The U.S. Supreme Court has issued an order staying Chrysler‘s proposed bankruptcy sale to Fiat, the UAW, and the U.S., Canadian, and Ontario governments in order to consider an appeal by three separate parties objecting to the sale.
After the U.S. Court of Appeals for the Second Circuit in New York upheld the sale of the Auburn Hills, Mich.-based automaker’s assets on Friday, the dissident groups worked furiously over the weekend to meet a 4 p.m. Monday deadline for filing an appeal to the High Court.
Supreme Court Justice Ruth Bader Ginsburg, who handles emergency matters arising from the Second Circuit, issued a one-sentence order late Monday afternoon granting a stay in the case of Indiana State Police Pension Trust v. Chrysler LLC.
The American Lawyer’s Supreme Court correspondent, Tony Mauro, reports that three separate groups filed stay applications for the Chrysler sale.
The first was from three Indiana state funds represented by a team of lawyers from White & Case led by global financial restructuring and insolvency head Thomas Lauria and global litigation chair Glenn Kurtz. (Incidentally, The New York Times profiled White & Case over the weekend, but for different reasons.)
A coalition of consumer groups also is challenging Chrysler’s sale. Mauro reports that this application, titled In Re Chrysler LLC, was filed by Adina Rosenbaum of the Public Citizen Litigation Group. Other lawyers appearing on the filing are from San Francisco’s Lieff Cabraser Heimann & Bernstein and Philadelphia’s Schnader Harrison Segal & Lewis.
The consumer group claims that approval of the bankruptcy sale would release a “new” Chrysler entity emerging from Chapter 11 from “pending and future product liability claims for injury caused by Chrysler vehicles.”
A third application was filed on behalf of Patricia Pascale, the widow of a Chrysler brake worker who died after allegedly contracting mesothelioma due to asbestos exposure on the job, Mauro reports. Sander Esserman of Dallas’s Stutzman, Bromberg, Esserman & Plifka is representing Pascale, who is suing Chrysler in Los Angeles Superior Court.
“Courts are not free to ignore the law in the name of the needs of the big or powerful,” Esserman wrote in Pascale v. Chrysler. “Rights of individuals may not be simply disregarded because some believe a quick sale of a car company will strengthen the U.S. economy.”
Mauro reports that Jones Day litigation chief Thomas Cullen, Jr., has responded to the stay applications in a brief filed on behalf of Chrysler. Cullen’s brief argues that a stay would increase the possibility that a “sale will not happen,” meaning that the challengers would prevail despite lower courts ruling in Chrysler’s favor. That result would force Chrysler’s liquidation, which the brief assets would “cause massive harm to Chrysler and the public interest.”
Represented by Kramer Levin Naftalis & Frankel‘s Jeffrey Trachtman, Chrysler’s official committee of unsecured creditors filed a response to the challenge by the Indiana funds, stating that the sale was “the only alternative to a far worse economic and human disaster.”
U.S. Solicitor General Elena Kagan also defended the proposed sale as the only viable alternative to liquidation, which she estimates could cause the loss of more than 38,000 jobs.
As noted by our own Am Law Litigation Daily, Ginsburg’s ruling does not mean that the Court will ultimately hear the challengers’ appeal, but merely that the Justices need more time to consider its merits.
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