In re ENVIRODYNE INDUSTRIES, INC., Sandusky Plastics, Inc., Sandusky Plastics of Delaware, Inc., Viskase Corporation, Viskase Holding Corporation, Viskase Sales Corporation, d/b/a Filmco, Clear Shield National, Inc., Envirodyne Finance Company, Debtors.
EISENBERG BROTHERS, INC., Servall Products, Inc., and St. Cloud Restaurant Supply, Appellants,
v.
CLEAR SHIELD NATIONAL, INC., Appellee.
United States District Court, N.D. Illinois, Eastern Division.
*339 *340 *341 *342 Michael R. Shelist, Much, Shelist, Freed, Denenberg, Ament, Bell & Rubenstein, P.C., Chicago, IL, for Appellants.
Jeffrey Michael Schwartz, Holleb & Coff, Chicago, IL, for Debtors.
MEMORANDUM OPINION AND ORDER
HOLDERMAN, District Judge.
Appellants, Eisenberg Brothers, Inc. ("Eisenberg"), Servall Products, Inc. ("Servall"), and St. Cloud Restaurant Supply ("St. Cloud"), appeal the decision of the Bankruptcy Court, In re Envirodyne Indus., Inc.,
BACKGROUND
On January 7, 1993 (the "Petition Date"), appellee Clear Shield, a company engaged in the business of manufacturing and selling plastic cutlery, filed a bankruptcy petition for relief under Chapter 11 of the Bankruptcy Code. Thereafter, appellee Clear Shield reviewed its books and records and interviewed its employees to prepare its schedules and statement of financial affairs and to determine what claims existed against it. Appellee Clear Shield listed on its schedules all entities that were included on its accounts payable listing as of the Petition Date, customers that had previously received rebates and who may have been eligible for additional rebates, and certain disputed environmental, personal injury, and trucking undercharge claims. Appellants Eisenberg and Servall were not and had never been customers of appellee Clear Shield, did not owe appellee Clear Shield any money, and thus were not listed on any of appellee Clear Shield's schedules. Appellant St. Cloud was a customer of appellee Clear Shield between December 1990 and April 1992 but was not listed on appellee Clear Shield's schedules because appellant St. Cloud did not owe appellee Clear Shield any money nor did appellee Clear Shield owe appellant St. Cloud any money as of the Petition Date.
On March 19, 1993, the bankruptcy court entered an administrative order (the "Bar Date Order") establishing June 15, 1993 as the last day to file prepetition claims against the estate. On April 6, 1993, appellee Clear Shield filed its schedules and statement of financial affairs. Pursuant to the Bar Date Order, on April 16, 1993 appellee Clear Shield served notice of the bar date to all of the creditors listed on its schedules. In addition, appellee Clear Shield published notice of the bar date in the Wall Street Journal and the New York Times on May 14, 1993 and in the Chicago Tribune on May 16, 1993.
On August 10, 1993, the bankruptcy court entered an order directing appellee Clear *343 Shield to send notice of the hearing on confirmation of the plan of reorganization to all creditors and to publish notice of the confirmation hearing. Appellee Clear Shield served notice of the confirmation hearing on all of its creditors listed on its schedules on August 16, 1993. Notice of the confirmation hearing was published in the Wall Street Journal and the New York Times on August 23, 1993 and in the Chicago Tribune оn August 22, 1993. Appellee Clear Shield's and the other debtors' First Amended Plan of Reorganization as Twice Modified was confirmed by the bankruptcy court on December 17, 1993 (the "Confirmation Order").
On August 13, 1993, after the bar date but before the Confirmation Order was entered, appellee Clear Shield was served with a subpoena duces tecum from the Antitrust Division of the United States Department of Justice. The subpoena requested the production of numerous documents from appellee Clear Shield for an Eastern District of Pennsylvania grand jury investigation of possible price fixing, customer allocation, and related crimes in the plastic cutlery industry. Although initially requested to comply with the subpoena by October 6, 1993, appellee Clear Shield was allowed to produce the responsive documents on December 19, 1993 and March 14, 1994. Employees and former employees of appellee Clear Shield were subpoenaed to testify before the grand jury on July 15, 1995. Only one Clear Shield employee actually appeared before the grand jury. That was on September 14, 1995. Appellee Clear Shield has never received any letter indicating that it is a target of the grand jury investigation and it has not been indicted by the grand jury. Two of appellee Clear Shield's competitors were indicted by the grand jury.
On February 5, 1996, appellants filed several lawsuits in the Eastern District of Pennsylvania seeking injunctive relief and damages from appellee Clear Shield and other defendants for alleged violations of the antitrust laws beginning in October 1990 and continuing through at least April 1992. After the complaints were filed, appellee Clear Shield's bankruptcy counsel contacted appellants' counsel and informed them that Clear Shield had filed for relief under Chapter 11 of thе Bankruptcy Code on January 7, 1993 and that an order confirming the plan of reorganization had been entered on December 17, 1993. Appellee Clear Shield maintained that appellants' lawsuits violated the Confirmation Order.
Thereafter, appellants filed a motion with the bankruptcy court pursuant to Rules 60(b)(3) and 60(b)(6) of the Federal Rules of Civil Procedure requesting the bankruptcy court to enter an order holding that the Confirmation Order did not discharge appellants' antitrust claims and that appellants would be allowed to pursue their claims against appellee Clear Shield. Appellants and appellee Clear Shield filed cross-motions for summary judgment with the bankruptcy court. On March 19, 1997, Chief Bankruptcy Judge Schwartz denied appellants' motion for summary judgment on their Rules 60(b)(3) and 60(b)(6) motions and granted appellee Clear Shield's motion for summary judgment, holding that appellants' аntitrust claims arose prior to the Petition Date and appellants were unknown creditors thus appellants were enjoined from pursing their antitrust claims against appellee Clear Shield pursuant to Clear Shield's Bar Date Order, Confirmation Order, and 11 U.S.C. § 524 of the Bankruptcy Code since appellants' claims were discharged by Clear Shield's Bar Date Order, Confirmation Order, and 11 U.S.C. § 1141 of the Bankruptcy Code.
Appellants now appeal the bankruptcy court's order. Appellants appear to concede that the denial of their Rule 60(b)(3) motion was correct in that their motion was time-barred since it was made well after one year after the date of entry of the Confirmation Order. Appellants did not raise this point in arguing for reversal of the bankruptcy court's order. Appellants argue instead that the bankruptcy court's order denying their Rule 60(b)(6) motion should be reversed sinсe the bankruptcy court erred in weighing the evidence in favor of appellee Clear Shield and against appellants in considering the cross-motions for summary judgment, appellee Clear Shield's conduct prevented appellants from timely filing their claims, appellants' right to due process was violated when *344 they did not receive formal notice of the bankruptcy proceedings, and the bankruptcy court erred in finding that appellants' antitrust claims were capable of detection prior to the bankruptcy proceedings.
STANDARD OF REVIEW
Motions for relief under Rule 60 of the Federal Rules of Civil Procedure are applicable to bankruptcy cases pursuant to Rule 9024 of the Federal Rules of Bankruptcy Procedure. Review of a denial of a motion for relief under Rule 60(b)(6) is highly deferential. U.S. v. 8136 S. Dobson St.,
In this case, Chief Bankruptcy Judge Schwartz had the parties submit cross-motions for summary judgment to aid his decision in ruling on appellants' Rule 60(b) motion, presumably to determine if appellants' claim had merit. "Judicial economy requires that a Rule 60(b) movant demonstrate a meritorious claim or it would be a waste of time to reopen proceedings." Delta Employees Credit Union v. Gonzalez (In re Gonzalez),
ANALYSIS
I. Appellee Clear Shield's Motion to Strike
Appellee Clear Shield has filed a motion to strike certain portions of appellants' reply memorandum in suppоrt of appeal. Appellee Clear Shield argues first that appellants attached three documents in an appendix to their reply brief that were neither submitted to nor considered by the bankruptcy court and were not included as part of appellants' designation of record on appeal. The three documents are: (1) Tab A: Stipulation and Order dated June 4, 1996 filed in the United States District Court for the Eastern District of Pennsylvania; (2) Tab B: Stipulation and Order dated May 7, 1996 filed in the United States District Court for the Eastern District of Pennsylvania; and (3) Tab C: Indictment entitled United States v. Amcel Corp., Dispoz-O Plastics, Inc., Lloyd Gordon, and Peter Iacovelli. Appellants argue that this court should take judicial notice of these documents since they are records from the district court for the Eastern District of Pennsylvania.
Generally, a district court acting as an appellate court in reviewing a bankruptcy case decision may consider only the evidence that was presented before the bankruptcy court and made a part of the record. Edgewater Walk Apartments v. Mony Life Ins. Co. of America, No. 93 C 3612,
Appellee Clear Shield also moves to strike certain factual assertions in appellants' reply brief arguing that they are not supported by the record below and appellants have not cited to any portion of the record below. Appellants argue that the statements they made in their reply brief are reasonable inferences they drew from the facts presented to the bankruptcy court. This court is aware of the difference between facts supported by evidence, reаsonable inferences that are drawn from facts, and unsubstantiated statements. This court will review appellants' reply brief following those principles as well as the principles of the Federal Rules of Civil Procedure and the proper standard of review and will accord appellants' statements the weight that they deserve. This court, however, will not strike the statements from appellants' reply brief and therefore appellee Clear Shield's motion to strike these statements is denied.
II. Appeal of Bankruptcy Court Order
A. Weighing the Evidence in Deciding the Parties' Cross-Motions for Summary Judgment
Appellants' first argument in support of their appeal is that the bankruptcy judge erred by not drawing inferences in favor of them. In ruling on cross-motions for summary judgment, the court must consider each motion individually. Marshall v. Clark Equip. Co., No. 94 C 4770,
B. Time of Filing of Appellants' Claims
Appellants second argument in support of their appeal is that the bankruptcy court erred in denying them equitable relief by not granting their Rule 60(b)(6) motion because appellants claim that appellee Clear Shield's conduct caused their delay in filing their antitrust claims. Appellants state that appellee Clear Shield was issued a subpoena duces tecum by the Antitrust Division of the United States Department of Justice on August 12, 1993 and appellee Clear Shield had special counsel that, appellants believe, devoted considerable time aiding appellee Clear Shield in the grand jury investigation. Appellants then argue that appellee Clear Shield attempted to cover-up *346 the potential antitrust claims against it by not responding to the subpoena until two days after the Confirmation Order was entered and by having its special counsel file its fee petitions under seal to the bankruptcy court, thereby allegedly concealing the time spent aiding appellee Clear Shield with the alleged antitrust allegations. Appellants claim that appellee Clear Shield should have included the antitrust investigation in the bankruptcy filings.[1]
This court can find no conduct on the part of appellee Clear Shield that prevented appellants from filing their antitrust claims sooner. There is no reason that appellee Clear Shield had to include in its bankruptcy documents the fact that it was served with a subpoena by a grand jury after the bar date for filing claims against the estate but before entry of the Confirmation Order. Merely being served with a subpoena does not mean that one is facing possible indictment. In fact, appellee Clear Shield never received notice that it was ever а target of the grand jury investigation nor was it indicted by the grand jury. Having attorneys assist in the gathering of the documents requested by the subpoena also does not demonstrate in any manner that appellee Clear Shield knew that potential antitrust claims could be brought against it. Appellants argue that the bankruptcy court ignored the reasonable inferences drawn from the fact that appellee Clear Shield received a subpoena from the grand jury and the fact that appellee Clear Shield's attorneys had their fee petitions to the bankruptcy court redacted. There are, however, no inferences to be drawn from these facts. It is undisputed that appellee Clear Shield received a subpoena in August 1993, after the bar date but before the Confirmation Order and that appellee Clear Shield had attorneys assist it in responding to the subpoеna. What appellants fail to accept is that mere receipt and response to a subpoena from the grand jury does not mean that one is a target of the grand jury or that indictment is imminent. Appellee Clear Shield's parent corporation also fully disclosed the fact that appellee Clear Shield had received a subpoena in its December 31, 1993 Form 10-K filed with the Securities and Exchange Commission on March 31, 1994. Appellants fail to show that appellee Clear Shield's conduct in any way prevented appellants from filing their antitrust claims sooner. Appellee Clear Shield did nothing wrong by not including the receipt of the subpoena in their bankruptcy documents.
Appellants presented three documents to the bankruptcy court that they claim support their belief that appellee Clear Shield violated antitrust laws. The three documents are: (1) a fax cover sheet from Dispoz-O Plastics, Inc. dated June 10, 1993 that states the belief that appellee Clear Shield will announce a price increase; (2) a proposed price increase announcement from Dispoz-O Plastics, Inc. dated June 14, 1993 that has handwritten writing on it stating in capital letters to not issue the letter; and (3) *347 appellee Clear Shield's June 10, 1993 announcement of a price increase.[2] The bankruptcy court determined that the documents did not incriminate appellee Clear Shield at all. This court agrees. Viewing the evidence in the light most favorable to appellants, there is nothing in the documents that demonstrates that appellee Clear Shield knew any of its competitors' price information prior to the public or that appellee Clear Shield shared information with anyone else. Furthermore, the issue in this aрpeal is not whether or not appellee Clear Shield actually committed antitrust violations. In re Penn Cent. Transp. Co.,
Appellants try to argue that they have not been able to conduct extensive discovery to produce further evidence that appellee Clear Shield knew of potential antitrust claims prior to the bankruptcy bar date. If appellants do not have the proper documents to demonstrate that appellee Clear Shield acted improperly, it is not the plaсe for the courts to surmise what appellee Clear Shield might have done. This is not the standard for a motion for summary judgment or a Rule 60(b) motion. The bankruptcy court did not and could not have granted appellants' Rule 60(b)(6) motion on appellants' mere speculation or strong belief that appellee Clear Shield committed antitrust violations. Furthermore, appellants filed summary judgment documents as did appellee Clear Shield. If appellants did not have the ability at the time to file appropriate documents to withstand summary judgment, appellants should have filed an affidavit pursuant to Rule 56(f) of the Federal Rules of Civil Procedure and requested more time for discovery from the bankruptcy court. United States v. All Assets & Equip. of West Side Bldg. Corp.,
C. Notice of Appellee Clear Shield's Bankruptcy Proceedings
Appellants argue that they did not receive formal notice of their potential antitrust claims from appellee Clear Shield in violation of their right to due process. In analyzing a due process claim, the interests between the state and the individual must be balanced. Mullane v. Central Hanover Bank & Trust Co.,
In determining the proper form of notice of a bankruptcy claim bar date that needs to be given, courts divide creditors into two groups, known and unknown creditors. Id.,
A creditor is reasonably ascertainable if he or she can be identified through reasonably diligent efforts. Mennonite Bd. of Missions v. Adams,
This court agrees with the bankruptcy court's determination that appellants were unknown creditors to appellee Clear Shield. Appellee Clear Shield conducted a review of their books and records and interviewed its employees in order to prepare its schedules and statement of financial affairs and to determine what claims existed against it. There was no possible way for appellee Clear Shield to ever run across the names of appellants Eisenberg and Servall since they were never customers of appellee Clear Shield and therefore there was no reason to conclude that they should be considered creditors. With respect to appellant St. Cloud, appellee Clear Shield's records showed that appellant St. Cloud did not owe Clear Shield any money nor did Clear Shield owe St. Cloud any money. Accordingly, there was no reason for appellee Clear Shield to have to give actual notice to appellant St. Cloud since it was not a creditor. Appellee Clear Shield used reasonably diligent efforts to determine who constituted their known creditors. There was no reason fоr appellee Clear Shield to have had to search out appellants and create reasons for appellants to make a claim against it.
Appellants continue to argue that appellee Clear Shield's receipt of the grand jury subpoena signified that appellants became known creditors of appellee Clear Shield. There is no justification to reach this conclusion. As stated earlier in this opinion, mere receipt of the subpoena by appellee Clear Shield does not mean that antitrust claims would be imminent or even possible *349 against appellee Clear Shield. There has been no showing that the antitrust claims were anything more than conjectural to appellee Clear Shield. Therefore, there was no potential liability of which appellee Clear Shield knew that warranted the necessity for actual notice to any of the appellants. Since appellants were unknown creditors of appellee Clear Shield past the entry of the Confirmation Order, the constructive notice appellee Clear Shield published in the Wall Street Journal, the New York Times, and the Chicago Tribune, was sufficient notice of the bankruptcy proceeding. In re Chicago, Milwaukee, St. Paul & Pac. R.R. Co.,
Appellants stress that it is inconsistent for the bankruptcy court to determine that their antitrust claims had to have been raised before the entry of the Confirmation Order and yet conclude that they were unknown creditors and only required constructive notice. These findings are not inconsistent. "Admittedly it may not seem entirely fair to require a party who has no actual notice of a bankruptcy to raise a claim before the bankruptcy court or be forever barred from raising such claims. We must keep in mind, however, that the bankruptcy provisions constitute an attempt to balance various interests . . . [t]hese interest are better served if a bankruptcy court has all claims before it when distributing a debtor's property." In re Chicago,
D. Detection of Appellants' Antitrust Claims
Appellants' final argument is that the bankruptcy court erred in determining that their antitrust claims against appellee Clear Shield were capable of detection prior to the bankruptcy proceedings. Appellants claim that appellee Clear Shield's alleged antitrust violations occurred between October 1990 and at least April 1992. The bankruptcy court concluded that these purported violations had they occurred were capable of detection by appellants well before entry of the Confirmation Order. Accordingly, the bankruptcy court found that appellants' claims were mature, uncontingent, and therefore discharged by the Confirmation Order.
Appellants argue that it is a paradox to conclude that appellants were unknown creditors and did not deserve formal notice of appellee Clear Shield's bankruptcy proceeding, yet appellants' antitrust claims were mature as of the Confirmation Order and therefore discharged. The bankruptcy court correctly concluded that there is no conflict by making these conclusions. As stated above, a bankruptcy claimant can be unaware that he or she has a claim and yet still relinquish such claim as a result of the bankruptcy proceedings. See In re Chicago, Milwaukee, St. Paul & Pac. R.R. Co.,
The issue is whether appellants' antitrust claims against appellee Clear Shield were discharged by the bankruptcy court's Confirmation Order since they were mature and uncontingent at that time. The purported antitrust violations allegedly occurred, if at all, between October 1990 and at least April 1992. A federal antitrust claim arises *350 when a party commits an anticompetitive act that injures the plaintiff. Zenith Radio Corp. v. Hazeltine Research, Inc.,
Even in considering whether the equitable tolling doctrine applies, this court cannot conclude that appellants could not have discovered appellee Clear Shield's alleged actions earlier.[3] Under the equitable tolling doctrine, appellants must show that they did not discover appellee Clear Shield's alleged wrongdoing although they diligently inquired into the circumstances. United Nat'l Records, Inc. v. MCA, Inc.,
The second type of fraudulent behavior that may warrant the tolling of the statutory limitation period is the "fraudulent *351 concealment doctrine." Id. Under this doctrine, appellants must allege that appellee Clear Shield took positive steps after commission of the fraud to keep it concealed. Id. Appellants state no facts that demonstrate how appellee Clear Shield concealed thеir actions so that appellants were unable to assert their claims prior to their being barred by the bankruptcy proceeding. Appellants merely point to their complaint that alleges that defendants and co-conspirators fraudulently concealed the existence of the conspiracy. Appellants present no facts to support this bald allegation. Appellants cannot defeat a motion for summary judgment merely by pointing to an allegation in their complaint. Celotex Corp. v. Catrett,
Appellants continue to argue that appellee Clear Shield received a subpoena from the grand jury and did not respond to the subpoena until after the Confirmation Order. This fact alone, however, does not demonstrate that appellee Clear Shield took steps to conceal the alleged conspiracy. Appellee Clear Shield did not appear to hide the fact that they received the subpoena. Appellee Clear Shield responded to the subpoena and disclosed to the public in its parent company's Form 10-K that it had received a subpoena. The three documents submitted by appellants regarding the price increase by appellee Clear Shield and pertaining to Dispoz-O Plastics, Inc., also do not demonstrate any act of fraudulent concealment by appellee Clear Shield. Appellants simply argue that due to the nature of an antitrust conspiracy, they were incapable of detecting their claims prior to the Confirmation Order. Such an assertion with no facts to support such a conclusion, is insufficient to warrant granting appellants' Rule 60(b)(6) motion. Appellants fail to demonstrate any genuine issue of fact as to whether they could nоt have discovered their antitrust claims prior to entry of the Confirmation Order.
Appellants focus on the fact, which the bankruptcy court accepted, that they did not know about their antitrust claims prior to appellee Clear Shield's bankruptcy confirmation. Appellants, however, could have and should have known about their antitrust claims against appellee Clear Shield prior to their being discharged. That appellants did not know about them at the time is not the issue. The bankruptcy laws state that claims that are asserted after confirmation are discharged, there is no exception for claims that were unknown to a claimant at the time. In re Penn Cent. Transp. Co.,
This conclusion follows other case law that pertain to environmеntal claims. The bankruptcy court in this case noted that antitrust claims are similar in characteristic to environmental claims. In re Envirodyne,
Additionally, appellants strenuously argue that they had no prepetition relationship with appellee Clear Shield through which they should be held accountable to have detected their claims earlier. Appellants, however, are not bringing their antitrust claims against only Clear Shield. There are other defendants in appellants' civil litigation with whom appellants claim appellee Clear Shield conspired to violate antitrust laws. Appellant Eisenberg and appellant Servall were customers of the other defendants, and appellant St. Cloud was a direct customer of appellee Clear Shield at the time of the alleged antitrust conspiracy. Moreover, all of the appellants were direct purchasers in the plastic cutlery industry at the time of the alleged antitrust conspiracy. All appellants had a direct interest in the pricing of plastic cutlery, otherwise there would be no reason *352 for their civil complaint. Accordingly, appellants were all in a position where they could have discovered their antitrust claims against appellee Clear Shield earlier than when they filed their civil complaint. That they in fact did not is not relevant. Appellants' antitrust claims are claims that were discharged by appellee Clear Shield's bankruptcy confirmation since they fit within the broad statutory definition of a claim prescribed by Congress in 11 U.S.C. § 101(5). Appellants' claims were capable of detection and thus mature and uncontingent at the time of the Confirmation Order.
Furthermore, appellants waited to file their civil cases until almost two years after appellee Clear Shield disclosed that it was served with a subpoena by the grand jury in its Form 10-K filed with the Securities and Exchange Commission on March 31, 1994. Surely appellants were on notice of any potential antitrust claims against appellee Clear Shield then. Perhaps had appellants filed their Rule 60(b) motion soon after that March 31, 1997 disclosure, thе bankruptcy court might have evaluated the case differently. See In re Chicago,
CONCLUSION
Based on the above stated reasons, appellee Clear Shield's motion to strike is granted in part, tabs A, B, and C of appellants' appendix to their reply brief are stricken, but the remaining part of appellee Clear Shield's motion to strike is denied. The decision of the bankruptcy court is AFFIRMED.
NOTES
Notes
[1] Appellants' argument in essence is premised on the notion that appellee Clear Shield's conduct constitutes fraud or a misrepresentation to the bankruptcy court by not disclosing potential anti-trust claims prior to entry of the Confirmation Order. While appellants phrase their argument as falling under Rule 60(b)(6), such an argument is really one under Rule 60(b)(3). In re Chicago, Milwaukee, St. Paul & Pac. R.R. Co.,
[2] This court notes for appellants that evidence set forth as exhibits to motions for summary judgment or briefs in opposition to motions for summary judgment must be competent evidence of a kind otherwise admissible at trial. Bombard v. Fort Wayne Newspapers, Inc.,
[3] This court recognizes that the tolling doctrine applies to the statutory limitation period for the filing of antitrust claims and that statutory limitation periods do not necessarily address the same issues or principals as the determination of when a claim arises for bankruptcy purposes. See Wisconsin Barge Lines, Inc. v. United States (In re Wis. Barge Lines, Inc.),