With the close of the United States Supreme Court’s 2017-18 term, we offer this wrap-up, focusing on decisions of special interest from the business and commercial perspective (excluding patent cases): In a much talked-about decision in the antitrust field, the Court held in Ohio v. American Express Co. that American Express’s anti-steering provisions in its merchant contracts, which generally preclude merchants from encouraging customers to use credit cards other than American Express, are not anticompetitive and therefore do not violate Section 1 of the Sherman Act. In so holding, the Court found that credit card networks are two-sided transaction platforms, one side being the merchant and the other side being the merchant’s customer. Thus, when assessing whether the anti-steering agreements are anticompetitive, the effects on both sides of the platform must be considered. The plaintiffs’ proof that American Express had increased its merchant fees over a period of time was insufficient to show an anticompetitive effect because it neglected the customer side of the platform, where consumers have received the benefit of ever-increasing rewards from credit card companies and other improvements in services that those higher merchant fees enable. Bringing an end to a fight that New Jersey had been waging...
Tagged: Bankruptcy Litigation
Third Circuit Holds That Personal Injury Plaintiffs’ “Mere Continuation” Successor Liability Claims Against Purchaser of Bankrupt Debtor’s Assets Belong to Bankruptcy Estate, Not Plaintiffs
In In re Emoral, Inc., the Third Circuit, in a decision of first impression, held that personal injury claims of individuals allegedly harmed by a bankrupt debtor’s products cannot be asserted against the purchaser of the debtor’s assets since they are “generalized claims” which belong to the debtor’s estate and not to the harmed individuals.
Third Circuit Affirms Bankrupt Asbestos Defendants’ Transfer of Insurance Recovery Rights to Personal Injury Trusts Notwithstanding Insurance Policies’ Anti-Assignment Provisions
The U.S. Court of Appeals for the Third Circuit, in its May 1, 2012, decision in In re: Federal-Mogul Global, Inc. held that asbestos defendants who file Chapter 11 petitions and seek to resolve their asbestos-related liabilities through the creation of a personal injury trust under Section 524(g) of the Bankruptcy Code may transfer their rights under their liability insurance policies to the trust notwithstanding the policies’ anti-assignment provisions.
The Southern District of New York and the District of Delaware Restore Order to a Chaotic Post-Stern Landscape
Recently, the Southern District of New York and the District of Delaware have issued Amended Standing Orders resolving some of the uncertainty arising from the Supreme Court’s ruling in Stern v. Marshall last term by expressly permitting bankruptcy courts to hear and issue proposed findings of fact and conclusions of law in those matters where they lack the constitutional authority to issue final judgments.
The Supreme Court’s decision in Stern v. Marshall has generated renewed focus on what types of cases and claims can be resolved in an adversary proceeding in the bankruptcy courts, and what types of cases will have to be resolved in the federal district courts. The resulting shift should serve as a reminder that, while the Federal Rules of Bankruptcy Procedure governing adversary proceedings are similar to and modeled on the Federal Rules of Civil Procedure, there are significant differences. For example, because the Bankruptcy Rules regarding service of process may result in a shorter time within which a defendant must respond, corporations must remain mindful of these differences and avoid relying upon the more well-known Federal Rules.
In September of this year, the Third Circuit reaffirmed that creditor claims against corporate directors and officers for fiduciary duty and related breaches under the “deepening insolvency” theory are alive and well, at least under Pennsylvania law. In Official Committee of Unsecured Creditors, on Behalf of the Estate of Lemington Home for the Aged v. Baldwin, the court considered an appeal from the District Court’s grant of summary judgment in favor of the D&O defendants, predicated upon that court’s finding that (i) the business judgment rule and the in pari delicto defense barred recovery on fiduciary duty claims and (ii) the Committee failed to establish a material issue of fact as to whether the defendants committed the fraud necessary to sustain a deepening insolvency claim.