda silence and ordering a new trial despite trial counsel’s failure to object to the error. The court ruled that the error affected the outcome because the error impacted Lopez’s credibility and the case hinged on credibility.

In a footnote, the court lamented that the Doyle error was “particularly egregious” because such errors “unfortunately resurface[] too often, threatening to undermine the integrity of proceedings in our courts.” After reiterating that it remained troubled by the recurring violations, the court “commend[ed] Assistant United States Attorney Steven G. Sanders for his forthright acknowledgment of the Doyle error during oral argument,” noting, “He was a model of professionalism in apologizing for the error at trial and vowing to take steps to avoid having this type of error recur.” Audio of the oral argument is here.

For criminal defense counsel, three prejudice points bear noting:

  1. The whole record matters. In finding that the error affected the outcome, the court didn’t just look at the testimony, it also looked at how the prosecutor argued that testimony at closing and at the questions jurors asked during deliberations.
  2. The fact that the credibility contest was between a defendant and police officers did not prevent the court from finding a reasonable probability that the error affected the outcome. Nor did the fact that the dispute was over whether the cops framed the defendant. In other words, the court recognized a reasonable probability that, without the improper impeachment, the jury would have believed that the defendant was telling the truth that the cops framed him, and that two police officers were lying when they said they found the gun on him.
  3. The court rejected the government’s argument that the Doyle error did not make a difference because the jury also had valid reasons to disbelieve the defendant (he had prior felony convictions and gave a false name when arrested).

Joining Vanaskie were McKee and Jordan. Arguing counsel were Steven Sanders for the government and my former colleague Maria Pulzetti of the EDPA Federal Community Defender for Lopez.

 

In re: World Imports — bankruptcy — reversal — Jordan

The Third Circuit today reversed a district court ruling in a bankruptcy case, holding that contractual modifications to a creditor’s maritime liens were enforceable on goods in the creditor’s possession.

Joining Jordan were McKee and Vanaskie. Arguing counsel were Brendan Collins for the creditor and David Braverman for the debtor.

New opinion — Conflict panel affirms in bankruptcy case

In re: Wettach — bankruptcy — affirmance — Sentelle

A Third Circuit panel of non-Third Circuit judges today affirmed a district court’s rulings in a bankruptcy case. The Third Circuit’s judges apparently all recused due to a peripheral financial interest in the case of one of them.  I previously posted about the case here and here. The appellant’s brief raised 10 issues, several related to constructive fraudulent transfer, but the court rejected them all.

Suppose, purely hypothetically, that the losing party believed that the panel opinion here contradicted prior CA3 precedent. When a conflict panel decides an appeal, en banc review is impossible, right? That’s an odd situation, but not as odd as constituting a conflict en banc panel I suppose.

Joining Sentellle (DC Cir) were Benton (CA8) and Gilman (CA6). Arguing counsel were James Cooney of Robert Lampl & Associates for the appellants and Neil Levin for the trustee.

New opinion — bankruptcy court can void an expired union contract

In re: Trump Entertainment Resorts — bankruptcy — affirmance — Roth

The Third Circuit today upheld a bankruptcy-court ruling voiding the continuing terms of a union’s expired collective-bargaining agreement in the Trump Taj Mahal’s Chapter 11 reorganization. The court summarized its reasoning thus:

Under the policies of bankruptcy law, it is preferable to preserve jobs through a rejection of a CBA, as opposed to losing the positions permanently by requiring the debtor to comply with the continuing obligations set out by the CBA. Moreover, it is essential that the Bankruptcy Court be afforded the opportunity to evaluate those conditions that can detrimentally affect the life of a debtor, whether such encumbrances attach by operation of contract or a complex statutory framework.

The appeal had received recent attention, on this blog and elsewhere, after counsel for the casino filed a letter on January 4 asking the court to hurry up and issue an opinion. How Appealing has links to early news coverage of today’s opinion.

Joining Roth were Shwartz and Scirica. Arguing counsel were Kathy Krieger for the union and Roy Englert for the casino.