Department of Justice Once Again Proves Its Loyalty to the President, Not the Rule of Law

AUSTIN SARAT

Austin Sarat—Associate Provost, Associate Dean of the Faculty, and William Nelson Cromwell Professor of Jurisprudence and Political Science at Amherst College—comments on the recent news that the Justice Department will seek dismissal of charges against Michael Flynn. Sarat suggests that because the decision does not seem to advance the fair administration of justice in this case, the court should take the unusual step of refusing to grant the prosecutor’s motion to dismiss.

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In re Motors Liquidation Co. (Pillars)

Court: US Court of Appeals for the Second Circuit

Docket: 18-1954

Opinion Date: May 6, 2020

Judge: Per Curiam

Areas of Law: Bankruptcy, Contracts, Personal Injury

The Second Circuit affirmed the district court's decision vacating the bankruptcy court's determination concerning whether General Motors assumed liability, through a judicial admission, for claims like appellant's. Appellant filed a wrongful death lawsuit against New GM after his wife was involved in an accident that left her incapacitated. She was driving a 2004 Pontiac Grand Am, a vehicle manufactured by Old GM, which allegedly had a faulty ignition switch. The Second Circuit held that for a statement to constitute a judicial admission, it must be intentional, clear, and unambiguous. In this case, the court held that the inadvertent inclusion of language from an outdated, non-operative version of a sale agreement was not intentional, clear, and unambiguous, and thus was not a judicial admission. Therefore, General Motors was not bound by the language.

In re: Hill

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-5861

Opinion Date: May 4, 2020

Judge: Donald

Areas of Law: Bankruptcy

In 2010, Hill, a principal of Meridian and the other principals sold Meridian to CMCO; the former Meridian principals were to work for CMCO. In 2012, Hill accepted employment with CMCO’s competitor, Peoples. CMCO filed suit, alleging that he breached his contract and shared trade secrets. CMCO settled its claims against Peoples. Hill proceeded pro se. Hill failed to attend a pretrial conference. The state court granted a default judgment. Hill also declined to appear for the damages trial. Hill asserts that he never received the order scheduling a pretrial conference but admits that he was initially aware of the date. Hill further acknowledged that he knew of the trial date because he spoke with the judge by phone and was warned that if he did not appear “adverse things [were] likely [to] happen.” He contends that a bankruptcy attorney he was consulting advised him that he need not participate because any judgments would “go away” in bankruptcy. The court granted CMCO judgment, finding Hill’s actions willful, intentional, in bad faith, egregious, and done with malice. The court awarded $3,417,477. Hill then filed his Chapter 7 bankruptcy petition. The bankruptcy court lifted the automatic stay, 11 U.S.C. 362(d), with respect to CMCO’s judgment.CMCO filed an adversary proceeding. The court found the damages judgment nondischargeable, 11 U.S.C. 523(a)(2)(A), (a)(4), (a)(6), applying collateral estoppel based on the state court finding that Hill’s actions caused “willful and malicious injury.” Hill unsuccessfully sought to vacate the state court judgment. The district and Sixth Circuit affirmed the bankruptcy court’s grant of summary judgment to CMCO. ” The state court damages judgment provided preclusive effect to the determination of the nondischargeability of Hill’s debt.

County of San Mateo v. Peabody Energy Corporation

Court: US Court of Appeals for the Eighth Circuit

Dockets: 18-3242, 19-1767

Opinion Date: May 6, 2020

Judge: Arnold

Areas of Law: Bankruptcy

After Peabody was reorganized, three California municipalities filed suit against Peabody and more than thirty other energy companies for their alleged contributions to global warming. The bankruptcy court enjoined the municipalities from pursuing their claims against Peabody. The district court affirmed. The Eighth Circuit affirmed and held that all the claims in the complaint are directed at Peabody's pre-bankruptcy conduct and are barred. The court rejected the municipalities' claim that the Environmental Law provision exempted their claims from discharge. The court held that their common-law claims against Peabody are "state or local equivalents" of "statutes, regulations and ordinances concerning pollution," holding that the bankruptcy court reasonably concluded that when the definition of Environmental Law mentioned state or local equivalents, it was talking about equivalents to the ten federal statutes listed, not equivalents to statutes, regulations and ordinances concerning pollution. Furthermore, the municipalities have not demonstrated that their common law claims are equivalent to the listed federal statutes. The court also rejected a second provision that the municipalities rely on for the survival of their claims, which exempts from discharge a governmental claim brought "under any . . . applicable police or regulatory law." The court disagreed with the municipalities' contention that, since their representative public-nuisance claim entitles them only to the equitable remedy of abatement, it is not dischargeable in bankruptcy.

Richards v. Rabo ArgiFinance, LLC

Court: US Court of Appeals for the Eighth Circuit

Docket: 19-6039

Opinion Date: May 4, 2020

Judge: Schermer

Areas of Law: Bankruptcy

The Eighth Circuit affirmed the bankruptcy court's determination that the interested parties were equitably estopped from asserting ownership of machinery and equipment in debtor's bankruptcy case. In this case, the interested parties allowed the misrepresentations concerning debtor's assets to continue throughout the bankruptcy case and now seek to protect their alleged pecuniary interests. The court found that the interested parties' arguments lacked merit and were not properly before the district court. The court also affirmed the bankruptcy court's denial of the interested parties' request for the bankruptcy court to alter or amend its ruling or for a new trial.

Drivetrain v. Kozel

Court: US Court of Appeals for the Tenth Circuit

Docket: 18-3120

Opinion Date: May 5, 2020

Judge: Timothy M. Tymkovich

Areas of Law: Bankruptcy

Debtor Abengoa Bioenergy Biomass of Kansas (ABBK), an American subsidiary of the Spanish engineering conglomerate, Abengoa, S.A., financed construction of an ethanol conversion facility in Hugoton, Kansas. Financing was accomplished through inter-company loans from other American subsidiaries of Abengoa, S.A. ABBK experienced financial difficulties and eventually filed for bankruptcy protection in Kansas. Four other Abengoa subsidiaries filed for bankruptcy protection in Missouri. The ABBK trustee pursued a plan of liquidation, which classified the inter-company loans ABBK had received beneath claims of general unsecured creditors, effectively ensuring no recovery for inter-company creditors. Acting as liquidating trustee in the Missouri bankruptcy, Drivetrain, LLC objected to this plan of liquidation. The bankruptcy court nevertheless confirmed the plan. Drivetrain sought a stay of enforcement and implementation of the plan of liquidation, pending appeal to the district court. But both the bankruptcy court and the district court, on appeal, denied Drivetrain’s motion for a stay. At this point, the ABBK trustee began to implement the plan, paying priority claims and distributing settled unsecured claims. After substantially consummating the plan, the ABBK trustee moved to dismiss Drivetrain’s appeal of the confirmed plan as equitably moot. The district court granted that motion, citing the potential harm that innocent third-party creditors would face from unwinding the plan at this juncture. Drivetrain appealed, but the Tenth Circuit affirmed, finding the district court did not abuse its discretion in concluding the potential harm to innocent third-party creditors justified this dismissal.

Medley v. Dish Network, LLC

Court: US Court of Appeals for the Eleventh Circuit

Docket: 18-13841

Opinion Date: May 1, 2020

Judge: Royal

Areas of Law: Bankruptcy, Communications Law, Consumer Law

Plaintiff filed suit alleging that DISH violated the Florida Consumer Collection Practices Act (FCCPA) in its attempts to collect debt it knew had been discharged in bankruptcy and in its direct contacts with plaintiff knowing she was represented by counsel. Plaintiff also alleged that DISH violated the Telephone Consumer Practices Act (TCPA) by contacting plaintiff about the debt with an automated dialing system after she revoked her consent to receive such calls. The Eleventh Circuit first determined that DISH's claim for the Pause debt was discharged. The court reversed the district court's grant of summary judgment as to the FCCPA claims. In this case, DISH attempted to collect debt it had no legal right to collect because the debt had been discharged in bankruptcy, and DISH directly contacted plaintiff after having received notice that she was represented by counsel. Accordingly, the court remanded on the FCCPA claims for the district court to consider whether DISH actually knew that the Pause charges were invalid and that plaintiff was represented by counsel with regard to the debt it was attempting to collect, and if so, whether such errors were unintentional and the result of bona fide error. The court affirmed the district court's grant of summary judgment as to the TCPA claim, holding that the TCPA does not allow unilateral revocation of consent given in a bargained-for contract. The court reasoned that, by permitting plaintiff to unilaterally revoke a mutually-agreed-upon term in a contract would run counter to black-letter contract law in effect at the time Congress enacted the TCPA.