In re Continental Airlines, Inc., Bankruptcy No. 90-932 (MFW) to 90-984(MFW).
| Decision Date | 28 June 1999 |
| Docket Number | Bankruptcy No. 90-932 (MFW) to 90-984(MFW). |
| Parties | In re CONTINENTAL AIRLINES, INC., et al., Debtors. |
| Court | U.S. Bankruptcy Court — District of Delaware |
COPYRIGHT MATERIAL OMITTED
Jon Geier, Paul Hastings Janofsky & Walker, Washington, DC, Counsel for Continental Airlines, Inc.
James L. Patton, Jr., Young Conaway Stargatt & Taylor, LLP, Wilmington, DE, Co-Counsel for Continental Airlines, Inc.
Charles M. Tatelbaum, Cummings & Lockwood, Naples, FL, Counsel for Eastern Pilots, Merger Committee.
James Harker, Herlihy Harker & Kavanaugh, Wilmington, DE, Co-Counsel for Eastern Pilots, Merger Committee.
Myles J. Tralins, Tralins & Associates, Miami, FL, Counsel for LPP Claimants.
Kate Stickles, Prickett Jones Elliott Kristol & Schnee, Wilmington, DE, Co-Counsel for LPP Claimants.
Before the Court are two Motions, both of which require that we apply the decision of the Court of Appeals for the Third Circuit in this case. In re Continental Airlines, 125 F.3d 120 (3d Cir.1997). The first is the Motion of a group of Eastern pilots, the Labor Protective Provision Claimants ("the LPP Claimants"), to expunge the claims of certain other Eastern pilots ("the Other Eastern Pilots")2 for failure to timely exercise their right to arbitration. The second is the Motion of the Debtor to enforce the Confirmation Order (as affirmed by the Third Circuit) which reduced all the Eastern pilots' claims for specific performance of their collective bargaining agreement to claims for monetary damages discharged by the provisions of the Plan.
We heard argument on the Motions on January 14, 1999. The parties submitted post-trial memoranda and an appendix of related documents on February 25, 1999.
This Court has jurisdiction over these Motions, which are core proceedings pursuant to 28 U.S.C. § 1334 and § 157(b)(1), (b)(2)(A), (B) and (O).
On February 23, 1986, Eastern Airlines ("Eastern") and its pilots' union, the Air Lines Pilot Association ("ALPA"), ratified a collective bargaining agreement. On February 24, 1986, Texas Air Corporation, the parent of Continental Airlines, Inc. ("Continental") acquired Eastern. ALPA asserted that the acquisition was a merger requiring integration of the Eastern and Continental pilots' seniority lists under the Eastern collective bargaining agreement. When Eastern and Continental refused to bargain with ALPA on the issue, ALPA initiated arbitration.
In March 1989, Eastern filed bankruptcy and asserted that the automatic stay precluded ALPA from proceeding with the arbitration. After protracted litigation, the Court of Appeals for the Second Circuit held that the automatic stay did not preclude arbitration. In re Ionosphere Clubs, Inc., 922 F.2d 984 (2d Cir.1990).
ALPA and Eastern thereafter proceeded with arbitration before Richard R. Kasher (Mr. Kasher, and any successor is referred to herein as "the Arbitrator"). ALPA sought prospective integration of the Eastern and Continental pilots' seniority lists and back pay until the integration was completed.
In the meantime, Continental filed bankruptcy in December 1990. ALPA (and individual Eastern Pilots) filed unliquidated proofs of claim in that proceeding. Continental filed objections and sought a declaration that the claims were general unsecured prepetition dischargeable claims compensable by an award of monetary damages. ALPA disagreed and asserted that the pilots were entitled to specific performance of the collective bargaining agreement, namely, seniority integration. In addition, ALPA asserted that only the Arbitrator had jurisdiction to determine whether a merger had occurred as defined by the collective bargaining agreement and the appropriate remedy thereunder.
In February 1993, the Bankruptcy Court sustained Continental's objection to the ALPA claim. In April 1993, the Bankruptcy Court confirmed Continental's Second Amended Joint Plan of Reorganization. In the Confirmation Order, the Bankruptcy Court stated that any claims under the collective bargaining agreement gave rise to a right of payment dischargeable in bankruptcy and that no right to injunctive or other equitable relief was available. The Confirmation Order consequently enjoined the arbitration proceedings.
ALPA and the LPP Claimants appealed the February and April orders. While the appeals were pending, ALPA settled with Continental. The Settlement Agreement was ultimately accepted by approximately two-thirds of the Eastern pilots who had filed claims in the bankruptcy case.
The LPP Claimants, who had not accepted the settlement, continued the appeals. The District Court affirmed the Bankruptcy Court's Orders in all respects except the injunction of the arbitration proceedings. In re Continental Airlines, Inc., No. 93-163 (D.Del. Nov. 29, 1995). Specifically, the District Court held that the claims of the pilots were dischargeable and that the Plan which so provided was confirmable. Id., slip op. at 27-32. The District Court concluded, however, that the Bankruptcy Court's injunction was invalid because the Bankruptcy Court failed to set forth in sufficient detail the reasons for the injunction. Id. at 35-37. The District Court did not remand that issue, however, because it held that section 1113 of the Bankruptcy Code precluded issuance of the injunction. Id. at 42.
Cross-appeals were filed by the LPP Claimants4 and Continental. On August 29, 1997, the Third Circuit issued its decision. The Court affirmed the Bankruptcy Court and District Court decisions holding that the Eastern pilots' equitable claims for seniority integration could be converted into money damages. 125 F.3d at 131-35. Consequently, those claims could be treated, and discharged, in the Continental Plan of Reorganization. Id. at 135-36. However, the Court also held that the Bankruptcy Court could not enjoin the arbitration proceedings (since the collective bargaining agreement requiring arbitration had not been rejected). Id. at 136-38.
We start our consideration of the Motions by noting that both require us to interpret the decision of the Third Circuit in this very case. In rendering our decision, we are bound by the doctrine of the law of the case to "implement both the letter and the spirit of the mandate, taking into account the appellate court's opinion and the circumstances it embraces." Casey v. Planned Parenthood of Southeastern Pennsylvania, 14 F.3d 848, 857 (3d Cir.1994) (quoting Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 949 (3d Cir.1985)).
Law of the case rules have developed "to maintain consistency and avoid reconsideration of matters once decided during the course of a single continuing lawsuit." Charles A. Wright et al., 18 Federal Rules and Practice § 4478 (1981). Of these rules, the most compelling is the mandate rule. This fundamental rule binds every court to honor rulings in the case by superior courts. As the Supreme Court has stated, "In its earliest days this Court consistently held that an inferior court has no power or authority to deviate from the mandate issued by an appellate court." Briggs v. Pennsylvania R. Co., 334 U.S. 304, 306, 68 S.Ct. 1039, 1040, 92 L.Ed. 1403 (1948). The statutory authority for the power of the appellate courts dates from the first Judiciary Act of 1789 and is now found in 28 U.S.C. § 2106.
Casey, 14 F.3d at 856 (footnotes omitted).
The mandate rule applies, however, only to those issues that were decided by the appellate court. Sanford Fork & Tool, 160 U.S. at 256, 16 S.Ct. at 293. On remand, a trial court is free to "make any order or direction in further progress of the case, not inconsistent with the decision of the appellate court, as to any question not settled by the decision." Bankers Trust Co., 761 F.2d at 950. "It may consider, as a matter of first impression, those issues not expressly or implicitly disposed of by the appellate decision."
While the issues before us are not on remand from the Third Circuit, they do require that we implement its ruling.
The Motion of the LPP Claimants seeks an Order disallowing (for purposes of distribution under Continental's Confirmed Plan) the claims of the Other Eastern Pilots for failure to timely invoke their right to arbitration.5 Continental supports the Motion to Strike.6
1. Jurisdiction
As an initial matter, EPMC asserts that this Court does not have jurisdiction to decide the Motion to Strike. It asserts that the Third Circuit affirmed the District Court determination that the Arbitrator has exclusive jurisdiction to decide whether the individual pilots have any claim. This includes, EPMC asserts, whether those claims are time-barred under applicable labor law.
In response, the LPP Claimants assert that since the Third Circuit held that any claim which the pilots may have under the seniority integration provision was a claim cognizable, and dischargeable, in this bankruptcy case, the Bankruptcy Court has jurisdiction to determine and allow those claims. They also point to the expansive retention of jurisdiction provisions of the Confirmed Plan and Confirmation Order to support their position. (See Appendix to Debtor's Memorandum of Law, Tab 1 at Section 15.1, and Tab 3 at ¶ 53.)7
The latter argument is without merit. If a court does not have jurisdiction over a dispute, it cannot create that jurisdiction by simply stating it has jurisdiction in a confirmation or other order. See, e.g., United States Trustee v. Gryphon at the Stone Mansion, Inc., 216 B.R. 764, 768 (W.D.Pa.1997) (); Walnut Associates v. Saidel, et al., 164 B.R. 487, 495 (E.D.Pa.1994) (...
To continue reading
Request your trial
-
In re Demeza, Case No.: 1–16–bk–02789 RNO
...courts have inherent power to enforce compliance with and execution of their lawful orders); also see In re Continental Airlines, Inc. , 236 B.R. 318, 330 (Bankr. D.Del. 1999) aff'd 279 F.3d 226 (3d Cir. 2002) (pilots who brought state court action sanctioned for violation of Chapter 11 con......