Court Strikes Unapproved Filing

On August 9, 2016, Judge Kevin Carey of the Delaware Bankruptcy Court issued an Order both dismissing a complaint and striking a defendant's Notice of Supplemental Authority. The decision was issued in the Quantum Foods bankruptcy, in the adversary proceeding No. 16-50045. A copy of the Opinion is available here.

On February 18, 2016, the Committee filed its complaint against the defendant, IPC, seeking to avoid and recover allegedly preferential transfers. On April 25, 2016, IPC filed the motion to dismiss. The Committee filed its response on May 23, 2016 and IPC filed a reply on June 6, 2016. Then, on June 29, 2016, IPC filed a Notice of Supplemental Authority in Support of Motion to Dismiss. On June 30, 2016 the Committee filed the Motion to Strike the notice of supplemental authority. Opinion at *2.

Judge Carey quickly covered the standard governing motions to dismiss, which was provided by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and was then distilled into a three-step process by the Third Circuit:

First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.”

Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011). Opinion at *3. Judge Carey then states that the complaint contains “only a few vague factual allegations,” “fails to allege any facts to support a claim under § 502(d),” and “the information in the exhibit does not provide any context or describe the nature of the transfers.” Opinion at *4-5. He then dismissed the complaint. However, as is the standard for Delaware Bankruptcy judges, he states that “leave to amend a complaint should be freely given when justice so requires” and gives the Committee leave to amend its complaint. Opinion at *5.

Judge Carey then turns to the motion to strike, looking...