Lawrence Investments, LLC et al v. Air Line Pilots Association, International et al

Filing 5

ORDER Denying Defendants' Motion for Leave to Appeal Bankruptcy Court's Order for Partial Summary Judgment, re [1-1] - Signed by JUDGE JILL A. OTAKE on 4/20/2022. For the foregoing reasons, the Court DENIES the Motion. The Court DIRECTS the Clerk's Office to close the case.(jni)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

CIVIL NO. 22-00045 JAO-RT

Lawrence Investments, LLC, et al.,
Putative-Appellants,
vs.

ORDER DENYING DEFENDANTS’
MOTION FOR LEAVE TO
APPEAL BANKRUPTCY COURT’S
ORDER FOR PARTIAL
Air Line Pilots Association, International, SUMMARY JUDGMENT
et al.,
Putative-Appellees.

ORDER DENYING DEFENDANTS’ MOTION FOR LEAVE TO APPEAL
BANKRUPTCY COURT’S ORDER FOR PARTIAL SUMMARY
JUDGMENT
Before the Court is the Ohana-Related Defendants’1 Motion for Leave to
Appeal (“Motion”) the Bankruptcy Court’s Order Granting in Part and Denying in

1

The Court uses the Bankruptcy Court’s designations for the groups of
Defendants. The Ohana-Related Defendants are Ohana Airline Holdings, LLC;
Lawrence Investments LLC; the Lawrence J. Ellison Revocable Trust;
Carbonview, LLC (sometimes identified as Carbonview Limited, LLC in the
proceedings); Paul Marinelli; and Lawrence J. Ellison.
1

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Part Plaintiffs’ Motion for Partial Summary Judgment (“MSJ Order”) in Kane v.
PaCap Aviation Finance, LLC, AP No. 19-90027 (Bankr. D. Haw.) (“AP”). See
ECF No. 1-1; see also AP ECF No. 400;2 AP ECF No. 394. Plaintiffs3 oppose.
ECF No. 4. For the following reasons, the Court DENIES the Motion.
I.

Background And Grounds For Motion

Because the Court and the parties are familiar with the underlying facts and
procedural history, the Court forgoes a detailed background section. The most
salient facts are that Plaintiffs moved for partial summary judgment on certain
issues, and the Bankruptcy Court granted the motion in part. The Ohana-Related
Defendants now move for interlocutory appeal of the MSJ Order4 on four issues:
1. Whether the Bankruptcy Court erred when it held that the exception
set out in the Displaced Worker’s Act (“DWA”), Hawai‘i Revised
Statutes (“HRS”) § 394B-9(c) — to the effect that an employer that is
“actively seeking a buyer for a sale, transfer, or merger” need not give
sixty days’ notice before shutting down — does not apply unless the
employer successfully completes a “divestiture?”

2

The Court cites to filings in the adversary proceeding as “AP ECF No. __.”

3

Plaintiffs are Elizabeth A. Kane, the Chapter 7 trustee in the underlying
bankruptcy case commenced by Debtor Hawaii Island Air, Inc.; Air Line Pilots
Association, International; and Hawaii Teamsters and Allied Workers, Local 996.
Plaintiffs excluding the trustee are the “Unions.”
4

The Ohana-Related Defendants also filed motions in Kane v. PaCap Aviation
Finance, LLC, Civil No. 19-00574 JAO-RT, seeking de novo review of the MSJ
Order and an earlier filed motion to dismiss order. Those motions are addressed in
a separate order in that proceeding.
2

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2. Whether the Bankruptcy Court erred when it concluded that both the
“actively seeking capital” and “unforeseen circumstances”5
affirmative defenses in the federal Worker Adjustment and Retraining
Notification Act (“WARN Act”), 29 U.S.C. § 2101, are unavailable if
the notice ultimately provided purportedly did not include all the
information set out in 20 C.F.R. § 639?
3. Whether the Bankruptcy Court erred when it interpreted the word
“owns,” as found in HRS § 394B-2, to mean anyone “who has a large
enough ownership interest to be able to influence the employer’s
decision to give the notice the DWA requires,” as well as anyone
(regardless of ownership interest) with some degree of “control” or
“influence” over the employer’s affairs?
4. Whether the Bankruptcy Court erred when it granted partial summary
judgment in favor of the Unions without considering whether the
Unions have standing to assert claims on behalf of their members?
See ECF No. 1-1 at 13–14.
II.

Legal Standard

A district court may hear an appeal from a bankruptcy judge’s interlocutory
order if the district court grants leave to appeal. See 28 U.S.C. § 158(a)(3); Ad Hoc
Comm. of Holders of Trade Claims v. PG&E Corp., 614 B.R. 344, 351 (N.D. Cal.
2020); see also Silver Sage Partners, Ltd. v. City of Desert Hot Springs (In re City
of Desert Hot Springs), 339 F.3d 782, 787–88 (9th Cir. 2003) (“It is within the
discretion of the district court . . . to hear interlocutory appeals.” (citing 28 U.S.C.
§ 158(a))). “In deciding whether to grant leave to appeal under Section 158(a)(3),
courts look to the analogous provisions of 28 U.S.C. Section 1292(b) [(“Section

5

Also referred to as the “unforeseeable circumstances” affirmative defense.
3

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1292(b)”)] governing review of interlocutory district court orders by the courts of
appeal.” Ad Hoc Comm. of Holders of Trade Claims, 614 B.R. at 351 (citing Belli
v. Temkin (In re Belli), 268 B.R. 851, 858 (B.A.P. 9th Cir. 2001)) (other citation
omitted).
The Section 1292(b) certification requirements are “(1) that there be a
controlling question of law, (2) that there be substantial grounds for difference of
opinion, and (3) that an immediate appeal may materially advance the ultimate
termination of the litigation.” Arizona v. Ideal Basic Indus. (In re Cement Antitrust
Litig.), 673 F.2d 1020, 1026 (9th Cir. 1981). Even when all three requirements are
satisfied, Section 1292(b) appeals are discretionary and intended only for
“exceptional situations.” See id.
“[A]ll that must be shown in order for a question to be ‘controlling’ is that
resolution of the issue on appeal could materially affect the outcome of
litigation[.]” Id. (citation omitted). “A controlling question of law must be one of
law — not fact — and its resolution must ‘materially affect the outcome of
litigation in the district court.’” ICTSI Or., Inc. v. ILWU, 22 F.4th 1125, 1130 (9th
Cir. 2022) (quoting In re Cement Antitrust Litig., 633 F.2d at 1026) (other citations
omitted); see also Hawai‘i v. JP Morgan Chase & Co., 921 F. Supp. 2d 1059, 1065
(D. Haw. 2013) (noting that a controlling question means a pure question of law
rather than a mixed question of law and fact) (citations omitted).
4

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“To determine if a ‘substantial ground for difference of opinion’ exists under
§ 1292(b), courts must examine to what extent the controlling law is unclear.”
Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). “[A] party’s strong
disagreement with the Court’s ruling is not sufficient for there to be a ‘substantial
ground for difference.’” Id. (some internal quotation marks and citation omitted).
Whether a substantial ground for difference of opinion exists “does not turn on a
prior court’s having reached a conclusion adverse to that from which [the party]
seek[s] relief. A substantial ground for difference of opinion exists where
reasonable jurists might disagree on an issue’s resolution, not merely where they
have already disagreed.” Reese v. BP Expl. (Alaska) Inc., 643 F.3d 681, 688 (9th
Cir. 2011).
“[N]either § 1292(b)’s literal text nor controlling precedent requires that the
interlocutory appeal have a final, dispositive effect on the litigation, only that it
‘may materially advance’ the litigation.” Id. at 688 (quoting 28 U.S.C. § 1292(b)).
As this district has explained:
The requirement that an interlocutory appeal materially advance
the ultimate termination of the litigation is directed to the very
purpose of § 1292(b) — to “facilitate disposition of the action by
getting a final decision on a controlling legal issue sooner, rather
than later in order to save the courts and the litigants unnecessary
trouble and expense.” United States v. Adam Bros. Farming,
Inc., 369 F. Supp. 2d 1180, 1182 (C.D. Cal. 2004); see also In re
Cement Antitrust Litig., 673 F.2d at 1026 (stating that § 1292(b)
is used “only in exceptional situations in which allowing an
5

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interlocutory appeal would avoid protracted and expensive
litigation”).
And most critical here, an interlocutory appeal is
appropriate where resolution of the issue would materially
advance the termination of not only the present case, but also
other cases pending before the court.
Leite v. Crane Co., Civil No. 11-00636 JMS/RLP, 2012 WL 1982535, at *6–7 (D.
Haw. May 31, 2012) (brackets and other citations omitted).
III.
A.

Discussion

An Interlocutory Appeal On WARN Act or DWA Issues Would Not
Materially Advance The Ultimate Termination of Litigation
All three Section 1292(b) requirements must be met in order to accept an

interlocutory appeal. See In re Cement Antitrust Litig., 673 F.2d at 1026. Because
it is clear that an interlocutory appeal would not materially advance the ultimate
conclusion of this litigation, and despite Plaintiffs’ extensive briefing on the first
two elements, the Court assumes without deciding that the WARN Act and DWA
issues (issues #1–3) satisfy the controlling question of law and substantial ground
for difference of opinion elements.
The Ohana-Related Defendants’ first two issues both relate to the
Bankruptcy Court’s interpretations of affirmative defenses. An interlocutory
appeal to review those interpretations now would only delay matters. For example,
the “Divestiture Exception,” applies to the notification requirement of the DWA
articulated in HRS § 394B-9(a), but only Counts II and V of the thirteen-count
6

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complaint implicate the DWA’s notification requirement. See AP ECF No. 1 at
82–107. Similarly, only Counts III and V relate to the WARN Act and the
corresponding affirmative defenses, and Count V is not even asserted against the
Ohana-Related Defendants. See id. at 87–94.
Additionally, allowing an interlocutory appeal on the limited affirmative
defenses could prove unnecessary. In other words, an interlocutory appeal to
clarify the legal standards for the affirmative defenses would not materially
advance the ultimate termination of this litigation. First, the Ohana-Related
Defendants could still win on the merits of the DWA or Warn Act claims without
relying on the affirmative defenses, thereby eradicating any need for them to
appeal the issue. Further, even if the Court accepted the interlocutory appeal and
reversed the Bankruptcy Court’s interpretations of the affirmative defenses, the
Ohana-Related Defendants would still have to adduce evidence at trial that they
were entitled to the defenses. Thus, under this Court’s hypothetical new
interpretations, a factfinder could still conclude that the Ohana-Related Defendants
failed to satisfy the requirements of the defenses. Such an outcome would render
the interlocutory appeal an unnecessary delay. Simply put, these questions appear
to comprise a small portion of the overall case. Addressing them now would not
substantially clear the path toward ultimate termination of the case.

7

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Additionally, even if the Court granted the Motion and heard the
interlocutory appeal, further appeals to the Ninth Circuit on these issues appear to
be a foregone conclusion. For example, if the Court reversed the MSJ Order’s
interpretation of the affirmative defenses, and the Ohana-Related Defendants
prevailed on those defenses, it seems certain Plaintiffs would appeal. ECF No. 4 at
18 (“[C]learly this issue will be appealed to the Ninth Circuit following a trial, no
matter how this Court decides this appeal.”). Conversely, if the Court affirmed the
Bankruptcy Court, and Defendants lost on the merits of the DWA and WARN Act
notification requirements, the Ohana-Related Defendants seem certain to appeal as
evidenced by this Motion. Thus, allowing an interlocutory appeal on these limited
topics would create the type of piecemeal litigation that Section 1292(b) reserves
only for exceptional circumstances.
Similarly, the third proposed issue for appeal concerns Bankruptcy Court’s
definition of “owns” for the DWA’s definition of “employer.” The DWA defines
“employer” as “any individual or entity that, directly or indirectly, owns, operates,
or has a controlling interest in a covered establishment,” but does not separately
define “owns.” HRS § 394B-2. But clarifying the definition of “owns” may not
even materially advance whether any of the Ohana-Related Defendants are an
“employer” under the statute for at least two reasons. First, the Bankruptcy Judge
held that there was a factual question as to whether the Ohana-Related Defendants
8

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“owned” Island Air pursuant to the Bankruptcy Court’s definition. See AP ECF
No. 394 at 12. Thus, even under the Bankruptcy Court’s interpretation of “owns,”
the factfinder could still find for the Ohana-Related Defendants on the matter.
Prevailing on that question at trial would negate any need for the Ohana-Related
Defendants to clarify the definition of “owns” on appeal. Second, even if the
Ohana-Related Defendants did not own the airline, they could still be an employer
if a factfinder concluded they had, for example, a “controlling interest” in Island
Air. See id. at 3 (noting that the MSJ Order did not decide “whether the OhanaRelated Defendants are ‘employers’ under the DWA on any grounds other than
those asserted in the Unions’ motion”); id. at 12 (“Further, a jury might
conceivably find that Ohana acted in close enough concert with Mr. Au and the
other Malama-Related Defendants to create a group such that they should all be
collectively treated as the ‘owner’ of the Debtor.”).
Further, the DWA is a Hawai‘i law that, as to the relevant issues here, the
Hawai‘i Supreme Court has yet to interpret. Accepting an interlocutory appeal
now might precipitate additional delays if the Court needed to certify certain issues
for the Hawai‘i Supreme Court to address before ruling on the MSJ Order. See
ECF No. 4 at 28–30.
In sum, the DWA and WARN Act only make up a limited portion of
Plaintiffs’ claims. The Ohana-Related Defendants’ proposed questions regarding
9

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those statutes further narrow the grounds on which they seek appeal. The Court’s
guidance on those limited issues now would delay matters rather than materially
advance the end of this litigation. Thus, the Court denies the Motion as to the first
three of the Ohana-Related Defendants’ issues for review.
B.

The Ohana-Related Defendants Have Not Demonstrated Why The
Standing Question Is Appropriate For Interlocutory Appeal
As an initial matter, the Ohana-Related Defendants do not even attempt to

demonstrate how the standing question meets the three prerequisites for an
interlocutory appeal. Instead, they argue that the Bankruptcy Court “shirked its
duty” by failing to consider the Unions’ standing to assert the DWA and Warn Act
Claims and “compounded its error” by intimating that the issue was one of
damages. See ECF No. 1-1 at 37. But the Ohana-Related Defendants have shirked
their burden of demonstrating that the issue meets the Section 1292(b)
requirements and compounded that error by attempting to incorporate pages from
their briefing in the bankruptcy court. See id. at 36 (referencing briefing from
bankruptcy court proceeding). Further, the Defendants’ characterization of the
MSJ Order’s treatment of the standing question is inaccurate. The Bankruptcy
Court declined to address the topic because the Ohana-Related Defendants failed to
move for relief on the matter, see AP ECF No. 394 at 3 n.3, instead only raising it
in opposition. See AP ECF No. 338.

10

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Regardless, the instant standing question is inappropriate for interlocutory
review. In general, the Ohana-Related Defendants argued to the Bankruptcy Court
that the Unions could not assert claims on behalf of individual employees. See AP
ECF No. 338 at 13–20. As to the DWA, the matter is not a purely legal question as
evidenced by the fact that Plaintiffs rely on designation forms, which employees
signed granting the Unions authority to assert the claims on their behalf. See AP
ECF No. 368 at 12–14. Wading into such facts is not the purpose of an
interlocutory appeal. See ICTSI, 22 F.4th at 1132.
Further, there is no substantial ground for a difference of opinion on the
matter. As to the WARN Act, the Supreme Court has held that unions may sue for
their members’ damages. See United Food & Com. Workers Union Local 751 v.
Brown Group, Inc., 517 U.S. 544, 546, 558 (1996); see also 29 U.S.C. §
2104(a)(5) (“A person seeking to enforce such liability, including a representative
of employees . . . may sue either for such person or for other persons similarly
situated[.]”). Similarly, the DWA establishes a civil enforcement mechanism like
that in the WARN Act. See HRS § 394B-13(a) (“An action by an employee to
enforce the provisions of this chapter may be maintained in any court of competent
jurisdiction by any one or more employees for and in behalf of oneself or
themselves, or the employee or employees may designate an agent or

11

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representative to maintain the action.” (emphasis added)). Thus, the Court denies
the Motion as to the Ohana-Related Defendants’ fourth proposed issue.
Alternatively, even if the Ohana-Related Defendants have satisfied the three
interlocutory appeal requirements on any of their proposed issues, the Court
declines to exercise its discretion to accept the interlocutory appeal. The trial,
which promises to be complex, is just months away. Addressing this proposed
interlocutory appeal now may prove fruitless and would delay this already longrunning case.
IV.

Conclusion

For the foregoing reasons, the Court DENIES the Motion. The Court
DIRECTS the Clerk’s Office to close the case.
IT IS SO ORDERED.
DATED: Honolulu, Hawai‘i, April 20, 2022.

CIV. NO. 19-00574 JAO-RT; Lawrence Invs., LLC, et al., v. Air Line Pilots Ass’n,
Int’l, et al., ORDER DENYING MOTION FOR LEAVE TO APPEAL
BANKRUPTCY COURT’S ORDER FOR PARTIAL SUMMARY JUDGMENT
12