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Debtors; their objections to substantive consolidation were overruled and their motions to withdraw the petitions of the debtors of which they were principals were denied. The defendants appealed the confirmation order, which was denied and ultimately, the case was closed. Thereafter, the defendants filed the Reilly Lawsuit and a putative class action filed another lawsuit against E&Y (the "Class Action"). E&Y removed the Class Action to this bankruptcy court and the court dismissed it under the doctrines of res judicata, collateral estoppel and judicial estoppel; the underlying facts of the Reilly Lawsuit and the Class Action are nearly identical.
Issues: Whether the court may issue a permanent injunction pursuant to 28 U.S.C. § 1651(a), the All Writs Act, under either (1) 28 U.S.C. § 2283, the Anti-Injunction Act (the "AIA"); or (2) 11 U.S.C. § 105(a). Rules: The All Writs Act is limited by the AIA, which prohibits injunctions to stay state court proceedings unless explicitly allowed by acts of Congress, or where necessary to aid its jurisdiction or to enforce its judgments. The Bankruptcy Code is an express exception to the AIA. The court may stay state court actions at any point in time from the institution to the close of the case.
Holding: E&Y's request is granted: the court issued a permanent injunction barring the Reilly Lawsuit.
Reasoning: E&Y has standing under the AIA to seek an injunction. The matters raised in the Reilly Lawsuit were "fully adjudicated years ago after protracted and acrimonious litigation in this Court. The Reillys, as the losing party even after appeal, simply refuse to be bound by the outcome. While the Reilly Lawsuit has been pending for many years, due to the procedural posture of the case, it is now back to square one. There is no final order by the state court adjudicating the issue of whether res judicata, collateral estoppel or judicial estoppel applies to the Reilly Lawsuit due to the bankruptcy. Thus it is appropriate to enjoin the Reilly Lawsuit.
Facts: After Carco Electronics ("Carco") filed for chapter 11, Ideal Aerosmith Inc. ("Ideal") took possession of Carco's production facilities without a bankruptcy court order. Acutronic USA Inc. ("Acutronic"), a competitor of Ideal's, had filed a counter-offer for Carco's assets. After learning that Ideal was on Carco's premises, Acutronic filed a motion to prohibit Ideal from taking Carco's assets, which the bankruptcy court granted. Ultimately, Acutronic was the winning bidder for Carco's assets and when it tried to get possession of Carco's assets after it won the bidding, Ideal's employees stalled and retained possession for an extra day. Acutronic claimed that a number of files and other documents were copied and deleted during this period of time and requested discovery to determine to what extent Ideal had violated the bankruptcy court's previous order. Both Acutronic and Ideal filed a motion for protective order relating to the exchange of their protected information during discovery. The bankruptcy court entered an order allowing "'counsel and one senior executive of each company to see 'Highly Confidential' information under strict terms.'" Ideal appealed. The district court affirmed and Ideal appealed again.
Issues: "Whether a discovery order granting a trade secret protection from exposure is immediately appealable if the prevailing party is dissatisfied with the scope and degree of protection afforded?"
Rules: The Third Circuit has "created an exception to the non-appealability of discovery orders... if a party is ordered to disclose trade secrets, it can invoke the collateral order doctrine to obtain an
