In re: Anc Rental Corp. v. Anc Rental Corp., et al. On Appeal From the United States District Court For the…

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 02-3178
IN RE: ANC RENTAL CORP., et al.,
Debtors
THE HERTZ CORPORATION, et al.,
Appellants
v.
ANC RENTAL CORP., et al.
On Appeal From the United States District Court
For the District of Delaware
(D.C. Civil Action No. 02-cv-00154)
District Judge: Honorable Gregory M. Sleet
Submitted Pursuant to Third Circuit LAR 34.1(a)
December 13, 2002
BEFORE: FUENTES and STAPLETON, Circuit Judges,
and O’KELLEY,* District Judge
(Opinion Filed: January 8, 2003)
_____________________________
*Honorable William C. O’Kelley, United States District Judge for the Northern District
of Georgia, sitting by designation.
OPINION
STAPLETON, Circuit Judge:
I.
National Car Rental System ("National") and Alamo Rent-A-Car ("Alamo")
are owned by ANC Rental Corp. ("ANC"). Despite common ownership, both National
and Alamo operate separately -- National catering to business travelers and Alamo
catering to leisure travelers. On November 13, 2001, National, Alamo, and ANC
(referred to collectively as "the Debtors") filed a petition for bankruptcy under Chapter 11
in the United States Bankruptcy Court for the District of Delaware.
Prior to filing for bankruptcy, National and Alamo operated separate
concessions at airports throughout the country. Concessions are acquired through a

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public bidding process. The concession agreements are identical except for the
compensation to be paid. The Debtors devised a plan, pursuant to the Chapter 11
reorganization, to consolidate their operations at airports where both National and Alamo
operated concessions. Under the reorganization, either National or Alamo would reject
its concession agreement with the airport. The other debtor would assume its concession
agreement with the airport under 365 and then assign the agreement to ANC. ANC
would then operate both the National and Alamo brands pursuant to one concession
agreement, resulting in significant savings to the bankrupt parties.
The Debtors sought the approval of the Bankruptcy Court to consolidate an
airport concession at the Cincinnati, Ohio airport by this reject, assume, and assign
technique. Although the governing airport authority did not object, competitors the Hertz
Corporation ("Hertz") and Avis Rent a Car System, Inc. ("Avis") (referred to collectively
as "Appellants"), who also operate airport concessions, did object to the consolidation.
Appellants claimed that allowing the Debtors to operate two companies out of one
concession was not a assumption permitted under 365 because it effectively modified
the executory contract to allow two companies to operate from the same concession
where the original agreement allowed only one. The Bankruptcy Court granted the
Debtors’ request to consolidate airport concessions through the method discussed above.
The Debtors began using the method to consolidate operations at several
airports. Appellants continued objecting. Although they had not done so in the initial
round of proceedings requesting airport concession consolidations, on March, 15, 2002,
the Debtors asserted a standing objection to Appellants’ objections. On May 3, 2002 the
Bankruptcy Court granted yet another 365 motion. The court found that the Appellants
did not have standing to object to orders under section 1109 of the Bankruptcy Code. The
court stated the following:
[I]t is clear that Hertz and Avis do not have standing to be
heard on the Debtors’ Motions to assume and assign the
Concession Agreements to ANC. Neither Hertz nor Avis are
creditors of the Debtors nor do they have any direct
contractual or other legal relationship with the Debtors. They
are merely competitors in the same industry. The rights they
assert are not their own, they are the rights of the Airport
Authorities. Section 365 is designed to protect the rights of
parties with whom debtors have contractual relationships, in
this case the Airport Authorities.
In re ANC Rental Corp., Inc., 277 B.R. 226, 232 (Bankr. D.Del. 2002).
The Debtors continued using the same method under the bankruptcy code to
consolidate airport concessions throughout the country and Appellants continued
objecting to the assumption and assignment. Appellants pointed out that they actually
were creditors of the Debtors. The Bankruptcy Court stated that Hertz and Avis still
lacked standing because while "section 1109 allows a creditor to be heard on any issue in
a bankruptcy case, it does not change the general principle of standing that a party may
assert only its own legal interests and not the interests of another." The court concluded
that "a general creditor such as Avis does not have standing to assert the rights of the
Airport Authorities under section 365(c) and/or (f)." 278 B.R. 714, 719 (Bankr. D. Del.
2002).
The United States District Court for the District of Delaware heard the
consolidated appeal of these objections to the concession agreements. The District Court,
noting the difference between standing in bankruptcy court and standing to appeal a
bankruptcy court decision in district court, found that "even if the Bankruptcy Court
incorrectly concluded that the appellants lacked standing to be heard in the bankruptcy
court, they lack standing to bring this appeal." In re ANC Rental Corp., 280 B.R. 808,
814 (D.Del. 2002). The District Court noted that Appellants’ status as creditors would
not be adversely affected by the consolidations because the consolidations, by Hertz’ and
Avis’ own admission, would reduce the Debtors’ expenses, resulting in more funds in the
bankruptcy estate. Id. at 816.
The court determined that Appellants’ objections to the assumptions and
assignments relied more heavily on their status as direct competitors to National and

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Alamo and the fear that the expense reduction caused by consolidating airport
concessions will cause Hertz and Avis to lose market share. The District Court held that
Hertz and Avis had no standing because they were not "person[s] aggrieved," because
"neither Hertz’s nor Avis’ rights, burdens, or property will be directly and adversely
affected by the actions of the bankruptcy court." Id. at 819.
We will affirm the decision of the District Court.
II.
"The question whether a party has standing to appeal in a bankruptcy case
is generally an issue of fact for the district court." In re O’Brien Environmental Energy,
Inc., 181 F.3d 527, 531 (3d Cir. 1999). But "[b]ecause the District Court sat as an
appellate court, we apply plenary review to its judgment and thus apply the same
standards that it applied." Stonington Partners, Inc. v. Lernout & Hauspie Speech Prods.
N.V., 310 F.3d 118 (3d Cir. 2002).
III.
The jurisdiction of federal courts is limited to "case[s] or controvers[ies]."
Allen v. Wright, 468 U.S. 737, 750 (1984). However, appellate standing in bankruptcy
cases is limited to "persons aggrieved." In re PWS Holding Corp., 228 F.3d 224, 249 (3d
Cir. 2000). This standard is more restrictive than the "case or controversy" standing
requirement of Article III. Travelers Ins. Co. v. H.K. Porter Co., Inc., 45 F.3d 737, 741
(3d Cir. 1995). Standing is thus "denied to marginal parties involved in bankruptcy
proceedings who, even though they may be exposed to some potential harm incident to
the bankruptcy court’s order, are not ’directly affected’ by that order." Id. (internal
quotation omitted). Appellants have standing as "persons aggrieved" when the
"bankruptcy court’s order ’diminishes their property, increases their burdens, or impairs
their rights.’" In re PWS Holdings Corp., 228 F.3d at 249 (quoting In re Dykes, 10 F.3d
184, 187 (3d Cir. 1993)). "[O]nly those ’whose rights or interests are directly and
adversely affected pecuniarily’ by an order of the bankruptcy court may bring an appeal."
Id. (quoting In re Dykes, 10 F.3d at 187).
Appellants contend that the Bankruptcy Court’s orders allowing the Debtors
to assume and assign concession agreements in order to consolidate their airport
operations into one concession is improper under section 365. We agree with the District
Court that this complaint relates to Appellants’ status as competitors of the Debtors and
not to their status as the Debtors’ creditors.
We hold that any claimed loss in market share or profits by Appellants does
not result in them being directly and adversely affected pecuniarily, and does not diminish
their property, increase their burdens, or impair their rights.
The claimed lost market share and/or profits in this case is contingent on
several factors unrelated to the Bankruptcy Court’s order. In Travelers Insurance Co., we
held that a person is not "aggrieved" if that person’s interest is "too contingent to not
have been ’directly affected’" by the Bankruptcy Court’s order. 45 F.3d at 742. As the
District Court observed, "no one company has a guaranteed portion of the market share ...
and indeed, can gain or lose market share for any number of reasons completely unrelated
to the debtors reorganization." In re ANC Rental Corp., 280 B.R. at 817. The fact that
bankrupt competitors can reduce their expenses pursuant to the bankruptcy code will not
necessarily lead to loss in market share or profits for other companies on sound financial
footing who are free to compete.
Appellants assert that they have a "far more direct economic interest in the
requested relief than do the airport authorities." Appellant’s Brief at 64. They cite In re
Braniff Airways, Inc., 700 F.2d 935, 942-943 (5th Cir. 1983), for the proposition that a
competitor can successfully challenge an assumption under 365. But In re Braniff
Airways involved a situation where a competitor was granted the right to lease a space at
Washington National Airport subject to the debtor’s right to recapture the space. Id. at
943. When the debtor attempted to retake and assume and assign the leased space, the
competitor would necessarily be precluded from using the space that it was presently
occupying. Thus, the pecuniary loss was not too attenuated or contingent to be
considered to have had a direct and adverse effect on the complaining party’s pecuniary
rights.
The other case cited by the Appellants for the proposition that standing is

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determined by who suffers the most direct economic effect is In re Westwood Community
Two Ass’n, Inc., 293 F.3d 1332 (11th Cir. 2002). In that case, members of a homeowners
association were allowed to object to a Bankruptcy Court’s decision regarding the
bankrupt homeowners association. But in that case, the affect on pecuniary rights was
also direct. The Bankruptcy Court had allowed damages claims that were rendered in a
case under the Florida and Federal Fair Housing Acts. Id. at 1333. The members of the
homeowners association were charged a "special assessment" of $7,250 to pay for
damages levied against the association. Id. The damage to the members was not
contingent and it was directly caused by the Bankruptcy Court’s decision to allow the
damages claims. See id. at 1336 ("This order, in which the bankruptcy court denied
reconsidering the allowed claims, directly and adversely affects pecuniarily the
[members] because the Trustee assessed the ... members to satisfy these claims."). It is
clear that the cases cited by the Appellants are distinguishable and that the Appellants
have not claimed a sufficiently direct adverse affect on a pecuniary right to have standing
to appeal the Bankruptcy Court’s order.
We also agree with the District Court finding that "[s]ince no one company
has a guaranteed portion of the market share ... the appellant’s market share is too tenuous
to be considered property." In re ANC Rental Corp., 280 B.R. at 817.
The Appellants argue that Topps Chewing Gum, Inc. v. Major League
Baseball Players Ass’n, 641 F.Supp. 1179 (S.D.N.Y. 1986), 3M Innovative Props. Co. v.
Avery Dennison Corp., 185 F.Supp. 2d 1031, 1041 (D. Minn. 2002), and In re SRJ
Enterprises, Inc., 150 B.R. 933, 941 (Bankr. N.D. Ill. 1993), show that lost market share
and lost profits give rise to compensable claims. However, Topps Chewing Gum and 3M
Innovative Props. involved the distinct assertion that lost market share could be
considered as a measure of damages following the violation of statutorily recognized
rights, not that companies have a property right in its market share. See Topps Chewing
Gum, Inc., 641 F. Supp. at 1191 (citing the adequacy of damages for lost market share as
a reason for denying a preliminary injunction in an antitrust action); 3M Innovative
Properties Co., 185 F. Supp. 2d at 1042 (stating that lost market share was not enough to
justify granting a preliminary injunction in a patent infringement case). And although In
re SRJ Enterprises, Inc. uses the term "market share value" in describing a pre-petition
asset of the debtor, the context of that case makes clear that the use of the term is
inapposite to the situation here. In re SRJ Enters., Inc., 150 B.R. 933 (describing as
"market share value" the pre-petition termination right in a Nissan franchise agreement).
The District Court found that the Appellants had not had their burdens
increased by the Bankruptcy Court’s orders. Appellants have not challenged this finding
on appeal.
Finally, we concur with the District Court that none of Hertz’ or Avis’
rights have been directly affected by the bankruptcy court’s rulings. The relevant
language of the 365(c) provides the following:
c) The trustee may not assume or assign any executory contract or
unexpired lease of the debtor, whether or not such contract or lease
prohibits or restricts assignment of rights or delegation of duties, if--
(1) (A) applicable law excuses a party, other than the debtor, to such
contract or lease from accepting performance from or rendering
performance to an entity other than the debtor or the debtor in
possession, whether or not such contract or lease prohibits or
restricts assignment of rights or delegation of duties; and
(B) such party does not consent to such assumption or assignment;
11 U.S.C. 365(c) (2002).
The language of 365 makes it clear that the section is intended to protect the
rights of the party to the assumed contract, not creditors in general, and certainly not
persons asserting complaints solely based on their status as competitors. As we held in In
re PWS Holding Corp., 228 F.3d at 248 (quoting Kane v. Johns-Manville Corp., 843 F.2d
636, 643 (2d Cir. 1988)):
Bankruptcy proceedings regularly involve numerous parties, each of whom might
find it personally expedient to assert the rights of another party even though that
other party is present in the proceedings and is capable of representing himself.
Third-party standing is of special concern in the bankruptcy context where, as

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here, one constituency before the court seeks to disturb a plan of reorganization
based on the rights of third parties who apparently favor the plan. In this context,
the courts have been understandably skeptical of the litigant’s motives and have
often denied standing as to any claim that asserts only third-party rights.
Because neither Avis nor Hertz is a party to the assumed concession agreements,
their rights are not directly affected by the bankruptcy court’s ruling.
Appellants assert that if they are found to lack standing, they will have no other
remedy to challenge the permissibility of the debtor’s consolidation of airport
concessions. However, the fact that a third party is precluded from challenging terms of
an agreement when that third party is neither a party to the agreement, nor an intended
beneficiary of the agreement is unremarkable.
We will, therefore, affirm the decision of the district court. TO THE CLERK:
Please file the foregoing not precedential opinion.
/s/ Walter K. Stapleton
Circuit Judg

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