# Petition for Writ of Certiorari — Urban Brands Inc. v. Oquendo, 127 S. Ct. 949 (2007) (No. 06-557) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1637%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2007 ## Text Supreme Court, oS. . “ (!) FILER. No. 06- 06-557 0CT 20 2006 se OFFICE OF THE CLERK Supreme Court of the United States URBAN BRANDS, INC., Petitioner, v, EVELYN RODRIGUEZ-OQUENDO, — Respondent. On PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME CouRT OF PUERTO RICO <1 ste ae ee atte a ttn re ene re a RN PETITION FOR A WRIT OF CERTIORARI AGUSTIN COLLAZO-MOo)IcA PREETA D. BANSAL JorGeE E. PEREZ Counsel of Record PIETRANTONI MENDEZ Jay B. KASNER & ALVAREZ LLP Tmortuy G. NELSON Popular Center, 19th Floor SKADDEN, ARPS, SLATE, 209 Mufioz Rivera Avenue MEAGHER & FLomM LLP San Juan, Puerto Rico 00918 Four Times Square (787) 274-1212 New York, New York 10036 (212) 735-3000 Attorneys for Petitioner COUNSEL PRESS (800) 274-3321 * (800) 359-6859 ee QUESTION PRESENTED Whether a federal bankruptcy court's order made pursuant to Section 363(f) of the Bankruptcy Code, which authorizes a debtor's property to be sold "free and clear of all interest in such property," as well as pursuant to the incidental powers .conferred by Section 105(a) of the Bankruptcy Code, may validly extinguish state common law successor liability claims asserted against a purchaser of such property of the debtor. : li STATEMENT OF PARTIES AND STATEMENT PURSUANT TO RULE 29.6 Pursuant to Supreme Court Rule 29.6, Petitioner Urban Brands Inc. states that it has no publicly traded parent, and no publicly traded company holds 10% or more of the stock in Urban Brands, Inc. Except that the defendant in the proceedings below was named as “Petrie Retail Inc. (Debtor in Possession) and/or Centro Retail Corporation D/B/A Marianne," the caption names all parties and/or participants in the proceedings below. ili TABLE OF CONTENTS Ace art iceightiniileinaiatinadiaactncnasiniassetnchenpensietcs l ' STATUTORY PROVISIONS INVOLVED................. 1] STATEMENT OF THE CASE.......... DE ET AEN ER 2 REASONS FOR GRANTING THE PETITION.......... 8 I. The Decision Below Squarely Conflicts With Precedent of the Third and Fourth Circuits.............. 9 A. The Third and Fourth Circuits Have Held that Section 363(f) Orders Can Extinguish "Successor Liability" Claims...............::csseceseesere 9 B. The Split in Authority on this Issue is Wide and Deep, and Ripe for Resolution by this Court .... 14 II. The Interpretation of Section 363(f) By the Court Below Undermines Important Federal Statutes and PANN cis cc cciscinsiboileniaptisticnubadatidccbaeseiulzamlecd sass 16 SID ccisiecivnnicirsstinteniacaakvischasescnpeuscedsdbbeininbs 16 B. The Decision Below Undermines Important Public Policies Enshrined in the Bankruptcy C. The Decision Below Frustrates Congress's Goal of Integrating Puerto Rico into the PURINE TINY oo ciincchicsevesensoenesicteniomiceieceoss 21 CONCLUSION .........ccscsscsssssessesersserssssreseseeserssesensnssere 23 TABLE OF AUTHORITIES CASES In re All American of Ashburn, Inc., | 56 B.R. 186 (Bkrtcy. N.D. Ga. 1986)....... Wty the ae In re Dow Corning Corp., 198 B.R. 214 (Banteh. ED. MiGH: 1996) vvvviscicccsossiscissseccesscvisscasses 11 Examining Board v Flores de Otero, 426 U.S. FI LAE) icixintoinmladieiuiaehbinianaamunnets 21,22 Fairchild Aircraft, Inc. v. Cambell (In re Fairchild Aircraft Corp.), 184 B.R. 910 CEG. WEL TE, TP heise cscsescdectecncoicsscejssocassessnss 15 Forde v. Kee-Lox Manufacturing Co., Inc., 437 F. Supp. 631 (W.D.N.Y. 1977)............. 5, 19, 12 International Shoe Co v. Pinkus, 278 U.S. BOE CEDEG) vitestiineaio skein destiatnesaestadtbeactiashcasticivanatn 20 Lefever v. K.P. Hovnanian Enterprises, Inc., FEM B28 LIE: TDD vvsssicsatsadsshesisscarapsvvetes 10, 17 In re Medical Software Solutions, 286 B.R. 431-CBankr. D. Uta 2002) sccsssicsscscsscescscsssreaese 12, 18 Myers v. United States, 297 B.R. 774 (S.D. CHR, BOA ccctsvdncecibdccadssoocetndielciatdiisinaianasesactoins 13, 20 Nathanson v. Labor Board, 344 U.S. 25 CRE sis iacisiiihenivetattentvemic basement 4, 20 In re P.K.R. Convalescent Ctrs., 189 B.R. 90 CERRY. FEED VG. TIOSD seivissscscserncocacnptisesesessaisinacives 1] Puerto Rico Department of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495 EE PES sonsrveststsscccbacciatadip oidatastied cavunatitalapiraclancisabie 24 Vv Rubenstein v. Alaska Pac. Consortium (In re New England Fish Co.), 19 B.R. 323 (Bankr. W.D. Wash. 1982)...........cccccessseeeeeees 5,9, 21 In re Segarra, 14 B.R. 870 (D.P.R. 1981).............. 8, 24 Simmons v. Mark Lift Industrial, Inc.,.622 TRAE CEP Clee BID Doescorsckeosbinep cctasipennieneneds 10, 17 Torres v. Puerto Rico, 442 U.S. 465 (1979) .........0000. 21 Trailer Marine Trans. Corp. v. Rivera Vazquez, 977 F.2d 1 (1st Cir. 1992)...........ccssccceres 21 In re Trans World Airlines, 322 Fe ee Ge Gi AI sear hansanesncccepecressiesnenniet passim UMWA 1992 Benefit Plan v. Leckie Smokeless Coal Co. (In re Leckie Smokeless Coal Co), 99 F.3d 573 “ ecle big g| OR nek EE BUR Aa cicada passim Used Tire International Inc. v. Diaz Saldana, No. 97-1028, 1997 U.S. Dist. LEXIS 14016 (Sept. 8, 1997) 0.0.0... eee 21 Van Huffel v. Harkelrode, 284 U.S. 225 ERIE AD iatscecssscinssiidssccre ioe hasnssicatibasedasiabdsiiinarnpeacsaiiobadunis 12 Volvo White Truck Corp. v. Chambersburg Beverage, Inc. (In re White Motor Credit Corp.), 75 B.R. 944 CPOIEE. Deslals Sa AEE Picrsecisiviccsscnisenivsbsicineinvevies 12 WBO Partnership v. Commonwealth of Virginia Department of Medical Assistance Services (In re WBQ Partnership), 189 B.R. 97 (Bankr. E.D. AE Darra icttisksdeatlevelabiesstrtntasinciacihainatackins 11, 18, 22 Western Automobile Supply Co. v. Savage Arms, Inc. (In re Savage Industrial, Inc.), BS PSG TEAC Ce, SII sec vcitisrecsiiescevicinintarsnin 14 vi Zerand-Bernal Group, Inc. v. Cox, 23-F.36 159 (Tih Cir. 1994)....<...corsverersseovseseses passim - CONSTITUTIONAL PROVISIONS Sa COE. OG © BE Bins ctiitiemeioncdiinecies 20 STATUTES BE UBC. © BOGE) vac ceccccnsccsccvens pshsheestenipenlianadiiuand passim BAe ce ese ssvchineichcedininiditigniing hesiigsinteel passim OUR BURR PECEC: 8 188 21 AGE E58) Sy 2” SPRRM no tianete ort Meee Noe Sena Nee 21 MD SE Astaas SE FIO scisacacessnsaviphaoiamcesbedtacklesane srsensensenesaess 21 EG FO ci siccectsiseckianction ensccbesesesaticeacotrosonsons 21 BO Re TIE OO iciknisikvisisisctininminttviiniscoonsins 10 U.S. Sup. Ct. Rule 10(b).......... eisai eae 13 OTHER Collier Bankruptcy Manual, 3d ed. 2002............ 4, 6, 13 William T. Bodoh & Michelle M. Morgan, Inequality Among Creditors: The Unconstitutional Use of Successor Liability to Create a New Class of Priority Claimants, 4 Am. Bankr. Inst. L. Rev. 325, PO, Se CUE ccirsieasiccecsbinsdiiensevucinseneaivt 13,18 OPINION BELOW The or ..»n of the court below is reported at Decisions of the Su; .° .e Court of Puerto Rico, 2006 TSPR 26. A certified English translation is enclosed in the Appendix. (App. A. ) JURISDICTION The judgment of the Supreme Court of Puerto Rico was entered on April 11, 2006. The Supreme Court of Puerto Rico issued an order denying a timely petition for - reconsideration on May 23, 2006. (App. F.) On July 16, 2006, this Court granted Petitioner an extension of time through October 20, 2006 to file this Petition. The jurisdiction of this Court is invoked under 28 U.S.C. § 1258. STATUTORY PROVISIONS INVOLVED Section 363(f) of the United States Bankruptcy Code, 11 U.S.C. § 1 et seq. (the "Bankruptcy Code"), provides: The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if — | (1) applicable nonbankruptcy law permits sale of such property free and clear of such interest; (2) such entity consents; (3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; (4) such interest is in bona fide dispute; or (5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. 11 U.S.C. § 363(f). (See App. H at 80a.) Section 105(a) of the Bankruptcy Code states that a court may “issue any order . . . necessary or appropriate to carry out the provisions of [title 11]."_ 11 U.S.C. § 105(a). (See App. H at 73a.) STATEMENT OF THE CASE This Petition asks the Court to resolve a deep conflict within the state and federal courts on the important federal question concerning a federal bankruptcy court's power, pursuant to Section 363(f) and 105(a) of the Bankruptcy Code, to extinguish successor liability claims for purchasers of a debtor's assets. In late 1998, Petitioner Urban Brands purchased Marianne Stores, a Puerto Rico department store chain, from Petrie Retail, Inc. ("Petrie"), a debtor then undergoing a reorganization pursuant to Chapter 11 of the Bankruptcy Code. As part of that reorganization, Petrie's creditors' committee sought and obtained permission from the United States Bankruptcy Court for the Southern District of New York (the "SDNY Bankruptcy Court") to sell various Petrie assets, including Marianne Stores, to an affiliate of Petitioner. On December 1, 1998, the SDNY Bankruptcy Court issued an order authorizing such sale and providing that: Pursuant to Sections 105(a) and 363(f) of the Bankruptcy Code, the Purchased Assets [including Marianne Stores] shall be transferred to the Purchaser upon the Closing free and clear of all Liens and Claims of any kind or nature, with all such Liens and Claims and Interests released, terminated and discharged as to the Purchased Assets, which Liens and Claims shall attach to the net proceeds of sale, in the order of their priority, with the same validity, force and effect that they now have against the Purchased Assets except for the Permitted Liens. - 3 (App. E (Dec. 1, 1998 Order of U.S. Bankruptcy Ct. for the Southern District of New York ("SDNY Bankruptcy Order") at 62a § 8 (emphasis added).) For purposes of this Order, "Claims" were defined as all debts arising in any way in connection with any acts of the Debtors, claims (including but not limited to "claims" as that term is defined in the Bankruptcy Code), obligations, demands, guaranties, interests and matters of any kind and nature, whether arising prior to or subsequent to the commencement of these Chapter 11 cases, and whether imposed by agreement, understanding, law, equity or otherwise. (Id. at 57a.) ; The "free and clear" sale of Marianne Stores from debtor Petrie to Petitioner was consummated on December 17, 1998, and Marianne Stores continued in business under Petitioner's stewardship from that date forward. Respondent Evelyn Rodriguez-Oquendo, a resident of Puerto Rico and an ex-employee of Petrie, worked between 1980 and 1988 at the Marianne Store at the Centro del Sur Shopping Center in Ponce, Puerto Rico. (App. A at 2a).) On October 5, 1998, before the sale of Marianne Stores to Petitioner, Petrie dismissed her from employment. (/d.) On September 29, 199°, almost a full year after Petrie had terminated her employment, and more than nine months after Petitioner- purchased Marianne Stores from Petrie, Respondent commenced civil proceedings against Petrie in the Court of First Instance of the Commonwealth of Puerto Rico, Ponce Superior Court (the "Ponce Court"), seeking $50,000 in damages for unjust dismissal, nonpayment of sums due under Puerto Rican labor statutes and age discrimination. (App. G (Complaint) at 7la-72a J 4-11.) After a "default hearing," the Ponce Court issued judgment against Petrie on May 18, 2001 in the sum of $41,204.67 i eas 4 plus attorney's fees. (App. D at 47a.) In October 2002, well after the "free and clear" sale of” Marianne Stores had been made to Petitioner, Mrs. Rodriguez-Oquendo attempted to execute the judgment against Petrie by attaching two of Petitioner's bank accounts. (App. A at 3a.) Shortly thereafter, Petitioner appeared before the Ponce Court and moved to set aside this attachment on the grounds, inter alia, that Petitioner was not responsible for Petrie's liabilities. (/d.) On January 16, 2004, the Ponce Court held that the judgment could properly be executed against Petitioners’ assets on the basis that Petitioner was a "successor employer." (App. C at 45a.) Rejecting Petitioner's contention that the SDNY Bankruptcy Order extinguished any such liabilities, the Ponce Court held that "a contract executed outside this jurisdiction cannot contravene the public labor policy of Commonwealth of Puerto Rico jurisdiction." (/d. at 43a n.12.) On June 4, 2004, the Puerto Rico Court of Appeals reversed, holding, by reference to the SDNY Bankruptcy Order and Section 363(f) of the Bankruptcy Code, that successor liability could not be established against Petitioner. (App. B at 24a-28a, 34a.) The Court of Appeals found Section 363(f) to have preclusive effect, endorsing Collier's observation that "{cjourts have provided protection to purchasers of assets, who would otherwise be subject to these claims under the successor liability doctrine, by way of the approval of sales free of all present and future claims against the debtor or the estate." (App. B at 24a; see also id. n.2 (Section 363(f) protects "purchasers of assets, who might otherwise be subject to such claims under principles of successor liability’) (quoting 3 Collier on Bankruptcy at 363-16).) The Court of Appeals continued: In Nathanson vy. Labor Board, 344 U.S. 25, 29 (1952), the United States Supreme Court held that the 5 purpose of the Bankruptcy Act was to achieve equality of distribution among the claimants. That is why bankruptcy courts have held that a sale of the debtor's assets, approved by the United States Bankruptcy Court as free and clear of all claims, precludes the application of the successor doctrine against a purchaser of those assets in a suit based on | the debtor's alleged employment discrimination and violations of employees’ civil rights. See Jn re All American of Ashburn, Inc., 56 B.R. 186, 190 (Bkrtcy. N.D. Ga. 1986); Rubinstein v. Alaska Pacific Consortium [(In re New England Fish Co.)], 19 B.R. 323, 328-329 (Bkrtcy. W.D. Wash. 1982); Forde v. Kee-Lox Mfg. Co., Inc., 437 F>Supp. 631 (W.D.N.Y. 1977). (App. B at 27a (footnote omitted).) Respondent thereupon appealed to the Supreme Court of Puerto Rico. The Decision Below The Supreme Court of Puerto Rico reversed,’ with one justice dissenting. It held that a bankruptcy sale of property free and clear of any interest in such property will not bar the application of the successor liability doctrine." (App. A at 15a.) - The court below recognized that a sale order issued pursuant to Section 363(f) might, if it were broadly construed, operate to "preclude[] the application of the successor liability doctrine against the asset purchaser." (App. A at 12a.) The court held, however, that "our caselaw precedents” on the doctrine of successor liability were not rendered inapplicable by the federal Bankruptcy Code or the SDNY Order. (/d. at 15a.) It rejected the Court of Appeals’ reliance upon Section 363(f) (and case law decided thereunder) as a bar to successor liability, finding that "another string of weightier federal cases has questioned the bankruptcy courts' authority to override the application of the 6 successor liability doctrines developed by state courts." (/d. at 13a (citing Collier Bankruptcy Manual, 3d ed. 2002, § 363.02[3], p. 363-10); Western Auto Supply Co. v. Savage Arms, Inc. (In re Savage Indus., Inc.), 43 F.3d 714 (Ast Cir. 1994); and Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159 (7th Cir. 1994)). The court below noted that there were "two main reasons" commonly proffered in support of a broad view of Section 363(f): (1) the need to preserve the scheme of priorities established by the Bankruptcy Code; and (2) "that the implementation of the successor liability doctrine would have a negative impact on the trustee's ability to sell assets of the estate at a fair price." (Jd. at 13a-142.) In dismissing these concerns, the court quoted at length the Seventh Circuit's opinion (written by Judge Posner) in Zerand-Bernal: If the [bankruptcy] court could do all these nice things the result would indeed be to make the property of bankrupts more valuable than other property — more valuable to the creditors, of course, but also to the debtor's shareholders and managers to the extent that the strategic position of the debtor in possession in a reorganization enables the debtor's owners and managers to benefit from bankruptcy. But the result would not only be harm to third parties . . . but also a further incentive to enter bankruptcy for reasons that have nothing to do with the purposes of bankruptcy law. (App. A at 14a-15a (citing Zerand-Bernal, 23 F.3d at 163).) The court below embraced the Seventh Circuit's reasoning and the cases that "refuse[] to acknowledge a limitation in the application of different successor liability doctrines simply because the sale of assets took place in the context of a bankruptcy proceeding." (/d. at 15a.) The court concluded that cases rejecting federal bankruptcy limits to successor liability were “better supported by federal 7 caselaw" in the bankruptcy area. (App. A at 15a.) The court below also found such cases refusing to abrogate the doctrine of successor liability to be "in tune with ‘important labor-related public policies that conform to our economic, social, and cultural reality." (/d.) The court noted its regard for "the successor employer doctrine as it has been applied in our jurisdiction" and its unwillingness to "ignore completely . . . our own precedents on a doctrine adopted in our jurisdiction since he 1960's." (/d. at 10a-1 1a.) We therefore hold that the sale of assets under a federal bankruptcy proceeding, though free of liens, will not bar the application of the successor employer doctrine as developed by our caselaw precedents. (App. A at 15a (emphasis in original).) Finding no federal bankruptcy law bar to successor liability, the court below proceeded to apply its own common law precedents concerning the doctrine to conclude that Respondent could seek to hold Petitioner liable under the doctrine of successor liability because Respondent "had no knowledge of the transfer of [Marianne Stores] assets" to Petitioner and "the employer's corporate structure was unknown to [Respondent].". (/d. at 17a (emphasis in original). ' On April 27, 2006, Petitioner moved for reconsideration of this decision, repeating its argument that federal circuit | The court below, having dispensed with all federal issues, held that Respondent had not received sufficient notice of the SDNY Bankruptcy Order, but this finding was confined to a separate state law issue, i.e., whether Puerto Rican "successor employer" liability applied to Petitioner. Cf In re All American of Ashburn, Inc., 56 B.R. 186, 190 (Bkrtcy. N.D. Ga. 1986) ("The Court will, however, consider the issue of notice to the [successor liability claimants] to the extent that it may be relevant to the application of the successor doctrine [under Georgia law}."). 2 8 precedent required that the court give effect to the SDNY Bankruptcy Order as barring successor liability claims. On May 23, 2006, the Supreme Court of Puerto Rico issued its decision denying Petitioner's reconsideration motion. (App. F.) Twojustices would have granted reconsideration. (/d.) REASONS FOR GRANTING THE PETITION The court below held that a federal bankruptcy court's sale order, made pursuant to Sections 105(a) and 363(f) of the federal Bankruptcy Code, may not validly extinguish the successor liability of the purchaser of those assets. Thus the decision below squarely and expressly conflicts with decisions of the Third and Fourth Circuits, which have construed Section 363(f) as empowering a district court to authorize a sale of debtor property "free and clear" of any "claims" that otherwise might have attached to the purchaser under common law or similar doctrines of "successor liability." See In re Trans World Airlines, 322 F.3d 283, 289-90 (3d Cir. 2003); UMWA 1992 Benefit Plan v. Leckie Smokeless Coal Co. (In re Leckie Smokeless Coal Co), 99 F.3d 573, 582 (4th Cir. 1996), cert. denied, 520 U.S. 1118 (1997). | \ The narrow effect given to Section 363(f) by the court below, which joins the Seventh Circuit, see Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159 (7th Cir. 1994), and two other state supreme courts” on this issue, ignores the plain language of the statute. Section 363(f) expressly authorizes bankruptcy sales "free and clear” of competing "interests" in the subject "property" and, therefore, on its face confers 2 See Simmons v. Mark Lift Indus., Inc., 622 S.E.2d 213, 215 (S.C. 2005) (court holding that "successor liability” claims survive bankruptcy sale) see id. at 225 (Barnett, J., concurring-in relevant part) (Section 363(f) does not reach "successor liability" claims); Lefever v. K.P. Hovnanian Enters., Inc., 734 A.2d 290, 317-18 (N.J. 1999) (Section 363(f) does not "cut off product liability claims). 9 power on bankruptcy courts to issue orders cleansing assets of potential successor claims. The decision below frustrates important federal statutory _ policies enshrined in the Bankruptcy Code. The statutory power to cleanse assets of successor liability not only benefits creditors by increasing the potential value of a debtor's assets for sale, but it is also makes bankrupt businesses more viable going forward. In light of Congress's long-standing goal of integrating Puerto Rico into the national economy, the decision below is especially harmful because it creates disincentives for a party to purchase a debtor's assets in Puerto Rico. s The wide circuit and state court split presented by this Petition is now ripe for resolution. As long as the split in authority is unresolved by this Court, there will remain significant confusion and uncertainty in all federal bankruptcy sales. Even when bankruptcy sales take place in jurisdictions that allow successor liability claims to be extinguished, enterprising litigants may bring "successor liability" claims against the purchaser in another jurisdiction such as that of the court below. Standing alone, this risk depresses the potential return on any bankruptcy sale in a Situation where, as here, the sold business operates in different parts of the country. The Court should grant this petition to resolve the split in authority on this important issue of federal bankruptcy law. q. The Decision Below Squarely Conflicts With Precedent of the Third and Fourth Circuits A. The Third and Fourth Circuits Have ~ Held that Section 363(f) Orders Can Extinguish "Successor Liability" Claims The holding of the decision below, that "the sale of assets under a federal bankruptcy proceeding, though free of liens, will not bar the application of the successor employer 10 doctrine as developed by our caselaw precedents" (App. A at 15a (emphasis in original)), is in direct conflict with decisions of the Fourth and Third Circuits which hold that a "free and clear" sale order issued under Section 363(f) may validly extinguish "successor liability." In UMWA 1992 Benefit Plan v. Leckie Smokeless Coal Co. (In re Leckie Smokeless Coal Co), 99 F.3d 573, 582 (4th Cir. 1996), eight coal-mining companies were subject to Chapter 11 proceedings before a West Virginia bankruptcy court. See id. at 577-78. Each of the mines operated by the bankrupt companies had ongoing liabilities under the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. § 9701 et seq. (the "Coal Act"), to fund retirement benefits for former mine employees. 99 F.3d at 575-76. To prevent these obligations from possibly attaching to the new mine owners, the bankruptcy court was requested to grant, and granted, a Section 363 bankruptcy sale order permitting the mines to be sold "free and clear of [all] liabilities" under the Coal Act. /d. at 577. The Fourth Circuit held that the various Coal Act funds' rights to collect Coal Act payments from the incoming mine owners were "interests in. . . property" for purposes of Section 363(f) because those claims were "grounded, at least in part, in the fact that those very assets have been employed for coal-mining purposes." Id. at 582. Thus, according to the Fourth Circuit, the bankruptcy court had jurisdiction to make an order "extinguish{ing] Coal Act successor liability pursuant to 11 U.S.C. § 363(f)." Id. at 585. The Third Circuit similarly held that "free and clear" orders pursuant to Section 363(f) may validly extinguish successor liability claims. See Jn re Trans World Airlines, 322 F.3d 283, 289-90 (3d Cir. 2003). During a Chapter 11 reorganization, TWA negotiated to sell its airline business to American Airlines ("AA") net of any prior liabilities arising from past employment discrimination claims. See 322 F.3d at 286 & n.1. The Delaware bankruptcy court granted a 11 requested order "extinguish[ing] successor liability on the part of [AA]" for these liabilities. /d. at 286. On appeal, the Third Circuit held that past discrimination claims, to the extent they might be transferred to AA as "successor" employer, were “interests in property" capable of being extinguished by a Section 363(f) order because "'the term ‘any interest’ is intended to refer to obligations that are connected to, or arise from, the property being sold." Jd. at 289 (citation omitted)). Thus, the Third Circuit held that the Delaware bankruptcy court possessed the power, through Section 363(f}, to extinguish successor liability for past employment discrimination claims against TWA. Jd. at 290, 293. : The Third and Fourth Circuits’ approach to Section 363(f) in TWA and Leckie is in accord with considerable lower court authority and scholarly literature. First, several bankruptcy court decisions pre-dating Leckie and TWA held that Section 363(f) orders could validly extinguish "successor" liability.* Second, numerous district courts from other Circuits have expressly followed TWA and/or Leckie, ’ The Third Circuit in TWA also held that an ursecured claim (such as Respondent's) falls within the scope of Secties. 353(f)(5) in that they could be "compelled" to accept monetary settlement of such claims. See TWA, 322 F.3d at 290-91 (noting that, had the Chapter 11 debtor "liquidated its assets under Chapter 7 of the Bankruptcy Code, the [employment discrimination] claims at issue would have ben converted to dollar amounts and the claimants would have received the distribution provided to other general unsecured creditors on account of their claims"). See, e.g., In re Dow Corning Corp., 198 B.R. 214, 244-47 (Bankr. E.D. Mich. 1996) (Section 363(f)'s conferral of power to sell property “free and clear" of claimed "interests" should confer an "inherent" power to "enjoin" litigation against the purchaser of that property); All Am. of Ashburn, Inc., 56 B.R. at 189-191; Jn re P.K.R. Convalescent Ctrs., 189 B.R. 90, 92-94 (Bankr. E.D. Va. 1995); WBQ Partnership v. Commonwealth of Virginia Department of Medical Assistance Services (In re WBQ Partnership), 189 B.R. 97, 105 (Bankr. E.D. Va. 1995) 12 or construed Section 363(f) in a similarly broad manner. Third, the result in TWA and Leckie is consistent with decisions addressing the Bankruptcy Code's statutory predecessors, which this Court interpreted as conferring on the trustee an implied power to "sell property of the bankrupt free from encumbrances." Van Huffel v. Harkelrode, 284 U.S. 225, 227 (1931). Under the old Bankruptcy Act, this implied power had been utilized by bankruptcy courts to craft sale orders that extinguished successor liability for past discrimination claims.° Fourth, several courts have held that, regardless of the reach of Section 363(f), the power to extinguish successor liability claims may validly be derived from Section 105(a), authorizing a court to issue any "order" that is "necessary or appropriate to carry out the provisions of [title 11]."_ 11 U.S.C. § 105(a).’ Fifth, Leckie and TWA 5 * See Myers v. United States, 297 B.R. 774, 782 (S.D. Cal. 2003) (applying 7WA; holding that a Delaware bankruptcy court's order, issued pursuant to Section 363(f) and authorizing a sale of debtor's asset "free and clear of all Claims of any kind or nature whatsoever," validly extinguished all environmental contamination claims that might have attached to the purchaser of a parcel of real estate under California's “successor liability" doctrine); Jn re Med. Software Solutions, 286 B.R. 431, 446-47 (Bankr. D. Utah 2002) (Section 363(f) order validly extinguished "successor liability" - claims). ® See Forde v. Kee-Lox Manuf. Co., 437 F. Supp. 631, 632-35 (W.D.N.Y. 1977), aff'd, 584 F.2d 4 (2d Cir. 1978) (court order stating that a bankruptcy sale would be "free and clear of liens, including tax liens, if any, claims, encumbrances, demands and rights of creditors, or any other person, all of his right, title and interest, in and to [the purchased assets]" applied to, and extinguished, any "successor" liability for the bankrupt's past Civil Rights violations); Med. Software Solutions, 286 B.R. at 446 ("Indeed, even before the Bankruptcy Code was enacted in 1978, courts relied on their general equitable powers to authorize the sale of assets free and clear [of successor liability]."). 7 See Volvo White Truck Corp. v. Chambersburg Beverage, Inc. (In re White Motor Credit Corp.), 75 B.R. 944, 948 (Bankr. N.D. Ohio 1987); Rubenstein v. Alaska Pac. Consortium (In re New England Fish Co.), 19 (cont'd) 13 find support in the most authoritative text in bankruptcy, Collier on Bankruptcy, which considers that they represent the prevailing "trend."® The court below did not find Z7JWA or Leckie distinguishable; on the contrary, the court accepted that the _ "string of cases" of which those decisions were a part "indeed" stood for the opposite conclusion from that reached below. (App. A at 12a; see also App. F (denying motion for reconsideration despite TWA and Leckie.) This Petition thus presents an exemplary case of both "a state court of last resort . . . decid[ing] an important federal question in a way that conflicts with the decision of . . . a United States court of appeals," U.S. Sup. Ct. Rule 10(b),’ and also of "a state court .. . decid[ing] an important question of federal law that has not been, but should be, settled by this Court... ."_ /d. Rule 10(c). In light of the express conflict acknowledged by the court below, a writ of certiorari is warranted. (cont'd from previous page) B.R. 323, 328-29 (Bankr. W.D. Wash. 1982). * See 3 Collier on Bankruptcy 4 363.06[1}, at 363-47 (Alan N. Resnick et al, eds.) ("[a]lthough some courts have limited the term [interests in property] to in rem interests in the property, the trend seems to be in favor of a broader definition that encompasses other obligations that may flow from ownership of the property.” (footnote omitted)); see a/so William T. Bodoh & Michelle M. Morgan, /nequality Among Creditors: The Unconstitutional Use of Successor Liability to Create a New Class of Priority Claimants, 4 Am. Bankr. Inst. L. Rev. 325, 345, 353 (1996) (criticizing decisions that frustrate a debtor's decision to "cleanse" assets in a bankruptcy sale utilizing Section 363(f); commenting that "{uJntil Congress chooses to act, state successor liability law, which frustrates the terms of a court-approved bankruptcy sale, is preempted by the Bankruptcy Code and the Supremacy Clause of the Constitution"). For purposes of the Rules of this Court governing the grant of certiorari, the Supreme Court of Puerto Rico is deemed a "state court." U.S. Sup. Ct. Rule 47. 14 B. The Split in Authority on this Issue is Wide and Deep, and Ripe for Resolution by this Court Resolution of the conflict now is warranted. The court below, in addition to issuing a decision that conflicts with the Third and Fourth Circuits, joins the Seventh Circuit and the Supreme Courts of South Carolina and New Jersey in its resolution of the question presented. In Zerand-Bernal, the Seventh Circuit stated that Section 363(f) may not extinguish successor “liability claims. Plaintiff/purchaser bought a manufacturing business pursuant to an Illinois bankruptcy court's sale order "provid{ing]} for the enjoining of any products liability claims against [the plaintiff/purchaser] that related to equipment sales which had occurred before the sale to it of [the prior owner's] assets." 23 F.3d at 161. Later, an individual in Pennsylvania, who had been injured by the prior owner's negligence, brought products liability claims against plaintiff/purchaser based on "successor liability." /d. Plaintiff/purchaser responded by seeking to revive the Illinois bankruptcy proceedings in order to enjoin those Pennsylvania products liability claims. Id. After rejecting plaintiff/purchaser's claims for lack of subject-matter jurisdiction, see id., the Seventh Circuit wrote that courts do not "enjoy[] a blanket power to enjoin all future lawsuits against a buyer at a bankruptcy sale in order to maximize the sale price" and that a sale of assets pursuant to Section 363(f), "free from all liens and other encumbrances," was not applicable to cases where a claimant "[was] not attempting to enforce a lien." /d. at 163 (citing Mooney Aircraft Corp. v. Foster (In re Mooney Aircraft, Inc.), 730 F.2d 367, 374-75 (Sth Cir. 1984)). The Seventh Circuit's observations in Zerand-Bernal on the application of Section 363(f) are arguably dictum, but the reasoning and statements were cited with approval by the court below as supporting its conclusion that a bankruptcy 15 sale order is not capable of extinguishing "successor liability." claims. The decision below also joins the ranks of decisions from the highest courts of South Carolina and New Jersey. The Supreme Court of South Carolina has held that assets _purchased at a bankruptcy sale are not protected from "successor liability” claims. See Simmons v. Mark Lift Indus., Inc., 622 S.E.2d 213, 213 (S.C. 2005); see also id. at 225 (Burnett, J., concurring in relevant part and dissenting in other respects) ("I find more persuasive the views expressed by several courts which have held that a successor may be held strictly liable in a state law product liability claim despite a bankruptcy court order or purchase agreement purporting to discharge such liability"; citing, inter alia, Zerand-Bernal, 23 F.3d at 161-64, as "suggest[ing] that § 363(f) may not be used to extinguish successor product-line claims."). In addition, the Supreme Court of New Jersey has held (based on a Texas federal district court case which, in turn, cites Zerand-Bernal) that Section 363(f) does not "cut off product liability claims." See Lefever v. K.P. Hovnanian Enters., Inc., 734 A.2d 290, 317-18 (N.J. 1999) (citing Fairchild Aircraft, Inc. v. Cambell (In re Fairchild Aircraft Corp.), 184 B.R. 910, 917-78 (Bankr. W.D. Tex. 1995) (citing Zerand-Bernal), vacated as moot on equitable grounds, 220 B.R. 909 (Bankr. W.D. Tex. 1998)). In light of the substantial authority on both sides of the issue, the question presented in this Petition will not be further refined or resolved by allowing it to further percolate among the circuit or state courts. The conflict has fully matured and is now ripe for review: the Third and Fourth Circuits (and numerous district courts) give preclusive effect to Section 363(f) with regard to common law successor liability claims; the Seventh Circuit and the highest courts of Puerto Rico, New Jersey and South Carolina do not. 16 II. The Interpretation of Section 363(f) By the Court Below Undermines Important Federal Statutes and Policies A. The Decision Below Ignores the Statute's Plain Language To hold that Section 363(f) is incapable of extinguishing successor liability claims is to ignore the plain language of the statute. Section 363(f) expressly authorizes bankruptcy sales "free and clear" of competing "interests" in the subject "property" and, therefore, on its face confers power on bankruptcy courts to issue orders cleansing assets of potential successor claims. The Third and Fourth Circuits’ decisions in TWA and Leckie focus, first and foremost, on the operative words of Section 363(f). They recognize that the phrase "interest in . property,” by its plain terms, embodies a broad concept which, while not unlimited, is not on its face confined to in rem interests or liens. See Leckie, 99 F.3d at 583; accord TWA, 322 F.3d at 290. "Indeed, to equate interests in property with only in rem interests such as liens would be inconsistent with section 363(f)(3), which contemplates that a lien is but one type of interest" that can be extinguished in a bankruptcy sale. TWA, 322 F.3d at 290 (citing 28 § U.S.C. 363(f}(3)) (emphasis added). In sharp contrast, neither the court below nor the Seventh Circuit in Zerand-Bernal conducted a detailed textual analysis in support of their conclusions that Section 363(f) is. incapable of extinguishing successor liability. Rather, they based their reasoning primarily on two non-textual considerations, First, they stated that it would be socially undesirable to permit Section 363(f) to be utilized to cleanse debtor assets of successor liability. Second, they expressed concern that a Section 363(f) order might be made without giving due notice to all affected parties who might have potential "successor liability" claims against the purchaser. 17 (Zerand-Bernal, 23 F.3d at 163; App. at 13a-15a.) Neither consideration is relevant to the issue of what Section 363(f) actually says — and means. B. The Decision Below Undermines Important Public Policies Enshrined in the Bankruptcy Code The decision below undermines the carefully crafted priority scheme and important public policies enshrined in the Bankruptcy Code. 1. Maximizing Value of Debtors' Assets to Further Interests of Creditors and Employees TWA and Leckie aptly illustrate the policy objectives furthered by Section 363(f) orders that cleanse assets of "successor liability" claims. In 7WA, the evidence showed that "the sale of TWA's assets to [AA] at a time when TWA was in financial distress was likely facilitated by [AA] obtaining title to the assets free and clear of these civil rights claims." Id. at 292 (emphasis added). Absent the Section 363(f) order, "[AA] may have offered a discounted bid." 322 F.3d at 293. Likewise, in Leckie, the evidence showed as to one of the coal mines that, if the incoming purchaser had not been able to purchase the mine (valued at $1.9 million) free of the Coal Act obligations (which stood at $7 million), "the assets would almost inevitably have [had] to be sold piecemeal, thereby generating fewer funds" to satisfy creditors. 99 F.3d at 586-87. As the chief bankruptcy judge of the Eastern District of Virginia observed: the purpose behind the "free-and-clear" language is to maximize the value of the asset, and thus enhance the payout made to creditors. Without the "free-and- clear" language, prospective buyers would be unwilling to pay a fair price for the property subject to sale; instead, the price would have to be discounted, 18 perhaps quite substantially, to account for the liabilities that the buyer would face simply as a result of acquiring the asset... . A discounted price would reduce the return to the estate to the detriment of the creditors involved in the case. The "free-and-clear" language avoids this kind of prejudice by providing the buyer with what is essentially a fully marketable title. WBOQ P'ship v. Commonwealth of Virginia Dep't of Med. Assistance Servs. (In re WBQO P'ship), 189 B.R. 97, 108 (Bankr. E.D. Va. 1995) (citation omitted); accord Med. Software Solutions, 286 B.R. at 447; William T. Bodoh et al, supra, n.8 (describing Section 363(f)'s capacity to "cleanse" debtor assets of all possible claims).'° But the public policies that favor maximizing the sale price of bankrupt assets not only benefit creditors; they also serve broader community interests, especially when the asset is a continuing business. Thus, in 7WA, the Third Circuit found that the Section 363(f) order, extinguishing "successor liability" for employee discrimination claims, inured to the ‘ benefit of TWA's workforce as a whole: Given the strong likelihood of a liquidation absent the asset sale to [AA], a fact which appellants do not ‘0 Courts relying on Section 105(a) as the basis ordering a sale "free and clear" of successor liability have also based this on public policy. See White Motor, 75 B.R. at 950-51 ("[t]he successor liability specter would chill and deleteriously affect sales of corporate assets, forcing debtors to accept less on sales to compensate for this potential liability[;] [t)his negative effect on sales would only benefit product liability claimants, thereby subverting specific statutory priorities established by the Bankruptcy Code."); New England Fish, 19 B.R. at 328-29 (the purchaser “would not and will not take the business burdened with civil rights litigation. No purchaser would. Such_a prospect would chill or render impossible any sale. . . . [Any] impediments [to the claimants] are far out- weighed by a policy encouraging bankruptcy sales ...."). 19 dispute, we agree with the Bankruptcy Court that a sale of the assets of TWA at the expense of preserving successor liability claims was necessary in order to preserve some 20,000 jobs, including those of [the Travel Voucher Program class] and the EEOC claimants still employed by TWA, and to provide funding for employee-related liabilities, including retirement benefits. 322 F.3d at 293. 2. Maintaining Priority Scheme of Federal Bankruptcy Code Moreover, the decision below undermines the priority scheme of the federal Bankruptcy Code by elevating the claims of those pressing successor liability claims over other general claimants of a debtor's property. Under the Bankruptcy Code, the interests of claimants who wish to press "successor liability" claims — which, in the final analysis, are "general unsecured claims" ordinarily "accorded low priority," see TWA, 322 F.3d at 292 — should not be elevated above all other stakeholders in a bankruptcy. To permit such claimants to "assert their claims against purchasers of the bankrupt's assets, while relegating lienholders to the proceeds of the sale" would "elevate claims that have not been secured or reduced to judgment to a position superior to those that have." /d. (quoting Forde v. Kee-Lox Manuf., 437 F. Supp. 631, 633 (W.D.N.Y. 1977)). Thus, "[t]o allow . . . claimants to assert successor liability claims against [an incoming purchaser] while limiting other creditors' recourse to the proceeds of the asset sale would be inconsistent with the Bankruptcy Code's priority scheme." 322 F.3d at 292 (emphasis added); accord In re All American of Ashburn, Inc., 56 B.R. 186, 190 (Bankr. N.D. Ga. 1986) ("There is no suggestion of Congressional intent to apply the successor doctrine to elevate product liability claims above their status under the Bankruptcy Code."). As the Puerto 20 Rico Court of Appeals held in the proceedings below, this Court's decisions under the prior bankruptcy legislation counsel against such a result. (See App. B at 27a (citing Nathanson v. Labor Board, 344 U.S. 25, 29 (1952).) 3. Ensuring National Uniformity The differing standards now applied by the circuits and state courts (including the courts of Puerto Rico) undermine the "national purpose to establish uniformity" of the Bankruptcy Code, /nt'l Shoe Co v. Pinkus, 278 U.S. 261, 265 (1929), and foster extreme uncertainty concerning the bankruptcy process. The Bankruptcy Code is a statute of vital economic importance. It serves the constitutionally-enshrined goal of creating "uniform Laws on the subject of Bankruptcies throughout the United States." U.S. Const., art. I, § 8, cl. 4. So long as the effect of a Section 363(f) "free and clear" order upon successor liability is open to debate, the price obtainable in a bankruptcy sale will be depressed; the potential recovery for creditors will be diminished; the debtor (or trustee's) negotiation position will be weakened; and the ongoing viability of a bankrupt business will be compromised. The effect of this disparate treatment is especially pernicious where, as here, the sold business operates in numerous states. Even after a Section 363(f) order has been issued, identical "successor liability” claims in different parts of the country may generate different kinds of exposure, an anomalous result antithetical to the constitutional goal of having uniform bankruptcy laws. Indeed, as long as there are some jurisdictions that permit "successor liability" claims to survive a Section 363(f) cleansing order, enterprising plaintiffs will contrive to bring their "successor liability" claims in those more permissive jurisdictions. 21 Cc. The Decision Below Frustrates Congress's Goal of Integrating Puerto Rico into the National Economy It is Congress's intention "to accord to Puerto Rico the degree of autonomy and independence normally associated with States of the Union." Examining Bd. v Flores de Otero, 426 U.S. 572, 594 (1976). '' Congress has given Puerto Rico the same functional economic status as a state.'? Thus, "[flull economic integration is as important to Puerto Rico as to any state in the Union." Trailer Marine Trans. Corp. v. Rivera Vazquez, 977 F.2d 1, 8 (1st Cir. 1992). The extension of the Bankruptcy Code to Puerto Rico is a critical (indeed indispensable) part of that legislative program. See In re Segarra, 14 B.R. at 872. Indeed, the federal Bankruptcy Code is the exclusive source of bankruptcy law throughout the United States, including 1! See 48 U.S.C. § 734 ("[t}he statutory laws of the United States not locally inapplicable . . . shall have the same force and effect in Puerto Rico as in the United States, except [certain] internal revenue laws"); Jn re Segarra, 14 B.R. 870, 872-73 (D.P.R. 1981) (noting that 48 U.S.C. § 734 "codiflies]" "[t]he policy of treating Puerto Rico on the same basis as a state for the purpose of determining if federal legislation is applicable in Puerto Rico" and that pursuant to that section, "the Bankruptcy Reform Act of 1978 is a statutory law not locally inapplicable and thus extensive to Puerto Rico"); 28 U.S.C. § 152 (establishing two bankruptcy court districts in Puerto Rico) 12 Federal courts have applied core U.S. commercial legislation to Puerto Rico on the same basis as if it were a state. Trailer Marine, 977 F.2d at 8 (finding that dormant Commerce Clause applies within Puerto Rico); Used Tire Int'l, Inc. v. Diaz Saldana, No. 97-1028, 1997 U.S. Dist. LEXIS 14016, at *28 (Sept. 8, 1997) (federal antitrust laws applicable within Puerto Rico), aff'd, 155 F.3d 1 (ist Cir. 1998). In a different context, this Court refused to permit Puerto Rico to erect a separate customs border. Torres v. Puerto Rico, 442 U.S. 465, 472 (1979); see also, e.g., 48 U.S.C. § 738 (barring tariffs or trade blockages with the mainland); 48 U.S.C. § 74la (same). 22 Puerto Rico," The decision below threatens to disrupt that important federal policy by throwing Puerto Rico's interpretation of a core bankruptcy principle into disharmony with the majority of states, and by creating disincentives for entities to purchase a debtor's assets in Puerto Rico. A grant of certiorari to correct the court's anomalous construction of section 363(f) would further the Congressional goal of integrating and supporting the economy of Puerto Rico. ‘> The provisions of the Bankruptcy Code pre-empt any inconsistent doctrine of Puerto‘Rican common law. "Although Puerto Rico has a unique status in our federal system, see, e.g., Examining Board v. Flores de Otero, 426 U.S. 572, 596... (1976)... the test for federal pre-emption of the law of Puerto Rico .. . is the same as the test under the Supremacy Clause, U.S. Const. Art. VI, Cl. 2, for pre-emption of the law of a State." Puerto Rico Dep't of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495 (1988). As to the pre-emptive effect of Section 363(f), see, e.g., Myers, 297 B.R. at 784 ("I find that the Bankruptcy Code preempts California state law in this case regarding successor liability.”); WBQ P'ship, 189 B.R. at 108 (finding that a Virginia depreciation-recoupment law "actually conflict[ed] with . . . 11 U.S.C. § 363(f) by 'stand{ing] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" and was therefore pre-empted by Section 363(f)) (first alteration added). 23 CONCLUSION The petition for certiorari should be granted. Respectfully submitted, PREETA D. BANSAL Counsel of Record JAY B. KASNER TIMOTHY G. NELSON SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Four Times Square New York, NY 10036 (212) 735-3000 AGUSTIN COLLAZO-MOIJICA JORGE E. PEREZ PIETRANTONI MENDEZ & ALVAREZ LLP Popular Center, 19th Floor 209 Mufioz Rivera Avenue San Juan, Puerto Rico 00918 (787) 274-1212 Counsel for Petitioner Dated: October 20, 2006 APPENDIX la APPENDIX A — OPINION OF THE SUPREME COURT OF PUERTO RICO DATED APRIL 11, 2006 IN THE SUPREME COURT OF PUERTO RICO No. CC-2004-900 Certiorari Evelyn Rodriguez Oquendo, Plaintiff and petitioner v. Petrie Retail Inc. D.1.P., and/or Centro Retail Apparel Corporation, D/B/A Marianne, Defendants Urban Brands, Inc., : Respondent JUSTICE FUSTER BERLINGERI delivered the opinion of the Court. San Juan, Puerto Rico, April 11, 2006 We must determine, among other things, whether the sale of assets “free of liens” under a federal bankruptcy proceeding precludes the application of the successor employer doctrine to a claim for wrongful discharge. 2a Appendix A | Evelyn Rodriguez Oquendo (plaintiff or petitioner) was an employee of the Tiendas Marianne store located at the Centro del Sur Shopping Center in Ponce from April 14, 1980, to October 5, 1998, when she was discharged. At the time -of her discharge, she worked as Assistant Manager. According to the findings of fact drawn by the Court of First Instance, she was replaced by a younger woman. On September 29, 1999, plaintiff filed a labor claim against Petrie Retail, Inc. (Petrie),' the corporate owner of Tiendas Marianne in Puerto Rico, alleging that she had been discharged from her job without just cause and that she had been discriminated against because of her age. Summons was issued on October 5, 1999, in the name of Petrie, and served on October 15 on Maritza Ruiz Vélez, manager of the Marianne store located at Centro del Sur Shopping Center. As said manager acknowledged in her testimony, immediately after receiving the summons, she contacted the main offices of Tiendas Marianne and forwarded the mentioned documents. Petrie did not appear at the trial and, on plaintiff’s motion, default was entered against it on May 25, 2000. The trial was held and the Court of First Instance, Superior Court 1. Plaintiff also included Centro Apparel Corporation because, as shown by the income withholding statements issued by the Department of the Treasury and the check stubs on record, the employer occasionally identified itself as that corporate entity. 3a Appendix A of Ponce, entered default judgment for plaintiff and ordered Petrie to pay plaintiff $11,204.67 as penalty for wrongful discharge under Act No. 80 of May 30, 1976, plus $30,000 . for age discrimination. A copy of the notice of judgment was filed in the record of the case on June 7, 2001, and on March 13, 2002, plaintiff moved the Court of First Instance to order the execution of said judgment. On September 16, 2002, the court issued the order of execution of judgment, ordering the attachment of two bank accounts as requested. On October 23, 2002, Urban Brands, Inc. (Urban or respondent) appeared before the Court of First Instance— without submitting to its jurisdiction—and asked the court to set aside the attachment and to stay the execution of judgment. Respondent alleged that the attached bank account belonged to it* and that it had purchased the assets of Tiendas Marianne from Petrie as part of a bankruptcy proceeding in the United States Bankruptcy Court for the Southern District of New York, without assuming liability for any of the debts of said corporation. Urban contended that the transaction was free of liens and that the service of the summons was insufficient because the summons was addressed to Petrie. Respondent further argued that even if the summons had been correctly served, the judgment was notified to Petrie—not to Urban—and, therefore, it was not final and unappealable and its execution did not lie. 2. 29 L.P.R.A. § 185 et seq. 3. One of the accounts was from Scotiabank de Puerto Rico and the other from Banco Popular de Puerto Rico. The funds deposited in the latter account were not attached because the account number on the attachment order was incorrect. 4a Appendix A Plaintiff-petitioner did not know that as part of the bankruptcy proceedings, Petrie had transferred its assets in Tiendas Marianne to. respondent Urban ten months before the service of summons—that is, two months after plaintiff's discharge. . The Court of First Instance held several hearings to determine whether it was proper to set aside the attachment and the execution of judgment. At those hearings—which Urban attended without submitting to the jurisdiction of the court—both parties presented evidence and arguments in support of their positions. By resolution of January 16, 2004, the trial court determined that Urban was Petrie’s successor employer and, consequently, denied the motion to set aside the attachment and stay the execution of judgment. Aggrieved by that ruling, Urban filed a brief entitled “Civil Appeal” in the Circuit Court of Appeals, essentially alleging that the Court of First Instance had erred in: (1) finding that Urban had been duly summoned; (2) finding that Urban was Petrie’s successor employer; and (3) authorizing the withdrawal of the funds attached in execution of the judgment before the resolution became final and unappealable. The Court of Appeals accepted Urban’s appeal as a petition for certiorari and, judgment of June 4, 2004, reversed the trial court’s decision. The appellate court was persuaded by respondent’s contentions that: (a) the acquisition of assets free of liens as part of a bankruptcy proceeding barred the application of the successor employer doctrine; and (b) even if there had been no bar to the application of said doctrine, 5a Appendix A the evidence presented was not sufficient to prove that it had to be applied to this case. The intermediate court also determined that Urban had not been duly summoned and, therefore, the court never acquired jurisdiction over it. Plaintiff Rodriguez Oquendo filed a motion for reconsideration in the appellate court, which denied it by way of a resolution notified on September 3, 2004. Aggrieved, plaintiff timely resorted to this Court, essentially alleging that the appellate court had erred in reversing the resolution of the Court of First Instance because Urban was liable for the discriminatory discharge under the successor employer doctrine. Petitioner also argued that Urban had been summoned according to law and that the judgment had been duly notified. On January 21, 2005, we issued the writ of certiorari. On March 18, 2005, having requested and obtained an extension of time, petitioner filed a brief in support of her petition for certiorari. Respondent, which also sought and obtained an extension of time, filed its brief on April 25, 2005. We are ready to adjudicate. A. The successor employer doctrine was incorporated four decades ago into our legal system by caselaw—through United States common law—to address cases in which a change of owners in a business operation makes it necessary 4. In its judgment, the Court of Appeals discussed the contention raised by Urban Brands, Inc. (Urban) that notice of the judgment had not been served on it, but on Petrie Retail, Inc. (Petrie). 6a Appendix A to determine the employees’ rights under the new employer. When this doctrine is applicable, it is understood that an employer who replaces another through a transfer of assets or a corporate merger will assume the obligations contracted by the previous employer. Pifieiro v. Int’l Air Serv. of P.R., Inc., 140 D.P.R. 343 [40 P.R. Offic. Trans. __] (1996); Bruno Lépez v. Motorplan, Inc. y otros, 134 D.P.R. 111 [34 PLR. Offic. Trans. __] (1993); J.R.T. v. Asoc. C. Playa Azul I, 117 D.P.R. 20 [17 P.R. Offic. Trans. 25] (1986); L.R.B. v. Cooperativa Azucarera, 98 P.R.R. 307 (1970); L.R.B. v. Club Nautico, 97 P.R.R. 376 (1969). The adoption and development of this doctrine addresses “the need to establish a balance between the employers’ right to ‘independently rearrange their business’ and to recognize ‘some protection to the employees from a sudden change in the employment relationship.”’ L.R.B. v. Cooperativa Azucarera, 98 P.R.R. at 318 (citing John Wiley & Sons v. Livingston, 376 U.S. 543 [, 549] (1964)). The successor employer doctrine originally developed in the United States Supreme Court and in other federal courts, in which it is known as “successor liability.” The doctrine was initially limited to enforcing collective bargaining agreements, particularly in dealing with arbitration provisions. John Wiley & Sons v. Livingston, 376 U.S. 543 (1964); United Steelworkers of Amer. v. Reliance Univ., Inc., 335 F.2d 891 (3d Cir. 1964); Wackenhut Corp. v. International U., United Plant Guard W., 332 F.2d 954 (9" Cir. 1964). Likewise, in Puerto Rico, we initially incorporated the doctrine to resolve controversies involving collective bargaining agreements and unfair labor practices. J.R.T. v. Asoc. C. Playa Azul I, 117 D.P.R. 20 [17 P.R. Offic. Ta Appendix A Trans. 25] (1986); L.R.B. v. Cooperativa Azucarera, 98 P.R.R. 307 (1970); L.R.B. v. Club Nautico, 97 P.R.R. 376 (1969). See also 2 Demetrio Fernandez and Celina Romany, Derecho laboral: casos y materiales 1265-1324, Rio Piedras, Ed. U.P.R. (1987). Federal courts subsequently extended the scope of the successor liability. doctrine to controversies involving discriminatory discharges under social legislation protective of labor. EEOC v. Vucitech, 842 F.2d 936 (7 Cir. 1988); Bates v. Pacific Maritime Ass’n, 744 F.2d 705 (9" Cir. 1984); In re National Airlines, Inc., 700 F.2d 695 (11 Cir. 1983); Equal Emp. Op. Com’n v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086 (6" Cir. 1974). This extension of the doctrine was justified when it was affirmed that the public policy against the discriminatory discharge of workers was as important as the public policy on the right to collective bargaining and the ban on unfair labor practices. In Bruno Lopez, this Court held that in our jurisdiction, the successor employer doctrine extends to claims for discriminatory discharge, which have a higher rank in our legal system. This type of discrimination is constitutionally and statutorily prohibited. Thus, in Pifeiro, at 349 [40 P.R. Offic. Trans. at __], we explained that “we have extended the successor employer doctrine in aid of the judicial responsibility to enforce, in concrete cases, important labor- related public policies that conform to our economic, social, and cultural reality.” Since we adopted the mentioned doctrine, we have acknowledged that “[t}he factors which have been considered 8a Appendix A in order to hold an entity liable for the unfair practices committed by another are varied.” L.R.B. v. Club Nautico, 97 P.R.R. at 390. As-a minimum, a substantial similarity is required “in the operation and continuity of the identity of the enterprise before and after the change .. . so that it be considered that the new employer shall assume obligations contracted by the previous employer.” L.R.B. v. Cooperativa Azucarera, 98 P.R.R. at 316. In the aforecited opinion, we held that Cooperativa Azucarera Central Juncos was the successor employer of a company that had entered into a collective bargaining agreement with the Asociacion de Azucareros Profesionales and, as such, had assumed the obligations contracted in said agreement. In so holding, we pointed out that a combination of an adequate number of the following factors was conclusive when attributing the continuation of the former employer’s obligations to the new employer: 1) [T]he existence of a substantial continuation in the same business activity; (2) the utilization of the same operating plant; (3) the employment of the same or substantially the same labor force; (4) to maintain the same supervisory personnel; (5) to use the same equipment and machinery and to employ the same methods of production; (6) the production of the same products and the rendering of the same services; (7) continuity of identity; and (8) the opération of the business during the transfer period. L.R.B. v. Cooperativa Azucarera, 98 P.R.R. at 317-318. ({Footnotes}] omitted.) 9a Appendix A In Bruno Lépez, at 122 [34 P.R. Offic. Trans. at ___], we again considered the federal caselaw and stated that in order to determine the existence of successor liability, several factors must be weighed, among which are: (1) [W]hether the new employer had notice of the employee’s claim against his or her predecessor; (2) the relative capacity of each employer to provide adequate relief to the employee’s claim, if valid, and (3) the benefit each employer has derived or may derive from the acts charged against them. These three factors, like those set forth in Cooperativa Azucarera, must be weighed when passing on cases that involve a possible successor liability issue, but none of these factors is controlling by itself. In Pifieiro, for instance, there was no evidence that the successor employer had notice of the employees’ claims, but we nevertheless imposed liability “to strike a fair balance between the interests involved,” considering “the clear continuity of identity between both companies, the similarity in business operations, as well as the public policy of protecting the workers in wrongful discharge cases, especially when in these cases the employees would otherwise be unable to obtain relief.” Pifeiro v. Int'l Air Serv. of P.R., Inc., 140 D.P.R. at 353 [40 P.R. Offic. Trans. at J. As we can see, what must be determined is whether in light of the specific facts of a case, there is a concurrence of a sufficient number of the factors considered important in previous cases for recognizing the existence of successor liability. 10a Appendix A B. As we have previously stated, in this case, the Court of First Instance deemed proven that plaintiff had been discriminated against because of her age and that she was discharged without just cause. It also found that Urban was liable for said discriminatory discharge under our successor employer doctrine. The Court of Appeals, in turn, reversed the trial court’s decision and concluded that none of the tests generally required for applying the successor liability doctrine, as developed in the United States common law system, was present here. Although the appellate court acknowledged that the doctrine was subject to state law and varied from state to state, it completely ignored the above-cited cases in which this Court has discussed in detail the successor employer doctrine as it has been applied in our jurisdiction. The Court of Appeals examined four factors that have been considered by the federal courts as exceptions to the general rule that when a company sells its assets to another, the purchaser is not liable for the seller’s obligations. However, it overlooked the previously cited factors stressed by this Court in Cooperativa Azucarera and in Bruno Lépez to establish that the successor employer is liable to the employees for the predecessor’s obligations. We are not insinuating here that it is improper for our courts to assess the factors considered in United States 5. (1) The purchaser (new employer) expressly or implicitly agrees to assume liability; (2) the transaction is a consolidation or merger; (3) the purchaser is a mere continuation of the seller; or (4) the transfer of assets is for the fraudulent purpose of escaping liability. 15 Fletcher Cyc. Corp. § 7122, at 249 (Perm. ed. 1999). lla Appendix A common law to determine the existence of “successor liability” where pertinent. But our courts cannot ignore completely—as they did here—our own precedents on a doctrine adopted in our jurisdiction since the 1960's. In turn, when the Court of First Instance found that Urban was a successor employer and, as such, was liable to plaintiff, - it made an effort to apply the tests laid down in Cooperativa Azucarera and ruled that “[njor all practical purposes, Tienda Marianne ... is still in the same place, with the same employees, engaged in the same type of business activity, and with the same business identity.’ [(Emphasis suppressed. )] 6. The Court of First Instance specifically arrived at the following conclusions of fact: “(1) [T]he Tiendas Marianne store at the Centro del Sur Shopping Center, where Urban was summoned, was and still is the same store it has kept; (2) it was in that store that plaintiff worked for many years for Ticndas Marianne; (3) Urban currently keeps that same store with the same name, with the same concept (selling women's clothes), and at the exact same place and physical space in the shopping center; (4) neither in that same store nor in the other Tiendas Marianne stores throughout Pucrto Rico has Urban changed the type of business activity in which it is engaged (the sale of women’s clothes), which is the same as when plaintiff worked for Tiendas Marianne under the former owner; (5) Urban has kept the same store design as the former owner; (6) it. uses the same cash register; (7) Urban keeps essentially the same personnel; (8) Urban keeps its bank (Cont'd) 12a Appendix A Although the Court of Appeals determined that it was not proper to impose liability on respondent here based on the factors associated with the common-law successor liability doctrine, it also ascribed great importance to Urban’s contention that the sale of assets in a bankruptcy proceeding barred the application of the successor employer doctrine. A well-pondered analysis of the subject shows that the appellate court erred in including in its judgment a limited analysis of the relevant federal caselaw. Indeed, there is a string of cases in which the courts have held that the sale of assets approved by a federal bankruptcy court as “free and clear of all claims” precludes the application of the successor liability doctrine against the asset purchaser. In re All American of Ashburn, Inc., 56 B.R. 186 [(Bkrtcy. N.D. Ga. 1986)]; Rubinstein v. Alaska Pacific Consortium (In re New England Fish Co.), 19 B.R. 323 {((Bkrtcy. W.D. Wash. 1982)]; Forde v. Kee-Lox Mfg. Co., Inc., 437 F. Supp. 631 [W.D. N.Y. (1977)]. Some bankruptcy courts have attempted to enjoin claims that would interfere not only with the sale of assets, but also with the enjoyment of its benefits. Collier Bankruptcy Manual ¥ 363.02 [3], at 363-10 ({rev.] 3d ed. 2002). (Cont'd) account in the same bank as the former owner; (9) Urban keeps the same floor design and space distribution in the store, the same colors, logo and sign as the former owner when plaintiff worked for it.” Appendix to the Petition for Certiorari at 40-41. (Emphasis suppressed. ) 13a Appendix A However, another string of weightier federal cases has questioned the bankruptcy courts’ authority to override the application of the successor liability doctrines developed by state courts. Collier, supra. Thus, the United States Circuit Court of Appeals for the First Circuit has found that inadequate notice to a claimant about the existence of a bankruptcy proceeding may preclude the bankruptcy court from granting injunctive relief against future claims. In re Savage Industries, Inc., 43 F.3d 714 (1* Cir. 1994). The Seventh Circuit Court of Appeals has gone even further, suggesting that bankruptcy courts lack jurisdiction to interfere with successor liability claims. Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159 (7" Cir. 1994). It bears mentioning that the caselaw on which the appellate court’s judgment rests comes from bankruptcy court and federal first-instance court cases, whereas the other string of federal cases mentioned here involves decisions from different federal appellate courts. In general terms, the cases in which the federal courts have held that the sale of assets “free and clear of all claims” approved by a bankruptcy court precludes the application of the successor liability doctrine have set forth two main reasons for arriving at such results: (1) that if after a bankruptcy sale a plaintiff asserts a successor liability claim, he or she would receive a priority over those claims that would be paid in accordance with the Federal Bankruptcy Code, and this would rearrange the priority scheme ‘established by said code; and (2) that the implementation of the successor liability doctrine would have a negative impact on the trustee’s ability to sell assets of the estate at a fair price. In re All American of Ashburn, Inc., 56 B.R. 186 l4a Appendix A (Bkrtcy. N.C. Ga. 1986); Rubinstein v. Alaska Pacific (In re New England Fish Co.), 19 B.R. 323 (Bankr.W.D. Wash. 1982); Forde v. Kee-Lox Mfg. Co., Inc., 437 F. Supp. 631 (W.D.N.Y. 1977). In rejecting these arguments, the Seventh Circuit, in the voice of Chief Judge Posner, explained: - All this is true, but proves too much. It implies, what no one believes, /n re American Hardwoods, Inc., 885 F.2d 621 (9 Cir. 1989), that by virtue of the arising-under jurisdiction a bankruptcy court enjoys a blanket power to enjoin all future lawsuits against a buyer at a bankruptcy sale in order to maximize the sale price: more, that the court could in effect immunize such buyers from all state and federal laws that might reduce the value of the assets bought from the bankrupt; in effect, that it could discharge the debts of nondebtors .. . as well as of debtors even if the creditors did not consent; that it could allow the parties to bankruptcy sales to extinguish the rights of third parties ... without notice to them or (as notice might well be infeasible) any consideration of their interests. If the [bankruptcy] court could do all these nice things the result would indeed be to make the property of bankrupts more valuable than other property—more valuable to the creditors, of course, but also to the debtor’s shareholders and managers to the extent that the strategic position of the debtor in possession in a reorganization enables the debtor’s owners and managers to benefit from bankruptcy. But the result would not only be harm to third parties .. . 15a Appendix A but also a further incentive to enter bankruptcy for reasons that have nothing to do with the purposes of bankruptcy law. Zerand-Bernal Group, Inc. v. Cox, 23 F.3d 159, 163 (7" Cir. 1994). The caselaw trend that refuses to acknowledge a limitation in the application of different successor liability doctrines simply because the sale of assets took place in the context of a bankruptcy proceeding is not only in tune with “important labor-related public policies that conform to our economic, social, and cultural reality,” Pifieiro v. Int'l Air Serv. of P.R., Inc., 140 D.P.R. at 349 [40 P.R. Offic. Trans. at __], but is also better supported by federal caselaw and by the doctrine in the field of bankruptcy. Thus, a well-known authority on this matter points out: “Successor liability is a nonbankruptcy state law issue, and bankruptcy should not change the result that would otherwise obtain under nonbankruptcy law.” Collier Bankruptcy Manual, supra, at 363-11. See also M. H. Reed, Successor Liability and Bankruptcy Sales, L1-3 Bus. Law 653 (1996). We therefore hold that the sale of assets under a federal bankruptcy proceeding, though free of liens, will not bar the application of the successor employer doctrine as developed by our caselaw precedents. C. We have repeatedly held that, as a rule, absent passion, prejudice, bias or manifest error, appellate courts must not disturb the trial courts’ weighing of the evidence. Torres Ortiz v. Pld, 123 D.P.R. 637 [23 P.R. Offic. Trans. 16a Appendix A 560] (1989); Valencia, ex parte, 116 D.P.R. 909 [16 P.R. Offic. Trans. 1118] (1986); Velazquez v. Ponce Asphalt, 113 D.P.R. 39 [13 P.R. Offic. Trans. 53] (1982). We are in no position to question the Court of First Instance’s findings that plaintiff was discriminated against by reason of her age and that she was discharged without just cause, but it is indeed incumbent upon this Court to examine whether this case may be appropriately decided by way of the successor employer doctrine as set forth in our caselaw. After applying to this case the tests laid down in Cooperativa Azucarera and reaffirmed in Pifeiro, the trial court concluded, among other things, that “Tienda Marianne . IS Still in the same place, with the same employees, engaged in the same type of business activity, and with the same business identity” it had when plaintiff was discharged, and held Urban liable for the obligations contracted by Petrie. Appendix to the Petition for Certiorari at 41. (Emphasis suppressed.) The fact that apparently Urban had no knowledge or notice of plaintiff's action against Petrie when it acquired the assets of Tiendas Marianne weighs against the imposition of liability under the successor employer doctrine. In fact, the claim had not been filed when the transaction was made. However, we have already indicated that none of the factors to be considered when determining the existence of successor employer liability is controlling by itself. In the last case in which we_discussed the successorship doctrine, we imposed liability even though there was no evidence that the purchaser of the company had prior notice of the employees’ claims. Pineiro v. Int'l Air Serv. of P.R., Inc., 140 D.P.R. 343 [40 P.R. Offic. Trans. __] (1996). 17a Appendix A An examination of the record of the instant case shows that plaintiff had no knowledge of the transfer of the Tiendas Marianne assets to Urban until that corporation appeared before the trial court to question the attachment of assets and the execution of judgment. It is clear that plaintiff was not given an opportunity to assert her claim against Petrie during the bankruptcy proceedings. Moreover, everything tends to show that the employer’s corporate structure was unknown to plaintiff. The copies of the income withholding statements issued by the Department of the Treasury and provided by plaintiff show that different artificial persons had paid her during the years she worked for Marianne, thus making it difficult for the aggrieved worker to determine who was actually her employer. Therefore, “to strike a fair balance between the interests involved,” and considering “the clear continuity of identity between both companies, the similarity in business operations, as well as the public policy of protecting the workers in wrongful discharge cases,” and the fact—highly relevant in these cases—that the employee “would otherwise be unable to obtain relief’ (Pifieiro v. Int’l Air Serv. of P.R., Inc., 140 D.P.R. at 353 [40 P.R. Offic. Trans. at __]), we hold that the Court of First Instance acted correctly by imposing liability on respondent Urban as Petrie’s successor employer. If] Finally, let us consider respondent Urban’s contentions that: (1) the service of summons was insufficient because the summons was addressed to Petrie, plaintiff's former 18a Appendix A employer; and (2) even if the summons had been correctly served, the judgment was not duly notified and, therefore, it was not final and unappealable and its execution did not lie. From the outset, we must point out that although respondent Urban has indicated that it appeared before the Court of First Instance without submitting to its jurisdiction to question the service of summons and notice of judgment, it is clear that in its oral and written appearances it presented arguments on the merits as to the sufficiency of the evidence presented by plaintiff.’ Therefore, we believe that respondent Urban tacitly submitted to the jurisdiction of the trial court and waived its contention of insufficient service of process. See: Vazquez v. Lépez, 2003 TSPR 173, 160 D.P.R. __ [60 P.R. Offic. Trans. __] (2003); and Qume Caribe, Inc. v. Srio. de Hacienda, 153 D.P.R. 700 [53 P.R. Offic. Trans. __] (2001). In view of this situation, we need not determine whether the imposition of successor liability to a business concern that replaces another through the purchase of the latter’s assets implies that the issuance of summons in the name of the predecessor employer suffices to acquire jurisdiction over its successor. Lastly, Urban contends that it was not duly notified of the trial court’s judgment because the address to which it was sent (150 Meadowlands Parkway, [Secaucus], NJ 07094) was not its address. However, if this is the case, we cannot understand why Urban does not rebut plaintiff's argument that the documents on record regarding the attached 7. These arguments were copied and developed by Urban in its brief to this Court. 19a Appendix A Scotiabank account (which respondent claims as its own), ‘registered in the name of Marianne USPR, Inc., DBA Marianne/Marianne Plus, show that the account holder’s address is Urban Brands, Inc., “Marianne Division, 150_Meadowlands Parkway, Secaucus, NJ 07094. In view of this fact, we must conclude not only that respondent Urban was notified of the judgment against Petrie—for which it must answer under the successor employer doctrine, as previously discussed—but also that its allegation to the contrary is meritless. Consequently, the judgment rendered by the Court of Appeals on June 4, 2004, is reversed, and the orders of attachment and execution of judgment issued by the Court of First Instance are affirmed. Judgment will be rendered accordingly. Justice Rivera Pérez dissents without a written opinion. 20a APPENDIX B — JUDGMENT OF THE COMMONWEALTH OF PUERTO RICO, COURT OF APPEALS, JUDICIAL REGION OF PONCE DATED JUNE 4, 2004 COMMONWEALTH OF PUERTO RICO COURT OF APPEALS JUDICIAL REGION OF PONCE KLCE400366 EVELYN QUINONES [sic] OQUENDO Plaintiff-Respondent Ve PIETRI /sic] RETAIL INC., D.i.P., AND/OR CENTRO APPAREL CORPORATION, D/B/A MARIANNE, Defendants URBAN BRANDS, INC. Petitioner Certiorari from the Court of First Instance, Ponce Superior Court Re: Wrongful Discharge Civil Case No. JPE 1999-0647 (605) Panel composed of Judge Brau Ramirez, as Presiding Judge, and Judges Hernandez Torres and Martinez Torres. Judgment rendered by Judge Martinez Torres. 2la Appendix B JUDGMENT San Juan, Puerto Rico, June 4, 2004 Petitioner Urban Brands, Inc. prays this Court to issue the writ of certiorari and to reverse the resolution of the Court of First Instance, Ponce Part, which denied Urban’s motion for an order to stay an allegedly unlawful attachment. On the grounds set forth below, we reverse the resolution appealed from. | I On September 29, 1999, plaintiff-respondent Evelyn Rodriguez Oquendo filed a labor claim against Petrie Retail Inc., D.I.P., and/or Centro Apparel Corporation, d/b/a Marianne (Petrie). In her complaint, Rodriguez Oquendo alleged that she was discharged without just cause and that she was the victim of discrimination by reason of age. Summons was issued in the name of Petrie. On October 15, 1999, the summons and the complaint were delivered to Maritza Ruiz Vélez, manager of the Tiendas Marianne store located at the Centro del Sur Shopping Center in Ponce. Ruiz Vélez, manager of the Tiendas Marianne store~at Centro del Sur Shopping Center, immediately called the main offices of Tiendas Marianne and sent them both documents. However, petitioner Urban had acquired the assets of Tiendas Marianne de Puerto Rico ten (10) months before the service of summons against respondent Petrie and two 22a Appendix B (2) months after plaintiff-respondent Rodriguez Oquendo was discharged. Urban acquired the assets at a sale carried out in the United States Bankruptcy Court, Southern District of New York, inasmuch as Petrie had filed for bankruptcy under Chapter 11 of the Federal Bankruntcy Code in the State of New York. On May 25, 2000, on motion of plaintiff-respondent Rodriguez Oquendo, default was entered against Petrie. The trial was held, and the Court of First Instance rendered Judgment for plaintiff and ordered defendant Petrie to pay Rodriguez Oquendo $11,204.67 as penalty for the alleged wrongful discharge, plus $30,000 for the alleged age discrimination. A copy of the notice of judgment was filed in the record of the case on June 7, 2001. On March 13, 2002, plaintiff-respondent Rodriguez Oquendo moved the Court of First Instance for execution of judgment and, on September 16, 2002, the court finally issued the order of execution of judgment, ordering the attachment of two (2) bank accounts belonging to petitioner Urban. One of the accounts is from Scotiabank de Puerto Rico and the other from Banco Popular de Puerto Rico. The court issued the writ of execution on October 4, 2002. The funds deposited in the Banco Popular account were not attached because the account number in the attachment order was incorrect. Petitioner Urban appeared in the Court of First Instance without submitting to its jurisdiction and asked the court to set aside the attachment and to stay the execution of judgment. In its motion, Urban adduced that the attached 23a Appendix B account belonged to it, and alleged insufficiency of process and that it was not a party to the claim. Urban also asked to- be heard. After the hearing, the Court of First Instance denied petitioner Urban’s motion. Aggrieved, Urban sought certiorari before this Court, assigning four errors to the Court of First Instance. Urban contends that said court erred: first, in determining that Urban was indeed summoned; second, in determining that Urban was a successor employer; third, in not issuing an order to stay the allegedly wrongful and illegal attachment; and, finally, in granting authorization to withdraw the funds attached in execution of judgment before the en became final and unappealable. In aid dios jurisdiction, we set aside the March 10, 2004, order of\the Court of First Instance, Ponce Part (which authorized the withdrawal of the attached funds) and banned the issuance of similar orders. We also ordered that any funds withdrawn in compliance with that order be deposited again in the Court of First Instance, Ponce Part. The Court\also ordered plaintiff-respondent Rodriguez Oquendo to file an opposition to the petition, which she timely did. Having examined the record and the parties’ briefs, we decide under the applicable law. 24a Appendix B I Under section 363(f) of the Federal Bankruptcy Code, 11 U.S.C. § 363(f), the trustee may sell property free of interests.' If the debtor’s assets have been liquidated, the claimants will probably seek to recover from the purchaser or purchasers of the assets. Courts have provided protection to purchasers of assets, who would otherwise be subject to these claims under the successor liability doctrine, by way of the approval of sales free of all present and future claims against the debtof~orthe-estate.’ As a general rule, a purchaser of assets does not assume the, liabilities of the seller unless the purchaser expressly agrees to do so or an exception to the rule exists. Successor liability is an equitable exception to this rule. Successor liability is subject to state law, and the doctrines vary from state to state, but generally successor liability will not attach unless (1) the purchaser expressly or impliedly assumes the liability; (2) the transaction constitutes a merger or consolidation of the businesses; (3) the purchaser is merely 1. “Under section 363 (f), the trustee may sell property free of interests.” 3 Collier on Bankruptcy $ 363.02[3], at 363-15 [sic]. 2. “If the debtor’s assets have been liquidated, such claimants may seek to recover from [a purchaser of the debtor’s assets. Courts have sought to provide protection to] purchascrs of assets, who might otherwise be subject to such claims under principles of successor liability, by approving sales free of all present future claims against the debtor or the estate.” Jd. at 363-16 [sic]. 25a Appendix B a continuation of the seller; or (4) the transaction was carried out fraudulently to avoid liability. * To determine whether the purchaser is a continuation of the seller, we must examine if there is a continuation of the seller’s corporate entity, not if there is a continuation of the seller’s business operations.* 15 William M. Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 7122.60 [sic], at 257, West Group (1999). See Cooper v. Lakewood Eng’g & Mfg. Co., 45 F.3d 243, 245 (8" Cir. 1995); Upholsterers Int’l Union Pension Fund vy. Artistic Furniture of Pontiac, 920 F.2d 1323, 1325-1326 (7 Cir. 1990). 3. “As a general rule, a purchaser of assets does not assume the liabilities of the seller unless the purchaser expressly agrees to do so or an exception to the rule exists. Successor liability is an equitable exception to this general rule. Successor liability depends on state law and the doctrines vary from state to state, but generally successor liability will not attach unless (1) the purchaser expressly or impliedly assumed the liability; (2) the transaction amounted to a merger or consolidation of the businesses; (3) the purchaser was merely a continuation of the seller; or (4) the transaction was centered into fraudulently in order to avoid liability for the obligations.” Id. at 363-16 /sic]. 4. “The mere continuation exception to the nonliability of successors applies when the transferee corporation is merely a continuation or reincarnation of the transferor corporation. In determining whether one corporation is a continuation of another, the test is whether there is a continuation of the corporate entity . . . not whether there is a continuation of the transferor’s business operations.” 15 William M. Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 7122.60 /sic], at 257, West Group (1999). 26a Appendix B The successor liability doctrine may be applied to claims for discrimination in employment filed under the Civil Rights Act of 1866 (42 U.S.C. § 1981). Although successor liability may be imposed in a particular case under § 1981, it all depends on whether the successor knew about the charge or pending lawsuit before acquiring the business or assets of its predecessor. The successor liability doctrine may also be applied to claims for discrimination in employment filed under Title VII of the Civil Rights Act of 1964. This doctrine is also applicable to actions filed under state civil rights acts. Successor liability in causes of action brought under state civil rights acts is defeated if the successor corporation had no knowledge of the discrimination claim before the date of purchase. What is more, the doctrine may apply to claims brought under the Age Discrimination in Employment Act (A.D.E.A.)2 Id. at 257-258 [sic]. 5. “The successor doctrine may apply to claims for employment discrimination brought under the Civil Rights Act of 1866, 42 U.S.C. § 1981. Whether successor liability should be imposed in a particular case brought under § 1981 depends upon whether the successor company had notice of the charge or pending lawsuit prior to acquiring the business or assets of the predecessor.... [T]he successor liability doctrine may also be applied to claims for employment discrimination brought under Title VII ef the Civil Rights Act of 1964. The successor liability doctrine is also applicable to actions brought under state civil rights acts. Successor liability in a cause of action brought pursuant to a state civil rights act is foreclosed where the successor corporation had no notice of the discrimination claim prior to the acquisition date. Furthermore, the successor doctrine may apply to claims for employment discrimination pursuant to the Age Discrimination in Employment Act.” Id. at 257-258 [sic]. 27a Appendix B In Nathanson v. Labor Board, 344 U.S. 25, 29 (1952), the United States Supre:ne Court held chat the purpose of the Bankruptcy Act was to achieve equality of distribution among the claimants.° That is why bankruptcy courts have held that a sale of the debtor’s assets, approved by the United States Bankruptcy Court as free and clear of all claims, precludes the application of the successor doctrine against a purchaser of those assets in a suit based on the debtor’s alleged employment discrimination and violations of employees’ civil nghts. See Jn re All American of Ashburn, Inc., 56 B.R. 186, 190 (Bkrtcy. N.D. Ga. 1986); Rubinstein v. Alaska Pacific Consortium [(In re New England Fish Co.)], 19 B.R. 323, 328-329 (Bkricy. W.D. Wash. 1982); Forde v. Kee-Lox Mfg. Co., Inc., 437 F. Supp. 631 (W.D.N.Y. 1977). In In re All American of Ashburn, Inc., the United States Bankruptcy Court in Atlanta explained that Forde, 437 F.Supp. at 633-634, established two policies against allowing successor liability to apply to purchasers of assets in bankruptcy sales. The first is that if a plaintiff files a claim grounded on successor liability after a bankruptcy sale, he or she, in effect, would receive a priority over those claims that would be paid in accordance with the Federal Bankruptcy Code. As a result, the successor liability theory would modify the priority scheme established by the Federal Bankruptcy Code. The other reason is the negative impact that the successor liability doctrine would have on the trustee’s ability to sell assets of the estate at a fair price.’ 6. The theme of the Bankruptcy Act is ‘equality of distribution.’” Nathanson v. Labor Board, 344 U.S. 25, 29 (1952). 7. “The Forde case sets out two policies against allowing successor liability to follow bankruptcy sales. The first is that if a (Cont'd) 28a Appendix B | This case does not satisfy the successor liability tests. Petitioner Urban, as the purchaser, did not assume—expressly or impliedly—defendant Petrie’s alleged liability to plaintiff- respondent Rodriguez Oquendo. Section 2.3 of the Asset Purchase Agreement clearly shows that Urban only assumed the following liabilities: (a) all liabilities for on-order merchandise; (b) all liabilities of any of the sellers accruing or arising from and after the closing date under any and all assigned contracts. The agreement further provides that all the liabilities and obligations of the seller of whatever kind or nature, known or unknown, fixed or contingent, accrued or unaccrued, other than the liabilities assumed by the purchaser, are considered excluded liabilities, and the purchaser will not assume or pay, perform, discharge or be responsible for any of the excluded liabilities. See Exhibit XXII, at 79-80. Second, there is no such thing here as a merger or consolidation of two businesses. Third, Urban is a corporation different from Petrie; it is not a continuation of Petrie’s same corporate entity. Finally, there is no assignment of fraud in the acquisition of the assets. _ Nevertheless, even if the successor liability tests had been met, plaintiff-respondent Rodriguez Oquendo did not prove that petitioner Urban had knowledge or notice of the (Cont'd) plaintiff asserts a claim grounded on successor liability after a bankruptcy salc, he, in effect, receives a priority over those claims which were paid in accordance with the Bankruptcy Code. . . The result is that successor rearrange the priority scheme established by the Bankruptcy Code. ... The other reason is the negative impact that potential successor liability claims would have on the trustee’ s ability to sell assets of the estate at a fair price.” All American of Ashburn, Inc., 56 B.R. 186, 190 (Bkrtcy. N.D. Ga. 1986). 29a Appendix B alleged employmient discrimination claim at the time of acquiring defendant Petrie’s assets. This forecloses or defeats Rodriguez Oquendo’s cause of action for employment discrimination against Urban under the successor liability doctrine. Therefore, the Court of First Instance erred in holding that petitioner Urban was liable to: plaintiff-respondent Rodriguez Oquendo under the successor liability doctrine for her allegedly discriminatory discharge by respondent Petrie. Ii Urban’s defenses were not waived, because it was never appropriately summoned or joined as a party to the claim. Service of process is a constitutional procedural mechanism whereby the cour; acquires jurisdiction over the defendant’s person, so that he or she may appear to be heard and to defend himself or herself from the claim filed against him or her. Civil Procedure Rule 4 (32 L.P.R.A. App. III); Peguero y otros v. Hernandez Pellot, 139 D.P.R. 487, 494 (1995). (Cases cited.) ““The main purpose of service of process is to notify the defendant that an action has been filed against him or her, in order to guarantee his or her right to be heard and to defend himself or herself.” Marquez v. Barreto, 143 D.P.R. 137, 142 (1997). See also Bco. Central Corp. v. Capit{o]l Plaza, Inc., 135 D.P.R. 760, 763 (199[4]). Since service of process is a constitutional imperative of due process of law, we have demanded strict compliance when its requirements are 30a Appendix B involved. Quinones Roman vy. Cia. ABC, opinion of October 31, 2000, 2000 J.T.S. 172, at 295; First Bank of P.R. v. Inmob. Nac., Inc., 144 D.P.R. 901, 913 (1998). If these requirements are not met, the court does not acquire jurisdiction over the defendant’s person. The concept of ‘in personam jurisdiction” is inextricably tied to the due process of law. Marquez v. Barreto, supra, at 142 [-143]; Reyes v. Oriental Fed. Savs. Bank, 133 D.P.R. 15, 21 (1993). A court may acquire in personam jurisdiction in two manners: (1) by adequately using the procedural mechanisms of service of process provided in the Rules of Civil Procedure, or (2) by the defendant’s voluntary submission to the jurisdiction of the court. Mdrquez v. Barreto, supra, at 143. Moreover, for a plaintiff to acquire jurisdiction over the person of a defendant, due process of law requires that the defendant be adequately notified of the claim filed against him or her, and that he or she be afforded the opportunity to be heard before his or her rights are adjudicated. Ledn v. Rest. El Tropical, opinion of June 7, 2001, 2001 J.T.S. 84, at 1326; Ind. Sideruirgica v. Thyssen Steel Caribbean, 114 D.P.R. 548, 559 (1983). Section 12.01 of Act No. 144 of August 10, 1995, better known as the General Corporations Law of 1995 (14 L.P.R.A. § 3126), provides the following with regard to service of process on corporations doing business_in Puerto Rico: 31a Appendix B § 3126. Service of process on corporations (a) Service of legal process upon any corporation organized in the Commonwealth shall be made by personally delivering a copy of the process to any officer or director of the corporation in the Commonwealth, or the registered agent of the corporation in the Commonwealth, or by leaving it at the dwelling or usual place of abode of any officer, director or registered agent (if the registered agent is an individual) in the Commonwealth, or at the registered office or other place of business of the corporation in the Commonwealth. If the resident agent is a corporation, service of process may be made through such corporation as agent, by delivery in the Commonwealth of a copy of the process to the president, vice president, secretary, assistant secretary or any director of the corporate resident agent,... Civil Procedure Rule 4.4(e) (32 L.P.R.A. App. III, R. 4.4 (e)) also provides the following with respect to service of process on corporations: Rule 4.4. Personal service The summons and complaint shall be served together. The plaintiff shall furnish the persons making service with the necessary copies. The process server, upon delivering copy of the summons, shall make proof of service on the back 32a Appendix B of the same, writing above his signature the date and place of the service and the name of the person upon whom service was made. Service shall be made as follows: (ec) Upon a corporation, company, partnership, association or any other artificial person, by delivering a copy of the summons and of the complaint to an officer, managing or general agent, or to any other agent authorized by appointment or designated by law to receive service of process. The above-stated rule shows that process may be served on a corporation by delivering a copy of the summons and of the complaint to an officer, managing or general agent or any other agent authorized by appointment or designated by law to receive service of process. Quifiones Réman v. Cia. ABC, supra, at 295. What is truly important for a person to qualify as managing agent through whom a corporation authorized to do business in Puerto Rico may be summoned is that said person be in a position of sufficient responsibility so that it may be reasonable to presume that the person will transmit or forward the summons and the complaint to his or her organizational superiors. /d. See 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1103, West Pub. (1987). Regarding the term “managing agent,’ Quifiones Roman cites corporate commentator Fletcher to point out that state and federal courts are inclined to construe said term liberally 33a Appendix B in order to facilitate the acquisition of jurisdiction over a corporation. See 18A William M. Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 8746, at 97, West Pub. (1997). To ensure compliance with the notification requirement, the summons must be served on a natural or artificial person who, as an officer, managing or general agent, or agent authorized or designated by law to receive service of process can, with reasonable certainty, receive and remit the summons to the defendant corporation. Civil Procedure Rule 4.4 (e); [Léon] v. Rest. El Tropical, opinion of June 7, 2001, 2001 J.T.S. 84, at 1326-1327. (Cases cited.) In sum, the rule reiterated by Puerto Rico’s highest court is that the defendant must be “[rJeally notified of the claim against him or her and that his or her essential nights are not substantially harmed.” /Léon] v. Rest. El Tropical, supra. In this case, petitioner Urban did not submit voluntarily to the jurisdiction of the court, The summons was addressed to Petrie, not to Urban. The complaint makes no reference to the fact that Petrie had sold its assets in Puerto Rico to Urban. Although process was served on the person of a managing agent, the manager was authorized to receive summonses on behalf of Urban not summonses addressed to Petrie. Neither was it alleged in the complaint that Urban had assumed Petrie’s liabilities or obligations. What is more, Urban is not even a party to the action. Therefore, the Court of First Instance erred in finding that petitioner Urban had been adequately summoned. — 34a Appendix B . IV For the foregoing reasons, the writ of certiorari is issued, the judgment below is reversed, and the attachment order is set aside. Therefore, it is ordered that the funds attached be returned to petitioner Urban Brands, Inc. It was so agreed and ordered by the Court and certified by the Chief Clerk. (illegible signature) Aida Ileana Oquendo Graulau Chief Clerk [Handwritten: ] Deputy Clerk 35a APPENDIX C — RESOLUTION OF THE COMMONWEALTH OF PUERTO RICO, COURT OF FIRST INSTANCE, SUPERIOR COURT OF PONCE DATED JANUARY 16, 2004 COMMONWEALTH OF PUERTO RICO COURT OF FIRST INSTANCE SUPERIOR COURT OF PONCE CIVIL NO. JPE1999-0647 (605) EVELYN QUINONES [sic] OQUENDO Plaintiff V. [PIETRIE] RETAIL INC., D.LP., AND/OR CENTRO APPAREL CORPORATION, D/B/A MARIANNE Employer-defendant RE: ACTION FOR WRONGFUL DISCHARGE setabanainen te EMPLOYMENT RESOLUTION I Plaintiff Evelyn Rodriguez Oquendo was employed by Tiendas Marianne”! from April 14, 1980, to October 5, 7. At the time, Tiendas Marianne de Puerto Rico was owned by Petrie Retail, Inc., although the payment stubs and withholding (Cont’d) 36a Appendix C 1998, when she was discharged. At the time of her discharge, Rodriguez Oquendo was Assistant Manager of the Marianne store that was—and still is—located at the Centro del Sur Shopping Center in Ponce. On September 29, 1999, Rodriguez Oquendo filed a labor claim against her employer, Tiendas Marianne, alleging that she had been discharged from her employment without just cause and that she had been discriminated against because of her age. On October 5, 1999, the Clerk’s Office of this Judicial Center issued the pertinent notice of the complaint filed against the defendant employer, who was duly notified and summoned on that same day at 1:30 p.m. According to the service of summons or notice of the complaint, to the oral and documentary evidence admitted during the proceedings, and to Urban Brands, Inc.’s admission and stipulation, the person served with summons on that date was Maritza I. Ruiz Vélez, who was and still is the Manager of the Tiendas Marianne store located at the Centro del Sur Shopping Center in Ponce; this was the same store branch owned by the defendant employer and where plaintiff Rodriguez Oquendo worked for many years. According to Ruiz Vélez'’s testimony before this Court, as soon as she received the complaint and the summons, she (Cont'd) statements admitted in evidence show that [plaintiff] received her salary from other corporations that apparently were subsidiaries to that company. 37a Appendix C immediately called the Tiendas Marianne main offices in San Juan and forwarded both documents. The evidence presented by Urban Brands, Inc., shows that by the date the manager of Tiendas Marianne in Centro del Sur was summoned, the corporate cluster that owned Tiendas Marianne in Puerto Rico had been sold almost ten months earlier to a corporation called Urban Acquisition Corp.* {sic} Despite the summons served on the person of Manager Ruiz Vélez, nobody appeared before this Court to answer or object to the\complaint or to report a change of owner; thus, on plaintiff's motion, this Court entered default against the defendant employer on May 25, 2000. See 32 L.P.R.A. §§ 3120 and \3121; Supermercado Grande Inc. v. Alamo Perez, decided September 12, 2002, 2003 TSPR 116; Ruiz Rivas v. Colegio San Agustin, decided September 15, 2000, 2000 TSPR 147; Valentin v. Housing, 146 D.P.R. 712 (1998); Mercado Cintron v. Zeta Communications, 135 D.P.R. 737 (1994); and Rules 10.1 and 45 of Civil Procedure. After holding the trial on the merits, this Court rendered ~— Judgment for plaintiff and ordered the defendant employer to pay plaintiff Rodriguez Oquendo $11,204.67 as penalty for wrongful discharge [Act No. 80 of May 30, 1976] and $30,000 in damages for age discrimination [Act No. 100 of June 30, 1959]. 8. ‘"*/ The evidence presented does not show clearly what relationship, if any [other than the similarity in names] existed between the appearing party Urban Brands Inc. and Urban Acquisition Corp. 38a Appendix C The Judgment in this case was filed in the record of the case and notified to the parties, according to the amended Notice of Judgment of June 7, 2001. As of this date, said Judgment is final and unappealable. On March 13, 2002, plaintiff sought execution of the Judgment rendered in this, case. On May 2, 2002, plaintiff requested a new order of execution of Judgment, which was finally issued on September 16, 2002. The corresponding writ of execution was issued on October 4, 2002. On October 21, 2002, a marshal from this Judicial Center served the order and the writ of execution on the Ponce branch of two banks: Banco Popular de Puerto Rico and Scotiabank. The Banco Popular de Puerto Rico account that, as informed by plaintiff, was kept by Tiendas Marianne during the time she was employed there, and to which she personally made deposits as part of her duties, could not be attached. Said bank alleged that the account number informed was incomplete.’ /“/ 9. ‘<) Plaintiff testified at the hearing that said account number was correct and that it was there that her employer made deposits from the Centro del Sur Shopping Center store. Witness Ivette Gomez Rodriguez, who had of been.an executive officer of Tiendas Marianne before the sale of its assets, and who was now Urban’s vice president for loss control, testified that said account was opened in December 1998, after the sale of the Marianne stores assets to “Urban.” 39a Appendix C At Scotiabank, the marshal attached $16,177.30 deposited in account No. 00402004926385, under the name of the defendant employer, Tiendas Marianne. As a result of the attachment, on October 23, 2002, Urban Brands, Inc. [Urban] appeared before this Court and, without submitting to its jurisdiction, asked the Court to set aside the attachment order and to stay execution of the Judgment. It must be mentioned that when Urban appeared before this Court seeking several remedies, it informed that it would not submit to, or recognize this Court’s jurisdiction to grant relief against it. However, it seems to recognize our authority and jurisdiction to grant relief in its favor. Urban essentially alleges that it is the owner of the attached bank account, because when the manager of the store located at the Centro del Sur Shopping Center [Maritza I. Ruiz Vélez] was summoned, Urban had already bought all the assets of Tiendas Marianne in Puerto Rico through a contract entitled Asset Purchase Agreement, dated December 1, 1998. Urban alleged that it had bought said assets without assuming debts or liabilities of any kind.'® ““ Urban further alleged that it had not been summoned as prescribed by Civil Procedure Rule 4 and that the labor claim had been directed against the plaintiff's former employer, 10. ““? According to the Asset Purchase Agreement, it was Urban Acquisition Corp. who purchased Marianne’s assets We must assume by such representation that [Urban Acquisition Corp.] and Urban Brands, Inc. are one and the same. 40a Appendix C not against it. Urban also alleged that it was not a party to this case, and requested a hearing to state its position."' ““/ Plaintiff, in turn, when notified of the above-mentioned motion, appeared of record through an Urgent Motion for Order Directed at Urban. In said motion, plaintiff essentially stated that although the Judgment rendered in this case was final and unappealable, and although the manager of the Marianne Store located at Centro del Sur Shopping Center had been personally summoned, it would agree to a stay of the execution of Judgment until the contentions set forth in Urban’s motion were clarified. Plaintiff also alleged that if what Urban claimed in its motion with regard to the sale of assets was true, Urban, in keeping with the decision in Berrios v. U.P.R., 116 D.P.R. [88 (1985)], had the obligation to promptly resort to the Court instead of doing nothing to clarify what it is now claiming. Plaintiff further alleged that if Urban’s pleadings prevailed, its acts would harm her. Plaintiff subsequently stated that if Urban did not submit to the court’s jurisdiction, it would not be entitled te relief. With the issue thus joined, this Court held several hearings to determine the tenability of setting aside the attachment and the execution of Judgment. Both parties 11. ‘“*/ Urban’s position underwent several changes during the hearing; its last position was that the Judgment rendered in this case should be set aside to allow Urban to present evidence that plaintiffs discharge was justified. 4 4la Appendix C presented evidence in support of their positions, and Urban always made clear that it was not submitting to the jurisdiction of this Court. Having examined and weighed the testimony given in Court, based on the credibility afforded by the Court to each witness, and with the benefit of the documents presented by the parties, as well as their pleadings, we resolve Urban’s motion. Trinidad Garcia v. Chadfe], decided January 18, 2000, 2000 TSPR 7; Aquelio Lopez v. Arquelio Garcia [sic], decided August 31, 2001, 2001 TSPR 124. Il To begin, we must make several remarks. In the first place, the Judgment rendered in this case is final and unappealable as of today. No motion has been filed against it to release one of the parties, nor has any independent action been brought to set it aside because one of the parties was not summoned for fraud to the Court, as provided by Civil Procedure Rule 49.2; Banco de Santander v. Fajardo Farms, 141 D.P.R. [237] (1996); Rios Moya v. Industrial Optics, 2001 TSPR 117. In this case, Urban has appeared, without submitting to the jurisdiction of this Court, to have us set aside the order for execution of the Judgment rendered in this case and the attachment of assets registered in the defendant employer’s name, and which, as alleged by Urban, belong to it. 42a Appendix C In second place, as shown by the certificate of service of summons in this case, by the admission made by Urban’s counsel, and by the testimony given by Urban’s manager at the Marianne store located in Centro del Sur Shopping Center [Maritza I. Ruiz Vélez], on October 15, 1999, said manager was personally served with the complaint or suit and with a copy of the summons or notice of the complaint on behalf of Tiendas Marianne. Therefore, Urban was duly notified and summoned through one of its managers. Civil Procedure Rule 4.4 (e); Roman v. Compania, decided October 31, 2000, 2000 TSPR 160; Leon Garcia v. Restaurante El Tropical, decided June 7, 2001, 2001 TSPR 81. According to the testimony given in open court by Urban’s manager, Maritza I. Ruiz Rivera, as soon as she received the documents regarding this complaint, she immediately contacted the Tiendas Marianne main offices in the metropolitan area and, as instructed by said office, sent them the documents. Ledn v. Rest. El Tropical, supra. Urban did nothing with these documents. In third place, it comes forth from the testimony of plaintiff Evelyn Rodriguez Oquendo, of Urban’s manager, Martiza |. Ruiz Rivera, and of Urban’s executive officer, Ivette Gomez Rodriguez, that: (1) the Tiendas Marianne store at the Centro del Sur Shopping Center, where Urban was summoned, was and still is the same store it has kept; (2) it was at that store that plaintiff worked for many years for Tiendas Marianne; (3) Urban currently keeps that same store with the same name, with the same concept (selling women’s clothes), and exactly at the same place and physical space in the shopping center; (4) neither in that same store nor in the 43a Appendix C other Tiendas Marianne stores throughout Puerto Rico has Urban changed the type of business activity in which it is engaged (the sale of women’s clothes), which is the same as when plaintiff worked for Tiendas Marianne under the former owner; (5) Urban has kept the same store design as the former owner; (6) it uses the same cash register; (7) Urban keeps essentially the same personnel; (8) Urban keeps its bank account in the same bank as the former owner; (9) Urban keeps the same floor design and space distribution in the store, the same colors, logo, and sign as the former owner when plaintiff worked for it. For all practical purposes, Tienda Marianne in Puerto Rico is still in the same place, with the same employees, engaged in the same type of business activity, and with the same business identity. In Law, this is known as a successor employer. /L.R.B./ v. Cooperativa Azucarera, 98 [P.R.R. 307] (1970); J.R.T. v. Asoc. Playa Azul, 117 D.P.R. [20] (1986); Bruno Lopez v. Motorplan, 134 D.P.R. 111 (1993); Pineiro v. Int'l Air Service, 140 D.P.R. 343 (1996). tl The Judgment rendered here under Acts Nos. 80 and 100 is protected by the public policy of the Commonwealth of Puerto Rico on labor claims to the point that the claim for compensation Act No. 80 is unwaivable. See 29 L.P.R.A. § 185i.'° “7 12. ‘“? Urban alleges that the purchase, free and clear of liens, of Tiendas Marianne’s assets in Puerto Rico that took place in the United States Bankruptcy Court relieves it from the effects of the Judgment rendered in this case. It suffices to say that a contract executed outside this jurisdiction cannot contravene the public labor policy of Commonwealth Puerto Rico jurisdiction. On the other hand, what Urban really wants is to have the Judgment set just cause for the discharge. 44a Appendix C Urban knew since October 15, 1999, that a labor claim had been filed against it as the successor employer of Tiendas Marianne in Puerto Rico, but did nothing about it. It did not answer the complaint, did not seek dismissal, and did not ask to intervene in order to clarify any defense it may raise. With its silence and inaction, it allowed the complaint to follow its course. At the hearing, Urban did not present evidence that it had notified the previous owner so that the latter would assume its own defense of the case or state whatever it deemed proper at law in defense of its rights. if Urban deemed that the claim against it was not actionable, in the discharge of its obligation to act with due diligence and clarity, it should have appeared of record, as it now does, to allege what it now alleges, or what it deemed was proper at law, thus alerting plaintiff and this Court that there had been a transfer of assets between the former employer and the new employer. Its silence and idleness cannot be rewarded. Nemo auditur propiam turpitudinem allegans. Berrios v. U.P.R., 116 D.P.R. 88 (1985); Velilla v. Pueblo Supermarkets, 111 D.P.R. 585 (1981); Morales v. Municipio de Toa Baja, 119 D.P.R. 682 (1987); Municipio de Ponce v. Autoridad de Carreteras, decided December 20, 2001, 2001 JTS 3; Rodriguez v. Banco Desarrollo, decided January 9, 2001, 2001 TSPR 2. By remaining idle and doing nothing, Urban knew or should have known that with its behavior it was admitting the fact that it was a successor employer. This was thus acknowledged by Urban by the way it acted in this incident, because its briefs and pleadings in Court show that the true reason for appearing in this case is to have the Judgment set aside so that it may present evidence that plaintiff's discharge was justified. Urban’s plan is four years too late. = 45a Appendix C IV Urban is what in law is known as a successor employer. Bruno Lopez v. Motorplan, supra; Pite[i]ro v. Int'l Air Services, supra. Therefore, it is liable to plaintiff not only because of this juridical figure, but also because of the breach of its legal obligation to diligently appear in Court. Berrios v. U.P.R., supra; Velilla v. Pueblo Supermarkets, supra. ‘ Since Urban has not submitted to the jurisdiction of this Court, it has no right to seek relief, because someone who does not recognize the Court’s authority to grant relief cannot, at the same time, seek such relief. Even if Urban was entitled to appear before this Court without submitting to our jurisdiction, its contentions are wrong, because as a successor employer, it was, and still is liable to plaintiff under Act No. 80 (Pifeiro v. Int'l Air Services, supra), and for the discrimination committed against her (Bruno Lopez v. Motorplan, supra). In this respect we must also stress that this Court must not tolerate the efforts and stratagems employed by unscrupulous employers to evade the jurisdiction of the courts when evidently such acts are utterly improper. Our main duty is to impart justice and to resist being misled by technicalities. We think it is high time /itigants realized that this Court will do everything in its power to see that cases are decided on their merits instead of on legalistic niceties of pleading and procedure. . . . The courts have long since abandoned the sporting theory of justice. Litigants should do the same. No party_ has a vested interest in the grammatical and ieee 46a Appendix C procedural errors of his adversary. Serra v. Transportation Authority, 68 P.R.R. 581, 585 (1948). Leon Garcia v. Restaurante El Tropical, 2001 TSPR 81. Based on the aforementioned factual and legal grounds, the Motion for Order to Stay Wrongful Attachment filed by Urban on October 23, 2003, is hereby denied. Consequently, the Court authorizes the continuation of the execution of the Judgment rendered in this case against the assets of the successor employer Urban.’ “’ In Ponce, Puerto Rico, this 16" day of January 2004. To be notified. (Illegible signature) EDUARDO R. ESTRELLA MORALES SUPERIOR COURT JUDGE 7. (se) After the evidentiary hearing on this issue was held, the court determined that this case strikes the necessary balance between the “unequivocal public policy” that covers workers and employces with respect to the “technicalities game” and the constitutional imperative of due process of law regarding the adequate, provable, and reasonable service of process on a defendant employer. Lucero Cuevas v. The San Juan Star, decided May 16, 2003, 2003 TSPR 80. 47a APPENDIX D — JUDGMENT OF THE COMMONWEALTH OF PUERTO RICO COURT OF FIRST INSTANCE, SUPERIOR COURT OF PONCE DATED MAY 18, 2001 COMMONWEALTH OF PUERTO RICO COURT OF FIRST INSTANCE SUPERIOR COURT OF PONCE CIVIL NO.: JPE1999-0647 RE: COMPLAINT FOR WRONGFUL DISCHARGE AND DISCRIMINATION IN EMPLOYMENT EVELYN RODRIGUEZ OQUENDO PLAINTIFF V. PETRIE RETAIL INC., D.L.P. AND/OR CENTRO APPAREL CORPORATION, D/B/A MARIANNE EMPLOYER-DEFENDANT JUDGMENT The default hearing on this case was called and plaintiff appeared represented by counsel. Having heard plaintiff's 48a Appendix D testimony and examined the documentary evidence presented and admitted, this Court draws the following: Conclusions of Fact Plaintiff Evelyn Rodriguez Oquendo was employed by the defendant, for whom she worked for approximately 18 years. During the time she worked for her employer, she was a good and profitable employee. A work relationship without a fixed term existed between plaintiff and her.employer. There was no written contract between the parties. The oral evidence shows that plaintiff worked as Assistant Manager. On October 5, 1998, the defendant employer discharged Evelyn Rodriguez Oquendo without just cause while she was under the protection of the State Insurance Fund. The employer then replaced her with a younger person, thus discriminating against plaintiff. Based on the above Conclusions of Fact, this Court reaches the following: CONCLUSIONS OF LAW “Every employee in commerce .. . in which he/she works for compensation of any kind, contracted without a fixed term, who is discharged from his/her employment without good cause, shall be entitled to receive from his/her employer, 49a Appendix D in addition to the salary he/she may have earned: (a) The salary corresponding to one month, as indemnity, if he/she is discharged within the first five (5) years of service .. . [and] (b) An additional progressive compensation equal to one week for each year of service.” 29 L.P.R.A. § 185a. The statute also provides that the years of service shall be determined on the basis of all the preceding periods of work accrued by the employee prior to his/her discharge. [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1637%3A1. Public record. Not legal advice.