Chinook v. Duck Commander, Inc. et al

Filing 8

MEMORANDUM OPINION signed by Senior Judge Charles R. Simpson, III on 1/7/2016, re 1 Defendants' MOTION to Withdraw Reference, to Dismiss, and/or Transfer Venue; and 6 Plaintiff's MOTION for Leave to File Surreply. A separate order will be entered in accordance with this Opinion.cc: Counsel (RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CHINOOK USA, LLC

PLAINTIFF

CIVIL ACTION NO. 3:15-CV-00240-CRS
Bankr. No. 15-30057-acs (Chapter 11)
A.P. No. 15-03006

v.

DUCK COMMANDER, INC., et al.

DEFENDANTS

MEMORANDUM OPINION
Before Plaintiff Chinook USA, LLC (“Chinook”) filed for bankruptcy and subsequently
filed an adversary proceeding against Defendants Duck Commander, Inc. (“Duck Commander”),
3292 Brands, LCC (“Brands”), and Dahlen Associates, Inc. (“Dahlen”) (collectively,
“Defendants”), Chinook filed suit in this Court involving the same license agreement, payments,
and factual background as the adversary proceeding. Defendants now move this Court to
withdraw reference to bankruptcy court of the adversary proceeding, consolidate the adversary
proceeding with the pending district court case, and dismiss the claims or transfer venue to
another district court. Chinook opposes Defendants’ motion.
For the reasons stated below, the Court will grant Defendants’ motion in part and
withdraw reference to bankruptcy court of the adversary proceeding and consolidate the
adversary proceeding with the pending district court case, civil action No. 3:14-CV-01015-CRS.
The Court will deny Defendants’ motion in part to the extent Defendants move the Court to
dismiss the claims or transfer venue.
1

United States district courts have exclusive jurisdiction over bankruptcy cases, 28 U.S.C.
§ 1334(a), and “original but not exclusive jurisdiction of all civil proceedings arising under title
11, or arising in or related to cases under title 11.” 28 U.S.C. § 1334(b). In the Western District
of Kentucky, under 28 U.S.C. § 157(a) and Local Rule 21, most bankruptcy related matters are
referred automatically to bankruptcy court. However, under 28 U.S.C. § 157(d), the Court “may
withdraw, in whole or in part, any case or proceeding … on its own motion or on timely motion
of any party, for cause shown.”
Chinook’s adversary proceeding against Defendants was referred to the bankruptcy court
under Section 157(a). While the Bankruptcy Code does not define “cause” to withdraw
reference, courts have considered various factors in determining whether cause exists, including:
(1) promoting judicial economy; (2) promoting uniformity and expediency in bankruptcy
administration; (3) reducing forum shopping and confusion; (4) fostering the economical use of
the debtor’s and creditor’s resources; and (5) the presence of a jury demand. See Big Rivers Elec.
Corp. v. Green River Coal Co., 182 B.R. 751, 754-55 (W.D. Ky. 1995) (aggregating factors
considered by different courts). In particular, where a proceeding within bankruptcy involves
common legal and factual issues with a case pending in district court, “the overlapping of facts,
transactions and issues in the two cases … is good cause for withdrawal of the reference and
consolidation with the district court proceeding.” Id. at 755 (internal quotation and citation
omitted).
Here, the existence of a pending district court case with overlapping facts, parties, issues,
and requested relief strongly weighs in favor of withdrawing the adversary proceeding’s
reference to bankruptcy court. Chinook filed a suit in this district court against Defendants
alleging, among other claims, breach of a license agreement between Chinook and Duck
2

Commander. In that lawsuit, Chinook seeks “the $1,750,000 it has paid to [Duck Commander]”
under the license agreement. Chinook USA, LLC v. Duck Commander, Inc., et al., Civil Action
No. 3:14-CV-01015-CRS, Amend. Compl. ¶ 97. In the adversary proceeding, Chinook is seeking
the same amount for Duck Commander’s failure to comply with the same license agreement due
to similar non-compliance. Advisory Proceeding, Compl. ¶ 35. In each instance, Chinook seeks
recovery for non-compliance from Duck Commander, Brands, and Dahlen.
Promoting judicial economy compels this Court to withdraw reference. Duck
Commander’s filing of a proof of claim does not alter this analysis. Cf. Pl.’s Surreply, ECF No.
6. There is an existing and preceding civil action between these parties involving overlapping
facts, issues, and relief. Allowing this adversary proceeding to continue in bankruptcy court
while a parallel suit proceeds in district court would waste judicial resources. Further,
consolidation with the district court lawsuit would not hinder expedient and uniform bankruptcy
administration.
The Court will grant Defendants’ motion to withdraw reference to bankruptcy court of
the adversary proceeding and consolidate the adversary proceeding with the pending district
court case, civil action No. 3:14-CV-1015-CRS. The Court will deny Defendants’ motion to
dismiss or transfer venue as moot. The Court will also deny Chinook’s motion for leave to file
surreply as moot.
A separate order will be entered in accordance with this opinion.

January 7, 2016

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