CANADIAN PACIFIC RAILWAY COMPANY et al v. KEACH
ORDER DENYING APPELLANT'S MOTION SEEKINGINTERLOCUTORY APPEAL 7 Motion for Leave to Appeal By JUDGE JON D. LEVY. (akr)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
CANADIAN PACIFIC RAILWAY
COMPANY, et al.,
ROBERT J. KEACH, in his capacity )
as estate representative of the post- )
effective date estate of Montreal,
Maine & Atlantic Railway, Ltd.,
ORDER DENYING APPELLANT’S MOTION SEEKING
In July of 2013, a freight train operated by the Montreal Maine & Atlantic
Railway, Ltd. (“MMA”), including its 72 carloads of crude oil, derailed in the town of
Lac-Megántic, Quebec, leading to a series of explosions that destroyed part of the
downtown area and killed 47 people. The next month, MMA filed a chapter 11
Bankruptcy proceeding in this District and simultaneously sought similar protection
in Canada. In January 2014, Robert Keach, then acting as the chapter 11 trustee of
the MMA estate, commenced an adversary proceeding against multiple defendants
who are no longer parties to the action. In January 2015, Keach filed an Amended
Complaint which added Appellant Canadian Pacific Railway Company as a
In September 2016, Keach, now in his capacity as the estate representative of
the estate of MMA (the “Estate Representative”), filed a Third Amended Complaint
in the U.S. Bankruptcy Court against Canadian Pacific Railway Company and Soo
Line Railroad Company (collectively, “CP”). Keach alleged claims for negligence
(Count One); breach of contract/warranty (Count Two); negligent misrepresentation
(Count Three); and disallowance of CP’s proof of claim in the underlying bankruptcy
involving MMA (Count Four). CP subsequently moved to dismiss the Third Amended
Complaint on grounds of forum non conveniens and for failure to state a claim upon
which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). In
July 2017, the Bankruptcy Court issued an interlocutory order granting CP’s motion
in part as to the Breach of Contract/Warranty Claims, but denied it as to the
This matter is before me on CP’s motion (ECF No. 7) seeking leave to appeal
from the Bankruptcy Court’s interlocutory order. CP’s motion invokes the District
Court’s jurisdiction “to hear appeals . . . with leave of the court, from interlocutory
orders and decrees” of bankruptcy judges established in 28 U.S.C.A. § 158(a)(3)
(2017). In the alternative, CP’s motion urges me to exercise the District Court’s
jurisdiction to review, “with leave of the court, [the] interlocutory orders and decrees,
of bankruptcy judges entered in cases and proceedings referred . . . under section 157
of this title.” Id. Section 157 refers to 28 U.S.C.A. § 157(c)(1) (2017), which authorizes
bankruptcy judges to submit proposed findings of fact and conclusions of law to the
District Court in “a proceeding that is not a core proceeding but that is otherwise
related to a case under title 11” of the United States Code (“Title 11” or the
“Bankruptcy Code”). Id.
For the reasons explained below, I reach two conclusions: First, CP’s motion
invokes the District Court’s appellate jurisdiction established in § 158(a)(3), and does
not invoke the related jurisdiction to consider proposed findings of fact and
conclusions of law in non-core proceedings. Second, CP has not demonstrated that
leave to appeal from the Bankruptcy Court’s interlocutory order is warranted. Thus,
I deny the motion.
I. LEGAL ANALYSIS
U.S. District Courts have jurisdiction over appeals from final judgments,
orders, and decrees of the Bankruptcy Courts, 28 U.S.C.A. § 158(a)(1) (2017),
including the discretion to hear appeals taken from the interlocutory orders and
decrees, id. at § 158(a)(3). See also In re Jackson Brook Inst., Inc., 280 B.R. 1, 4 (D.
Me. 2002). Section 158(a)(3) provides:
The district courts of the United States shall have jurisdiction to hear
appeals with leave of the court, from . . . interlocutory orders and
decrees; and, with leave of the court, from interlocutory orders and
decrees, of bankruptcy judges entered in cases and proceedings referred
to the bankruptcy judges under section 157 of this title.
28 U.S.C.A. § 158(a)(3).
In a “core proceeding” before a Bankruptcy Court—one arising under the
Bankruptcy Code, Title 11—appellate review of an interlocutory order or decree is,
as provided in § 158(a)(3), “with leave of court.” 28 U.S.C.A. §§ 157(b)(1), § 158(a)(3).
See also Stern v. Marshall, 564 U.S. 462, 474 (2011). The same standard applies in a
non-core proceeding—one that does not “arise under” Title 11 but is merely “related
to” a case under Title 11. §§ 157(b)(1), 157(c)(1); Stern, 564 U.S. at 474. In non-core
proceedings, the Bankruptcy Court submits proposed findings of fact and conclusions
of law to the District Court, which then enters a final judgment after reviewing de
novo any matter to which a party objects. § 157(c)(1).
Where, as here, the Bankruptcy Court issues an order or decree in a non-core
proceeding that dismisses some, but not all of the claims, the order is interlocutory.
Fleet Data Processing Corp. v. Branch (In re Bank of New England Corp.), 218 B.R.
643, 647 (B.A.P. 1st Cir. 1998).
Section 158(a)(3) provides that appeals from
interlocutory orders and decrees in “cases and proceedings referred to the bankruptcy
judges under section 157 of this title,” such as non-core proceedings referred to the
bankruptcy judge, are also subject to “leave of court.” In short, appellate review of an
interlocutory order of the Bankruptcy Court, whether it is an interlocutory order
entered in a core proceeding or in a non-core proceeding, is only permitted “with leave
of court,” as stated in § 158(a)(3).
CP contends that the Bankruptcy Court’s order granting in part and otherwise
denying its motion to dismiss is not an “order” of the Bankruptcy Court for purposes
of § 158(a)(3), but is instead “proposed findings of fact and conclusions of law” under
section 157(c)(1). Therefore, CP argues, it is subject to de novo review in the District
Court without leave of court. This argument is contrary, however, to the plain and
unambiguous language of § 158(a)(3), which recognizes that Bankruptcy Courts may
enter “interlocutory orders and decrees” in non-core proceedings, i.e., “cases and
proceedings referred to bankruptcy judges under section 157.” § 158(a)(3). Such
“interlocutory orders and decrees” are not “proposed findings of fact and conclusions
of law” pursuant to § 157(c)(1) that may result in the entry of a final order or
Thus, because the Bankruptcy Court issued an interlocutory order not a
proposed finding of fact and conclusions of law, the District Court’s jurisdiction arises
“with leave of court,” regardless of whether this is a core or non-core proceeding.
Factors Relevant to Interlocutory Appeals
Having established that interlocutory review in this case is only available with
leave of the court, I turn to consider the standards by which that judicial discretion
is exercised. Although § 158(a)(3) establishes the District Court’s jurisdiction to hear
interlocutory bankruptcy appeals, it does not set forth standards or criteria for
deciding when that jurisdiction should be exercised. In re Bank of New England
Corp., 218 B.R. at 652. Courts have therefore turned to the analysis used under 28
U.S.C.A. § 1292(b) (2017), the statute governing the certification of interlocutory
appeals from orders of the district courts to the circuit courts of appeal. Id. (citation
omitted). See also BancBoston Real Estate Capital Corp. v. JBI Assoc. Ltd. P’ship (In
re Jackson Brook Inst., Inc.), 227 B.R. 569, 581 (D.Me. 1998) (“a district court may
exercise jurisdiction over an interlocutory order of a bankruptcy court if leave to hear
the appeal is granted . . . most courts borrow the factors considered under section
1 The parties dispute and have briefed related questions such as whether CP impliedly consented to
the Bankruptcy Court determining the motion to dismiss. See Wellness Int’l Network, Ltd. v. Sharif,
135 S.Ct. 1932, 1947-48 (2015) (concluding that a Bankruptcy Court may enter orders in a non-core
proceeding with the consent of all parties, and that explicit consent is not required–parties may
impliedly consent as long as they do so knowingly and voluntarily). I do not address and resolve the
other related questions because, for the reasons I have discussed, § 158(a)(3) provides jurisdiction for
this appeal from the Bankruptcy Court’s order regardless of whether this is a core or non-core
proceeding, and regardless of whether CP consented to the Bankruptcy Court’s determination of the
motion to dismiss.
1292(b)”); Carr v. Carr (In re Meridian Med. Sys., LLC), Case No. 2:16-cv-00038-DBH,
2016 WL 3221558, at *3 (D.Me. June 10, 2016).
Under § 1292(b), leave to appeal an interlocutory order is appropriate where:
(1) the order involves a controlling question of law; (2) as to which there is substantial
ground for difference of opinion; and (3) an immediate appeal from the order may
materially advance the ultimate termination of the litigation. Caraballo-Seda v.
Municipality of Hormigueros, 395 F.3d 7, 9 (1st Cir. 2005).
A district court’s
discretion to certify an interlocutory appeal under § 1292(b) is used “sparingly and
only in exceptional circumstances.” Id. See also In re Jackson Brook Inst., 227 B.R.
at 581 (citation omitted). For interlocutory bankruptcy appeals, however, “a more
pragmatic and liberal approach” has been recognized and the standard is “somewhat
loosened” as compared with § 1292(b). Id. In re Jackson Inst., 227 BR at 582 (citing
N.E. Savings, F.A. v. Geremia (In re Kalian), 191 B.R. 275, 278 (D.R.I. 1996)).
Notwithstanding this loosened standard, the exceptions are treated as “narrowly
limited in order to avoid piecemeal review.” Quiros Lopez v. Unanue Casal (In re
Casal), 998 F.2d 28, 31 (1st Cir. 1993). I turn to consider the three factors as applied
to this case.
Controlling Question of Law
A controlling question of law is an issue “embodied in an order which, if
reversed, would terminate the action.” In re Jackson Brook Inst., Inc. (“Jackson Brook
II”), 280 B.R. 1, 5 (D.Me. 2002) (quoting Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d
21, 24-25 (2d Cir. 1990)).
A question of law may be controlling if reversal on
interlocutory appeal “might save time for the district court, and time and expense for
the litigants.” Ashmore v. Ne. Petroleum Div. of Cargill, Inc., 855 F. Supp. 438, 440
(D. Me. 1994) (quoting 16 C. Wright, A. Miller, E. Cooper, E. Gressman, Federal
Practice and Procedure § 3930 at 159-60 n.12 (1977 and 1994 supplement)). If a party
can be successful on alternative grounds or asserted theories that are not controlled
by a question of law, then the question asserted is not controlling. Jackson Brook II,
280 B.R. at 5 (citing Sandler v. Eastern Airlines, Inc., 649 F.2d 19, 20 (1st Cir. 1981)).
CP asserts that a controlling question of law exists because the Bankruptcy
Court concluded that the Estate Representative’s factual allegations were plausible
and not subject to dismissal pursuant to Rule 12(b)(6). CP also argues that the
Bankruptcy Court determined the forum non conveniens issue without regard to CP’s
evidentiary needs, without considering CP’s ability to implead or call crucial
Canadian witnesses, and without taking into account certain unnamed First Circuit
legal authority holding that a forum non conveniens dismissal would best serve the
ends of justice.
In making its argument that the forum non conveniens doctrine represents a
controlling question of law in this case, CP has set forth its reasons for disagreeing
with the Bankruptcy Court’s decision, but has failed to support its assertion that
reversing the Bankruptcy Court’s ruling in an interlocutory appeal will either
terminate the action or otherwise save time and expense for the parties and the court.
Ashmore, 855 F. Supp. at 440; Jackson Brook II, 280 B.R. at 5. While CP cites
numerous cases for the proposition that a § 1292(b) appeal from an adverse forum
non conveniens decision is appropriate, see ECF No. 10 at 6 n.11, this point is not in
contention. None of the cited cases support the notion that a district court should
more readily exercise its discretion under § 1292(b) or § 158(a)(3) simply because the
issue in dispute relates to the forum non conveniens doctrine.
For example, in the first case cited by CP, Van Cauwenberghe v. Biard, 486
U.S. 517, 529-30 (1988), the Supreme Court held that an order denying a motion to
dismiss on forum non conveniens grounds is not subject to appeal as a final judgment.
Instead, a defendant who has been denied a forum non conveniens dismissal must
seek interlocutory certification under 28 U.S.C. § 1292(b). Id. While the Court
observed that “in certain cases, the forum non conveniens determination will not
require significant inquiry into the facts and legal issues,” this observation did not
change or lessen the requirement that a party seeking interlocutory review must
satisfy the § 1292(b) factors, nor suggest that any factors are satisfied simply because
a party argues for dismissal based upon the doctrine of forum non conveniens. See
In another case cited by CP, Gonzalez v. Naviera Neptuno AA, 832 F.2d 876,
881 (5th Cir. 1987), the Fifth Circuit concluded that the district court erred in not
dismissing the case for forum non conveniens and noted that the district court did not
“carefully state in detail” its reasoning. The Fifth Circuit urged trial judges “to put
on the record adequate detailed reasons for action in granting or denying motions to
dismiss for forum non conveniens[.]” Id. The lack of “adequate detailed reasons” in
the District Court’s denial of the motion to dismiss was the focus of the Fifth Circuit’s
opinion, and it is through this lens that the court’s admonishment that “judges should
be hospitable to applications for Interlocutory Appeals under” § 1292(b) should be
read. See id. Moreover, the Fifth Circuit recognized that the decision to certify “is
within the considered discretion of the trial judge” and that “we cannot direct that all
forum non conveniens issues be certified” for interlocutory appeal. Id. at n.5. Thus,
while Gonzalez supports the proposition that a § 1292(b) interlocutory appeal may be
appropriate where a motion to dismiss for forum non conveniens has been denied, it
does not address the § 1292 factors and sheds no light on whether those factors have
been satisfied by CP in this case. Likewise, in Ford v. Brown, 319 F.3d 1302, 1304
n.2 (11th Cir. 2003), the Eleventh Circuit observed that interlocutory review of the
denial of a motion to dismiss based upon the forum non conveniens doctrine may be
available pursuant to § 1292(b), but the court did not address whether the doctrine
of forum non conveniens necessarily raises a controlling question of law or otherwise
satisfies the § 1292(b) factors.2
CP’s 12(b)(6) argument fares no better because it is predicated on the
complaint’s factual allegations, whereas a controlling question of law typically
involves “a pure legal principle that can be resolved without extensive consultation
to the record.” Meijer, Inc. v. Ranbaxy, Inc., 245 F. Supp. 3d 312, 315 (D. Mass. 2017);
see also Ahrenholz v. Bd. of Tr. of Univ. of Ill., 219 F.3d 674, 676 (7th Cir. 2000)
(noting that a controlling question of law usually involves “a question of the meaning
of a statutory or constitutional provision, regulation, or common law doctrine.”).
CP cites three additional cases, two of which, Friends for All Children, Inc. v. Lockheed Aircraft
Corp., 717 F.2d 602, 603 (D.C. Cir. 1983) and Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239,
1241-42 (7th Cir. 1990), acknowledge that the underlying cases had been certified by the district court
for interlocutory review under § 1292(b). However, neither case contains any discussion of the statute
or its factors for granting interlocutory review. See id. The third case cited by CP, Tuazon v. Reynolds
Tobacco Co., 433 F.3d 1163, 1168 (9th Cir. 2006), contains no mention of § 1292(b) at all.
Therefore, the first § 1292 factor does not support an interlocutory appeal in
Substantial Ground for a Difference of Opinion
A substantial ground for a difference of opinion occurs only in “rare cases”
where an interlocutory appeal presents one or more “difficult and pivotal questions
of law not settled by controlling authority.” In re Bank of New England Corp., 218
B.R. at 653 (quoting McGillicuddy v. Clements, 746 F.2d 76, 76 n.1 (1st Cir. 1984)
(internal quotation marks omitted) (emphasis in original)); see also Watson v.
Boyajian (In re Watson), 309 B.R. 652, 660 (B.A.P. 1st Cir. 2004). The § 1292(b)
standard requires a level of difficulty and significance beyond mere “garden variety
legal argument.” Id. (citing Pacamor Bearings, Inc. v. Minebea Co., Ltd., 892 F. Supp.
347, 361-62 (D.N.H. 1995)).
The critical question in determining whether an
“a substantial ground for a difference of opinion with respect to issues of law raised
by the parties [and] not whether the plaintiffs disagree with the court’s ruling.” In
re: Meridian Med. Sys., LLC, 2016 WL 3221558, at *3 (D. Me. June 10, 2016) (quoting
Hidalgo-Vélez v. San Juan Asset Mgmt., Inc., 2013 WL 1089745, at * 5 (D.P.R. Mar.
CP argues that the Bankruptcy Court’s refusal to dismiss Counts I, III, and
IV of the Third Amended Complaint gives rise to substantial grounds for
disagreement because I reached a different conclusion when I ordered dismissal of
the plaintiffs’ complaint on forum non conveniens grounds in the related In re Lac
Megantic litigation. See In re Lac Megantic Litigation, 1:16-cv-1001-JDL, ECF No.
29. CP’s argument does not, however, identify a “difficult and pivotal question of law”
that has gone unanswered by controlling authority. In re Bank of New England
Corp., 218 B.R. at 653 (emphasis omitted). Instead its argument highlights the
different conclusions I reached in In re Lac Megantic Litigation and the Bankruptcy
Court reached in this case after applying the same settled legal standard governing
forum non conveniens established by the Supreme Court’s opinion in Gulf Oil Corp.
v. Gilbert, 330 U.S. 501 (1947), and its progeny. See In re Lac Megantic, Case No.
1:16-cv-1001-JDL, ECF No. 29 at 18-22; Keach v. Canadian Pacific Railway
Company, et al., Adv. Proc. No. 14-1001, ECF No. 285 at 5-11 (citing Gilbert, 330 U.S.
501); Iragorri v. Int’l Elevator, Inc., 203 F.3d 8, 12 (1st Cir. 2000)). This case and In
re Lac Megantic Litigation arise out of the same tragic train derailment, but are quite
different because they involve different parties, different theories of liability, and
despite significant overlap, different factual questions. Given these differences, the
forums non conveniens analysis in In re Lac Megantic Litigation is not determinative
of the analysis applied in this case.
CP also argues that there are substantial grounds for disagreement concerning
the Bankruptcy Court’s conclusion that the Third Amended Complaint stated
plausible factual allegations.
However, CP’s argument is limited to a single,
conclusory sentence with no citation to the record or to legal authority. Moreover, a
disagreement over the plausibility of certain factual allegations is precisely the sort
of “garden variety legal argument” that does not meet the § 1292(b) standard. See In
re Bank of New England Corp., 218 B.R. at 653.
Accordingly, I conclude that the second § 1292(b) factor has not been satisfied.
Material Advancement of the Litigation
CP contends that granting interlocutory review of the Bankruptcy Court’s
decision would materially advance the ultimate resolution of this case, reasoning that
this court will eventually engage in de novo review of CP’s forum non conveniens and
Rule 12(b)(6) objections on final appeal.
Thus, according to CP, denial of an
interlocutory appeal will require the parties to engage in discovery and pretrial
motions practice that will be both time-consuming and expensive. However, granting
interlocutory appeal will require the parties to brief and argue the forum non
conveniens issue a second time, which would also be time-consuming and expensive.
Further, if CP’s reasoning is adopted, interlocutory review would be justified in
virtually every case.
CP also argues that by the time a final appeal is heard, CP will already have
been required to fully defend the case in this district, which would negate its forum
non conveniens argument. ECF No. 7 at 8-9, ¶ 27 (citing In re Lloyd’s Register N.
Am., Inc., 780 F.3d 283, 289-90 (5th Cir. 2015). While this point is well taken, it does
not address the issue of the advancing of the litigation.
I conclude that the third § 1292(b) factor is neutral, and weighs neither for nor
against granting CP’s motion.
“The movant bears the burden of persuasion under a § 1292(b) claim.” In re
Kalian, 191 B.R. at 278. Having explored the applicable factors, I conclude that CP
has not met its burden of persuasion under § 1292(b) or the loosened § 158(a)(3)
standard for granting interlocutory review of the Bankruptcy Court’s decision.
CP’s motion for leave to appeal the Bankruptcy Court’s July 7, 2017, denial of
its motions, or in the alternative, CP’s objections (ECF No. 7) is DENIED.
Dated this 26th day of October 2017.
/s/ JON D. LEVY
U.S. DISTRICT JUDGE
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