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  • Writer's pictureKirk Hartley

The Supreme Court Takes Unusual Action on Chrysler – Future Tort Impact Requires Some Thought

The Supreme Court acted in unusual fashion yesterday on Chrysler, and the actions create some issues that need further thought as to their implications for underlying tort claimants and for due process. Specifically, in this order, the Court granted certiorari, but then immediately vacated the judgment and AND vacated as moot the Second Circuit’s opinion that explained its reasons for affirming the district court. The Second Circuit’s opinion was germane to mass tort claims and due process because of its language to the effect that future tort claimants would not be bound by the bankruptcy court rulings. See below for the exact wording of the order.

I’ll readily admit that I’m not a Supreme Court scholar. That said, this all seems rather odd, and makes one wonder about the motivations and thoughts behind these actions. Are these actions unique to the odd facts and pressures of Chrysler? Are the actions related to Justice Robert’s avowed interest in making a name for this Court by taking and resolving more “business issues” ? Do these actions in any way reflect hat the Court thinks it learned or held about bankruptcy court finality in its Travelers/Manville bankruptcy case ruling that remanded the Manville case back to the Second Circuit for further proceedings (which have been briefed and argued)?

I look forward to learning what others think. I think this means that everyone is now back to lower court orders which also include language suggesting that future claimants are not bound. For now, with a hat tip, here are excerpts from the commentary on LAW360, with quotes from Chrysler’s counsel:

“The order makes clear the case is over,” attorney Todd R. Geremia of Jones Day, which represents the Chrysler debtors, said Monday. “There’s nothing for another day.”

The high court’s ruling vacated a 53-page ruling in the Second Circuit affirming the sale as legal under the Bankruptcy Code but declining “to delineate the scope of the bankruptcy court’s authority to extinguish future claims” until a claim for injury caused by Old Chrysler could be brought under successor liability law.

While the court vacated the Second Circuit ruling, it did not necessarily disagree with it. The court invoked a precedent from a case known as United States v. Munsingwear Inc. that allows it simply to vacate and remand cases that become moot on their way up.

“Nothing in this order today reflects any disagreement with the Second Circuit,” Geremia said. “It’s an order that arises from the application of Munsingwear.”


The Supreme Court’s order states:

” IN POLICE PENSION TRUST, ET AL. V. CHRYSLER LLC, ET AL. The motion of Washington Legal Foundation, et al. for leave to file a brief as amici curiae is granted. The petition for a writ of certiorari is granted. The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Second Circuit with instructions to dismiss the appeal as moot. See United States v. Munsingwear, Inc., 340 U.S. 36 (1950).

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