Opinion ID: 4553073
Heading Depth: 2
Heading Rank: 1

Heading: “Standing” has imprecisely referred to a

Text: bankruptcy litigant’s statutory authority to sue When a debtor declares bankruptcy, most of its property gets transferred to its estate. 11 U.S.C. § 541. The estate encompasses “all kinds of property, including . . . causes of action.” Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 169 (3d Cir. 2002) (quoting 7 United States v. Whiting Pools, Inc., 462 U.S. 198, 205 n.9 (1983)); see 11 U.S.C. § 541(a)(1). “A cause of action [becomes] property of the estate if the claim existed at the commencement of the [bankruptcy] filing and the debtor could have asserted the claim on his own behalf under state law.” Foodtown, 296 F.3d at 169 n.5. A court-appointed bankruptcy trustee manages the estate’s property, including those causes of action. The trustee “is the representative of the estate” with the “capacity to sue and be sued” on its behalf. 11 U.S.C. § 323(a), (b). So once a cause of action becomes the estate’s property, the Bankruptcy Code gives the trustee, and only the trustee, the statutory authority to pursue it. At times, we have called that statutory authority the trustee’s exclusive “standing” to assert those claims. We have held that “[a]fter a company files for bankruptcy, [its] creditors lack standing to assert claims that are property of the estate.” In re Emoral, Inc., 740 F.3d 875, 879 (3d Cir. 2014) (emphasis added) (internal quotation marks omitted); accord Foodtown, 296 F.3d at 169 (same). Our use of that terminology followed the Supreme Court’s lead in Caplin v. Marine Midland Grace Trust Co., 406 U.S. 416, 416–17 (1972). We were not alone. See, e.g., Highland Capital Mgmt. LP v. Chesapeake Energy Corp. (In re Seven Seas Petrol., Inc.), 522 F.3d 575, 584 (5th Cir. 2008); Logan v. JKV Real Estate Servs. (In re Bogdan), 414 F.3d 507, 511–12 (4th Cir. 2005). That imprecise language is confusing, so some courts have tried to clear up the confusion. As Judge Easterbrook has noted, writing for the Seventh Circuit, bankruptcy “standing” 8 is doctrinally “abnormal.” Grede v. Bank of N.Y. Mellon, 598 F.3d 899, 900 (7th Cir. 2010). He explained that the Caplin Court “used the language of ‘standing’ to refer, not to . . . [constitutional] standing, but to whether Congress had authorized a trustee to pursue a given kind of action.” Id. (internal citation omitted). And “[w]hether a given action is within the scope of the [Bankruptcy] Code is a question on the merits rather than one of justiciability.” Id. Thus, “[t]o avoid confusion,” the court recharacterized bankruptcy “standing” as the trustee’s “ ‘authority’ to act on behalf of the [estate].” Id. Our sister circuit’s explanation is persuasive and we will adopt it.