Public Employees Retirement Association of New Mexico v. PG&E Corporation

Background

PG&E Corporation and Pacific Gas and Electric Company began chapter 11 bankruptcy cases in January 2019. The Public Employees Retirement Association of New Mexico was the court-appointed lead plaintiff in a pending securities class action alleging that the debtors misled investors about wildfire safety practices. The securities litigation also named current and former directors and officers of the debtors and investment banks that underwrote certain public offerings of PG&E senior notes.

After the securities litigation was automatically stayed as to the debtors, the association asked the Bankruptcy Court to apply Bankruptcy Rule 7023, which makes the federal class-action rule available in certain bankruptcy proceedings, to a class proof of claim. The Bankruptcy Court denied that request on February 27, 2020. It found that allowing the class proof of claim could interfere with the bankruptcy estate’s confirmation process, but it addressed notice concerns by extending the deadline for the affected securities claimants to file individual proofs of claim. The association filed a notice of appeal on March 10, 2020.

Issue and arguments

The district court first considered whether the Bankruptcy Court’s order was final and appealable as of right or interlocutory, meaning temporary or not yet final for appeal purposes. The association argued that the order was final. PG&E Corporation and Pacific Gas and Electric Company argued that it was interlocutory and that the association had neither sought nor obtained permission to appeal.

The district court concluded that the order was interlocutory. It reasoned that the association had filed a timely individual proof of claim, that the claim remained subject to later proceedings, and that the Bankruptcy Court had allowed other potential class members to file individual claims. The court compared the order to class-certification decisions under the federal class-action rule, which the Supreme Court has described as inherently interlocutory.

Ruling

Judge Gilliam held that the association could appeal the interlocutory order only if the court granted permission. Because the association had not sought permission, and its briefing did not establish the requirements for an interlocutory appeal, the court dismissed the appeal as an unauthorized interlocutory appeal. The court added that, even if it construed the appeal as a motion for permission to appeal, it would deny leave to appeal. The clerk was directed to terminate the appeal and close the case.

Disposition

The appeal was dismissed. The opinion does not state that the Bankruptcy Court’s underlying denial of the Rule 7023 request was reversed or affirmed on its merits.