No IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT : : : : : : : : : : : : : : :

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1 No IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT CORPORATE COMMISSION OF THE MILLE LACS BAND OF OJIBWE INDIANS, v. Appellee-Plaintiff, CHRISTOPHER WOLFINGTON, and MARK WOLFINGTON, Appellants-Defendants.. ORAL ARGUMENT REQUESTED (TWENTY MINUTES) ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA Case No RHK APPELLANTS OPENING BRIEF PATTERSON LAW OFFICE, P.A. Robert B. Patterson, Jr., # West 78th Street, Suite 400 Eden Prairie, MN Tel DUANE MORRIS LLP James L. Beausoleil, Jr., Esq. Luke P. McLoughlin, Esq. 30 S. 17th St. Philadelphia, PA Counsel for Appellants Appellate Case Page 1 Date Filed 10/22/2015 Entry ID

2 Summary of the Case and Request for Oral Argument Counsel moved to withdraw with the consent of their clients but that Motion was erroneously denied for (1) lack of jurisdiction and (2) lack of good cause. The Magistrate concluded that the bankruptcy stay pertaining to Money Centers of America, Inc. ( MCA ) deprived the Magistrate of the ability to hear Counsel s Motion to Withdraw from representing other parties in the case (Mark and Christopher Wolfington, former officers of MCA). Then, the District Court affirmed the denial of the Motion, concluding that even if there was jurisdiction to hear the Motion to Withdraw, the Motion lacked good cause. The result reached by the District Court requires that Counsel continue to represent former officers of MCA while the Trustee of MCA s bankruptcy estate (of which Duane Morris LLP is the third-largest creditor) brings claims against one or both of those officers. This untenable result is not appropriate under the good cause test, nor is it required by the Bankruptcy Code. The Bankruptcy Code s automatic stay does not preclude counsel for a party in a separate, non-bankruptcy civil action from withdrawing with the consent of that party, regardless of that party s interests in the bankruptcy proceedings. Moreover, Counsel cannot be forced to remain attached to a case notwithstanding the client s consent to withdraw based on factors divorced from the good cause criteria. Counsel respectfully request 20 minutes for oral argument. i Appellate Case Page 2 Date Filed 10/22/2015 Entry ID

3 Table of Contents Summary of the Case and Request for Oral Argument... i I. JURISDICTIONAL STATEMENT...1 II. STATEMENT OF ISSUES PRESENTED FOR REVIEW...2 III. STATEMENT OF THE CASE...3 A. MCA Files for Bankruptcy... 3 B. Counsel Moves to Withdraw with Client Consent and for Good Cause... 4 C. The Commission Offers No Cases or Authority to Challenge the Good Cause to Withdraw D. The Magistrate Finds Jurisdiction Lacking E. The District Court Does Not Resolve the Jurisdictional Question and Finds Good Cause to Withdraw To Be Lacking IV. SUMMARY OF THE ARGUMENT...12 V. STANDARD OF REVIEW...13 VI. ARGUMENT...14 A. The Automatic Stay Does Not Bar the Motion to Withdraw B. The Magistrate s Ruling Misconstrued the Scope of the Bankruptcy Stay C. The District Court s Ruling Failed to Apply the Correct Legal Criteria in Considering Counsel s Good Cause VII. CONCLUSION...23 ii Appellate Case Page 3 Date Filed 10/22/2015 Entry ID

4 TABLE OF AUTHORITIES Federal Cases A.L.A. v. Avilla R-XIII Sch. Dist., 2012 U.S. Dist. LEXIS (W.D. Mo. Mar. 31, 2012)...22 Ajaxo Inc. v. Bank of Am. Tech. & Operations, Inc., 2008 WL (E.D. Cal. Dec. 2, 2008)...22 Banyan Licensing, Inc. v. Orthosupport Int l, Inc., No. 300CV7038, 2002 WL (N.D. Ohio Aug. 15, 2002)...2, 16 Barton v. Dist. of Columbia, 209 F.R.D. 274 (D.D.C. 2002)...2, 16 Brandon v. Blech, 560 F.3d 536 (6th Cir. 2009)...1 Chrysler Corp. v. Carey, 186 F.3d 1016 (8th Cir. 1999)...22 Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949)...1 EEOC v. Lehi Roller Mills Co., Inc., No CV-00591, 2013 WL (D. Utah Oct. 28, 2013)...2, 16 Fid. Nat. Title Ins. Co. of New York v. Intercounty Nat. Title Ins. Co., 310 F.3d 537 (7th Cir. 2002)...1 In re Gaines, 932 F.2d 729 (8th Cir. 1991)...1, 14 Gold s Gym Lic., LLC v. K-Pro Mktg. Group, Inc., No , 2009 U.S. Dist. LEXIS (D. Minn. Oct. 2, 2009)...2, 20 In re Hoskins, 266 B.R. 872 (Bankr. W.D. Mo. 2001) Hunter v. Underwood, 362 F.3d 468 (8th Cir. 2004)...14 Kep-Co, Inc. v. Park Nat l Bank, N.A., No. 406CV747 CDP, 2008 WL (E.D. Mo. Apr. 3, 2008)...2, 16 Kommanditselskab Supertrans v. O.C.C. Shipping, Inc., 79 B.R. 534 (S.D.N.Y. 1987) Lincoln Provision, Inc. v. Puretz, 775 F.3d 1011 (8th Cir. 2015)...14 Luiken v. Domino s Pizza LLC, Civil No , 2009 WL (D. Minn. Dec. 2, 2009)... 2, Miracle-Ear, Inc. v. S. Georgia Hearing, Inc., et al., No , 2011 WL (D. Minn. May 12, 2011)...2, 20 iii Appellate Case Page 4 Date Filed 10/22/2015 Entry ID

5 In re Money Centers of America, Inc., Case No (D. Del. Bankr.)...4 Peter Kiewit Sons, Inc. v. Wall St. Equity Grp., Inc., 2012 U.S. Dist. LEXIS (D. Neb. Nov. 5, 2012)...22 Picco v. Global Marine Drilling Co., 900 F.2d 846 (5th Cir. 1990)...1, 14 Portscher v. Ohio Indus., Inc., No. 00-CV-0675E(Sr), 2007 WL (W.D.N.Y. Mar. 20, 2007)...2, 16 R & R Sails Inc. v. Ins. Co. of Pa., 251 F.R.D. 520 (S.D. Cal. 2008)...22 Rophaiel v. Alken Murray Corp., 1996 U.S. Dist. LEXIS 7796 (S.D.N.Y. June 6, 1996)...23 Starmac, Inc. v. City of Minneapolis, No , 2014 U.S. Dist. LEXIS (D. Minn. Aug. 29, 2014)...2, 16 Stillpass v. Mortg. Fin. Planners, LLC, No. CIV JRT/FLN, 2009 WL (D. Minn. July 17, 2009)...2, 21 Stotler and Co. v. Sonnenschein, No. 87 C 3892, 1989 WL 6376 (N.D. Ill. Jan. 20, 1989)...2, 16 Universal-Polygram Int'l Publ g, Inc. v. Prairie Broad. Co., Civ. No , 2009 U.S. Dist. LEXIS (D. Minn. June 17, 2009)...20 Title Res. Guar. Co. v. Am. Title Servs. Co., No. 14-cv-00366, 2014 WL (D. Col. May 30, 2014)...2, 16 Federal Statutes 11 U.S.C. 362(a)(1) U.S.C. 362(a)(1)-(8) U.S.C. 362 et seq...2, U.S.C. 541(a)(1) Rules 8th Cir. R. 47A(a)...1 District of Minneosota Local Rule 7.1(b)(2)...6 District of Minneosota Local Rule 83.7(c)... 6, iv Appellate Case Page 5 Date Filed 10/22/2015 Entry ID

6 Minnesota Rules of Professional Conduct (a), & 1.16(a)(1) & (b)(6)-(7) (a)(1) & (b)(1), (5)-(7) (b) (b)(5) (b)(6)-(7)...5 v Appellate Case Page 6 Date Filed 10/22/2015 Entry ID

7 I. JURISDICTIONAL STATEMENT The Eighth Circuit has jurisdiction over this collateral order appeal. Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949); Brandon v. Blech, 560 F.3d 536, 537 (6th Cir. 2009) ( An order compelling an attorney to continue work without compensation is just the sort of order the [collateral order] doctrine contemplates it conclusively determined the withdrawal question, is unrelated to the merits, cannot be rectified after a final judgment, and may impose significant hardship. ); Fid. Nat. Title Ins. Co. of New York v. Intercounty Nat. Title Ins. Co., 310 F.3d 537, 539 (7th Cir. 2002) ( Because an order compelling a lawyer to work without prospect of compensation is unrelated to the merits of the dispute, cannot be rectified at the end of the case, and has a potential to cause significant hardship the order is immediately appealable as a collateral order. ). Because counsel s Motion to Withdraw was not barred by the stay in the MCA bankruptcy, and because this Court has jurisdiction to determine its own jurisdiction, In re Gaines, 932 F.2d 729, 731 (8th Cir. 1991); 8th Cir. R. 47A(a), this appeal from the denial of the Motion to Withdraw is properly before the Eighth Circuit to be heard on the merits. Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir. 1990) ( [t]he automatic stay of the bankruptcy court does not divest all other courts of jurisdiction to hear every claim that is in any way related to the bankruptcy proceeding ). Appellate Case Page 7 Date Filed 10/22/2015 Entry ID

8 II. STATEMENT OF ISSUES PRESENTED FOR REVIEW 1. Whether the District Court erred in denying counsel s Motion to Withdraw on the basis that it did not have jurisdiction to permit withdrawal under the Bankruptcy Code. 11 U.S.C. 362 et seq.; Starmac, Inc. v. City of Minneapolis, No , 2014 U.S. Dist. LEXIS (D. Minn. Aug. 29, 2014); Barton v. Dist. of Columbia, 209 F.R.D. 274 (D.D.C. 2002); Stotler and Co. v. Sonnenschein, No. 87 C 3892, 1989 WL 6376 (N.D. Ill. Jan. 20, 1989); EEOC v. Lehi Roller Mills Co., Inc., No CV-00591, 2013 WL (D. Utah Oct. 28, 2013); Title Res. Guar. Co. v. Am. Title Servs. Co., No. 14-cv-00366, 2014 WL (D. Col. May 30, 2014); Kep-Co, Inc. v. Park Nat l Bank, N.A., No. 406CV747 CDP, 2008 WL (E.D. Mo. Apr. 3, 2008); Portscher v. Ohio Indus., Inc., No. 00-CV-0675E(Sr), 2007 WL (W.D.N.Y. Mar. 20, 2007); Banyan Licensing, Inc. v. Orthosupport Int l, Inc., No. 300CV7038, 2002 WL (N.D. Ohio Aug. 15, 2002). 2. Whether the District Court erred in denying counsel s Motion to Withdraw on the basis that, if it did have jurisdiction to permit withdrawal under the Bankruptcy Code, good cause does not exist to grant the withdrawal of counsel. Minnesota Rule of Professional Conduct 1.7; Minnesota Rule of Professional Conduct 1.16; Stillpass v. Mortg. Fin. Planners, LLC, No. CIV JRT/FLN, 2009 WL (D. Minn. July 17, 2009); Miracle- Ear, Inc. v. S. Georgia Hearing, Inc., et al., No , 2011 WL (D. Minn. May 12, 2011); Luiken v. Domino s Pizza LLC, Civil No , 2009 WL (D. Minn. Dec. 2, 2009); Gold s Gym Lic., LLC v. K-Pro Mktg. Group, Inc., No , 2009 U.S. Dist. LEXIS (D. Minn. Oct. 2, 2009). 2 Appellate Case Page 8 Date Filed 10/22/2015 Entry ID

9 III. STATEMENT OF THE CASE A. MCA Files for Bankruptcy This case was originally brought in Minnesota state court in 2012 by the political arm of a Native American tribe (the Corporate Commission of the Mille Lacs Band of Ojibwe Indians, or the Commission ) against MCA and MCA of Wisconsin, Inc. The case was removed to the District Court of Minnesota (docketed as 12-CV-1015). After removal, the Commission amended its Complaint to sue MCA s CEO, Christopher Wolfington, as well as its CFO, Mark Wolfington (collectively the Wolfingtons ). MCA filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware in March 2014, staying the litigation in the District of Minnesota. In re Money Centers of America, Inc., Case No (D. Del. Bankr.). Even though Christopher Wolfington had not filed for bankruptcy at that time, the stay triggered by MCA s bankruptcy filing encompassed the Commission s claims against both Mark and Christopher Wolfington, because such claims are property of the MCA bankruptcy estate that can only be asserted by the MCA bankruptcy trustee (the Trustee ). On April 1, 2014, the Magistrate issued an order staying all claims and proceedings against the Wolfingtons pursuant to the automatic stay of the United States Bankruptcy Code (the Code ) on the bases of (1) the filing of a bankruptcy 3 Appellate Case Page 9 Date Filed 10/22/2015 Entry ID

10 proceeding involving bankrupt entities MCA and MCA of Wisconsin, Inc. and (2) a finding of an identity of interests between the Wolfingtons and MCA and MCA of Wisconsin, Inc. See A.1, Dkt At the time MCA filed for bankruptcy, MCA and the Wolfingtons were both represented by Duane Morris LLP and Robert B. Patterson, Jr. ( Counsel ). B. Counsel Moves to Withdraw with Client Consent and for Good Cause Almost one year after MCA filed for bankruptcy, Counsel met and conferred with the Wolfingtons and obtained their consent to the Motion to Withdraw. At that time, Duane Morris LLP ( Duane Morris ) was owed $1.5 million by MCA, and the Wolfingtons indicated that they could not individually afford to pay Counsel for future services. 1 Continued representation of the Wolfingtons would result in an unreasonable and additional financial burden upon Duane Morris, even beyond the $1.5 million already owed. Rule 1.16(b)(6)-(7). The Wolfingtons inability to pay Counsel for legal services confirmed that they failed substantially to fulfill an obligation to their lawyers. Rule 1.16(b)(5). 1 Minnesota Rule of Professional Conduct 1.16(b) provides that counsel may withdraw from representing a client if (i) withdrawal can be accomplished without material adverse effect on the interests of the client, (ii) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer s services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled, (iii) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client, or (iv) other good cause for withdrawal exists. Rule 1.16(a)(1) & (b)(1), (5)-(7). 4 Appellate Case Page 10 Date Filed 10/22/2015 Entry ID

11 In addition, the Trustee was actively considering asserting claims against Christopher Wolfington and other former senior managers of MCA in MCA s bankruptcy. The Trustee of MCA is empowered to seek recovery against Christopher Wolfington and other former senior MCA managers on behalf of MCA s creditors. See 11 U.S.C. 541(a)(1); A.12, Dkt. 344 at 5. Counsel filed the Motion to Withdraw, A.9, Dkt. 343, 2 and memorandum in support, A.11, Dkt. 344, on February 25, Id. At the time Counsel moved to withdraw, the Trustee was potentially adverse to the Wolfingtons, while Duane Morris, one of the largest creditors of MCA, remained counsel of record to the Wolfingtons in this case. Id. By the time oral argument was heard by the Magistrate, the Trustee had in fact filed suit against Christopher Wolfington and certain other former senior managers of MCA. This placed Duane Morris in the position of representing the Wolfingtons in this matter while at the same time potentially benefitting from any recovery the Trustee obtained from Mr. Wolfington and others on behalf of MCA s creditors. Good cause was and is present on account of the present and future financial burden, as well as the posture of the Trustee suing Counsel s client for the benefit of Counsel and all other creditors. 2 By Rule, a motion was necessary for Counsel to withdraw without substitution. Withdrawal without substitution may be granted only by a motion made before the Court, for good cause shown. D. Minn. L.R. 83.7(c). 5 Appellate Case Page 11 Date Filed 10/22/2015 Entry ID

12 C. The Commission Offers No Cases or Authority to Challenge the Good Cause to Withdraw. Counsel moved to withdraw with the consent of their clients on February 25, 2015, and under the Rules any opposition to the Motion to Withdraw was due seven days later. L.R. 7.1(b)(2). That deadline passed without any action by the Commission. See A.145, Dkt (Commission did not expect to challenge the Withdrawal Motion ). The Commission subsequently, on March 23, 2015, identified one , cited in a complaint in a separate case filed by the Trustee of MCA, that the Commission contended should have been produced earlier in this case. The Commission s sole issue identified in correspondence before the April 2, 2015 hearing on the Motion to Withdraw was the production of one We d like to be able to consent to Duane Morris withdrawal and eliminate the need for the hearing next Friday, but we re reluctant to do so with this issue [regarding the one ] unresolved. See A.45, Dkt (March 26, from Comm n counsel). The Commission thereafter filed an untimely opposition that attempted to raise discovery issues which either had been resolved or stayed more than one year prior. At the motion hearing, the Magistrate refused to consider any discovery issues. A.86, A.98, Apr. 2, 2015 Tr. at 20, 32 ( I m not resolving any discovery 6 Appellate Case Page 12 Date Filed 10/22/2015 Entry ID

13 dispute. ). And the Commission acknowledged that questions about documents are ultimately for the Wolfingtons, not Counsel. Id. at 24. Moreover, the Commission cited no cases applying the good cause standard. A.100, Dkt. 347 at 5-6. Rather, its opposition merely attempted to re-litigate discovery issues in the case, which attempt the Magistrate rejected. D. The Magistrate Finds Jurisdiction Lacking. At oral argument on April 2, 2015, the Magistrate raised the issue of jurisdiction sua sponte. Counsel explained that it did not believe there was any question as to the Court s jurisdiction, and offered several grounds for finding jurisdiction. The Commission offered no rebuttal. At the close of oral argument, the Magistrate invited both sides to submit supplemental letter briefs on this jurisdictional question by April 16, On April 16, 2015, Counsel submitted its supplemental brief. A.106, Dkt Counsel demonstrated that (1) the stay does not apply to another party s counsel (or any counsel) in stayed proceedings to which the debtor is a party, (2) the stay does not bar the Motion because the debtor has no legally cognizable property interest in another party s counsel of record, and (3) the Magistrate has the inherent authority to hear the Motion to Withdraw. Id. Counsel s research uncovered no case suggesting that counsel in a civil suit could be compelled to remain tethered to clients for the duration of the automatic stay. 7 Appellate Case Page 13 Date Filed 10/22/2015 Entry ID

14 The Commission did not submit a supplemental brief on the jurisdictional issue, despite the invitation of the Court. On April 30, 2015, the Magistrate denied the Motion to Withdraw solely on the ground that it lacked jurisdiction to hear Counsel s Motion. A.118, Dkt Focusing principally on the judicial act purportedly sought by the Motion to Withdraw, the Magistrate found that the Court lacked jurisdiction and could not act on the Motion to Withdraw. In its Order, the Magistrate did not closely examine the text of the Bankruptcy Code, instead focusing on cases that did not involve attorney withdrawals. In its summary of Counsel s good cause argument, the Magistrate did not mention a key basis for Counsel s request the fact that the Trustee has brought an action against Counsel s client, Christopher Wolfington, for the ultimate benefit of MCA s creditors (of which Duane Morris is the third largest). A.67, A.95, Apr. 2, 2015 Tr. at 29 (Counsel As I noted in paragraph 5 of our motion, there was a concern that with the trustee s power to sue our individuals, there s a risk that we might be seen as wearing two hats. And indeed, as a result of this most recent filing against Chris Wolfington, that s precisely what may happen. All the more reason, we submit, to excuse Duane Morris. ); A.12, Dkt. 344 at 5. 8 Appellate Case Page 14 Date Filed 10/22/2015 Entry ID

15 E. The District Court Does Not Resolve the Jurisdictional Question and Finds Good Cause to Withdraw To Be Lacking. After the Magistrate concluded that it lacked jurisdiction to consider the Motion to Withdraw, Counsel timely filed on May 14, 2015 an Objection that addressed the Court s jurisdiction and the good cause to withdraw. A.125, Dkt Again, the time to respond expired without any response from the Commission. The District Court contacted the Commission after the time for the Commission to respond had expired and requested that the Commission file an opposition. A.142, Dkt According to the Commission s counsel s declaration, [o]n June 10, 2015, a clerk from the [District] Court contacted me and noted that the Commission had not filed a response to the Objection within the timeframe permitted by the Local Rules. The clerk requested that the Commission respond to the Objection by June 19, Id. at 6. On June 19, 2015, more than five weeks after Counsel s Objection was filed and served, and more than three weeks after any opposition was due as required under the Rules, the Commission filed an opposition. A.143, Dkt The District Court then granted the Commission leave to file the late opposition, but denied Counsel any opportunity to reply. A.157, Dkt The Commission s belated filing again did not challenge the Court s jurisdiction to hear the Motion to Withdraw. Notwithstanding the Court s 9 Appellate Case Page 15 Date Filed 10/22/2015 Entry ID

16 invitation, the Commission informed the Court it could not reach a position on the Magistrate s central holding that jurisdiction was absent. A.143. The Commission then used its belated opposition to renew discovery objections that had been either resolved or stayed for more than one year. These attacks were groundless, and did nothing to question Counsel s good cause to withdraw from representing the Wolfingtons. The District Court did not cite in its Order any of the cases the Commission belatedly offered. Not a single sentence in the Commission s response addressed the core issue of Duane Morris present dual status as creditor of MCA and counsel to the Wolfingtons. On June 26, 2015, Judge Kyle overruled Counsel s Objection and affirmed the Magistrate s ruling in a two-page Order. A.158, Dkt. 367 at 2. In doing so, the District Court sidestepped both the jurisdictional issue and the core problem of requiring Counsel to remain positioned between the Trustee and the Wolfingtons. Id. ( Counsel object, arguing Judge Brisbois clearly erred in determining he lacked jurisdiction to permit withdrawal. Ultimately, the Court need not resolve the issue. ). The District Court indicated that if the Magistrate was in error, the District Court would nonetheless affirm its order because a discovery question remained open and because Duane Morris was owed roughly $20,000 from the Wolfingtons individually. Id. 10 Appellate Case Page 16 Date Filed 10/22/2015 Entry ID

17 Discovery issues, however, had already been addressed by the Magistrate. The Magistrate affirmatively rejected the attempt by the Commission to interject discovery into the good cause analysis. And counsel for the Commission explicitly recognized that discovery responsibilities are ultimately that of the client, not for outside counsel. A.67, Apr. 2, 2015 Tr. at 24 (THE COURT [U]ltimately isn t the production the responsibility of the Defendants, the Wolfingtons? MR. FARRELL I think ultimately that s true.... ). Likewise, while the Court focused on $20,000 owed to Duane Morris, it failed to address the $1.5 million already owed by MCA to Duane Morris (Duane Morris being MCA s third largest creditor), and the Wolfingtons consent. Most importantly, the Court (like the Commission) failed to address the core issue of Duane Morris being positioned as counsel for individuals whom the MCA Trustee is suing to ultimately benefit Duane Morris. 3 This appeal followed. 4 3 Counsel s Notice of Appeal was timely filed on July 24, On July 30, 2015, the Eighth Circuit Court of Appeals issued an Order directing the parties to show cause why the appeal should not be stayed pursuant to the automatic stay provisions of the Code. On August 13, 2015, Counsel submitted a response brief that fully briefed the jurisdictional issue and explained why jurisdiction was present. The Commission filed a brief that did not defend the jurisdictional holdings below, and took no position on the jurisdiction of the Eighth Circuit to hear this appeal. 4 Months after this appeal was filed, Christopher Wolfington filed for personal bankruptcy on September 16, See A.18, Dkt Appellate Case Page 17 Date Filed 10/22/2015 Entry ID

18 IV. SUMMARY OF THE ARGUMENT Counsel s Motion to Withdraw does not run afoul of the bankruptcy stay, and is founded on abundant good cause. The outcome reached by the District Court tethering Counsel to clients who have consented to Counsel s withdrawal ad infinitum, and perhaps for years is neither permitted nor conceived of by any precedent in this Circuit. Requiring that Counsel continue to represent former officers of MCA while the Trustee of MCA s bankruptcy estate (of which Duane Morris is the third-largest creditor) brings claims against one or both of those officers, is not appropriate under the good cause test, is not required by the Bankruptcy Code, and cannot be premised on a discovery question or a narrow reading of the burden imposed on Counsel. The District Court should be reversed. Counsel submitted the Motion to Withdraw with the consent of their clients. Granting the Motion to Withdraw does not violate the bankruptcy stay because the choice of counsel does not affect MCA s estate or the bankruptcy stay. Prior to the Magistrate s order, it has never been suggested by any jurisdiction of which Counsel is aware that the Bankruptcy Code prevents counsel from moving to withdraw from representing those parties in a separate, non-bankruptcy proceeding. Indeed, numerous courts, including the District of Minnesota, have permitted counsel to withdraw notwithstanding an automatic stay. See VII.A, infra. Moreover, nothing in the Code (or in any of the cases cited by the 12 Appellate Case Page 18 Date Filed 10/22/2015 Entry ID

19 Magistrate or the District Court in either of their Orders, see A.118, A.158, Dkts. 355 & 367) precludes withdrawal especially one supported by client consent. Even bankruptcy counsel to a bankrupt defendant may move to withdraw without any fear of violating the stay. Although tacitly recognizing that the stay does not foreclose the Motion to Withdraw, the District Court upheld the Magistrate s ruling on the alternative grounds that a discovery issue was outstanding and that Duane Morris was owed only $20,000 from the Wolfingtons. This was error. The future financial burdens that would be imposed upon Counsel would be significant, even apart from the fact that Duane Morris is now the third-largest creditor (with claims totaling $1.5 million) in MCA s bankruptcy. In addition, the District Court did not address the core issue that Duane Morris is now placed in a position between MCA and the Wolfingtons that requires its withdrawal. Because jurisdiction over the Motion to Withdraw and Counsel s good cause to withdraw are clear, this Court should reverse the order of the District Court. V. STANDARD OF REVIEW The Eighth Circuit reviews questions of law de novo and findings of fact for clear error. Lincoln Provision, Inc. v. Puretz, 775 F.3d 1011, 1014 (8th Cir. 2015). The Magistrate s and District Court s determination that they lacked jurisdiction were determinations of questions of law. In re Gaines, 932 F.2d at 731 ( Every 13 Appellate Case Page 19 Date Filed 10/22/2015 Entry ID

20 federal court has the inherent power to determine as a preliminary matter its own subject matter jurisdiction. ); Hunter v. Underwood, 362 F.3d 468, 477 (8th Cir. 2004) ( The case will be dismissed if subject matter jurisdiction is lacking, and the appellate court s review is limited to determining whether the district court s application of the law is correct. ). 5 VI. ARGUMENT A. The Automatic Stay Does Not Bar the Motion to Withdraw. The result conceived by the Magistrate and tacitly accepted by the District Court has no foundation in the Bankruptcy Code or in cases applying it. Nothing in the Code prohibits another party s counsel, let alone any other counsel of record in a proceeding involving the debtor, from withdrawing. See 11 U.S.C. 362 et seq. Counsel in non-bankruptcy proceedings are not precluded by the Code from withdrawing as counsel for the debtor in those proceedings without substitution after the automatic stay has gone into effect, nor does the automatic stay preclude withdrawal by counsel for any non-debtor to such proceedings. The automatic stay instead bars actions directly against the debtor or which otherwise implicate property interests of the debtor. See 11 U.S.C. 362(a)(1)-(8). Counsel s 5 This Court considers de novo its own jurisdiction. Picco, 900 F.2d at 850 ( The automatic stay of the bankruptcy court does not divest all other courts of jurisdiction to hear every claim that is in any way related to the bankruptcy proceeding. ). 14 Appellate Case Page 20 Date Filed 10/22/2015 Entry ID

21 withdrawal does not implicate MCA or any of its property interests, nor is it an action directly against the debtor. The applicable Code provision directs that 6 Except as provided in subsection (b) of this section, a petition [or application] filed under [various sections of the Code], operates as a stay, applicable to all entities, of (1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title. 11 U.S.C. 362(a)(1) (emphasis added). Numerous district courts, including the District of Minnesota, have approved attorney withdrawals notwithstanding an automatic stay. See, e.g., Starmac, 2014 U.S. Dist. LEXIS , at *1 ( Plaintiffs counsel moved to withdraw [from representing bankrupt party Nelson and non-bankrupt plaintiff, Starmac, Inc. in the otherwise-stayed civil litigation] without substitution. See D. Minn. LR 83.7(c). In July 2014, the Honorable Franklin L. Noel, United States Magistrate Judge, granted the motion to withdraw without substitution.... ). Various other courts have followed the same course. E.g., Barton v. Dist. of Columbia, 209 F.R.D. 274 (D.D.C. 2002); Stotler and Co. v. Sonnenschein, No There are seven (7) other subsections of 362(a); subsection (1) is the most relevant subsection for the above analysis. 15 Appellate Case Page 21 Date Filed 10/22/2015 Entry ID

22 C 3892, 1989 WL 6376 (N.D. Ill. Jan. 20, 1989); EEOC v. Lehi Roller Mills Co., Inc., No CV-00591, 2013 WL (D. Utah Oct. 28, 2013); Title Res. Guar. Co. v. Am. Title Servs. Co., No. 14-cv-00366, 2014 WL (D. Col. May 30, 2014); Kep-Co, Inc. v. Park Nat l Bank, N.A., No. 406CV747 CDP, 2008 WL (E.D. Mo. Apr. 3, 2008); Portscher v. Ohio Indus., Inc., No. 00-CV- 0675E(Sr), 2007 WL (W.D.N.Y. Mar. 20, 2007); Banyan Licensing, Inc. v. Orthosupport Int l, Inc., No. 300CV7038, 2002 WL (N.D. Ohio Aug. 15, 2002). The Magistrate erred in concluding that jurisdiction was lacking. B. The Magistrate s Ruling Misconstrued the Scope of the Bankruptcy Stay. The Magistrate s ruling (which formed the basis for the District Court s jurisdictional holding) was based on a flawed understanding of the scope of the bankruptcy stay. The Magistrate cited a handful of cases in denying the Motion to Withdraw, but none of them involved attorney withdrawal. See A , Dkt. 355 at 4-6. The Magistrate erred in focusing on the amount of affirmative discretion[] it might have to exercise in reviewing a motion to withdraw, rather than focusing on whether Counsel s Motion was precluded by the stay under the Bankruptcy Code. Id. at 7 (deeming jurisdiction lacking because the [m]otion requires the Court to take affirmative discretionary action ). The fact that the withdrawal must be 16 Appellate Case Page 22 Date Filed 10/22/2015 Entry ID

23 accomplished by motion under Rule 83.7(c) did not mean that it violates the automatic stay. Moreover, the Magistrate s misplaced focus on whether a judicial act is involved in an attorney withdrawal was at the expense of the other relevant language in the cases cited by the Magistrate. That language makes clear that the stay applies only to claims against the debtor. Thus, the Magistrate cited In re Hoskins, 266 B.R. 872 (Bankr. W.D. Mo. 2001), and quoted it as holding that [o]nce the stay is in effect, the parties cannot undertake any judicial action material to the claim against the debtor without relief from the automatic stay. Id. at 876 (emphasis added by Magistrate). But the key term in that sentence is what follows the words judicial action material to the claim against the debtor. Nothing about a consented-to motion to withdraw by counsel is material to the claims against MCA (or Christopher Wolfington). Moreover, Hoskins is distinguishable from this case because it did not involve an attorney withdrawal; it involved an attempt to remove a pending state court lawsuit to the bankruptcy court. Id. at 877. The misplaced emphasis was also evident in the citation to Kommanditselskab Supertrans v. O.C.C. Shipping, Inc., 79 B.R. 534, 540 (S.D.N.Y. 1987), and the Magistrate s quotation that, if an automatic stay is triggered, the district court s power to adjudicate the case is suspended pending 17 Appellate Case Page 23 Date Filed 10/22/2015 Entry ID

24 the outcome of the bankruptcy proceedings. Approving a withdrawal motion does not adjudicate the case. 7 Indeed, the period during which an action is stayed is the ideal time for Counsel to withdraw because it affords the Wolfingtons sufficient time and opportunity to retain other counsel who can review the claims against the Wolfingtons without the threat of imminent deadlines. For all of these reasons, the Magistrate s ruling (which formed the basis for the District Court s jurisdictional holding) was incorrect as a matter of law. C. The District Court s Ruling Failed to Apply the Correct Legal Criteria in Considering Counsel s Good Cause. The District Court erred in affirming the Magistrate s ruling over Counsel s objection. The District Court sidestepped both the jurisdictional issue and the core problem of requiring Counsel to remain positioned between the Trustee and the Wolfingtons. Id. ( Counsel object, arguing Judge Brisbois clearly erred in determining he lacked jurisdiction to permit withdrawal. Ultimately, the Court need not resolve the issue. ). The District Court s ruling should be reversed. The District Court added no new reasoning to support the Magistrate s jurisdictional holding (indeed, neither the District Court nor the Commission has ever offered independent grounds of their own to suggest that jurisdiction was 7 As explained in Counsel s supplemental brief on jurisdiction, A.112, Dkt. 354 at 4 & n.1, what Counsel seeks is even less than a ministerial act. If a court can take a ministerial act with respect to the corporate debtor itself, it can hear a withdrawal motion by counsel for the consenting individual clients. 18 Appellate Case Page 24 Date Filed 10/22/2015 Entry ID

25 lacking). To the extent the District Court reached a holding in the alternative that jurisdiction was lacking, the District Court was incorrect for the same reason that the Magistrate was incorrect. The District Court also erred in its approach to the good cause issue. The District Court named two putative grounds for affirming the Magistrate s order. Those grounds were (1) the amount ($20,000) Duane Morris is owed directly by the Wolfingtons, and (2) a discovery issue the Commission had previously raised. A.159, Dkt. 367 at 2. Neither ground cited by the District Court obviates the good cause established by Counsel under this Circuit s precedents. First, client consent is the touchstone of good cause to withdraw, and the Wolfingtons have consented. The District Court of Minnesota has considered a client s consent to a motion to withdraw, whether express or implied, to constitute good cause. See, e.g., Luiken, 2009 WL , at *4; Miracle-Ear, Inc., 2011 WL , at *1; Gold s Gym, 2009 WL , **3-4 ( [W]e find that good cause exists to support the Law Firm s withdrawal from its representation of the Defendant, given the Defendant s termination of the Law Firm s services.... we find no authority which requires the Law Firm to donate its time and efforts to the Defendant. ). The Wolfingtons consent to the withdrawal and no case precludes Counsel s Motion to Withdraw based on this criterion. 19 Appellate Case Page 25 Date Filed 10/22/2015 Entry ID

26 Second, Counsel has shown good cause due to the untenable position in which it has been placed. Duane Morris is a potential beneficiary of the Trustee s actions against Christopher Wolfington. That posture alone is good cause to withdraw. See Minnesota Rules of Professional Conduct 1.7(a), & 1.16(a)(1) & (b)(6)-(7); Universal-Polygram Int l Publ g, Inc. v. Prairie Broad. Co., Civ. No , 2009 U.S. Dist. LEXIS (D. Minn. June 17, 2009). Third, the amount owed (even excluding the amount MCA owes Duane Morris) is fully adequate grounds to withdraw, as the District of Minnesota federal court has found good cause for withdrawal where a client was non-responsive and owed $6,000. See Stillpass, 2009 WL , at *3 (affirming magistrate s granting of withdrawal). The Wolfingtons are unable to pay the $20,000 they owe, have consented to the withdrawal, and acknowledge that their former business (MCA, the primary defendant in this case) owes Duane Morris $1.5 million. Good cause also exists due to the future financial burdens that would be imposed upon Counsel. Upon reactivation of this case, significant fees and costs would be incurred, and the Wolfingtons are unable to pay any portion of Counsel s legal fees and costs going forward. Fourth, precedent from this Circuit is clear that a discovery issue may not be used to tether counsel to a client. Good cause is not eliminated or reduced by an opposing party s desire to interface with counsel to seek discovery, and the District 20 Appellate Case Page 26 Date Filed 10/22/2015 Entry ID

27 of Minnesota federal court rejected precisely that argument in Luiken, 2009 WL , at **2-4. In that case, Defendant contested Plaintiffs counsel s motion to withdraw on the basis that it should be deferred until the court decided a pending motion to compel discovery. See id. at *4 ( Defendant contends that it would serve the administration of the present case to defer ruling upon the motions to withdraw until after this Court rules upon the Defendants Motion to Compel. ). The court rejected Defendants argument If Plaintiffs counsels have met their burden to withdraw, this Court discerns no utility in delaying its Order. Id. The same result should have been reached here. Fifth, matters outside the good cause test cannot be used to deny Counsel the ability to withdraw with client consent, as the Commission would have it. After initially citing no case in opposing Counsel s Motion to Withdraw, and then filing no response whatsoever to Counsel s Objection to the Magistrate s Order, the Commission filed at the invitation of the District Court a brief that cites a smattering of off-point cases. See A.143, Dkt None of these cases poses an obstacle to Counsel s Motion to Withdraw, as they either fail to address the law and Rules germane to the issues in this appeal or are cited for general points of law that fail to address or contradict Counsel s legal arguments. For example, the Commission cited Peter Kiewit Sons, Inc. v. Wall St. Equity Grp., Inc., 2012 U.S. Dist. LEXIS , at **3-4 (D. Neb. Nov. 5, 2012), 21 Appellate Case Page 27 Date Filed 10/22/2015 Entry ID

28 but admitted that it does not apply the District of Minnesota Local Rules. A.150, Dkt. 359 at 8. The Commission cited R & R Sails Inc. v. Ins. Co. of Pa., 251 F.R.D. 520, (S.D. Cal. 2008), A.L.A. v. Avilla R-XIII Sch. Dist., 2012 U.S. Dist. LEXIS 45241, at **3-8 (W.D. Mo. Mar. 31, 2012), Ajaxo Inc. v. Bank of Am. Tech. & Operations, Inc., 2008 WL , at *3 (E.D. Cal. Dec. 2, 2008), and Chrysler Corp. v. Carey, 186 F.3d 1016, 1022 (8th Cir. 1999), in an attempt to argue for sanctions, Dkt. 359 at 12; however, the Magistrate expressly denied the Commission s attempts to turn the withdrawal hearing into a discovery hearing, see A.98, Apr. 2, 2015 Tr. at 32 ( I m not resolving any discovery dispute. ). Likewise, the Commission cited Rophaiel v. Alken Murray Corp., 1996 U.S. Dist. LEXIS 7796, at **3-5 (S.D.N.Y. June 6, 1996), in an attempt to contradict Counsel s financial burden rationale for good cause to grant withdrawal, A.155, Dkt. 359 at 13, but that case neither applies Minnesota law nor does it involve withdrawal in the context of an automatic stay, an individual s separate bankruptcy filing, and the actions of a trustee. Unsurprisingly, the District Court did not cite in its Order any of the cases the Commission belatedly offered. Counsel filed their Motion to Withdraw in February 2015 with abundant good cause and with their clients consent. The District Court erred in affirming the denial of that Motion. In overruling Counsel s Objection to the Magistrate s Order, the District Court erred in its application of federal law governing stays of 22 Appellate Case Page 28 Date Filed 10/22/2015 Entry ID

29 non-parties. Moreover, it misapplied the law of good cause by considering matters both unrelated to good cause and precluded by Eighth Circuit precedent in affirming the denial of the Motion to Withdraw. The Eighth Circuit should act to reverse these errors. VII. CONCLUSION For the reasons set forth above, Counsel respectfully requests that this Court reverse the order below. Respectfully submitted, PATTERSON LAW OFFICE, P.A. Robert B. Patterson, Jr., # West 78th Street, Suite 400 Eden Prairie, MN Tel October 22, 2015 DUANE MORRIS LLP s/luke P. McLoughlin James L. Beausoleil, Jr., Esquire Luke P. McLoughlin, Esquire 30 S. 17 th Street Philadelphia, PA Tel Counsel for Christopher Wolfington and Mark Wolfington 23 Appellate Case Page 29 Date Filed 10/22/2015 Entry ID

30 No IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT CORPORATE COMMISSION OF THE MILLE LACS BAND OF OJIBWE INDIANS, v. Plaintiff-Appellee, Defendants-Appellants. CHRISTOPHER WOLFINGTON, and MARK WOLFINGTON, CERTIFICATE OF COMPLIANCE I hereby certify that the foregoing response complies with the type-volume limitations of Fed. R. App. P. 32(a)(7)(B)(i) because, per the word count of the word processing system used in preparing the brief, the brief contains 6,938 words. I further certify that the brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it was prepared in a proportionally spaced typeface using Microsoft Word 2003 in 14-point, Times New Roman font. I further certify that 24 Appellate Case Page 30 Date Filed 10/22/2015 Entry ID

31 this brief has been scanned for viruses with the most recent version of a commercial virus scanning program and according to the program is free of computer viruses. Respectfully submitted, PATTERSON LAW OFFICE, P.A. Robert B. Patterson, Jr., # West 78th Street, Suite 400 Eden Prairie, MN Tel DUANE MORRIS LLP s/luke P. McLoughlin James L. Beausoleil, Jr., Esquire Luke P. McLoughlin, Esquire 30 S. 17 th Street Philadelphia, PA Tel Counsel for Christopher Wolfington and Mark Wolfington October 22, Appellate Case Page 31 Date Filed 10/22/2015 Entry ID