Fjord et al v. AMR Corporation et al

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: 	Chapter 11
AMR CORPORATION, et al., 	Case No. 11-15463 (SHL)
Debtors. 	(Jointly Administered)
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CAROLYN FJORD, et al.,
Plaintiffs,
v. 	Adv. Proc. No. 13-01392 (SHL)
AMR CORPORATION, AMERICAN AIRLINES,
US AIRWAYS GROUP, INC. and
US AIRWAYS, INC.,
Defendants,
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS,
As Intervenor.
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ORDER ON PLAINTIFFS’ MOTION FOR RECONSIDERATION
Before the Court is Plaintiffs’ Motion for Leave to Serve Supplemental Expert Report of
Dr. Carl Lundgren and/or Motion for Reconsideration (the “Motion”) [Adv. Proc. ECF No. 180]
and Memorandum of Law in Support of Plaintiffs’ Motion (the “Memo of Law”) [Adv. Proc.
ECF No. 181]. The Motion requests that the Court grant leave to serve the supplemental expert
report of Dr. Carl Lundgren that was served on Defendants on November 12, 2018 (the
“Supplemental Report”) [Adv. Proc. ECF No. 184-1), or, in the alternative, reconsider its
December 10, 2018 Order excluding the Supplemental Report (the “Exclusion Order”) [Adv.
Proc. ECF No. 179].
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The Memo of Law notes that “[t]he standards applicable to motions for reargument
brought pursuant to Federal Rules of Bankruptcy Procedure 9023, 9024, and Local Bankruptcy
Rule 9023–1 are identical to that applicable to motions under Federal Rules of Civil Procedure
59(e) and and/or 60(b).” Memo of Law at 7. However, Plaintiffs also hedge their argument that
the Motion is a true “motion for reconsideration” because, “[w]hen the Court issued its
December 10 Exclusion Order, no motion had been filed by either party.” Id. at 7 n.3. “Because
there is no motion for the Court to reconsider,” Plaintiffs argue, “this Motion is more properly a
Motion for Leave to Serve the Supplemental Expert Report of Dr. Lundgren[.]” 1 Id.
While the parties did not submit underlying motions before entry of the Exclusion Order,
they did jointly submit a letter dated November 8, 2018 (the “Letter”) [Adv. Proc. ECF No. 178]
following the Court’s bench decision on the parties’ motions for summary judgment in August
(the “Summary Judgment Decision”) [Adv. Proc. ECF No. 177]. The Letter sets forth the
parties’ agreements about the trial in this matter but identifies one area of dispute: the
admissibility of the Supplemental Report. The Letter goes on to detail the parties’ dispute at
length, with arguments that span six single-spaced pages and a note that the parties would “be
pleased to discuss . . . [the dispute] or any other issues at a status conference . . . or to provide
full briefing on the disputed item as appropriate.” Letter at 1 (emphasis added). Given the
length of briefing on the disputed issue, the Court interpreted this Letter as a request from the
parties to rule on the admissibility of the Supplemental Report based on the arguments therein.
See Exclusion Order at 1–2 (“[T]he parties jointly seek the Court’s guidance on this issue.”).
1 	Nevertheless, Plaintiffs state that they “have filed this Motion as both [a motion for leave to submit the
Supplemental Report and a motion for reconsideration].” Memo of Law at 7 n.3.
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Having reviewed such arguments and applicable case law, the Court did not believe any
additional briefing was necessary to decide the issue and entered the Exclusion Order.
Regardless of how Plaintiffs label the Motion, the Court cannot grant the affirmative
relief they seek without vacating or modifying the Exclusion Order. Accordingly, the Motion is,
in essence, a motion for reconsideration. Motions for reconsideration are reviewed under Rule
60(b) of the Federal Rules of Civil Procedure, which is made applicable to bankruptcy
proceedings pursuant to Federal Rule of Bankruptcy Procedure 9024. See In re FairPoint
Commc’ns, Inc., 462 B.R. 75, 79 (Bankr. S.D.N.Y. 2012). Rule 60(b) provides that a court may
relieve a party from a final judgment, order or proceeding due to:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have
been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or
misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an
earlier judgment that has been reversed or vacated; or applying it prospectively is
no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b).
To prevail on a Rule 60(b) motion for reconsideration “there must be ‘highly convincing’
evidence supporting the motion; . . . the moving party must show good cause for failing to act
sooner; and . . . the moving party must show that granting the motion will not impose an undue
hardship on the other party.” Broadway v. City of New York, 2003 WL 21209635, at *3
(S.D.N.Y. May 21, 2003) (citing Kotlicky v. U.S. Fid. & Guar. Co., 817 F.2d 6, 9 (2d Cir.
1987)). “A motion for relief from judgment is generally not favored and is properly granted only
upon a showing of exceptional circumstances.” United States v. Int’l Bhd. of Teamsters, 247
F.3d 370, 391 (2d Cir. 2001). “The burden of proof is on the party seeking relief from
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judgment . . . .” Id. Whether to grant a motion for relief under Rule 60(b) is within the
discretion of the court. See Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012). Similarly, Rule
59(e) of the Federal Rules of Civil Procedure, made applicable to bankruptcy proceedings
pursuant to Federal Rule of Bankruptcy Procedure 9023, permits parties to file motions to alter
or amend judgments “no later than 28 days after entry of the judgment.” Fed. R. Civ. P. 59(e).2
The Court denies the Motion for the following four reasons.
First, contrary to Plaintiffs’ position that the Court “excluded Dr. Lundgren’s
Supplemental Expert Report without the benefit of full briefing or argument on any Motion, and
thus, without Plaintiffs being given the opportunity to fully and completely present the ‘reasons
for delay,’” Memo of Law at 8, the Exclusion Order was based on a sufficient record. As
explained above, the Letter presented the parties’ arguments regarding the dispute, offering only
to provide further briefing “as appropriate.” Letter at 1. Indeed, Plaintiffs were the ones who
chose to raise their arguments through the Letter in the first place; there was nothing stopping
them from filing a motion on the subject. Having chosen to brief the issue as they did, they
cannot now obtain relief based on that choice. Moreover, for the reasons explained below, the
Court remains convinced that the Supplemental Report should not be permitted even after
reviewing the Plaintiffs’ additional briefing on this issue in the Motion.
Second, Plaintiffs are incorrect that the Court “gave no weight to the importance of the
evidence it excluded.” Memo of Law at 11. Plaintiffs decry the Exclusion Order as “tantamount
to a dismissal” because “the Court took great pains to emphasize that it was not likely to find in
favor of Plaintiffs at trial in the absence of expert testimony on competitive effects.” Id. at 12.
2 	Local Bankruptcy Rule 9023-1 also provides parameters for motions for reargument of a court order.
However, the comments to the Rule note that “[t]his rule does not apply to motions made under Bankruptcy Rule
3008 or 9024.” The Court’s ruling remains the same regardless of whether Bankruptcy Rule 9023, Bankruptcy Rule
9024 and/or Local Rule 9023-1 is applied.
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But Plaintiffs are wrong that their failure to provide an expert competitive effects analysis is fatal
to their case. Indeed, Defendants moved for summary judgment on that basis. See, e.g.,
Memorandum of Law in Support of Defendant American Airlines Group Inc.’s Motion for
Summary Judgment [Adv. Proc. ECF No. 140] ¶ 4 (complaining that Plaintiffs “have neither
presented any expert testimony that would suggest there were anticompetitive effects caused by
the Merger, nor have they conducted any independent analysis of the competitive effects at all”);
id. ¶ 28 (“[Plaintiffs] do not have any expert testimony on competitive effects . . . [but] cannot
meet their burden of proof with their purely structural approach [using market share data].”); id.
¶ 35.3 But the Court explicitly rejected that position, Summary Judgment Decision at 71:1–17,
concluding that it needed to weigh the evidence, id. at 81:10–15 (“But the Court doesn’t dictate
the evidence that a party decides to put forward in a case, or on summary judgment. The final
weighing of all the evidence in this case, [whatever] the scope, would be conducted at [trial], and
it’s to the scheduling of that trial that the Court now turns.”). In short, Plaintiffs will get their
“day in Court” at trial but are nonetheless bound to the case that they chose to present through
their complaint and discovery.
In any event, the lack of an expert on competitive effects in this case—what Plaintiffs
seek to introduce now—was not identified for the first time in the Court’s Summary Judgment
Decision. As explained in the Exclusion Order and as acknowledged by Plaintiffs in the Memo
of Law, the Court has continually questioned the Plaintiffs’ failure to provide an expert opinion
on the causal effect of the merger during the five-year span of this litigation. See Exclusion
3 See also Defendant American Airlines Group Inc.’s Opposition to Plaintiffs’ Cross-Motion for Summary Judgment
& Reply in Support of Defendant’s Motion for Summary Judgment [Adv. Proc. ECF No. 160] ¶ 4 (“And Plaintiffs’
criticisms of Defendants’ expert testimony regarding the effects of the Merger are not only misguided but, absent a
proffer of any relevant competing evidence, do nothing to discharge Plaintiffs’ ultimate burden of showing that this
Merger has resulted in anticompetitive effects.”).
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Order at 5–6; Memo of Law at 4–5. Plaintiffs had multiple opportunities to provide such an
opinion, and, as addressed previously, Plaintiffs are incorrect in characterizing the Supplemental
Report as “[reliant] on information that was not available to [Dr. Lundgren] when his first report
was served in March 2017.” 4 Memo of Law at 18; see also Exclusion Order at 4 (“His Prior
Report made crystal clear that these calculations were ‘presented without further analysis or
conclusions based on statistical, econometric, or other expert economic analysis.’”). It is
baffling why Plaintiffs waited until the eve of trial—and long after the close of discovery—to
seek to introduce such an analysis. As explained in the Exclusion Order, however, the analysis is
not merely a supplement to their existing expert opinion, and it is too late for it to be admitted.
Third, Plaintiffs are wrong in claiming that “[t]here is no timing issue [in seeking to
introduce the Supplemental Report now], and thus no prejudice.” Memo of Law at 14.
Following this Court’s Summary Judgment Decision—provided five months ago—it has been
clear that the next step for this case is trial. Indeed, the purpose of the Letter was to respond to
the Court’s direction to provide a final pretrial conference date. See Summary Judgment
Decision at 81–91 (discussing trial scheduling and procedures with the parties after rendering
ruling on summary judgment motions). Thus, the Letter included “an agreed schedule for
pretrial exchanges and filings and a proposed trial date.” Letter at 1. After having been pending
for more than five years, trial in this case is now scheduled to start on March 11, 2019. See
Scheduling Order [Adv. Proc. ECF No. 188] at 2. Defendants are correct that “this eleventh-
hour shift [arising out of a new expert report] and the consequent burden it would impose upon
4 	Plaintiffs attempt to minimize these opportunities by citing to “the disparity in financial resources” between
themselves and Defendants. See Memo of Law at 11. Plaintiffs do not cite any legal authority for this argument. In
any event, it is unavailing, particularly as Plaintiffs themselves say Dr. Lundgren’s analysis uses “standard
methodologies” and constructs “standard econometric models, utilizing data from publicly available databases[.]”
Id. at 15.
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Defendants is precisely the kind of prejudice that justifies the Court’s denial of Plaintiffs’
request.” Defendant American Airlines Group Inc.’s Opposition to Plaintiffs’ Motion [Adv.
Proc. ECF No. 186] at 5 (noting that Defendants would need to “incur expenses to depose Dr.
Lundgren, incur additional expert expense to respond to Dr. Lundgren’s entirely new competitive
effects analysis and potentially move to exclude Dr. Lundgren’s testimony,” and that admitting
the Supplemental Report could further “create all sorts of ripple effects regarding additional
discovery and the ultimate presentation of evidentiary submissions at trial”).
Fourth, the Court rejects Plaintiffs’ claim that the scheduling order in this case (the
“Interim Scheduling Order”) [Adv. Proc. ECF No. 128] “did not provide a date for the closure of
expert discovery.” Memo of Law at 17; see also Letter at 1. Plaintiffs note that the Interim
Scheduling Order states that the parties shall complete fact discovery by March 15, 2017, but
they claim that “there is no corresponding deadline for the closure of expert discovery.” Memo
of Law at 17. This is nonsense. The Interim Scheduling Order clearly states that Plaintiffs shall
serve an expert report by March 1, 2017, Defendants shall serve expert reports by March 31,
2017 and the parties shall depose each other’s experts by April 14, 2017. See Interim Scheduling
Order at 1. As attorneys are well aware, the word “shall” is in the nature of a command. See
Alabama v. Bozeman, 533 U.S. 146, 153 (2001) (“The word ‘shall’ is ordinarily ‘the language of
command.’” (citing Anderson v. Yungkau, 329 U.S. 482, 485 (1947))). In light of such
mandatory deadlines, it is untenable to claim that expert discovery continued indefinitely or that
the Summary Judgment Decision somehow opened the door to new discovery. Indeed, the
proposed pretrial scheduling order drafted by the parties and attached to the Letter did not
contemplate any new discovery. As the Court already highlighted in its Exclusion Order, “[t]he
Interim Scheduling Order clearly specified deadlines to serve expert discovery, and the word
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‘interim’ cannot be used to circumvent the disclosure requirements articulated under Rule 26 or
to change the fact that discovery is closed.” Exclusion Order at 7.
Given the reasons stated in this Order and the prior Exclusion Order, the Court concludes
that it would deny the requested relief even if it had been presented for the first time in a motion
before the Court had issued its Exclusion Order. For the foregoing reasons, therefore, the Court
denies Plaintiffs’ Motion for leave to serve the Supplemental Report or, in the alternative,
reconsider the Exclusion Order.5
IT IS SO ORDERED.
Dated: New York, New York
January 30, 2019
/s/ Sean H. Lane___
UNITED STATES BANKRUPTCY JUDGE
5 	To the extent that Plaintiffs have raised other arguments in the Motion and Memo of Law not specifically
addressed in this Order, such arguments likewise do not present “extraordinary circumstances” requiring
reconsideration.
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