Opinion ID: 219830
Heading Depth: 2
Heading Rank: 2

Heading: Commonly Used in the Securities Trade

Text: Section 741(8) defines settlement payment as a preliminary settlement payment, a partial settlement payment, an interim settlement payment, a settlement payment on account, a final settlement payment, or any other similar payment commonly used in the securities trade. Enron argues that the phrase commonly used in the securities trade modifies all the preceding terms and thereby excludes from the definition all uncommon payments. We disagree. First, as the district court held, the grammatical structure of the statute strongly suggests that the phrase commonly used in the securities trade modifies only the term immediately preceding it: any other similar payment. Under the rule of the last antecedent, ... a limiting clause or phrase ... should ordinarily be read as modifying only the noun or phrase that it immediately follows. Barnhart v. Thomas, 540 U.S. 20, 26, 124 S.Ct. 376, 157 L.Ed.2d 333 (2003); see also Stepnowski v. Comm'r, 456 F.3d 320, 324 n. 7 (3d Cir.2006) (Under the last-antecedent rule of construction, ... the series `A or B with respect to C' contains two items: (1) `A' and (2) `B with respect to C.'). Enron seizes on a corollary rule of construction under which a modifier ... set off from a series of antecedents by a comma ... should be read to apply to each of those antecedents. Kahn Lucas Lancaster, Inc. v. Lark Int'l Ltd., 186 F.3d 210, 215 (2d Cir.1999), abrogated on other grounds as recognized by Sarhank Grp. v. Oracle Corp., 404 F.3d 657, 660 n. 2 (2d Cir.2005). For example, in the phrase no person shall be deprived of life, liberty, or the pursuit of happiness, without due process of law, the phrase without due process of law modifies all three terms. This rule, however, does not apply to the series in § 741(8) because the modifier is not set off from its antecedents by a comma. Because both the modifier and its immediate antecedent are set off from the preceding terms in the series, the last-antecedent rule applies. The phrase commonly used in the securities industry thus is properly read as modifying only the term any other similar payment. The phrase is not a limitation on the definition of settlement payment, but rather, as our sister circuits have held, it is a catchall phrase intended to underscore the breadth of the § 546(e) exemption. In re QSI Holdings, Inc., 571 F.3d at 550 (quoting Contemporary Indus. Corp., 564 F.3d at 986 (emphasis in original)). Moreover, Enron's proposed reading would make application of the safe harbor in every case depend on a factual determination regarding the commonness of a given transaction. It is not clear whether that determination would depend on the economic rationality of the transaction, its frequency in the marketplace, signs of an intent to favor certain creditors  as suggested by the facts on which the bankruptcy court relied, such as the alleged coercion by Enron's commercial paper noteholders, Enron II, 407 B.R. at 31  or some other factor. This reading of the statute would result in commercial uncertainty and unpredictability at odds with the safe harbor's purpose and in an area of law where certainty and predictability are at a premium. Accordingly, we hold that the phrase commonly used in the securities industry limits only the phrase immediately preceding it; it does not limit the other transactions that § 741(8) defines as settlement payments.