Seventh Circuit Appears Ready to Ground Retired Pilots' Challenge to United Airline's Confirmation Order

Practitioners before the Seventh Circuit Court of Appeals know that oral arguments in that Court can sometimes go well (e.g., by following the guidelines set forth in Question 4 here), and sometimes not so well (see here), and that one's success, failure, and/or embarrassment at oral argument may well hinge upon the panel drawn.

Counsel to the United Airlines Retired Pilots' Benefit Protection Association in preparing to argue the Retirees' appeal of United Airline's plan confirmation order surely had to be concerned upon learning that he had drawn a panel consisting of Judges Posner, Easterbrook, and Bauer.  As suggested here, one planning to argue a weak case before this group of heavyweights may as well throw away the script and pray to the Almighty for forgiveness because failure and embarrassment are the likely outcomes of such a test.

The Retirees' appeal presented the Court with two primary issues: 

First, whether the UAL's plan unfairly classified and treated active pilots differently from retired pilots in respect of their respective claims resulting from termination of pension benefits.

Second, whether the reorganization plan appropriately included exculpatory releases that shielded the union for the active pilots from claims that the retirees may desire to assert against the union.

In yesterday's oral argument (accessible here), Judge Posner took the lead in peppering the retirees' counsel with questions.  Judge Posner provides litigators a lesson in the importance of answering the precise question asked, regardless of how damaging the answer may be to one's case.  Here, while pressing the retirees' counsel to answer his question as to how this appeal is not a direct attack on Judge Posner's ruling last March (holding that the bankruptcy court could approve UAL's agreement with the active pilots' union providing for differential treatment that favored the active pilots interests over those of the retired pilots), Judge Posner had this to say in response to counsel's failure to respond directly to the question asked:

Judge Posner:  You're not tracking me.  What is inaccurate about my statement?  It's not about law or anything like that.  It's not legalistic.  It's just saying, we said [in our March ruling] the special deal, the preferential treatment of active pilots, was OK.  And now, you are seeking to undo the preferential aspect of it by giving the same deal to the retired pilots.  Isn't that what you're doing?....  That is, you're insisting that your clients be treated the same way as the active pilots were treated.

Counsel:  With respect to the claim that arises from the termination of the plan...

Judge Posner:  I'm getting upset.  If you don't answer my question, I'm gonna be upset, and I won't listen to you anymore.

Judge Bauer:  Don't make him upset either.  He really gets tough then.

Judge Posner (smiling):  Don't make me upset.... 

Judge Posner:  Don't you agree that you're seeking the same amount as the active pilots.

Counsel:  With respect to the pension plan, yes.

Judge Posner:  And that would have made our March decision completely empty.  The March decision said you can treat the active pilots better, and now you're telling us you can't treat the active pilots better.  (Arg. at 11:09 - 12:42)

Having thus dispensed with the first issue, the Court turned to the second issue relating to the release provided to the pilots' union, where -- with Judge Easterbrook picking up the whip -- counsel fared even worse:

Judge Posner:  What is the signficance of the exculpation clause?  I've lost the thread.

Counsel:  The exculpation clause is a release that is just called an exculpation clause.

Judge Easterbrook:  We're not asking what an exculpation clause does!  We're not entirely stupid!  The question is whether it has any significance independent of what's gone before.  That is, if there's no claim for anything on top of what's in the settlement, why does exculpating ALPA matter?  Unless your whole point is to continue with vexatious litigation.... (Arg. at 25:17 - 25:53).

Judge Posner and Judge Easterbrook then combine to close the book on the case and end argument on the matter: 

Judge Posner:  If you don't have a duty, you don't reach the issue of exculpation, do you?

Counsel:  Your honor, we don't think that the bankruptcy court was the forum to pre-judge any rights...

Judge Posner (with Judge Easterbrook laughing in the background):  But, we judged it, right?  That's part of our holding.  You can challenge it, but...

Judge Easterbrook (with Judge Posner laughing in the background):    Derived from a holding of the Supreme Court.  You know, desiring to get rid of an exculpation clause so that [on remand] you can go ask some district judge to ignore the Supreme Court and the 7th Circuit just doesn't sound like a wise thing for us to do. 

(Silent pause)

Judge Posner:  Well, do you have anything further you'd like to say?

Counsel (voice shaking):  Nothing further, your Honor.  

Judge Posner:  Well, thank you very much to all sides.   (Arg. 30:00 - 30:48).

Looks like UAL's confirmation order will survive the Retired Pilots' challenge.

Here are links to the Appellant/Retirees' Opening and Reply Briefs and to Appellee/United's Response Brief.

Thanks to the Seventh Circuit for its foresight and technological saavy in providing RSS feeds to its oral arguments and opinions as they are released.

Update:  As discussed in this post of 10/29/06, Judge Posner delivered the opinion of the 7th Circuit denying the retired pilots' appeal and affirming the bankruptcy court's order confirming UAL's plan.

© Steve Jakubowski 2006

Written By:Diane Brauch On May 9, 2008 9:11 PM

And the retired United pilots' attorney continues in his stellar manner to represent the retirees. Why do the retired pilot representatives continue to use these people? Surely there is a firm that at least wouldn't be an embarrassment.

Written By:Peter Friedman On May 13, 2008 8:56 AM

The issues are DEAD. The facts are before you. United completed a deal with the active pilots, and that was blessed and allowed by the bankruptcy court. It would be like digging up a grave. They are not going to do it without proof of coercion or wrong doings. URPBPA is one dimensional and inept. Roger Hall couldn't tie his shoes with both eyes open.

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