# Petition for Writ of Certiorari — Air Line Pilots Ass'n, International v. Pension Benefit Guaranty Corp., 127 S. Ct. 1910 (2007) (No. 06-1019)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2007

## Text

061019 JAN 23 200

N

ate
— wee EPIC EOF Tie CLERK

IN THE

Supreme Court of the United States

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL
Petitioner.

V.

PENSION BENEFIT GUARANTY CORPORATION AND
UNITED AIR LINES. INC.
Respondents.

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

MICHAEL E. ABRAM *
BABETTE A. CECCOTTI
THOMAS N. CIANTRA
ZACHARY N. LEEDS

CLAIRE K. TUCK

COHEN. WEISS AND SIMON LLP
330 West 42nd Street

New York. NY 10036

(212) 563-4100

Attorneys for Petitioner Air Lin

* Counsel of Record Pilots Association, International

W LSON-EPES PRINTING CO INC. — (202) 789-0096 - WasHinGron D C 20002

@ > «0

QUESTIONS PRESENTED FOR REVIEW

1. Where Congress directed that a court, not the Pension
Benefit Guaranty Corporation (the “PBGC’”) establish the
termination date of a pension plan, which the PBGC sccks to
involuntarily terminate under 29 U.S.C. § 1342(c), whether
the court below ignored the plain meaning of the involuntary
termination provisions by (a) determining the unreasonable
increase in the PBGC’s liability and (b) failing to inde-
pendently establish a termination date.

2. Whether a bankruptcy court order conclusively decid-
ing that a debtor must continue contractually required pay-
ments constituted a final order for which an appeal not timely
taken was forfeited.

(1)

il
LIST OF PARTIES TO THE PROCEEDING

The Air Line Pilots Asscciation, International (“ALPA”) is
an unincorporated labor organization representing pilots in
the commercial airline industry. It was an intervenor-
defendant in PBGC v. United Air Lines, Inc., Adv. Proc. No.
05-481 (Bankr. N. D. Ill.) (the “Pension Plan Termination
Case”), an appellant and cross-appellee in the court of ap-
peals, and a petitioner in this Court; ALPA was also the
movant in the separate contested proceedings in the bank-
ruptcy court regarding the payment of October, 2005 supple-
mental pension benefits (the “Supplemental Benefits Case”),
and, with respect to that case, was an appellec in the dis-
trict court and the court of appeals, and is the petitioner in
this Court.

The United Retired Pilots Benefit Protection Association
(“URPBPA”) is an Illinois not-for-profit corporation repre-
senting certain retired pilots of United Air Lines, Inc. The
individual parties are retired United pilots who serve on
URPBPA’s Board of Directors. URPBPA was also an
intervenor-defendant, appellant and cross-appellee in the
Pension Plan Termination Case, and a movant and appellee in
the Supplemental Benefits Case. URPBPA is the petitioner in
a separate petition for a writ of certiorari regarding the Pen-
sion Plan Termination Case and the Supplemental Benefits
Case.

The PBGC is a wholly-owned United States government
corporation established under 29 U.S.C. § 1302(a) to admin-
ister the defined benefit pension plan insurance program
established by Title TV of the Employee Retirement Income
Security Act, 29 U.S.C. § 1001 ef seg. (“ERISA”). The
PBGC was the plaintiff in the Pension Plan Termination
Case, the appellee and cross-appellant in the court of appeals,
and is a respondent in this Court.

iil

United Air Lines, Inc. and twenty-seven related and
affiliated entitics as debtors and debtors in possession” were
respondents in the Supplemental Benefits Case in the
bankruptcy court and appellants in the district court.
Reorganized United Air Lines, Inc. was appellant in the court
of appeals and is a respondent in this Court. United Air
Lines, Inc., as administrator of the United Air Lines Pilots
Defined Benefit Pension Plan (the “Pilot Plan”), was a
defendant in the Pension Plan Termination Case, an appellee
in the court of appeals, and is the respondent in this Court.
The foregoing entities, as debtor, as the reorganized entity,
and as administrator of the Pilot Plan, are hereinafter referred
to collectively as “United.”

” The debtor entitites were: UAL Corporation, UAL Loyalty Services,
LLC, Ameniti Travel Clubs, Inc., Mileage Plus Holdings, Inc., Mileage
Plus Marketing, Inc., MyPoints.com, Inc., MyPoints Offline Services,
Inc., Cybergold, Inc., iTarget.com, UAL Company Services, Inc., UAL
Benefits Management, Inc., United BizJet Holdings, Inc., BizJet Charter,
Inc., BizJet Fractional, Inc., BizJet Services, Inc., United Airlines, Inc.,
Kion Leasing, Inc., Premier Meeting and Travel Services, Inc., United
Aviation Fuels Corporation, United Cogen, Inc., Mileage Plus, Inc.,
United GHS, Inc., United Worldwide Corporation, United Vacations, Inc.
UAL Corporation is the publicly traded parent company for United Air
Lines, Inc.

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW.................
LIST OF PARTIES TO THE PROCEEDING ...............
BPS A FF LFA Bes estsicrsncscpunicaainnscsnoncensepeinse
Ce RI casicchsvercocavacibipicosscayeniviviivscunineniobedes

ETRE RET CAE LOE CA sccssceseciccccssesinsissnpsinvescis

ee SESE ED Die TET ae SENS ATCT DE AO TOT TURE TS

Factual and Procedural History ...............:sssseseseseeeeees
REASONS FOR GRANTING THE WRIT ..................

I.

II.

The Decision of the Court of Appeals That the
Pilot Plan Should Be Terminated as of
December 30, 2004 Misapplies the Involun-
tary Pension Plan Termination Provisions and
Requires Review to Clarify an Important
CUREEION OF FOGCTAL TW oi iicccccecececescersevecencecscnass

A. The Meaning of an “Unreasonable”
ids iacsétiesttajestacsdiataldeciascadsaniaaa i

B. Participants’ Expectations in Continued
PID oi iitistinibsczstiincteeke Scie

The Decision of the Court of Appeals That
United Had Not Forfeited Its Appeal Rights In
Challenging Its Obligation to Pay Supple-
mental Benefits Deepens an Already Con-
fusing Divide in Case Law Regarding Appeals
in Bankruptcy Cases and Presents an Issue of
Compelling Importance Warranting This
RE BIO ansniiiccsottn'edecpescunsandesipiranaastiatostees

12

13

16

19

vi
TABLE OF CONTENTS—Continued

A. The Ruling Below was Contrary to Well-
Estadltaned Precedent ......0ssscsesscesessessoresersee

B. The Court’s Approach Introduces New
Uncertainty into the Administration of

APPENDICES

Opinion Below

A. Opinion, Seventh Circuit Court of Appeals,

Case Nos. 06-1867, 06-2662, 06-2714 & 06-
ee NE Big HAD Cerctian wsotcestetoiisasstaniores

Relevant Lower Court Rulings

Pension Plan Termination Case

B.

Order, Honorable Joan H. Lefkow, United
States District Court, Northern District of
Illinois, Case No. 06-C-1222, June 13, 2006...

Memorandum Opinion and Order, Joan H.
Lefkow, United States District Court,
Northern District of Illinois, Case No. 06-C-
Re NE Be MD cc ctccerscissicudndilsneanttnaniacaeeanieiss

Proposed Findings of Fact and Conclusions
of Law on Motion for Summary Judgment
and Following Trial, Honorable Eugene R.
Wedoff, United States Bankruptcy Court,
Northern District of Illinois, Case No. 02-B-
48191, 0S-AP-481, February 13, 2006............

. Order, Honorable John W. Darrah, United

States Distnct Court, Northem District of
Illinois, Case No. 05-C-6955, February 2, 2006..

Page

19

23
26

la

18a

19a

46a

76a

Vil
TABLE OF CONTENTS—cContinued

. Memorandum Opinion and Order, Honorable
John W. Darrah, United States District Court,
Northern District of Illinois, Case No. 05-C-
GSD) TOROUEY 2, FOO cicisicsincssevncsevininevinienintss

. Order, Honorable Eugene R. Wedoff, United
States Bankruptcy Court, Northern District of
Illinois, Case No. 02-B-48191, 05-AP-481,
CIE FR FO biciisiniinchipnstdivoicctaindacavertienmut

. Memorandum of Decision, Honorable Eugene
R. Wedoff, United States Bankruptcy Court,
Northern District of Illinois, Case No. 02-B-
48191, 0S-AP-481, October 26, 2005...............

Amended Memorandum of Decision on
Motion for Summary Judgment, Honorable
Eugene R. Wedoff, United States Bankruptcy
Court, Northern District of Illinois, Case No.
02-B-48191, 05-AP-481, October 26, 2005 ....

Excerpts from Transcript of September 21,
2005 Proceedings before Honorable Eugene
R. Wedoff, United States Bankruptcy Court,
Northern District of Illinois, Case No. 02-B-
a EE acon ciwiicinasceebsotindanies

Supplemental Benefits Case

K. Order, Honorable John W. Darrah, United

States District Court, Northern District of
Illinois, Case No. 05-C-6220, February 23,
SAIN R dere cl N ON eT N OLA: RDN DT ches AS

Page

T7a

88a

90a

100a

118a

Vili
* _“*LE OF CONTENTS—Continued

L. Order, Honorable Eugene R. Wedoff, United
States Bankruptcy Court, Northern District of
Illinois, Case No. 02-B-48191, October 6,
2005 and Excerpts from Transcript of
October 6, 2005 Proceedings before
Honorable Eugene R. Wedoff, United States
Bankruptcy Court, Northern District of
SONS Gi EF Lvkises case cavsnctevieasancivessisetececes

Other Rulings

M. Order, Honorable Eugene R. Wedoff, United
States Bankruptcy Court, Northern District of
Illinois, Case No. 02-B-48191, February 18,
BNO ackiicsci ucts butcacrsttunvecsumcaducitndabiane alleles

N. Excerpts from Transcript of February 18,
2005 Proceedings before Honorable Eugene
R. Wedoff, United States Bankruptcy Court,
Northern District of Illinois, 02-B-48191........

Order on Petition for Rehearing

O. Order Denying Petition for Rehearing, Sev-
enth Circuit Court of Appeals, Case Nos. 06-
1867, 06-2662, 06-2714 & 06-2843, Novem-
WE FD 5. TIP ciernsticcccuhiccinidianssnaiciiecamliaies

Statutes Involved
Bs. ae lice UID pthiicccteipeaaicaianaaeie
CO. FEEL. © A cictrdinnicbicciee eee
es Fr es BB apiece ect ces
Additional Material

S. ALPA News Release No. 04-UAL6, Decem-
ber 30, 2004 (ALPA Trial Exhibit 27) ............

Page

122a

I3la

133a

iX

TABLE OF AUTHORITIES

CASES Page

Ass'n of Flight Attendants v. PBGC,
No. 05-1036, 2006 WL 89829 (D.D.C. Jan. 13,

re a acsauskesdecnsesgsins 7
Bank of Am., N.A., v. Moglia,

EE Fe RE CEU GAL, BUD) cccoccceccessesecvsssvoveeses 20
Budinich v. Becton Dickinson and Co.,

I SIT os scscreucccedbeuibsbevesevoessenveses 22
Conn. Nat’l Bank v. Germain,

I ES BED ns cvcesninnsieuavesssvineverestescorénes 13
Doggett v. United States,

I MET SWINE scccsnesveciscarsevecvausonersecoverevéens 14
Howard Delivery Serv., Inc. v. Zurich Am. Ins.

Co.,

Ne OID vo cisck veacsevencasevcerntenscseseveres 20
In re Christian,

SOG F260 46 (3G Cir. 19G6) ........0.0.....cccccscesevevess 23
In re Fowler,

394 F.3d 1208 (9th Cir. 2005) ..................ccccceees 22
In re Fox,

241 B.R. 224 (10th Cir. B.A.P. 1999) ..000..... 21
In re Golant,

BO SE CTU GET. ZOOL) .ncccessncsscceccsesseescoes 21
In re Gould,

977 F.2d 1038 (7th Cir. 1992)........ siteairaneinlig 23, 24

In re Greene County Hosp.,
ee eae Se COU COT. BDGB) on. ccvecccresoveseceesvenses 21

In re Huebner,
Ue F 2 1222 (OU CHP. EDDD) ..<..ccccckcscecesscccecess

N
n

x
TABLE OF AUTHORITIES—Continued

Page

In re Integrated Res. Inc.,

FE Sr Rs FD iivcteicstssbesdinbeeaaniiecoiiiba 20
In re James Wilson Assoc.,

er Fae Re CT Gi EGE ccvesncctvieresiisicninincviiitn ee
In re Kids Creek Partners, L.P.,

200 F.3d 1070 (7th Cir. 2000)..........ccccccccocssccsess 22
In re Martin Bros. Toolmakers, Inc.,

796 F.2d 1435 (Lith Cir. 1986) 0.0.0.0... ceseee 23, 24
In re Miller,

284 B.R. 734 (10th Cir. B.A.P. 2002) ............... 22
In re Saco Local Dev. Corp.,

seb wT gi) 4s a) 3 | Renee eemmannr 20
In re Taylor,

PES Fe LOZ EAE CI. TOGO iivccniniscicccetinccient 20-21
In re UAL Corp.,

SET F.3d GES Cis Cie, DOS) wicciccveccenivcvedettneicces 22
In re UAL Corp., Appeal of Ass'n of Flight

Attendants, Sis

428 F.3d 677 (7th Cir. 2005) 0.0.0... eeceeeeeeeeeees 5 Oe
In re Urban Broadcasting Corp.,

401 F.3d 236 (4th Cir. 2005) ..................ccssscessees 21
Jones v. Flowers,

Ee ae ee Cites taehidconcacenbasbnacaibiemanter 18
Khan & Nate's Shoes No. 2, Inc. v. First Bank of

Whiting,

908 F.2d 1351 (7th Cir. 1990) 0.0.0.0... 25

PBGC v. Dickens,
535 F.Supp. 922 (W.D. Mich. 1982)................. 17

xi
TABLE OF AUTHORITIES—Continued

Page

PBGC v. FEL Corp.,

798 F Supp. 239 (D.N.J, 1992).......-csccrceossoereees 15
PBGC v. Heppenstall Co.,

SD Fe CO eo Cl A, EPO cicentssiinsccotncanicencinsin 12, 16
PBGC v. LTV Corp.,

FF TOE hcriniicintnctdniasiciatbenrsdeincdanin 14
PBGC v. Mad. Glass Corp., ma

618 F.Supp. 1410 (D. Md. 1985)... eee 16

~ PBGC v. Mize Co., Inc.,

987 F.2d 1059 (4th Cir. 1993) .........cccccccsccercorees 17
PBGC v. Republic Technologies Int'l, LLC, ie

386 F.3d 659 (Gth Cir. 2004) ........cecccscsoseecsooevess 16

PBGC v. The Pension Comm. of Pan Am. World
Airways, Inc.,

777 F.Supp. 1179 (S.D.N.Y. 1991) vecceeessseesseees 15,17

PBGC v. United Airlines Inc.,
No. 05-2375, 2007 WL $7271 (4th Cir. Jan. 9.

f 2 5 RICA eC NC RES DRM AORTA RE RENE Area, EO ET f
Pavelic & LeFlore v. Marvel Entertainment

Group,

as Se CSOD istic cervininbvanstsovcinpiniiecchibenss 13
Price v. City of Fort Wavne,

BEF Fe Pe CPU BED viisiciccctisonsnpaspensene 18

Rodriguez v. United States,
i ee TB chitin rccuivob teclisineccnesuekinereoaons 14

Samson v. California,
Fe A ee visas chcdicieinccccdcsicccdbinmsessctseins 15

XIl
TABLE OF AUTHORITIES—Continued

Page

Schering Corp. v. Ill. Antibiotics Co.,

OF FIO DOT CFOS GAL, FOOD iccssscenvevecsicsenenscinccess 23
Taylor v. Voss,

BEE ee NTO LTE sthiidshcknitrthicdinssieipuecitioas 20
United States v. Clark,

OS BR BF CED triste picesaiciriusininiacnnsssbicidiaincee 19
Walker v. City of Hutchinson,

FE AI le FR iosivinoins sb incbuiinissisvaasclacdnbodes 18

STATUTES, REGULATION AND RULE

Re 3 MAM © 5 5. SRASUIARI Mag sot B CURRY PT SEC EDIE ONO USIER 3
Be ree Oe Rs ciscaicsasisseaivasciend earncuanibarneonns 3,6
PGE 1ST ass aisiandnausaseadobaneamusiins 18
er EE Geta ciccenshgsitncopddaatitininedeiantlaccehaic passim
Se Ri ls ee 8 hiicssickoniiatteisns cinta twidncotoiadcesse 2
ree PE Biicia tine ipacepadccncsinaseticeibbonsmane. ii
Be ace Re ics nscshceisessdcnegieaticidaoeiecaswhates 12
Be chs pparividbastitcr ticeciiasiaveapaooien 8, 14
Br ats RED casita paccrcesecnssescuetiveds 5
Br Ne BE Kast esd bigbiintbcaciniiiadniedaseuabeteoenio; passim
ae RT Fe iit pnsed okie adinaivientonteathyvihenbon passim
PCP E CAT A occas 8
OG. Te, TO, Pe FOG) svc sccisicinsiiecscsseptatinsatens 21

ERISA, Pub. L. No. 93-406, § 4042(c), 88 Stat.
829, 1021 (1974) (amended 1980) .......ceccseesee-. 13

Xill
TABLE OF AUTHORITIES—Continued

SECONDARY MATERIALS Page
Cr winitateccininciintininieteisianpinatebeen 20, 21
Black's Law Dictionary (8th ed. 2004) ................. 15

John P. Hennigan, Jr., Towards Regularizing
Appealability in Bankruptcy, 12 Bankr. Dev. J.
FE 1 eee tnspciccacnieasvotensedioneienpeldiiennaantineniave 20, 24, 25

IN THE

Supreme Court of the Anited States

Se!

AIR LINE PILOTS ASSOCIATION, INTERNATIONAL
Petitioner,
vi

PENSION BENEFIT GUARANTY CORPORATION AND
UNITED AIR LINES, INC.
Respondents.

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Seventh Circuit

PETITION FOR A WRIT OF CERTIORARI

The Air Line Pilots Association, International petitions this
Court to issue a writ of certiorari to the United States Court of
Appeals for the Seventh Circuit to review the judgment in /n
re UAL Corporation (Pilots’ Pension Plan Termination), 468
F.3d 444 (7th Cir. 2006).

OPINIONS BELOW
The opinion of the United States Court of Appeals for the
Seventh Circuit is reported at /n re UAL Corp., 468 F.3d 444
(7th Cir. 2006). App. A, la-17a. The November 13, 2006
order of the court of appeals denying ALPA’s petition for
rehearing is unreported. App. O, 137a.

The court of appeals’ opinion consolidated the appeals of
separate cases, the “Pension Plan Termination Case” and the
“Supplemental Benefits Case.” The decision of the court of

2

appeals in the Pension Plan Termination Case affirmed a June
13, 2006 decision and order of the Honorable Joan H. Lefkow
of the United States District Court for the Northern District of
Illinois, reported at PBGC v. United Air Lines, Inc., 436
F.Supp.2d 909 (N.D. Ill. 2006) (the “Pension Plan Termi-
nation Order’). App. B, 18a, App. C, 19a-45a. Judge
Lefkow’s decision adopted, as modified, the unreported
Proposed Findings of Fact and Conclusions of Law issued by
the Honorable Eugene R. Wedoff of the United States
Bankruptcy Court for the Northern District of Illinois. App.
D, 46a-75a. The bankruptcy court initially issued the
proposed findings and conclusions on October 26, 2005 as an
Amended Memorandum of Decision on Motion for Summary
Judgment, reported at Jn re UAL Corp., 333 B.R. 802 (Bankr.
N.D. Ill. 2005), App. I, 100a-117a, and separate Memo-
randum of Decision, reported at 332 B.R. 858 (Bankr. N.D.
Ill. 2005), App. H, 90a-99a. On February 2, 2006, the
Honorable John W. Darrah of the United States District Court
for the Northern District of Illinois reversed and remanded
these rulings to be reissued as the proposed findings and
conclusions. The February 2, 2006 Memorandum Opinion
and Order are unreported. App. E, 76a, App. F, 77a-87a.

The court of appeals’ Supplemental Benefits Case decision
reversed the unreported order entered on February 23, 2006
by Judge Darrah. App. K, I2la. Judge Darrah’s order
dismissed as unripe the appeal of an unreported October 6,
2005 order entered by the bankruptcy court (the “Sup-
plemental Benefits Order”). App. L, 122a-130a.

JURISDICTION

The Court of Appeals for the Seventh Circuit entered
judgment in this case on October 25, 2006. A timely petition
for rehearing was filed with that court, and was denied on
November 13, 2006. This Court’s jurisdiction is invoked
pursuant to 28 U.S.C. § 1254(1).

3
STATUTES INVOLVED

The following statutory provisions, which are set out in full
in the accompanying appendix, are relevant to this case: 28
U.S.C. § 158, 29 U.S.C. § 1342, and 29 U.S.C. § 1348.

STATEMENT OF THE CASE
Introduction

United filed a petition for reorganization under Chapter 11
of the federal bankruptcy law, 11 U.S.C. §§ 101-1532, in
December, 2002 and cmerged from bankruptcy on February
1, 2006. While in bankruptcy, United pursued a restructuring
of its labor and pension costs, including two rounds of
proceedings to reject its collective bargaining agreements
with ALPA under 11 U.S.C. § 1113 that led to modified
collective bargaining agreements. App. C, 20a-2la. United
also initiated separate, related proceedings designed to
climinate its defined benefit pension funding obligations and
it ultimately reached a comprehensive settlement with the
PBGC for termination of all four of its defined benefit
pension plans covering pilots and other classifications of
cmployees. See In re UAL Corp., Appeal of Ass'n of Flight
Attendants, 428 F.3d 677, 681 (7th Cir. 2005).

This petition concerns two separate, but related proceed-
ings in the United bankruptcy case, the termination of the
Pilot Plan through an action commenced by the PBGC under
Title I[V of ERISA, and United’s efforts to cease the payment
of contractually owed supplemental retirement benefits that
are paid from United’s general assets (rather than from the
Pilot Plan’s assets). '

' Hereinafter, the “Pilot Plan” refers to the defined benefit pension plan
qualified as a retirement plan under 26 U.S.C. § 401(a) and subject to the
PBGC’s termination authority under Title 1V of ERISA. “Supplemental
Benefits” refers to the monthly retirement payments that were made from
United’s general assets.

4

In the Pension Plan Termination Case, an action contested
by ALPA and by URPBPA, the PBGC sought to terminate
the Pilot Plan under 29 U.S.C. § 1342(c) in the midst of
United’s attempt to reject its collective bargaining agreements
with its labor unions to eliminate its pension funding
obligations. The PBGC sought to terminate the plan by
showing “that the plan must be terminated in order... to
avoid... any unreasonable increase in the liability of the
[PBGC insurance] fund,” 29 U.S.C. § 1342(c), with a date of
plan termination of December 30, 2004, established under 29
U.S.C. § 1348(a)(4). The courts below granted the relief
requested by the PBGC despite the fact that United and the
PBGC had already reached a settlement agreement whereby
the PBGC was well-compensated for agreeing to accept the
liabilities of all of United’s defined benefit pension plans,
including the Pilot Plan. Moreover, the courts chose the
December 30, 2004 termination date by applying strikingly
dissimilar case law involving severely distressed plan
sponsors. The Pilot Plan was terminated as of the day after
the PBGC filed its involuntary termination complaint. With
no warning, pilots who continued to provide services to
United under their modified concessionary labor agreements
would no longer earn pension accruals even for the few addi-
tional months they expected their peiision plan to continue.

In the Supplemental Benefits Case, in the Fall of 2005,
after the bankruptcy court issued a ruling (later vacated by
Judge Darrah) terminating the Pilot Plan, United, for the
second time in the bankruptcy casc, attempted to discontinue
the payment of the Supplemental Benefits. The bankruptcy
court ruled against United because the court had already ruled
(when United first sought to discontinue payment of the
Supplemental Bencfits) that United was required to pay the
benefits “until the Pilot Plan is terminated pursuant to
applicable law or the parties agree otherwise,” an order
United had not appealed and to which it was therefore bound.
Despite that earlier unappealed ruling, the court of appeals

5

ruled that United could again press its objection to contin-
uation of the payments because United was not required to
appeal what the Court deemed an interlocutory ruling. In
reaching its decision, the court ignored that United could have
appealed the initial order as of right and instead relied on
wholly inapposite, non-bankruptcy law concerning inter-
locutory orders in other cases.

Factual and Procedural History

On December 29, 2004, the PBGC filed suit to terminate
the Pilot Plan under 29 U.S.C. § 1342(c), seeking a termi-
nation date of December 30, 2004. The termination case was
referred to the bankruptcy court and in July, 2005, the PBGC
moved for summary judgment. In August, the bankruptcy
court issued a preliminary oral ruling that the PBGC was
entitled to summary judgment regarding the proposed date of
plan termination, but was required to prove at trial that the
termination of the Pilot Plan was necessary under § 1342(c)
in order to avoid an unreasonable increase in the liability of
the PBGC insurance fund. The district and appeals courts
subsequently affirmed this ruling. App. C, 19a-45a, App.
A, la-17a.

At the time the PBGC brought its action to terminate the
Pilot Plan, United’s pilots were voting on the terms of a new
collective bargaining agreement that resolved United’s
second motion to reject its agreement with ALPA. See App.
C, 20a-21a. The agreement eventually ratified by the pilots
(the “ALPA Agreement’), included an 11.8 percent pilot pay
cut (adding to a substantial pay cut taken a few months after
United entered bankruptcy) and various work rule changes.
In addition, ALPA agreed to waive “any claim it may have
that termination of the [Pilot] Plan would violate the terms
and conditions of the existing collective bargaining agree-
ment” and agreed to “not otherwise oppose the Company’s
efforts to terminate” the Pilot Plan under the ERISA distress
termination provision, 29 U.S.C. § 1341(c)(2)(B)ai). 7d.

6

Under the agreement, United agrced that it would not seek to
terminate, or agree to the termination of, the Pilot Plan,
effective at any time before the latest effective date of the
termination of any other United pension plan, a date which
turned out to be June 30, 2005. The agreement provided that
it was not to be construed “as any agreement of any form by
[ALPA] that the [Pilot] Plan should be terminated.” The
agreement also provided that the Pilot Plan “shall remain in
full force and effect unless... the Bankruptcy Court issues
an order declaring that the Company has met the require-
ments for plan termination under” ERISA. /d.

From the time United filed for bankruptcy, pilots continued
to receive retirement benefits. The benefits came from two
sources. The benefits below the limits permitted by § 401(a)
of the Internal Revenue Code for tax-qualified pension plans
were paid out of the Pilot Plan pension fund trust. The
payments that exceeded the § 401(a) limits, the Supplemental
Benefits, were paid by United directly from its general
corporate asscts.

After reaching the ALPA Agreement, United sought in
February 2005 to stop paying the Supplemental Benefits. In
response, ALPA brought a motion to compel United to
continue to make the payments, on the ground that the
agreement contractually obligated United to do so. App. N,
134a. The bankruptcy court held that the contract required
United to continue paying the Supplemental Benefits until the
Pilot Plan terminated under applicable law. /d. at 136a. The
bankruptcy court rejected United’s argument that a possible
future ruling in the Pension Plan Termination Case estab-
lishing December 30, 2004 as the Pilot Plan termination date
would alter United’s current contractual obligation to make
the payments. /d. In reaching this conclusion, the bank-
ruptcy court noted that the PBGC sought the retroactive plan
termination date to define its rights with regard to qualified
pension benefits only (meaning those benefits paid from the

7

Pilot Plan trust then subject to the PBGC’s termination
lawsuit). App. N, 134a. The bankruptcy court ordered that
United “shall continue payment of non-qualified [Supple-
mental] benefits (as described in the motion) until the [Pilot
Plan] is terminated pursuant to applicable law or the parties
agree otherwise.” App. M, 13la.“ United did not appeal the
February 18, 2005 order.

In April, 2005, while its termination lawsuit over the Pilot
Plan was pending, the PBGC reached agreement with United
(the “PBGC Settlement”) whereby the PBGC agreed to the
termination of all of United’s defined benefit pension plans.
See Ass'n of Flight Attendants, 428 F.3d at 681. As a result
of the PBGC settlement, a plan covering United ground
personnel was terminated effective March 11, 2005. See
PBGC v. United Airlines Inc., No. 05-2375, 2007 WL 57271,
at *9 (4th Cir. Jan. 9, 2007). Two other plans were termi-
nated with effective dates of June 30, 2005. See Ass'n of
Flight Attendants v. PBGC, No. 05-1036, 2006 WL 89829, at
*11 (D.D.C. Jan. 13, 2006). The Pension Plan Termination
Case continued to be litigated, because the PBGC reserved its
right to seek a December 30, 2004 termination date for the
Pilot Plan, but with a limited range of possible dates as a
result of the PBGC Settlement. The Court of Appeals for the
Seventh Circuit ultimately approved the settlement. Ass'n of
Flight Attendants, 428 F.3d 677.

At trial in the Pension Plan Termination Case in Septem-
ber, 2005, ALPA moved to introduce additional evidence
concerning the termination date to establish that Pilot Plan
participants had a continued expectation that the plan would

* The bankruptcy court reasoned that under United's “carefully bar-
gained-for” post-pctition agreement with ALPA, “United committed to
continue making the payments” until termination of the plan. App. N,
136a. The court stated that “until that termination actually occurs.
irrespective of any retroactive effective date, the obligation to make
payment of nonqualified benefits is present under the CBA.” /d. at 135a.

8

continue given ALPA’s position opposing a termination date
of December 30, 2004. The court denied the motion. App.
J, 119a-120a.

In its case, the PBGC identified four factors that would
increase its liability if the plan was not terminated on
December 30, 2004, but continued for six months until June,
30, 2005, the latest termination date contemplated under the
PBGC Settlement. Specifically, the PBGC pointed to the
effect of the statutory annual cost of living adjustment,
effective January |, 2005, in the maximum benefit that the
PBGC is required by law to guarantee, established under
ERISA to track changes in the Social Security wage base
(the “COLA”). See 29 C.F.R. § 4011 Appendix B (Table
of Maximum Guaranteed Benefits); see also 29 U.S.C.
§ 1322(b). The remaining factors were attributable to
monthly service accruals and benefit payouts that would
occur in the normal operation of the plan and other gradual
changes the PBGC alleged should be counted as an unrca-
sonable increased liability. ALPA contested the PBGC’s
claim that the additional liability attributable to this period
constituted an “unreasonable increase” in the PBGC’s
liability. See App. C, 41a-42a.

On October 26, 2005, the bankruptcy court issued a ruling
granting all of the relief sought by the PBGC. App. G, 88a.
The court set the additional liability attributable to the period
December 30, 2004 through June 30, 2005 at $84.2 million
(less than the PBGC’s calculation) and ordered the Pilot Plan
terminated as of December 30, 2004. App. H, 94a.

Because the bankruptcy court’s order was issued in a “non-
core” proceeding, see 28 U.S.C. § 158(c)(1), it was not final
under the statutory procedures for a review of non-core
matters, and ALPA, URPBPA and the PBGC lodged
objections. On June 13, 2006, the district court adopted the
bankruptcy court’s proposed findings and conclusions, as
modified, and entered a final order terminating the Pilot Plan

9

effective December 30, 2004. App. B, 18a, App. C, 20a. The
district court did not grant ALPA’s request to accept
additional evidence regarding the notice of the PBGC’s intent
to terminate the plan and the expectations of the pilots.

In the interim, scizing on an earlier tentative ruling
announced by the bankruptcy court in the Pension Plan
Termination case, United decided, again, to cease paying the
Supplemental Benefits. ALPA, (joined by URPBPA) again
filed a motion to compel payment and the bankruptcy court
again granted the motion. App. L, 130a. The bankruptcy
court noted that it was following its prior order, which United
had not appealed. United did appeal this second ruling. On
February 23, 2006, the district court issued a minute order,
dismissing, “for lack of ripeness,” United’s appeal. App. K,
12la. United appealed that decision to the court of appeals.
In addition, ALPA and URPBPA appealed the district court’s
order in the Pension Plan Termination Case.”

In a consolidated ruling on those appeals, the court of
appeals affirmed the ruling in the Pension Plan Termination
Case and reversed the order in the Supplemental Benefits
Case. In reviewing the pension termination, the court
concluded that the additional costs to the PBGC for con-
tinuation of the Pilot Plan for the six-month period through
June 30, 2005 were “unreasonable,” dismissing ALPA’s
attempt to compare that cost with the “total obligations of the
plan (several billion dollars),” because any “number can be
made to look trifling by comparing it with some much larger
number.” App. A, 10a. Instead of identifying what relevant
comparators should be used to determine what loss would be
“unreasonable,” the court summarily concluded that by any
“normal calculation” $84 million is “substantial.” /d.

* Even though the PBGC prevailed in the termination action, the
agency filed a cross-appeal secking affirmation of the Pension Plan
Termination Order on other grounds.

10

The court did not address the merits of the December 30,
2004 termination date, noting only that “the district judge was
not required to split the difference between the ALPA and the
PBGC. That United had promised the Union not to agree to a
date before June 30 does not affect either the PBGC or the
court, for they are strangers to the bargain.” /d. at lla. The
PBGC’s cross-appeal was dismissed as an improper request
for an advisory opinion. /d. at Sa.

With respect to the Supplemental Benefits Order, the court
determined that United’s failure to appeal the initial February,
2005 decision compelling it to continue making payments did
not preclude it from appealing the Supplemental Benefits
Order because the earlier order was interlocutory, and failure
to appeal an interlocutory decision does not result in a
forfeiture of a litigation position. /d. at 12a-l4a. On the
merits, the court ruled that United was not required to pay the
Supplemental Benefits due for October, 2005 or thereafter
because the termination of the Pilot Plan, which was set
retroactively at December 30, 2004, necessarily terminated its
obligation to pay the Supplemental Benefits.

REASONS FOR GRANTING THE WRIT

The petition should be granted because the issues presented
raise important questions of fedcral law that have not been,
and should be, settled by this Court. In its ruling affirming
the Pension Plan Termination Order, the court of appeals
ignored the plain language of the involuntary termination
statute, under which Congress (a) limited the PBGC’s ability
to terminate a pension plan and, (b) in order to protect
participants where a termination is contested, placed ultimate
decision-making power in the hands of the court. Even
though the Pilot Plan, like other United pension plans, was
terminated during United’s bankruptcy case, in which the
airline sought sweeping changes to its labor agreements and
the elimination of its pension obligations, the additional

1]

accruals for the six-month period the Pilot Plan could have
remained in effect beyond December 30, 2004 were
significant to the pilots as stakeholders competing with other
United stakeholders, including the PBGC, for the limited
returns available in the deeply concessionary environment of
the United bankruptcy.

The courts below instead applied a loose standard that
ignored the meaning of the statute and that would allow the
PBGC to terminate a pension plan whenever it faces any
additional liability if the plan continues, and as of a date that
affords no meaningful notice to the plan participants. The
Supreme Court should grant the writ in order to secure a
workable standard that comports with the plain language of
the statute.

In addition, the petition should be granted because in its
ruling in the Supplementai Benefits Case, the court of appeals
has created unworkable uncertainty among the courts
regarding the finality of appeals in bankruptcy. In ruling that
United had not forfeited its right to appeal a prior order
compelling the payment of the Supplemental Benefits, the
court undermined courts’ and parties’ ability to conclusively
resolve discrete matters within a bankruptcy case that are
critical to an expeditious overall completion of the case. If
the court’s ruling ignoring the important distinction between
non-bankruptcy interim orders and orders entered in discrete
proceedings in a bankruptcy case goes unreviewed, the
prospects for orderly resolution of bankruptcy cases are
severely weakened. —

12

I. The Decision of the Court of Appeals That the
Pilot Plan Should Be Terminated as of December
30, 2004 Misapplies the Involuntary Pension Plan
Termination Provisions and Requires Review to
Clarify an Important Question of Federal Law

ERISA permits the PBGC to seck the termination of a
single-employer pension plan by filing an action and estab-
lishing that the plan must be terminated “in order to protect
the interests of the participants or to avoid an unreasonable
deterioration of the financial condition of the plan or any
unreasonable increase in the liability of the [PBGC’s
insurance] fund.” 29 U.S.C. § 1342(c). In such a contested
plan termination case, the court establishes the termination
date. See 29 U.S.C. § 1348(a)(4). Congress thus intended
that the courts adjudicate a plan termination by addressing
and balancing the interests of the plan participants, the plan
itself and the PBGC. See PBGC v. Heppenstall Co., 633 F.2d
293, 301 (3d Cir. 1980). The provisions of Title IV of
ERISA apply to approximately 28,800 single-employer plans
insured by the PBGC, covering over 34 million individ-
uals. See http://www.phgc.gov/media/key-resources-for-the-
press/content/page 1 3540.html (last visited on Jan, 20, 2007).
The construction of these statutory provisions therefore has
enormous consequences for millions of active and retired
employces and their representatives’ and presents an impor-
tant question of federal law that has not been, and should be,
settled by this Court.

Congress considered the role of the Court in plan termi-
nations to be a “substantial safeguard” of the rights of par-
ticipants and beneficiaries. See 29 U.S.C. § 1342(a) (noting

* See 29 U.S.C. § 1303(f(1) (a participant or beneficiary, adversely
affected by an action of the PBGC or an “employee organization
representing such a participant or beneficiary” may bring an action against
the PBGC for appropriate equitable relict in the appropriate court).

13

that the PBGC may prescribe a simplified termination pro-
cedure for smaller plans that must include “the requirement
for a court decree under subsection [1342](c)”); App. C, 31a
(explaining that “the judicial decree functions as a ‘sub-
stantial safeguard’ for the rights of parties other than PBGC
affected by plan termination”). In particular, Congress did
not intend plans to be terminated as of a particular date
merely because the date is selected by the PBGC, as is
evident both from the statutory mandate that “the court”
establish the termination date under 29 U.S.C. § 1348(a)(4),
as well as from the requirement that the PBGC obtain a
decree from the court adjudicating the termination. 29 U.S.C.
§ 1342(c).

A. The Meaning of an “Unreasonable” Increase

Congress’ intention that the court balance three factors in
adjudicating a termination is also evident in the choice of the
word “unreasonable” to limit the additional liability that
could form the basis of a termination. In 1980, Congress
amended § 1342(c) to reinforce its intention. As originally
enacted, § 1342(c) allowed the PBGC to terminate pension
plans to avoid “further” increases. ERISA, Pub. L. No. 93-
406, § 4042(c), 88 Stat. 829, 1021 (1974). Congress
amended the statute to change the word “further” to “unrca-
sonable.” As this Court has repeatedly explained, “a legis-
lature says in a statute what it means and means in a statute
what it says there.” Conn. Nat'l Bank v. Germain, 503 U.S.
249, 253-54 (1992); see also Pavelic & LeFlore v. Marvel
Entertainment Group, 493 U.S. 120, 126 (1989) (the courts’
“task is to apply the text, not to improve upon it’).

The courts below, however, failed to apply the plain
meaning of the statute. In construing the standard set forth in
29 U.S.C. § 1342(c), the courts were required to conclude that
continuation of the Pilot Plan beyond December 30, 2004
until June 30, 2005 unreasonably increased the liability to the

14

insurance fund.? “Unreasonable” denotes something out of
the ordinary. See, e.g., Doggett v. United States, 505 U.S.
647, 652 (1992) (contrasting “ordinary” and “unreasonable’’).
In secking to terminate the Pilot Plan as of December 30,
2004, the PBGC aimed to prove that liability increases for the
period January | through June 30, 2005, the latest termination
date under PBGC’s global settlement with United, were
“unreasonable” under the statute. It could only point to,
however, increases from normal plan operations and from a
Congressionally-mandated cost of living adjustment that took
effect January 1, 2005.

Thus, the additional liability attributable to a continuation
of the Pilot Plan beyond December 30, 2004 includes several
components reflecting costs attributable to the passage of
time between January | and June 30, 2005, such as normal
benefit accruals due to the continued services rendered by the
pilots, merely “further,” rather than “unreasonable” increases.
The increased liability also includes $44 million attributable
to an increase in the annual COLA adjustment to the
maximum government benefit, an increase in the maximum
benefit that the PBGC is required to guarantee under 29
U.S.C. § 1322(b). As such, it is a cost Congress provided for
as part of its complex delineation of the benefits that would
be guaranteed by the pension insurance program. “Deciding
what competing values will or will not be sacrificed to the
achievement of a particular objective is the very essence of
legislative choice....” PBGC v. LTV Corp., 496 U.S. 633,
646-47 (1990) (quoting Rodriguez v. United States, 480 U.S.
522, 526 (1987)). The COLA adjustment effective January |,
2005 cannot be an “unreasonable” increase in the PBGC’s
liability where Congress has established it as an integral
component of the insurance program.

* Where, as here, the PBGC seeks termination solely to avoid an
“unreasonable increase in the liability of the fund,” that determination 1s
tantamount to a determination of the termination date itself.

15

The courts below also construed the statutory standard of
“reasonableness” in a virtual vacuum, divorced from any
consideration of the relevant context in the case, in particular,
the PBGC’s settlement with United. Cf Samson v.
California, 126 S.Ct. 2193, 2197 (2006) (the Court examines
““the totality of the circumstances’ to determine whether a
search is reasonable”); Black’s Law Dictionary 1293 (8th ed.
2004) (defining “reasonable” as “[flair, proper, or moderate
under the circumstances” (emphasis added)).

The court of appeals ignored this context, App. A, 9a-10a,
and instead stated, without explanation, that the amount at
issue here “is substantial by any normal calculation.” Jd. at
10a. Whether substantial or not, the question before the court
was whether the increase was “unreasonable.” The court’s
standard provides an unworkable framework for the PBGC,
other courts, and pension plan participants or their rep-
resentatives facing termination of their pension plan.

No other court of appeals has applied § 1342(c) to a
contested involuntary termination case like this one.° If
Congress’ deliberate choice in crafting a termination standard
is to be given effect by the courts, an application of the
standard that comports with its plain meaning needs clear
definition. This Court therefore should grant the writ to
ensure that the plain language of the statute is given effect.

* Several district courts have applied § 1342(c), and cach one has also
offered loose and ineffectual standards. Nonetheless, even these courts
have rclicd on more definite contextual analysis than the Seventh Circuit
did here. See, e.g., PBGC v. The Pension Comm. of Pan Am. World
Airways, Inc., 777 F.Supp. 1179, 1183 (S.D.N.Y. 1991) (“[a] substantial
increase in such potential liability, with no certain prospect that such
potential liability can be recouped, should be regarded under this statute as
unreasonable”); PBGC v. FEL Corp., 798 F.Supp. 239, 242 (D.N.J. 1992)
(relying on evidence showing that termination was immediately necessary
to ensure the PBGC’s recovery, as well as because the sponsor was
“technically insolvent”).

16

B. Participants’ Expectations in Continued
Accruals

In addition, contrary to Congress’ directive that the court
“establish[]” the termination date where the parties do not
agree, see 29 U.S.C. § 1348(a)(4), the courts below merely
selected the date chosen by the PBGC. In cases like this one,
courts generally select a plan termination date by “balanc[ing]
the competing interests of the [PBGC] and the participants in
an appropriate termination date.” Heppenstall, 633 F.2d at
301. In Heppenstall, the court defined the employees’
interests as an expectation in the continued accrual of benefits
and concluded that participants enjoy a statutory right to the
protection of those interests in a termination proceeding,
including notice of such proceedings. /d. at 301-03. Fol-
lowing Heppenstall, courts have determined the date on
which participants have received notice sufficient to extin-
guish their reasonable expectation in continued accrual of
benefits. Once that date is determined, the court selects the
date thereafter that “serves the interests of PBGC.” PBGC v.
Republic Technologies Int’l, LLC, 386 F.3d 659, 666 (6th Cir.
2004).

Under this test, courts ostensibly balance competing inter-
ests. In actuality, however, in most cases, by the time the
PBGC has issued its notice of termination, any reasonable
expectation of continued accruals has long since vanished. In
such cases, there is in reality little need to undertake a balance
of competing interests. In R77, for instance, the PBGC
sought a termination date in response to the company’s failed
efforts to reorganize, while the company was in the process of
shutting down. /d. at 660-61. In Heppenstall, the plan
sponsor had already ceased all operations by the time the
PBGC moved to terminate the plan. /d. at 301. See also
PBGC vy. Md. Glass Corp., 618 F.Supp. 1410, 1415-16 (D.
Md. 1985) (PBGC chose to terminate the plan after plant
production was brought to a standstill, evidenced by the

17

shutdown of the plant furnace); PBGC v. Mize Co., Inc., 987
F.2d 1059, 1060 (4th Cir. 1993) (PBGC sought termination of
plan six years after company ceased operations). In PBGC v.
Dickens, 535 F.Supp. 922 (W.D. Mich. 1982), “the PBGC
orally agreed at trial... [that the date the employer] totally

ceased operations” was the appropriate date of termination.
Id. at 925.’

Thus, although courts have generally selected the date
PBGC filed its termination complaint as the date employees’
expectations were extinguished, e.g., Mize, 987 F.2d at 1060,
in fact, a plant shutdown, an asset sale or other event resulting
in loss of employment provides a necessary factual predicate
for the cessation of the plan participants’ expectation of
continued pension accruals. Under those circumstances,
morcover, the interest of the PBGC in establishing an early
termination date is more consistent with the reduced ex-
pectations of continued employment.

The use of the PBGC notice as reflected in these liqui-
dation cases does not work, however, where there is a
divergence between participants’ actual expectation regarding
continued employment and continued pension accruals, on
the one hand, and the PBGC’s view of its interests in
stemming its losses on the other. The United bankruptcy bore
no resemblance at all to a case involving a shutdown of
operations or sale of assets that would extinguish the em-
ployees’ expectation in continued employment and accrual of
benefits as of the date the PBGC took its preemptive action
against the Pilot Plan.

United, the second largest airline in the United States, was
reorganizing aS an ongoing enterprise. Its intense effort to

"In Pan Am, the court rejected the termination date proposed by the
PBGC even after it provided notice. It established a termination date one
weck later, as of when the court determined that participants had received
constructive notice. Pan Am., 777 F.Supp. at 1185.

18

obtain labor cost concessions, pension funding relief and
other cost restructuring during a period of industry-wide
distress did not convey the same evidentiary predicate as the
cases under which the standard was erected. The PBGC’s
notices appeared just as the pilots were voting to ratify a
modified labor agreement with United. Communications from
ALPA expressed the union’s strong, negative reaction to the
action taken by the PBGC, and conveyed ALPA’s resolve to
challenge it. App. S, 153a. Under these circumstances, the
mere issuance of notices by the PBGC could not suffice to
extinguish the pilots’ expectations of continued accruals as of
December 30, 2004.

In order to give effect to the competing interests involved,
courts must balance them under 29 U.S.C. § 1348(a)(4) in
establishing a termination date, a balancing test that is
essentially fact intensive. Whether notice is adequate is fun-
damentally an issue of fact that depends on the circumstances.
See, e.g., Jones v. Flowers, 126 S.Ct. 1708, 1714 (2006) (“we
have explained that the ‘notice required will vary with
circumstances and conditions’” (quoting Walker v. City of
Hutchinson, 352 U.S. 112, 115 (1956)); Price v. City of Fort
Wayne, 117 F.3d 1022, 1026 (7th Cir. 1997). Because the
circurnstances here demanded more than merely applying the
two-part test developed under § 1348(a)(4) as a matter of law,
ALPA sought, unsuccessfully, the right to submit evidence in
the bankruptcy court on the matter, App. J, 119a-120a, and
again as part of its objections to the bankruptcy court’s
proposed finding of fact under 28 U.S.C. § 157(c). The
courts below not only erred in denying ALPA the right to
submit evidence, but more fundamentally failed to apply the
statutory termination test as adopted by Congress.

The writ should be granted so that courts will apply these
rules regarding the determination of adequate notice of a plan
termination in the manner Congress intended.

19

Il. The Decision of the Court of Appeals That United
Had Not Forfeited Its Appeal Rights In Challeng-
ing Its Obligation to Pay Supplemental Benefits
Deepens an Already Confusing Divide in Case Law
Regarding Appeals in Bankruptcy Cases and Pre-
sents an Issue of Compelling Importance Warrant-
ing This Court’s Review

A. The Ruling Below was Contrary to Well-
Established Precedent

In February, 2005, the bankruptcy court ordered United to
pay the Supplemental Benefits until the Pilot Plan was ter-
minated under the provisions of Title I[V of ERISA. See App.
M, 131a-132a. United did not appeal that order but initially
complied, and then decided not to make the Supplemental
Benefits due in October, 2005, before the court terminated the
Pilot Plan.

In later ruling that United was not obligated to pay the
Supplemental Benefits, the court of appeals rejected the
appellees’ argument that United had forfeited its right to
contest the October payment by failing to appeal the
February, 2005 order. The court rejected the forfeiture
argument based solely on its conclusion, nowhere analyzed in
the decision, that an appeal from the bankruptcy court’s
February, 2005 order would have been interlocutory, citing,
among other rulings, this Court’s decision in United States v.
Clark, 445 U.S. 23, 25 n.2 (1980). See App. A, 12a-14a.
Neither Clark nor the court’s other citations, however,
involved bankruptcy. appeals. The court simply presumed
that the February, 2005 ruling was interlocutory and that if
United “was willing to... Iet the subject slide until October
[2005], that was its own loss (and the retirees’ gain); a legal
ruling declaring the legal position lost forever would Icad
prudent lawyers to file appeals early and often, pouring
molasses on the judicial process.” /d. at 13a-14a.

20

The court’s ruling, however, ignored long standing case
law, including court of appeals precedent, that discrete
disputes within a bankruptcy case are separate judicial units
and that orders resolving these disputes on the merits are final
orders for appeal purposes.*® See generally, In re Saco Local
Dev. Corp., 711 F.2d 441 (ist Cir. 1983) (Breyer, J.); 1
Collier on Bankruptcy (15th ed. rev.), 4 5.07[i][b] (noting
that “each adversary proceeding or contested matter is a
discrete unit [within the larger bankruptcy case] and that,
once that unit is defined, ordinary concepts of finality
apply”), John P. Hennigan, Jr., Towards Regularizing
Appealability in Bankruptcy, 12 Bankr. Dev. J. 583, 599-602
(1996) (hereafter “Hennigan”) (describing legislative history
of bankruptcy appeals provisions).

The test for determining a final order in a bankruptcy
proceeding is that the order “must completely resolve all
issues pertaining to the disputed claim, including issues as to
proper relief.” Jn re Integrated Res. Inc., 3 F.3d 49, 53 (2d |
Cir. 1993). See also Saco Local Dev. Corp., 711 F.2d at 444
(for an order to be immediately appealable as a final order it
“must finally dispose” of a discrete dispute within the
bankruptcy case).

Thus, a bankruptcy court order is final for purposes of
appeal when it resolves on the merits a discrete dispute within
the larger bankruptcy case. See Howard Delivery Serv., Inc.
v. Zurich Am. Ins. Co., 126 S.Ct. 2105, 2110 n.3 (2006); Bank
of Am., N.A., v. Moglia, 330 F.3d 942, 944 (7th Cir. 2003); In

* The district court has jurisdiction to hear appeals from “final judg-
ments, orders and decrees” of the bankruptcy court. 28 U.S.C.
§ 158(a)(1).

” Historically, the bankruptcy laws have recognized a “proceeding” in a
bankruptcy as an “individual ‘matter [| of an administrative character. . .
presented in the ordinary course of the administration of the bankrupt’s
estate’” (alterations in original) (emphasis in original). Saco Local Dev.,
711 F.2d at 444-45 (citing Taylor v. Voss, 271 U.S. 176, 181 (1926)).

21

re Taylor, 913 F.2d 102, 104 (3d Cir. 1990) (order “fully and
finally resolved a discrete set of issues” and was therefore
appealable). See also In re Urban Broadcasting Corp., 401
F.3d 236, 247 (4th Cir. 2005) (order not final where it did not
conclusively determine a separable dispute); Jn re Golant,
239 F.3d 931, 934 (7th Cir. 2001) (in _ bank-
ruptcy proceedings, “[w|here an order terminates a discrete
dispute that, but for the bankruptcy would be a stand-alone
suit .. . the order will be considered final and appealable”’); Jn
re James Wilson Assoc., 965 F.2d 160, 166 (7th Cir. 1992); In
re Greene County Hosp., 835 F.2d 589, 594 (Sth Cir. 1988)
(for appeal purposes, final order includes “an order that
conclusively determines a separable dispute’’); /n re Fox, 241
B.R. 224, 228 (10th Cir. B.A.P. 1999) (order not appealable
as a final order unless it “conclusively determines ‘discrete
disputes’ within the larger case”).

By contrast, an interlocutory order in bankruptcy, which is
immediately appealable only if certain conditions are met, see
28 U.S.C. § 158(a)(2), (3), is cither one which does not reach
the merits, or which reaches the merits but “is not the end of
the road for the losing party.” 1 Collier on Bankruptcy at
4 5.07[5]. See also id. (listing orders courts have found to be
interlocutory).

ALPA and URPBPA brought their motions in February,
2005 to compel payment of the Supplemental Benefits as
“contested matters” in the main United bankruptcy case and
the court entered its ruling in the main bankruptcy case. See
Fed. R. Bank. Proc. 9014(a) (contested matter is initiated by
motion). Movants did not bring the motion as part of the
Pension Plan Termination Case then pending in the bank-
ruptcy court as a separate adversary proceeding, another form
of discrete judicial unit from which the parties took appeals.'°

10

An adversary proceeding resembles a non-bankruptcy civil action
and is initiated through the filing of a complaint. The applicable

22

The bankruptcy court’s February, 2005 order clearly
satisfied the standard for a final order that has been applied in
bankruptcy cases. The order not only resolved the con-
troversy on the merits, but, by requiring United to continue
the payments, also necessarily determined that, under the
terms of the post-petition agreement between ALPA and
United, United was required to pay the claimed amounts in
full and to pay them when they came due. App. A, 16a
(noting that payment provided retired pilots with “100¢ on
the dollar”).'' The February, 2005 order was akin to orders
considered final and appealable in other discrete proceedings
resolving disputes regarding claims in bankruptcy. F.g., /n re
Kids Creek Partners, L.P., 200 F.3d 1070, 1073 (7th Cir.
2000) (priority of claim for administrative costs and fees); /n
re Fowler, 394 F.3d 1208 (9th Cir. 2005) (priority of tax
claim); In re Miller, 284 B.R. 734 (10th Cir. B.A.P. 2002)
(priority of claim for child and spousal support). See also In
re UAL Corp., 411 F.3d 818, 821 (7th Cir. 2005).

Because the February, 2005 order was final in the context
of the bankruptcy case, United’s failure to appeal should have
resulted in a forfeiture of its right to argue in October, 2005
that it was no longer obligated to make these payments. See
Budinich v. Becton Dickinson and Co., 486 U.S. 196, 202-03
(1988) (noting “jurisdictional consequences of untimely
appeal’); In re Kids Creek Partners, L.P., 200 F.3d at 1073
(if an order “was a final decision, appealable to the district
court under 28 U.S.C. § 158(a), then failure to take a timely
appeal puts that order beyond review,” and “all claims that

bankruptcy procedural rules track the Federal Rules of Civil Procedure.
See Part VII, Fed. R. Bankr. Proc.

'' The bankruptcy court fully addressed the parties’ dispute and ruled
that the payment priority of the Supplemental Benefits under bankruptcy
law did not need to be decided because the post-petition agreement
between United and ALPA required that United continue the payiments
regardless of the priority. Apr. N, 135a-136a.

23

could have been raised at that time were forfeited”). See also
In re Gould, 977 F.2d 1038, 1040 (7th Cir. 1992) (party may
not “challenge the efficacy” of a bankruptcy court’s final
order if it never appealed the order). Accordingly, as of
October, 2005, United should have been bound by the
February, 2005 order requiring it to continue paying the
Supplemental Benefits. Schering Corp. v. Ill. Antibiotics Co.,
89 F.3d 357, 358 (7th Cir. 1996) (“a ruling by the trial court,
in an earlier stage of the case, that could have been but was
not challenged on appeal is binding in subsequent stages of
the case’).

Instead, without discussion, and contrary to long-estab-
lished bankruptcy practice, the court of appeals treated the
February, 2005 order as interlocutory, as if it were not entered
in a bankruptcy case and, as such, ruled that United had not
waived its right to challenge the bankruptcy court’s ruling
later on. By failing to address the prior order in bankruptcy
terms, the court of appeals’ ruling resembled the discredited
notion that the final order in a bankruptcy case is the order
entered at the end of the entire bankruptcy case. This ruling
will create new havoc in the administration of a bankruptcy
case. See Becton Dickinson, 486 U.S. at 201 (considerations
of finality “are not abstractions” but pertain to “the smooth
functioning of our judicial system”).

B. The Court’s Approach Introduces New Uncer-
tainty into the Administration of Bankruptcy

The courts have long considered the approach of the court
below unworkable because it is at odds with the peculiar
needs of a bankruptcy case, in which discrete matters must be
resolved along the way in order to reach an overall resolution
of the case. F.g., In re Christian, 804 F.2d 46, 48 (3d Cir.
1986) (awaiting outcome of entire case before appeal can be
heard is neither “desirable or practical”); /n re Martin Bros.
Toolmakers, Inc., 796 F.2d 1435, 1437 (11th Cir. 1986)

24

(finality “cannot be limited to the last order concluding the
bankruptcy case”). The Court’s ruling thus undermines the
ability to resolve the myriad individual matters that must be
addressed in order to complete the resolution of a bank-
ruptcy case.

Courts have long recognized that the concept of finality in
bankruptcy appeals is “considerably more flexible” than in
ordinary civil litigation because resolution of the larger
bankruptcy case necessarily depends on the prior, authori-
tative disposition of the many subsidiary disputes that arise
during the case in the form of separate proceedings. See /n re
Gould, 977 F.2d at 1041; In re Martin Bros. Toolmakers, Inc..,
796 F.2d at 1437 (flexible approach to appeals is “vital” in
bankruptcy, since each “claim represents a variable which
must be quantified before ... a workable reorganization plan
[is] adopted”). The resolution of a bankruptcy case has been
aptly described as “assembling a jigsaw puzzle. It is
necessary to start by putting some of the pieces firmly in
place.” Hennigan, 12 Bank. Dev. J. at 601.

Like the jigsaw puzzle, a bankruptcy case is resolved by
conclusively securing the various pieces that will eventually
comprise the whole. Clear rules regarding when individual
disputes must be appealed, and therefore forfeited if not
timely appealed, are a necessary prerequisite to concluding a
bankruptcy case in which numerous parties, claims, and
transactions must be addressed before a debtor can propose a
reorganization plan and determine how creditors will be paid.
See Martin Bros. Toolmakers, Inc., 796 F.2d at 1437 (reor-
ganization cases “proceed most smoothly when at least some
variables become fixed and operate as the basis for further
negotiation”). Adherence to the forfeiture rule, which is
“black letter law” regarding non-appealed final orders, see
Hennigan, 12 Bank. Dev. J. at 585, aids the overall resolution
of bankruptcy cases by forcing parties to address substantive
disputes at the time they are decided.

25

Courts and commentators have noted that the subject of
finality in bankruptcy cases is “complex,” Jn re Huebner, 986
F.2d 1222, 1223 (8th Cir. 1993), “murky,” Khan & Nate’s
Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351,
1354 (7th Cir. 1990) and greatly in need of systemic,
organizing rules. Hennigan, 12 Bankr. Dev. J. at 622-26
(suggesting that courts regularize their approach following
the principles developed under 28 U.S.C. § 1291). The ruling
below, by permitting a debtor to preserve the ability to
challenge a substantive ruling for an indeterminate time
period, fosters uncertainty and prolongs—-rather than fore-
shortens—the resolution of individual disputes that must be
accomplished for complete resolution of a bankruptcy case.
This ruling opens a new ground for confusion in an already
complicated maze of case law that would benefit from
decisive guidance by this Court. If left to stand, the ruling
below by an influential court of appeals will leave bankruptcy
litigants in a state of perpetual uncertainty regarding the
finality of unappealed rulings made during the course of the
case.

This Court should grant the writ in order to clarify the rules
establishing final orders and application of the forfeiture
doctrine in bankruptcy.

26
CONCLUSION

For the foregoing reasons the writ should be granted.

Respectfully Submitted,

MICHAEL E. ABRAM *
BABETTE A. CECCOTTI
THOMAS N. CIANTRA

ZACHARY N. LEEDS

CLAIRE K. TUCK **

COHEN, WEISS AND SIMON LLP
330 West 42nd Street

New York, NY 10036

(212) 563-4100

Attorneys for Petitioner Air Line ,
* Counsel of Record Pilots Association, International

** Admitted in New Jersey only.
January 23, 2007

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_2069%3A1. Public record. Not legal advice.