Pro-Pac Inc v. WOW Logistics Company

Filing 5

ORDER signed by Judge J P Stadtmueller on 9/13/13 denying 1 Defendant's Motion to Withdraw the Reference of the parties' adversary proceeding in the U.S. Bankruptcy Court; and, denying as moot 3 Defendant's Motion to Stay the parties' adversary proceeding pending a decision on 1 Defendant's Motion to Withdraw the Reference. See Order. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
PRO-PAC, INC,
Plaintiff,
v.

Case No. 13-CV-902-JPS

WOW LOGISTICS COMPANY,

ORDER
Defendant.
Plaintiff Pro-Pac, Inc. (“Pro-Pac”) filed for Chapter 11 bankruptcy in
2006.1 In that connection, Pro-Pac filed (and now maintains) an adversary
proceeding against defendant WOW Logistics Company (“WOW”) claiming
that WOW aided and abetted a Pro-Pac employee’s breach of fiduciary duty.2
After trial, the bankruptcy court entered judgment against WOW and
in favor of Pro-Pac. That judgment was appealed to this Court3 and, in turn,
this Court’s decision was appealed to the Seventh Circuit.4
On July 18, 2013, the Seventh Circuit’s mandate issued, remanding the
adversary proceeding “to the district court and to the bankruptcy court to
reformulate the award of damages based on WOW’s aiding and abetting of
[a Pro-Pac employee’s] breach of fiduciary duty.” (11-CV-1075-JPS, Docket
#21, p. 21). In accordance with that mandate, this Court remanded the cause
“to the bankruptcy court for further proceedings consistent with the Seventh
Circuit’s opinion.” (11-CV-1075-JPS, Docket #22).

1

Case No. 06-06608-SVK-11.

2

Adversary Case No. 07-02110-SVK.

3

Case No. 11-CV-1075-JPS

4

7th Cir. Case No. 12-2976

Now, WOW has filed a motion under 28 U.S.C. § 157(d) seeking
withdrawal of this Court’s reference. (Docket #1).5 Section 157(d) provides,
in relevant part, that "[t]he 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." Alas, the statute does not
define what constitutes sufficient cause, "but various factors have been
considered by courts, including whether the proceeding is core or non-core,
considerations of judicial economy and convenience, promoting the
uniformity and efficiency of bankruptcy administration, forum shopping and
confusion, conservation of debtor and creditor resources, and whether the
parties requested a jury trial." In re Beale, 410 B.R. 613, 616 (N.D. Ill. 2009).
As the moving party, WOW bears the burden of persuasion. To that
end, WOW argues primarily that this Court should withdraw the reference
(and thereby assert original jurisdiction over the residual merits to be
decided in this matter) because an appeal of the bankruptcy court's judgment
is "likely" (in WOW's view) and so withdrawal promotes judicial economy
and efficiency and conserves party resources. (Docket #1-1, 37-38). Nestled
in these arguments rests WOW’s concession that it "consented to the
bankruptcy court's jurisdiction to enter a final order in this matter." (Id.).
In addition, WOW attempts to portray this Court as better-situated to
hear the residual merits at issue, notwithstanding the fact that the
bankruptcy court tried this adversary proceeding in the first instance. (Id.).

5

"[A] motion to withdraw the reference invokes the district judge's original
rather than appellate jurisdiction in bankruptcy[.]" Caldwell-Baker Co. v. Parsons, 392
F.3d 886, 888 (7th Cir. 2004).

Page 2 of 3

Having considered the arguments set forth in WOW’s briefing against
the balance of the record in this case, the Court is not convinced that cause
exists for withdrawing the reference in this matter.6
Having found no cause for withdrawing the reference in this matter,
the Court is obliged to deny WOW’s motion.
Accordingly,
IT IS ORDERED that WOW’s motion to withdraw the reference
(Docket #1) of the parties’ adversary proceeding – U.S. Bankruptcy Court
Adversary Case No. 07-02110-SVK – be and the same is hereby DENIED; and

IT IS FURTHER ORDERED that WOW’s motion to stay the parties’
adversary proceeding pending a decision on the aforementioned motion
(Docket #3) be and the same is hereby DENIED as moot.
Dated at Milwaukee, Wisconsin, this __ day of
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

6

Moreover, the pallor of WOW’s arguments suggests its motion may
be motivated by forum-shopping – a consideration which militates strongly
against withdrawal of the reference.
Page 3 of 3