246 F. Supp. 3d 680
E.D.N.Y2017Background
- United Airlines filed Chapter 11 on Dec. 9, 2002; a pre-petition proof-of-claim bar date was May 12, 2003, and an administrative-claim bar date was March 3, 2006; United’s reorganization plan was confirmed Jan. 20, 2006 (effective Feb. 1, 2006).
- DHL (and affiliates) were actual notice recipients and had multiple scheduled disputed claims; DHL tracked airline fuel-surcharge changes internally and circulated reports reflecting widespread, near-parallel surcharge changes beginning in 2000.
- DHL’s customers and some DHL executives expressed suspicion that carriers were acting collusively; DHL received news of IATA’s Resolution 116ss, DOT’s rejection, and that carriers (including United) implemented surcharges despite the rejection.
- In Feb. 2006 European “Dawn Raids” (with DOJ cooperation) and immediate U.S. class actions publicly alleged price-fixing in air cargo; DHL learned of raids, retained counsel, later obtained amnesty for its own conduct, and adopted a ‘‘shadow the class’’ strategy rather than litigate in bankruptcy.
- DHL sued United in 2011 based on documents obtained in 2010; Judge Gleeson originally denied dismissal; the Second Circuit reversed and remanded, instructing the district court to determine (1) what DHL knew or should have known pre-confirmation, (2) whether class complaints sufficed to alert DHL, and (3) if DHL lacked notice, whether United had a duty to notify.
- On remand, the district court found the material facts undisputed and held DHL was on inquiry notice (pre- and post-petition) and therefore failed to timely assert claims in bankruptcy; United’s motion for partial summary judgment was granted as to all claims arising before confirmation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Were DHL’s pre-petition antitrust claims discharged by United’s Chapter 11 confirmation? | DHL contends it did not know and could not reasonably have discovered its claim before the pre-petition bar date. | United argues DHL had inquiry notice of facts sufficient to trigger a proof of claim before the bar date. | Held: DHL had inquiry notice pre-bar date; pre-petition claims discharged. |
| Could DHL have obtained leave to file a late proof of claim? | DHL asserts it could not timely plead or would have been effectively excluded from bankruptcy participation. | United says DHL chose a tactical wait-and-see approach and had mechanisms (late claim by excusable neglect) but did not use them. | Held: Even assuming no pre-bar inquiry notice, DHL could have sought leave for a late claim (Pioneer excusable-neglect framework); failure to do so bars the claim. |
| Were DHL’s post-petition, pre-confirmation claims allowable as administrative expenses and therefore required to be timely filed? | DHL argues timing and uncertainty justified waiting on DOJ/class actions. | United contends DHL had inquiry notice (especially after the Dawn Raids) and failed to timely file an administrative claim by the administrative bar date. | Held: DHL had inquiry notice by the administrative bar date (Dawn Raids and ensuing suits); administrative claims not filed were discharged at confirmation. |
| Did United have a constitutional due-process duty to notify DHL specifically of potential antitrust claims? | DHL argues United’s internal documents and knowledge required affirmative notice to known creditors. | United contends due-process notice is unnecessary where creditor had inquiry notice; inquiry notice obviates the extra duty. | Held: Court did not reach affirmative-duty inquiry because it found DHL had inquiry notice; due-process notice claim fails on that basis. |
Key Cases Cited
- Merck & Co. v. Reynolds, 559 U.S. 633 (potential claimant is on notice when facts would prompt a reasonably diligent plaintiff to investigate)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380 (excusable neglect standard for permitting late filings)
- Reading Co. v. Brown, 391 U.S. 471 (tort claims arising during reorganization may be administrative expenses)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard: genuine issue for trial)
- DPWN Holdings (USA), Inc. v. United Air Lines, Inc., 747 F.3d 146 (2d Cir.) (remanding to decide what DHL knew, whether class complaints sufficed, and whether United had notice obligations)
- In re Chateaugay Corp., 53 F.3d 478 (confirmation discharge effect on untimely claims)
- In re Mazzeo, 131 F.3d 295 (broad scope of "claim" under the Bankruptcy Code)