Astro Tel, Inc. v. Verizon Florida LLC et al

Filing 5

ORDER granting 1 Defendants' Motion to Withdraw the Reference. The Clerk is directed to withdraw the reference of the adversary proceeding, 8:11-ap-00342-MGW. Signed by Judge Virginia M. Hernandez Covington on 9/30/2011. (CR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
IN RE:
ASTRO TEL, INC.,
Debtor.
__________________________________/
ASTRO TEL, INC.,
Plaintiff,
v.

Case No. 8:11-mc-00059-T-33
Bankruptcy Case No. 8:10-bk-29992-MGW
Adv. Pro. No. 8:11-ap-00342-MGW

VERIZON FLORIDA, LLC and
VERIZON COMMUNICATIONS INC.,
Defendants.
__________________________________/

ORDER
This cause comes before the Court pursuant to Defendants
Verizon Florida, LLC and Verizon Communication Inc.’s (collectively
“Verizon”)

Motion

Plaintiff/Debtor

to

Withdraw

the

Reference

(Doc.

#

1).

Astro Tel, Inc. (“Astro Tel”) has not filed a

response to this motion.
On March 29, 2011, Astro Tel filed an adversary proceeding,
8:11-ap-00342-MGW,

against

Verizon

in

bankruptcy

court.

The

Complaint alleges that Verizon engaged in unlawful and anticompetitive

actions

including

monopolization,

attempted

monopolization, monopoly leveraging and tying - all in violation of
the Sherman Antitrust Act, 15 U.S.C. §§ 1-2. See Verified Complaint
in Adv. Proc. No. 8:11-ap-00342-MGW at ¶¶ 55-73. Astro Tel also
alleges that, in violation of the federal Racketeer Influenced and

Corrupt Organizations Act, 18 U.S.C. §§ 1961-62, Verizon entities
worked together to defraud Astro Tel while impairing its ability to
compete in the telephone services market. Id. at ¶¶ 74-88. Further
allegations include violations of the Lanham Act, 15 U.S.C. §
1125(a). Id. at ¶¶ 89-92. There are additional state law causes of
action alleged in the Complaint, including tortious interference,
unfair

competition,

unjust enrichment.

business

defamation,

civil

conspiracy

and

Id. at ¶¶ 93-128.

The United States Code grants bankruptcy jurisdiction to
Article III district courts pursuant to 28 U.S.C. § 1334(b), which
states that “district courts shall have original but not exclusive
jurisdiction of all civil proceedings arising under title 11, or
arising in or related to cases under title 11.”

The United States

Code further provides in 28 U.S.C. § 157(a) that each district
court may refer all cases arising under, arising in or related to
Title 11 proceedings to the bankruptcy judges for the district. In
re Gunnallen Fin., Inc., No. 8:10-cv-2855-T-24, 2011 WL 398054, at
*1 (M.D. Fla. Feb. 3, 2011). As such, bankruptcy courts obtain
jurisdiction over cases and proceedings brought pursuant to the
bankruptcy code only by referral at the discretion of the district
courts.
Fla.

Control Center, L.L.C. v. Lauer, 288 B.R. 269, 273 (M.D.

2002).

This

Court

has

a

standing

bankruptcy matters to the bankruptcy court.

order

referring

all

In re Gunnallen, 2011

WL 398054, at *1; In re Hvide Marine Inc., 248 B.R. 841, 842 n.1
(M.D. Fla. 2000).
Because the jurisdiction of a bankruptcy court is obtained
2

only by referral, Congress has also provided a mechanism for a
district

court

to

withdraw

any

such

reference

of

a

case

or

proceeding in bankruptcy. Control Center, L.L.C., 288 B.R. at 27374.

Section 157(d) provides for both permissive withdrawal and

mandatory withdrawal as follows:
The district court may withdraw, in whole or in part, any
case or proceeding referred under this section, on its
own motion or on timely motion of any party, for cause
shown. The district court shall, on timely motion of a
party, so withdraw a proceeding if the court determines
that resolution of the proceeding requires consideration
of both title 11 and other laws of the United States
regulating
organizations
or
activities
affecting
interstate commerce.
28 U.S.C. § 157(d)(emphasis added).
“permissive

withdrawal,”

and

the

The first sentence addresses
second

sentence,

“mandatory

In re Hvide Marine Inc., 248 B.R. at 843 (citing In

withdrawal.”

re Am. Body Armor & Equip., Inc., 155 B.R. 588, 590 (M.D. Fla.
1993)).
On April 22, 2011, Verizon filed its Motion to Withdraw the
Reference

of

the

adversary

proceeding

pursuant

to

§

157(d).

Verizon submits that withdrawal of the reference is mandatory or,
in the alternative, permissive withdrawal would also appropriate.
Mandatory withdrawal under § 157(d) requires that the following be
established:
substantial

(1)
and

the

adversary

material

question

proceeding
of

both

must

title

involve
11

and

a

non-

bankruptcy code federal law; (2) the non-bankruptcy code federal
law must have more than a de minimis effect on interstate commerce;
and (3) the motion for mandatory withdrawal must be timely. In re
Nat’l Gypsum Co., 145 B.R. 539, 541 (N.D. Tex. 1992); see also In
3

re Sec. Bank Corp.,

No. 09-52409-JTL, 2010 WL 2464966, at *3 (M.D.

Ga. June 14, 2010); In re Am. Body Armor & Equip., Inc., 155 B.R.
at 590; In re TPI Int’l Airways, 222 B.R. 663, 667 (S.D. Ga. 1998).
These requirements reflect Congressional “intent to keep nonbankruptcy questions in district courts, which are more experienced
at handling questions of non-bankruptcy federal law than the
specialized bankruptcy courts.” In re Contemporary Lithographers,
Inc., 127 B.R. 122, 128 (M.D.N.C. 1991).
Upon due consideration, the Court finds that withdrawal of the
reference is mandatory. First, resolution of Astro Tel’s Complaint
will

require

“substantial

and

material

consideration”

of

the

Sherman Act, the RICO Act and the Lanham Act. Substantial and
material consideration of non-bankruptcy code law requires more
than mere presence of non-bankruptcy code law. In re Am. Body Armor
& Equip., Inc. 155 B.R. at 590. However, substantial and material
consideration is required when “the resolution of non-bankruptcy
law [is] essential to the dispute.” In re TPI Int’l Airways, 222
B.R.

at

668.

Because

the

non-bankruptcy

code

federal

laws

predominate the Complaint, resolution of those issues is essential
to the dispute. In addition, these statutes, by their very nature,
require substantial and material consideration of non-bankruptcy
code federal law. See, e.g., Burger King Corp. v. B-K of Kan.,
Inc., 64 B.R. 728, 731 (D. Kan. 1986)(finding that a claim of
trademark

infringement

and

antitrust

and

RICO

counterclaims

entailed “material and substantial consideration” of non-bankruptcy
code federal law). Therefore, the non-bankruptcy code laws at issue
4

require substantial and material consideration.
Next, it must be determined whether the non-bankruptcy code
federal law questions have more than a de minimis effect on
interstate commerce. Verizon asserts that the Sherman Act, the RICO
Act

and

the

Lanham

Act

regulate

organizations

or

activities

affecting interstate commerce far more than to a de minimis degree.
(Doc. # 1-6). Section 1 of the Sherman Act states, “[e]very
contract . . . in restraint of trade or commerce among the several
States. . . is declared to be illegal.” 15 U.S.C. § 1 (emphasis
added). Therefore, interstate commerce is essential to a Sherman
Act violation. Section 1962 of RICO requires a similar nexus
between a defendant’s conduct and interstate commerce. 18 U.S.C. §
1962.

Additionally, Congress enacted the Lanham Act specifically

“in order to provide national protection for trademarks used in
interstate and foreign commerce.” Park ‘N Fly, Inc. v. Dollar Park
& Fly, Inc., 469 U.S. 189, 193 (1985). This Court agrees that the
non-bankruptcy code federal laws involved have more than a de
minimis effect on interstate commerce.
Finally, Verizon timely filed its motion within thirty days
after commencement of the adversary proceeding.1 See M.D. Fla.
Bankr.

R.

5011-1(b)(2).

With

no

compelling

argument

to

the

contrary, the Court agrees that, “in cases such as this one,
withdrawal of the reference is properly and routinely found to be

1

The Complaint was filed on March 29, 2011. Verizon filed
this motion with the Bankruptcy Court on April 22, 2011.
5

mandatory under section 157(d).”2 Doc. # 1-7.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1) Defendants’ Motion to Withdraw the Reference (Doc. # 1)
is GRANTED.
(2) The Clerk is directed to withdraw the reference of the
adversary proceeding, 8:11-ap-00342-MGW.
DONE and ORDERED in Chambers in Tampa, Florida this 30th day
of September, 2011.

Copies:
All Counsel of Record

2

The Court notes that although it need not address Verizon’s
alternative grounds for permissive withdrawal, withdrawal “for
cause” would be appropriate as the claims are non-core and AstroTel has made a demand for a jury trial. See Control Center,
L.L.C., 288 B.R. at 274.
6