09-50026-reg Doc 13365 Filed 08/11/15 Entered 08/11/15 17...
Transcript of 09-50026-reg Doc 13365 Filed 08/11/15 Entered 08/11/15 17...
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King & Spalding LLP 1185 Avenue of the Americas New York, NY 10036-4003 Tel: (212) 556-2100 Fax: (212) 556-2222 www.kslaw.com
Arthur Steinberg Direct Dial: 212-556-2158 [email protected]
August 11, 2015
VIA E-MAIL TRANSMISSION AND ECF FILING The Honorable Robert E. Gerber United States Bankruptcy Judge United States Bankruptcy Court Southern District of New York Alexander Hamilton Custom House One Bowling Green New York, New York 10004 Re: In re Motors Liquidation Company, et al. Case No. 09-50026 (REG)
Letter Regarding Update on Related Proceedings
Dear Judge Gerber:
King & Spalding LLP is co-counsel with Kirkland & Ellis LLP for General Motors LLC (“New GM”) in the above-referenced matter. We write to provide the Court, pursuant to Your Honor’s Endorsed Order dated May 5, 2015 [Dkt. No. 13131], with an update on developments in proceedings relating to New GM’s Motions to Enforce.
On Friday, August 7, 2015, New GM filed a Response (“Response”) to the Motion to Withdraw the Reference Filed by Designated Counsel in Respect of the GUC Trust Asset Pleading, in the United States District Court for the Southern District of New York (“District Court”), in the case captioned Ignition Switch Plaintiffs and Certain Non-Ignition Switch Plaintiffs v. General Motors LLC (Case 1:15-cv-05056-JMF). A copy of the Response is attached hereto as Exhibit A.
On the same date, the GUC Trust filed with the District Court the Memorandum of Law
by Wilmington Trust Company, as GUC Trust Administrator and Trustee, and the Participating Unitholders in Opposition to Motion to Withdraw the Reference with Respect to the Non-Ignition Switch Plaintiffs’ GUC Trust Asset Pleading (“GUC Trust Opposition”). A copy of the GUC Trust Opposition is attached hereto as Exhibit B.
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Honorable Robert E. Gerber Aug. 11, 2015 Page 2
Respectfully submitted, /s/ Arthur Steinberg Arthur Steinberg
AJS/sd Encl. cc: Edward S. Weisfelner Howard Steel
Sander L. Esserman Jonathan L. Flaxer S. Preston Ricardo Matthew J. Williams Lisa H. Rubin Keith Martorana Daniel Golden Deborah J. Newman Jamison Diehl William Weintraub Steve W. Berman Elizabeth J. Cabraser Robert C. Hilliard
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Exhibit A
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KING & SPALDING LLP 1185 Avenue of the Americas New York, New York 10036 Telephone: (212) 556-2100 Facsimile: (212) 556-2222 Arthur Steinberg Scott Davidson
KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Richard C. Godfrey, P.C. (admitted pro hac vice) Andrew B. Bloomer, P.C. (admitted pro hac vice) Attorneys for General Motors LLC UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x In re : Chapter 11
: MOTORS LIQUIDATION COMPANY, et al., : Bankruptcy Case No.: f/k/a General Motors Corp., et al. : 09-50026 (REG)
: Debtors. : (Jointly Administered) :
---------------------------------------------------------------x IGNITION SWITCH PLAINTIFFS : And CERTAIN NON-IGNITION SWITCH : : PLAINTIFFS, : Case No.: 1:15-cv-05056-JMF Plaintiffs, : -versus- : : GENERAL MOTORS LLC, : : Defendant. : ---------------------------------------------------------------x
RESPONSE OF GENERAL MOTORS LLC TO THE MOTION TO WITHDRAW THE REFERENCE FILED BY DESIGNATED COUNSEL
IN RESPECT OF THE GUC TRUST ASSET PLEADING
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General Motors LLC (“New GM”), by its attorneys King & Spalding LLP and Kirkland
and Ellis LLP, hereby files this Response (“Response”) to the Motion to Withdraw the
Reference filed by Designated Counsel in respect of the GUC Trust Asset Pleading and, in
support thereof, respectfully represents as follows:
A. There is No Basis to Withdraw the Reference for the GUC Trust Asset Pleading.
1. Designated Counsel filed an omnibus pleading entitled “No Strike Pleading,
Objection Pleading and GUC Trust Asset Pleading” (as such terms are defined in the Bankruptcy
Court’s June 1, 2015 Judgment1) on June 24, 2015, and simultaneously sought to withdraw the
reference to the Bankruptcy Court with respect to such omnibus pleading.
2. On July 23, 2015, New GM filed a response to the omnibus pleading limited to
(a) the No Strike Pleading and the Objection Pleading with the Bankruptcy Court, and (b) the
motion to withdraw the reference of the No Strike Pleading and the Objection Pleading with this
Court. [Dkt. No. 7] (“July 23 Response”).
3. Pursuant to a Stipulation and Order of the Bankruptcy Court on July 28, 2015, the
GUC Trust Asset Pleading was severed from the omnibus pleading and the response deadline for
the GUC Trust Asset Pleading tolled, subject to reinstatement on seven business days’ notice.
The same severance/tolling procedure as it related to the motion to withdraw the reference of the
GUC Trust Asset Pleading was agreed to by this Court. [Dkt. No. 9]. Notice of the reinstatement
was received on July 29, 2015, thus necessitating this Response to the motion to withdraw the
1 A copy of the Judgment is annexed hereto as Exhibit “A”.
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reference of the GUC Trust Asset Pleading. Simultaneously herewith, New GM is filing a
response to the GUC Trust Asset Pleading in the Bankruptcy Court.2
4. The GUC Trust Asset Pleading was only a small segment of Designated
Counsels’ omnibus pleading. New GM’s reasons why the Court should not withdraw the
reference to the No Strike Pleading and the Objection Pleading apply equally to the GUC Trust
Asset Pleading. The July 23 Response filed with this Court is incorporated herein by reference.
5. In reality, the GUC Trust Asset Pleading is a reservation of rights. Designated
Counsel asserted that it was premature to bar Non-Ignition Switch Plaintiffs from accessing
GUC Trust Assets. Objection Pleading, at 30. They also contend that it would be inequitable to
now bar Non-Ignition Switch Plaintiffs from accessing GUC Trust Assets without the same
opportunity that was afforded the Ignition Switch Plaintiffs. Id. Exhibit A hereto filed in the
Bankruptcy Court provides the substantive response to these arguments. Essentially, the
Judgment required Designated Counsel to show why Non-Ignition Switch Plaintiffs were
different from Ignition Switch Plaintiffs with respect to the Bankruptcy Court’s equitable
mootness ruling and they failed to do so. Reservations of rights pleadings were not contemplated.
Designated Counsel’s inability to draw a distinction between the two groups they currently
represent is not surprising: there is no difference between them with respect to the equitable
mootness ruling.
6. Further, as a general proposition, a pleading like the GUC Trust Asset Pleading
that essentially seeks to reserve rights is not a pleading that compels, as a matter of this Court’s
discretion, the withdrawal of the reference.
2 A copy of the response to the GUC Trust Asset Pleading filed in the Bankruptcy Court is attached hereto as Exhibit “B” and incorporated herein by reference.
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7. Designated Counsel seek to “muddy the waters” as to why their motion to
withdraw the reference is appropriate by referring to recent proceedings in the Bankruptcy Court.
As explained below, their characterization of such bankruptcy proceedings are misleading,
incomplete and/or incorrect.
B. Paragraph 16 of the Judgment Provides for the Bankruptcy Court’s Exclusive Jurisdiction, Which Highlights the Improper Basis for the Motion to Withdraw the Reference.
8. Designated Counsel state that the Judgment does not purport to prohibit motions
to withdraw the reference. See Designated Counsel Reply, at 1. They simply ignore the first
sentence of paragraph 16 of the Judgment, which provides that:
The Court [(i.e., the Bankruptcy Court)] shall retain exclusive jurisdiction, to the fullest extent permissible under law, to construe the Sale Order, this Judgment, and/or the Decision on which it was based.
Id. (emphasis supplied).
9. The GUC Trust Asset Pleading (as well as the No Strike/Objection Pleadings) are
part of the enforcement procedures set forth in the Judgment, and require the Bankruptcy Court
to construe the Sale Order. As such, they fall squarely within the exclusive jurisdiction
provisions of paragraph 16 of the Judgment.
10. The above sentence in paragraph 16 of the Judgment was included in Designated
Counsel’s form of judgment submitted to the Bankruptcy Court.3
11. The accompanying letter submitted by Designated Counsel with their form of
judgment, dated May 12, 2015, asked the Bankruptcy Court to provide in the judgment that the
courts where the original cases were pending should decide whether causes of action alleged to
3 A copy of the Letter, dated May 12, 2015, submitted by Designated Counsel to the Bankruptcy Court, with their form of judgment attached as Exhibit A [Bankr. Dkt. No. 13137], is annexed hereto as Exhibit “C”.
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be Independent Claims (as defined in the Judgment) were proscribed by the Judgment.4 The
Bankruptcy Court rejected that request and instead implemented the No Strike/Objection/GUC
Trust Asset Pleading procedures suggested by New GM, which mandate that the Bankruptcy
Court decide these matters in the first instance.
12. Paragraph 13 of the Judgment (which addresses both Ignition Switch Plaintiffs
and Non-Ignition Switch Plaintiffs) expressly provides that if a No Strike Pleading/GUC Trust
Asset Pleading is filed, it must be done in “this Court” (i.e., the Bankruptcy Court), and the
Bankruptcy Court will schedule a hearing thereon, if necessary.
13. To make sure that there was no ambiguity regarding the Bankruptcy Court’s
exclusive jurisdiction to decide these issues in the first instance, the Bankruptcy Court added the
following language to paragraph 16 of the Judgment:
For the avoidance of doubt, except as otherwise provided in this Judgment, the Sale Order remains fully enforceable, and in full force and effect. This Judgment shall not be collaterally attacked, or otherwise subjected to review or modification, in any Court other than this Court or any court exercising appellate authority over this Court.
Judgment ¶ 16 (emphasis supplied).5
14. The Bankruptcy Court explained its reasoning for the addition of this sentence in
its Decision Re Form of Judgment, dated May 27, 2015 [Bankr. Dkt. No. 13162] (“Form of
Judgment Decision”):6
New GM has expressed an understandable concern that plaintiffs in actions whose prosecution is barred by the Sale Order (sic. Cases) will seek to have this Court’s Sale Order or judgment vacated or modified by courts in which plaintiffs’
4 That argument is made in the omnibus pleading filed by Designated Counsel. It is the type of re-argument that is expressly prohibited by the Judgment.
5 A district court that withdraws the reference is not exercising appellate authority. 6 A copy of the Form of Judgment Decision, published as In re Motors Liquidation Co., No. 09-50026, 2015 WL
3398398 (Bankr. S.D.N.Y. May 27, 2015), is annexed hereto as Exhibit “D”.
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underlying actions are docketed. This Court cannot (sic. not) tolerate efforts of that character. Wholly apart from the additional expertise that Bankruptcy Courts have with respect to the order they enter and the bankruptcy matters they decide, the interpretation of the Sale Order is a matter for this Court. Subject to the power, of course, of federal courts exercising appellate jurisdiction over this Court, so is the interpretation of the Decision and the Judgment. This Court’s determinations with respect to each of those matters are reviewable by the federal appellate courts alone; they cannot be subject to collateral attack. And this last point is so important that the Court is adding even more language to the Judgment to make that clear.
Id. at 12.
C. Footnote 16 of the Bledsoe Decision Does Not Alter the Bankruptcy Court’s Exclusive Jurisdiction to Construe the Sale Order and Decide the Omnibus Pleading
15. Designated Counsel’s reference to footnote 16 of the Bledsoe Decision7 likewise
does not support their motion for withdrawal of the reference. The footnote provides that
whether Independent Claims have been asserted against New GM must be decided in the context
of “specific allegations in specific complaints.” The Bankruptcy Court noted that these issues
are “teed up” in the plaintiffs’ No Strike Pleadings pending before it. The Bankruptcy Court also
stated its intention to decide these issues, but recognized that the District Court may do so in the
event the reference is withdrawn.
16. The rest of the footnote does not refer to motions to withdraw the reference.
While it mentions that “other courts” would implement the Bankruptcy Court’s rulings, the only
fair reading of “rulings” must be the ones the Bankruptcy Court has and will make in the matters
before it. Taken in context, that means the Judgment and those matters related to No Strike
Pleadings, GUC Trust Asset Pleadings (and other similar pleadings) filed in the Bankruptcy
7 See Designated Counsel’s Reply, at 2. A copy of the Decision and Order on Bledsoe Plaintiffs’ Reargument and Other Post-Judgment Motions, entered July 22, 2015 [ECF No. 13313] (“Bledsoe Decision”) is annexed hereto as Exhibit “E”.
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Court. The statement about “other courts” was made as part of an overall caution that other
courts will need to be “wary of reliance on facts ostensibly introduced as ‘background’ when
they were in fact attempts to paint New GM with Old GM acts.” The reference to “other courts”
does not mean the Bankruptcy Court has changed its view (as expressed clearly in the Judgment
and the Form of Judgment Decision) that it (as compared to other courts), in the first instance,
should construe the Sale Order, the Judgment, and the enforcement procedures (e.g., No Strike
Pleadings, GUC Trust Asset Pleadings, etc.) relating thereto.8
D. Designated Counsel’s Reference to the Bankruptcy Court’s July 16, 2015 Hearing is Misleading.
17. At the July 16, 2015 hearing before the Bankruptcy Court, Designated Counsel
asked the Bankruptcy Court to grant an extension of the time for the GUC Trust to answer a
pleading (the motion to withdraw the reference) that was pending in the District Court. It was in
that context that the Bankruptcy Court corrected Designated Counsel and indicated that it is the
District Court that must decide whether to grant the extension request for matters pending before
it (i.e., a motion to withdraw the reference).
18. Designated Counsel cite to snippets from the hearing (Designated Counsel Reply,
at 6 n.19) but omit their own statements made towards the end of the hearing in which they
8 Designated Counsel also cite this footnote for a proposition that is unrelated to their pending motion to withdraw the reference. They point out that the Bankruptcy Court noted that, to the extent an Independent Claim is based, in whole or in part, on the knowledge of New GM personnel, however obtained, that knowledge is “fair game.” However, the example cited by the Bankruptcy Court puts its’ comment into context. The Bankruptcy Court theorized that assuming (without deciding) there was a viable cause of action, New GM could be liable for knowingly installing a defective part made by Old GM in a vehicle after the 363 Sale. The Bankruptcy Court assumed New GM would have the same liability if it knowingly installed a defective part made by another manufacturer in the supplier chain. But, the Bankruptcy Court was careful that its statement not be misconstrued, making it clear that “New GM could not be held liable for anything that Old GM did, and that claims for either compensatory or punitive damages would have to be premised solely on New GM’s knowledge and conduct.” Bledsoe Decision, at 6 n.16.
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apologized to the Bankruptcy Court and New GM’s counsel for not making themselves clear.
See July 16, 2015 Hr’g. Tr., Bankr. Case No. 09-50026 (REG), at 55:6-8); see also id. at 57:21-
25 (Weisfelner) (“[S]ince we were all here today we wanted to take an opportunity to let you
know what might be coming down the pike. And instead of clarifying things and making things
easier we have obviously done just the opposite. For that I apologize.”). In sum, the July 16,
2015 hearing offers nothing to support the motions to withdraw the reference.
****
19. For the reasons stated above, and in New GM’s prior pleadings, New GM
requests that the Court deny the motions to withdraw the reference with respect to the GUC Trust
Asset Pleading, and grant New GM such other and further relief that is just and proper.
Dated: New York, New York August 7, 2015
Respectfully submitted, /s/ Arthur Steinberg Arthur Steinberg Scott Davidson KING & SPALDING LLP 1185 Avenue of the Americas New York, New York 10036 Telephone: (212) 556-2100 Facsimile: (212) 556-2222
Richard C. Godfrey, P.C. (admitted pro hac vice) Andrew B. Bloomer, P.C. (admitted pro hac vice) KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200
Attorneys for General Motors LLC
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Exhibit A
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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x In re : Chapter 11
: MOTORS LIQUIDATION COMPANY, et al., : Case No.: 09-50026 (REG) f/k/a General Motors Corp., et al. :
: Debtors. : (Jointly Administered)
---------------------------------------------------------------x
JUDGMENT
For the reasons set forth in the Court’s Decision on Motion to Enforce Sale Order,
entered on April 15, 2015 (“Decision”),1 it is hereby ADJUDGED as follows:
1. The Ignition Switch Plaintiffs and the Ignition Switch Pre-Closing Accident
Plaintiffs (collectively, the “Plaintiffs”) were “known creditors” of the Debtors. The Plaintiffs
did not receive the notice of the sale of assets of Old GM to New GM (“363 Sale”) that due
process required.
2. Except with respect to Independent Claims (as herein defined), the Ignition
Switch Plaintiffs were not prejudiced by their lack of notice of the 363 Sale, and they thus failed
to demonstrate a due process violation with respect to the 363 Sale.
1 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Decision.
For purposes of this Judgment, the following terms shall apply: (i) “Ignition Switch Plaintiffs” shall mean plaintiffs that have commenced a lawsuit against New GM asserting economic losses based on or arising from the Ignition Switch in the Subject Vehicles (each term as defined in the Agreed and Disputed Stipulations of Fact Pursuant to the Court’s Supplemental Scheduling Order, Dated July 11, 2014, filed on August 8, 2014 [Dkt. No. 12826], at 3); (ii) “Pre-Closing Accident Plaintiffs” shall mean plaintiffs that have commenced a lawsuit against New GM based on an accident or incident that occurred prior to the closing of the 363 Sale; (iii) “Ignition Switch Pre-Closing Accident Plaintiffs” shall mean that subset of the Pre-Closing Accident Plaintiffs that had the Ignition Switch in their Subject Vehicles; (iv) “Non-Ignition Switch Pre-Closing Accident Plaintiffs” shall mean that subset of Pre-Closing Accident Plaintiffs that are not Ignition Switch Pre-Closing Accident Plaintiffs; and (v) “Non-Ignition Switch Plaintiffs” shall mean plaintiffs that have commenced a lawsuit against New GM asserting economic losses based on or arising from an alleged defect, other than the Ignition Switch, in an Old GM vehicle.
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3. The Ignition Switch Pre-Closing Accident Plaintiffs were not prejudiced by their
lack of notice of the 363 Sale, and they thus failed to demonstrate a due process violation with
respect to the 363 Sale.
4. With respect to the Independent Claims, the Ignition Switch Plaintiffs were
prejudiced by the failure to give them the notice of the 363 Sale that due process required. The
Ignition Switch Plaintiffs established a due process violation with respect to the Independent
Claims. The Sale Order shall be deemed modified to permit the assertion of Independent
Claims. For purposes of this Judgment, “Independent Claims” shall mean claims or causes of
action asserted by Ignition Switch Plaintiffs against New GM (whether or not involving Old GM
vehicles or parts) that are based solely on New GM’s own, independent, post-Closing acts or
conduct. Nothing set forth herein shall be construed to set forth a view or imply whether or not
Ignition Switch Plaintiffs have viable Independent Claims against New GM.
5. Except for the modification to permit the assertion of Independent Claims by the
Ignition Switch Plaintiffs, the Sale Order shall remain unmodified and in full force and effect.
6. The Plaintiffs were prejudiced by the failure to receive the notice due process
required of the deadline (“Bar Date”) to file proofs of claim against the Old GM bankruptcy
estate. Any Plaintiff may petition the Bankruptcy Court (on motion and notice) for authorization
to file a late or amended proof of claim against the Old GM bankruptcy estate. The Court has
not determined the extent to which any late or amended proof of claim will ultimately be allowed
or allowed in a different amount. But based on the doctrine of equitable mootness, in no event
shall assets of the GUC Trust held at any time in the past, now, or in the future (collectively, the
“GUC Trust Assets”) (as defined in the Plan) be used to satisfy any claims of the Plaintiffs, nor
will Old GM’s Plan be modified with respect to such claims; provided that nothing in this
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Judgment shall impair any party’s rights with respect to the potential applicability of Bankruptcy
Code section 502(j) to any claims that were previously allowed or disallowed by the Court. The
constraints on recourse from GUC Trust Assets shall not apply to any Ignition Switch Plaintiff,
Pre-Closing Accident Plaintiff, or Non-Ignition Switch Plaintiff who had a claim previously
allowed or disallowed by the Court, but in no event shall he or she be entitled to increase the
amount of any allowed claim without the prior authorization of the Bankruptcy Court or an
appellate court following an appeal from the Bankruptcy Court.
7. Any claims and/or causes of action brought by the Ignition Switch Pre-Closing
Accident Plaintiffs that seek to hold New GM liable for accidents or incidents that occurred prior
to the closing of the 363 Sale are barred and enjoined pursuant to the Sale Order. The Ignition
Switch Pre-Closing Accident Plaintiffs shall not assert or maintain any such claim or cause of
action against New GM.
8. (a) Subject to the other provisions of this paragraph 8, each Ignition Switch
Pre-Closing Accident Plaintiff (including without limitation the Ignition Switch Pre-Closing
Accident Plaintiffs identified on Exhibit “A” attached hereto) is stayed and enjoined from
prosecuting any lawsuit against New GM.
(b) Within two (2) business days of the entry of this Judgment, New GM shall
serve a copy of this Judgment on counsel in the lawsuits identified on Exhibit “A,” by e-mail,
facsimile, overnight mail or, if none of the foregoing are available, regular mail, with a cover
note that states: “The attachment is the Judgment entered by the Bankruptcy Court. Please
review the Judgment, including without limitation, the provisions of paragraph 8 of the
Judgment.”
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(c) If counsel for an Ignition Switch Pre-Closing Accident Plaintiff
(including, but not limited to, one identified on Exhibit “A”) believes that, notwithstanding the
Decision and this Judgment, it has a good faith basis to maintain that its lawsuit against New GM
should not be stayed, it shall file a pleading with this Court within 17 business days of this
Judgment (“No Stay Pleading”). The No Stay Pleading shall not reargue issues that were
already decided by the Decision, this Judgment, or any other decision, order, or judgment of this
Court. If a No Stay Pleading is timely filed, New GM shall have 17 business days to respond to
such pleading. The Court will schedule a hearing thereon if it believes one is necessary.
9. Except for Independent Claims and Assumed Liabilities (if any), all claims and/or
causes of action that the Ignition Switch Plaintiffs may have against New GM concerning an Old
GM vehicle or part seeking to impose liability or damages based in whole or in part on Old GM
conduct (including, without limitation, on any successor liability theory of recovery) are barred
and enjoined pursuant to the Sale Order, and such lawsuits shall remain stayed pending appeal of
the Decision and this Judgment.
10. (a) The lawsuits stayed pursuant to the preceding paragraph shall include
those on the attached Exhibit “B.” The lawsuits identified on Exhibit “B” include the Pre-Sale
Consolidated Complaint.
(b) Within two (2) business days of the entry of this Judgment, New GM shall
serve a copy of this Judgment on counsel in the lawsuits identified on Exhibit “B”, by e-mail,
facsimile, overnight mail or, if none of the foregoing are available, regular mail, with a cover
note that states: “The attachment is the Judgment entered by the Bankruptcy Court. Please
review the Judgment, including without limitation, the provisions of paragraph 10 of the
Judgment.”
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(c) If a counsel listed on Exhibit “B” believes that, notwithstanding the
Decision and this Judgment, it has a good faith basis to maintain that its lawsuit against New GM
should not be stayed, it shall file a No Stay Pleading with this Court within 17 business days of
this Judgment. The No Stay Pleading shall not reargue issues that were already decided by the
Decision and this Judgment, or any other decision or order of this Court. If a No Stay Pleading
is timely filed, New GM shall have 17 business days to respond to such pleading. The Court will
schedule a hearing thereon if it believes one is necessary.
11. (a) The complaints in the lawsuits listed on the attached Exhibit “C”
(“Hybrid Lawsuits”) include claims and allegations that are permitted under the Decision and
this Judgment and others that are not. Accordingly, until and unless the complaint in a Hybrid
Lawsuit is (x) amended to assert solely claims and allegations permissible under the Decision
and this Judgment (as determined by this or any higher court, if necessary), or (y) is judicially
determined (by this or any higher court) not to require amendment, that lawsuit is and shall
remain stayed. The Hybrid Lawsuits include the Post-Sale Consolidated Complaint. Within two
(2) business days of the entry of this Judgment, New GM shall serve a copy of this Judgment on
counsel in the Hybrid Lawsuits, by e-mail, facsimile, overnight mail or, if none of the foregoing
are available, regular mail, with a cover note that states: “The attachment is the Judgment entered
by the Bankruptcy Court. Please review the Judgment, including without limitation, the
provisions of paragraph 11 of the Judgment.”
(b) Notwithstanding the stay under the preceding subparagraph, however, the
complaints in the actions listed in Exhibit “C” may, if desired, be amended in accordance with
the subparagraphs that follow. Subject to the other provisions of this paragraph 11, and unless
the applicable complaint already has been dismissed without prejudice pursuant to an order
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entered in MDL 2543, each Plaintiff in a Hybrid Lawsuit wishing to proceed at this time may
amend his or her complaint on or before June 12, 2015, such that any allegations, claims or
causes of action concerning an Old GM vehicle or part seeking to impose liability or damages
based on Old GM conduct (including, without limitation, any successor liability theory of
recovery) are stricken, and only Independent Claims are pled.
(c) If a counsel listed in the lawsuits on Exhibit “C” believes that,
notwithstanding the Decision and this Judgment, it has a good faith basis to maintain that its
allegations, claims or causes of action against New GM should not be stricken, it shall file a
pleading with this Court within 17 business days of this Judgment (“No Strike Pleading”). The
No Strike Pleading shall not reargue issues that were already decided by the Decision and
Judgment. If a No Strike Pleading is timely filed, New GM shall have 17 business days to
respond to such pleading. The Court will schedule a hearing thereon if it believes one is
necessary.
(d) If an Ignition Switch Plaintiff fails to either (i) amend his or her respective
complaints on or before June 12, 2015, such that all allegations, claims and/or causes of action
concerning an Old GM vehicle or part seeking to impose liability or damages based on Old GM
conduct (including, without limitation, any successor liability theory of recovery) are stricken,
and only Independent Claims are pled, or (ii) timely file a No Strike Pleading with the Court
within the time period set forth above, New GM shall be permitted to file with this Court a notice
of presentment on five (5) business days’ notice, with an attached order (“Strike Order”) that
directs the Ignition Switch Plaintiff to strike specifically-identified allegations, claims and/or
causes of action contained in his or her complaint that violate the Decision, this Judgment and/or
the Sale Order (as modified by the Decision and this Judgment), within 17 business days of
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receipt of the Strike Order.
(e) For any allegations, claims or causes of action of the Ignition Switch
Plaintiffs listed on Exhibit “C” that are stricken pursuant to this Judgment (voluntarily or
otherwise), (i) the statute of limitations shall be tolled from the date of the amended complaint to
30 days after all appeals of the Decision and Judgment are decided, and (ii) if the Decision and
Judgment are reversed on appeal such that the appellate court finds that the Ignition Switch
Plaintiffs can make the allegations, or maintain the claims or causes of action, against New GM
heretofore stricken pursuant to this Judgment, all of the Ignition Switch Plaintiffs’ rights against
New GM that existed prior to the striking of such claims or causes of action pursuant to this
Judgment shall be reinstated as if the striking of such claims or causes of action never occurred.
(f) Notwithstanding the foregoing, to the extent (but only the extent)
acceptable to the MDL Court, the Plaintiff in any lawsuit listed on Exhibit “C” may elect not to
amend his or her complaint and may await the outcome of appellate review of this Judgment. If
that plaintiff thereafter determines to proceed with his or her lawsuit, the plaintiff’s counsel shall
provide notice to New GM, and the procedures set forth above shall apply.
12. (a) The lawsuits captioned People of California v. General Motors LLC, et
al., No. 30-2014-00731038-CU-BT-CXC (Orange County, Cal.) and State of Arizona v. General
Motors LLC, No. CV2014-014090 (Maricopa County, Ariz.) (the “State Lawsuits”) likewise
include claims and allegations that are permitted under the Decision and this Judgment and
others that are not. Accordingly, until and unless the complaint in a State Lawsuit is
(x) amended to assert solely claims and allegations permissible under the Decision and this
Judgment (as determined by this or any higher court, if necessary), or (y) is judicially determined
(by this or any higher court) not to require amendment, that lawsuit is and shall remain stayed.
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Within two (2) business days of the entry of this Judgment, New GM shall serve a copy of this
Judgment on counsel in the State Lawsuits, by e-mail, facsimile, overnight mail or, if none of the
foregoing are available, regular mail, with a cover note that states: “The attachment is the
Judgment entered by the Bankruptcy Court. Please review the Judgment, including without
limitation, the provisions of paragraph 12 of the Judgment.”
(b) Notwithstanding the stay under the preceding subparagraph, however, the
State Lawsuits may, if desired, be amended in accordance with the subparagraphs that follow.
Subject to the other provisions of this paragraph 12, and unless the applicable complaint already
has been dismissed without prejudice, each Plaintiff in a State Lawsuit (“State Plaintiff”)
wishing to proceed at this time may amend its complaint on or before June 12, 2015, such that
any allegations, claims or causes of action concerning an Old GM vehicle or part seeking to
impose liability or damages based on Old GM conduct (including, without limitation, any
successor liability theory of recovery) are stricken, and only Independent Claims are pled.
(c) If a counsel in a State Lawsuit believes that, notwithstanding the Decision
and this Judgment, it has a good faith basis to maintain that its allegations, claims or causes of
action against New GM should not be stricken, it shall file a No Strike Pleading with this Court
within 17 business days of this Judgment. The No Strike Pleading shall not reargue issues that
were already decided by the Decision and Judgment. If a No Strike Pleading is timely filed,
New GM shall have 17 business days to respond to such pleading. The Court will schedule a
hearing thereon if it believes one is necessary.
(d) If a State Plaintiff fails to either (i) amend its complaint, on or before June
12, 2015, such that all allegations, claims and/or causes of action concerning an Old GM vehicle
or part seeking to impose liability or damages based on Old GM conduct (including, without
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limitation, any successor liability theory of recovery) are stricken, and only Independent Claims
are pled, or (ii) timely file a No Strike Pleading with the Court within the time period set forth
above, New GM shall be permitted to file with this Court a notice of presentment on five (5)
business days’ notice, with an attached Strike Order that directs such State Plaintiff to strike
specifically-identified allegations, claims and/or causes of action contained in its complaint that
violate the Decision, this Judgment and/or the Sale Order (as modified by the Decision and
Judgment), within 17 business days of receipt of the Strike Order.
(e) For any allegations, claims or causes of action of a State Plaintiff that are
stricken pursuant to this Judgment (voluntarily or otherwise), (i) the statute of limitations shall be
tolled from the date of the amended complaint to 30 days after all appeals of the Decision and
Judgment are decided, and (ii) if the Decision and Judgment are reversed on appeal such that the
appellate court finds that the State Plaintiff can make the allegations, or maintain the claims or
causes of action, against New GM heretofore stricken pursuant to this Judgment, all of the State
Plaintiff’s rights against New GM that existed prior to the striking of such allegations, claims or
causes of action pursuant to this Judgment shall be reinstated as if their striking never occurred.
(f) Notwithstanding the foregoing, a State Plaintiff may elect not to amend its
complaint and may await the outcome of appellate review of this Judgment. If such plaintiff
thereafter determines to proceed with its lawsuit, the plaintiff’s counsel shall provide notice to
New GM, and the procedures set forth above shall apply.
13. (a) The rulings set forth herein and in the Decision that proscribe claims and
actions being taken against New GM shall apply to the “Identified Parties”2 who were heard
2 “Identified Parties” as defined in the Court’s Scheduling Order entered on May 16, 2014
(ECF No. 12697), and persons that have asserted Pre-Closing personal injury and wrongful death claims against New GM based on the Ignition Switch Defect (as defined in the Decision).
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during the proceedings regarding the Four Threshold Issues and any other parties who had notice
of the proceedings regarding the Four Threshold Issues and the opportunity to be heard in
them—including, for the avoidance of doubt, the plaintiffs in the Bledsoe, Elliott and Sesay
lawsuits listed on Exhibit “C.” They shall also apply to any other plaintiffs in these proceedings
(including, without limitation, the Non-Ignition Switch Pre-Closing Accident Plaintiffs and Non-
Ignition Switch Plaintiffs identified on Exhibit “D” attached hereto), subject to any objection
(“Objection Pleading”) submitted by any such party within 17 business days of the entry of this
Judgment. New GM shall file a response to any such Objection Pleading within 17 business
days of service. The Court will schedule a hearing thereon if it believes one is necessary. To
the extent an issue shall arise in the future as to whether (i) the Non-Ignition Switch Pre-Closing
Accident Plaintiffs and Non-Ignition Switch Plaintiffs were known or unknown creditors of the
Debtors, (ii) the doctrine of equitable mootness bars the use of any GUC Trust Assets to satisfy
late-filed claims of the Non-Ignition Switch Pre-Closing Accident Plaintiffs and Non-Ignition
Switch Plaintiffs, or (iii) the Non-Ignition Switch Pre-Closing Accident Plaintiffs or Non-
Ignition Switch Plaintiffs were otherwise bound by the provisions of the Sale Order, the Non-
Ignition Switch Pre-Closing Accident Plaintiffs or Non-Ignition Switch Plaintiffs shall be
required to first seek resolution of such issues from this Court before proceeding any further
against New GM and/or the GUC Trust.
(b) Within two (2) business days of the entry of this Judgment, New GM shall
serve a copy of this Judgment on counsel for the Non-Ignition Switch Pre-Closing Accident
Plaintiffs or Non-Ignition Switch Plaintiffs identified on Exhibit “D”, by e-mail, facsimile,
overnight mail or, if none of the foregoing are available, regular mail, with a cover note that
states: “The attachment is the Judgment entered by the Bankruptcy Court. Please review the
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Judgment, including without limitation, the provisions of paragraph 13 of the Judgment.”
(c) If a counsel for a Non-Ignition Switch Pre-Closing Accident Plaintiff or
Non-Ignition Switch Plaintiff listed on Exhibit “D” believes that, notwithstanding the Decision
and this Judgment, it has a good faith basis to maintain that its lawsuit, or certain claims or
causes of action contained therein, against New GM should not be dismissed or stricken, it shall
file a pleading with this Court within 17 business days of this Judgment (“No Dismissal
Pleading”). Such No Dismissal Pleading may request, as part of any good faith basis to
maintain a lawsuit (or certain claims or causes of action contained therein) against New GM, (i)
an opportunity to select one or more designated counsel from among the affected parties to
address the Four Threshold Issues with respect to particular defects in the vehicles involved in
the accidents or incidents that form the basis for the subject claims, and (ii) the establishment of
appropriate procedures (including a briefing schedule and discovery, if appropriate) with respect
thereto. If a No Dismissal Pleading is timely filed, New GM shall have 17 business days to
respond to such pleading. The Court will schedule a hearing thereon if it believes one is
necessary.
(d) If counsel for a Non-Ignition Switch Pre-Closing Accident Plaintiff or a
Non-Ignition Switch Plaintiff believes that, notwithstanding the Decision and this Judgment, it
has a good faith basis to believe that any of the GUC Trust Assets may be used to satisfy late
proofs of claim filed by them that may ultimately be allowed by the Bankruptcy Court, it shall
file a pleading with this Court within 17 business days of this Judgment (“GUC Trust Asset
Pleading”). The GUC Trust Asset Pleading shall not reargue issues that were already decided
by the Decision and Judgment. If a GUC Trust Asset Pleading is timely filed, the GUC Trust,
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the GUC Trust Unitholders and/or New GM shall have 17 business days to respond to such
pleading. The Court will schedule a hearing thereon if it believes one is necessary.
(e) If a Non-Ignition Switch Pre-Closing Accident Plaintiff or Non-Ignition
Switch Plaintiff listed on Exhibit “D” fails to timely file a No Dismissal Pleading or a GUC
Trust Asset Pleading with the Court within the time period set forth in paragraphs 13(c) and (d)
above, New GM, the GUC Trust and/or the GUC Trust Unitholders, as applicable, shall be
permitted to file with this Court a notice of presentment on five (5) business days’ notice, with an
attached order (“Dismissal Order”) that directs the Non-Ignition Switch Pre-Closing Accident
Plaintiff or Non-Ignition Switch Plaintiff to dismiss with prejudice its lawsuit, or certain claims
or causes of action contained therein that violate the Decision, this Judgment and/or the Sale
Order (as modified by the Decision and Judgment), within 17 business days of receipt of the
Dismissal Order. For any lawsuit, or any claims or causes of action contained therein, of the
Non-Ignition Switch Pre-Closing Accident Plaintiffs or Non-Ignition Switch Plaintiffs that are
dismissed pursuant to this Judgment, (i) the statute of limitations shall be tolled from the date of
dismissal to 30 days after all appeals of the Decision and Judgment are decided, and (ii) if the
Decision and Judgment are reversed on appeal, such that the appellate court finds that the Non-
Ignition Switch Pre-Closing Accident Plaintiffs or Non-Ignition Switch Plaintiffs can make the
allegations, or maintain the lawsuit or claims or causes of action, against New GM and/or the
GUC Trust heretofore dismissed or stricken pursuant to this Judgment, all of the Non-Ignition
Switch Pre-Closing Accident Plaintiffs’ or Non-Ignition Switch Plaintiffs’ rights against New
GM and/or the GUC Trust that existed prior to the dismissal of their lawsuit or the striking of
claims or causes of action pursuant to this Judgment shall be reinstated as if the dismissal or the
striking of such claims or causes of action never occurred.
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(f) Notwithstanding the provisions of this Paragraph 13, any plaintiff whose
lawsuit would otherwise have to be dismissed, in whole or in part, under this Paragraph 13 may
elect, by notice filed on ECF and served upon New GM and the GUC Trust (no later than 14
days after the entry of this judgment), to stay the lawsuit instead. Except as the Court may
otherwise provide by separate order (entered on stipulation or on motion), the provisions of
Paragraph 13 shall then apply to any request for relief from that stay.
14. The Court adopts the legal standard for “fraud on the court” as set forth in the
Decision.
15. (a) By agreement of New GM, Designated Counsel for the Ignition Switch
Plaintiffs, the GUC Trust, and the GUC Trust Unitholders, and as approved by the Court, no
discovery in the Bankruptcy Court was conducted in connection with the resolution of the Four
Threshold Issues. The Ignition Switch Pre-Closing Accident Plaintiffs did not challenge the
earlier decision not to seek discovery in the Bankruptcy Court in connection with the Bankruptcy
Court’s determination of the Four Threshold Issues. New GM, Designated Counsel, the Groman
Plaintiffs, the GUC Trust, and the GUC Trust Unitholders developed and submitted to the Court
a set of agreed upon stipulated facts. Such parties also submitted to the Bankruptcy Court certain
disputed facts and exhibits. The Court decided the Four Threshold Issues on the agreed upon
stipulated facts only.
(b) The Court has determined that the agreed-upon factual stipulations were
sufficient for purposes of determining the Four Threshold Issues; that none of the disputed facts
were or would have been material to the Court’s conclusions as to any of the Four Threshold
Issues; and that treating any disputed fact as undisputed would not have affected the outcome or
reasoning of the Decision.
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(c) The Groman Plaintiffs requested discovery with respect to the Four
Threshold Issues but the other parties opposed that request, and the Court denied that request.
To the extent the Groman Plaintiffs’ discovery request continues, it is denied without prejudice
to renewal in the event that after appeal of this Judgment, the discovery they seek becomes
necessary or appropriate.
(d) For these reasons (and others), the findings of fact in the Decision shall
apply only for the purpose of this Court’s resolution of the Four Threshold Issues, and shall have
no force or applicability in any other legal proceeding or matter, including without limitation,
MDL 2543. Notwithstanding the foregoing, in all events, however, the Decision and Judgment
shall apply with respect to (a) the Court’s interpretation of the enforceability of the Sale Order,
and (b) the actions of the affected parties that are authorized and proscribed by the Decision and
Judgment.
16. The Court shall retain exclusive jurisdiction, to the fullest extent permissible
under law, to construe or enforce the Sale Order, this Judgment, and/or the Decision on which it
was based. For the avoidance of doubt, except as otherwise provided in this Judgment, the Sale
Order remains fully enforceable, and in full force and effect. This Judgment shall not be
collaterally attacked, or otherwise subjected to review or modification, in any Court other than
this Court or any court exercising appellate authority over this Court.
17. Count One of the amended complaint (“Groman Complaint”) filed in Groman et
al v. General Motors LLC (Adv. Proc. No. 14-01929 (REG)) is dismissed with prejudice. The
remaining counts of the Groman Complaint that deal with the “fraud on the court” issue are
deferred and stayed until 30 days after all appeals of the Decision and Judgment are decided.
With respect to Count One of the Groman Complaint, (i) the statute of limitations shall be tolled
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from the date of dismissal of Count One to 30 days after all appeals of the Decision and
Judgment are decided, and (ii) if the Decision and Judgment are reversed or modified on appeal
such that the appellate court finds that the Groman Plaintiffs can maintain the cause of action in
Count One of the Groman Complaint heretofore dismissed pursuant to this Judgment, the
Groman Plaintiffs’ rights against New GM that existed as of the dismissal of Count One shall be
reinstated as if the dismissal of Count One never occurred.
18. (a) New GM is hereby authorized to serve this Judgment and the Decision
upon any additional party (or his or her attorney) (each, an “Additional Party”) that commences
a lawsuit and/or is not otherwise on Exhibits “A” through “D” hereto (each, an “Additional
Lawsuit”) against New GM that would be proscribed by the Sale Order (as modified by the
Decision and this Judgment). Any Additional Party shall have 17 business days upon receipt of
service by New GM of the Decision and Judgment to dismiss, without prejudice, such Additional
Lawsuit or the allegations, claims or causes of action contained in such Additional Lawsuit that
would violate the Decision, this Judgment, or the Sale Order (as modified by the Decision and
this Judgment).
(b) If any Additional Party has a good faith basis to maintain that the
Additional Lawsuit or certain allegations, claims or causes of action contained in such Additional
Lawsuit should not be dismissed without prejudice, such Additional Party shall, within 17
business days upon receipt of the Decision and Judgment, file with this Court a No Dismissal
Pleading explaining why such Additional Lawsuit or certain claims or causes of action contained
therein should not be dismissed without prejudice. The No Dismissal Pleading shall not reargue
issues that were already decided by the Decision and Judgment. New GM shall file a response to
the No Dismissal Pleading within 17 business days of service of the No Dismissal Pleading. The
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Court will schedule a hearing thereon if it believes one is necessary.
(c) If an Additional Party fails to either (i) dismiss without prejudice the
Additional Lawsuit or the claims and/or causes of action contained therein that New GM asserts
violates the Decision, Judgment, and/or Sale Order (as modified by the Decision and this
Judgment), or (ii) timely file a No Dismissal Pleading with the Court within the time period set
forth above, New GM shall be permitted to file with this Court a notice of presentment on five
(5) business days’ notice, with an attached Dismissal Order that directs the Additional Party to
dismiss without prejudice the Additional Lawsuit or the claims and/or causes of action contained
therein that violate the Decision, this Judgment and/or the Sale Order (as modified by the
Decision and this Judgment), within 17 business days of receipt of the Dismissal Order. With
respect to any lawsuit that is dismissed pursuant to this paragraph, (i) the statute of limitations
shall be tolled from the date of dismissal of such lawsuit to 30 days after all appeals of the
Decision and Judgment are decided, and (ii) if the Decision and Judgment are reversed on appeal
such that the appellate court finds that the Additional Party can maintain the lawsuit heretofore
dismissed pursuant to this Judgment, the Additional Party’s rights against New GM that existed
as of the dismissal of the lawsuit shall be reinstated as if the dismissal of the lawsuit never
occurred.
(d) For the avoidance of doubt, nothing in this paragraph 18 shall apply to the
Amended Consolidated Complaint to be filed in MDL 2543 on or before June 12, 2015.
Dated: New York, New York s/ Robert E. Gerber June 1, 2015 United States Bankruptcy Judge
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Exhibit “A”: Complaints Alleging Pre-Closing Ignition Switch Accidents To Be Stayed Bachelder, et al. v. General Motors LLC, MDL No. 1:15-cv-00155-JMF (S.D.N.Y.)3
Betancourt Vega v. General Motors LLC, et al., No. 3:15-cv-01245-DRD (D.P.R.) (MDL No. 1:15-cv-02638) Bledsoe, et al. v. General Motors LLC, MDL No. 1:14-cv-07631-JMF (S.D.N.Y.)4
Boyd, et al. v. General Motors LLC, No. 4:14-cv-01205-HEA (E.D. Mo.) (MDL No. 1:14-cv-08385)5 Doerfler-Bashucky v. General Motors LLC, et al., No. 5:15-cv-00511-GTS-DEP (N.D.N.Y.)
Edwards, et al. v. General Motors LLC, MDL No. 1:14-cv-06924-JMF (S.D.N.Y.)6
Johnston-Twining v. General Motors LLC, et al., No. 3956 (Philadelphia County, Pa.)
Meyers v. General Motors LLC, No. 1:15-cv-00177-CCC (M.D. Pa.)
Occulto v. General Motors Co., et al., No. 15-cv-1545 (Lackawanna County, Pa.)
Scott v. General Motors Company, et al., No. 8:15-cv-00307-JDW-AEP (M.D. Fla.) (MDL No. 1:15-cv-01790) Vest v. General Motors LLC, et al., No. 1:14-cv-24995-DAF (S.D. W.Va.) (MDL No. 1:14-cv-07475)
3 The Bachelder complaint includes both Ignition Switch and non-Ignition Switch Pre-Closing Accident
vehicles subject to the Judgment. Accordingly, it is listed both on Exhibits “A” and “D.”
4 The Bledsoe complaint includes both Ignition Switch and non-Ignition Switch Pre-Closing Accident vehicles subject to the Judgment. Accordingly, it is listed both on Exhibits “A” and “D.” In addition, the Bledsoe complaint includes economic loss claims regarding Old GM conduct and vehicles and, therefore, also appears on Exhibit “C.”
5 The Boyd complaint contains allegations regarding both a Pre-Closing ignition switch accident and one or more Post-Closing ignition switch accidents. To the extent the complaint concerns one or more Post-Closing ignition switch accidents, those portions of the Boyd complaint that assert Product Liabilities (as defined in the Sale Agreement) based on a Post-Closing ignition switch accident are not subject to the Judgment.
6 The Edwards complaint includes both Ignition Switch and non-Ignition Switch Pre-Closing Accident vehicles subject to the Judgment. Accordingly, it is listed both on Exhibits “A” and “D.”
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Exhibit “B”: Economic Loss Complaints To Be Stayed
Hailes, et al. v. General Motors LLC, et al., No. 15PU-CV00412 (Pulaski County, Mo.)
In re General Motors LLC Ignition Switch Litigation, 14-MD-2543, Consolidated Class Action Complaint Against New GM For Recalled Vehicles Manufactured By Old GM and Purchased Before July 11, 2009
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Exhibit “C”: Complaints Containing Particular Allegations And/Or Claims Barred By Sale Order To Be Stricken
Post-Sale Personal Injury/Wrongful Death Complaints With Economic Loss Claims To Be Stricken:
Ackerman v. General Motors Corp., et al., No. MRS-L-2898-14 (Morris County, N.J.)
Austin, et al. v. General Motors LLC, No. 2015-L- 000026 (St. Clair County, Ill.)
Berger, et al. v. General Motors LLC, No. 9241/2014 (Kings County, N.Y.)
Casey, et al. v. General Motors LLC, et al., No. 2014-54547 (Texas MDL)
Colarossi v. General Motors, et al., No. 14-22445 (Suffolk County, N.Y.)
Dobbs v. General Motors LLC, et al., No. 49D051504PL010527 (Marion County, Ind.)
Felix, et al. v. General Motors LLC, No. 1422-CC09472 (City of St. Louis, Mo.) Gable, et al. v. Walton, et al., No. 6737 (Lauderdale County, Tenn.)
Goins v. General Motors LLC, et al., No. 2014-CI40 (Yazoo County, Miss.)
Grant v. General Motors LLC, et al., No. 2014CV02570MG (Clayton County, Ga.)
Green v. General Motors LLC, et al., No. 15-144964-NF (Oakland County, Mich.)
Hellems v. General Motors LLC, No. 15-459-NP (Eaton County, Mich.)
Hinrichs v. General Motors LLC, et al., No. 15-DCV-221509 (Texas MDL)
Jackson v. General Motors LLC, et al., No. 2014-69442 (Texas MDL)
Largent v. General Motors LLC, et al., No. 14-006509-NP (Wayne County, Mich.)
Licardo v. General Motors LLC, No. 03236 (Fulton County, N.Y.)
Lincoln, et al. v. General Motors LLC, No. 2015-0449-CV (Steuben County, N.Y.)
Lucas v. General Motors LLC, et al., No. 15-CI-00033 (Perry County, Ky.)
Miller v. General Motors LLC, et al., No. CACE-15-002297 (Broward County, Fla.)
Mullin, et al. v. General Motors LLC, et al., No. BC568381 (Los Angeles County, Cal.)
Nelson v. General Motors LLC, et al., No. D140141 (Texas MDL)
Petrocelli v. General Motors LLC, et al., No. 14-17405 (Suffolk County, N.Y.)
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Polanco, et al. v. General Motors LLC, et al., No. CIVRS1200622 (San Bernardino County, Cal.)
Quiles v. Catsoulis, et al., No. 702871/14 (Queens County, N.Y.)
Quintero v. General Motors LLC, et al., No. 15-995 (Orleans Parish, La.)
Shell, et al. v. General Motors LLC, No. 1522-CC00346 (City of St. Louis, Mo.)
Solomon v. General Motors LLC, No. 15A794-1 (Cobb County, Ga.)
Spencer v. General Motors LLC, et al., No. D-1-GN-14-001337 (Texas MDL)
Szatkowski, et al. v. General Motors LLC, et al., No. 2014-08274-0 (Luzerne County, Pa.)
Tyre v. General Motors LLC, et al., No. GD-14-010489 (Allegheny County, Pa.)
Wilson v. General Motors LLC, et al., No. 2014-29914 (Texas MDL)
Post-Sale Economic Loss Complaints With Old GM Allegations/Claims To Be Stricken: Bledsoe, et al. v. General Motors LLC, MDL No. 1:14-cv-07631-JMF (S.D.N.Y.)
Elliott, et al. v. General Motors LLC, No. 1:14-cv-00691-KBJ (D.D.C.) (MDL No. 1:14-cv-08382)
Sesay, et al. v. General Motors LLC, et al., MDL No.1:14-cv-06018-JMF (S.D.N.Y.)
In re General Motors LLC Ignition Switch Litigation, 14-MD-2543, Consolidated Complaint Concerning All GM-Branded Vehicles That Were Acquired July 11, 2009 or Later
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Exhibit “D”: Non-Ignition Switch Complaints Subject to the Judgment
Personal Injury/Wrongful Death Complaints:
Abney, et al. v. General Motors LLC, MDL No. 1:14-cv-05810-JMF (S.D.N.Y.)7
Bachelder, et al. v. General Motors LLC, MDL No. 1:15-cv-00155-JMF (S.D.N.Y.)
Bacon v. General Motors LLC, MDL No. 1:15-cv-00918-JMF (S.D.N.Y.)
Edwards, et al. v. General Motors LLC, MDL No. 1:14-cv-06924-JMF (S.D.N.Y.)
Phillips-Powledge v. General Motors LLC, No. 3:14-cv-00192 (S.D. Tex.) (MDL No. 1:14-cv-08540) Pillars v. General Motors LLC, No. 1:15-cv-11360-TLL-PTM (E.D. Mich.)
Williams, et al. v. General Motors LLC, No. 5:15-cv-01070-EEF-MLH (W.D. La.) (MDL No. 1:15-cv-03272)
Economic Loss Complaints:
Bledsoe, et al. v. General Motors LLC, MDL No. 1:14-cv-07631-JMF (S.D.N.Y.) Elliott, et al. v. General Motors LLC, No. 1:14-cv-00691-KBJ (D.D.C.) (MDL No. 1:14-cv-08382) Sesay, et al. v. General Motors LLC, et al., MDL No.1:14-cv-06018-JMF (S.D.N.Y.) Watson, et al. v. General Motors LLC, et al., No. 6:14-cv-02832 (W.D. La.)
7 The Abney complaint includes a non-Ignition Switch Pre-Closing Accident vehicle subject to the Judgment.
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Exhibit B
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1
Hearing Date and Time: To Be Determined By the Court if Necessary
KING & SPALDING LLP 1185 Avenue of the Americas New York, New York 10036 Telephone: (212) 556-2100 Facsimile: (212) 556-2222 Arthur Steinberg Scott Davidson
KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Richard C. Godfrey, P.C. (admitted pro hac vice) Andrew B. Bloomer, P.C. (admitted pro hac vice) Attorneys for General Motors LLC
UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------X In re : Chapter 11
: MOTORS LIQUIDATION COMPANY, et al., : Case No.: 09-50026 (REG) f/k/a General Motors Corp., et al. :
: Debtors. : (Jointly Administered)
: ---------------------------------------------------------------x
OMNIBUS RESPONSE BY GENERAL MOTORS LLC TO (I) THE GUC TRUST ASSET PLEADING FILED BY THE NON-IGNITION SWITCH PLAINTIFFS AND (II) THE AMENDED RESERVATION OF RIGHTS
OF CERTAIN NON-ISD PRE-CLOSING ACCIDENT PLAINTIFFS
General Motors LLC (“New GM”), by its undersigned counsel, submits this omnibus
response (“Response”) to (i) the GUC Trust Asset Pleading (as defined in the Judgment dated
June 1, 2015 [Dkt. No. 13177] (“Judgment”) filed by Designated Counsel for the Non-Ignition
Switch Plaintiffs (“DC GUC Trust Asset Pleading”), and (ii) the Amended Reservation Of
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Rights Of Certain Non-ISD Pre-Closing Accident Plaintiffs filed by Goodwin Proctor1 on June
24, 2015 [Dkt. No. 13254] (“Reservation of Rights”).2 In support thereof, New GM states as
follows:
1. In the Judgment, the Court held that, while the Ignition Switch Plaintiffs and
Ignition Switch Pre-Closing Accident Plaintiffs could seek to file late proofs of claim “based on
the doctrine of equitable mootness, in no event shall assets of the GUC Trust held at any time in
the past, now, or in the future (collectively, the ‘GUC Trust Assets’) (as defined in the Plan) be
used to satisfy any claims of the Plaintiffs, nor will Old GM’s Plan be modified with respect to
such claims . . . .” Judgment ¶ 6.
2. The Judgment further provides that the Court’s ruling on equitable mootness shall
also apply to “any other plaintiffs in these proceedings (including, without limitation, the Non-
Ignition Switch Pre-Closing Accident Plaintiffs and Non-Ignition Switch Plaintiffs identified on
Exhibit “D” attached hereto) . . .” unless it can be shown in a timely filed GUC Trust Asset
Pleading (as defined in the Judgment) that such other plaintiffs should be exempt from such
ruling. Judgment ¶ 13(a).
3. The Reservation of Rights pleading is not a valid GUC Trust Asset Pleading. The
Court expressly held in its Decision re Form of Judgment, dated May 27, 2015 (“May 27
Decision”) that the time for other plaintiffs to set forth their arguments as to why they should be
1 Goodwin Proctor filed the Reservation of Rights on behalf of certain law firms who represent Non-Ignition
Switch Pre-Closing Accident Plaintiffs. 2 Designated Counsel for the Ignition Switch Plaintiffs and Non-Ignition Switch Plaintiffs filed a No Strike
Pleading, Objection Pleading, and GUC Trust Asset Pleading (each as defined in the Judgment) on June 24, 2015. On July 23, 2015, New GM filed a response to the No Strike Pleading and Objection Pleading with this Court. See Dkt. No. 13316. Pursuant to a Stipulation and Order so-ordered by the Court on July 28, 2015, the GUC Trust Asset Pleading was severed and the response deadline was tolled, subject to reinstatement, on seven business days’ notice. Notice of the reinstatement was received on July 29, 2015 and thus, the response deadline for the GUC Trust Asset Pleading is August 7, 2015.
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exempt from the Court’s ruling on equitable mootness is now—and expressly rejected deferring
argument in the form of a reservation of rights pleading:
The Court agrees with New GM, the GUC Trust and the Unitholders that it is time to come to closure on whether there is any basis to excuse the Non-Ignition Switch Plaintiffs from the provisions of the Sale Order and the Court’s mootness conclusions. And fairness to the MDL Court requires that this Court timely provide the MDL Court with any ruling that the MDL Court may require. The Court’s Judgment balances the Non-Ignition Switch Plaintiffs’ need for opportunity now to be heard with others’ needs for expeditious closure on these additional claims.
Id. at 9 (emphasis supplied).
4. The “GUC Trust Asset Pleading” was intended to provide other plaintiffs with the
opportunity to assert a “good faith basis” as to why “any of the GUC Trust Assets may be used
to satisfy late proofs of claim filed by them that may ultimately be allowed by the Bankruptcy
Court[.]” Judgment ¶ 13(d). The GUC Trust Asset Pleading, however, could not be used to
“reargue issues that were already decided by the Decision and the Judgment.” Id. The burden of
proof was on the Non-Ignition Switch Plaintiffs and the Non-Ignition Switch Pre-Closing
Accident Plaintiffs to demonstrate why they should be treated differently than the Ignition
Switch Plaintiffs and Ignition Switch Pre-Closing Accident Plaintiffs with respect to the Court’s
equitable mootness ruling. Significantly, neither the DC GUC Trust Asset Pleading nor the
Reservation of Rights set forth any basis for this Court to conclude that they should be treated
differently.3
5. This glaring omission is not surprising. Both groups of plaintiffs are similarly
situated, and all of the equitable mootness factors, as discussed in the April 15 Decision, apply 3 In the April 15 Decision, the Court held that Non-Ignition Switch Plaintiffs had not yet proved that there was a
due process violation relating to the Sale Order as it applied to them so, at this juncture, the Sale Order would not be modified for them to assert Independent Claims against New GM. That finding, which provided no relief for the Non-Ignition Switch Plaintiffs or the Non-Ignition Switch Pre-Closing Accident Plaintiffs relating to the Sale Order, cannot be contorted to provide them with better treatment than the Ignition Switch Plaintiffs or the Ignitions Switch Pre-Accident Plaintiffs. In all events, that finding has nothing to do with the Court’s equitable mootness ruling in the April 15 Decision.
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equally to them. The failure to raise any distinguishing argument is easily understood by the fact
that counsel for the Ignition Switch Plaintiffs and the Ignition Switch Pre-Closing Accident
Plaintiffs are the same as counsel for the Non-Ignition Switch Plaintiffs and counsel who filed
the Reservation of Rights. Simply put, all of the relevant arguments were made by the same
counsel prior to the entry of the Judgment, their arguments were rejected by the Court, and they
have no new arguments with respect to the equitable mootness ruling.
6. The reality is that it is futile for plaintiffs to try and make a new argument
purporting to distinguish Non-Ignition Switch-based claims for the simple and dispositive reason
that the Court’s ruling on equitable mootness is not dependent on whether the claim asserted
against Old GM was an Ignition Switch based claim or a Non-Ignition Switch based claim. As
the Court held in its May 27 Decision:
When Old GM creditors received distributions under the Plan, and when Unitholders – even if as aftermarket acquirors of GUC Trust Units – acquired their units, they had a reasonable expectation that the total universe of claims filed against Old GM would not increase. And while they knew that there was an accordion feature, they also knew that claims exposure would result, with exceptions exceedingly difficult to show, only from previously filed claims. The Decision respected those concerns. The Court’s Judgment will stay true to the principles articulated in the Decision, and will not allow GUC Trust assets to be tapped for claims not previously filed.
Id. at 9-10.
7. In summary, the argument made in the DC GUC Trust Asset Pleading (that “[i]t is
premature and inappropriate to bar the Non-Ignition Switch Plaintiffs from accessing GUC Trust
Assets”, (id. at 30)) is vague, devoid of substance, and contrary to the direction in the May 27
Decision that the issue as to the applicability of the equitable mootness ruling be determined at
this time. Moreover, plaintiffs’ argument that it would be “inequitable” to now bar them “from
accessing GUC Trust Assets without the same opportunity that was afforded the Ignition Switch
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Plaintiffs” (id. at 30) ignores the fact that they have been given that opportunity (in the form of
the GUC Trust Asset Pleading), and they have failed to carry their burden.
WHEREFORE, New GM respectfully requests that this Court (i) deny the relief
requested in the DC GUC Trust Asset Pleading and in the Reservation of Rights, (ii) find that the
provisions of the Judgment relating to the equitable mootness ruling apply equally to the Non-
Ignition Switch Plaintiffs and the Non-Ignition Switch Pre-Closing Accident Plaintiffs; and
(iii) grant New GM such other and further relief as the Court may deem just and proper.
Dated: New York, New York August 7, 2015
Respectfully submitted, /s/ Arthur Steinberg Arthur Steinberg Scott Davidson KING & SPALDING LLP 1185 Avenue of the Americas New York, New York 10036 Telephone: (212) 556-2100 Facsimile: (212) 556-2222 Richard C. Godfrey, P.C. (admitted pro hac vice) Andrew B. Bloomer, P.C. (admitted pro hac vice) KIRKLAND & ELLIS LLP 300 North LaSalle Chicago, IL 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 Attorneys for General Motors LLC
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Exhibit C
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EDWARD S. WEISFELNER
direct dial: (212) 209-4900
fax: (212) 202-4800
May 12, 2015
VIA E-MAIL
AND ECF FILING
The Honorable Robert E. Gerber
United States Bankruptcy Judge
United States Bankruptcy Court
Southern District of New York
Alexander Hamilton Custom House
One Bowling Green
New York, New York 10004
RE: In re Motors Liquidation Company, et al., Case No. 09-50026 (REG)
Dear Judge Gerber:
We write jointly as Co-Designated Counsel and Counsel for Economic Loss Plaintiffs and Designated
Counsel and Counsel for Ignition Switch Pre-Closing Accident Plaintiffs (together, the “Ignition Switch
Plaintiffs”) in response to the direction set forth in the April 15 Decision and May 5 Endorsed Order. Despite
extensive efforts, the parties have not reached a fully consensual form of judgment. Accordingly, we hereby
submit the Ignition Switch Plaintiffs’ proposed form of judgment attached hereto as Exhibit A. Attached
hereto as Exhibit B is a blackline comparing the Ignition Switch Plaintiffs’ proposal to New GM’s form. The
following highlights the substantive points of disagreement, and why the Court should approve the Ignition
Switch Plaintiffs’ proposed form.
1) Permissible Claims Against New GM.
Paragraph 4 of the Ignition Switch Plaintiffs’ proposed judgment provides that “[f]or the reasons set
forth in the Decision, the Ignition Switch Plaintiffs established prejudice and thus a due process violation with
respect to the Independent Claims. The Sale Order shall be deemed modified to permit the assertion and
continued prosecution of Independent Claims.” New GM cannot dispute this conforms to the Decision.
The Ignition Switch Plaintiffs and New GM generally agree on the definition of “Independent
Claims” with the Ignition Switch Plaintiffs proposing in paragraph 4 of their proposal that “Independent
Claims” shall mean “claims or causes of action asserted by Ignition Switch Plaintiffs against New GM,
whether or not involving Old GM vehicles or parts, that are based solely on New GM’s own, independent,
post-Closing acts or conduct.” See In re Motors Liquidation Co., 2015 Bankr. LEXIS 1296, at *222 (Bankr.
S.D.N.Y. Apr. 15, 2011).
However, New GM, in paragraph 9 of its form improperly attempts to limit the definition of
Independent Claims by proposing that any claims that Ignition Switch Plaintiffs may have against New GM
“concerning an Old GM vehicle or part seeking to impose liability or damages based on Old GM conduct, or
a successor liability theory of recovery are forever barred and enjoined pursuant to the Sale Order.” This
undercuts the agreed definition of Independent Claims as well as the Decision which provide that the Ignition
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Page 2
Switch Plaintiffs may assert and continue to prosecute claims against New GM involving Old GM vehicles or
parts. See id. at *22.
Accordingly, the Court should adopt the Ignition Switch Plaintiffs’ proposed paragraph 8 which
provides: “Except for the Independent Claims and Assumed Liabilities, any claims and/or causes of action
that the Ignition Switch Plaintiffs may have against New GM based on successor liability are barred and
enjoined pursuant to the Sale Order, and such lawsuits shall remain stayed pending appeal of the Decision and
this Judgment.”
2) Status of Ignition Switch Plaintiffs’ Lawsuits.
The Ignition Switch Plaintiffs intend to appeal, inter alia, that portion of the Decision upholding the
Sale Order’s bar on successor liability claims. Accordingly, Plaintiffs request that the successor liability
claims be stayed pending appeal. If the Decision is ultimately affirmed, only then should the successor
liability claims be dismissed with prejudice.
This Court should adopt the Ignition Switch Plaintiffs’ proposed judgment as faithful to the Decision
and sound judicial administration. Rather than compelling plaintiffs with actions pending in other
jurisdictions to file papers in this Court as to why their lawsuits should not be dismissed with prejudice as
New GM suggests (necessitating this Court to dive into the merits of plaintiffs’ claims), the Ignition Switch
Plaintiffs provide an administratively balanced and non-prejudicial pathway forward as follows:
(i) Independent Claims proceed in the jurisdictions where they are pending with those courts
reviewing same with care to ensure they are not “dressed up” successor liability claims prohibited
under the Sale Order. Id. at *26;
(ii) claims or causes of action that Ignition Switch Plaintiffs may have against New GM sounding in
the nature of successor liability are stayed pending appeal; and
(iii) claims of Non-Ignition Switch Pre-Closing Accident Plaintiffs and Non-Ignition Switch Plaintiffs
remain subject to the Sale Order, provided that to the extent an issue shall arise in the future as to
whether they were known or unknown creditors of the Debtors or were otherwise bound by the
Sale Order, such plaintiffs shall be required to first seek resolution of such issues from this Court
before proceeding any further against New GM.
New GM’s proposed judgment improperly would dismiss the Ignition Switch Plaintiffs’ lawsuits with
prejudice now despite the stated intention to appeal and the fact that many of the lawsuits assert Independent
Claims. Paragraphs 8, 10, 11 and 13 of New GM’s proposed judgment would provide an inefficient labyrinth
of cumbersome procedures impacting a wide array of actions pending against New GM in various
jurisdictions. Adopting New GM’s proposed procedures unduly prejudices plaintiffs, raises extra-
jurisdictional concerns, and would unnecessarily congest this Court’s docket.
The Ignition Switch Plaintiffs submit that the Decision did not direct the substantive actions or extra-
jurisdictional procedures set forth in New GM’s proposed judgment. Indeed, New GM’s proposed
cumbersome procedure for dismissing cases with prejudice is inconsistent with the heavily negotiated and
carefully crafted provisions of MDL Order No. 50 (attached hereto as Exhibit C and which provides that
certain actions that are subsumed by the Amended Consolidated Complaint are dismissed, without prejudice).
Under New GM’s proposed judgment, this Court would be faced with deciding whether the merits of
the underlying claims in numerous plaintiff actions, including those currently pending and scheduled to be
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The Honorable Robert E. Gerber
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Page 3
amended in the MDL, raise Independent Claims, or claims barred by the Sale Order and the Decision. Such a
result was not contemplated by the Decision which correctly left it to reviewing courts to analyze the claims
to determine whether they are in substance successor liability claims “dressed up to look like something else.”
Id. at *26. New GM’s proposed procedure would eviscerate the work to be done in the MDL and replace
Judge Furman’s jurisdiction over these exact matters, all on an untenable time line and playing field.
New GM’s proposed procedures effectuating immediate dismissals with prejudices in cases pending
in other courts are inefficient and inconsistent with sound principles of judicial management and the
procedures set forth in the MDL and other courts. See Donovan v. City of Dallas, 377 U.S. 408, 412 (1964)
(noting general rule that courts will not interfere with or try to restrain each other’s proceedings). New GM’s
proposed procedure could provide imperfect protection if the appeal is successful, plus force plaintiffs to
incur costs in re-filing fees. See Theilmann v. Rutland Hosp., Inc., 455 F.2d 853, 855 (2d Cir. 1972)
(“Dismissal with prejudice is a harsh remedy to be utilized only in extreme situations.”). Any dismissals with
prejudice are premature. If New GM wants to move to dismiss in the home courts, the home court judge may
decide whether to dismiss and on what terms, in light of the anticipated appeals. Staying the actions pending
appeal provides more administrative convenience and procedural equity and no undue prejudice to New GM.
See Greenidge v. Allstate Ins. Co., No. 02 Civ. 9796 (JCF), 2003 WL 22871905, at *3 (S.D.N.Y. Dec. 3,
2003) (deferral of determination of summary judgment motion pending appeal of intervention motion is not
prejudicial).
More fundamentally, Plaintiffs’ Second Amended Consolidated Complaint will not be filed until June
12, 2015. All other actions and complaints in the MDL will remain stayed or dismissed without prejudice and
the Second Amended Consolidated Complaint will be the only operative pleading in the MDL. It will not
assert any successor liability claims to avoid proceedings inconsistent with the Decision, pending resolution
of the appeal. Once it is filed, New GM will have the opportunity to move to dismiss the claims pled. At that
time, upon full briefing, Judge Furman can rule on the viability of those claims – and that review will no
doubt include the question of whether the claims (or any of them) improperly seek to hold New GM liable on
a successor liability theory. Dismissal with prejudice now is premature.
3) The Judgment Should Not Unduly Affect The Interests Of Non-Ignition Switch Plaintiffs.
New GM’s proposed judgment improperly seeks to expand the Decision beyond its parameters as it
relates to the Non-Ignition Switch Pre-Closing Accident Plaintiffs and the Non-Ignition Switch Plaintiffs.
Specifically, the Decision was confined to plaintiffs that owned or leased a vehicle that contained the
“Ignition Switch Defect” as defined therein. See In re Motors Liquidation Co., 2015 Bankr. LEXIS 1296 at
*5. The other category of Plaintiffs later coming into the picture (“Non-Ignition Switch Plaintiffs”) brought
actions asserting Economic Loss Claims as to GM branded vehicles that did not have Ignition Switch Defects,
including cars made by New GM and Old GM alike. While New GM brought another motion to enforce the
Sale Order with respect to them, this additional motion “has been deferred pending the determination of the
issues here.” Id. at *8-9.
Accordingly, the Decision is limited to the Ignition Switch Defect and does not extend to pre-closing
accident plaintiffs whose incident or accident related to a vehicle with a defect other than the Ignition Switch
Defect or to plaintiffs with economic loss claims that relate to vehicles that do not contain the Ignition Switch
Defect. Of course, this makes sense, because, as the Court itself noted, the “common set of stipulated facts”
was developed with respect to the Ignition Switch Defect and not any other defect. Id. Those plaintiffs
remain stayed and the Sale Order is still fully applicable to those parties, but any effort to give the Decision
preclusive effect as to them would be ironic given the due process issues addressed in the Decision.
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Page 4
New GM’s proposed judgment places unnecessary hurdles and administrative burdens on these
plaintiffs by compelling them to file No Dismissal Pleadings within 17 business days of receipt of a notice of
the claims or causes of action that New GM itself determines violates the Decision and Sale Order. Forcing
these claimants to litigate now on New GM’s terms is administratively inefficient and prejudicial. The
Decision yields no such result. Accordingly, the Court should strike New GM’s proposed procedures in
paragraphs 13(b) – (e) as unduly burdensome and premature.
4) Status of Attorney General Actions.
The Decision holds that claims against New GM based solely on the conduct of New GM can
proceed, even if those claims involve cars and parts made by Old GM. Id. at *222. There are two pending
State law enforcement actions that assert solely Independent Claims and accordingly the Sale Order, as
modified by the Decision, poses no impediment to their advancement. See People of California v. General
Motors LLC, No 30-2014-00731038-CU-BT-CXC (Orange County, Cal.); State of Arizona v. General
Motors, LLC, No. CV2014-014090 (Maricopa County, Ariz.) (collectively, the “State Actions”).
Accordingly, paragraph 9 of the Ignition Switch Plaintiffs’ proposed judgment provides that the State
Actions “shall be subject to the appropriate motion practice in the courts where those proceedings are
pending, consistent with the Decision and this Judgment.” Conversely, in paragraph 12 of its proposed
judgment, New GM provides that the State Actions should remain stayed without prejudice to the plaintiffs
seeking relief from the stay in this Court.
New GM’s proposal is inconsistent with the Decision and seeks to impose additional delay on actions
that consist entirely of Independent Claims. The State Actions assert law enforcement claims for injunctive
relief, civil penalties and other available relief against New GM solely for its post-Sale violations of the State
consumer protection laws at issue - respectively, Arizona’s Consumer Fraud Act (A.R.S. § 44-1521, et seq.),
and California’s Unfair Competition Law (“UCL”) (Cal. Bus. Code § 17200) and False Advertising Law
(“FAL”) (Cal Bus. Code § 17500).
For example, the Arizona Complaint (a copy of which is attached hereto as Exhibit D) alleges that
“New GM’s false representations and/or omissions concerning the safety and reliability of its vehicles, and its
concealment of a plethora of known safety defects plaguing its vehicles and its brand, caused Arizona
residents to purchase GM-branded vehicles under false pretenses.” Arizona Complaint, ¶ 22, and that New
GM’s conduction violated A.R.S. § 44-1522(A). See id. ¶¶ 497-498. As the Arizona Complaint makes clear,
the unlawful practices at issue are those committed by New GM “in connection with the sale and lease of
GM-branded vehicles on or after July 11, 2009.” Id. ¶¶ 498, 503. Likewise, in the Prayer for Relief, all the
remedies are targeted at New GM’s conduct, as the State (A) seeks to enjoin New GM from “engaging in the
unlawful acts and practice as alleged in this Complaint;” (B) seeks an Order that New GM disgorge its profits
or gains from its unlawful practices; and (C) seeks an Order that New GM pay penalties for each of its willful
violations of the Consumer Fraud Act.
Similarly, the California Complaint (a copy of which is attached hereto as Exhibit E) alleges that
post-Sale conduct by New GM violated, inter alia, the prohibitions on unfair and deceptive conduct embodied
in California’s UCL and FAL. See Cal., Compl., ¶¶ 253-274. The Prayer for Relief seeks to (A) enjoin New
GM from committing further acts of unfair competition; and (B) obtain civil penalties from New GM for its
violations of the UCL and FAL.
Significantly, in his decision remanding the California action to state court, Judge Furman recognized
that New GM might be held liable for post-Sale violations of its own independent duties under State law:
“[A]s Plaintiff notes, the claims for violations of the UCL and FAL are premised on various allegedly
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deceptive practices by New GM.” In re General Motors LLC Ignition Switch Litig., 2014 WL 6655796, at *7
(S.D.N.Y. Nov. 24, 2014). The same is true of the Arizona action.
New GM wrongfully attempts to encroach on the jurisdiction of the State Action courts. Clearly, the
Decision does not countenance such a result as it cautions other courts to consider whether actions properly
assert Independent Claims during the administration of matters pending before them. Moreover, the Decision
does not suggest that additional litigation relating to stay relief on these matters should proceed before this
Court. New GM may argue that the State Actions are somehow “dressed-up” successor liability claims, but
under the Decision, those arguments should be addressed to the State Action courts. Accordingly, the Court
should adopt paragraph 9 of the Ignition Switch Plaintiffs’ proposed judgment.
5) Equitable Mootness.
There is disagreement between the Ignition Switch Plaintiffs on the one hand, and New GM, the GUC
Trust and the Unit Holders, on the other, on two substantive issues relating to the equitable mootness findings.
First, in paragraph 6 of its proposed judgment, the Ignition Switch Plaintiffs propose that “based on the
doctrine of equitable mootness, in no event shall GUC Trust Assets (as defined in the Decision) be used to
satisfy any claims of the Plaintiffs, nor will Old GM’s Plan be modified with respect to such claims.”
Conversely, New GM, the GUC Trust and the Unit Holders seek to expand the findings by adding
language that based on the doctrine of equitable mootness, in no event shall the assets of the GUC Trust “held
at any time in the past, now, or in the future” be used to satisfy any claims of the Ignition Switch Plaintiffs.
The Ignition Switch Plaintiffs believe their proposed language is more in faith with the Decision since
it did not address whether Plaintiffs may have the exclusive benefit of, or share in, the proceeds of triggering
the accordion provision under the Plan and Sale Agreement. The Ignition Switch Plaintiffs submit that
because the proceeds of the accordion provision can only be triggered by allowance of the Ignition Switch
Plaintiffs’ claims against the Old GM bankruptcy estate and the Decision focused on Unit Holders’
expectation that the universe of claims could only go down (see Id. at *194-95), the judgment should adopt
the Ignition Switch Plaintiffs’ proposed language. Any other formulation may prejudice the Ignition Switch
Plaintiffs’ rights going forward.
The Second substantive issue relates to paragraphs 13(d) and (e) of New GM’s proposed judgment.
Those paragraphs would compel the Non-Ignition Switch Pre-Closing Accident Plaintiffs and the Non-
Ignition Switch Plaintiffs to file a pleading within 17 business days of entry of the judgment setting forth the
basis it believes that any GUC Trust Assets may be used to satisfy late proofs of claim.
The Ignition Switch Plaintiffs propose that Court should not adopt these procedures as the Decision
did not address the claims of the Non-Ignition Switch Pre-Closing Accident Plaintiffs and the Non-Ignition
Switch Plaintiffs, and such procedures add unnecessary administrative and judicial burdens and costs.
6) Miscellaneous Language Disagreements.
There are several other points of disagreement between the competing proposed judgments reflected
in the Ignition Switch Plaintiffs’ blackline, attached hereto as Exhibit B. They are equally substantive and
important as those issues in dispute highlighted above. However, for the sake of brevity, the Ignition Switch
Plaintiffs believe that this Court will ably see that the Ignition Switch Plaintiffs’ proposed language is more
faithful to the plain meaning and spirit of the Decision and should be adopted in its entirety.
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The Honorable Robert E. Gerber
May 12, 2015
Page 6
Respectfully submitted,
/s/ Edward S. Weisfelner _ /s/ Sander L. Esserman _ /s/ William P. Weintraub _
Edward S. Weisfelner Sander L. Esserman William P. Weintraub
David J. Molton STUTZMAN, BROMBERG, Gregory W. Fox
Howard S. Steel ESSERMAN & PLIFKA GOODWIN PROCTER
BROWNN RUDNICK LLP 2323 Bryan Street, Suite 2200 The New York Times Bldg.
7 Times Square 2323 Bryan Street, Suite 2200 620 Eighth Avenue
New York, NY 10036 Dallas, Texas 75201 New York, NY 10018
cc: Arthur Steinberg
Scott Davidson
Richard C. Godfrey, P.C.
Andrew B. Bloomer, P.C.
Leonid Feller
Matt Williams
Lisa H. Rubin
Daniel Golden
Deborah J. Newman
Alex Schmidt
Jonathan L. Flaxer
Garry Peller
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EXHIBIT A
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25598126v3
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
In re : Chapter 11
:
MOTORS LIQUIDATION COMPANY, et al., : Case No.: 09-50026 (REG)
f/k/a General Motors Corp., et al. :
:
Debtors. : (Jointly Administered)
---------------------------------------------------------------x
JUDGMENT
For the reasons set forth in the Court’s Decision on Motion to Enforce Sale Order,
entered on April 15, 2015 (“Decision”),1 it is hereby ORDERED AND ADJUDGED as follows:
1. For the reasons set forth in the Decision, the Ignition Switch Plaintiffs and the
Ignition Switch Pre-Closing Accident Plaintiffs (collectively, the “Plaintiffs”) were “known
creditors” of the Debtors. The Plaintiffs did not receive the requisite notice of the sale of
substantially all of the assets of Old GM to New GM (“363 Sale”).
2. Subject to the sole exception of the Independent Claims (as herein defined), for
the reasons set forth in the Decision, the Ignition Switch Plaintiffs have not demonstrated that
their lack of notice of the 363 Sale was prejudicial and, therefore, failed to establish a due
process violation with respect to the 363 Sale.
1 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Decision. For
purposes of this Judgment, the following terms shall apply: (i) “Ignition Switch Plaintiffs” shall mean
plaintiffs that have commenced a lawsuit against New GM asserting economic losses based on or arising from
the Ignition Switch in the Subject Vehicles (each term as defined in the Agreed and Disputed Stipulations of
Fact Pursuant to the Court’s Supplemental Scheduling Order, Dated July 11, 2014, filed on August 8, 2014
[Dkt. No. 12826], at 3); (ii) “Pre-Closing Accident Plaintiffs” shall mean plaintiffs that have commenced a
lawsuit against New GM based on an accident or incident that occurred prior to the closing of the 363 Sale; (iii)
“Ignition Switch Pre-Closing Accident Plaintiffs” shall mean that subset of the Pre-Closing Accident
Plaintiffs that had the Ignition Switch in their Subject Vehicles; (iv) “Non-Ignition Switch Pre-Closing
Accident Plaintiffs” shall mean that subset of Pre-Closing Accident Plaintiffs that are not Ignition Switch Pre-
Closing Accident Plaintiffs; and (v) “Non-Ignition Switch Plaintiffs” shall mean plaintiffs that have
commenced a lawsuit against New GM asserting economic losses based on or arising from an alleged defect,
other than the Ignition Switch, in an Old GM vehicle.
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3. For the reasons set forth in the Decision, the Ignition Switch Pre-Closing
Accident Plaintiffs have not demonstrated that their lack of notice of the 363 Sale was prejudicial
and, therefore, failed to establish a due process violation with respect to the 363 Sale.
4. For the reasons set forth in the Decision, the Ignition Switch Plaintiffs
established prejudice and thus a due process violation with respect to the Independent Claims.
The Sale Order shall be deemed modified to permit the assertion and continued prosecution of
Independent Claims. For purposes of this Judgment “Independent Claims” shall mean claims
or causes of action asserted by Ignition Switch Plaintiffs against New GM, whether or not
involving Old GM vehicles or parts, that are based solely on New GM’s own, independent, post-
Closing acts or conduct. Nothing set forth herein shall be construed to imply whether or not
Ignition Switch Plaintiffs have viable Independent Claims against New GM.
5. Except for the modification to permit the assertion and continued prosecution of
Independent Claims by the Ignition Switch Plaintiffs, the Sale Order shall remain unmodified
and in full force and effect.
6. For the reasons set forth in the Decision, the Plaintiffs were prejudiced by the
failure to receive the requisite notice of the deadline (“Bar Date”) to file proofs of claim against
the Old GM bankruptcy estate. The Plaintiffs may petition the Bankruptcy Court (on motion and
notice) for authorization to file late or amended proofs of claim against the Old GM bankruptcy
estate. However, based on the doctrine of equitable mootness, in no event shall GUC Trust
Assets (as defined in the Decision) be used to satisfy any claims of the Plaintiffs, nor will Old
GM’s Plan be modified with respect to such claims. The preceding sentence shall not apply to
any Ignition Switch Plaintiff, Pre-Closing Accident Plaintiff, or Non-Ignition Switch Plaintiff
that had a claim previously allowed by the Court, but in no event shall they be entitled to
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increase the amount of such allowed claim without the prior authorization of the Bankruptcy
Court or an appellate court following an appeal from the Bankruptcy Court.
7. Any claims and/or causes of action brought by the Ignition Switch Pre-Closing
Accident Plaintiffs against New GM that seek to hold it liable for accidents or incidents that
occurred prior to the closing of the 363 Sale are barred and enjoined pursuant to the Sale Order.
The Ignition Switch Pre-Closing Accident Plaintiffs shall not assert or maintain any such claim
or cause of action against New GM.
8. Except for the Independent Claims and Assumed Liabilities, any claims and/or
causes of action that the Ignition Switch Plaintiffs may have against New GM based on
successor liability are barred and enjoined pursuant to the Sale Order, and such lawsuits shall
remain stayed pending appeal of the Decision and this Judgment.
9. The lawsuits captioned People of California v. General Motors LLC, et al., No.
30-2014-00731038-CU-BT-CXC (Orange County, Cal.) and State of Arizona v. General Motors
LLC, No. CV2014-014090 (Maricopa County, Ariz.) shall be subject to appropriate motion
practice in the courts where those proceedings are currently pending, consistent with the
Decision and this Judgment.
10. The rulings set forth herein and in the Decision that proscribe claims and actions
being taken against New GM shall apply to the “Identified Parties”2 who were heard during the
proceedings regarding the Four Threshold Issues. They shall also apply to other plaintiffs in
these proceedings, subject to any objection (“Objection Pleading”) submitted by any such party
within 17 business days of the entry of this Judgment. New GM shall file a response to any such
Objection Pleading within 17 business days of service. The Court will schedule a hearing
2 “Identified Parties” as defined in the Court’s Scheduling Order entered on May 16, 2014 (ECF No.
12697), and persons that have asserted Pre-Closing personal injury and wrongful death claims against New
GM based on the Ignition Switch Defect (as defined in the Decision).
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thereon if it believes one is necessary. The rulings set forth herein are without prejudice to the
submission of other objections to New GM’s Motions to Enforce Sale Order. To the extent an
issue shall arise in the future as to whether (i) the Non-Ignition Switch Pre-Closing Accident
Plaintiffs and Non-Ignition Switch Plaintiffs were known or unknown creditors of the Debtors,
or (ii) the Non-Ignition Switch Pre-Closing Accident Plaintiffs or Non-Ignition Switch Plaintiffs
were otherwise bound by the provisions of the Sale Order, the Non-Ignition Switch Pre-Closing
Accident Plaintiffs or Non-Ignition Switch Plaintiffs shall be required to first seek resolution of
such issues from this Court before proceeding any further against New GM.
11. The Court adopts the legal standard for “fraud on the court” as set forth in the
Decision.
12. (a) By agreement of New GM, Designated Counsel for the Ignition Switch
Plaintiffs, the GUC Trust, and the GUC Trust Unitholders, and approved by the Court, no
discovery was conducted in connection with the resolution of the Four Threshold Issues. The
Ignition Switch Pre-Closing Accident Plaintiffs did not challenge the earlier decision barring
discovery in connection with the Four Threshold Issues. Instead, New GM, Designated Counsel,
the Groman Plaintiffs, the GUC Trust, and the GUC Trust Unitholders developed and submitted
to the Court a set of agreed upon stipulated facts. Such parties also submitted to the Bankruptcy
Court certain disputed facts and exhibits.
(b) The Court finds that the agreed-upon factual stipulations were sufficient
for purposes of determining the Four Threshold Issues, that none of the disputed factual
stipulations raised a genuine issue of material fact as to any of the Four Threshold Issues, and
that treating any of the disputed facts as part of the undisputed stipulated record would not have
affected the Decision.
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(c) The Groman Plaintiffs requested discovery with respect to the Four
Threshold Issues but the other parties opposed the request and the Court denied said request.
The Groman Plaintiffs’ continuing request for such discovery is also denied.
(d) For these reasons (and others), the findings of fact in the Decision shall
apply only for the purpose of this Court’s resolution of the Four Threshold Issues and shall have
no force or applicability in any other legal proceeding or matter, including without limitation,
MDL 2543.
13. The Court shall retain exclusive jurisdiction, to the fullest extent permissible
under law, to construe or enforce the Sale Order, this Judgment, and/or the Decision on which it
was based.
14. Pursuant to Bankruptcy Rule 8006(e)(1), for the reasons stated in the Decision,
the Court hereby certifies this Judgment for direct appeal to the Circuit Court (“Appeal”). The
Ignition Switch Plaintiffs, the Pre-Closing Accident Plaintiffs, the Non-Ignition Switch
Plaintiffs, New GM, the GUC Trust, the GUC Trust Unitholders and the Groman Plaintiffs each
reserve all of their rights with respect to the Appeal, including the right to challenge any of the
factual and legal findings made by the Court in the Decision and to challenge certification for
direct appeal.
15. The parties have stipulated that they shall not file any voluntary supplemental
statements regarding the Court’s certification of the Appeal as allowed pursuant to Bankruptcy
Rule 8006(e)(2), and shall submit all statements either in support or against certification of the
Appeal in the Circuit Court.
16. Count One of the amended complaint (“Groman Complaint”) filed in Groman et
al v. General Motors LLC (Adv. Proc. No. 14-01929 (REG)) is dismissed with prejudice. The
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remaining counts of the Groman Complaint that deal with the “fraud on the court” issue are
deferred and stayed until 30 days after all appeals of the Decision and Judgment are decided.
With respect to Count One of the Groman Complaint, (i) the statute of limitations shall be tolled
from the date of dismissal of Count One to 30 days after all appeals of the Decision and
Judgment are decided, and (ii) if the Decision and Judgment are reversed on appeal such that the
appellate court finds that the Groman Plaintiffs can maintain the cause of action in Count One of
the Groman Complaint heretofore dismissed pursuant to this Judgment, the Groman Plaintiffs’
rights against New GM that existed as of the dismissal of Count One shall be reinstated as if the
dismissal of Count One never occurred.
17. New GM is hereby authorized to serve this Judgment and the Decision upon any
additional party (and/or their attorney) (each, an “Additional Party”) that commences a lawsuit
(each, an “Additional Lawsuit”) against New GM that would be proscribed by the Sale Order
(as modified by the Decision and Judgment). Any Additional Party shall have 17 business days
upon receipt of service by New GM of the Decision and Judgment to dismiss, without prejudice,
such Additional Lawsuit or the allegations, claims or causes of action contained in such
Additional Lawsuit that would violate the Decision, this Judgment, and the Sale Order (as
modified by the Decision and Judgment). If any Additional Party has a good faith basis to
maintain that the Additional Lawsuit or certain allegations, claims or causes of action contained
in such Additional Lawsuit should not be dismissed without prejudice, such Additional Party
shall, within 17 business days upon receipt of the Decision and Judgment, file with this Court a
pleading (“No Dismissal Pleading”) explaining why such Additional Lawsuit or certain claims
or causes of action contained therein should not be dismissed without prejudice. The No
Dismissal Pleading shall not reargue issues that were already decided by the Decision and
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Judgment. New GM shall file a response to the No Dismissal Pleading within 17 business days
of service of the No Dismissal Pleading. The Court will schedule a hearing thereon if it believes
one is necessary. If an Additional Party fails to either (i) dismiss without prejudice the
Additional Lawsuit or the claims and/or causes of action contained therein that New GM asserts
violates the Decision, Judgment, and/or Sale Order (as modified by the Decision and Judgment),
or (ii) timely file a No Dismissal Pleading with the Court within the time period set forth above,
New GM shall be permitted to file with this Court a notice of presentment on five (5) business
days’ notice, with an attached Dismissal Order that directs the Additional Party to dismiss
without prejudice the Additional Lawsuit or the claims and/or causes of action contained therein
that violate the Decision, this Judgment and/or the Sale Order (as modified by the Decision and
Judgment), within 17 business days of receipt of the Dismissal Order. With respect to any
lawsuit that is dismissed pursuant to this Paragraph, (i) the statute of limitations shall be tolled
from the date of dismissal of such lawsuit to 30 days after all appeals of the Decision and
Judgment are decided, and (ii) if the Decision and Judgment are reversed on appeal such that the
appellate court finds that the Additional Party can maintain the lawsuit heretofore dismissed
pursuant to this Judgment, the Additional Party’s rights against New GM that existed as of the
dismissal of the lawsuit shall be reinstated as if the dismissal of the lawsuit never occurred. For
the avoidance of doubt, nothing in this Paragraph 17 shall apply to the Amended Consolidated
Complaint to be filed in the MDL proceeding on or before June 12, 2015.
Dated: New York, New York
May __, 2015
____________________________________
UNITED STATES BANKRUPTCY JUDGE
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Exhibit D
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In re Motors Liquidation Company, 531 B.R. 354 (2015)
2015 WL 3398398
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 1
531 B.R. 354United States Bankruptcy Court,
S.D. New York.
In re Motors Liquidation Company, et al.,f/k/a General Motors Corp., et al. Debtors.
Case No.: 09–50026 (REG) (JointlyAdministered) | Signed May 27, 2015
SynopsisBackground: Purchaser at sale outside the ordinary courseof business of assets of bankrupt automobile manufacturerbrought adversary proceeding to enforce “free and clear of”language in sale order, and creditors with claims arising fromignition switch defects in certain models of vehicles objectedon due process grounds. After the Bankruptcy Court enteredits decision on the motion to enforce, 529 B.R. 510, disputearose over form of judgment to implement court's decision.
Holdings: The Bankruptcy Court, Robert E. Gerber, J., heldthat:
[1] entry of judgment would not be delayed so that certaincreditors could present additional arguments to the court;
[2] those complaints embodying claims that were barred bythe sale order, which were filed in violation of the sale order,would be stayed, rather than dismissed outright;
[3] prosecution of actions brought by state AttorneysGeneral, which intermixed claims involving pre- and post-sale conduct, would remain stayed; and
[4] court would enjoin claims against asset purchaser thatwere based on debtor's wrongful conduct, including, but notlimited to, successor liability claims.
Ordered accordingly.
West Headnotes (8)
[1] Bankruptcy
Rights and liabilities of purchasers, andright to purchase
On motion of purchaser of Chapter 11 debtor-automobile manufacturer's assets to enforce“free and clear” sale order, entry of judgment onbankruptcy court's ruling would not be delayedso that certain creditors with claims arising fromignition switch defects in particular models ofvehicles could present additional arguments tothe court; these creditors had more than ampleopportunity to raise contentions that had notbeen raised by counsel designated to act forthose creditors whose counsel generally litigatedtort matters, and even though filings made byattorney for these creditors were so numerousand frivolous that they prompted a warning fromthe court, attorney still had the right to makepoints others had not. 11 U.S.C.A. § 363.
Cases that cite this headnote
[2] BankruptcyRights and liabilities of purchasers, and
right to purchase
Complaints embodying claims that were barredby bankruptcy court's “free and clear” saleorder pertaining to assets of Chapter 11 debtor-automobile manufacturer, which complaintswere filed in violation of the sale order, wouldbe stayed pending completion of appellateproceedings, rather than dismissed outright,upon court's entry of order on asset purchaser'smotion to enforce sale order; asset purchaserwould not be prejudiced, much less materiallyso, if such complaints were simply stayed forthe time being, whereas proposed dismissalprocedures would be cumbersome and couldresult in additional expense in refiling fees if anycomplaints now to be dismissed later turned out,after appeal, to assert claims that could properlybe presented. 11 U.S.C.A. § 363.
Cases that cite this headnote
[3] BankruptcyOrder of court and proceedings therefor in
general
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In re Motors Liquidation Company, 531 B.R. 354 (2015)
2015 WL 3398398
© 2015 Thomson Reuters. No claim to original U.S. Government Works. 2
Compliance with bankruptcy court's sale orderwas required, unless and until the sale order wasvacated or modified by the bankruptcy court or ahigher court. 11 U.S.C.A. § 363.
Cases that cite this headnote
[4] BankruptcyRights and liabilities of purchasers, and
right to purchase
Upon bankruptcy court's entry of order onmotion of purchaser of Chapter 11 debtor-automobile manufacturer's assets to enforce“free and clear” sale order, prosecution of actionsbrought by state Attorneys General, whichintermixed claims involving pre- and post-saleconduct, would remain stayed; claims involvingpre-sale conduct were barred by the sale order.11 U.S.C.A. § 363.
Cases that cite this headnote
[5] BankruptcyRights and liabilities of purchasers, and
right to purchase
On motion of purchaser of Chapter 11 debtor-automobile manufacturer's assets to enforce“free and clear” sale order, bankruptcy courtwould continue to enjoin claims against assetpurchaser that were based on debtor's wrongfulconduct, including, but not limited to, successorliability claims; although successor liabilitytheories were the paradigmatic example ofclaims that must be barred under a “free andclear” order, they were not the only ones, andhere, the sale order was intended to bar claimsof any type that might be asserted against assetpurchaser based on debtor's wrongful conduct.11 U.S.C.A. § 363.
Cases that cite this headnote
[6] BankruptcyReconsideration
Section of the Bankruptcy Code governingreconsideration of claim applies, by its terms,only to claims that were previously allowed ordisallowed. 11 U.S.C.A. § 502(j).
Cases that cite this headnote
[7] BankruptcyOrder of court and proceedings therefor in
general
Interpretation of the bankruptcy court's sale orderwas a matter for that court. 11 U.S.C.A. § 363.
Cases that cite this headnote
[8] BankruptcyRights and liabilities of purchasers, and
right to purchase
BankruptcyCollateral attack
Interpretation of the bankruptcy court's decisionand judgment on asset purchaser's motionto enforce sale order was a matter for thebankruptcy court, subject to the power of federalcourts exercising appellate jurisdiction over thebankruptcy court, and the bankruptcy court'sdeterminations could not be subject to collateralattack. 11 U.S.C.A. § 363.
Cases that cite this headnote
Attorneys and Law Firms
*356 KING & SPALDING LLP, Counsel for GeneralMotors LLC (New GM), 1185 Avenue of the Americas, NewYork, New York 10036, By: Arthur J. Steinberg, Esq.
BROWN RUDNICK, Designated Counsel and Counsel forEconomic Loss Plaintiffs, Seven Times Square, New York,New York 10036, By: Edward S. Weisfelner, Esq.
STUTZMAN, BROMBERG, ESSERMAN & PLIFKA,P.C., Designated Counsel and Counsel for Economic LossPlaintiffs, 2323 Bryan Street, Suite 2200, Dallas, Texas75201, By: Sander L. Esserman, Esq.
GOODWIN PROCTER, LLP, Designated Counsel andCounsel for Pre-Sale Accident Victim Plaintiffs, The NewYork Times Building, 620 Eighth Avenue, New York, NewYork 10018, By: William P. Weintraub, Esq.
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GOLENBOCK, EISEMAN, ASSOR, BELL & PESKOE,LLP, Counsel for Groman Plaintiffs, 437 Madison Avenue,New York, New York 10022, BY: Jonathan L. Flaxer, Esq.
GIBSON, DUNN & CRUTCHER, LLP, Counsel forWilmington Trust Company as GUC Trust Administrator,200 Park Avenue, New York, New York 10166, BY: Lisa H.Rubin, Esq.
AKIN, GUMP, STRAUSS, HAUER & FELD, LLP, Counselfor Participating GUC Trust Unit Trust Holders, One BryantPark New York, New York 10036, BY: Deborah J. Newman,Esq.
DECISION RE FORM OF JUDGMENT
ROBERT E. GERBER, UNITED STATES BANKRUPTCYJUDGE:
**1 The parties' inability to agree on a form of judgmentto implement the Court's Decision on Motion to Enforce Sale
Order 1 requires this Court to decide the disputed matters.The Court will be entering a judgment, consistent with its
rulings on the disputed matters, within a few days. 2 TheCourt's reasoning on the disputed matters follow.
1. Request for Delay in Entry of Judgment[1] Gary Peller, Esq., counsel for the Elliott and
Sesay Plaintiffs (and an additional plaintiff, SharonBledsoe, a pre-petition accident victim) (collectively, the“Peller Plaintiffs”)—whose insistence on prosecuting theircomplaints ahead of all of the other plaintiffs similarlysituated *357 (and that this Court lacks the jurisdiction toenforce its own orders) necessitated two written opinions by
this Court 3 —now argues that entry of judgment is premature.He argues, effectively, that the entry of a judgment as desiredby all of the other parties in this case (and the prompt appellatereview that all of the other parties also desire) should await theconsideration of additional arguments he wishes to present.
He further argues, on behalf of the Peller Plaintiffs, that theCourt's rulings in the Decision are not binding on them. TheCourt disagrees. The Peller Plaintiffs had more than ampleopportunity to raise contentions Designated Counsel did notraise. And though Mr. Peller's filings were so numerous andfrivolous that the Court warned him of the entry of a Martin–
Trigonaorder, 4 he still had the right, under the Court's orders
establishing the mechanisms for determination of the Motionto Enforce, to make any points others had not.
Under these circumstances, there is no good reason fordelaying the entry of a judgment that all of the other parties inthis case need. Judgment will be entered now. The only fairlydebatable issue is exactly how it will be framed.
2. Dismissal With Prejudice v. Stay of Cases[2] In its proposed form of judgment, New GM provides
for the outright dismissal, with prejudice, of the complaintsembodying claims that continue to be barred by the SaleOrder. In their proposed form of judgment, DesignatedCounsel argue that such complaints should merely be stayed.Though the matter is close—as neither side would bematerially prejudiced by the other's approach—the Courtbelieves it should provide, for the time being, for no morethan a stay.
**2 [3] Of course it is true, as New GM has argued, thatmany plaintiffs' counsel filed plenary action complaints, inboth state and federal courts, in knowing disregard of theprohibitions of the Sale Order. And whether those counseldid so out of arrogance; ignorance; their own perceptions ofwhen orders should be complied with; or an apparent notionthat orders of a United States Bankruptcy Court are unworthyof respect, is of no moment. Compliance with the Court'sSale Order was required, unless and until the Sale Order was
vacated or modified by this or a higher court. 5 With thisCourt having declined to vacate or modify the Sale Order withrespect to successor liability claims, New GM is right in itscontention that the normal remedy for the filing of a complaintin violation of a court order—now determined, in respectsrelevant here, to be fully valid—would be an order mandatingthat complaint's dismissal.
The real issue, however, is when— and whether merelystaying the actions pending the completion of appellateproceedings would suffice. Designated Counsel argue thatfull dismissal “would provide an inefficient labyrinth ofcumbersome procedures impacting a wide array of actionspending against New GM in various jurisdictions.” *358That is true, but it is largely a problem of Ignition SwitchPlaintiffs' making—resulting from their filing of manyactions that they knew or should have known were barredby the Sale Order, and apparently intentional efforts tointermingle permitted and impermissible claims in commoncomplaints.
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Nevertheless, though many of New GM's proposedprocedures would have to remain in any event (to providemechanisms for relief from the stays, and for determiningwhether curative measures were sufficient), New GM'sdismissal procedures would be cumbersome, and could resultin additional expense in refiling fees if any complaints nowto be dismissed later turn out, after appeal, to assert claimsthat could properly be presented. And while New GM offersmechanisms (such as a tolling of the statute of limitationsand restoration of the status quo ante ) to protect IgnitionSwitch Plaintiffs in the event of a reversal or modificationof the Decision, there is no need for quite so many measuresso complex, nor for the additional burdens on the Court thatwould result from New GM's approach. New GM wouldnot be prejudiced, much less materially so, if complaintsembodying claims proscribed by the Sale Order are simplystayed for the time being.
The Court gave substantial thought to the issues addressed inthe Decision and believes, not surprisingly, that it got themright. But as the Court noted when it certified the Decisionfor direct appeal to the Circuit, available authorities, whilehelpful to a point, came nowhere close to addressing a factualsituation of this nature. Staying the actions embodying barredclaims more than satisfactorily protects New GM's legitimateneeds and concerns for now. If, as the Court believes, itsconclusions on the issues to be appealed were right, New GMcan then come back to the Court for full dismissals after theappellate process has taken its course.
3. State Court Attorney General Actions[4] After the filing of the Motion to Enforce, actions in
California and Arizona state court (the “State Actions”) werefiled on behalf of the Attorneys General of California andArizona (the “State Plaintiffs”) seeking injunctive relief,civil penalties and “other available relief.” New GM's form ofjudgment provides for those actions to be stayed. DesignatedCounsel object to that, contending that the two State Actionsassert claims based only on New GM conduct—which, if true,would be permissible under the Decision.
**3 But the Court does not believe that to be true. On theirface, the State Plaintiffs, like many Ignition Switch Plaintiffs,intermix claims involving pre-and post-sale conduct. TheCalifornia complaint includes at least 18 paragraphs alleging
events that took place prior to the 363 Sale, 6 and the Arizonacomplaint includes at least 60 paragraphs alleging pre–363
Sale conduct. 7 Reliance on allegations of that character wasexpressly prohibited under the Court's decision. And theState Actions' prayers for monetary relief (as contrasted toinjunctive relief, which is forward looking, and much lessprone to rest on Old GM conduct), in reliance on pre-saleallegations aggravate the problem.
The Court has included within the Judgment, however,provisions allowing the State Plaintiffs to choose betweenmaintaining the complaints in their State Actions as theyoriginally drafted them, pending any appeal they might bring,or pruning their complaints of allegations relating conductto Old GM conduct. If either elects the latter, and New GMdoes *359 not agree that claims and allegations only of apermissible nature remain, the State Plaintiffs may seek aruling from this Court. But in the meantime, the prosecution
of the state lawsuits will remain stayed. 8
4. Language Re Barred Claims[5] In its form of judgment, New GM proposes to continue
the injunction against claims against New GM “concerning anOld GM vehicle or part seeking to impose liability or damagesbased on Old GM conduct, or a successor liability theoryof recovery.” Designated Counsel's form of judgment limitsthe barred claims to those “based on successor liability.”But the latter's formulation is unduly narrow, distorting theCourt's intent. The Court cannot accept Designated Counsel'slanguage.
Successor liability theories are the paradigmatic example ofclaims that must be barred under a Free and Clear Order,but they are not the only ones. The Sale Order was intendedto bar claims of any type that might be asserted against theasset buyer New GM that would be based on the asset sellerOld GM's wrongful conduct—including, but not limited to,
successor liability claims. 9 Acquirers of assets cannot beplaced at risk of liability for claims based on seller conductpremised on the notion that the claims are not exactly for“successor liability.” Any sale order that did not protectpurchasers of assets from the sellers' wrongful acts wouldnot do its job. And when the Court issued the Decision(having rejected the Ignition Switch Plaintiffs' contentions,except insofar as they involved alleged wrongful conduct byNew GM alone), its intent was to leave all of the protective
provisions intact. 10
**4 *360 The Court's judgment will stay true to theoriginal Sale Order and the language in the Decision.
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5. Language Re Non–Ignition Switch PlaintiffsAs both sides recognize, after New GM filed the Motionto Enforce, still another category of Plaintiffs came intothe picture—the “Non–Ignition Switch Plaintiffs.” ThoughNew GM brought still another motion—a third one—toenforce the Sale Order with respect to Non–Ignition SwitchPlaintiffs, this third motion could not easily be melded intothe earlier stipulation and briefing schedule. Thus it wasdeferred pending the determination of the issues addressed inthe Decision.
The Non–Ignition Switch Plaintiffs' claims remain stayed,and properly so; those Plaintiffs have not shown yet, if theyever will, that they were known claimants at the time ofthe 363 Sale, and that there was any kind of a due processviolation with respect to them. And unless and until they doso, the provisions of the Sale Order, including its injunctiveprovisions, remain in effect. Similar considerations (and alsomootness points) may apply with respect to the allowance oflate Non–Ignition Switch Plaintiffs' claims.
Yet as Designated Counsel properly observe, the Non–Ignition Switch Plaintiffs are still entitled to a fair opportunityto be heard in this Court as to whether there are any reasonsto excuse them from the Sale Order, or the Court's mootnessconclusions with respect to tapping GUC Trust assets. TheDecision will be stare decisis for the Non–Ignition SwitchPlaintiffs (subject to the usual right of any litigant to showthat a judicial opinion is distinguishable), but it will not beres judicata. The Court agrees with New GM, the GUCTrust and the Unitholders that it is time to come to closureon whether there is any basis to excuse the Non–IgnitionSwitch Plaintiffs from the provisions of the Sale Order andthe Court's mootness conclusions. And fairness to the MDLCourt requires that this Court timely provide the MDL Courtwith any rulings that the MDL Court may require. The Court'sJudgment balances the Non–Ignition Switch Plaintiffs' needfor opportunity now to be heard with others' needs forexpeditious closure on these additional claims.
6. Language Re GUC Trust AssetsNew GM and, particularly, the GUC Trust and theUnitholders, on the one hand, and Designated Counsel, on theother, disagree on the language in the judgment appropriateto implement the Court's mootness conclusions. The Courtgenerally agrees with the GUC Trust, Unitholders and NewGM. But it believes, consistent with the rationale of the
Decision, that the guiding standard should the reasonableexpectations of GUC Trust and acquirors of GUC Trust Unitsunder the Plan—a matter not fully addressed by either side.
It is necessary, in the Court's view, to include differentprovisions in the Judgment with respect to new claims andreconsideration of old ones. When Old GM creditors receiveddistributions under the Plan, and when Unitholders—evenif as aftermarket acquirors of GUC Trust Units—acquiredtheir units, they had a reasonable expectation that the totaluniverse of claims filed against Old GM would not increase.And while they knew that there was an accordion feature, theyalso knew that claims exposure would result, with exceptionsexceedingly difficult to show, only from previously filedclaims. The Decision respected those concerns. The Court'sJudgment will stay true to the principles articulated in theDecision, and will not allow GUC Trust assets to be tappedfor claims not previously filed.
**5 [6] *361 But as noted, the situation is differentwith respect to claims that were already filed, and previouslyallowed or disallowed. Bankruptcy Code section 502(j)provides, in relevant part:
A claim that has been allowed ordisallowed may be reconsidered forcause. A reconsidered claim may beallowed or disallowed according to the
equities of the case. 11
Creditors receiving distributions under the Plan, and ownersof GUC Trust units acquiring such units after confirmation ofthe Plan, were on notice that the Bankruptcy Code includes asection 502(j). Just as they had the justifiable expectation thatthe Court would apply provisions of the Bankruptcy Code orcaselaw that would bolster their rights, they had (or shouldhave had) the same expectation that the Court might applyprovisions of the Bankruptcy Code or caselaw that coulddilute their recoveries. Each assumed the risk that the Courtmight apply section 502(j) with respect to any claims thatpreviously had been allowed or disallowed.
The Court expresses no view now as to whether or how itwould apply section 502(j) to the claim of any plaintiff whopreviously filed a claim that was allowed or disallowed, buthas added a proviso to its Judgment to provide that nothing inthe judgment impairs any rights under section 502(j).
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7. Language Re Disputed FactsDesignated Counsel and New GM also joust over the extentto which the Court should address, in the judgment, disputedfacts that did not affect the Court's Decision. DesignatedCounsel ask the Court to provide that disputed facts did notraise any “genuine issue of material fact as to any of the FourThreshold Issues, and that treating any of the disputed factsas part of the undisputed stipulated record would not haveaffected the Decision.” New GM opposes such a provision,stating that this “is found nowhere in the Decision and, in fact,is inconsistent with the Decision.”
New GM is right that the language Designated Counsel wantto add is found nowhere in the Decision. But New GM ismistaken when it says that the language “is inconsistent withthe Decision.” Such language—or at least language to thesame general effect—is implicit. The Court expressly statedthat “[b]y analogy to motions for summary judgment, the
Court has relied only on undisputed facts.” 12 Both sidesagree, or should, that the Plaintiffs did indeed put forwardadditional facts which New GM disputed, but which the Courtfound unnecessary to decide to reach the conclusions it did.If the Court considered any disputed fact to have *362 thepotential to change the outcome (or even its analysis on theway to the outcome), the Court would have said so—just asit would, if necessary, on a motion for summary judgment.
8. Enforcement Authority**6 New GM's proposed form of judgment provides, in
Paragraph 15:
Notwithstanding the foregoing, in allevents, however, the Decision andJudgment shall apply with respect to(a) the Court's interpretation of theenforceability of the Sale Order, and(b) the actions of the affected partiesthat are authorized and proscribed bythe Decision and Judgment.
The Plaintiffs want this language taken out. The Courtdeclines to do so.
[7] [8] New GM has expressed an understandable concernthat plaintiffs in actions whose prosecution is barred bythe Sale Order cases will seek to have this Court's SaleOrder or Judgment vacated or modified by courts in whichplaintiffs' underlying actions are docketed. This Court cannotnot tolerate efforts of that character. Wholly apart from theadditional expertise that Bankruptcy Courts have with respectto the orders they enter and the bankruptcy matters theydecide, the interpretation of this Court's Sale Order is a matterfor this Court. Subject to the power, of course, of federalcourts exercising appellate jurisdiction over this Court, sois the interpretation of the Decision and the Judgment. ThisCourt's determinations with respect to each of those mattersare reviewable by the federal appellate courts alone; theycannot be subject to collateral attack. And this last point is soimportant that the Court is adding even more language to theJudgment to make that clear.
8. Other MattersIn several places, New GM has proposed that the judgmentstate that notice of the 363 sale came from Old GM, fearingthat omitting reference to Old GM would imply that someoneelse was responsible for the 363 sale notice, “which clearlyis not true.” Of course the notice came from Old GM. Butleaving it out does not result in the implication New GMfears. Consistent with the Court's practice here to minimizeunnecessary matter, and to point readers to the Decisionto understand its rationale, the Court leaves that and othernonessential matter out.
Certification to the Second Circuit Court of Appeals is more
appropriately handled by a separate order. 13 The parties'stipulation with respect to voluntary supplemental statementswill be included in that separate order as well.
In many places, the Court has pruned language from theproposed forms of judgment to reduce verbosity. Wherechanges were meant to be substantive, they have beenexplained in the discussion above.
All Citations
531 B.R. 354, 2015 WL 3398398
Footnotes
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2015 WL 3398398
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1 See In re Motors Liquidation Co., 529 B.R. 510 (Bankr.S.D.N.Y.2015) (Bankr.S.D.N.Y. Apr. 15, 2015) (the “Decision”),familiarity with which is assumed. Defined terms (such as the Court's reference to “Designated Counsel,” the bankruptcycounsel for many of the Ignition Switch Plaintiffs) are as set forth the Decision and in the proposed forms of judgment.
2 By separate order, entered today, the Court is inviting comments on technical matters relating to the form of judgment.The entry of the judgment will await the submission of any such technical comments, but nothing else.
3 See In re Motors Liquidation Co., 514 B.R. 377 (Bankr.S.D.N.Y.2014) (Elliott Plaintiffs); In re Motors Liquidation Co.,522 B.R. 13 (Bankr.S.D.N.Y.2014) (“Sesay ”) (Sesay Plaintiffs), leave to appeal denied,No. 15–CV–772 and 15–CV–776 (S.D.N.Y. May 18, 2015) (Furman, J.).
4 See Sesay, 522 B.R. at 20 n. 13.
5 See, e.g., Celotex Corp. v. Edwards, 514 U.S. 300, 306, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) (“Persons subject to aninjunctive order issued by a court with jurisdiction are expected to obey that decree until it is modified or reversed, evenif they have proper grounds to object to the order.”)(internal citations omitted).
6 See ECF No. 13137, Exhibit E.
7 See id.Exhibit D.
8 According to New GM, the State Plaintiffs have indicated that they will not amend their complaints to eliminate relianceon Old GM conduct. The Court does not know that to be true. But assuming that it is, a decision of that character comeswith a price—and that price is a stay of the State Action for as long as appropriate as the federal appellate process takesits course. Compliance with the Sale Order, or with the Decision and Judgment, is not a matter for the State Plaintiffs,or the state courts, to decide. The issues addressed in the Decision were issues properly before the federal courts, andthis Court in particular. On matters properly within its purview, the Court cannot permit a disregard of its orders andjudgments, or end-runs on its jurisdiction.
9 See Sale Opinion,In re General Motors Corp., 407 B.R. 463, 500 n. 92 (Bankr.S.D.N.Y.2009) (Sale Order would providethat except for Assumed Liabilities, assets would be transferred “free and clear of all liens, claims, encumbrances,and other interests of any kind or nature whatsoever...including rights or claims based on any successor or transfereeliability ....” (quoting Proposed Sale Order at ¶ 7) (emphasis added)). See also id.(noting that injunction would bar personsand entities holding claims “of any kind or nature whatsoever, including rights or claims based on any successor ortransferee liability, against or in a Seller or the Purchased Assets ... arising under or out of, in connection with, or in anyway relating to, the Sellers, the Purchased Assets, the operation of the Purchased Assets prior to the Closing, or the 363Transaction ....” (quoting Proposed Sale Order at¶ 8) (emphasis added)).
10 See Decision, 529 B.R. at 528, 2015 WL 1727285 at *8 (“[I]t is plain that to the extent the Plaintiffs seek to imposesuccessor liability, or to rely, in suits against New GM, on any wrongful conduct by Old GM, these are actually claimsagainst Old GM, and not New GM”); id. at 528, 2015 WL 1727285 at *8 (“Claims premised in any way on Old GM conductare properly proscribed under the Sale Agreement and the Sale Order, and by reason of the Court's other rulings, theprohibitions against the assertion of such claims stand.”); id. at 598, 2015 WL 1727285 at *68 (Economic Loss Plaintiffscould assert otherwise viable claims against New GM arising “solely out of New GM's own, independent, post-Closingacts,”so long as those Plaintiffs' claims do not in any way rely on any acts or conduct by Old GM ”) (emphasis addedin each case).
11 It goes on to say that:Reconsideration of a claim under this subsection does not affect the validity of any payment or transfer from theestate made to a holder of an allowed claim on account of such allowed claim that is not reconsidered, but if areconsidered claim is allowed and is of the same class as such holder's claim, such holder may not receive anyadditional payment or transfer from the estate on account of such holder's allowed claim until the holder of suchreconsidered and allowed claim receives payment on account of such claim proportionate in value to that alreadyreceived by such other holder.
This provides other creditors with a considerable measure of protection, but does not go to all of the concerns theGUC Trust and Unitholders voiced that were thereafter addressed in the Decision. Importantly, section 502(j) applies,by its terms, only to claims that were previously allowed or disallowed.
12 Decision, 529 B.R. at 529–30, 2015 WL 1727285 at *9 n. 17.
13 SeeFed. R. Bankr. P. 8006(e)(1).
End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.
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Exhibit E
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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------x In re : Chapter 11 : MOTORS LIQUIDATION COMPANY, et al., : Case No.: 09-50026 (REG) f/k/a General Motors Corp., et al. : : (Jointly Administered) Debtors. : ------------------------------------------------------------x
DECISION AND ORDER ON BLEDSOE PLAINTIFFS’ REARGUMENT AND OTHER
POST-JUDGMENT MOTIONS
APPEARANCES: GARY PELLER Attorney for Bledsoe Plaintiffs 600 New Jersey Avenue, NW Washington, DC 20001 By: Gary Peller, Esq. KING & SPALDING LLP Counsel for General Motors LLC (New GM) 1185 Avenue of the Americas New York, New York 10036 By: Arthur J. Steinberg, Esq. Scott I. Davidson, Esq. ROBERT E. GERBER UNITED STATES BANKRUPTCY JUDGE:
In still another filing in his efforts to go it alone in connection with litigation
arising from the announcement by General Motors LLC (“New GM”) of the defects in its
ignition switches (the “Ignition Switches Controversy”), and the issuance by this Court
of two opinions in connection with that controversy1 following the briefing by other
counsel who ably presented plaintiffs’ arguments, Gary Peller Esq., this time on behalf of
1 See In re Motors Liquidation Co., 529 B.R. 510 (Bankr. S.D.N.Y. 2015) (Gerber, J.) (“Decision”);
In re Motors Liquidation Co., 531 B.R. 354 (Bankr. S.D.N.Y. 2015) (Gerber, J.) (“Form of Judgment Decision”). Familiarity with each is assumed.
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the “Bledsoe Plaintiffs,”2 a subset of the clients he has represented (individually and as
purported class representatives) in this case,3 has filed many motions seeking post-
judgment relief from this Court. He moves, with respect to the judgment this Court
entered implementing the Decision (the “Judgment”) and the Decision’s Findings of
Fact (the “Findings”):
(a) to amend the Findings under Fed.R.Bankr.P. 7052;
(b) to alter or amend the Judgment, under Fed.R.Bankr.P. 9023 (and,
presumably, Fed.R.Civ.P. 59(e));
(c) for relief from the Judgment, under Fed.R.Bankr.P. 9024; and
(d) for reargument, under S.D.N.Y. Local Bankruptcy Rule 9023-1.
The motions are denied.
Facts
Familiarity with facts set forth in the Decision and the Form of Judgment
Decision is presumed. The Court limits its discussion of the facts to those necessary to
address Peller’s post-Judgment motions, and then only in combined factual and legal
discussion of all of his motions.
2 Sharon Bledsoe, Celestine Elliott, Lawrence Elliott, Tina Farmer, Paul Fordham, Momoh Kanu,
Tynesia Mitchell, Tierra Thomas and James Tibbs. Celestine Elliott and Lawrence Elliott were (and may still be) plaintiffs in another subset of Peller’s clients, the “Elliott Plaintiffs,” the subject of this Court’s earlier opinion in In re Motors Liquidation Co., 514 B.R. 377 (Bankr. S.D.N.Y. 2014) (“Elliott”), leave to appeal denied, No. 15–CV–772 (S.D.N.Y. May 18, 2015) (Furman, J.).
3 There is a hint in Peller’s papers that all of this was merely to preserve, for the Bledsoe Plaintiffs subset of his clients, appellate rights with respect to the arguments he already made on behalf of the others. See Bledsoe Br. at 7-8. If that is so, it is not clear to the Court why he needed to file a 25 page brief to do it.
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Discussion
1. Motions to Amend Findings
Peller first moves, pursuant to Fed.R.Civ.P. 52(b) (as made applicable to
adversary proceedings and contested matters by Fed.R.Bankr.P. 7052 and 9014), for
amendments in the Court’s Findings. But he identifies no fact that the Court confused or
otherwise got wrong, nor any fact that belonged in the Findings but was not included.
Rather, Peller differs with conclusions of law and on mixed questions of fact and
law on matters the Court already decided. For instance, he argues that “the Court’s
construction of the [Sale Order4] is untenable, and the Court should amend its findings to
construe the [Sale Order] not to encompass Independent Claims.”5 As discussed below,
contentions of that character are inappropriate even on a motion for reargument. They
are especially inappropriate on a request for amended findings.6
4 Notwithstanding the requirements of the Court’s Case Management Order (“Parties are not to use
acronyms in briefs to describe names of parties or agencies or expressions, unless their meaning is obvious,” Case Management Order No. 3 at ¶ 28), Peller repeatedly speaks in terms of the “SOI” and “MTE.” In place of those cryptic acronyms, the Court has substituted words meaningful to a reader.
5 Bledsoe Br. at 19. Also, of course, Peller misconstrues the Court’s ruling. Of course the Sale Order encompassed Independent Claims. It did so by its express terms. But this Court ruled that although the Sale Order did so, it should not have covered genuinely Independent Claims. Not content with this, Peller seems to argue that New GM—and more importantly, the Court—should accept his ipse dixit contentions that the claims as he proposes to press them (including, for example, those of Sharon Bledsoe, the victim of a pre-Sale accident before New GM came into existence) are Independent Claims. Contentions of that nature will be reviewed under the “No-Stay Pleading” mechanism crafted under the Judgment to which all of the other plaintiffs’ counsel are adhering. Rule 52 relief is not the appropriate means to address contentions of this type.
6 Though there is authority for the proposition that motions to amend findings may be used to amend conclusions of law as well as those on facts--though only those whose error is “manifest”—see National Metal Finishing Co. v. BarclaysAmerican/Commercial, Inc., 899 F.2d 119, 123 (1st Cir. 1990), “Rule 52(b) is not intended to allow parties to rehash old arguments already considered and rejected by the trial court.” Id.
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2. Motion to Alter or Amend Judgment
Peller likewise moves for amendment of the Court’s judgment. He argues
(rearranging the arguments slightly, for purposes of analysis) that the Judgment should be
amended:
(1) to permit one of his clients, plaintiff Sharon Bledsoe—a pre-
sale accident victim—to assert “Independent Claims”;7
(2) to exclude the Bledsoe Plaintiffs because the they did not
receive the constitutionally required notice in 2009, and the “Court’s
construction of the [Sale Order] was not reasonably foreseeable”;8
(3) to exclude successor liability claims based on New GM’s
unlawful operation of Old GM assets;9
(4) to “exclude the Bledsoe Plaintiffs’ Independent Claims from its
reach”;10
(6) to be “limited to the construction of the [Sale Order]” and that
“the Motion to Enforce should be denied in all other respects,”11 and
(5) to deny the Motion to Enforce in its entirety.12
But these arguments, to the extent the Bledsoe Plaintiffs did not already win on them,
repeat contentions the Court already rejected, are inappropriate for Rule 59 relief, or both.
7 Bledsoe Br. at 19. 8 Id. at 20. 9 Id. at 22. 10 Id. at 21. 11 Id. at 22. 12 Id. at 22.
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The first contention is unpersuasive for both reasons. Sharon Bledsoe, as Peller
acknowledges,13 was the victim of a pre-sale accident. The Court is highly sympathetic
to accident victims. But she is no different than the other victims of pre-closing
accidents, very ably represented by Designated Counsel for the Pre-Closing Accident
Plaintiffs, whose arguments the Court fully considered but ultimately rejected. She
admittedly “asserts a ‘successor liability’ claim for pre-sale injury”14—which, for reasons
explained at length in the Decision, could not be brought. And Peller’s efforts to
characterize her claims as “Independent Claims” are spurious. New GM did not exist at
the time of her accident (as it did not at the time of the accidents involving other Pre-
Closing Accident Plaintiffs), and was not responsible for the consideration of Ms.
Bledsoe’s claims, which were classic prepetition claims. Thus New GM could be liable
to her only under prohibited theories of successor liability or similar theories imposing
liability on New GM for Old GM acts. Peller has provided no basis for changing that
conclusion now. As one who was an accident victim before the sale, Sharon Bledsoe
cannot, as the Court previously ruled, assert what are in substance successor liability
claims “dressed up to look like something else.” 15
The second contention is unpersuasive as well. The Court ruled that all of the
Ignition Switch Plaintiffs failed to receive constitutionally requisite notice in the 363 Sale
and claims allowance stages of Old GM’s chapter 11 case, but that except for the ability
to file claims against Old GM, and to assert Independent Claims, Ignition Switch
Plaintiffs were not prejudiced by their lack of notice—a critical element of any claim for
13 Id. at 13, 21. 14 Bledsoe Br. at 13. 15 Decision, 529 B.R. at 528 (quoting Burton v. Chrysler Grp., LLC (In re Old Carco), 492 B.R. 392,
405 (Bankr. S.D.N.Y. 2013) (Bernstein, C.J.) (“Old Carco”)).
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relief. And though certain plaintiffs, or their lawyers, might not have regarded the
Court’s recent rulings (in favor of New GM in some respects, and in favor of Ignition
Switch Plaintiffs in others) as foreseeable, the Court’s rulings, in its view, were entirely
foreseeable—at least to those who were familiar with bankruptcy law and had read the
relevant cases. In any event, this contention raises no issues the Court has not considered
before.
The third contention, to the extent the Court can understand it (given the inherent
inconsistency between successor liability claims and those premised solely on the
acquirer’s conduct), is likewise unpersuasive. The Court considered, and rejected, the
argument that Plaintiffs—whoever they might be—could still bring successor liability
claims. To the extent, if any, that “unlawful operation” of what were once Old GM assets
is an independent offense otherwise actionable under nonbankruptcy law—consistent
with the rulings in Old Carco and the Decision that it not be a successor liability claim
“dressed up to look like something else”16—the Bledsoe Plaintiffs (other than Sharon
16 See Old Carco, n.15 supra. How that principle applies to specific allegations in specific
complaints is the subject of the various “No-Stay Pleadings,” which have been and will be filed by counsel in this case, and are not before the Court now. They will be decided by this Court (or the District Court, depending on the outcome of pending motions related to withdrawal of the reference) in subsequent proceedings.
But what this Court had in mind when it previously ruled as it did should not be in doubt. This Court assumed that things New GM did, or knowledge New GM personnel had when acting for New GM (even if those personnel acquired that knowledge while acting for Old GM) would be fair game. (For example, if such were actionable under applicable nonbankruptcy law, New GM could still be held liable, consistent with this Court’s ruling, for knowingly installing a part it knew to be defective even if the part had been made by Old GM—just as New GM might be liable for doing that if the part had been manufactured by another manufacturer in the Supplier Chain—and likewise could be held liable for refusing to make a repair that New GM knew had to be made, no matter when its personnel acquired the requisite knowledge.) But this Court further believed that New GM could not be held liable for anything Old GM did, and that claims for either compensatory or punitive damages would have to be premised solely on New GM’s knowledge and conduct. While mention (without anything materially more) of Old GM and of the 363 Sale would be proper, and New GM would have to live with the knowledge its personnel had from the earliest days they began to serve New GM, this Court assumed that in light of its rulings, courts thereafter implementing them would be wary of reliance on facts ostensibly introduced as “background” when they were in fact attempts to paint New GM with Old GM acts.
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Bledsoe) can bring claims premised on that theory.17 But like all of the other Ignition
Switch Plaintiffs, the Bledsoe Plaintiffs cannot bring any successor liability claims.
The fourth contention—that the Judgment should be amended to exclude the
Bledsoe Plaintiffs’ Independent Claims from its reach—has largely already been
addressed. To the extent the Bledsoe Plaintiffs’ claims truly are Independent Claims,
they already are carved out from the prohibitions in the Judgment. But the Bledsoe
Plaintiffs’ assertions that claims they wish to bring are in fact Independent Claims do not,
without New GM’s agreement or a ruling by this or a higher Court, make them so. In any
event, the Judgment needs no amendment to reflect that reality.
The fifth contention is frivolous. New GM is entitled to not just construction of
the Sale Order but also its enforcement,18 to the extent (which is considerable) that the
Sale Order remains enforceable. Peller’s contentions here that the Court lacks the
jurisdiction to do either are as frivolous now as they were when the Court rejected them
in Elliott and another decision considering Peller’s many contentions,19 Sesay.20 And
17 Thus Peller’s further assertion that this Court, once having heard Designated Counsel’s excessive
breadth argument (with which the Court ultimately agreed), nevertheless invoked “despotic power” to insulate New GM from its own allegedly wrongful acts, Bledsoe Br. at 8-9—effecting a “startling nullification of the laws of the United States and the States”—has no relation to what the Court actually held. Peller attacks a straw man.
18 See, e.g., Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009) (“Travelers”) (“[T]he only question left is whether the Bankruptcy Court had subject-matter jurisdiction to enter the Clarifying Order. The answer here is easy: as the Second Circuit recognized, and respondents do not dispute, the Bankruptcy Court plainly had jurisdiction to interpret and enforce its own prior orders.”) (emphasis added); Elliott, 514 B.R. at 379–380 & nn.4–9.
19 In re Motors Liquidation Co., 522 B.R. 13, 20 (“Sesay”), leave to appeal denied, No. 15–CV–776 (S.D.N.Y. May 18, 2015) (Furman, J.).
20 See Elliott, 514 B.R. at 379–380 & nn.4–9 (this Court had jurisdiction to construe and enforce the Sale Order) (quoting Luan Investment S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223 (2d Cir. 2002) (“Petrie Retail”) (“A bankruptcy court retains post-confirmation jurisdiction to interpret and enforce its own orders,”) (emphasis added); Sesay, 522 B.R. at 20 (“This contention, as I held in Elliott (and which also is now the law of the case), is frivolous. Federal judges, including bankruptcy judges, have subject matter jurisdiction to enforce their own orders.”).
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New GM is not seeking a second injunction; it seeks only to enforce the injunction the
Court issued six years ago. Peller has cited no law, nor is the Court aware of any, that
says that New GM must invoke the word “contempt” (and provide the additional
safeguards to Peller a request for contempt would impose) to enforce an earlier order.21
Though he contended that the Sale Order did not properly cover the claims he
wanted to bring, Peller had notice of the Sale Order by no later than July 9, 2014, when
his co-counsel Daniel Hornal submitted Peller’s letter to the Court22—more than two
months before when he filed Bledsoe, on September 19, 2014. And when Peller
nevertheless filed Bledsoe, he did so notwithstanding what he knew the Sale Order to say.
Though the Court will entertain a motion for contempt if New GM wishes to bring one (a
matter as to which Peller is surprisingly cavalier), the Court will not require one as a
condition to the enforcement of the Sale Order, nor will it hold the other parties in this
case, with their respective desires to appeal and cross appeal, hostage to the completion
of proceedings for contempt.
The sixth contention likewise is no basis for relief. Its premise for denying the
Motion to enforce in its entirety—that the Bledsoe Plaintiffs did not receive the requisite
notice and opportunity to be heard back in 2009—was addressed at great length in the
21 Peller lays out requirements for holding him liable for contempt under the law of the Second
Circuit, see Bledsoe Br. at 23 n.87, but the authorities he cites do not support the proposition that it is necessary to place him in contempt to simply enforce the Court’s order. Though contempt is available to enforce earlier orders, “and no further remedy is necessary,” Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 507 (9th Cir. 2002), that does not mean that motions to simply enforce an earlier order, without seeking contempt, are impermissible. To the contrary, Bankruptcy Judges enforce their earlier orders, without also placing people in contempt, with great frequency.
22 See ECF #12765, amended in respects not relevant here, ECF#12766 (7/9/2014 Peller Ltr.) at 2 (contending that the complaint he wanted to file “carefully avoids violation of the Sale Order”); accord id. at 4-5.
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Decision.23 If Peller wants the Judgment overturned in its entirety, he should seek that by
appeal. Rule 59(e) was adopted in order to clarify that the district court has the power to
rectify its own mistakes in the period immediately following the entry of judgment,24 and
here the Court sees none. “A Rule 59(e) motion to alter or amend a judgment may not be
used to relitigate the same matters already determined by the court.”25
3. Motions for Relief from Judgment
Peller then makes three contentions that seem to sound in relief under Rule 60(b),
based on contentions that this Court’s actions were void. He contends that:
(a) the Court has no power to order dismissal of or to “censor” the Bledsoe
Plaintiffs’ pleadings pending before an Article III Court;26
(b) The Bledsoe Plaintiffs cannot be bound by the Judgment because they
“were precluded from participating in the ‘threshold issues’”;27 and that
(c) the Bledsoe Plaintiffs are entitled to relief from the void provisions of
the [Sale Order].”28
Once again, however, his arguments, to the extent the Bledsoe Plaintiffs did not already
win on them, lack merit.
23 See 529 B.R. at 572-73. 24 See 12 Moore’s Federal Practice – Civil § 59.30[1]. 25 Id. § 59.30[6] & n.20. 26 Id. at 23. 27 Id. at 24. In his motion, Peller seeks that same relief as an amended finding under Rule 7052,
asserting that the “record is clear” that the Bledsoe Plaintiffs had no opportunity to be heard. Bledsoe Motion at 2.
28 Bledsoe Br. at 25.
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(a) “Censoring” the Bledsoe Plaintiffs
The first point, apart from its theatrics, is simply contrary to the law. Bankruptcy
Judges, notwithstanding their appointment under Article I, most assuredly have the power
to enjoin litigants from prosecuting claims in other courts—state or federal, and in the
latter case, even those that might otherwise be heard by judges appointed under Article
III—when such injunctions are otherwise within Bankruptcy Judges’ jurisdiction and an
appropriate use of their injunctive powers.29 (This is no different in effect, and not
materially different in concept, from the operation of the automatic stay, implemented
under section 362 of the Bankruptcy Code, which enjoins litigation in any forum, before
any kind of judge.30) Peller recognizes that “[a]s the Court has stated, it unquestionably
had in rem jurisdiction to issue the [Sale Order] under § 363.”31
The Sale Order enjoined the prosecution of the litigation Peller commenced; the
Court thereafter enforced that order, by staying his litigation;32 and as Travelers, Petrie
29 See, e.g Petrie Retail, 304 F.3d at 225 (affirming three orders by Judge Gonzalez of this Court,
thereafter affirmed by Judge Pauley of the District Court, enjoining a landlord from “commencing or continuing any action contingent upon the interpretation of lease provisions that were at issue in the administration of the debtors’ estate”); Adelphia Communications Corp. v. The America Channel, LLC (In re Adelphia Communications Corp.), 345 B.R. 69, 71 (Bankr. S.D.N.Y. 2006) (Gerber, J.) (enjoining The America Channel and its counsel from prosecuting certain of their antitrust claims in the United States District Court for the District of Minnesota), motion for expedited appeal denied, No. 1:06-cv-05137-BSJ (S.D.N.Y. Jul. 25, 2006) (Jones, D.J.) (denying expedited appeal, describing Bankruptcy Court’s opinion below as “thorough and well-reasoned”).
30 Peller seems to recognize this. He notes that under the automatic stay provisions of section 362, the Court acquires the power to enjoin ongoing civil proceedings, “even those in superior Article III courts.” Bledsoe Br. at 9.
31 Bledsoe Br. at 11. Peller also concedes, in a way, that the Court “also may have inherent power to construe and enforce its own orders,” id. (emphasis added), as if the Supreme Court’s decision in Travelers, which says that the Bankruptcy Court “plainly” has that power, leaves any doubt as to that. See n.18, supra.
32 The Court has always believed that just as it had the power to enjoin the prosecution of litigation under the Sale Order, it had the power to order the dismissal of litigation brought in violation of it. But to the extent that proposition is debatable, the Court here does not have to decide it, because, for reasons stated in the Form of Judgment Decision, see 531 B.R. at 357-58, it merely stayed the offending litigation and did not dismiss it.
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Retail and the other cases make clear, this Court had the power to do so. It does not
matter that the litigation Peller brought, in violation of the Sale Order, was before an
Article III judge.
Nor was Peller “censored” in any way by this Court, other than by prohibiting
him from prosecuting litigation he had already been enjoined from prosecuting. Peller is
not “censored” from saying anything he wants on appeal.
(b) Asserted Inability to Be Heard
Peller’s second point, asserting an inability to be heard on the Threshold Issues, is
contradicted by the record in this case. The Court finds, as a fact, to the contrary. The
Court never limited the opportunity to be heard on the issues before it to Designated
Counsel or anyone else. All counsel for Plaintiffs whose complaints were the subject of
the Motions to Enforce, including Peller, had the opportunity to file a brief and (assuming
they had filed a brief) to present oral argument on the Threshold Issues.
New GM filed the Motion to Enforce on April 21, 2014. It was obvious from the
outset that a very large number of Plaintiffs’ lawyers would oppose it. On that same day,
New GM counsel Arthur Steinberg wrote the Court seeking a conference on the
management of the Motion, noting that as of that point in time, there were “currently over
50 Ignition Switches pending across the country (with new actions filed each week),” and
that for the most part, the Plaintiffs in those actions were not represented by the same
counsel.33
Also on the same day, the first of the Plaintiffs’ counsel to be heard on this matter
(Jonathan Flaxer, Esq., on behalf of the Groman Plaintiffs) filed an adversary complaint in
33 ECF #12622 at 2. By the time the Court issued the Decision, the number of affected actions had
increased to about 140.
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this Court seeking a declaration that his clients should not be bound by the Sale Order.
The following day, April 22, Flaxer wrote his own letter to the Court, inter alia agreeing
that the status conference New GM requested “would streamline the proceedings,” and
also stating that “it would serve the interests of economy and efficiency to coordinate [his
complaint] with the Motion to Enforce for discovery and other scheduling purposes.”34
Later that day—considering it obvious that coordinated management of the issues
to be determined was essential35—the Court issued an Endorsed Order agreeing to hold
the requested status conference, on-the-record, on May 2, 2014, and directing New GM to
send out notice of the conference. The Court stated, inter alia,
No substantive matters will be decided at the conference, nor will evidence be taken. The Court understands the purpose of the conference to be determining how best to procedurally address any contentions parties wish to make. The Court expects to then limit its consideration to matters such as ascertaining what must be determined, when, and how—and how the positions of many who may have identical or similar positions may be presented without undue duplication and expense. Matters then to be addressed will include (but not necessarily be limited to) establishing an appropriate briefing schedule and fixing a date and time for hearing.36
34 ECF #12626 at 2. 35 The Court had dealt with case management issues of this character before. When Old GM’s
motion for approval of the 363 Sale was heard in 2009, it engendered about 850 objections. See In re General Motors Corp., 407 B.R. 463, 520 (Bankr. S.D.N.Y. 2009) (the “Sale Opinion”), stay pending appeal denied, 2009 WL 2033079 (S.D.N.Y. Jul. 9, 2009), appeal dismissed and aff'd sub nom Campbell v. General Motors Corp., 428 B.R. 43 (S.D.N.Y.2010); Parker v. General Motors Corp., 430 B.R. 65 (S.D.N.Y.2010), appeal dismissed, No. 10–4882–bk (2d Cir. July 28, 2011) (per curiam), cert. denied, --- U.S. ---, 132 S.Ct. 1023 (2012). There the Court considered the briefs of anybody who filed one, but to keep the proceedings manageable and avoid duplication, limited oral argument to designated representatives for each kind of objection, with others being heard orally if, but only if, they had something different to say. The same procedure was utilized here.
36 ECF #12627 (emphasis added).
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On May 1, 2014, just before the upcoming May 2 conference, Edward Weisfelner,
Esq., a bankruptcy lawyer who would later become one of the Designated Counsel, wrote
the Court advising, inter alia, that his firm, along with two others, had been designated
by a majority of the Plaintiffs to meet with New GM to present Plaintiffs’ views at the
upcoming conference. Along with presenting substantive thoughts as to issues that
should be teed up for judicial determination and how they should be addressed,
Weisfelner stated that he and others had “worked to coordinate efforts in the spirit of
Your Honor’s April 22, 2014 scheduling order and case management orders in this
case.”37
The Court then held the first conference in this matter on that May 2 date,
focusing on its desire, to avoid the chaos that otherwise would result, to hear from many
affected parties in a coordinated way, with skilled bankruptcy litigators making the
arguments for Plaintiffs in the first instance, with others having the right to supplement
them. But while believing that the Plaintiffs’ lead arguments should be presented by a
small number of counsel with bankruptcy litigation expertise, the Court emphasized its
intent that any nonrepetitive points would still be heard:
I don’t want repetition, and that includes making the same point in different ways. I need to hear from anybody who thinks those three firms [three of the four who emerged as Designated Counsel] aren’t good enough [to say] why that’s so, or conversely why they’re not raising issues that need to be addressed. That’s not to say that anybody who thinks up anything those firms couldn’t can’t be heard, but I need to know why and what’s the problem.38
37 ECF #12677 at 3. 38 May 2, 2014 Conf. Tr. (No. 1:14-AP-1929, ECF #16), at 13:1-13:8 (emphasis added).
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By the end of the May 2, 2014 Conference, the Court scheduled a follow-up
conference for July 2, and issued a number of directives for matters to be accomplished
before that time, to be thereafter implemented in a written scheduling order. The Court
directed those who had been heard at the May 2, 2014 Conference to meet and confer and
thereafter present an agreed-on order to embody the matters on which the Court had
ruled, along with further details.
Those lawyers did so. But while the Court largely agreed with the proposed form
of order they had submitted, the Court added several paragraphs (shown by blackline) to
underscore its desire to ensure that other voices could be heard. One such paragraph
expressly confirmed the Court’s willingness to allow others to be heard, so long as they
did so in a nonrepetitive way. The resulting order (the “May 2014 Procedures Order”)
was ultimately entered on May 16, 2014. The paragraphs the Court added provided, in
relevant part:
[T]o the extent reasonably practicable, Designated Counsel shall consult and coordinate with other bankruptcy counsel who have filed a notice of appearance on behalf of any Plaintiff(s) in connection with the matters set forth in paragraphs 2, 3 and 6 above.
[N]othing in this Order is intended to or shall preclude any other Plaintiff’s counsel from taking a position in connection with any of the matters set forth in paragraphs 2, 3 and 6 above, PROVIDED that any other counsel who wishes to be heard orally with respect to such position at the Conference on July 2 shall submit and electronically file, no later than noon on July 1, a letter to the Court (with copies to all Identified Parties) summarizing the points he or she will wish to make; and PROVIDED FURTHER that any
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counsel who has failed to do so will not be heard orally at the July 2 Conference.39
By the time of the July 2 conference, there were 87 actions (about 83 of which
were class actions) pending against New GM, most of which were consolidated for
pretrial proceedings before Judge Furman in the MDL. According to a letter he sent to
the Court on July 9,40 Peller was retained by the first of his clients (Celestine and
Lawrence Elliott, who had initially filed a pro se complaint in the District of Columbia)
on June 17. Peller’s co-counsel Daniel Hornal was heard at length, on behalf of the
Elliotts, at the July 2 Conference,41 seeking relief from a No-Stay Stipulation the Elliotts
had entered before they had counsel.42
By email dated June 30, 2014, Peller’s co-counsel Hornal (copying Peller)
submitted the first of many emails, letters, motions, briefs, and other filings in this Court,
all of which (except for notices of appeal and motions for leave to appeal) were
considered by the Court. Peller personally submitted his first on July 3, 2014, cosigning
a letter with his co-counsel Hornal at that time.43 All in all, Peller and Hornal made more
than 20 substantive filings (not counting notices of appeal and motions for leave to
39 May 2014 Scheduling Order at 6 (emphasis added). The identified paragraphs were matters as to
which parties were to meet and confer, or otherwise accomplish specified tasks, in advance of the next conference on July 2. This order, like other Court directives that preceded and followed it, exemplifies the distinction between counsel’s ability to argue orally, on the one hand, and to file briefs and be heard by letter, on the other.
40 ECF #12763. 41 See July 2, 2014 Conf. Tr. (ECF #13001) at 7, 98-114. 42 The Court then learned that Hornal and Peller wanted to convert the Elliotts’ pro se complaint into
not just a more intelligible one but also a class action. See id. at 104. Hornal also admitted that “we are soliciting clients for other cases.” Id. at 107. The Court granted Hornal’s request for relief from the stipulation to permit the filing of an amended complaint to cure the Elliotts’ pro se deficiencies, but for them alone. The Elliott action was thereafter followed by the Sesay and Bledsoe actions, each a class action.
43 ECF #12761. Peller’s first solo submission was on July 9. See ECF ##12765, 12766.
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appeal),44 all of which, no matter how frivolous, were considered by the Court; seven of
which resulted in substantive45 orders of the Court;46 and three of which were addressed
in full written opinions (or parts of larger opinions) by the Court.47
44 ECF #12737 (Hornal 6/30/2014 email and Endorsed Order on it re Elliott Plaintiffs); ECF #12761
(7/3/2014 Ltr. from Peller and Hornal on behalf of Elliott Plaintiffs seeking reconsideration of rulings at 7/2/2014 hearing); ECF ##12765, 12766 (7/9/2014 Ltr. by Peller on behalf of Elliott Plaintiffs seeking vacatur or suspension of Court’s 7/8/2014 order); ECF #12769 (7/11/2014 Ltr. by Hornal on behalf of Elliott Plaintiffs to correct assertedly erroneous statements by New GM’s counsel); ECF #12772 (7/11/2014 No-Stay Pleading and Motion and Brief Seeking Dismissal signed by Hornal on behalf of Elliott Plaintiffs);
Also, ECF #12773 (7/12/2014 Declaration by Peller and other documents re Motion Seeking Dismissal on behalf of Elliott Plaintiffs); ECF #12774 (7/12/2014 Corrected No Stay Pleading and Motion and Brief Seeking Dismissal signed by Hornal on behalf of Elliott Plaintiffs); ECF #12775 (7/14/2014 Notice of Appeal on behalf of Elliott Plaintiffs signed by Hornal from orders of 6/30/2014, 7/8/2014, and 7/11/2014); ECF #12777 (7/18/2014 Notice signed by Hornal of 7/16/2014 order in District of Columbia with respect to the Elliott Plaintiffs); ECF #12778 (7/18/2014 Notice of Withdrawal of Appeal signed by Hornal on behalf of Elliott Plaintiffs);
Also, ECF #12783 (7/23/2014 Ltr. by Peller on behalf of Elliott Plaintiffs asking that his 7/12/2014 motion (ECF #12773) be treated as submitted and granted forthwith); ECF #12784 (7/23/2014 Exhs. to Peller 7/23/2014 Ltr., including 7/21/2014 Peller email, all on behalf of Elliott Plaintiffs); ECF #12787 (7/28/2014 Ltr. by Peller, on behalf of Elliott Plaintiffs, re subject matter jurisdiction points on their Motion to Dismiss); ECF #12788 (7/28/2014 Corrected Ltr. by Peller, on behalf of Elliott Plaintiffs, re subject matter jurisdiction points on their Motion to Dismiss); ECF #12821 (8/8/2014 Ltr. by Peller, on behalf of Sesay Plaintiffs, re subject matter jurisdiction points as to their planned motion to dismiss);
Also, ECF #12830 (8/12/2014 Ltr. by Peller, on behalf of Sesay Plaintiffs, re their pending motions); ECF #12822 (8/8/2014 Notice of Settlement, on behalf of Elliott Plaintiffs, re their counter-order); ECF #12828 (8/12/2014 Supplemental Notice of Settlement of Counter-Order filed by Peller on behalf of Elliott Plaintiffs); ECF #12839 (8/13/2014 Notice of Appeal filed by Peller on behalf of Elliott Plaintiffs); ECF #12870 (8/22/2014 Corrected No-Stay Pleading and Motion Seeking Dismissal and Abstention signed by Peller on behalf of Sesay Plaintiffs);
Also, ECF #12871 (8/25/2014 Motion and Brief Seeking Amendment of Judgment filed by Peller on behalf of Elliott Plaintiffs); ECF #12872 (8/25/2014 Motion and Brief Seeking Abstention filed by Peller on behalf of Elliott Plaintiffs); ECF #12883 (9/5/2014 Amended No-Stay Pleading, Motion and Brief Seeking Dismissal and Abstention filed by Peller on behalf of Sesay Plaintiffs); ECF #12948 (10/13/2014 Brief on No-Stay Pleading filed by Peller on behalf of Bledsoe Plaintiffs); ECF #13002 (11/21/2014 Renewed Notice of Appeal filed by Peller on behalf of Elliott Plaintiffs);
Also, ECF #13004 (11/24/2014 Notice of Appeal by Peller on behalf of Sesay Plaintiffs); ECF #13005 (11/24/2014 Motion for Leave to Appeal filed by Peller on behalf of Elliott Plaintiffs); and ECF #13007 (11/24/2014 Motion for Leave to Appeal filed by Peller on behalf of Sesay Plaintiffs).
45 Not counting, e.g., orders approving stipulations, granting extensions of time, and granting admission to the Court pro hac vice.
46 See ECF #12792 (re request to “grant forthwith” motion, on behalf of the Elliott Plaintiffs, to dismiss New GM Motion to Enforce for lack of subject matter jurisdiction); ECF #12834 (re Elliott Plaintiffs’ No-Stay Pleading); ECF #12835 (re various Sesay Plaintiffs’ requests); ECF
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Following the Court’s conference of July 2, 2014, it issued another scheduling
order (the “July 11 Order”),48 implementing the July 2 conference’s rulings. The
Court’s order was entered on July 11, 2014 (not on July 7, as Peller asserts49), but more
importantly the July 11 Order (which Peller does not quote) did not “restrict[]
participation in the proceedings to ‘counsel for the Identified Parties,’” as Peller likewise
asserts. In fact, while it is plain that the Court contemplated receiving briefs from most
or all of the Identified Parties (Designated Counsel, Flaxer, the GUC Trust, Unitholders,
and New GM), and set the dates by which each of their briefs were due, that is as far as it
went. As nobody had requested that the July 11 Order address the issue, it was wholly
silent on whether others could file briefs as well. It certainly did not prohibit Peller (or
anyone else) from doing so.
After a conference on August 18, 2014, dates for the submission of briefs on the
Motion to Enforce were pushed back, principally to take into account the Plaintiffs’ filing
of an amended complaint in the MDL.50 At that conference, after the most active players
had spoken (principally about the Threshold Issues to be decided, and when briefs should
be due), the Court asked those in the Courtroom, “[o]thers want to be heard?”51 One
attorney spoke up, but not on whether he or others could file briefs. After his issues were
#12836 (on Elliott Plaintiffs’ Supplemental Notice of Settlement); ECF #12991 (re Bledsoe Plaintiffs’ No-Stay Pleading); ECF #12993 (re Elliott Plaintiffs’ request for reargument); ECF #12995 (re Sesay Plaintiffs’ No-Stay Pleading).
47 See ECF #12815 (Elliott); #12989 (Sesay); #13162 (Form of Judgment Decision). The Court also issued a fourth decision on matters raised by Peller, denying, by Endorsed Order (“Bledsoe Endorsed Order”), similar arguments he made on behalf of the Bledsoe Plaintiffs, citing, inter alia, the Court’s earlier rulings in Elliott and Sesay. See ECF #12991.
48 See ECF #12770. 49 Bledsoe Br. at 6. 50 See Tr. of Hrg. of 8/18/2014, ECF #12899. 51 Id. at 73:25.
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addressed, the Court then asked, “[a]nything else?” This time, nobody spoke, on whether
others could file briefs or otherwise.52
On August 21, 2014, New GM counsel Arthur Steinberg wrote the Court,
advising that counsel for the Identified Parties had met and conferred on an appropriate
briefing schedule, and proposed specified modifications to the briefing schedule.53
Steinberg stated, inter alia, that:
As previously agreed, Designated Counsel, to the extent reasonably practicable, shall consult and coordinate with other counsel who have filed a notice of appearance on behalf of any Plaintiff(s) and solicit input and/or comments to Designated Counsel’s proposed response to the New GM Opening Brief and proposed response to the Unitholder/GUC Trust Opening Brief (including providing counsel drafts of Designated Counsel’s briefs no less than ten days prior their submission deadline as set forth above).
But neither Steinberg nor the others asked that the Court prohibit other counsel be from
filing briefs on their own, and the Court, which on August 22 issued an Endorsed Order
on Steinberg’s letter, simply saying “Approved,”54 never issued such a prohibition.
Under the revised schedule, briefs in opposition to the Motion to Enforce were
due on December 16, 2014, by which time Peller had made nearly two dozen filings on
behalf of each of his three client groups. Opposing briefs were filed on or before that
date by the GUC Trust and Unit Holders, Designated Counsel for the Ignition Switch
Plaintiffs, Designated Counsel for the Pre-Closing Accident Plaintiffs, and one additional
52 Id. at 90:22. 53 ECF #12867. 54 ECF #12869.
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counsel, Flaxer, for the Groman Plaintiffs.55 Peller did not submit a brief on the
Threshold Issues, on behalf of any of his client groups, timely or otherwise. Nor did he
ask the Court if he could.
On January 13, 2015, with oral argument on the Threshold Issues coming up, the
Court entered an “Administrative Order re Oral Argument and Related Matters” (the
“Oral Argument Administrative Order”).56 After requiring New GM, Designated
Counsel and GUC Trust counsel to confer and submit a joint recommendation to the
Court on a sequence for oral argument and time allocations for each constituency, the
Court’s order provided, inter alia:
Counsel other than New GM counsel, Designated Counsel and GUC Trust counsel are to consult with counsel for the entity most aligned with their interests to ascertain whether their oral argument needs can be satisfied by counsel for the most closely aligned entity. If, after such consultation, any other party wishes oral argument, the party will be heard orally only if (a) that party has filed a brief (other than an unqualified joinder) and (b) writes the Court, no later than noon on Tuesday, January 27, (i) requesting time for oral argument; (ii) stating the amount of time requested; and, most importantly, (iii) stating the reasons why argument by one of the most closely aligned counsel would be insufficient—it being remembered that the Court will have read all briefs.57
Only Flaxer (on behalf of the Groman Plaintiffs) made a request to be heard
orally. His request was granted. Peller had not filed a brief, and under the Oral
Argument Administrative Order, he thus was not entitled to ask for oral argument. But in
any event, he did not then ask to be heard orally either.
55 See ECF ##13021, 13025, 13028, 13030. 56 ECF #13044. 57 Oral Argument Administrative Order at ¶ 3.
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The fact that Peller ultimately decided not to file a brief, or request oral argument
in connection with the hearing on the Four Threshold Issues (on behalf of any of his
clients, the Elliott Plaintiffs, the Sesay Plaintiffs, or the Bledsoe Plaintiffs), was his
choice to make. But that does not mean that he was denied the chance to be heard.
In the Form of Judgment Decision, the Court considered Peller’s contention, on
behalf of his various clients, that they should not be bound by the Judgment. The Court
rejected it:
He [Peller] further argues, on behalf of the Peller Plaintiffs, that the Court's rulings in the Decision are not binding on them. The Court disagrees. The Peller Plaintiffs had more than ample opportunity to raise contentions Designated Counsel did not raise. And though Mr. Peller's filings were so numerous and frivolous that the Court warned him of the entry of a Martin–Trigona order, he still had the right under the Court's orders establishing the mechanisms for determination of the Motion to Enforce, to make any points others had not.58
For that matter, Peller even had the ability to make any points others had made, so
long as he did so in writing. But he chose to put his energy into a variety of frivolous
points, addressed in Elliott, Sesay, and the Bledsoe Endorsed Order,59 rather than the
Threshold Issues. Based on the Court’s now very extensive knowledge of the issues it
addressed in the Decision, the Court cannot see any points that one or another of
Designated Counsel, Flaxer, or the GUC Trust failed to make. But if Peller thought there
were such (, he could have raised them.
58 531 B.R. at 357. 59 See n.47 supra.
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(c) Asserted Voidness of the Sale Order
The third point (contending that the Court lacked the subject matter jurisdiction to
issue the Judgment enforcing the Sale Order; that the Court enforced the Sale Order
against the Bledsoe Plaintiffs in violation of their due process rights; and that the Bledsoe
Plaintiffs were denied the opportunity to participate on the threshold issues) merely
rehashes points Peller made before, in Elliott, Sesay, and here. It is rejected for the
reasons previously stated.
4. Motions for Reargument
Finally, in reliance on S.D.N.Y. Local Bankruptcy Rule 9023-1, Peller seeks
“reargument regarding whether the Bledsoe Plaintiffs may be bound by the [Sale Order]
consistent with the Due Process Clause, and an amendment of the Judgment to exempt
each of their independent, non-derivative claims from its reach.”60 He also contends that
the Court committed “manifest error” by not understanding the difference between in rem
and in personam jurisdiction. Reargument too is denied.
To be entitled to reargument, the moving party “must demonstrate that the court
overlooked controlling decisions or factual matters ‘that might materially have influenced
its earlier decision.’”61 “The rule permitting reargument must be narrowly construed to
avoid repetitive arguments on issues that the court has already fully considered.”62
The first half of the first contention—that the Bledsoe Plaintiffs could not be
bound by the Sale Order—was extensively addressed in the Decision. Peller has brought
60 Bledsoe Motion at 2. 61 In re Stylesite Marketing, Inc., 2001 WL 13212, at *1 (Bankr. S.D.N.Y. 2001) (Bernstein, C.J.)
(quoting Anglo–American Ins. Group, P.L.C. v. Calfed, Inc., 940 F. Supp. 554, 557 (S.D.N.Y. 1996)).
62 Id.
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forward no points that the Court then overlooked. The second half of the first
contention—that the Court needs “to exempt each of [the Bledsoe Plaintiffs’]
independent, non-derivative claims from [the Judgment’s reach]” has been addressed
above.63 The Bledsoe Plaintiffs’ Independent Claims, like all other Plaintiffs’, already
are exempt from a continuing bar under the Judgment—to the extent they genuinely are
Independent Claims. But a motion for reargument is not the means to test whether they
are.
Finally, Peller’s perception that the Court fails to understand the difference
between in rem and in personam jurisdiction, aside from being incorrect in its premise, is
of no moment. He devotes a full 10 pages of his brief to discussion of the distinction
between in rem and in personam claims. But the reason for that lengthy discussion is
unclear. If it is to argue that successor liability claims can still be asserted,
notwithstanding the Court’s extensive analysis and conclusions to the contrary,64 that is
not a matter the Court overlooked; it is a matter for appeal. If, as seems to be the case, it
is to suggest that genuinely Independent Claims can still be asserted, he already has won
on that, so long as he limits his future claims to genuinely Independent Claims. Here too,
there is no basis for reargument or reconsideration.
The Court will not lengthen this decision further by specifically addressing more
of Peller’s remarks in these motions. The Court has canvassed the submission in its
entirety and satisfied itself that no material points other than those it has specifically
addressed were raised and have any merit.
63 See, e.g., page 7 above. 64 See Decision, 529 B.R. at 566-68.
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The motions are denied.
SO ORDERED.
Dated: New York, New York s/Robert E. Gerber July 22, 2015 United States Bankruptcy Judge
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Exhibit B
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------------------------x
In re
MOTORS LIQUIDATION COMPANY, et al.,
Debtors.
::::::::
Ch. 11 Case No. 09-50026 (REG) (Jointly Administered)
---------------------------------------------------------
IGNITION SWITCH PLAINTIFFS And CERTAIN NON-IGNITION SWITCH PLAINTIFFS,
Plaintiffs,
-versus-
GENERAL MOTORS LLC,
Defendant.
:x::::::::::::
Case No. 15-cv-05056 (JMF)
----------------------------------------------------------x
MEMORANDUM OF LAW BY WILMINGTON TRUST COMPANY, AS GUC TRUST ADMINISTRATOR AND TRUSTEE, AND THE PARTICIPATING UNITHOLDERS IN
OPPOSITION TO MOTION TO WITHDRAW THE REFERENCE WITH RESPECT TO THE NON-IGNITION SWITCH PLAINTIFFS’ GUC TRUST ASSET PLEADING
GIBSON, DUNN & CRUTCHER LLP AKIN GUMP STRAUSS HAUER & FELD MATTHEW J. WILLIAMS LLP LISA H. RUBIN DANIEL H. GOLDEN KEITH R. MARTORANA DEBORAH J. NEWMAN 200 Park Avenue NAOMI MOSS New York, NY 10166-0193 One Bryant Park Telephone: 212.351.4000 New York, NY 10036 Facsimile: 212.351.4035 Telephone: 212.872.1000 Facsimile: 212.872.1002 Attorneys for Motors Liquidation Company Attorneys for the Participating Unitholders GUC Trust Administrator
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i
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT ................................................................................................... 1
BACKGROUND ........................................................................................................................... 3
A. The 363 Sale and Motions to Enforce .................................................................... 3
B. The Multidistrict Litigation Pending Against New GM ........................................ 4
C. The Threshold Issues Decision .............................................................................. 5
D. The Form of Judgment Decision ............................................................................ 6
E. The Bankruptcy Court’s Judgment with Respect to the April 15 Decision ........... 7
F. Designated Counsel’s Current Pleadings ............................................................... 8
ARGUMENT………….. ............................................................................................................... 9
A. Plaintiffs’ Withdrawal Motion as it Applies to the Reservation of Rights is Not Ripe for Adjudication ............................................................................................ 9
B. Mandatory Withdrawal of the Reference Is Not Required .................................. 10
C. Permissive Withdrawal of the Reference Is Inappropriate .................................. 12
1. Legal Standard ......................................................................................... 12
2. The Adjudication of the Reservation of Rights Is a Core Matter, and the Bankruptcy Court Has Authority to Adjudicate It. .................................. 13
3. Plaintiffs Are Forum Shopping. ............................................................... 15
4. Denying Withdrawal of the Reference Will Promote Judicial Efficiency and Will Reduce Delay and Costs. .......................................................... 16
5. The Claims at Issue Are Equitable. .......................................................... 17
CONCLUSION ............................................................................................................................ 18
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INDEX OF EXHIBITS
Exhibit Description
A
OMNIBUS RESPONSE OF WILMINGTON TRUST COMPANY, AS GUC TRUST ADMINISTRATOR AND TRUSTEE, AND THE PARTICIPATING UNITHOLDERS TO (A) THE NON-IGNITION SWITCH PLAINTIFFS’ GUC TRUST ASSET PLEADING AND (B) CERTAIN NON-IGNITION SWITCH PRE-CLOSING ACCIDENT PLAINTIFFS’ AMENDED RESERVATION OF RIGHTS, filed on August 7, 2015 in Case No. 09-50026 (Bankr. S.D.N.Y.) [Bankr. Dkt. No. 13351].
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TABLE OF AUTHORITIES
Page(s)
Cases
Baker v. Simpson, 613 F.3d 346 (2d Cir. 2010) ..................................................................................................... 14
In re Burger Boys, Inc., 94 F.3d 755 (2d Cir. 1996) ....................................................................................................... 13
In re Charter Commcn’s, No. 09-11435, 2010 WL 502764 (Bankr. S.D.N.Y. Feb. 8, 2010) .......................................... 14
In re Chateaugay Corp., 104 B.R. 622 (S.D.N.Y. 1989) ................................................................................................... 9
In re Chateaugay Corp., 193 B.R. 669 (S.D.N.Y. 1996) ................................................................................................. 12
In re Connie's Trading Corp., No. 14-cv-376 (LAK) (GWG), 2014 WL 1813751 (S.D.N.Y. May 8, 2014) .......................... 10
In re Enron Corp., 318 B.R. 273 (S.D.N.Y. 2004) ................................................................................................. 10
In re Extended Stay, Inc., 466 B.R. 188 (S.D.N.Y. 2011) ................................................................................................. 11
In re Ionosphere Clubs, Inc., 922 F.2d 984 (2d Cir. 1990) ..................................................................................................... 10
In re Lehman Bros. Holdings Inc., No. 11–cv–6194 (DAB), 2015 WL 3778512 (S.D.N.Y. June 15, 2015) ................................. 12
In re Motors Liquidation Co., 529 B.R. 510 (Bankr. S.D.N.Y. 2015).......................................................................... 1, 5, 6, 20
In re Motors Liquidation Co., 531 B.R. 354 (Bankr. S.D.N.Y. 2015) ....................................... 6, 7
In re Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures), 4 F.3d 1095 (2d Cir. 1993) ....................................................................................................... 13
In re Quebecor World (USA), 12-cv-6614(JMF), 2012 WL 5289919 (S.D.N.Y. Oct. 26, 2012) ............................................ 13
In re Residential Capital, LLC, 519 B.R. 593 (S.D.N.Y. 2014) ..................................................................................... 13, 16, 17
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iv
In re Sheldrake Lofts LLC, 14-cv-4274(NSR), 2014 WL 6450340 (Bankr. S.D.N.Y. Nov. 15, 2014) ............................... 18
In re Willis Roof Consulting, Inc., No. 10-CV-01682-GMN-VCF, 2012 WL 3011985 (D. Nev. July 23, 2012) ............................ 9
Lehman Brothers Holdings Inc. v. Intel Corp. (In re Lehman Bros. Holdings Inc.), 18 F. Supp. 3d 553 (S.D.N.Y. May 10, 2014) .......................................................................... 12
Schneider v. Riddick (In re Formica Corp.), 305 B.R. 147 (S.D.N.Y. 2004) ................................................................................................. 16
Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) ................................................................................................................. 14
Wechsler v. Squadron, Ellenoff, Plesent, & Sheinfeld LLP, 201 B.R. 635 (S.D.N.Y. 1996) ................................................................................................. 15
Weisfelner v. Blavatnik (In re Lyondell Chem. Co.), 467 B.R. 712 (S.D.N.Y. 2012) ................................................................................................. 15
Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015) .............................................................................................................. 14
Statutes
28 U.S.C. § 157 ............................................................................................................. 3, 10, 12, 14
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1
Wilmington Trust Company, not in its individual capacity and solely in its capacity as
trust administrator and trustee (the “GUC Trust Administrator”) of the Motors Liquidation
Company GUC Trust (the “GUC Trust”), as established under the Debtors’ Second Amended
Joint Chapter 11 Plan dated as of March 18, 2011 [Bankr. Case No. 09-50026, Dkt. No. 9836]
(as confirmed, the “Plan”)1 of the above-captioned post-effective date debtors, and certain
holders of beneficial units of the GUC Trust (the “Participating Unitholders”) submit this
Memorandum of Law in opposition to the motion of Designated Counsel (the “Withdrawal
Motion”) seeking withdrawal of the reference with regard to the Non-Ignition Switch Plaintiffs’
(as defined below) GUC Trust Asset Pleading.2 In support of the foregoing, the GUC Trust
Administrator and the Participating Unitholders respectfully represent as follows:
PRELIMINARY STATEMENT
More than four years have passed since the confirmation of Old GM’s Plan. Since that
time the GUC Trust has distributed approximately 92% of its assets to creditors of the Old GM
bankruptcy estate and the holders of GUC Trust Units (the “Unitholders”). As recognized by
the Bankruptcy Court in its April 15 Decision, such Unitholders made investment decisions in
reliance on the procedures established under the Plan and based on their understanding that new
claims against the Old GM estate “could only go down.” In re Motors Liquidation Co., 529 B.R.
510, 587 (Bankr. S.D.N.Y. 2015). In so finding, the Bankruptcy Court held that under the
1 Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Plan, the Decision
on Motion to Enforce Sale Order issued on April 15, 2015, published as In re Motors Liquidation Co., 529 B.R. 510 (Bankr. S.D.N.Y. 2015) (the “April 15 Decision”), or the June 1, 2015 Judgment [Bankr. Case No. 09-50026, Dkt. No. 13177] (the “Judgment”), as applicable.
2 While the Withdrawal Motion was filed on an omnibus basis and also applies to the Ignition Switch Plaintiffs’
No Strike Pleading with regard to the Second Amended Consolidated Complaint and the Non-Ignition Switch Plaintiffs’ Objection Pleading with regard to the Second Amended Consolidated Complaint, the GUC Trust Administrator and Participating Unitholders herein respond only to the portion of the Withdrawal Motion addressing the Non-Ignition Switch Plaintiffs’ GUC Trust Asset Pleading and take no position with respect to the remaining aspects of the Withdrawal Motion.
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doctrine of equitable mootness any previously unfiled claims relating to the Ignition Switch
Defect could not be satisfied with the assets of the GUC Trust (the “Equitable Mootness
Holding”). While the April 15 Decision was not directly applicable to the claims of the Non-
Ignition Switch Plaintiffs, in an attempt to balance the Non-Ignition Switch Plaintiffs’ rights to
be heard with the interests of the GUC Trust and its Unitholders in finality and closure, the
Bankruptcy Court afforded the Non-Ignition Switch Plaintiffs a limited time (17 business days)
to file a pleading (a “GUC Trust Asset Pleading”) setting forth a good faith basis as to why the
Equitable Mootness Holding should not apply to their claims.
Disregarding the express terms of the Bankruptcy Court’s directive, the Non-Ignition
Switch Plaintiffs’ purported “GUC Trust Asset Pleading” constitutes a mere reservation of rights
(the “Reservation of Rights”), asserting solely that adjudication of the applicability of the April
15 Decision to the Non-Ignition Switch Plaintiffs is premature and should be deferred.3 The
Non-Ignition Switch Plaintiffs made no attempt to distinguish their claims from those of the
Ignition Switch Plaintiffs as required by the Bankruptcy Court.4
3 This Reservation of Rights was set forth in two pages as part of Designated Counsel’s Omnibus Judgment
Pleading (defined below) dated June 24, 2015 [Bankr. Case No. 09-50026, Dkt. No. 13247]. Contemporaneously herewith, the GUC Trust Administrator and the Participating Unitholders filed a response to the Reservation of Rights with the Bankruptcy Court, which response addresses the procedural and substantive deficiencies of the Non-Ignition Switch Plaintiffs’ filing in greater detail. A copy of that response is attached hereto as Exhibit A.
4 Nor could they. As set forth in the response to the Reservation of Rights filed by the GUC Trust Administrator
and Participating Unitholders, the rationale underlying the Bankruptcy Court’s Equitable Mootness Holding applies in equal measure to both the Ignition Switch Plaintiffs and the Non-Ignition Switch Plaintiffs. Specifically in reaching the Equitable Mootness Holding, the Bankruptcy Court found it could not grant effective relief for the Ignition Switch Plaintiffs from GUC Trust assets that had been reserved for existing GUC Trust beneficiaries or costs and expenses under the Plan and Confirmation Order; that permitting the Ignition Switch Plaintiffs to access the GUC Trust’s assets “would be extraordinarily unjust for the purchasers of GUC Trust Units after confirmation” who understood that claims against the GUC Trust “could only go down”; and that the Ignition Switch Plaintiffs, having failed to seek to file claims against the GUC Trust or to stay its distributions, had not diligently pursued claims against the GUC Trust. Each of these factors applies with equal force against the Non-Ignition Switch Plaintiffs, who seek to preserve indefinitely their right to access GUC Trust assets that rightfully belong to GUC Trust beneficiaries; who have failed, even to this day, to seek to file claims against the GUC Trust; and who joined the Ignition Switch Plaintiffs in their strategic decision not to seek a stay of the GUC Trust’s distribution of assets in November 2014.
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In light of the foregoing, the Non-Ignition Switch Plaintiffs’ request that the reference be
withdrawn with respect to their Reservation of Rights is simply nonsensical. A reservation of
rights is, by definition, not a ripe case or controversy. In essence, the Non-Ignition Switch
Plaintiffs are seeking to reserve their preferred venue now, in advance of any litigation, in the
event that they someday seek to move forward with claims against the GUC Trust. Preemptive
venue fights are not contemplated by 28 U.S.C. § 157, and case law is clear that they should not
be permitted.
Moreover, even if the Non-Ignition Switch Plaintiffs had filed a proper GUC Trust Asset
Pleading, the Withdrawal Motion would nevertheless fail to satisfy the governing standards for
mandatory and permissive withdrawal of the reference. Mandatory withdrawal is not required
because the issues raised by Designated Counsel against the GUC Trust do not necessitate
substantial interpretation of federal non-bankruptcy law. Permissive withdrawal is inappropriate
because adjudication of a GUC Trust Asset Pleading (had one properly been filed) is undeniably
within the Bankruptcy Court’s core jurisdiction, and Designated Counsel have failed to meet
their burden of showing “cause” for such withdrawal. To the contrary, it is clear that the
Withdrawal Motion is a transparent effort to forum shop.
For these reasons and the reasons set forth below, this Court should deny Designated
Counsel’s request for withdrawal of the reference with respect to the Reservation of Rights.
BACKGROUND
A. The 363 Sale and Motions to Enforce
In July 2009, Motors Liquidation Company, formerly known as General Motors
Corporation (“Old GM”), as a Chapter 11 debtor, sold substantially all of its assets to General
Motors LLC (“New GM”) in a sale pursuant to section 363 of the Bankruptcy Code (the “363
Sale”), pursuant to an Amended and Restated Master Sale and Purchase Agreement (the “Sale
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Agreement”). The Bankruptcy Court approved the 363 Sale in an order and injunction (the
“Sale Order and Injunction”) dated July 5, 2009. See Sale Order and Injunction, Dkt. No. 7-1,
Case No. 15-cv-05056 (Jul. 23, 2015). Pursuant to New GM’s agreement to perform Old GM’s
recall responsibilities under federal law (see Sale Agreement ¶ 6.15(a)), beginning in February
2014, New GM began to recall certain vehicles, many of which were manufactured by Old GM.
Immediately after the first recalls were announced, plaintiffs throughout the country began filing
lawsuits against New GM asserting various personal injury and economic loss claims.
Following the commencement of the post-recall lawsuits, New GM filed three motions
with the Bankruptcy Court seeking to enforce the provisions of the Sale Order and Injunction
and bar the suits from proceeding. The first motion (the “Ignition Switch Motion to Enforce”)
was filed in April 2014 in response to lawsuits (the “Ignition Switch Actions”) asserting
economic loss claims against New GM relating to defective ignition switches (the “Ignition
Switch Defect”) in certain vehicles. In 2014, New GM also announced other recalls unrelated to
the alleged Ignition Switch Defect, with respect to vehicles manufactured and sold by Old GM,
and lawsuits were commenced against New GM based on these other recalls. On August 1,
2014, New GM filed two additional motions seeking to enforce the Sale Order with respect to
complaints filed by plaintiffs asserting economic losses (the “Non-Ignition Switch Plaintiffs”)
or personal injuries relating to defects other than the Ignition Switch Defect (collectively with the
Ignition Switch Motion to Enforce, the “Motions to Enforce”).
B. The Multidistrict Litigation Pending Against New GM
An MDL proceeding, captioned In re General Motors LLC Ignition Switch Litig., Case
No. 14-md-2543 (JMF), is currently pending in this Court. A substantial number of the cases in
the MDL are subject to the Motions to Enforce. In this proceeding, this Court has held certain
matters in abeyance pending a final resolution in the Bankruptcy Court of the issues raised in the
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Motions to Enforce. In 2014, Lead Counsel in the MDL filed two consolidated complaints: (i)
one filed against New GM by plaintiffs who purchased Old GM vehicles prior to the closing of
the 363 Sale (the “Pre-Sale Consolidated Complaint”), and (ii) one filed against New GM by
plaintiffs who purchased either Old GM vehicles or New GM vehicles after the closing of the
363 Sale (the “Post-Sale Consolidated Complaint”). Following the Bankruptcy Court’s April
15 Decision and Judgment, on June 12, 2015, Lead Counsel filed a single amended complaint
(the “Second Amended Consolidated Complaint”), which partially combines the Pre-Sale
Consolidated Complaint and the Post-Sale Consolidated Complaint, asserting claims on behalf of
plaintiffs who, inter alia, bought Old GM vehicles both prior to and after the 363 Sale. See Pl.
Mem. at 10 (“On June 12, 2015, Lead Counsel filed the [Second Amended Consolidated
Complaint], amending and superseding the Pre-Sale and Post-Sale Complaints on behalf of the
same group of plaintiffs and a virtually identical list of proposed class representatives.”).
C. The Threshold Issues Decision
In connection with the Motions to Enforce, the parties and the Bankruptcy Court agreed
to address four threshold issues (the “Threshold Issues”), which included the question: “If any
or all of the claims asserted in the Ignition Switch Actions are or could be claims against the Old
GM bankruptcy estate (and/or the GUC Trust), should such claims or the actions asserting such
claims nevertheless be disallowed/dismissed on grounds of equitable mootness” (the “Equitable
Mootness Threshold Issue”).” April 15 Decision, 529 B.R. at 540. After briefing and
argument, the Bankruptcy Court issued its April 15 Decision.
In analyzing the Equitable Mootness Threshold Issue, the Bankruptcy Court applied the
five-factor analysis established by the Second Circuit in In re Chateaugay Corp. April 15
Decision, 529 B.R. at 584-86. Under that standard, the Bankruptcy Court concluded that the
Ignition Switch Plaintiffs’ claims against the GUC Trust were equitably moot (the “Equitable
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Mootness Holding”) because, inter alia, the Plan has been substantially consummated and (1)
fashioning effective relief would require the modification or revocation of the Confirmation
Order, and was thus impossible under applicable Second Circuit law; (2) allowing Ignition
Switch Plaintiffs to access GUC Trust assets through late-filed proofs of claim would
impermissibly “knock the props out of” intricate transactions in GUC Trust Units; and (3)
Ignition Switch Plaintiffs’ strategic decision not to seek a stay of GUC Trust distributions
constituted a failure to diligently pursue claims against the GUC Trust. Id. at 585-93. Because
granting relief to the Ignition Switch Plaintiffs “would require . . . the modification of the
confirmation order—and with it, impairment of the rights of the Unitholders,” the Bankruptcy
Court concluded that the Second Circuit mootness standard required that the “GUC Trust
Unitholders . . . be protected from a modification of the Plan.” Id. (emphasis in original).
D. The Form of Judgment Decision
The parties to the Motions to Enforce were unable to agree on a form of a proposed
judgment in connection with the April 15 Decision and submitted letter briefs respecting such
judgment to the Bankruptcy Court. Designated Counsel’s proposed form of judgment contained
a provision that Non-Ignition Switch Plaintiffs would be bound by the April 15 Decision and the
proposed judgment, subject to the filing of a pleading challenging such applicability in the
Bankruptcy Court, whereupon the Bankruptcy Court would rule on the issue. By seeking relief
in the District Court in the first instance, the Withdrawal Motion contradicts the procedures
proposed in Designated Counsel’s own proposed form of judgment.
On May 27, 2015, the Bankruptcy Court entered its Decision re Form of Judgment (the
“Judgment Decision”), published as In re Motors Liquidation Co., 531 B.R. 354 (Bankr.
S.D.N.Y. 2015). With respect to equitable mootness, the Bankruptcy Court explained that the
guiding standard for the Judgment should be “the reasonable expectations of GUC Trust and
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acquirors of GUC Trust Units under the Plan,” and reaffirmed that the Judgment would “not
allow GUC Trust assets to be tapped for claims not previously filed.” Id. at 360-61. Although
the Bankruptcy Court recognized that the April 15 Decision did not have res judicata effect with
respect to the Non-Ignition Switch Plaintiffs, it further held that the April 15 Decision, including
the Equitable Mootness Holding, would be stare decisis with respect to Non-Ignition Switch
Plaintiffs, subject only to such a plaintiff’s satisfactory showing that the April 15 Decision
should not apply to them because of a factual distinction with respect to that plaintiff’s claims.
Id. at 360.
In setting a deadline for the Non-Ignition Switch Plaintiffs to make the required showing,
the Bankruptcy Court sought to balance the Non-Ignition Switch Plaintiffs’ need to be heard with
the interest of the GUC Trust and Unitholders in finality:
The [Bankruptcy] Court agrees with New GM, the GUC Trust and the Unitholders that it is time to come to closure on whether there is any basis to excuse the Non–Ignition Switch Plaintiffs from the provisions of the Sale Order and the [Bankruptcy] Court’s mootness conclusions. And fairness to the MDL Court requires that this [Bankruptcy] Court timely provide the MDL Court with any rulings that the MDL Court may require. The [Bankruptcy] Court’s Judgment balances the Non–Ignition Switch Plaintiffs’ need for opportunity now to be heard with others’ needs for expeditious closure on these additional claims.
Judgment Decision, 531 B.R. at 360. E. The Bankruptcy Court’s Judgment with Respect to the April 15 Decision
On June 1, 2015, the Bankruptcy Court issued the Judgment, implementing its rulings in
the April 15 Decision and the Judgment Decision. The Judgment specifically addresses
procedures to be followed by the Ignition Switch Plaintiffs and the Non-Ignition Switch
Plaintiffs. Among other things, the Judgment provides:
(i) [B]ased on the doctrine of equitable mootness, in no event shall assets of the GUC Trust held at any time in the past, now, or in the future (collectively, the “GUC Trust Assets”) (as defined in the Plan) be used to satisfy any claims of the Plaintiffs, nor will Old GM’s Plan be modified with respect to such claims . . . . [Judgment ¶ 6.]
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(ii) To the extent an issue shall arise in the future as to whether . . . the doctrine of equitable mootness bars the use of any GUC Trust Assets to satisfy late-filed claims of the [Non-Ignition Switch Plaintiffs] . . . the [Non-Ignition Switch Plaintiffs] shall be required to first seek resolution of such issues from this [Bankruptcy] Court before proceeding any further against New GM and/or the GUC Trust. [Judgment ¶ 13(a).]
(iii) If counsel for a [Non-Ignition Switch Plaintiff] believes that, notwithstanding the Decision and this Judgment, it has a good faith basis to believe that any of the GUC Trust Assets may be used to satisfy late proofs of claim filed by them that may ultimately be allowed by the Bankruptcy Court, it shall file a pleading with this [Bankruptcy] Court within 17 business days of this Judgment (“GUC Trust Asset Pleading”). The GUC Trust Asset Pleading shall not reargue issues that were already decided by the Decision and Judgment. If a GUC Trust Asset Pleading is timely filed, the GUC Trust, the GUC Trust Unitholders and/or New GM shall have 17 business days to respond to such pleading. [Judgment ¶ 13(d).]
With respect to all of the pleadings permitted under the Judgment, potential movants
were directed not to reargue issues already decided by the April 15 Decision, the Judgment, or
any other decision or order of the Bankruptcy Court. See, e.g., id. ¶ 10(c). The Ignition Switch
Plaintiffs and the Non-Ignition Switch Plaintiffs were stayed from further action in their lawsuits
except for the pleadings expressly permitted under the Judgment (or the ability to amend a
complaint).
F. Designated Counsel’s Current Pleadings
On June 24, 2015, Designated Counsel simultaneously filed The Ignition Switch
Plaintiffs’ No Strike Pleading with Regard to the Second Amended Consolidated Complaint; and
the Non-Ignition Switch Plaintiffs’ (I) Objection Pleading With Regard to the Second Amended
Complaint and (II) GUC Trust Asset Pleading (the “Omnibus Judgment Pleading”) and the
Withdrawal Motion. Through the Withdrawal Motion and Omnibus Judgment Pleading,
Designated Counsel request entry of an order finding, inter alia, that “the Non-Ignition Switch
Plaintiffs’ rights are reserved to, at a future date, file and seek allowance of late claims, seek a
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recovery on such claims from the assets of the GUC Trust . . . and litigate issues . . . identified in
paragraph 13(a) of the Judgment.” Omnibus Judgment Pleading ¶ 51.
ARGUMENT
A. Plaintiffs’ Withdrawal Motion as it Applies to the Reservation of Rights is Not Ripe for Adjudication
With respect to the relief sought by Designated Counsel against the GUC Trust, there is
no proceeding, motion, or controversy for which the Court may withdraw the reference. Insofar
as Designated Counsel’s Omnibus Judgment Pleading relates to the GUC Trust, it seeks only a
“reservation of rights” on an issue that is either moot as a result of Designated Counsel’s failure
to comply with the Judgment’s procedures or is not ripe for adjudication. See Omnibus
Judgment Pleading at ¶ 51 (requesting entry of an order finding that “the Non-Ignition Switch
Plaintiffs’ rights are reserved to, at a future date, file and seek allowance of late claims, seek a
recovery on such claims from the assets of the GUC Trust . . . and litigate issues . . . identified in
paragraph 13(a) of the Judgment.”).
Designated Counsel’s attempt to simply “reserve” rights—while failing to assert any—
demonstrates that, at this juncture, there is no proceeding for which the reference may be
withdrawn. Where a party seeking withdrawal of the reference raises a mere speculative
objection to a potential future circumstance, the motion should be denied. In re Willis Roof
Consulting, Inc., No. 10-CV-01682-GMN-VCF, 2012 WL 3011985, at *2 (D. Nev. July 23,
2012) (where plaintiffs moved to withdraw the reference with respect to their claim, but the
bankruptcy trustee had not yet filed an objection thereto, district court held that plaintiffs’
concern was “only a speculative objection that does not require the Court to withdraw the
reference at this time.”); see also In re Chateaugay Corp., 104 B.R. 622, 625-26 (S.D.N.Y.
1989) (creditor’s motion to withdraw the reference was premature where its claim had not been
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objected to by any party); In re Enron Corp., 318 B.R. 273, 275-76 (S.D.N.Y. 2004) (denying
motion to withdraw the reference where bankruptcy court had not yet been asked to determine
whether matter was core or non-core); In re Connie's Trading Corp., No. 14-cv-376 (LAK)
(GWG), 2014 WL 1813751, at *10 (S.D.N.Y. May 8, 2014) (“Given this concern for judicial
efficiency, courts in this District generally deny withdrawal motions where a case is not yet
ready for trial.”). Indeed, Designated Counsel cite no authority—and the GUC Trust
Administrator and Participating Unitholders are aware of none—in which a court withdrew the
reference for the purpose of simply entering an order reserving the movant’s rights.
Accordingly, this Court should reject Designated Counsel’s attempt to sidestep or override the
clear deadlines provided in the Judgment and decline to withdraw the reference.
B. Mandatory Withdrawal of the Reference Is Not Required
Pursuant to 28 U.S.C. § 157(d), a “district court shall, on timely motion of a party, so
withdraw a proceeding if the court determines that resolution of the proceeding requires
consideration of both title 11 and other laws of the United States regulating organizations or
activities affecting interstate commerce.” District courts must withdraw a reference when
“substantial and material consideration of non-Bankruptcy Code federal statutes is necessary for
the resolution of the proceeding.” In re Ionosphere Clubs, Inc., 922 F.2d 984, 995 (2d Cir. 1990)
(internal quotation marks omitted). The mandatory withdrawal provision “has been construed
narrowly,” and “is not available merely whenever non-Bankruptcy Code federal statutes will be
considered in the Bankruptcy Court proceeding, but is reserved for cases where substantial and
material consideration of non-Bankruptcy Code federal statutes is necessary for the resolution of
the proceeding.” Id. (citation omitted). Such substantial and material consideration occurs
“when a determination of issues requires ‘significant interpretation of federal laws that
[C]ongress would have intended to have decided by a district judge rather than a bankruptcy
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judge . . . .’” Withdrawal of the reference is mandated where “issues arising under non-title 11
laws dominate[ ] those arising under title 11 . . . .” In re Extended Stay, Inc., 466 B.R. 188, 196
(S.D.N.Y. 2011) (citation omitted).
Here, “substantial and material consideration” of non-bankruptcy federal law is not
necessary to resolve Designated Counsel’s reservation of rights regarding a GUC Trust Asset
Pleading. To the contrary, resolution of a GUC Trust Asset Pleading (had one properly been
filed) would simply require the interpretation of the April 15 Decision and Judgment and
application of any purported distinguishing facts—an analysis for which the Bankruptcy Court
that authored the April 15 Decision and Judgment is most optimally suited. The Bankruptcy
Court’s Equitable Mootness Holding was an exercise of that court’s power and does not
implicate non-bankruptcy federal law.
Indeed, the Non-Ignition Switch Plaintiffs do not even attempt to argue that mandatory
withdrawal is required with respect to the Reservation of Rights. Rather, Designated Counsel
focus their arguments on the necessary interpretation of the Magnuson-Moss Warrant Act and
the RICO Act—federal statutes that purportedly apply to the No Strike Pleading and the
Objection Pleading due to an asserted “overlap” of issues presented by those pleadings and the
Second Amended and Consolidated Complaint—statutes that are not implicated by the
Reservation of Rights.
Designated Counsel also cite potential due process concerns as a basis for withdrawal,
but again, cites these concerns as a basis for mandatory withdrawal of the Objection Pleading,
not the Reservation of Rights. Even if a proper GUC Trust Asset Pleading had been filed, any
claimed constitutional due process concerns would not have mandated withdrawal, as the
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allegation of a due process violation does not compel mandatory withdrawal of the reference. As
the district court held in In re Chateaugay Corp.:
Whether LTV complied with due process in providing notice to its creditors of the bar date set by the Bankruptcy Court is a procedural issue well within the competence of the Bankruptcy Court. Even if, as movants suggest, the notice issue rises above statutory interpretation to the level of a constitutional claim, the Bankruptcy Court is equipped to decide it. A bankruptcy court is just as bound by the Constitution as any Article III court, and is well situated to decide whether the notice provided to implement its own bar date complied with established rules of due process. Allowing bankruptcy courts to decide these issues in no way diminishes the authority conferred by Article III of the Constitution, because a district court may review that decision de novo. The statute contemplates mandatory withdrawal not when the Bankruptcy Court is called upon to make a routine interpretation of its own notice requirements, or whether that notice complies with the Constitution, but when it is called upon to interpret a federal statute with which it has little familiarity. Moreover, the particular constitutional issue here is one that could almost always be raised by a party seeking withdrawal of the reference. Holding that that issue mandates withdrawal would defeat Congress's purpose when it created the bankruptcy courts, and would transform § 157(d) into an escape hatch through which numerous cases would fall.
193 B.R. 669, 674-75 (S.D.N.Y. 1996).
Accordingly, mandatory withdrawal of the reference with respect to the Non-Ignition
Switch Plaintiffs’ Reservation of Rights is not required.
C. Permissive Withdrawal of the Reference Is Inappropriate
1. Legal Standard
A party seeking to withdraw the reference bears the burden of demonstrating that
permissive withdrawal is warranted. In re Lehman Bros. Holdings Inc., No. 11–cv–6194 (DAB),
2015 WL 3778512, at *8 (S.D.N.Y. June 15, 2015); Lehman Brothers Holdings Inc. v. Intel
Corp. (In re Lehman Bros. Holdings Inc.), 18 F. Supp. 3d 553, 557 (S.D.N.Y. May 10, 2014).
Designated Counsel have failed to satisfy this burden.
A “district court may withdraw, in whole or in part, any case or proceeding referred [to
the bankruptcy court] under this section, on its own motion or on timely motion of any party, for
cause shown.” 28 U.S.C. § 157(d). While “cause” is not defined in the statute, the Second
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Circuit has set forth various factors to review when deciding whether the reference should be
withdrawn. “These factors include (1) whether the claim or proceeding is core or non-core; (2)
whether the claim or proceeding is legal or equitable; and (3) considerations of efficiency,
prevention of forum shopping, and uniformity in the administration of bankruptcy law.” In re
Quebecor World (USA), 12-cv-6614(JMF), 2012 WL 5289919, at *2 (S.D.N.Y. Oct. 26, 2012)
(citing In re Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures), 4 F.3d
1095, 1101 (2d Cir. 1993)); see also In re Burger Boys, Inc., 94 F.3d 755, 762 (2d Cir. 1996)
(“[I]n deciding whether to withdraw an issue from the bankruptcy court, the district court should
weigh several factors, of which the first is the most important: (1) whether the claim is core or
non-core, (2) what is the most efficient use of judicial resources, (3) what is the delay and what
are the costs to the parties, (4) what will promote uniformity of bankruptcy administration, (5)
what will prevent forum shopping, and (6) other related factors.”).
2. The Adjudication of the Reservation of Rights Is a Core Matter, and the Bankruptcy Court Has Authority to Adjudicate It.
The Second Circuit in In re Orion called for a non-dispositive “threshold” determination
of whether the proceedings for which withdrawal of the reference is sought are “core” or “non-
core.” 4 F.3d at 1101; see also Burger Boys, 94 F.3d at 762 (whether the claim is core or non-
core is the most important factor). Since Stern v. Marshall was decided, district courts
addressing this “threshold” factor have also considered whether the bankruptcy court has the
constitutional authority to enter a final judgment with respect to the proceedings at issue. See,
e.g., In re Residential Capital, LLC, 519 B.R. 593, 598 (S.D.N.Y. 2014).
The adjudication of the Reservation of Rights is undeniably within the Bankruptcy
Court’s core jurisdiction. Included on the statutory list of core matters are “other proceedings
affecting the liquidation of assets of the estate or the adjustment of the debtor-creditor . . .
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relationship . . . .” 28 U.S.C. § 157(b)(2). The sole purpose of the Reservation of Rights is to
permit the Non-Ignition Switch Plaintiffs to reserve their rights to one day seek to access estate
assets. Accordingly, adjudication of the Reservation of Rights falls squarely within subsection
(b)(2) of 28 U.S.C. § 157.
Nor does the adjudication of the Reservation of Rights implicate any Stern v. Marshall
concerns regarding the Bankruptcy Court’s authority to enter a final judgment on the matter. A
“Bankruptcy Court plainly ha[s] jurisdiction to interpret and enforce its own prior orders.”
Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009); see also Baker v. Simpson, 613 F.3d
346, 352 (2d Cir. 2010) (“[A] bankruptcy court retains post-confirmation jurisdiction to interpret
and enforce its own orders.” (citation omitted)); In re Charter Commcn’s, No. 09-11435, 2010
WL 502764, at *4 (Bankr. S.D.N.Y. Feb. 8, 2010) (“This Court unquestionably has the authority
and discretion to rule on the Enforcement Motion . . . . All courts retain the jurisdiction to
interpret and enforce their own orders.”). The issue raised in the Reservation of Rights—
whether the April 15 Decision and Judgment preclude the Non-Ignition Switch Plaintiffs from
seeking to access estate assets through the filing and allowance of late claims—is a paradigmatic
bankruptcy matter that, unlike the state law claims at issue in Stern and its progeny, does not
implicate Article III considerations. Further, throughout the pendency of this bankruptcy case,
Designated Counsel have repeatedly consented to the exclusive jurisdiction of the Bankruptcy
Court. Cf. Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1947 (2015) (holding that any
right to an Article III decision-maker recognized in Stern v. Marshall may be waived where the
objecting party has consented to bankruptcy court adjudication). At no point—including in the
instant Withdrawal Motion and Omnibus Judgment Pleading—have Designated Counsel argued
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that the Bankruptcy Court lacks the authority to enter a final order with respect to a GUC Trust
Asset Pleading.
Recognizing that the resolution of the Reservation of Rights is indeed a core matter,
Designated Counsel attempt to bootstrap a permissive withdrawal grant by citing Weisfelner v.
Blavatnik (In re Lyondell Chem. Co.), 467 B.R. 712, 724 (S.D.N.Y. 2012) for the proposition
that where non-core issues predominate, the withdrawal of core issues may be appropriate.
Reliance on Lyondell is misguided, however, as the core and non-core issues to be adjudicated in
that case all related to one defendant. Here, there are no non-core issues to be adjudicated with
respect to the GUC Trust. Designated Counsel cannot manufacture the result they desire by
arbitrarily grouping core issues that relate to the GUC Trust with non-core issues that relate to
New GM. Such gerrymandering is not what is contemplated by Lyondell.5
3. Plaintiffs Are Forum Shopping.
Designated Counsel’s abrupt about-face from their earlier position of consenting to the
exclusive jurisdiction of the Bankruptcy Court also raises significant forum-shopping concerns.
Their first attempt to transfer these proceedings to the District Court follows the Bankruptcy
Court’s Decision and Judgment, which, inter alia, precluded recovery from the GUC Trust
Assets on equitable mootness grounds. Cf. Wechsler v. Squadron, Ellenoff, Plesent, & Sheinfeld
LLP, 201 B.R. 635, 641 (S.D.N.Y. 1996) (“The Court also finds that it is in the interest of the
prevention of forum shopping that this case be litigated by the District Court. It is more than
coincidental that this action was filed in the Bankruptcy Court shortly after this Court's Report &
5 Moreover, as Judge Cote recognized in Lyondell, even in circumstances where a bankruptcy court lacks the
authority to enter final judgment as to a subset of claims, withdrawal of the reference is nonetheless unwarranted where the bankruptcy court has acquired extensive experience in the matter. 467 B.R. at 724.
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Recommendation that the Noteholder plaintiffs’ suit . . . be dismissed.”).6 Designated Counsel’s
desire to litigate issues relating to the GUC Trust Assets in front of a court other than the one that
recently ruled against them is a litigation tactic that should not be condoned. See Schneider v.
Riddick (In re Formica Corp.), 305 B.R. 147, 151 (S.D.N.Y. 2004) (“[C]ourts should employ
withdrawal judiciously in order to prevent it from becoming just another litigation tactic for
parties eager to find a way out of bankruptcy court.” (citation and internal quotations omitted)).
Accordingly, the forum shopping factor weighs heavily against withdrawal of the reference.
4. Denying Withdrawal of the Reference Will Promote Judicial Efficiency and Will Reduce Delay and Costs.
As this Court has previously recognized in the context of the Sale Order and Injunction,
“Judge Gerber is in a better position to interpret his prior orders and figure out what is and isn’t
subject to those orders and [] it will just cause undue complications to withdraw the reference as
to some subset of claims or proceedings.” Aug. 11, 2014 MDL 2543 Hr’g Tr. at 6, 22-23. This
continues to be the case. Judge Gerber is deeply versed in this case and, as the author of the
April 15 Decision and Judgment, is best-positioned to resolve issues relating to the scope of their
applicability according to the procedures that he himself laid out in the Judgment. See, e.g., In re
Residential Capital, 519 B.R. at 603 (“This Court concludes that the matter should remain in
bankruptcy court primarily because of [the bankruptcy judge’s] expertise and extensive
familiarity with . . . this complex bankruptcy case, which commenced in 2012.”). Because it
would remove these proceedings from the court that has long presided over them and is most
familiar with them, withdrawal of the reference would disserve judicial economy.
6 Designated Counsel’s reference to Judge Gerber’s recall status coupled with their disregard for the terms of the
Judgment governing GUC Trust Asset Pleadings are also indicative of forum shopping. There are no grounds to believe that Judge Gerber’s recall status will hinder or delay the adjudication of the relevant proceeding in any way. Further, Designated Counsel’s purported concern that “it is unclear how much longer [Judge Gerber] will be available to preside over the proceedings in the Bankruptcy Court” is undermined by the delays that they have created through their failure to comply with the deadlines established in the Judgment and proceed before Judge Gerber in the first instance.
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By contrast, this Court does not share the Bankruptcy Court’s close familiarity with the
facts, circumstances and prior proceedings relevant to the Reservation of Rights (having not been
directly subject to the lengthy briefing, numerous status conferences and hearings related
specifically to the Threshold Issues), and is thus not as well-positioned as the Bankruptcy Court
to rule on the Reservation of Rights. Withdrawing the reference with respect to the Reservation
of Rights under these circumstances would only increase the already substantial delays caused by
the Non-Ignition Switch Plaintiffs’ failure to comply with the express terms of the Judgment, and
will increase attendant legal costs and expenses.
Designated Counsel claim that judicial economy supports its request because the
Omnibus Judgment Pleading shares common issues of fact and law with the concurrent
proceedings before this Court with respect to the Second Amended and Consolidated Complaint.
But there are not, and cannot ever be, common issues of law and fact between the subject matter
of the Reservation of Rights and that of the Second Amended and Consolidated Complaint.
Pursuant to the Judgment, the Second Amended and Consolidated Complaint may only address
independent conduct of New GM following the Sale. By contrast, claims against the Old GM
bankruptcy estate (the claims the Non-Ignition Switch Plaintiffs seek to preserve in their
Reservation of Rights) can only relate to pre-Sale conduct of Old GM. By definition, the issues
of fact and law presented by any GUC Trust Asset Pleading and the Second Amended and
Consolidated Complaint cannot overlap, and thus any argument that efficiencies will be realized
by permitting this Court to adjudicate the Reservation of Rights are without merit.
5. The Claims at Issue Are Equitable.
It is beyond dispute that a determination of equitable mootness is a prudential doctrine
based on courts’ equitable authority. See April 15 Decision, 529 B.R. at 584-85. There are thus
no concerns relating to the potential loss of a jury right in this case. See, e.g., In re Residential
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Capital, 519 B.R. at 605 (factor does not weigh in favor of or against withdrawal of the reference
where jury rights are not at issue); In re Sheldrake Lofts LLC, 14-cv-4274(NSR), 2014 WL
6450340, at *2 (Bankr. S.D.N.Y. Nov. 15, 2014) (same). This factor therefore does not support
withdrawal of the reference.
CONCLUSION
Designated Counsel’s disregard of the procedures set forth in the Judgment
should not be condoned—nor should their unprecedented attempt to withdraw the reference as to
a reservation of rights. Because resolution of the Reservation of Rights will not require
substantial reference to non-bankruptcy federal law, there is no basis for mandatory withdrawal
of the reference. Further, each of the applicable factors weighs against discretionary withdrawal
of the reference. For the foregoing reasons, the GUC Trust Administrator and the Participating
Unitholders respectfully request that the Court deny Designated Counsel’s request to withdraw
the reference with respect to the Reservation of Rights.
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Dated: New York, New York August 7, 2015 GIBSON, DUNN & CRUTCHER LLP
By: /s/ Lisa H. Rubin Matthew J. Williams Lisa H. Rubin Keith R. Martorana
200 Park Avenue New York, NY 10166-0193 Telephone: 212.351.4000 Facsimile: 212.351.4035
Attorneys for the Motors Liquidation Company GUC Trust Administrator AKIN GUMP STRAUSS HAUER & FELD LLP By: /s/ Daniel H. Golden Daniel H. Golden Deborah J. Newman Naomi Moss One Bryant Park New York, New York 10036 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 Attorneys for the Participating Unitholders
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EXHIBIT A
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1
GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, NY 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 Matthew J. Williams Lisa H. Rubin Keith R. Martorana
Attorneys for the Motors Liquidation Company GUC Trust Administrator AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 Daniel H. Golden Deborah J. Newman Naomi Moss Attorneys for the Participating Unitholders UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------------x In re MOTORS LIQUIDATION COMPANY, et al., f/k/a General Motors Corp., et al.
Debtors.
::::::::
Chapter 11 Case No. 09-50026 (REG) (Jointly Administered)
------------------------------------------------------------------x
OMNIBUS RESPONSE OF WILMINGTON TRUST COMPANY, AS GUC TRUST ADMINISTRATOR AND TRUSTEE, AND THE PARTICIPATING UNITHOLDERS
TO (A) THE NON-IGNITION SWITCH PLAINTIFFS’ GUC TRUST ASSET PLEADING AND (B) CERTAIN NON-IGNITION SWITCH PRE-CLOSING
ACCIDENT PLAINTIFFS’ AMENDED RESERVATION OF RIGHTS
Wilmington Trust Company, not in its individual capacity and solely in its capacity as
trust administrator and trustee (the “GUC Trust Administrator”) of the Motors Liquidation
Company GUC Trust (the “GUC Trust”), and certain holders of beneficial units of the GUC
Trust (the “Participating Unitholders”) hereby file this joint omnibus response to (a) the
Non-Ignition Switch Plaintiffs’ GUC Trust Asset Pleading [Docket No. 13247] (the “Non-
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Ignition Switch Economic Loss Plaintiffs’ Pleading”),1 and (b) the Amended Reservation of
Rights of Certain Non-ISD Pre-Closing Accident Plaintiffs [Docket No. 13254] (the “Non-
Ignition Switch Personal Injury Plaintiffs’ Pleading”), and respectfully represent as
follows:
BACKGROUND
1. In April 2014, General Motors Company (“New GM”) filed the first of a
series of three motions (the “Ignition Switch Motion to Enforce”) seeking to enforce the
terms of this Court’s order dated July 7, 2009 approving the sale of substantially all of the
assets of General Motors Corporation (“Old GM”) to New GM (the “Sale Order”). The
Ignition Switch Motion to Enforce sought to enjoin the numerous complaints (the “Ignition
Switch Actions”) that had been filed by certain plaintiffs (the “Ignition Switch Plaintiffs”)
against New GM throughout the United States relating to economic losses suffered as a result
of defects in the ignition switches (the “Ignition Switch Defect”) contained in certain cars
manufactured by Old GM.
2. In August 2014, New GM filed two additional motions seeking to enforce the
Sale Order, this time with respect to complaints filed by plaintiffs asserting economic losses
(the “Non-Ignition Switch Economic Loss Plaintiffs”) or personal injuries (the “Non-
Ignition Switch Personal Injury Plaintiffs,” and collectively with the Non-Ignition Switch
Economic Loss Plaintiffs, the “Non-Ignition Switch Plaintiffs”) related to defects in cars
manufactured by Old GM other than the Ignition Switch Defect (collectively with the
Ignition Switch Motion to Enforce, the “Motions to Enforce”).
3. In connection with the Motions to Enforce, the parties and the Court agreed to
address four threshold issues (the “Threshold Issues”), which included the following
1 The Non-Ignition Switch Economic Loss Plaintiffs’ Pleading is combined, on an omnibus basis, with the Ignition Switch Plaintiffs’ No Strike Pleading, and the Non-Ignition Switch Economic Loss Plaintiffs’ Objection Pleading (each as defined in the Judgment, as defined below). The GUC Trust Administrator and Participating Unitholders take no position with respect to the No Strike Pleading or the Objection Pleading.
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question: “if any or all of the claims asserted in the Ignition Switch Actions are or could be
claims against the Old GM bankruptcy estate (and/or the GUC Trust), should such claims or
the actions asserting such claims nevertheless be disallowed/dismissed on grounds of
equitable mootness” (the “Equitable Mootness Threshold Issue”). See Supplemental
Scheduling Order [Docket No. 12770].
4. Following briefing and oral argument on the Threshold Issues, on April 15,
2015 the Court rendered its Decision on Motion to Enforce Sale Order and Injunction
[Docket No. 13109] (the “Threshold Issues Decision”), published as In re Motors
Liquidation Co., 529 B.R. 510 (Bankr. S.D.N.Y. 2015). With respect to the Equitable
Mootness Threshold Issue, the Court found that even if the Ignition Switch Plaintiffs’
hypothetical late-filed claims were to be allowed, permitting them to access assets of the
GUC Trust would constitute an impermissible modification of the confirmation order. See
Threshold Issues Decision at 15-16. Accordingly, the Court held that the Ignition Switch
Plaintiffs could file and seek allowance of their late claims, if any, but that the doctrine of
equitable mootness barred them from obtaining any recovery on such claims from the assets
of the GUC Trust (the “Equitable Mootness Holding”). Id.
5. On May 27, 2015 the Court rendered its Decision re Form of Judgment
[Docket No. 13162] (the “Judgment Decision”), published as In re Motors Liquidation Co.,
531 B.R. 354 (Bankr. S.D.N.Y. 2015).
6. In its Judgment Decision, the Court recognized that, because the evidentiary
record was not sufficiently developed, the Threshold Issues Decision did not have res
judicata effect with respect to the Non-Ignition Switch Plaintiffs. Id. at 360. However, the
Court also held that the Threshold Issues Decision, including the Equitable Mootness
Holding, would be stare decisis, subject only to a Non-Ignition Switch Plaintiff’s satisfactory
showing that the Threshold Issues Decision is distinguishable on a factual basis with respect
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to its claims. Id.
7. The Court did not provide the Non-Ignition Switch Plaintiffs with unlimited
time to make the required showing. Instead, the Court balanced the needs of the Non-
Ignition Switch Plaintiffs to be heard, with the needs of the GUC Trust and Unitholders for
closure, holding the following:
The Court agrees with New GM, the GUC Trust and the Unitholders that it is time to come to closure on whether there is any basis to excuse the Non-Ignition Switch Plaintiffs from the provisions of the Sale Order and the Court’s mootness conclusions. And fairness to the MDL Court requires that this Court timely provide the MDL Court with any rulings that the MDL Court may require. The Court’s Judgment balances the Non-Ignition Switch Plaintiffs’ need for an opportunity now to be heard with others’ needs for expeditious closure on these additional claims.
Id. at 360 (emphasis added).
8. The Non-Ignition Switch Plaintiffs did not appeal the Judgment Decision.
9. On June 1, 2015, the Court entered its Judgment implementing the terms of
the Threshold Issues Decision and the Judgment Decision [Docket No. 13177] (the
“Judgment”). Pursuant to paragraph 13(d) of the Judgment:
If counsel for a [Non-Ignition Switch Plaintiff] believes that, notwithstanding the [Threshold Issues] Decision and this Judgment, it has a good faith basis to believe that any of the GUC Trust Assets may be used to satisfy late proofs of claim filed by them that may ultimately be allowed by the Bankruptcy Court, it shall file a pleading with this Court within 17 business days of this Judgment (“GUC Trust Asset Pleading”). The GUC Trust Asset Pleading shall not reargue issues that were already decided by the Decision and Judgment. If a GUC Trust Asset Pleading is timely filed, the GUC Trust, the GUC Trust Unitholders and/or New GM shall have 17 business days to respond to such pleading. The Court will schedule a hearing thereon if it believes one is necessary.
Judgment ¶ 13(d).
10. On June 24, 2015, the Non-Ignition Switch Economic Loss Plaintiffs filed
their Non-Ignition Switch Economic Loss Plaintiffs’ Pleading, and the Non-Ignition Switch
Personal Injury Plaintiffs filed their Non-Ignition Switch Personal Injury Plaintiffs’ Pleading.
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The parties subsequently agreed that responses to the Non-Ignition Switch Economic Loss
Plaintiffs’ Pleading and the Non-Ignition Switch Personal Injury Plaintiffs’ Pleading would
be filed no later than August 7, 2015.2
RESPONSE3
11. Neither of the pleadings filed by the Non-Ignition Switch Plaintiffs complies
with this Court’s Judgment. Accordingly, the Court should find that the Equitable Mootness
Holding of the Threshold Issues Judgment applies to the Non-Ignition Switch Plaintiffs.
12. First, while styled as a “GUC Trust Asset Pleading,” the Non-Ignition Switch
Economic Loss Plaintiffs’ Pleading fails to assert any basis, let alone a “good faith basis,” as
to why the Equitable Mootness Holding should not apply to their claims as required by the
Judgment. See Judgment ¶ 13(d). Nor could they assert such a basis. The rationale
underlying the Court’s Equitable Mootness Holding applies in equal measure to both the
Ignition Switch Plaintiffs and Non-Ignition Switch Plaintiffs. Specifically, in reaching the
Equitable Mootness Holding, the Court found that it could not grant effective relief for the
Ignition Switch Plaintiffs from GUC Trust assets that had been reserved for existing GUC
Trust beneficiaries or costs and expenses under the Plan and Confirmation Order; that
permitting the Ignition Switch Plaintiffs to access the GUC Trust’s assets “would be
extraordinarily unjust for the purchasers of GUC Trust Units after confirmation” who
understood that claims against the GUC Trust “could only go down”; and that the Ignition
Switch Plaintiffs, having failed to seek to file claims against the GUC Trust or to stay its
distributions, had not diligently pursued claims against the GUC Trust. Each of these factors
2 See Stipulation and Agreed Order Tolling Certain of the Ignition Switch Plaintiffs’ No Strike Pleading With Regard to the Second Amended Consolidated Complaint and the Non-Ignition Switch Plaintiffs’ (i) Objection Pleading With Regard to the Second Amended Consolidated Complaint and (ii) GUC Trust Asset Pleading and the Amended Reservation of Rights of Certain Non-ISD Pre-Closing Accident Plaintiffs, so ordered by this Court on July 28, 2015 [Docket No. 13325].
3 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Threshold Issues Decision.
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applies with equal force against the Non-Ignition Switch Plaintiffs, who seek to preserve
indefinitely their right to access GUC Trust assets that rightfully belong to GUC Trust
beneficiaries; who have failed, even to this day, to seek to file claims against the GUC Trust;
and who joined the Ignition Switch Plaintiffs in their strategic decision not to seek a stay of
the GUC Trust’s distribution of assets in November 2014.
13. Instead of demonstrating a basis as to why the Equitable Mootness Holding
should not apply to them, the Non-Ignition Switch Economic Loss Plaintiffs assert only that
it is premature and/or inappropriate to impose the Equitable Mootness Holding on the Non-
Ignition Switch Economic Loss Plaintiffs because they are not parties to the appeal of the
Threshold Issues Decision. See Non-Ignition Switch Economic Loss Plaintiffs’ Pleading ¶
105. This rationale is circular; the entire purpose of the GUC Trust Asset Pleading is to
immediately determine whether the Equitable Mootness Holding should apply to such
plaintiffs, and if so, to permit them to participate in the related appeals.
14. The Non-Ignition Switch Personal Injury Plaintiffs, by comparison, did not
even attempt to characterize their pleading as a “GUC Trust Asset Pleading,” and instead
filed a reservation of rights bereft of any “good faith basis” for distinguishing their claims, or
explanation as to how their reservation of rights comports with the plain language of the
Judgment and the Judgment Decision.
15. It is beyond dispute that paragraph 13(d) of the Judgment was intended to
balance the needs of the Non-Ignition Switch Plaintiffs to have their day in court—and
attempt to distinguish their factual record from that of the Ignition Switch Plaintiffs—with
the needs of the GUC Trust and Unitholders for closure. Yet it is clear from the face of the
pleadings filed by the Non-Ignition Switch Plaintiffs that, while they disagree with this
Court’s Equitable Mootness Holding, there is no reasoned, good-faith basis to distinguish
their purported claims from those of the Ignition Switch Plaintiffs. If distinguishing facts
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exist, the Non-Ignition Switch Plaintiffs have either failed to meet their burden of
establishing such facts or have waived their right to do so. Respectfully, the Court should
find that the Equitable Mootness Holding applies with equal force to the Non-Ignition Switch
Plaintiffs.
CONCLUSION
WHEREFORE, the GUC Trust Administrator and Participating Unitholders
respectfully request that the Court (A) enter an order providing that the Equitable Mootness
Holding applies to the Non-Ignition Switch Plaintiffs and (B) grant such other and further
relief as may be deemed just and proper.
Dated: New York, New York August 7, 2015
GIBSON, DUNN & CRUTCHER LLP
By: /s/ Matthew J. Williams
Matthew J. Williams Lisa H. Rubin Keith R. Martorana 200 Park Avenue New York, NY 10166-0193 (212) 351-4000 Attorneys for the Motors Liquidation Company GUC Trust Administrator
AKIN, GUMP, STRAUSS, HAUER & FELD LLP
By: /s/ Daniel G. Golden
Daniel H. Golden Deborah J. Newman Naomi Moss One Bryant Park New York, NY 10036 (212) 872-1000 Attorneys for the Participating Unitholders
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