In re Visteon Corp.

• Decision Date: 28 August 2014
• Docket Number: No. 12-3352,No. 12-3353,12-3352,12-3353
• Parties: In re: VISTEON CORPORATION, et al., Debtor INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW, Appellant
• Court: U.S. Court of Appeals — Third Circuit

In re: VISTEON CORPORATION, et al., Debtor

INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS
OF AMERICA, UAW, Appellant

No. 12-3352
No. 12-3353

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued May 20, 2014
August 28, 2014

NOT PRECEDENTIAL

On Appeal from the United States District Court for the District of Delaware
(Nos. 1:10-cv-00918, 1:10-cv-01070)
District Judge: Hon. Richard G. Andrews

Before: McKEE, Chief Judge, CHAGARES, and NYGAARD, Circuit Judges.

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John G. Adam, Esq.
Legghio & Israel
306 South Washington
Suite 600
Royal Oak, MI 48067

Peter D. DeChiara, Esq.
Cohen, Weiss & Simon
25th Floor
330 West 42nd Street
New York, NY 10036

Counsel for Appellant

Heather A. Bloom, Esq.
Kirkland & Ellis
655 15th Street, N.W.
Suite 1200
Washington, DC 20005

Andrew B. Bloomer, Esq.
Catherine L. Fitzpatrick, Esq.
R. Allan Pixton, Esq.
Kirkland & Ellis
300 North LaSalle Street
Chicago, IL 60654

Laura D. Jones, Esq.
James E. O'Neill, III, Esq.
Pachulski Stang Ziehl & Jones
Suite 1600
919 North Market Street
P.O. Box 8705, 17th Floor
Wilmington, DE 19801

Counsel for Appellee

OPINION

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CHAGARES, Circuit Judge.

This case is about the consequences of failing to appeal a final order of a bankruptcy court. For the reasons that follow, we will affirm the orders of the District Court.

I.

Because we write solely for the benefit of the parties, we recount only the facts relevant to our disposition. Visteon, a supplier of parts for automobiles, filed a voluntary petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code in 2009. Shortly after filing, Visteon moved the Bankruptcy Court for permission pursuant to 11 U.S.C. § 363(b)(1) to terminate "other post-employment benefits" ("OPEB") that it previously had been providing for a number of its retirees. Visteon gave notice of its motion to every retiree that would be affected as well as the labor unions that had represented them. The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America ("UAW") represented retirees at Visteon's plants in Canovanas, Puerto Rico and Lansdale, Pennsylvania (the "North Penn" plant). The Industrial Division of the Communications Workers of America ("IUE") represented approximately 2,100 retirees from Visteon's plants in Connersville and Bedford, Indiana. At the time that Visteon entered bankruptcy, all of these plants were closed, except for the North Penn plant.

The UAW, IUE, and numerous salaried employees contested the termination motion in the Bankruptcy Court. They argued that in order to terminate the OPEB, Visteon would need to comply with § 1114 of the Bankruptcy Code, which contains certain substantive and procedural protections for retiree benefits in bankruptcy. Visteon

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argued that because these benefits were not vested and it could terminate them unilaterally outside of bankruptcy (or after emerging), it should not have to follow the special procedures of § 1114. After a two-day trial, the Bankruptcy Court determined that as a factual and legal matter, Visteon did not need to employ the procedures of § 1114, and could terminate the OPEB unilaterally while still in bankruptcy.

The Bankruptcy Court carved-out the benefits for retirees from the North Penn plant from its order, because the plant was still operating and an ongoing collective bargaining agreement ("CBA") governed employee and retiree benefits. Subsequent to the Bankruptcy Court's order, Visteon and the UAW entered into a Closure Agreement for the North Penn plant to settle all disputes related to the North Penn closing. The Closure Agreement set forth the procedures for terminating OPEB for North Penn retirees, and was approved by the Bankruptcy Court.

The IUE, on behalf of the retirees it represented from the Connersville and Bedford plants — and only the IUE, not the UAW — appealed the OPEB termination order to the District Court, which affirmed. The IUE then appealed to this Court, and we reversed. See In re Visteon Corp., 612 F.3d 210 (3d Cir. 2010) ("Visteon I"). We held that Visteon could not terminate retiree benefits without employing the special procedures of § 1114. We only vacated the Bankruptcy Judge's legal determination that § 1114 did not apply; we did not vacate any of his factual findings regarding whether the OPEB were vested, or opine on Visteon's right to unilaterally terminate OPEB once it emerged from bankruptcy. Id. at 212 n.1.

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After we issued our mandate, the IUE and UAW both moved the Bankruptcy Court to reinstate the OPEB for all retirees. The Bankruptcy Court agreed and restored OPEB to all retirees except the North Penn subgroup (which was covered by the Closure Agreement) on August 17, 2010. In doing so, it stated that "view[ed] the Third Circuit as having if not technically, in effect, voiding, ab initio, this Court's order in December, authorizing termination of retiree benefits. . . . [My] holding is going to be, that all retiree benefits that were terminated in December, will need to be restored at some point. And that restoration will need to be backdated." Aug. 17, 2010 Hr'g Tr., ECF No. 3970 in No. 09-11786-CSS (Bankr. D. Del.), at 9-10. The Bankruptcy Court entered a written order restoring all retiree OPEB on August 30, 2010.

The Bankruptcy Court confirmed Visteon's reorganization plan on August 31, 2010, and Visteon emerged from bankruptcy on October 1, 2010. The confirmed plan reserved Visteon's right to terminate retiree benefits after emerging from bankruptcy, which it did a month later.¹

Visteon timely appealed the Bankruptcy Court's August 30 restoration order to the District Court. It argued that the UAW and its retirees remained bound by the OPEB termination order because they never appealed it. It further argued that because the UAW was not a party in the IUE's appeal, it could not now reap the benefit of the relief

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that we gave to the IUE. The UAW also cross-appealed the Bankruptcy Court's carve-out of the North Penn plant on account of the Closure Agreement. The District Court ruled in favor of Visteon on both Visteon's appeal and the UAW's cross-appeal, orders which the UAW timely appealed to this Court.

II.

The Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. § 157. The District Court had jurisdiction over the final order of the Bankruptcy Court restoring OPEB pursuant to 28 U.S.C. § 158(a). We have jurisdiction over the District Court's order pursuant to 28 U.S.C. § 158(d).

Our review of the District Court's disposition is plenary. In re Heritage Highgate, Inc., 679 F.3d 132, 139 (3d Cir. 2012). We exercise plenary review over the Bankruptcy Court's legal conclusions, and review its findings of fact for clear error. In re Philadelphia Newspapers, LLC, 599 F.3d 298, 303 (3d Cir. 2010).

III. A.

It is clear "that any party contesting an unfavorable order or judgment below must file an appeal." EF Operating Corp. v. Am. Bldgs., 993 F.2d 1046, 1048 (3d Cir. 1993). "[A] party which does not appeal a decision by a district court cannot receive relief with respect to that decision." In re Taylor, 655 F.3d 274, 287 (3d Cir. 2011). "[T]he mere fact that a [party] may wind up with a judgment against one [party] that is not logically consistent with an unappealed judgment against another is not alone sufficient to justify taking away the unappealed judgment." Repola v. Morbark Indus., Inc., 980 F.2d 938,

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942 (3d Cir. 1992). A party that makes "a considered choice not to appeal . . . cannot be relieved of such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong." Ackermann v. United States, 340 U.S. 193, 198 (1950).

A final order "precludes the parties or their privies from relitigating" issues elsewhere. Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981). "[T]he res judicata consequences of a final, unappealed judgment on the merits [are not] altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled." Id. A final order can "only" be challenged "by direct review." Id. Although this rule may be harsh, it furthers the important goals of finality, autonomy, and respecting settled expectations. See Ackermann, 340 U.S. at 198.

The Supreme Court's Ackermann decision is instructive. There, three people, a brother, his sister, and her husband, had their naturalization cancelled in a consolidated trial. The brother appealed, but the sister and her husband did not. The brother prevailed in his appeal, after which the sister and her husband attempted to avail themselves of the brother's victory. The Supreme Court rejected their attempt. It held that they had a "duty to take legal steps to protect [their] interest in [the] litigation," and that the outcome of the brother's case could not undo their "voluntary, deliberate, free, untrammeled choice . . . not to appeal." Ackermann, 340 U.S. at 197, 200.²

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The application of these principles to this case is relatively straightforward. The UAW opposed Visteon's motion to terminate OPEB for its retirees in the Bankruptcy Court and lost. The Bankruptcy Court entered an order which was final and appealable as to this specific issue. If the UAW wanted relief from that order,...