(L), 09-4306-cv (con), 09-4373-cv (con) In Re: Parmalat Securities Litigation

09-4302-cv (L), 09-4306-cv (con), 09-4373-cv (con)
In Re: Parmalat Securities Litigation
UNITED STATES COURT OF APPEALS 1
2
FOR THE SECOND CIRCUIT 3
4
5
6
August Term, 2010 7
8
Argued: November 2, 2010 Decided: January 18, 2011 9
Amended: April 12, 2011 10
11
Docket Nos. 09-4302-cv (L); 09-4306-cv (con); 12
09-4373-cv (con) 13
14
15
Parmalat Capital Finance Limited, 16
17
Plaintiff-Appellant, 18
19
Dr. Enrico Bondi, Extraordinary Commissioner of Parmalat 20
Finanziaria S.p.A., Parmalat S.p.A., and other affiliated 21
entities, in Extraordinary Administration under the laws of 22
Italy, 23
24
Plaintiff-Counter-Defendant-Third-Party-Defendant-Appellant, 25
26
Capital & Finance Asset Management S.A., Cattolica 27
Partecipazioni S.p.A., Hermes Focus Asset Management Europe 28
Limited, Erste Sparinvest Kapitalanlagegesellschaft m.b.H., 29
Solotrat, Societe Moderne des Terrassements Parisiens, 30
Renato Esposito, Fondazione Italo Monzino, Southern Alaska 31
Carpenters Pension Fund, on behalf of itself and all others 32
similarly situated, Cristina Poncibo, Margery Louise 33
Kronengold, Robert McQueen, Custodian, individually and on 34
behalf of all others similarly situated, Ferri Giampolo, 35
Food Holdings Limited, Dairy Holdings Limited, G. James 36
Cleaver, Gordon I. MacRae, Gerald K. Smith, Laura J. 37
Sturaitis, Monumental Life Insurance Company, TransAmerica 38
Occidental Life Insurance Company, TransAmerica Life 39
Insurance Company, Aviva Life Insurance Company, Principal 40
Global Investors, LLC, Principal Life Insurance Company, 41
Scottish Re (US) Inc., Hartford Life Insurance Company, Plan 42

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2
Administrator G. Peter Pappas, 1
2
Plaintiffs, 3
4
–v.– 5
6
Bank of America Corporation, Banc of America Securities 7
Limited, Bank of America, N.A., Bank of America National 8
Trust & Savings Association, Banc of America Securities LLC, 9
Bank of America International, Ltd., Grant Thornton 10
International, Ltd, 11
12
Defendants-Appellees, 13
14
Grant Thornton International, Grant Thornton LLP, 15
16
Defendants-Third-Party-Plaintiffs-Counter-Claimants- 17
Appellees, 18
19
Deutsche Bank AG, Morgan Stanley & Co., Incorporated, Bonlat 20
Financing Corporation, Calisto Tanzi, Fausto Tonna, 21
Coloniale S.p.A., Citigroup Inc., Buconero, LLC, Zinni & 22
Associates, P.C., Deloitte Touche Tohmatsu, Deloitte & 23
Touche S.p.A., a Societa per Azioni under the laws of Italy, 24
James E. Copeland Jr., Parmalat Finanziaria S.p.A., Stefano 25
Tanzi, Luciano Del Soldato, Domenico Barili, Francesco 26
Giuffredi, Giovanni Tanzi, Deloitte & Touche USA, LLP, 27
Deloitte & Touche L.L.P., Credit Suisse First Boston, 28
Citibank, Eureka Securitisation plc, Vialattea LLC, Pavia e 29
Ansaldo, Banca Nazionale Del Lavoro S.p.A., Citibank, N.A., 30
Professor Maria Martellini, Banca Intesa S.p.A., Deloitte & 31
Touche Tohmatsu Auditores Independentes, Credit Suisse 32
International, Credit Suisse Securities (Europe) Limited, 33
Credit Suisse, Credit Suisse Group, Grant Thorton S.p.A., a 34
Societa per Azioni under the laws of Italy, now known as 35
Italaudit, S.p.A., 36
37
Defendants, 38
39
Parmatour S.p.A., 40
41
Defendant-Third-Party-Defendant. 42
43

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* The Honorable John G. Koeltl, of the United States
District Court for the Southern District of New York, sitting by
designation.
3
1
2
Before: 3
C ABRANES , W ESLEY , Circuit Judges, and K OELTL ,* District Judge. 4
5
Plaintiff-Appellant Parmalat Capital Finance Limited 6
and Plaintiff-Counter-Defendant-Third-Party-Defendant- 7
Appellant Dr. Enrico Bondi (collectively, “Appellants”) 8
commenced these actions to recover damages that they contend 9
are owed to them pursuant to Illinois state law. In this 10
appeal, Appellants challenge orders of the United States 11
District Court for the Southern District of New York 12
(Kaplan, J.) and the Northern District of Illinois 13
(Castillo, J.) denying Appellants’ motions for remand and 14
abstention, and granting summary judgment to 15
Defendants-Third-Party-Plaintiffs-Counter-Claimants- 16
Appellees Grant Thornton International and Grant Thornton 17
LLP. We hold that the district courts had proper removal 18
jurisdiction over these actions. As a matter of first 19
impression in our Circuit, we set forth the standard for 20
determining “timely adjudication” for the purposes of 28 21
U.S.C. § 1334(c)(2) abstention. We then VACATE and REMAND 22
to allow the district court to consider, in light of this 23
Opinion, whether abstention is mandatory in the 24
circumstances presented here. 25
26
A FFIRMED in part and V ACATED and R EMANDED in part. 27
28
29
30
K ATHLEEN M. S ULLIVAN , Quinn Emanuel Urquhart & 31
Sullivan, LLP, New York, NY (Peter E. 32
Calamari, Terry L. Wit, Sanford I. Weisburst, 33
on the brief), for Plaintiff-Counter- 34
Defendant-Third-Party Defendant-Appellant 35
Bondi. 36
37
J. G REGORY T AYLOR , Diamond McCarthy LLP, New York, NY 38
(Allan B. Diamond, Richard I. Janvey, J. 39

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4
Benjamin King, on the brief), for Plaintiff- 1
Appellant Parmalat Capital Finance Limited. 2
3
L INDA T. C OBERLY , Winston & Strawn LLP, Chicago, IL 4
(Bruce R. Braun, William P. Ferranti, on the 5
brief), for Defendant-Third-Party-Plaintiff- 6
Counter-Claimant-Appellee Grant Thornton LLP. 7
8
J OSEPH B. T OMPKINS J R ., Sidley Austin LLP, 9
Washington, DC (Alan C. Geolot, Mark P. 10
Guerrera, Robert D. Keeling, A. Robert 11
Peitrzak, Daniel A. McLaughlin, on the brief), 12
for Defendants-Appellees Bank of America et 13
al. 14
15
J AMES L. B ERNARD , Strook & Strook & Lavan LLP, New 16
York, NY (Quinlan D. Murphy, Katherine I. 17
Puzone, David M. Cheifetz, on the brief), for 18
Defendant-Third-Party-Plaintiff-Counter- 19
Claimant-Appellees Grant Thornton 20
International, Inc. and Grant Thornton 21
International Ltd. 22
23
P ARTHA P. C HATTORAJ , Markowitz & Chattoraj LLP, New 24
York, NY for Amicus Curiae Guido Alpa. 25
26
G EORGE M. P AVIA , Pavia & Harcourt LLP, New York, NY 27
for Amicus Curiae the Government of the 28
Republic of Italy. 29
30
31
32
WESLEY, Circuit Judge: 33
The questions presented are (1) whether the district 34
court erred in exercising jurisdiction over plaintiffs’ 35
claims, pursuant to 28 U.S.C. § 1334(b); and (2) whether the 36
district court properly declined to abstain from exercising 37
that jurisdiction, pursuant to 28 U.S.C. § 1334(c)(2). This 38

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1 Although multiple courts were initially involved in these
cases, the multidistrict litigation proceedings are now before
the United States District Court for the Southern District of New
York (Kaplan, J.). We thus remand to that court. References
herein to “the district court” refer to the United States
District Court for the Southern District of New York unless
otherwise noted.
5
appeal is taken from judgments of the United States District 1
Court for the Southern District of New York (Kaplan, J.) and 2
challenges rulings made by that court and by the United 3
States District Court for the Northern District of Illinois 4
(Castillo, J.). The contested rulings include two orders 5
dated February 25, 2005 and February 16, 2006 finding 6
federal jurisdiction in the present cases and declining to 7
abstain from exercising that jurisdiction. We conclude that 8
jurisdiction was proper, but remand to allow the district 9
court 1 to consider, in light of this Opinion, whether 10
abstention is mandatory. 11
I. BACKGROUND 12
These cases arise from the financial collapse of 13
Parmalat Finanziaria, S.p.A. and many of its subsidiaries. 14
Twenty-three Parmalat-related corporations are now in the 15
midst of bankruptcy and reorganization proceedings in Italy. 16
Italy’s Minister of Finance appointed Dr. Enrico Bondi, here 17
the Plaintiff-Counter-Defendant-Third-Party-Defendant- 18

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2 Although § 304 was repealed, it remains applicable to
this case. See Pub. L. 109-8 (enacting Chapter 15 of the
Bankruptcy Code and repealing 11 U.S.C. § 304 for all ancillary
petitions filed after October 17, 2005).
6
Appellant, to serve as Extraordinary Commissioner of these 1
bankruptcy proceedings in a role analogous to a Chapter 11 2
Trustee. Parmalat Capital Finance Limited (“PCFL”), a 3
Parmalat subsidiary headquartered in the Grand Caymans, is 4
likewise insolvent and currently in liquidation proceedings. 5
These liquidation proceedings are ongoing in the Grand 6
Caymans and are overseen by Joint Official Liquidators 7
appointed by the Grand Court of the Cayman Islands. 8
In January and June 2004 respectively, PCFL and Bondi 9
commenced separate proceedings pursuant to former 11 U.S.C. 10
§ 304 in the Bankruptcy Court for the Southern District of 11
New York. Section 304 permitted PCFL and Bondi, as 12
representatives of the foreign bankruptcy estates, to 13
commence bankruptcy cases in the United States in order to 14
enjoin litigation against PCFL and Parmalat in United States 15
courts. 2 Section 304 also empowered PCFL and Bondi to seek 16
orders from the bankruptcy court regarding turnover of 17
property in the United States belonging to the respective 18
bankruptcy estates. 19
Meanwhile, purchasers of Parmalat’s debt and equity 20

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7
securities filed class action lawsuits against Parmalat and 1
others for securities fraud. Those cases were consolidated 2
before Judge Kaplan in the United States District Court. 3
In August 2004, Bondi filed suit in Illinois state 4
court against Defendants-Third-Party-Plaintiffs-Counter- 5
Claimants-Appellees Grant Thornton International and Grant 6
Thornton LLP (collectively, “Grant Thornton”). Bondi 7
alleges claims against Grant Thornton arising under Illinois 8
state law for professional malpractice, fraud, aiding and 9
abetting fraud and constructive fraud, negligent 10
misrepresentation, aiding and abetting breach of fiduciary 11
duty, theft and diversion of corporate assets, conversion, 12
unjust enrichment, aiding and abetting fraudulent transfer, 13
deepening insolvency, and unlawful civil conspiracy. On 14
September 16, 2004, Grant Thornton removed the case to the 15
United States District Court for the Northern District of 16
Illinois on the basis of 28 U.S.C. §§ 1334(b) and 1452. In 17
its Notice of Removal, Grant Thornton argued, among other 18
things, that removal was proper because the Illinois state 19
law case was “related to” Bondi’s § 304 proceedings in the 20
Southern District of New York. The next day, Bondi filed a 21
“Motion to Remand to State Court.” Bondi argued therein 22
that there was no federal jurisdiction over the case and, in 23

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3 The district court likewise declined Bondi’s motion to
abstain pursuant to 28 U.S.C. § 1334(c)(1). It concluded that
permissive abstention was not appropriate because of “the
importance of coordinating this proceeding with the international
bankruptcy and the Securities Fraud Action outweighs any interest
in comity with Illinois courts or Illinois law.” Bondi does not
challenge this ruling on appeal.
4 Shortly after the district court issued its order, Bondi
filed a motion under 28 U.S.C. §1292(b) to certify questions of
law related to remand and abstention. The district court denied
Bondi’s motion, precluding him from pursuing an interlocutory
appeal. Accordingly, Bondi’s first opportunity to challenge
Judge Kaplan’s ruling on remand and abstention arose in the
present appeal following the entry of judgment below.
8
any event, the court should abstain pursuant to 28 U.S.C. § 1
1334(c)(2). 2
On December 9, 2004, the Judicial Panel on 3
Multidistrict Litigation transferred Bondi’s action against 4
Grant Thornton to Judge Kaplan in the Southern District of 5
New York. On February 25, 2005, Judge Kaplan denied Bondi’s 6
Motion to Remand to State Court. The district court found 7
that it had jurisdiction pursuant to § 1334(b) and that 8
abstention was not mandatory. 3 The district court reasoned 9
that Bondi failed to file a motion for abstention and, in 10
the alternative, Bondi failed to demonstrate that his claims 11
could be “timely adjudicated” in Illinois state court. 4 28 12
U.S.C. § 1334(c)(2). 13
In December 2005, PCFL likewise filed suit against 14
Grant Thornton in Illinois state court alleging similar 15

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5 In addition, PCFL moved for permissive abstention pursuant
to 28 U.S.C. § 1334(c)(1). Like Bondi, PCFL does not challenge
the denial of its motion for permissive abstention on appeal.
9
claims to those asserted by Bondi. On January 5, 2006, 1
Grant Thornton removed the case to the United States 2
District Court for the Northern District of Illinois on the 3
basis of 28 U.S.C. §§ 1334(b) and 1452. In its Notice of 4
Removal, Grant Thornton argued, as in the Bondi case, that 5
removal was appropriate because the state law claims were 6
related to PCFL’s § 304 proceeding. On January 20, 2006, 7
PCFL filed a motion titled “Parmalat Capital Finance 8
Limited’s Motion to Abstain and Remand.” Like Bondi, PCFL 9
argued that there was no federal jurisdiction over its case 10
and that abstention was mandatory pursuant to 28 U.S.C. § 11
1334(c)(2). 5 By short order on February 16, 2006, the 12
Northern District of Illinois denied PCFL’s motion, noting 13
that it “fully adopt[ed]” the reasoning of the Southern 14
District of New York’s February 25, 2005 order denying 15
Bondi’s remand motion. The case was then transferred to the 16
United States District Court for the Southern District of 17
New York for consolidation with Bondi’s case. 18
Following discovery, the district court entertained a 19
series of motions to dismiss the complaints or to grant 20

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10
judgment in favor of defendants. Ultimately, the court 1
resolved the cases in final judgments for defendants, 2
dismissing the matters on grounds not relevant here. See In 3
re Parmalat Sec. Litig., 659 F. Supp. 2d 504 (S.D.N.Y. 4
2009). 5
Appellants filed this timely appeal. This opinion 6
focuses on the February 25, 2005 and February 16, 2006 7
orders to determine whether the district courts correctly 8
determined that those courts had jurisdiction and were not 9
required to abstain pursuant to § 1334(c)(2). Although 10
Appellants also raise other challenges relating to the 11
summary judgment proceedings in the district court, we need 12
not reach those claims. 13
II. DISCUSSION 14
Bondi and PCFL challenge the lower federal courts’ 15
exercise of jurisdiction on two grounds. First, Bondi and 16
PCFL contend that removal from Illinois state court was 17
improper because the Illinois actions are based solely on 18
state law claims and are not “related to” any bankruptcy 19
cases in federal court. See 28 U.S.C. § 1334(b). Second, 20
Bondi and PCFL contend that, even if removal was proper, the 21
district courts were required to abstain pursuant to 28 22
U.S.C. § 1334(c)(2), which provides that a district court 23

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11
“shall abstain” from hearing an applicable claim “if an 1
action is commenced, and can be timely adjudicated, in a 2
State forum of appropriate jurisdiction.” 3
We conclude that the cases were properly removed. As 4
to the abstention question, the meaning of “timely 5
adjudicated” is a matter of first impression in this 6
Circuit. Our task here then is to set forth a standard for 7
determining “timely adjudication” for the purposes of 28 8
U.S.C. § 1334(c)(2). We hold that the district court 9
employed the wrong standard. We therefore vacate the 10
judgment on the abstention issue and remand to allow the 11
district court to consider, in light of this decision, 12
whether abstention is mandatory. 13
A. Removal Jurisdiction 14
28 U.S.C. § 1334(b) provides that “the district courts 15
shall have original but not exclusive jurisdiction of all 16
civil proceedings arising under title 11, or arising in or 17
related to cases under title 11.” 28 U.S.C. § 1334(b) 18
(emphasis added). Grant Thornton removed the present 19
actions from Illinois state court as actions “related to” 20
the 11 U.S.C. § 304 proceedings in the Southern District of 21

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6 Grant Thornton also removed on the ground of relation to
the United States bankruptcy of a subsidiary of Parmalat.
Because of our resolution of the appellees’ principal claim, it
is unnecessary to reach this argument.
12
New York. 6 PCFL and Bondi press a novel argument: they 1
contend that removal was improper because § 304 proceedings 2
are not “cases” within the meaning of the removal statute. 3
In the alternative, they argue that the state law claims are 4
not “related to” the § 304 proceedings. We disagree on both 5
counts. 6
1. A Section 304 Proceeding is a “Case” 7
One need not look far to find substantial support for 8
Grant Thornton’s contention that a § 304 proceeding is a 9
“case” within the context of the bankruptcy statute. The 10
Bankruptcy Code repeatedly refers to § 304 proceedings as 11
“cases” and Section 304 itself is titled “Cases ancillary to 12
foreign proceedings.” 11 U.S.C. § 304 (emphasis added). 13
The Bankruptcy Code also defines “petition” as a “petition 14
filed under section 301, 302, 303, or 304 of this title, as 15
the case may be, commencing a case under this title.” 11 16
U.S.C. § 101(42) (emphasis added). The statutory language 17
is clear: a § 304 proceeding is a case for the purposes of 18
subject matter jurisdiction under § 1334(b). 19
2. State Law Claims may be “Related to” a Section 304 20

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13
Proceeding 1
For the purposes of removal jurisdiction, a civil 2
proceeding is “related to” a title 11 case if the action’s 3
“outcome might have any ‘conceivable effect’ on the bankrupt 4
estate.” In re Cuyahoga Equip. Corp., 980 F.2d 110, 114 (2d 5
Cir. 1992). In the Illinois state law actions at issue 6
here, Bondi and PCFL are attempting to recover damages that 7
they contend are due the respective bankruptcy estates in 8
Italy and the Grand Caymans. If either Bondi or PCFL is 9
successful in their claims against Grant Thornton, the funds 10
they recover will benefit the respective bankruptcy estates. 11
See In re Boston Reg’l Med. Ctr., Inc., 410 F.3d 100, 107 12
(1st Cir. 2005) (“[The liquidating entity’s] success or lack 13
of success in securing a share of the trust corpus will 14
directly impact the amount of the liquidating dividend 15
eventually paid to [the debtor’s] creditors. That is a 16
matter intimately connected with the efficacy of the 17
bankruptcy proceeding.”) It is not difficult to conclude 18
that the “conceivable effect” test is satisfied. The 19
present actions are therefore “related to” the § 304 20
proceeding. 21
The fact that a § 304 proceeding, by definition, 22
involves a bankruptcy estate located abroad does not short 23

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7 We disagree with another court’s approach in a similar
case involving state law claims related to the Parmalat
bankruptcy. In Bondi v. Citigroup, Inc., No. 04 CV 4373 (D.N.J.
Nov. 18, 2004), the United States District Court for the District
of New Jersey concluded that although the state law claims were
related to the Parmalat estate, “related to” jurisdiction was
nevertheless lacking because the Parmalat estate is located
abroad. As explained above, we disagree with this conclusion.
State law claims are “related to” § 304 proceedings so long as
they satisfy our Court’s “related to” test set forth in Cuyahoga,
980 F.2d at 114. Nothing more is required.
14
circuit the “related to” analysis. In the context of § 1
1334(b), there is no need to distinguish between estates 2
administered principally in foreign forums and those 3
administered principally in domestic forums. As the 4
district court explained below, “[t]here is no reason why a 5
state law action designed to recover some of those assets 6
[of the foreign debtor] . . . and thus increase the size of 7
the estate involved in the Section 304 case is not ‘related 8
to’ the Section 304 Proceeding within the meaning of Section 9
1334.” Bondi v. Grant Thorton Int’l, 322 B.R. 44, 48 10
(S.D.N.Y. 2005). So long as the estate at issue in a § 304 11
proceeding, wherever located, may conceivably be affected by 12
the state law actions, those state law actions are “related 13
to” the § 304 case. 7
14
The district court properly exercised removal 15
jurisdiction pursuant to 28 U.S.C. § 1334(b). 16
B. Section 1334(c)(2) Abstention 17

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15
The jurisdiction-conferring statute covering bankruptcy 1
cases and proceedings provides: 2
Upon timely motion of a party in a 3
proceeding based upon a State law claim 4
or State law cause of action, related to 5
a case under title 11 but not arising 6
under title 11 or arising in a case under 7
title 11, with respect to which an action 8
could not have been commenced in a court 9
of the United States absent jurisdiction 10
under this section, the district court 11
shall abstain from hearing such 12
proceeding if an action is commenced, and 13
can be timely adjudicated, in a State 14
forum of appropriate jurisdiction. 15
16
28 U.S.C. § 1334(c)(2) (emphasis added). The district 17
courts determined that abstention pursuant to § 1334(c)(2) 18
was not mandatory here because PCFL and Bondi failed to move 19
for abstention and, in the alternative, PCFL and Bondi 20
failed to show that their actions could be “timely 21
adjudicated” in state court as required by statute. We 22
review these holdings in turn. 23
1. Motion for Abstention 24
Bondi filed a motion titled “Plaintiff’s Motion for 25
Remand to State Court” and explicitly argued that the court 26
should abstain pursuant to § 1334(c)(2). PCFL filed a 27
motion titled “Parmalat Capital Finance Limited’s Motion to 28
Abstain and Remand.” In that motion, PCFL likewise 29
explicitly argued that the court should abstain pursuant to 30

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16
§ 1334(c)(2). Based on these filings, the district courts 1
clearly erred in their determinations that PCFL and Bondi 2
failed to file motions for abstention. 3
2. Timely Adjudication 4
i. Standard of Review 5
As explained above, § 1334(c)(2) abstention is 6
mandatory when, among other things, the matter can be 7
“timely adjudicated” in state court. Whether an action can 8
be timely adjudicated in state court is a mixed question of 9
law and fact. The factual inquiry focuses on how quickly a 10
case can be adjudicated in state court; the legal inquiry 11
asks if this pace is sufficiently swift. Given this mixed 12
question of law and fact, we review the court’s 13
determination de novo. See McCarthy v. Dun & Bradstreet 14
Corp., 482 F.3d 184, 204 (2d Cir. 2007). 15
ii. What Constitutes ‘Timely’ 16
Four factors come into play in evaluating § 1334(c)(2) 17
timeliness: (1) the backlog of the state court’s calendar 18
relative to the federal court’s calendar; (2) the complexity 19
of the issues presented and the respective expertise of each 20
forum; (3) the status of the title 11 bankruptcy proceeding 21
to which the state law claims are related; and (4) whether 22
the state court proceeding would prolong the administration 23

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8 The district court may find that this factor particularly
favors abstention here because one of the key issues in this case
– the defense of in pari delicto – is a matter of Illinois state
law and there is some doubt as to the nature and reach of the
17
or liquidation of the estate. See In re Georgou, 157 B.R. 1
847, 851 (N.D. Ill. 1993). 2
The first two factors require a court to consider 3
timely adjudication in light of the particular factual and 4
procedural circumstances presented in the two courts being 5
compared. Timeliness cannot reasonably be defined as a 6
fixed period of time. Instead, timeliness is a case- and 7
situation-specific inquiry that requires a comparison of the 8
time in which the respective state and federal forums can 9
reasonably be expected to adjudicate the matter. The 10
inquiry does not turn exclusively on whether an action could 11
be adjudicated most quickly in state court. It is, however, 12
informed by the comparative speeds of adjudication in the 13
federal and state forums. A court should therefore consider 14
the backlog of the state court’s calendar (if any) relative 15
to the federal court’s calendar. Where the legal issues in 16
a case are especially complex, the forum with the most 17
expertise in the relevant areas of law may well be expected 18
to adjudicate the matter in a more timely fashion relative 19
to the other forum. 8 On the other hand, when the facts in a 20

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defense. Notably, Illinois does not permit our Court to certify
questions of Illinois state law to the Illinois Supreme Court.
Ill. Sup. Ct. R. 20 (permitting certification only from the
Supreme Court of the United States and the United States Court of
Appeals for the Seventh Circuit).
18
case are especially complex, the forum with greater 1
familiarity with the record may likewise be expected to 2
adjudicate the matter more quickly. Ultimately, the 3
relative adjudication times are not solely determinative, 4
but do shed light on whether the state court can timely 5
adjudicate the matter. 6
As to the third factor — the status of the “related to” 7
title 11 bankruptcy proceeding — a court must consider 8
whether the litigants in a state proceeding need the state 9
law claims to be quickly resolved as a result of the status 10
of the ongoing title 11 bankruptcy proceeding. For 11
instance, a trustee in a chapter 11 reorganization may 12
require expeditious resolution of the state law claims in 13
order to determine what resources are available to fund the 14
chapter 11 reorganization. For this reason, courts have 15
found that what might be timely in the Chapter 7 context is 16
not necessarily timely in Chapter 11 cases where time is of 17
the essence. See In re Leco Enters., 144 B.R. 244, 251 18
(S.D.N.Y. 1992). In the Chapter 7 context, some courts have 19

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9 Because a court overseeing a § 304 case is not tasked with
overseeing reorganization or liquidation of the estate, we see no
reason why, as a result of the § 304 proceeding, the litigants in
a state law proceeding would require swift resolution of the
state law claims. A court may, however, find that a particular
§ 304 proceeding does create a need for urgency among the
litigants in the state law proceeding.
19
even suggested that “in deciding whether a matter may be 1
timely adjudicated, perhaps the single most important factor 2
is the nature of the underlying chapter proceeding.” Id. 3
(citation omitted). 9
4
Finally, the fourth factor asks whether the state court 5
proceeding would prolong the administration or liquidation 6
of the estate. A matter cannot be timely adjudicated in 7
state court if abstention and remand of the state law claims 8
will unduly prolong the administration of the estate. Thus, 9
in a case like the WorldCom bankruptcy, “the close 10
connections between the defendants in [the] action and the 11
debtor, and the complexity of [the] litigation” may suggest 12
that “remanding to the state court could slow the pace of 13
litigation dramatically” by leading to duplicative motions 14
practice, repetitious discovery, and parallel adjudication 15
of common issues. In re Worldcom, Inc. Sec. Litig., 293 16
B.R. 308, 331 (S.D.N.Y. 2003). 17
In the present case, the district courts emphasized 18

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10 It bears noting that Bondi and the Joint Official
Liquidators, appointed by the Grand Court of the Cayman Islands
and charged with overseeing PCFL, selected Illinois state court
as the forum in which to prosecute their claims against Grant
Thornton. Presumably, Bondi and the Joint Official Liquidators
were well versed in the timeliness concerns of their respective
foreign bankruptcy proceedings when they selected the state
forum.
20
that remand would not promote timely adjudication because 1
this case is a “complex bankruptcy-cum-securities fraud 2
multidistrict litigation[]” such that “the importance of 3
coordinating this proceeding with the international 4
bankruptcy and the Securities Fraud Action outweighs any 5
interest in comity with Illinois courts or Illinois law.” 6
We disagree with this approach. The impact of the state 7
court proceedings on the securities class action itself, 8
absent evidence of prolonging the administration or 9
liquidation of the foreign estates, is immaterial to the 10
question of timely adjudication. 10 Unlike Worldcom, the 11
district court here is not charged with administration of a 12
bankruptcy estate. As a result, the possibility that remand 13
of the state court claims will slow down the § 304 14
proceeding is insufficient to show that state court 15
adjudication would be untimely. The inquiry’s proper focus 16
is on the timely administration of the estate, not the § 304 17
proceeding. 18

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21
c. Remand to Assess Timely Adjudication 1
Nearly six years has passed since Appellants sought 2
federal abstention in this matter. The record tells us 3
nothing of the current status of the domestic and foreign 4
bankruptcy proceedings. Similarly, the record is silent as 5
to whether remanding these cases to Illinois state court 6
would prolong the administration of the foreign estates. 7
Accordingly, we cannot resolve the issue of “timely 8
adjudication” based on the record before us. 9
On remand, the district court should determine whether 10
these cases can be timely adjudicated in Illinois state 11
court at the present time. Although Bondi preserved for 12
appeal the question of whether this case could have been 13
timely adjudicated in Illinois state court at the time the 14
district court declined to abstain in February 2005 (and 15
indeed sought to appeal the issue at that time), much may 16
have changed in the intervening years. It would be futile 17
for the district court on remand to consider only the facts 18
known to it at the time of its initial order. Accordingly, 19
the district court should allow the parties to supplement 20
the record with current information to allow it to assess 21
timely adjudication in the present tense. See generally 22
Stoe v. Flaherty, 2006 WL 2927272 (W.D. Pa. Oct. 11, 2006) 23

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22
(considering “timely adjudication” following a remand order 1
from the Third Circuit and noting that prior resolution of 2
the case on the merits in federal court was not dispositive 3
in the timely adjudication analysis). 4
On remand, the district court should also consider 5
which party should bear the burden to show that these 6
matters cannot be timely adjudicated in state court. 7
Although many courts have required the movant to 8
affirmatively show that a matter can be timely adjudicated 9
in state court, few cases have analyzed the question in 10
detail. See, e.g., Stoe v. Flaherty, 436 F.3d 209, 219 n.5 11
(3d Cir. 2006); but see XL Sports, Ltd. v. Lawler, 49 Fed. 12
App’x 13, 20 (6th Cir. 2002) (“Nothing in the record 13
indicates that the Tennessee courts would not adjudicate the 14
claim in a timely fashion . . . .”). Typically, a party 15
seeking relief bears the burden to show he is entitled to 16
that relief. See, e.g., In re the City of New York, 607 17
F.3d 923, 944 (2d Cir. 2010). Placing the burden on the 18
party seeking remand may nevertheless be inconsistent with 19
the mandatory nature of abstention under § 1334(c)(2) as 20
well as the principles of comity, which presume that a state 21
court will operate efficiently and effectively. See Younger 22
v. Harris, 401 U.S. 37, 44 (1971). Accordingly, when 23

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23
examining this issue, the district court should consider 1
these significant competing concerns. 2
A mandate shall issue forthwith remanding these cases 3
to the district court to hold such proceedings as are 4
necessary to assess whether § 1334(c)(2) abstention is 5
mandatory. If the district court elects to abstain pursuant 6
to § 1334(c)(2) and remands these cases to the appropriate 7
Illinois state court, we will have no jurisdiction over an 8
appeal. See 28 U.S.C. § 1334(d); In re Cathedral of the 9
Incarnation, 90 F.3d 28, 32-34 (2d Cir. 1996) (holding that 10
a decision to remand based on mandatory abstention is not 11
reviewable on appeal). If, however, the district court 12
determines that abstention is not mandatory, any party to 13
this appeal may restore jurisdiction to this court within 30 14
days by letter to the Clerk’s Office seeking review, without 15
need for a new notice of appeal. See United States v. 16
Jacobson, 15 F.3d 19, 22 (2d Cir. 1994). The Clerk’s Office 17
will then set a briefing schedule and refer the appeal to 18
this panel for disposition. 19
III. CONCLUSION 20
The Southern District of New York’s February 25, 2005 21
order denying Bondi’s motion for remand and the Northern 22
District of Illinois’s February 16, 2006 order denying 23

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PCFL’s motion to abstain and remand are hereby AFFIRMED in 1
part and VACATED and REMANDED in part. We affirm the 2
district courts’s determinations that these cases were 3
properly removed under 28 U.S.C. § 1334(b). We VACATE the 4
district courts’s abstention holdings and REMAND to the 5
Southern District of New York for proceedings consistent 6
with this Opinion. The mandate shall issue forthwith. 7

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