Firefighters' Retirement System v. Citco Group Ltd.
796 F.3d 520
| 5th Cir. | 2015Background
- Three Louisiana pension funds sued various defendants in state court over losses from investments in a Cayman Islands "Leveraged Fund," part of the Fletcher Income Arbitrage Fund structure.
- The master fund previously filed Chapter 11 in S.D.N.Y.; defendants removed the state suit to federal court in June 2013 based on the Chapter 11 bankruptcy and alleged diversity jurisdiction (Skadden was later joined).
- In January 2014, Cayman liquidators filed Chapter 15 petitions recognizing the Leveraged Fund and Arbitrage Fund in S.D.N.Y.; defendants notified the district court of these Chapter 15 proceedings.
- The magistrate found federal bankruptcy "related-to" jurisdiction but recommended permissive abstention under 28 U.S.C. §1334(c)(1) and equitable remand under §1452(b); the magistrate did not analyze the Chapter 15 filings in that recommendation.
- The district court adopted the recommendation and remanded the case to state court on permissive abstention/equitable remand grounds; defendants appealed.
- The Fifth Circuit reviewed whether it had jurisdiction to hear the appeal and whether the district court erred by permissively abstaining and remanding despite the pending Chapter 15 cases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court could permissively abstain and equitably remand proceedings "related to" Chapter 15 cases | Remand was proper; removal judged at time of removal and Chapter 15 came later | §1334(c)(1) bars permissive abstention for Chapter 15-related proceedings, so remand was improper | Court held §1334(c)(1) prohibits permissive abstention for proceedings arising in or related to Chapter 15; remand was erroneous |
| Whether the appellate court may review a remand based on permissive abstention related to Chapter 15 | (implicit) remand orders generally unreviewable | Exceptions exist where district court exceeded statutory authority, including Chapter 15 context | Court held a limited exception to non-reviewability applies for remands based on §1334(c)(1) permissive abstention when related to Chapter 15 cases |
| Whether §1452(b) equitable remand can apply when §1334(c)(1) forbids abstention in Chapter 15-related matters | §1452(b) can support equitable remand | §1452(b) should be read in pari materia with §1334(c)(1), so equitable remand is barred for Chapter 15-related proceedings | Court held §1452(b) equitable remand cannot be used to avoid §1334(c)(1)’s bar for Chapter 15-related proceedings |
| Whether the Chapter 15 filings must have existed at time of removal to affect remand analysis | Removal posture at time of removal controls remandability | Remandability is judged at time of remand; Chapter 15 filings are relevant even if filed after removal | Court held remandability assessed at time of remand; Chapter 15 filings rendered permissive abstention/remand improper |
Key Cases Cited
- Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (recognition of limited review when remand rests on grounds not enumerated in remand statute)
- Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336 (district court exceeds statutory authority when remanding despite proper jurisdiction)
- Things Remembered, Inc. v. Petrarca, 516 U.S. 124 (limitations on appellate review of remand orders under §1447(d))
- In re Vitro S.A.B. de CV, 701 F.3d 1031 (Chapter 15 purpose: comity and concentrating cross-border insolvency questions)
- In re Wilson Indus., 886 F.2d 93 (Fifth Circuit: remand orders unreviewable unless based on non-statutory grounds)
- Bissonnet Invs. LLC v. Quinlan (In re Bissonnet Invs. LLC), 320 F.3d 520 (discussing appellate jurisdiction over bankruptcy remand orders)
- Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (operative facts for removal judged at time of removal)