AngioDynamics, Inc. v. Biolitec, Inc.
775 F.3d 550
2d Cir.2015Background
- AngioDynamics sued Biolitec (diversity) alleging failure to defend/indemnify under a distribution agreement; Biolitec counterclaimed for litigation expenses.
- District Court entered partial final judgment for AngioDynamics on September 28, 2012; Biolitec appealed.
- While the appeal was pending, Biolitec filed Chapter 11 (Jan 22, 2013); Biolitec FZ (UAE parent) claimed a 75% interest in two counterclaims via an alleged Jan 21, 2013 assignment.
- AngioDynamics and Biolitec stipulated to withdraw the appeal; Biolitec FZ moved under Fed. R. App. P. 43(b) to be substituted as appellant.
- The bankruptcy court expunged Biolitec FZ’s proof of claim, finding the assignment void; parties later settled in bankruptcy and stipulated to dismiss the appeal with prejudice.
Issues
| Issue | AngioDynamics' Argument | Biolitec FZ's Argument | Held |
|---|---|---|---|
| Whether substitution under Fed. R. App. P. 43(b) is permitted when the original party voluntarily ceases to litigate | Rule 43(b) allows substitution only when a party “needs” substitution (i.e., cannot continue), not when the original party voluntarily withdraws | Substitution is allowed where a transferee acquired an interest in the appeal and the original party seeks to withdraw | Substitution unavailable: Rule 43(b) permits substitution only when a party is unable to continue, not when the original party voluntarily withdraws |
| Whether the alleged Jan 21, 2013 assignment justified substitution | The assignment was ineffective/illegal (violated bankruptcy stay and a Massachusetts preliminary injunction) and thus cannot justify substitution | The assignment vested Biolitec FZ with an interest before bankruptcy and so supports substitution; if bankruptcy court invalidated it, Biolitec FZ conceded substitution would be inappropriate | Assignment was voided/expunged by the bankruptcy court; substitution therefore inappropriate |
Key Cases Cited
- Neilson v. Colgate-Palmolive Co., 199 F.3d 642 (2d Cir. 1999) (noting guardian may file notice of appeal for disabled party)
- Name.Space, Inc. v. Network Solutions, Inc., 202 F.3d 573 (2d Cir. 2000) (granting unopposed substitution for corporate predecessor-in-interest)
- Alabama Power Co. v. Interstate Commerce Comm’n, 852 F.2d 1361 (D.C. Cir. 1988) (interpreting Rule 43(b) to allow substitution only when a party cannot continue to litigate)
- Maier v. Lucent Techs., Inc., 120 F.3d 730 (7th Cir. 1997) (treating “necessary” substitution to mean the original party is incapable of continuing)
- Lake Coal Co. v. Roberts & Schaefer Co., 474 U.S. 120 (1985) (complete settlement of underlying claims typically moots an appeal)