District Court Cautiously Affirms Five-Year Old Purdue Preliminary Injunction

Significance

This decision by a smart, conscientious, experienced and knowledgeable district judge explains the judicial rationale for bankruptcy court preliminary injunctions. First, despite contrary authority, the court reviewed the merits of a preliminary injunction, a nonfinal interlocutory order. It then explained why the bankruptcy court had jurisdiction to enjoin the third party dispute here. Finally, the court applied the specific criteria for a bankruptcy court to issue a preliminary injunction covering third party disputes, noting that “the Second Circuit ha[d] never explicitly established the standard for reviewing” such relief under Code §105(a). Id. at *7.

Discretionary Appellate Jurisdiction

The court summarily dealt with its ability to review the bankruptcy court’s Preliminary Injunction. It merely noted its discretion to review “interlocutory orders and decrees … of bankruptcy judges.” Id. at *5, quoting 28 U.S.C. §158(a). Significantly, it ignored the split among the district courts on whether bankruptcy court preliminary injunctions, admittedly interlocutory, are appealable to the district court as of right under 28 U.S.C. §1292(a)(i)(courts of appeals have jurisdiction, and appellate review exists as of right over ‘interlocutory orders … granting [or] refusing … injunctions”). See, In re Kassover, 343 F.3d 91, 95 (2d Cir. 2003) (court of appeals lacked jurisdiction to review district court’s denial of leave to appeal from bankruptcy court’s preliminary injunction); Navient Solutions LLC v. Homaidan, 2022 W.L. 17252459,*4 (E.D.N.Y. Nov 28, 2002) (district court had “discretion…to decline to hear” and dismissed appeal from a bankruptcy court’s preliminary injunction, quoting Kassover). The Purdue district court, in contrast, impliedly agreed with other appellate courts (courts of appeals and district courts) that reviewing the merits was at least appropriate here, if not mandatory. See, United Airlines, Inc. v. U.S. Bank, 406 F.3d 918, 923-24 (7th Cir. 2005) (reversed district court’s refusal to review bankruptcy court’s “interlocutory orders” (injunctions); court stressed need for “review by an Article III judge.”) (Easterbrook, J.); In re World Imports Ltd., 820 F.3d 576, 582 n.5 (3d Cir. 2016) (“Pursuant to 28 U.S.C. §§158(a) and 1292(a), the District Court had jurisdiction over the appeal from the Bankruptcy Court’s order granting injunctive relief.”); In re Affeldt, 60 F.3d 1292, 1294 (8th Cir. 1995) (“Under 28 U.S.C. §1292(a)(l) ..., we have jurisdiction over [bankruptcy court] injunctions.”), citing Conn. Nat’l Bank v. Germain, 503 U.S. 249, 254-56 (1992); In re Prof’l Ins., Mgmt., 285 F.3d 268, 282 n.16 (3d Cir. 2002) (Ambro, J.) (district court, as appellate court, authorized to hear appeal from bankruptcy court as appealable “injunctive order” under 28 U.S.C. §1292(a)(1)).