UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
ENRON CREDITORS RECOVERY
CORP., et al.,
Reorganized Debtors.
Chapter 11
Case No. 01-16034 (AJG)
Jointly Administered
ENRON CREDITORS RECOVERY
CORP.,
Appellant,
v.
INTERNATIONAL FINANCE CORP.,
et al.,
Appellees.
Adv. Pro. No. 03-93370 (AJG)
District Court
Case No. 07-06597 (AKH)
ORAL ARGUMENT REQUESTED
APPELLEES’ REPLY MEMORANDUM OF LAW
IN FURTHER SUPPORT OF MOTION FOR RECONSIDERATION
Stephen J. Shimshak (SS-8822)
Douglas R. Davis (DD-0874)
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Telephone: (212) 373-3000
Attorneys for Appellees
Caisse de Dépôt et Placement du Québec
and National Australia Bank
Dated: October 31, 2007
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 1 of 17
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Table of Contents
Page
Table of Authorities ........................................................................................................ ii
Preliminary Statement ..................................................................................................... 1
Argument........................................................................................................................ 2
I. THE RESPONSE MISREPRESENTS THE FACTUAL AND LEGAL BASES
FOR APPELLEES’ MOTION FOR RECONSIDERATION ............................ 2
II. THE RESPONSE FAILS TO ADDRESS SQUARELY THE ISSUES RAISED
IN APPELLEES’ MOTION FOR RECONSIDERATION................................ 6
A. Enron Does Not Refute Appellees’ Objection to this
Court’s Subject-Matter Jurisdiction....................................................... 6
B. Enron Overstates Appellees’ Reading of Rule 58 ................................ 10
C. Enron’s Appeal to Fairness is Unavailing............................................ 11
Conclusion.................................................................................................................... 12
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 2 of 17
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Table of Authorities
Page(s)
FEDERAL CASES
A-1 Amusement Co., Inc. v. United States,
15 Fed. Appx. 777, 781 (Fed. Cir. 2001)........................................................ 5, 12
Ansam Associates, Inc. v. Cola Petroleum, Ltd.,
760 F.2d 442 (2d Cir. 1985)............................................................................... 11
Bowles v. Russell,
551 U.S.___, 127 S. Ct. 2360 (2007) ............................................................... 6, 7
Brunswick Corp. v. Sheridan,
582 F.2d 175 (2d Cir. 1978)................................................................................. 4
Chapple v. Levinsky,
961 F.2d 372 (2d Cir. 1992)............................................................................. 5, 9
Cooper v. Town of East Hampton,
83 F.3d 31 (2d Cir. 1996) .................................................................................. 11
Dorsey v. Enron Corp. (In re Enron Corp.), 2006 WL 1030413,
(Bankr. S.D.N.Y. Apr. 10, 2006) ..................................................................... 2, 4
Fletcher v. Marino,
882 F.2d 605 (2d Cir. 1989)............................................................................. 6, 9
HBE Leasing Corp. v. Frank,
48 F.3d 623 (2d Cir. 1995)..........................................................................8, 9, 10
Kahn v. Chase Manhattan Bank, N.A.,
91 F.3d 385 (2d Cir. 1996)............................................................................... 8, 9
Lindsay v. Beneficial Reins. Co., (In re Lindsay),
59 F.3d 942 (9th Cir. 1995) ........................................................................5, 6, 12
RMM Records & Video Corp. v. Universal Music & Video Distrib. Co.
(In re RMM Records & Video Corp.),
372 B.R. 603 (Bankr. S.D.N.Y. 2007).................................................................. 4
Sandwiches, Inc. v. Wendy’s Int’l, Inc.,
822 F.2d 707 (7th Cir. 1987)................................................................................ 5
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 3 of 17
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Siemon v. Emigrant Sav. Bank (In re Siemon),
421 F.3d 167 (2d Cir. 2005)................................................................................. 7
St. Paul Fire & Marine Ins. Co. v. PepsiCo, Inc.,
884 F.2d 688 (2d Cir. 1989)................................................................................. 6
State Farm Mut. Auto. Ins. Co. v. Wilkins,
No. 05-20934, 2007 WL 2186274 (5th Cir. Jul. 30, 2007) ................................... 5
Stovall v. Denno,
388 U.S. 293 (1967) .......................................................................................... 11
United States v. Machado,
465 F.3d 1301 (11th Cir. 2006)............................................................................ 7
FEDERAL STATUTES
28 U.S.C. § 158(c)(2).................................................................................................... 13
28 U.S.C. § 1291......................................................................................................... 6, 8
28 U.S.C. § 2072(c) ........................................................................................................ 8
28 U.S.C. § 2111............................................................................................................. 9
FEDERAL RULES
Fed. R. Bankr. P. 7054 .................................................................................................... 2
Fed. R. Bankr. P. 8002 .................................................................................................. 13
Fed. R. Civ. P. 54...............................................................................................2, 8, 9, 10
Fed. R. Civ. P. 58.......................................................................................................... 10
MISCELLANEOUS
RICHARD H. FALLON, JR., DANIEL J. MELTZER & DAVID L. SHAPIRO,
HART AND WECHSLER’S THE FEDERAL COURTS AND THE FEDERAL SYSTEM
(5th ed. 2003) .................................................................................................... 11
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 4 of 17
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Caisse de Dépôt et Placement du Québec (“Caisse”) and National
Australia Bank (“NAB,” together with Caisse, the “Appellees”) respectfully submit this
Reply Memorandum of Law (the “Reply Memorandum”) in Further Support of the
Motion for Reconsideration of the Court’s October 10, 2007 Order Denying Appellees’
Motion to Dismiss filed October 19, 2007 (the “Reconsideration Motion”).1
Preliminary Statement
Enron uses its Memorandum of Law in Opposition to Appellees’ Motion for
Reconsideration filed October 26, 2007 (the “Response”) to trivialize the Reconsideration
Motion and to mischaracterize most of Appellees’ arguments, but Enron nowhere comes to
grips with the fundamental question that the Reconsideration Motion poses: does this Court
have subject-matter jurisdiction to consider Enron’s challenge to Judge Gonzalez’s express
direction of the immediate entry of final judgment pursuant to Bankruptcy Rules 7054 and
9021, when Enron waited over one year after entry of the 7054 Order and ten months after
the entry of the final August 9 Judgment to appeal?2 Based on the facts and authority set
forth in the Memorandum of Law and in this Reply Memorandum, the answer to that
question is “No.”
1 Capitalized terms not otherwise defined herein have the meanings ascribed to them in the
Memorandum of Law in Support of Appellees’ Motion for Reconsideration filed October
19, 2007 (the “Memorandum of Law”).
2 Enron labels the Reconsideration Motion “frivolous.” (Response at 2.) To call this
Court’s attention to factual errors (factual errors that Enron concedes) and to relevant
authority from three Circuits dealing with versions of the same procedural issue as that
presented here -- all of which place the burden of a timely appeal from an order or
judgment, even one seen as deficient, on a party like Enron -- hardly seems frivolous.
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 5 of 17
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Argument
I.
THE RESPONSE MISREPRESENTS THE FACTUAL AND LEGAL BASES
FOR APPELLEES’ MOTION FOR RECONSIDERATION
The Response mischaracterizes much of Appellees’ factual account and legal
presentation. Enron says that the fact that Judge Gonzalez deleted the Rule 54(b) language
from the order submitted by Bear Stearns rather than the one submitted by Appellees is of no
consequence because “Appellees’ order … never even mentioned Rule 54(b).” (Response at
1.)
It’s hard to understand what point Enron is trying to make with this argument.
The adversary proceeding took place in a United States Bankruptcy Court, where Judge
Gonzalez sits as a United States Bankruptcy Judge. Rule 54(b) of the Federal Rules of Civil
Procedure applies to adversary proceedings through Bankruptcy Rule 7054, which Judge
Gonzalez and every bankruptcy lawyer, including those that have represented Enron, knows.
Fed. R. Bankr. P. 7054; see Dorsey v. Enron Corp. (In re Enron Corp.), 2006 WL 1030413,
at *5 (Bankr. S.D.N.Y. Apr. 10, 2006) (“Bankruptcy Rule 7054 … incorporates Rule 54(b)
of the Federal Rules of Civil Procedure.”). There’s just no question that in reading Judge
Gonzalez’s reference to Rule 7054, Enron knew and understood that Judge Gonzalez’s 7054
Order invoked Rule 54(b), including the direction, in the very words of that Rule, that the
clerk immediately enter final judgment pursuant to Bankruptcy Rule 7054.
Enron next claims that the fact “[t]hat the Opinion referred to a June 15, 2006
judgment, rather than one entered on August 9, 2006 … does not matter … [because] there
was never a Rule 54(b) certification sought by or granted to Appellees.” (Response at 1-2.)
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This statement is problematic on three counts. First, it’s a classic “straw
man” argument. Appellees never suggested that the Opinion’s omission of a reference to the
August 9 judgment in itself provides a basis for reconsideration, only that “[t]he Opinion’s
references to the May 15 Proposed Order and the June 15 Order suggest that the Court
confused the Appellees with the 546(e) Defendants in reaching its decision; it also suggests
that this Court did not focus on the unambiguous language of Judge Gonzalez’s June 5, 2006
order (the ‘7054 Order’) which did pertain to Appellees.” (Memorandum of Law at 2.)
Because the Opinion attributed the June 15 Order to Appellees and found significant Judge
Gonzalez’s deletion of certification language from the May 15 Proposed Order, the
Memorandum of Law recounted Appellees’ understandable concern that this Court
overlooked the crucial factual and substantive differences between the June 15 Order, on the
one hand, and the 7054 Order entered June 5 and the August 9 Judgment entered in
Appellees’ favor, on the other hand.
Second, Enron asserts that Judge Gonzalez never intended certification in the
7054 Order. (Response at 2, 5.) That assertion is impossible to square with the language of
his 7054 Order. As noted in Appellees’ Memorandum of Law, Judge Gonzalez’s intent was
perfectly clear. He stated that “this order shall take effect immediately upon its entry; and
… pursuant to Fed. R. Bankr. P. 7054 and Fed. R. Bankr. P. 9021, the Clerk of this
Court is directed to enter forthwith a final judgment dismissing this adversary proceeding
with prejudice as to [Caisse] and NAB.” (7054 Order, Shimshak Decl., Ex. 15 (emphasis
supplied), discussed in Memorandum of Law at 7.)
Enron proposes that because Judge Gonzalez has published two opinions in
which he discusses the basis for granting or denying certification motions, he could not have
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 7 of 17
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intended certification, given the measured and reasoned explanation on the topic that his
published opinions contain. (Response at 5 n.1, 7.) But Enron’s invocation of Judge
Gonzalez’s judicial practice argues for the opposite conclusion: when the careful and
meticulous jurist that Enron describes directed entry of an order “pursuant to Fed R. Bankr.
P. 7054” and a final judgment is entered in furtherance of that order pursuant to Bankruptcy
Rule 9021, then Enron should have known Judge Gonzalez meant precisely what he said, not
something else, and that his intention was clear. Compare RMM Records & Video Corp. v.
Universal Music & Video Distrib. Co. (In re RMM Records & Video Corp.), 372 B.R. 603,
618 (Bankr. S.D.N.Y. 2007) (opinion by Judge Gonzalez granting a motion for final entry of
judgment under Rule 54(b) (citing Brunswick Corp. v. Sheridan, 582 F.2d 175, 183 (2d Cir.
1978) (“[E]ntry of final judgment under Rule 54(b) is not to be done lightly, particularly
when the action remains pending as to all parties.”) (emphasis supplied))).3
Third, on the basis of claimed deficiencies in the 7054 Order, Enron relies on
the “clarity of the law in this Circuit” to deride the Reconsideration Motion.4 But as
Appellees’ Memorandum of Law establishes, not a single decision in the Second Circuit has
ever addressed the question here -- whether an appellant can challenge as improper the
supposedly flawed direction of immediate entry of a final order and final judgment pursuant
to Rules 7054 and 9021 at the appellant’s leisure, rather than within the statutorily-prescribed
3 Judge Gonzalez’s two published opinions also involved requests to certify orders
granting summary judgment where claims between the same parties remained pending --
not the situation in this case. See RMM Records & Video Corp. v. Universal Music &
Video Distrib. Co. (In re RMM Records & Video Corp.), 372 B.R. 603, 605 (Bankr.
S.D.N.Y. 2007); Dorsey v. Enron Corp. (In re Enron Corp.), 2006 WL 1030413, at *6
(Bankr. S.D.N.Y. Apr. 10, 2006).
4 As noted in their previous submissions, Appellees maintain that the 7054 Order in this
adversary proceeding satisfied the requirements of Rule 54. See infra note 6.
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period after the separate entry of final judgment pursuant to the Rule 7054 Order. (See
Memorandum of Law at 3, 8-11.)
In every one of the cases noted in the Opinion and listed by Enron (including
the two new cases that Enron cites in its Response), a party took a timely appeal from an
order or judgment later found deficient. (See id. at 13-14; Response at 3 (citing Sandwiches,
Inc. v. Wendy’s Int’l, Inc., 822 F.2d 707 (7th Cir. 1987) (appeal taken while claims were
pending in another consolidated action was found to be premature); Chapple v. Levinsky,
961 F.2d 372, 374 (2d Cir. 1992) (Chapple had a claim pending against a second defendant
when he filed his appeal from the order dismissing the first defendant)).) Chapple, in fact,
reinforces Appellees’ argument: in Chapple, the Court of Appeals declined to hold that the
order was final precisely because “the district court did not direct that a final judgment of
dismissal be entered pursuant to Rule 54(b).” Chapple, 961 F.2d at 374. In this appeal, by
contrast, Judge Gonzalez did direct the entry of final judgment pursuant to Rule 7054.
While the Second Circuit has not confronted the question of subject-matter
jurisdiction at issue here, three Circuits -- the Fifth Circuit (State Farm Mut. Auto. Ins. Co. v.
Wilkins, No. 05-20934, 2007 WL 2186274, at *3 (5th Cir. Jul. 30, 2007) (unpublished slip.
op.)), the Ninth Circuit (Lindsay v. Beneficial Reins. Co. (In re Lindsay), 59 F.3d 942, 951
(9th Cir. 1995), cert. denied 516 U.S. 1074 (1996)), and the Federal Circuit (A-1 Amusement
Co., Inc. v. United States, 15 Fed. Appx. 777, 781 (Fed. Cir. 2001)) -- have done so, and all
have resolved the question of timeliness in favor of parties like Appellees that obtained the
order and judgment entered pursuant to Rule 54 or Bankruptcy Rule 7054, even when the
order and judgment later proved deficient. (Memorandum of Law at 11-13.) In the words of
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Lindsay, “[a] Rule 54(b) determination, right or wrong, starts the time for appeal running.”
Lindsay, 59 F.3d at 951.5
II.
THE RESPONSE FAILS TO ADDRESS SQUARELY
THE ISSUES RAISED IN APPELLEES’ MOTION FOR RECONSIDERATION
A. Enron Does Not Refute Appellees’ Objection to this Court’s Subject-
Matter Jurisdiction.
Rather than address Appellees’ core objection to subject-matter jurisdiction
over this appeal, Enron submits that because the District Court would have declined to
exercise appellate jurisdiction if Enron had taken an immediate appeal from the 7054 Order
or August 9 Judgment, the finality designation was unappealable before June 18, 2007.6
This argument assumes away the problem of Enron’s inaction. As Appellees
explained in their Memorandum of Law, if a Rule 54 order directing the entry of final
judgment were not a “final decision” for purposes of appeal, then no appellate court would
have jurisdiction under 28 U.S.C. § 1291 to review the propriety of the Rule 54 certification
5 The Supreme Court has forcefully confirmed the jurisdictional rigor of a timely appeal as
recently as June of 2007 (see Bowles v. Russell, 551 U.S.___, 127 S. Ct. 2360, 2366
(2007), cited in Memorandum of Law at 8), and those circuits that ostensibly resolved
this issue differently than the cases on which Appellees rely have used reasoning
inconsistent with Second Circuit precedents. (Memorandum of Law at 9 nn.6-7.)
6 Appellees maintain that appellate jurisdiction would have been upheld. (Memorandum
of Law at 4 n.3.) Berkeley, the only defendant remaining in the proceeding following the
entry of the June 15 Order, was a Transferee Defendant, not a Put Payment Defendant.
(Id. at 5.) “Where the reasons for the entry of [a] judgment are obvious … a district
court’s entry of judgment pursuant to Rule 54(b) will satisfy the purposes of the Rule
even though the court did not state the reasons for its determination that judgment should
be entered.” Fletcher v. Marino, 882 F.2d 605, 609 (2d Cir. 1989); see also St. Paul Fire
& Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 692-94 (2d Cir. 1989) (finding that the
reasons for directing the entry of final judgment under Rule 54(b) were readily apparent
from the record, despite the omission of an express finding of “no just reason for delay”),
discussed in Appellees’ Mem. Supp. Mot. Dismiss at 11-14.
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 10 of 17
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itself during the pendency of an ongoing case, yet clearly courts do so. (Memorandum of
Law at 10.) Moreover, controlling Supreme Court and Second Circuit precedents establish
that appellate courts analyze the basis of appellate jurisdiction without resort to an
appellant’s reasons for missing a deadline and without considering the merits of the appeal.
See, e.g., Bowles v. Russell, 551 U.S.___, 127 S. Ct. 2360, 2366 (2007) (holding that
“[b]ecause this Court has no authority to create equitable exceptions to jurisdictional
requirements, use of the ‘unique circumstances’ doctrine [to excuse an untimely appeal] is
illegitimate”); Siemon v. Emigrant Sav. Bank (In re Siemon), 421 F.3d 167, 169 (2d Cir.
2005) (per curiam) (compliance with Bankruptcy Rule 8002 is a jurisdictional requirement);
see also United States v. Machado, 465 F.3d 1301 (11th Cir. 2006) (deciding that an
untimely appeal rendered the circuit court without jurisdiction to decide whether the district
court lacked jurisdiction to belatedly enter a final order of forfeiture).
Due to the unusual procedural posture of this case, there are two separate
aspects to the “merits” of Enron’s appeal. One involves the merits of Enron’s challenge to
Judge Gonzalez’s decision on the meaning of Section 550 of the Bankruptcy Code. The
other involves the merits of Enron’s contention that defects in the 7054 Order directing
immediate entry of final judgment obviated the need for a timely appeal from the judgment
entered pursuant to the Order. The fact that the order directed the entry of final judgment
pursuant to Rules 7054 and 9021 a year ago is uncontroverted; Enron argues now, not then,
that it was improper for the Bankruptcy Court to do so.
But the emergence of a challenge to Judge Gonzalez’s procedural steps --
whether he properly designated the 7054 Order and whether he should have designated the
August 9 Judgment as “final” -- does not alter the basic framework separating consideration
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 11 of 17
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of the underlying merits from the consideration of subject-matter jurisdiction, particularly in
a case where: (i) the order expressly directed the immediate entry of final judgment pursuant
to Rule 7054; (ii) the basis for the designation is irrefutable from the record; (iii) the order
was to “take effect immediately”; and (iv) the clerk did in fact enter final judgment pursuant
to the order and Bankruptcy Rule 9021. If Rule 54 orders were not themselves immune from
the strictures of the Rule -- if Rule 54 orders need not be reviewed before the end of a case
because their supposed deficiencies meant that they could not be reviewed, as Enron insists,
then the finality contemplated by the Rule would be unattainable.7
Focusing exclusively on the contention that the 7054 Order was deficient,
Enron ignores the fact that Judge Gonzalez did enter an order expressly directing the entry of
final judgment pursuant to Bankruptcy Rules 7054 and 9021. Instead, relying on passages
from Kahn v. Chase Manhattan Bank, 91 F.3d 385 (2d Cir. 1996), and HBE Leasing v.
Frank, 48 F.3d 623 (2d Cir. 1995), Enron rehashes points from its earlier Memorandum in
Opposition to Appellees’ Motion to Dismiss. (See Response at 6.) Enron reads Kahn, for
example, as supporting the argument that neither the 7054 Order nor August 9 Judgment
could have been final because “an order that ‘adjudicates fewer than all the claims or the
rights and liabilities of fewer than all the parties’ is not a final judgment unless the district
court makes ‘an express determination that there is no just reason for delay … and an express
direction for the entry of judgment.’” Kahn, 91 F.3d at 387 (quoting Fed. R. Civ. P. 54(b)),
quoted in Appellant’s Mem. Opp. Mot. Dismiss at 11.
7 While the Supreme Court, under 28 U.S.C. § 2072(c), may prescribe rules that define
when a ruling of a district court is final for the purposes of appeal under 28 U.S.C.
§ 1291, Enron’s interpretation of Rule 54, which frustrates any pursuit of finality, would
arguably cause the Rule to exceed this statutory grant of authority.
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 12 of 17
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But Kahn is readily distinguishable from this case. Kahn involved an
immediate appeal from an order denying plaintiffs’ motion to amend their complaint, which
did not cite Rule 54(b) and was, by its nature, incapable of certification under Rule 54(b)
since it was not a judgment ending litigation on the merits. Id. at 387. The actual holding in
Kahn -- contained in the very same paragraph that Enron quotes -- states that “the district
court did not certify its August 17th order by making an express determination that there was
no just reason for delay or by directing entry of judgment pursuant to Rule 54(b).” Id. at
387-88. In other words, Kahn recognizes that by directing entry of final judgment pursuant
to Rule 54(b) -- as opposed to merely directing the entry of a judgment without either
invoking the rule or stating that there is no just reason for delay -- the court reveals its intent
to certify the entry of a final judgment. See also Fletcher v. Marino, 882 F.2d 605, 609-10
(2d Cir. 1989) (noting that a district court’s entry of judgment pursuant to Rule 54(b) will
satisfy the purposes of the Rule), discussed supra note 6; Chapple, 961 F.2d at 374 (where
the order was not final precisely because “the district court did not direct that a final
judgment of dismissal be entered pursuant to Rule 54(b)”), discussed supra page 5.
Enron also relies on HBE Leasing for its explanation that Rule 54(b) imposes
a duty on the court to “both direct entry of judgment and expressly determine that there is no
just reason for delay,” and for its acknowledgment that directing entry of a final judgment
without any reasoned explanation for why there was no just reason for delay constitutes an
abuse of discretion. HBE Leasing, 48 F.3d at 631, quoted in Appellant’s Mem. Opp. Mot.
Dismiss at 9. But not every error rises to reversible error (28 U.S.C. § 2111), and even
reversible error becomes irreversible if the error is not timely appealed. In HBE Leasing, the
order was immediately appealed. Id. Moreover, the court found that “there [was] simply no
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evidence that the District Court intended its ruling on the stay to constitute a Rule 54(b)
certification. The requirement of an express determination cannot be met if the District
Court does not make clear that such determination is for the purpose of certifying a final
judgment (e.g., by labeling its order a ‘Rule 54(b) Certification’).” Id. at 631-32 (emphasis
supplied). Because the 7054 Order expressly directed immediate entry of a final judgment
pursuant to Bankruptcy Rule 7054, Judge Gonzalez’s intent to direct the entry of a final
judgment in favor of Appellees is undeniable.
In sum, Enron’s arguments would be germane to the question of this Court’s
subject-matter jurisdiction only if Enron had done what it chose not to do -- appeal the 7054
Order and the August 9 Judgment by August 21, 2006. Only then would this Court have the
jurisdiction needed to evaluate whether or not Judge Gonzalez’s direction of the immediate
entry of final judgment pursuant to Rules 7054 and 9021 was in error. But when an order
clearly directs the immediate entry of final judgment pursuant to Bankruptcy Rules 7054 and
9021, a challenge to the basis for that order and judgment must be made within ten days, not
a year later.
B. Enron Overstates Appellees’ Reading of Rule 58.
Resorting to yet another straw man argument, Enron contends that Appellees
invoke Rule 58 “to argue that the entry of a without more judgment starts the clock running
on an appeal.” (Response at 4 (Appellees’ emphasis supplied).) But Appellees do not
maintain that a judgment separately entered in compliance with Bankruptcy Rule 9021 or
Rule 58 in and of itself is a final and appealable judgment, absent any indication that the
bankruptcy court intended the entry of that judgment pursuant to Bankruptcy Rule 7054.
Appellees went to some length to point out that this Court should read Rules 54 and 58 in
conjunction with each other. (Memorandum of Law at 8-11.) Thus, in Cooper v. Town of
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East Hampton, 83 F.3d 31, 34-35 (2d Cir. 1996), the Second Circuit held that while a Rule
54(b) order was immediately appealable, the statutory time for appealing the order directing
entry of final judgment pursuant to Rule 54(b) started to run only upon separate entry of the
judgment pursuant to Rule 58; it did not hold, as Enron suggests (Response at 4-5), that the
time to appeal would run once judgment was separately entered only if the order directing
entry of final judgment was later determined to be free of error. To imply such a
requirement would defeat the clarity and certainty of the Cooper decision.8
C. Enron’s Appeal to Fairness is Unavailing.
Enron’s contention that a ruling against it would amount to the application of
a post hoc rule is difficult to comprehend. (Response at 6-7.) Constitutional standing
requires limiting Article III jurisdiction to live cases and controversies and it prohibits the
issuance of advisory opinions. “[T]he [Supreme] Court explained in Stovall v. Denno, 388
U.S. 293, 301 (1967), that ‘[s]ound practices of decision-making, rooted in the command of
Article III of the Constitution that we resolve issues solely in cases and controversies, …
militate against’ pure prospectivity. Since then, pure prospectivity has seldom been treated
as a live alternative.” RICHARD H. FALLON, JR., DANIEL J. MELTZER & DAVID L. SHAPIRO,
HART AND WECHSLER’S THE FEDERAL COURTS AND THE FEDERAL SYSTEM 74 (5th ed. 2003).
Nor does a ruling of “pure prospectivity” have any justification here. Enron
has not relied to its detriment on an established old rule of law, because the Second Circuit
has never decided that a judgment entered under Bankruptcy Rule 9021 pursuant to a
8 The Second Circuit’s decision in Ansam is also consistent with this reading. Compare
Ansam Associates, Inc. v. Cola Petroleum, Ltd., 760 F.2d 442, 446 (2d Cir. 1985)
(declining to penalize appellant from failing to appeal from an order that contained no
citation to Rule 54(b) or any of the language contained therein), discussed in
Memorandum of Law at 11, 13.
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 15 of 17
12
supposedly defective Bankruptcy Rule 7054 or Rule 54(b) order need not be appealed. If
anything, the precedents, old and new, cited in this Reply Memorandum and in Appellees’
Memorandum of Law, support the interpretation of Rule 54 advanced by Appellees. Indeed,
Lindsay, 59 F.3d 942, and A-1 Amusement Co., 15 Fed. Appx. 777, decisions rendered in
1995 and 2001, respectively, exemplify the authority that predates the August 9 Judgment;
Enron was certainly on notice of these decisions and their persuasive force when it decided
to forego an appeal. There is simply no injustice in finding that an appellant like Enron that
consciously disregards a court’s express designation of an order as final under Bankruptcy
Rule 7054 and that order’s direction of the entry of final judgment under Bankruptcy Rule
9021 has waived its right to challenge that designation as improper. The plain language of
the 7054 Order and the August 9 Judgment were unequivocal, and Enron either decided not
to appeal, or to wait and take its chances.
Conclusion
The Reconsideration Motion goes to the fundamental issue of this Court’s
subject- matter jurisdiction. The Response misconstrues both the factual and legal bases for
that Motion, and does not deal squarely with that fundamental issue. Instead, Enron offers a
weak interpretation of Rule 54 that would nullify Rules 54 and 58 and implicitly eliminate a
basic principle of appellate jurisdiction -- the distinction between the basis for subject-matter
jurisdiction (here, a timely appeal) and the merits of the appeal.
The dispositive facts are incontrovertible: Judge Gonzalez directed the
immediate entry of final judgment pursuant to Bankruptcy Rules 7054 and 9021, and the
Clerk of the Bankruptcy Court entered that final judgment in accordance with his directions.
Enron chose not to appeal from the Rule 7054 Order and the August 9 Judgment within the
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ten-day period prescribed by 28 U.S.C. § 158(c)(2) and Bankruptcy Rule 8002(a), and
Enron’s appeal is untimely as a result.
For all of the foregoing reasons, Appellees respectfully request that this Court
reconsider and vacate the Opinion, restore Appellees’ Motion to Dismiss Enron’s Appeal,
and grant that Motion.
Dated: New York, New York
October 31, 2007
Respectfully submitted,
/s/ Stephen J. Shimshak
Stephen J. Shimshak (SS-8822)
Douglas R. Davis (DD-0874)
PAUL, WEISS, RIFKIND, WHARTON &
GARRISON LLP
1285 Avenue of the Americas
New York, NY 10019-6064
Telephone: (212) 373-3000
Attorneys for Caisse de Dépôt et Placement
du Québec and National Australia Bank
Case 1:07-cv-06597-AKH Document 22 Filed 10/31/2007 Page 17 of 17