Dynegy Holdings, LLC v. Peabody COALTRADE International Ltd.
Filing
7
OPINION AND ORDER re: 1 MOTION TO WITHDRAW THE BANKRUPTCY REFERENCE. Bankruptcy Court Case Numbers: 11-B-38111(CGM), 12-09050A filed by Peabody COALTRADE International Ltd. For the reasons stated herein, Defendant's Motion to Withdraw the Reference is granted. The Clerk of Court is respectfully directed to terminate the pending motion. (Dkt. No. 1.) (Signed by Judge Kenneth M. Karas on 11/7/2012) (mml)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
DYNEGY DANSKAMMER, L.L.C.,
Plaintiff,
Case No. 12-CV-5859 (KMK)
-vOPINION AND ORDER
PEABODY COALTRADE INTERNATIONAL
LTD.,
Defendant.
Appearances:
James D. Arden, Esq.
John J. Lavelle, Esq.
Sophia Park Mullen, Esq.
Sidley Austin LLP (NY)
New York, New York
Counsel for Plaintiff
Robert A. Scher, Esq.
Foley & Lardner, LLP
New York, New York
Counsel for Defendant
KENNETH M. KARAS, District Judge:
Plaintiff, Dynegy Danskammer, L.L.C. (“Danskammer”), brings this suit against
Peabody COALTRADE International Ltd. (“Peabody”) alleging breach of contract for delaying
delivery or failing to deliver coal shipments at various times from 2008 to 2011. Plaintiff
Danskammer filed a Chapter 11 petition on November 7, 2011. On July 24, 2012, Defendant
Peabody moved to withdraw the reference to the bankruptcy court for the breach of contract
claim under 28 U.S.C. § 157(d). (Dkt. No. 1.) For the reasons stated herein, Peabody’s Motion
to Withdraw the Reference to bankruptcy court is granted.
I. Background
The following facts, drawn from Danskammer’s Complaint, are assumed to be true for
purposes of deciding the instant Motion. On January 1, 2008, Peabody and Danskammer entered
into a Contract for Sale and Purchase of Guasare Steam Coal (the “Contract”). (Compl. ¶ 8.)
Under the Contract, Peabody agreed to sell and deliver, and Danskammer agreed to purchase and
receive, the coal. (Id.) On November 7, 2011, Danskammer filed its Chapter 11 petition.
Danskammer alleges that Peabody breached the Contract by “fail[ing] to timely and completely
perform its obligations under the agreement, repeatedly delaying coal shipments or declaring
force majeure,” (id. ¶ 13), and points to a delay in late 2008 and failures to deliver in February
2009, April 2009, March 2010, and November 2011, (id. ¶ 13-33). Based on these events,
Danskammer pleads two causes of actions: (1) breach of contract, and in the alternative, (2) an
ongoing anticipatory repudiation of the Contract. (Id. ¶ ¶ 34-57.) Danskammer claims damages
including demurrage charges, dead freight charges, and other incidental and consequential
damages. (Id. at 15-16.)
Danskammer filed its Debtor’s Complaint against Peabody for breach of contract on June
4, 2012 in bankruptcy court.1 On July 24, 2012, Peabody filed this Motion to Withdraw the
Reference to the bankruptcy court. (Dkt. No. 1.)
1
A standing order in the Southern District of New York automatically refers “any or all
proceedings arising under title 11 . . . or related to a case under title 11” to the bankruptcy court.
In re Standing Order of Reference Re: Title 11, No. 12-M-32 (S.D.N.Y. Jan 31, 2012).
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II. Discussion
A. Legal Standard
1. Jurisdiction and Adjudicative Power of the Bankruptcy Court
With certain exceptions not relevant here, district courts have original jurisdiction over
all civil proceedings “arising under” or “related to” title 11. See 28 U.S.C. § 1334. Pursuant to
28 U.S.C. § 157, district courts may refer “all cases under title 11 and all core proceedings
arising under title 11” to the district’s bankruptcy court. 28 U.S.C. § 157(b)(1). Section
157(b)(2) provides a non-exclusive list of proceedings designated as “core.” Id. § 157(b)(2).
Until recently, the bankruptcy court’s role depended on whether the proceeding was “core” or
“non-core.” With respect to core proceedings, the bankruptcy court could issue a final
determination, but with respect to non-core proceedings, it was permitted only to “submit
proposed findings of fact and conclusions of law to the district court,” which were then subject
to de novo review in the district court. 28 U.S.C. § 157(c); see Cent. Vt. Pub. Serv. Corp. v.
Herbert, 341 F.3d 186, 189-91 (2d Cir. 2003) (explaining the role of bankruptcy courts in core
and non-core proceedings).
In Stern v. Marshall, 131 S. Ct. 2594 (2011), the Supreme Court altered this framework
by holding that the constitutional grant of judicial power to Article III courts, not the statutory
designation of “core” or “non-core,” determines whether a bankruptcy judge may issue a final
determination. See also Adelphia Recovery Trust v. FLP Grp., Inc., No. 11-CV-6847, 2012 WL
264180, at *2 (S.D.N.Y. Jan. 30, 2012) (explaining Stern’s holding that “Congress’s delineation
of core matters in section 1572(b)(2) overstepped constitutional boundaries . . . when it allowed
bankruptcy courts ‘to enter a final judgment on a state law counterclaim’” (quoting Stern, 131 S.
Ct. at 2620)); Dev. Specialists, Inc. v. Akin Gump Strauss Hauer & Feld LLP, 462 B.R. 457, 464
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(S.D.N.Y. 2011) (noting that after Stern, “identifying a claim as ‘core’ or ‘non-core’ under the
bankruptcy law does not necessarily determine whether a bankruptcy court is constitutionally
empowered to finally adjudicate the matter”). In holding that Article III did not permit a
bankruptcy court to adjudicate finally the state law counterclaim at issue in Stern, the Supreme
Court considered: (1) whether the counterclaim involved a public or private right;
(2) whether the process of adjudicating the creditor’s proof of claim would resolve the
counterclaim; and (3) whether the parties consented to final adjudication by the bankruptcy
court. 131 S. Ct. at 2608, 2614, 2617.
2. Withdrawal of Bankruptcy Reference
Pursuant to 28 U.S.C. § 157(d), a “district court may withdraw, in whole or in part, any
case or proceeding referred under this section . . . for cause shown.” Prior to Stern, the Second
Circuit held in In re Orion Pictures Corp., 4 F.3d 1095, 1101 (1993), that cause for withdrawal
should be evaluated based on five factors: “whether the claim or proceeding is core or non-core,
whether it is legal or equitable, and considerations of efficiency, prevention of forum shopping,
and uniformity in the administration of bankruptcy law.” The Orion court emphasized that “[a]
district court considering whether to withdraw the reference should first evaluate whether the
claim is core or non-core, since it is upon this issue that questions of efficiency and uniformity
will turn.” Id. The Orion court further reasoned that “the fact that a bankruptcy court’s
determination on non-core matters is subject to de novo review by the district court could lead
the latter to conclude that in a given case unnecessary costs could be avoided by a single
proceeding in the district court.” Id.
Following the Supreme Court’s holding in Stern, courts in this district have taken
different approaches in adapting the Orion factors to Stern’s holding. Some courts have
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modified the first prong of Orion (whether a proceeding is core or non-core) and considered
whether the bankruptcy court has constitutional authority to finally adjudicate the matter under
Stern. See Arbco Capital Mgmt., LLP v. O’Connell, 479 B.R. 254, 262 (S.D.N.Y. 2012) (“This
Court concludes, as have others in this district, that the relevant inquiry under the first prong of
the Orion test is not whether a matter is core or non-core, but whether the bankruptcy court has
the authority to finally adjudicate the matter.”); Lyondell Chem. Co. v. Blavatnik, 467 B.R. 712,
719 (S.D.N.Y. 2012) (“Under Stern, it is not the core/non-core distinction but Article III that
determines the bankruptcy court’s adjudicative authority. Thus, a district court . . . must first
determine whether or not the bankruptcy court has constitutional authority to enter final
judgment on the claim . . . . To the extent the core/non-core distinction held a privileged
position among the Orion factors before Stern, this is no longer the case.”); In re Levine, No. 11CV-9101, 2012 WL 310944, at *2-3 (S.D.N.Y. Feb. 1, 2012) (applying Stern’s public rights
doctrine to the core/non-core Orion factor); Dev. Specialists, Inc., 462 B.R. at 471-72
(modifying Orion’s core/non-core factor to account for final adjudicative authority as
determined by Stern); see also Picard v. Avellino, 469 B.R. 408, 413 n.3 (S.D.N.Y. 2012)
(acknowledging Stern’s impact on the analysis of judicial efficiency set out in the Orion factors).
A second approach retains the original Orion factors and adds Stern’s evaluation of the
bankruptcy court’s constitutional authority to make a final determination as a separate inquiry.
See Adelphia Recovery Trust, 2012 WL 264180, at *3 (“After Stern, a court’s consideration of a
motion to withdraw reference to bankruptcy court should–in addition to the Orion
factors–include consideration of: whether the claims at issue involve a public or private right;
whether the claims will be resolved in ruling on a creditor’s proof of claim, if any; and whether
the parties consent to final adjudication by a non-Article III tribunal.”); see also Madison Bentley
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Assocs. v. Bentley Manhattan Inc., LLC, 474 B.R. 430, 435 (S.D.N.Y. 2012) (same).
Finally, some district courts have continued to apply the Orion test as originally
conceived with no modification in light of the Stern holding. See Extended Stay, Inc. v.
Blackstone Grp., 466 B.R. 188, 204 (S.D.N.Y. 2011) (“As an initial matter, there is nothing in
Stern to suggest that the statutory distinction between core claims and non-core claims is an
inappropriate consideration when analyzing permissive withdrawal under section 157(d).”); see
also Coudert Bros. v. Peabody Energy Corp., No. 11-CV-4949, 2011 WL 7678683, at *3-5
(S.D.N.Y. Sept. 23, 2011) (granting motion to withdraw the reference with respect to non-core
claims).
After considering these approaches, this Court concludes that the first of the Orion
factors, originally the statutory core/non-core distinction, should include the question of whether
the bankruptcy court has constitutional authority to enter a final decision under Stern. The Orion
court reasoned that the core/non-core distinction was particularly relevant for efficiency
considerations, because if the matter was core, a bankruptcy court could issue a final
determination, whereas if the matter was non-core, it would be subject to de novo review by the
district court. See Orion, 4 F.3d at 1101. But because the core/non-core determination is no
longer dispositive of a bankruptcy court’s authority to enter a final determination, it is no longer
“upon this issue that questions of efficiency and uniformity will turn.” Id. Instead, following
Stern, the question of whether the bankruptcy court may finally determine a proceeding or
whether the bankruptcy court’s proposals must be reviewed de novo by a district court is
governed by Article III. See Stern, 131 S. Ct. at 2608. Thus, this Court joins the other courts
that have applied a modified analysis of the core/non-core factor under Orion to account for the
Article III requirements and exceptions articulated in Stern.
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B. Analysis
The Court now considers each of the five Orion factors, as modified by Stern: whether
the bankruptcy court has final adjudicative authority over the claim; whether the claim is legal or
equitable; and considerations of efficiency, prevention of forum shopping, and uniformity in the
administration of bankruptcy law.
1. The Bankruptcy Court’s Final Adjudicative Authority
As discussed above, the first inquiry is whether the bankruptcy court has final
adjudicative authority over the claim under Stern’s constitutional analysis. The Stern Court
explained that Article III protects liberty “through its role in implementing the separation of
powers” and “by specifying the defining characteristics of Article III judges.” 131 S. Ct. at
2609. Therefore, “in general, Congress may not ‘withdraw from [Article III] judicial cognizance
any matter which, from its nature, is the subject of a suit at the common law, or in equity, or
admiralty.’” Id. (quoting Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272,
284 (1856)). In other words, only Article III courts may make final determinations in common
law, equity, and admiralty suits. See id. Consistent with this principle, the Supreme Court set
forth three instances where a bankruptcy court may adjudicate finally a claim at issue: (1) if the
claim involves a public right; (2) if the process of adjudicating the creditor’s proof of claim
would resolve a counterclaim; or (3) if the parties consent to final adjudication by the bankruptcy
court. See id. at 2608, 2614, 2617; accord Lyondell Chem. Co., 467 B.R. at 720 (applying these
three considerations in deciding motion to withdraw bankruptcy reference).
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a. Public Versus Private Rights
The first consideration under Stern is whether the case involves “public rights” such that
it may be assigned to a non-Article III court for final resolution. See 131 S. Ct. at 2611-15. In
Stern, the Supreme Court recognized that the public rights “exception has been the subject of
some debate,” but concluded that it was limited to “cases in which the claim at issue derives
from a federal regulatory scheme, or in which resolution of the claim by an expert government
agency is deemed essential to a limited regulatory objective within the agency’s authority.” Id. at
2611, 2613; see also Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 55-56 (1989) (holding that
public rights doctrine did not encompass trustee’s claim for fraudulent conveyance); Thomas v.
Union Carbide Agric. Prods. Co., 473 U.S. 568, 588-92 (1985) (concluding that rights provided
by statutory compensation and arbitration scheme were public rights); N. Pipeline Constr. Co. v.
Marathon Pipe Line Co., 458 U.S. 50, 69-70 (1982) (plurality opinion) (describing the public
rights doctrine).
Regardless of the exact contours of the public rights exception, the state law breach of
contract claim here is clearly outside its bounds. In Northern Pipeline, the Supreme Court held
that the post-petition breach of contract and misrepresentation claims at issue did not involve
public rights, and, therefore, the bankruptcy court did not have the constitutional authority to
finally adjudicate them. See 458 U.S. at 71 (plurality opinion) (rejecting argument that postpetition breach of contract claim involved public rights and explaining that “the restructuring of
debtor-creditor relations, which is at the core of the federal bankruptcy power, must be
distinguished from the adjudication of state-created private rights, such as the right to recover
contract damages . . . . The former may well be a ‘public right,’ but the latter obviously is not.”);
id. at 91 (Renhquist, J., concurring) (concluding that breach of contract claim could not be
8
adjudicated in bankruptcy court under the public rights doctrine); see also Stern, 131 S. Ct. at
2611, 2615 (holding that a “state law action independent of the federal bankruptcy law and not
necessarily resolvable by a ruling on the creditor’s proof of claim in bankruptcy” is outside the
public rights doctrine, and in fact, requires “the most prototypical exercise of judicial power: the
entry of a final, binding judgment by a court with broad substantive jurisdiction, on a common
law cause of action, when the action neither derives from nor depends upon any agency
regulatory regime” (emphasis in original)); Granfinanciera, 492 U.S. at 55-56 (describing
Northern Pipeline’s holding that “state-law causes of action for breach of contract or warranty
are paradigmatic private rights, even when asserted by an insolvent corporation in the midst of
Chapter 11 reorganization proceedings”). Therefore, the public rights doctrine does not permit
final determination of Plaintiff’s claim by the bankruptcy court.
Plaintiff argues that under U.S. Lines, Inc. v. American Steamship Owners Mutual
Protection & Indemnity Ass’n, 197 F.3d 631 (2d Cir. 1999), the post-petition breach of a prepetition contract in this case is a “core” proceeding that should remain in bankruptcy court.
(Plaintiff’s Mem. in Opp. to Def.’s Mot. for Withdrawal of the Ref. (“Plaintiff’s Mem.”) 9-11.)
In U.S. Lines, the Second Circuit issued three opinions to explain that the breach of contract
claim for indemnity insurance contracts in that case was “core” and should not have been
withdrawn from the bankruptcy court. Writing for the court, Judge Walker reasoned that a
proceeding can be core if either “(1) the type of proceeding is unique to or uniquely affected by
the bankruptcy proceedings, or (2) the proceedings directly affect a core bankruptcy function.”
U.S. Lines, 197 F.3d at 637 (citations omitted). He explained that the insurance contracts at
issue would have “a significant impact on the administration of the [bankruptcy] estate,” given
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that they were arguably the most important asset of the estate, and thus the dispute was a “core”
proceeding. Id. at 634. In concurring, Judge Calabresi thought it best to “defer the matter [of
whether all post-petition breaches of pre-petition contracts are core] to another day,” though he
indicated that he would be “inclined to favor a case-by-case approach.” Id. at 643 (Calabresi, J.,
concurring). And, Judge Newman proposed a “bright-line rule that treats as core proceedings all
suits alleging post-petition breaches of pre-petition contracts.” Id. at 641 (Newman, J.,
concurring).
The case at hand is distinguishable from U.S. Lines. Unlike the insurance contract in that
case, there is no allegation that the coal Contract here involves the most important asset of the
bankruptcy estate. Although Danskammer’s claim clearly does involve some of the estate’s
property, such involvement alone is not sufficient to render a claim core. See id. at 638
(collecting cases); Orion, 4 F.3d at 1102 (finding a post-petition breach of a pre-petition contract
to be non-core); Enron Power Mktg., Inc. v. City of Santa Clara, No. 01-CV-7964, 2003 WL
68036, at *9 (S.D.N.Y. Jan. 8, 2003) (explaining that because the post-petition breach “causes of
action are essentially contract claims dressed up as bankruptcy claims, they must be considered
‘non-core’”). Only Judge Newman’s bright line approach that all post-petition breaches must be
“core” favors Danskammer’s position. However, such an approach has never been adopted
within or by the Second Circuit. See, e.g., Enron Power Mktg., Inc., 2003 WL 68036, at *9
(finding a post-petition breach of contract claim to be non-core). In any event, even if the
present claim were designated “core” by Judge Newman’s post-petition bright line, because it is
a private right and does not meet any of the other Stern exceptions (as discussed below), the
bankruptcy court may not finally adjudicate the claim, and this Court would be required to
10
review any proposed findings de novo. Thus, adjudication of this claim by the bankruptcy court
would not satisfy the Orion court’s intent to prevent duplicative review.
b. Whether Claim Would Be Resolved in Ruling on Proof of Claim
The Stern Court also considered whether the “process of adjudicating [a] proof of claim
would necessarily resolve [a state-law] counterclaim.” 131 S. Ct. at 2617. In this case, the
primary facts at issue in the breach of contract claim–Peabody’s alleged failure to deliver the
coal shipment and resulting damages–will not be resolved by the bankruptcy court’s adjudication
of Danskammer’s title 11 petition.
c. Consent
Finally, Peabody has not consented to adjudication by the bankruptcy court. See id. at
2607-08, 2614 (suggesting that consent could permit final adjudication by the bankruptcy court
when the public rights doctrine does not apply); see also Fed. R. Bankr. P. 7012(b) (requiring
“express consent” of the parties to allow final adjudication in non-core proceedings); Men’s
Sportswear, Inc. v. Sasson Jeans, Inc., 834 F.2d 1134, 1138 (2d Cir. 1987) (“[A] court should
not lightly infer from a litigant’s conduct consent to have private state-created rights adjudicated
by a non-Article III bankruptcy judge.”). It was this district’s standing order that automatically
referred this case to the bankruptcy court, and Peabody, by its motion, has declined to consent to
final adjudication of this case in bankruptcy court.
Because none of the three exceptions applies here, Article III prohibits the bankruptcy
court from issuing a final determination of Danskammer’s contract claims. This conclusion tips
the scales toward withdrawal.
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2. Additional Orion Factors
Orion dictates consideration of additional factors before determining whether withdrawal
of the reference is appropriate. See Lyondell Chem. Co., 467 B.R. at 723 (“The bankruptcy
court’s authority to enter final judgment on claims is not determinative in deciding whether to
withdraw the reference . . . .”). In this case, however, the additional Orion factors also support
withdrawal of the reference.
Under Orion, district courts should consider the most efficient use of judicial resources.
The determination as to whether the bankruptcy court could issue a final determination is
“pivotal,” Orion, 4 F.3d at 1102, because if a district court must review recommendations de
novo, “it would be inefficient to allow the[] proceedings to go forward, knowing that they will
have to be substantially repeated,” Dev. Specialists, Inc., 462 B.R. at 472. On the other hand, in
cases where the bankruptcy court is more familiar with the record or already has extensive
experience in the matter, it may be most efficient for the bankruptcy court to propose
recommendations first, even though the district court ultimately would have to review them de
novo. See Lyondell Chem. Co., 467 B.R. at 723 (denying motion to withdraw reference where
bankruptcy court had already overseen discovery and begun work on several motions to
dismiss); Adelphia Recovery Trust, 2012 WL 264180, at *7 (explaining that the bankruptcy court
has “a wealth of knowledge . . . having overseen . . . this action for seven years”); Extended Stay,
Inc., 466 B.R. at 206 (“Judicial economy would be promoted by allowing the bankruptcy court,
already familiar with the extensive record in this case, to initially adjudicate these cases.”).
Here, Defendant’s Motion was filed shortly after the Complaint was filed, and no
discovery or extensive motion practice has come before the bankruptcy court. As a result, the
12
bankruptcy court likely does not have extensive familiarity with the record related to the
Complaint. Danskammer claims that it would be more efficient to conduct all proceedings in
one court (Plaintiff’s Mem. 12), but this does not account for the fact that this Court would
ultimately be required to review de novo the bankruptcy court’s proposed findings as to the
contract claim. Thus, withdrawal of the reference is necessary in order to adjudicate the
proceedings in a single court, and efficiency considerations weigh in favor of granting the
Motion for Withdrawal.
Orion also advises district courts to consider the prevention of forum shopping. There is
no indication that forum shopping was Peabody’s motivation, as opposed to a genuine desire for
more efficient adjudication. See Lyondell Chem. Co., 467 B.R. at 725 (“It is unclear whether
the defendants are engaged in forum shopping or simply believe that withdrawal of the reference
will reduce the time and expense of litigation.”). Therefore, this consideration does not cut one
way or the other.
The final Orion factor is whether the bankruptcy court’s adjudication of the claim would
promote uniformity of bankruptcy administration. To evaluate whether a benefit to uniform
administration exists, courts look to the nature of the cause of action. Courts routinely have
found no benefit where claims are based on state law. See, e.g., Dev. Specialists, Inc., 462 B.R.
at 473 (finding that claims based on New York state partnership and contract law would have
“no impact that would require uniform, coordinated adjudication before the Bankruptcy court”).
In contrast, courts have found a benefit where the claims are based on bankruptcy law itself. See
Arbco Capital Mgmt., LLP, 479 B.R. at 268 (finding a benefit to uniform bankruptcy
administration where claims focused on specific provisions of the Bankruptcy Code); Extended
13
Stay, Inc., 466 B.R. at 207 (discussing benefit of bankruptcy court administration where claims
likely involved“novel issues of bankruptcy law”). Danskammer’s claims in this case are based
in state contract law, and there is no indication that any bankruptcy-specific legal analysis will
be required. Danskammer argues that the pending motion to compel arbitration in the
bankruptcy court is reason to maintain the reference. (Plaintiff’s Mem. 13.) Although
bankruptcy courts may have experience resolving motions to compel arbitration, see, e.g., In re
Millennium SeaCarriers, Inc., 275 B.R. 690 (S.D.N.Y. 2002), such experience is not bankruptcy
specific.2 Thus, withdrawing the reference likely would not harm the uniformity of bankruptcy
administration.
In sum, an analysis of the Orion factors, as modified by Stern, supports granting the
Motion for Withdrawal. Under Stern, the bankruptcy court lacks constitutional authority to
make a final determination in this case. As described above, the other Orion factors also support
withdrawal of the reference considering the overall judicial efficiency, the lack of evidence of
forum shopping, and the lack of impact on the uniformity of bankruptcy administration.3
2
In any event, this is a non-core proceeding, and any “conflict [between the Bankruptcy
Code and arbitration] is lessened in non-core proceedings which are unlikely to present a conflict
sufficient to override by implication the presumption in favor of arbitration.” U.S. Lines, 197
F.3d at 640; see also Crysen/Montenay Energy Co. v. Shell Oil Co., 226 F.3d 160, 166 (2d Cir.
2000) (“[T]he presumption in favor of arbitration generally will trump the lesser interest of
bankruptcy courts in adjudicating non-core proceedings that could otherwise be arbitrated.”).
Moreover, withdrawal promotes judicial efficiency, because this Court reviews bankruptcy court
arbitration orders de novo. See Crysen/Montenay Energy Co. v. Shell Oil Co., 240 B.R. 166, 171
(S.D.N.Y. 1999), aff’d 226 F.3d 160.
3
Orion also directs lower courts to consider whether the proceeding may involve a jury
trial, which cannot be conducted by a non-Article III court without consent of the parties. See
Arbco Capital Mgmt., LLP, 479 B.R. at 267 (considering the fact that the bankruptcy court could
not conduct a jury trial in analyzing a motion to withdraw the reference to the bankruptcy court);
Dev. Specialists, Inc., 462 B.R. at 472 (noting that defendant demanded a jury trial, and this
demand precluded the bankruptcy court from finally adjudicating the claim); see also 28 U.S.C.
14
III. Conclusion
For the reasons stated herein, Defendant's Motion to Withdraw the Reference is granted.
The Clerk of Court is respectfully directed to terminate the pending motion. (Dkt. No. 1.)
SO ORDERED.
Dated:
White Plains, New York
Novembert_,·2012
ET
TED STATES DISTRJCT JUDGE
157(e) ("[A] bankruptcy judge may conduct the jury trial if specially designated to exercise such
jurisdiction by the district court and with the express consent of all the parties."). If a jury trial
were required, this could counsel for withdrawal of the reference. See Orion , 4 F .3d at 1101-02
("[A] district court might find that the inability of the bankruptcy court to hold the trial
constitutes cause to withdraw the reference.").
This factor does not change the analysis, because it is far from clear that a jury trial is in
the immediate future of this case (indeed, Peabody believes this dispute should go to arbitration),
and a withdrawal could be effected later if a jury trial were demanded. See Lyondell Chern. Co. ,
467 B.R. at 725 ("If and when the defendants assert their jury trial rights and/or the case
proceeds to trial, then, the defendants are free to move for withdrawal a second time.");
Extended Stay, Inc., 466 B.R. at 205-06 (noting that the actions were "far from trial ready," and
the motion for withdrawal could be made again at a later time).
15
Service List:
James D. Arden, Esq.
John J. Lavelle, Esq.
Sophia Park Mullen, Esq.
Sidley Austin LLP (NY)
787 Seventh Avenue
New York, NY 10019
(212) 839-5300
(212) 839-5599 (fax)
j arden@sidley. com
jlavelle@sidley.com
smullen@sidley.com
Counsel for Plaintiff
Robert Allen Scher, Esq.
Foley & Lardner, LLP
90 Park A venue
New York, NY 10016
(212) 682-7474
(212) 687-2329 (fax)
rscher@foley.com
Counsel for Defendant
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