Court Opinion

ID: 2964039
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Date Created: 2015-09-21 21:19:29.832566+00
Date Added: 2024-06-11T15:01:33.619104
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USCA1 Opinion

	

          May 7, 1996
                                [Not for Publication]
                                [Not for Publication]

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 95-1736

                CHERYL ADAMS, RICHARD WAUGH, BRENT ADAMS, RONALD RING,
             PATRICIA ADAMS, ROBERT RAVITZ, CARRIE BURKE, WELDON ADAMS, 
               ELIZABETH TARGEE, TINA LEVESQUE AND MELISSA SMITH RAPA,

                               Plaintiffs - Appellants,

                                          v.

                               CUMBERLAND FARMS, INC. 
                              AND LANCE CURLEY, ET AL.,

                               Defendants - Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________
                            Bownes, Senior Circuit Judge,
                                    ____________________
                              and Stahl, Circuit Judge.
                                         _____________

                                 ____________________

            Stanley R. Cohen for appellant.
            ________________
            Barbara  D. Gilmore,  with whom  Kathleen Provost  and Sullivan  &
            ___________________              ________________      ___________
        Worcester, were on brief for appellee.
        _________
                                 ____________________

                                 ____________________

                      STAHL,  Circuit  Judge.   This appeal  involves the
                      STAHL,  Circuit  Judge.
                              ______________

            review of  an  order entered  by  the bankruptcy  court  that

            effectively estimated and  discharged the appellants' claims.

            The appellants,  Cheryl Adams and ten  other former employees

            of  the  debtor  (collectively   "Adams"),  claim  that   the

            bankruptcy court lacked authority  to enter the order because

            the  claims constituted  "personal injury  tort claims."   We

            affirm.

                                          I.
                                          I.
                                          __

                                      Background
                                      Background
                                      __________

                      Cheryl  Adams  and ten  other  former employees  of

            Cumberland Farms, Inc. ("CFI"), filed proofs of claim against

            CFI   in   the  bankruptcy   court   for   the  District   of

            Massachusetts.    The claims  stemmed  from  a pending  civil

            action  in which Adams alleged that  various CFI officers and

            supervisors  had  conspired  to  recoup  inventory losses  by

            falsely accusing  Adams and other low-level  CFI employees of

            stealing  money  and  merchandise  from CFI  stores.    Adams

            further alleged  that these same CFI  officials had knowingly

            coerced  Adams and  other  employees into  confessing to  the

            alleged  thefts  notwithstanding  that Adams  and  the  other

            employees  had not committed them.  The complaint in the case

            asserted claims of false imprisonment,  wrongful termination,

            malicious   prosecution,   abuse   of  process,   defamation,

            intentional infliction of  emotional distress, and  violation

                                         -2-
                                          2

            of Massachusetts civil  rights laws  (collectively the  "loss

            prevention claims").

                      In 1993,  CFI reached  a tentative settlement  in a

            separate  class action suit involving similar loss prevention

            claims (the "Curley suit").  The Curley suit had been brought

            in  New Jersey federal district court by a different group of

            former CFI employees that did not include Adams.  As part  of

            the proposed Curley settlement, the parties to that agreement

            filed a  joint motion  in the Massachusetts  bankruptcy court

            requesting  the  creation of  a  mandatory  class that  would

            include all loss prevention claimants who had filed proofs of

            claim  in  the  Massachusetts  bankruptcy  proceeding  (e.g.,
                                                                    ____

            Adams).   Moreover,  the parties  further requested  that the

            Massachusetts  bankruptcy  court  use  the  Curley settlement

            agreement as a vehicle for estimating and discharging  all of

            the  loss prevention  claims alleged  by individuals  in this

            newly  created class.   Adams  objected to  this motion.   On

            August  30, 1993,  the bankruptcy  court granted  the motion.

            Adams appealed to the  Massachusetts federal district  court,

            and  the  district court  affirmed.    Additionally, the  New

            Jersey  district court  ultimately  approved,  and the  Third

            Circuit affirmed, the  proposed settlement  agreement in  the

            Curley suit.  See  Curley v. Cumberland Farms, Inc.,  27 F.3d
                          ___  ______    ______________________

            556 (3d Cir. 1994).

                                         II.
                                         II.
                                         ___

                                         -3-
                                          3

                                      Discussion
                                      Discussion
                                      __________

                      On   appeal  to   this  court,   Adams's  principal

            complaint is  that the bankruptcy court  lacked the authority

            to  enter a final order  discharging her claims.   Adams also

            raises several  additional arguments  including an attack  on

            the  bankruptcy  court's  estimation  of her  claims  and  an

            assertion  that the  bankruptcy  court's  order violated  her

            Seventh Amendment right  to a  jury trial.   We begin with  a

            brief overview of the  statutory framework and follow with  a

            discussion of Adams's assignments of error.

            A.  Statutory Overview
            ______________________

                      Title 28 U.S.C.   1334  vests in the district court

            a  broad  grant  of   subject-matter  jurisdiction  over  all

            bankruptcy-related  matters,  expressly  providing  that  the

            "district   court   shall   have   original   and   exclusive

            jurisdiction  of all cases under  title 11" and "original but

            not exclusive  jurisdiction of all  civil proceedings arising

            under title 11, or arising in or related to cases under title

            11."  28  U.S.C.    1334(a), (b); see  also Celotex Corp.  v.
                                              ___  ____ _____________

            Edwards,  115   S.  Ct.  1493,  1498-99   (1995)  (discussing
            _______

            comprehensive  scope of    1334  jurisdictional grant).   The

            bankruptcy court, in turn, is authorized to hear matters, not

            as  an independent  entity, but  as "a  unit of  the district

            court."    28  U.S.C.    151.    Subject-matter  jurisdiction

            remains  in  the  district  court, which  is  authorized,  in

                                         -4-
                                          4

            appropriate   circumstances,   to  refer   matters   "to  the

            bankruptcy  judges  of th[at]  district."    Id.    157;  cf.
                                                         ___          ___

            Northern Pipeline Const.  Co. v. Marathon Pipe  Line Co., 458
            _____________________________    _______________________

            U.S. 50 (1982)  (holding unconstitutional previous  statutory

            scheme   that  authorized   bankruptcy  courts   to  exercise

            independently  all  jurisdiction  conferred to  the  district

            courts  under the  bankruptcy  laws).   The district  court's

            power of referral extends to any case or proceeding for which

            it has  subject-matter jurisdiction  under    1334.   See  28
                                                                  ___

            U.S.C.    157.  The district court, however, may withdraw any

            matter referred under  this provision for cause shown  on its

            own motion or by the request of either party.  Id.   157(d).
                                                           ___

                      While the district court  may refer all matters for

            which  it has  jurisdiction under    1334,  the power  of the

            bankruptcy  judge  to  enter   final  orders  in  a  referred

            proceeding  is limited.  See 28 U.S.C.    157.  In general, a
                                     ___

            bankruptcy  judge may  hear and  finally determine  only core

            bankruptcy proceedings.  Id.    157(a).  Core proceedings are
                                     ___

            those that involve rights that are created by, and depend on,

            the bankruptcy laws for their existence.  In re G.S.F. Corp.,
                                                      __________________

            938  F.2d 1467, 1475 (1st  Cir. 1991); see  also In re Arnold
                                                   ___  ____ ____________

            Print  Works,  Inc., 815  F.2d  165, 166-67  (1st  Cir. 1987)
            ___________________

            (reading  the  legislative  history  as  indicating   that  a

            bankruptcy  court's  core  authority  should  be  interpreted

            broadly).   Section 157  sets forth  a nonexhaustive list  of

                                         -5-
                                          5

            "core  proceedings"  that includes  such  obvious  matters as

            "allowance or disallowance of  claims against the estate," 28

            U.S.C.    157(b)(2)(B),  as well  as a  final broadly-phrased

            catchall  covering  most  "other  proceedings  affecting  the

            liquidation of the assets of the estate," id.   157(b)(2)(O).
                                                      ___

                      A  bankruptcy  judge  may   also  hear  a  properly

            referred non-core  proceeding  otherwise falling  within  the

            district  court's bankruptcy  jurisdiction, but,  in general,

            may  only issue  proposed  findings of  fact and  recommended

            conclusions  of law subject  to the district  court's de novo
                                                                  __ ____

            review.  Id.   157(c)(1).  This non-core authority extends to
                     ___

            those  matters  that, while  not  directly  dependent on  the

            bankruptcy   laws  for   their  existence,   are  nonetheless

            sufficiently   connected   to   the  restructuring   of   the

            debtor/creditor  relationship to  come  within  the  district

            court's broad jurisdictional grant.   The bankruptcy court is

            authorized, on its  own motion or on the  "timely motion of a

            party," to  determine whether  a proceeding comes  within the

            court's  core  or  non-core  authority.    Id.     157(b)(3).
                                                       ___

            Finally, with the consent of  the parties, a bankruptcy court

            may hear and  finally determine  non-core proceedings  within

            the   district  court's  bankruptcy   jurisdiction.    Id.   
                                                                   ___

            157(c)(2).

                                         -6-
                                          6

                      Significantly,  personal  injury tort  and wrongful

            death claims are afforded special status under the bankruptcy

            laws.    Several express  exceptions  address  and limit  the

            authority  of the  bankruptcy court over  such claims.   See,
                                                                     ___

            e.g., 28 U.S.C.    157(b)(2)(B), (O), and   157(b)(5).1   For
            ____

            example,  the   estimation  of  unliquidated   or  contingent

            personal injury tort claims  for the purposes of distribution

                                
            ____________________

            1.    Subsection 157(b)(2)  provides, in relevant  part, that
            core proceedings include: 

                      (B) allowance or  disallowance of  claims
                      against  the  estate  or exemptions  from
                      property of the estate, and estimation of
                      claims  or interest  for the  purposes of
                      confirming a plan under chapter 11, 12 or
                      13 of title 11 but not the liquidation or
                                     ___ ___
                      estimation of  contingent or unliquidated
                      personal  injury  tort or  wrongful death
                      ________  ______  ____     ________ _____
                      claims against the estate for purposes of
                      distribution in a case under title 11
                      . . . 
                      (O)   other  proceedings   affecting  the
                      liquidation  of the assets  of the estate
                      or the adjustment of  the debtor-creditor
                      or    the    equity    security    holder
                      relationship, except personal injury tort
                                    ______ ________ ______ ____
                      or wrongful death claims.
                         ________ _____

            28 U.S.C.   157(b)(2) (emphasis added).  Subsection 157(b)(5)
            provides that: 

                      The  district  court  shall   order  that
                      personal injury tort  and wrongful  death
                      ________ ______ ____      ________  _____
                      claims shall  be  tried in  the  district
                      court  in  which the  bankruptcy  case is
                      pending, or in the district  court in the
                      district in  which  the claim  arose,  as
                      determined by the district court in which
                      the bankruptcy case is pending.

            28 U.S.C.   157(b)(5) (emphasis added).

                                         -7-
                                          7

            is explicitly excluded from   157's list of core proceedings.

            Id.     157(b)(2)(B).     Moreover,  the  district  court  is
            ___

            instructed to  order that  personal injury tort  and wrongful

            death  claims shall be tried  in the district  court in which

            the  bankruptcy case is pending  or in the  district in which

            the  claims arose.   Id.    157(b)(5).   This  special status
                                 ___

            apparently   stems  from  Congress's  recognition  that  most

            personal  injury tort and  wrongful death victims  stand in a

            somewhat  different relationship  with the  bankruptcy debtor

            because they did not voluntarily enter into dealings with the

            debtor (and  accept the risk  of loss)  in the same  sense as

            traditional  bankruptcy  claimants.    See  Matter  of  Poole
                                                   ___  _________________

            Funeral Chapel,  Inc., 63  B.R.  527, 530  (Bankr. N.D.  Ala.
            _____________________

            1986) (quoting statements of Sen. DeConcini).

            B.  Personal Injury Torts
            _________________________

                      Adams challenges the  bankruptcy court's  authority

            to  enter  a  final  order   with  respect  to  her   claims.

            Essentially,  she contests  the  bankruptcy court's  implicit

            determination that her  claims constituted core  proceedings.

            Adams argues that  her claims are non-core because  they fall

            within at  least one of several  specific exceptions provided

            for "personal  injury tort" claims.   Therefore, she contends

            that, because  the  proceeding was  non-core, the  bankruptcy

                                         -8-
                                          8

            court lacked the authority to enter a final order effectively

            estimating and discharging her claims.2

                      Whether or  not Adams's claims  constitute personal

            injury tort claims is a close question.  Compare In  re Atron
                                                     _______ ____________

            Inc. of  Michigan, 172  B.R. 541,  542-45 (Bankr.  W.D. Mich.
            _________________

            1994)  ("personal injury  tort"  should be  read narrowly  to

            exclude  emotional distress and other nontraditional personal

            injury  claims), with  Poole,  63 B.R.  at 529-30  ("personal
                             ____  _____

            injury  tort" should  be read  broadly to include  claims for

            emotional  and mental  distress).   We  decline, however,  to

            reach the issue in this case.  Adams failed to argue that her

            claims  constituted   personal  injury  tort  claims  in  her

            objection  to the  joint motion  before the  bankruptcy court

            and, again, in  her opening brief before  the district court.

            Accordingly,  she has  waived consideration  of the  issue on

            appeal to this court.   See, e.g., Fish Market  Nominee Corp.
                                    ___  ____  __________________________

                                
            ____________________

            2.  Adams does not contend that her claims against the estate
            were  outside the  district court's  broad grant  of subject-
            matter  jurisdiction under  28 U.S.C.    1334.   This  is not
            surprising.  The  district court's "related  to" jurisdiction
            under    1334(b) is expansive.  See Celotex Corp. v. Edwards,
                                            ___ _____________    _______
            115 S. Ct. 1493, 1499 (1995) ("Congress did not delineate the
            scope of `related  to' jurisdiction, but its choice  of words
            suggests   a  grant   of  some   breadth.").     "`The  usual
            articulation  of the  test  for determining  whether a  civil
            proceeding is related to bankruptcy is whether the outcome of
            that  proceeding could  conceivably  have any  effect on  the
            estate being administered in bankruptcy.'"  In re G.S.F., 938
                                                        ____________
            at  1475 (quoting Pacor, Inc.  v. Higgins, 743  F.2d 984, 994
                              ___________     _______
            (3d Cir. 1984)).  We have little doubt that proceedings, such
            as this one, involving the estimation and discharge of proofs
            of  claim filed against  the estate by  a bankruptcy creditor
            come within this broad range.

                                         -9-
                                          9

            v.  Pelofsky, 72  F.3d 4,  6 (1st  Cir. 1995)  (arguments not
                ________

            raised  in bankruptcy court are waived on appeal); In re Mark
                                                               __________

            Bell Furniture Warehouse, Inc., 992 F.2d 7, 9 (1st Cir. 1993)
            ______________________________

            (same).

                      At bottom, Adams's claim is that she was denied her

            right to an  Article III  judge.  That  right, which  derives

            from the language of  Article III,    1, is a personal  right

            and is subject to waiver upon a party's failure to assert it.

            See Commodity Future Trading  Comm'n v. Schor, 478 U.S.  833,
            ___ ________________________________    _____

            848-50 (1986).  Schor, however, makes clear that Article III,
                            _____

              1, protects  other non-waivable institutional  interests by

            barring "congressional attempts  to transfer jurisdiction [to

            non-Article III  tribunals] for  the purpose  of emasculating

            constitutional courts."  Id.  at 850 (citations and quotation
                                     ___

            marks omitted).  No such concerns are at issue in  this case.

            The present appeal does not involve a challenge to Congress's

            allocation of authority to a non-Article III bankruptcy judge

            to   resolve  personal  injury  and  wrongful  death  claims.

            Indeed, the specific provisions in question, viz 28 U.S.C.   
                                                         ___

            157(b)(2)(B) and  157(b)(5), strictly limit the  authority of

            bankruptcy  judges  with  respect   to  personal  injury  and

            wrongful death claims.

                      Though, in  extraordinary  cases, we  may  make  an

            exception to the raise-or-waive rule where our failure  to do

            so  would  result in  a gross  miscarriage  of justice,   see
                                                                      ___

                                         -10-
                                          10

            Credit Francais Int'l  v. Bio-Vita,  Ltd., 78  F.3d 698,  709
            _____________________     _______________

            (1st  Cir. 1996),  Adams has  not persuaded  us that  such an

            exception  is  warranted in  this case.    The effect  of the

            bankruptcy court's order did  not completely deprive Adams of

            a  remedy for  her  alleged injuries.    Instead, the  ruling

            simply  had  the  effect of    estimating  the  value of  her

            unliquidated tort  claims by  ordering her to  participate in

            the  Curley settlement  agreement.   Because,  as we  explain

            infra,  Adams  has  failed to  persuade  us  that  the Curley
            _____

            settlement will  provide an unreasonable  estimation, we  are

            likewise unpersuaded  that giving  effect  to the  bankruptcy

            court's  order will  result in  a substantial  miscarriage of

            justice.

            C.  Other Matters 
            _________________

                      In  her  reply brief,  Adams  directly  attacks the

            bankruptcy court's use  of the class  action settlement as  a

            vehicle for estimating her claims.  While title 11 authorizes

            the  bankruptcy court to estimate unliquidated and contingent

            claims when  necessary for  the prompt administration  of the

            bankruptcy  estate,  see  11  U.S.C.   502(c),  it  does  not
                                 ___

            provide methods for conducting  such estimations.  Therefore,

            in estimating claims, "bankruptcy courts  should use whatever

            method  is  best  suited  to  the particular  circumstances."

            Lawrence P. King, 3 Collier on Bankruptcy   502.03, at 502-76
                                _____________________

            (15th  ed.  1995).     The  bankruptcy  courts  are  afforded

                                         -11-
                                          11

            substantial deference in this  area, and errors assigned both

            to its estimates and its methods for achieving such estimates

            generally will be  reviewed only for an  abuse of discretion.

            Matter of Continental Airlines, 981 F.2d 1450, 1461 (5th Cir.
            ______________________________

            1993); Bittner v. Borne Chem. Co., 691 F.2d 134, 136 (3d Cir.
                   _______    _______________

            1982).   Moreover, in this case, because Adams did not attack

            the  actual estimates in her opening brief, she has, in fact,

            waived consideration of this issue absent a  showing that the

            estimates  would result  in a  clear miscarriage  of justice.

            See  Indian Motocycle  Assocs.  v. Massachusetts  Hous.  Fin.
            ___  _________________________     __________________________

            Agency, 66 F.3d 1246, 1253 n.12 (1st Cir. 1995).  
            ______

                      On the  particulars of this case,  Adams has failed

            to convince us that the bankruptcy court's decision to  order

            her  participation in  the Curley  settlement constituted  an

            abuse  of  discretion,  much  less  a  clear  miscarriage  of

            justice.    The claims  asserted  in the  Curley  action were

            brought by  employees similarly situated to  Adams, and arose

            from essentially  the same  scheme that  Adams  alleges.   In

            general, we find  no reason  to think  that a  court-approved

            settlement in such a strikingly parallel proceeding would not

            provide a  reasonable benchmark  for estimating the  value of

            Adams's  claims.   Though there  may be  reasons that  such a

            method  for  estimation would  not  be  appropriate in  other

            cases,  Adams has not provided us  with any compelling reason

            for finding it inappropriate here.

                                         -12-
                                          12

                      Adams raises several additional issues, including a

            claim that the  bankruptcy court's order deprived her  of her

            Seventh  Amendment  right to  a jury  trial.   We  find these

            additional claims either waived, substantially without merit,

            or  both.   Specifically,  with  respect  to Adams's  Seventh

            Amendment  argument, filing a proof of  claim in a bankruptcy

            proceeding, as Adams  has done, generally waives any right to

            a jury trial.   See  Langenkamp v. Culp,  490 U.S. 42,  44-45
                            ___  __________    ____

            (1990) (filing  proof  of claim  invokes  bankruptcy  court's

            equitable   jurisdiction  and  generally  waives  jury  trial

            right).  We  do note, however, that 28 U.S.C.    1411(a), may

            restrict this  general rule  with respect to  personal injury

            and  wrongful   death  claims.3     Nonetheless,   Adams  has

            forfeited  the application  of this  provision by  failing to

            argue that her claims constituted personal injury tort claims

            to the courts below.  See, e.g., In re Mark Bell, 992 F.2d at
                                  ___  ____  _______________

            9.

                                         III.
                                         III.
                                         ____

                                      Conclusion
                                      Conclusion
                                      __________

                      For the  foregoing reasons, we affirm  the decision

            of the district court.

                                
            ____________________

            3.  28 U.S.C.   1411(a) provides in relevant part that 

                      this chapter and title  11 do not  affect
                      any  right  to  trial  by  jury  that  an
                      individual  has   under  applicable  non-
                      bankruptcy law with regard to  a personal
                      injury or wrongful death tort claim.

                                         -13-
                                          13