Fifth Circuit Remands Bankruptcy Court’s Refusal to Abstain from Adjudicating Uri Storm-Related Pricing Claims

On January 5, 2023, the Fifth Circuit issued an opinion vacating and remanding the bankruptcy court’s refusal to abstain from adjudicating claims against Electric Reliability Council of Texas, Inc. (“ERCOT”) arising from the week-long winter storm Uri in 2021. In the chapter 15 case of Just Energy Group, Inc., the Fifth Circuit held that (a) the abstention doctrine created in Burford v. Sun Oil Co., 319 U.S. 315 (1943), is distinct from statutory abstention under 28 U.S.C. § 1334(c) and (b) Burford applies in the bankruptcy context. The Fifth Circuit noted that abstention under Burford requires a careful balancing of state and federal interests that rarely favor abstention, but on consideration of the relevant factors at issue in Just Energy’s case, the bankruptcy court should have abstained from adjudicating Just Energy’s claims against ERCOT for Uri-storm related invoices. On January 18, 2023, Just Energy filed a petition for rehearing en banc. Just Energy Group, Inc. v. Electric Reliability Council of Texas, Inc. (In re Just Energy Group, Inc.), 2023 WL 111207 (5th Cir. Jan. 5, 2023).

District Court Denies Leave to Appeal Chapter 15 Discovery Order

On January 12, 2023, the District Court for the Southern District of New York denied The Boeing Company’s request for discretionary appeal of the bankruptcy court’s order permitting discovery in the chapter 15 case of Comair Limited. The bankruptcy court had granted the foreign representative of Comair authority under section 1521(a)(4) of the Bankruptcy Code to conduct discovery of Boeing related to causes of action that Comair might hold against Boeing arising from an aircraft purchasing agreement. The order granting the discovery motion did not address Boeing’s objections to the requests; it directed the parties to meet and confer in an effort to resolve the discovery-related disputes. The district court found that the order was not a “final” order that entitled Boeing to appeal as of right and declined to grant Boeing leave to appeal, noting, among other things, that Boeing had not shown that doing so would materially advance the ultimate termination of the litigation or that exceptional circumstances existed. The Boeing Co. v. Ferguson (In re Comair Ltd.), 2023 WL 171892 (Jan. 12, 2023).