# Petition for Writ of Certiorari — Employers Insurance v. Celotex Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_0644%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1993 - **Citation:** 510 U.S. 915 ## Text Suprema Court, WS e~> . ‘. ” i AUG 10 1993 3 a = } IN THE Supreme Court of the United States OcToBEerR TERM, 1993 EMPLOYERS INSURANCE-OF WAUSAU, Petitioner, v. THE CELOTEX CORPORATION, Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT PETITION FOR WRIT OF CERTIORARI RONALD J. COHEN" Dan J. SCHULMAN EILEEN MURPHY SEWARD & KISSEL One Battery Park Plaza New York, New York 10004 (212) 574-1200 Attorneys for Petitioner Employers Insurance of Wausau * Counsel of Record QUESTION PRESENTED Whether a writ of mandamus should be issued by this Court to correct the errors of the court of appeals in dismissing an appeal from the district court and refusing to issue a writ of mandamus requiring the district court to exercise its jurisdiction to review the merits of a bankruptcy court’s order remanding an action to state court, where such errors denied Wausau review by an Article III court of a decision by an Article I tribunal denying Wausau access to the federal courts and controlling the Article III court’s jurisdiction, contrary to the United States Constitution, the Judiciary Code and this Court’s decision in Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) ("Marathon")? (i) LIST OF PARTIES AND RULE 29.1 LISTING The names of all parties appear in the caption of the case. Petitioner Employers Insurance of Wausau, A Mutual Company, named herein as Employers Insurance of Wausau, has no parent corporation. Employers Insurance of Wausau is affiliated with Nationwide Insurance Group and all of Petitioner’s subsidiaries are wholly owned. (ii) TABLE OF CONTENTS Page I Us ceccensnisnnentnnccanaanenenanas (i) LIST OF PARTIES AND RULE 29.1 LISTING....... (ii) DE OE BT ERE I osccssncscccsesassnssssssossosseeses (vii) I iscsi cupsnamasiossnesecenstnebesmesaninoeen 2 EEE er 2 CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED................cccccccseseeceeeee 2 STATEMENT OF THE CASE.................cccccccccsceseeeess 3 REASONS FOR GRANTING THE WRIT................ 6 THE COURT OF APPEALS’ DECISION CONFLICTS WITH THE CONSTITUTION AND DECISIONS OF THIS COURT.................. 7 By Refusing to Review the District Court Order, the Eleventh Circuit Ignored the Constitution and Decisions of This Court Establishing That a Litigant’s Right to an Adjudication by an Article Ii Court Is Not Satisfied by an Unreviewed Decision of an Article I Tribunal Lacking Federal ria sakcniaachninhgmntnsiibeanmseane 7 (uli) Mandamus Should Issue to Prevent Nullification of the Removal Statutes by an Unreviewed Decision of a Non-Article III] Court Remanding a Case Within the Federal Jurisdiction to (iv) APPENDICES APPENDIX A Court of Appeals Order: Jn re The Celotex Corporation, et al. {Employers Insurance of Wausau v. The Celotex Corporation), Nos. 92- 2125 and 92-2971 (11th Cir. 1993) (dismissing APPENDIX B Court of Appeals Order: Jn re Employers Insurance of Wausau, No. 92-2658 (11th Cir. 1993) (denying mandamus petition).....................0- 2a APPENDIX C District Court Order: In re The Celotex Corporation, et al. (The Celotex Corporation, et al. vy. Employers Insurance of Wausau), Case No. 91-1849-CIV-T-10(C) (M.D. Fla. Jan. 9, 1992) (treating notice of appeal as motion for leave to appeal and denying leave to appeal)........... 3a APPENDIX D Bankruptcy Court Order: Jn re The Celotex Corporation, et al. (The Celotex Corporation v. The Aetna Casualty & Surety Co., et al.), Adversary No. 91-0611 (Bankr. M.D. Fla. Nov. 27, 1991) (granting remand to state court)............... 6a APPENDIX E Court of Appeals Order: The Celotex Corporation, et al. (Employers Insurance of Wausau v. The (v) Celotex Corporation), Nos. 92-2125 and 92-2971 (11th Cir. 1993) (denying rehearing of appeals)...... 9a APPENDIX F Court of Appeals Order: Jn re Employers Insurance of Wausau, No. 92-2658 (11th Cir. 1993) (denying rehearing of mandamus petition)..... lla APPENDIX G District Court Order: In re The Celotex Corporation, et al. (The Celotex Corporation, et al. v. Employers Insurance of Wausau), No. 91-1849 CIV-T-10(C) (M.D. Fla. Aug. 25, 1992) (denying reconsideratiOn)..............seceseseersserseeenenes 12a APPENDIX H y FIR Ci BL Sepeeeeennrnpnveen creme 15a 2B UB... © BABB i seresvsseseiscicasiceninscnssecctnstnsasnenasbenmensn 17a (vi) TABLE OF AUTHORITIES Statutes rts CIE, OUR, BB, 0, Bi siis cccscesscvnssone is Ge US OS eee Bh Ce eelee EOE ets ccscecécesecinwedscteses Be TE ch ceitibcanh eociicseddeiciebicaecs Be a Oe i stieitekcctsthncsniccabecessetinias pee Soe ee | nee Be i Pe iikcncainccosensicnnnasnnsesons Fe ay Oe i tinietchiscks cncssaueccnmasunans Fe en Ue ME cciiedeiithahaienaeiencecnnnnetes Cases Crowell v. Benson, 285 U.S. 22 (1932)........ In re Goerg, 930 F.2d 1563 (11th Cir. Granfinanciera, S.A. v. Nordberg, 492 U.S. ee I iicabtiassnalkisnabiceecstctsincilacaniaseanasses Hernandez v. Brakegate, Ltd., 942 F.2d Rr AP BIE Pacebencicatascctivnnsesesseeses Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982).......... Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Ri Me aiedetariiasd epicclsesialannhbeatsincassotbeicgnaenas In re Parklane/Atlanta Joint Venture, 927 Fle Dao CE AUG, DDL) ..ccccssenscessecsee Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976)...... (vil) N WON WOWND W — © IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1993 No. EMPLOYERS INSURANCE OF WAUSAU, Petitioner, -against- THE CELOTEX CORPORATION, Respondent. Petition for Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit PETITION FOR WRIT OF CERTIORARI Employers Insurance of Wausau ("Wausau") petitions for writ of certiorari to the United States Court of Appeals for the Eleventh Circuit. OPINIONS BELOW The orders of the court of appeals dismissing Wausau's appeal and denying its petition for a writ of mandamus are reprinted in the appendix hereto at (la-2a). The Eleventh Circuit’s orders denying petitioner’s petition for rehearing and suggestion for rehearing en banc (9a-11a), and the opinions of the district court that gave rise to the appeals and the petition for a writ of mandamus (3a-5a, 12a-14a) and the opinion of the bankruptcy court (6a-8a) are also reprinted in the appendix. JURISDICTION This Court’s jurisdiction is invoked pursuant to 28 U.S.C. §§ 1254(1) and 1651. The orders of the court of appeals were entered on March 5, 1993. The Eleventh Circuit denied Wausau’s timely petition for rehearing on May 12, 1993. CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The issues presented by this petition generally implicate Articles I and II of the Constitution of the United States, relating to the constitutional basis for, and the powers of, the bankruptcy courts, including the following specific provisions: U.S. Const. art. TT, § 1 The judicial Power of the United States, shall be vested in one Supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office. U.S. Const. art. I, § 8, cl. 4 The Congress shall have Power ...To establish... uniform Laws on the subject of Bankruptcies throughout the United States. The question presented also implicates 28 U.S.C. §§ 158 and 1452, relating to appeals from the bankruptcy court to the district court and the removal from other courts of pending claims related to bankruptcy cases, respectively, which statutes are reproduced in the appendix at 15a-17a. STATEMENT OF THE CASE A. Proceedings in the Bankruptcy Court On October 12, 1990, The Celotex Corporation and Carey Canada, Inc. ("Debtors") filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101-1330. On Debtors’ motion, the bankruptcy court entered an order, dated October 17, 1990 (the “October 17th Order"), that all litigation of any kind involving Debtors, including litigation initiated by Debtors, be stayed. The purpose of the October 17th Order was to centralize the various nationwide litigations affecting Debtors in the bankruptcy court. Consistent with the goal of centralizing all disputes, Debtors filed an omnibus insurance coverage adversary proceeding (the "Omnibus Proceeding") in the bankruptcy court in January 1991, against Wausau and forty other insurance companies seeking an adjudication of all the disputes between Debtors and their insurance carriers, including disputes with Wausau which were then pending in two state court actions in the Circuit Court of Hillsborough County, Florida (the "Hillsborough Actions") but had been stayed under the October 17th Order. Notwithstanding their longstanding pesition that the Omnibus Proceeding in the bankruptcy court is the only appropriate forum for resolution of all Debtors’ insurance disputes, on August 27, 1991, Debtors sought to modify the October 17th Order to allow further proceedings against Wausau alone before the state judge in the Hillsborough Actions. On September 19, 1991, Wausau removed the two Hillsborough Actions to the federal district court as claims related to Debtors’ bankruptcy cases pursuant to 28 U.S.C. § 1452(a). On October 4, 1991, Debtors moved the bankruptcy court for an order remanding the Hillsborough Actions to state court. Wausau opposed this motion on the ground, inter alia, that the bankruptcy court, as an Article I legislative court, lacked jurisdiction to enter a final order denying Wausau its access to federal jurisdiction and, at best, could make recommendations to the district court. On November 27, 1991, the bankruptcy court signed final orders remanding the Hillsborough Actions to the Florida state court (the "Remand Orders") and modifying the October 17th Order to allow the Hillsborough Actions to proceed to the entry of an order against Wausau of partial summary judgment (the "Lift Stay Order"). B. The District Court Appeal On December 4, 1991, Wausau filed its notices of appeal of the Remand Orders and of the Lift Stay Order. On December 19, 1991, the clerk of the bankruptcy court transmitted the record for the three appeals to the district court. Wausau’s motions for consolidatior. of the appeals and for stay pending appeal were filed in the district court on December 27, 1991. On January 9, 1992, the district court sua sponte,and \ without any notice to or briefing from the parties, entered an order which erroneously viewed one of the Remand Orders appealed from as interlocutory, treated the notice of appeal as a motion for leave to appeal and dismissed the appeal (the "District Court Order ").! C. The Eleventh Circuit Appeal and Mandamus Petition By notice of appeal dated February 10, 1992, Wausau appealed the District Court Order to the Eleventh Circuit (Case No. 92-2125). This appeal subsequently was consolidated with Wausau’s appeal from the August 27, 1992 Order denying reconsideration of the District Court Order (Case No. 92-2971) and Wausau’s Petition for Writ of Mandamus, dated July 2, 1992 (Case No. 92-2658) (the 1. On January 15, 1992, Wausau filed a motion for relief from the District Court Order, asked the district court to exercise its jurisdiction to correct the error of the clerk below denominating the appeal as interlocutory and sought a determination that the bankruptcy court order appealed from is final, or in the alternative, for leave to appeal. By Order entered August 27, 1992 (the "August 27, 1992 Order"), District Judge Hodges (i) denied Wausau’s motion for relief or reconsideration of the January 9, 1992 District Court Order and (ii) denied Wausau’s motion for determination that the bankruptcy court order appealed from is a final order and for leave to appeal. In the interim, on February 19, 1992, the state court judge entered certain rulings in the remanded litigation. “Mandamus Petition"). Oral argument of the consolidated appeals took place on January 28, 1993. Wausau did not seek to have the Eleventh Circuit reverse the bankruptcy court’s decision on the merits. Rather, Wausau only sought that the court of appeals direct the district court, as an Article III court, to review on a complete record the bankruptcy court’s decision remanding the Hillsborough Actions to state court. D. Disposition of the Appeals and the Mandamus Petition The Eleventh Circuit dismissed the consolidated appeals of Wausau in a two sentence order, dated March 5, 1993, stating without any analysis that the District Court Order was not reviewable.” By separate order on the same day, Wausau’s Mandamus Petition was denied. Wausau timely filed its petition for rehearing and suggestion of rehearing en banc, which was denied on May 12, 1993. Wausau hereby makes this petition for writ of certiorari in light of the important constitutional issues implicated by these decisions. REASONS FOR GRANTING THE WRIT The court of appeals’ summary dismissal of the consolidated appeals and Mandamus Petition denied Wausau its right to review by an Article III court of the bankruptcy court’s decision denying access to the federal courts. In so 2. The order of the Eleventh Circuit dismissing Wausau’s consolidated appeals provides in its entirety: The district court’s January 9, 1992, order dismissing the appeal from the bankruptcy court’s order is not reviewable by this Court. Therefore, this appeal is dismissed for lack of jurisdiction. APPEAL DISMISSED. doing, the Eleventh Circuit disregarded the Constitution and the express holdings of this Court in Marathon and Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976). This Court should grant certiorari given the important constitutional issues raised here as to the jurisdiction and powers of the Article I bankruptcy courts and the constitutional requirement that decisions eliminating access to a federal forum granted by Congress in the Judiciary Code be subject to review by an Article III court. THE COURT OF APPEALS’ DECISION CONFLICTS WITH THE CONSTITUTION AND DECISIONS OF THIS COURT By Refusing to Review the District Court Order, the Eleventh Circuit Ignored the Constitution and Decisions of This Court Establishing That a Litigant’s Right to an Adjudication by an Article III Court Is Not Satisfied by an Unreviewed Decision of an Article I Tribunal Lacking Federal Judicial Power Constitutional considerations require that a writ of mandamus be issued to the court of appeals to instruct the district court to vacate its dismissal of Wausau’s appeal and review the Remand Order of the bankruptcy court on the merits. As the Eleventh Circuit itself held in Jn re Goerg and In re Parklane/Atlanta Joint Venture, constitutional dictates enumerated by this Court in Marathon, as reinforced in 3. The Eleventh Circuit ignored its own precedent in dismissing Wausau’s appeal. The Eleventh Circuit had held that permitting a bankruptcy court to dictate the jurisdiction of an Article III court “would be an impermissible exercise of the judicial power of the United States by a non-Article III court." Jn re Parklane, 927 F.2d (Footmote continued) 7 Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989),4 preclude the jurisdiction of Article III courts from being placed within the unfettered and unreviewable discretion of Article I bankruptcy tribunals. In Marathon, this Court held that it was an unconstitutional exercise of the judicial power of the United States for judgments and orders of the Article I bankruptcy courts adjudicating private rights to be subject to district court review on appeal only under the deferential "clearly erroneous" standard of review. The holdings below in this case are even more constitutionally suspect than those at issue in Marathon, since neither the district court nor the court of appeals ever undertook any substantive review of the order of an Article I court which remanded the Hillsborough Actions to the state court. (Footnote continued) 532, 538 (11th Cir. 1991) (affirming district court order withdrawing the reference to hear motion to dismiss or abstain, as permitting bankruptcy court to enter nonreviewable order dismissing the case would "terminate the district court’s jurisdiction over the instant case without review by an Article II] court” and "would place the jurisdiction of an Article III court within the discretion of an Article I court"); see also In re Goerg, 930 F.2d 1563, 1566 (11th Cir. 1991) (district court required under the Constitution to undertake de novo review of bankruptcy court order to dismiss or to abstain in favor of state court jurisdiction). 4. in Granfinanciera, this Court reaffirmed its holding in Marathon that an Article III analysis is appropriate in examining whether a party's rights to adjudication by a jury in an Article III court are affected by relegating the proceeding to an Article I tribunal. This Court held that the power of Congress to prescribe bankruptcy laws and set up specialized courts thereunder can not take away a party’s constitutional right to such an adjudication by an Article III court in a matter involving private rights. In response to Marathon, Congress designated bankruptcy judges and bankruptcy courts in each district as "a unit of the district court." 28 U.S.C. § 151. As such, bankruptcy courts have limited powers, and de novo review by the district court is required in many instances to prevent the bankruptcy courts from unlawfully and unconstitutionally exercising Article III judicial powers. As this Court held in Marathon, "the requirement of de novo review by an Article I court was not simply the question of due process in relation to notice and hearing, but was rather a question of the appropriate maintenance of the Federal judicial power." 458 U.S. at 82 n.33 (quoting Crowell v. Benson, 285 U.S. 22, 56 (1932)). Wausau was denied de novo review. Indeed, no review occurred here to validate the bankruptcy court’s issuance of an order remanding the Hillsborough Actions to State court. Mandamus Should Issue to Prevent Nullification of the Removal Statutes by an Unreviewed Decision of a Non-Article II Court Remanding a Case Within the Federal Jurisdiction to State Court This Court held in Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976), that the courts of appeals have both the authority and the duty to use their mandamus powers "to prevent nullification of the removal Statutes by remand orders resting on grounds having no warrant in the law." Thermtron, 423 U.S. at 353 (reversing district court order remanding action to state court and specifically holding that courts of appeals have jurisdiction to entertain writ of mandamus notwithstanding limitation on appellate jurisdiction set forth in 28 U.S.C. § 1447(d)). The failure of the court of appeals to instruct the district court to exercise its appellate jurisdiction conflicts with the Constitution, Thermtron and the principles of Marathon. The district court below simply dismissed the appeal, stating as its only reason Wausau’s purported failure to satisfy the standard applicable to interlocutory appeals, as set forth in case law interpreting 28 U.S.C. § 158(a). ‘such a dismissal in no way constituted the required substantive review of the bankruptcy court’s Remand Order on the merits. The court of appeals then dismissed Wausau’s appeal to it and denied the Mandamus Petition. The result is that the bankruptcy court deprived Wausau of its access to a federal forum without any substantive review of its ruling by an Article II court. Wausau has been denied its constitutional right to have an Article III court determine whether Wausau might litigate in the federal courts. Wausau would be prejudiced irreparably absent review of such rulings by this Court at this time. Appellate review would be wholly ineffectual after entry of final judgment as the state court’s partial summary judgment would be wholly and inextricably intertwined in the bankruptcy court’s final judgment in the Omnibus Proceeding. 5. There currently exists a conflict among the circuits with regard to the interpretation of the statute governing removal ind remand applicable to a bankruptcy adversary proceeding as set forth in 28 U.S.C. § 1452. The Third Circuit reads Section 1452(b) literally, as barring review by the courts of appeal only if remands were issued "on any equitable ground," but permitting review of remands based on legal or jurisdictional grounds. Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984). In contrast, the Seventh Circuit reads the word "equitable" in Section 1452(b) to mean equitable or legal, as appropriate, and bars any review where the district court gives a reason authorized by statute. Hernandez v. Brakegate, Ltd., 942 F.2d 1223 (7th Cir. 1991) (dismissing appeal from remand order for want of jurisdiction). Under either interpretation of the statute, Wausiu’s appeal to the court of appeals should not have been dismisse