Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-04002/USCOURTS-cand-3_18-cv-04002-0/pdf.json

Nature of Suit Code: 423
Nature of Suit: Bankruptcy Withdrawal 28 USC 157
Cause of Action: 28:0157 Motion for Withdrawal of Reference

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United States District Court

Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re 

DIADEXUS, INC.,

 Debtor 

LEAP TIDE CAPITAL 

MANAGEMENT, LLC, 

Plaintiff, 

v. 

LORI RAFIELD et al., 

Defendants. 

Case No. 18-cv-04002-CRB 

ORDER GRANTING MOTION TO 

WITHDRAW REFERENCE 

 Defendants move to withdraw the reference of an adversary proceeding filed by 

Leap Tide Capital Management (“Leap Tide”) to bankruptcy court. Defendants argue that 

withdrawal is permissive, not mandatory, under 28 U.S.C. § 157(d). 

In determining whether cause exists to withdraw the reference, district courts 

consider (1) “the efficient use of judicial resources,” (2) “delay and costs to the parties,” 

(3) “uniformity of bankruptcy administration,” (4) “the prevention of forum shopping,” 

and (5) “other related factors.” Sec. Farms v. Int’l Bhd. of Teamsters, 124 F.3d 999, 1008 

(9th Cir. 1997). 

The parties concede that Rafield’s claims are non-core (they all arise under state 

law). Accordingly, the bankruptcy court lacks jurisdiction over these claims. In re 

Castlerock Props., 781 F.2d 159, 162 (9th Cir. 1986). Any rulings the bankruptcy court 

makes would be subject to de novo review by the district court as to both factual and legal 

Case 3:18-cv-04002-CRB Document 5 Filed 07/30/18 Page 1 of 2
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United States District Court

Northern District of California

findings. Id. 

While Rafield argues that it would be more efficient to litigate the adversary 

proceeding in bankruptcy court, it is difficult to see how this could be so, given that any 

decision made by the bankruptcy court would be subject to de novo review by this Court. 

While Rafield contends that the adversary proceeding is inextricably entwined with 

Diadexus’s Chapter 7 proceeding, this is not correct: all of the claims it brings relate to 

Defendants’ mismanagement of the company prior to the Chapter 7 filing. These claims 

are conceptually distinct from the issue of how Diadexus’s liabilities should be discharged 

in bankruptcy. Nor has the bankruptcy court evaluated the merits of the claims in the 

adversary proceeding, which was only filed on June 13—little over a month ago. 

Accordingly, judicial efficiency would be best served by withdrawing the reference. 

None of the other factors for permissive withdrawal weigh in favor of leaving the 

proceeding in bankruptcy court. The Court thus exercises its discretion to withdraw the 

reference. The motion is GRANTED. 

IT IS SO ORDERED. 

Dated: July 30, 2018 

CHARLES R. BREYER 

United States District Judge 

Case 3:18-cv-04002-CRB Document 5 Filed 07/30/18 Page 2 of 2