MEMORANDUM OPINION AND ORDER

CHARLES S. HAIGHT, JR., Senior District Judge

Plaintiffs move for reconsideration of this Court's Memorandum Opinion and Order dated March 31, 2000 and docketed on April 3, 2000, 2000 WL 343891 (S.D.N.Y. 2000), ("the March 31 Opinion" or "the March 31 Order"), which construed § 507(b) of the Bankruptcy Code, 11 U.S.C. § 507(b). Specifically, in the March 31 Opinion I held that where a secured creditor makes a lift stay/adequate protection motion before the bankruptcy court, the court denies any relief, and the creditor's collateral subsequently proves inadequate to cover its claim, § 507(b) does not confer superpriority status upon that claim. In the alternative, Plaintiffs move for an Order certifying the March 31 Opinion for interlocutory appeal under 28 U.S.C. § 1292(b). Defendants oppose the motion in its entirety.

I assume the reader's familiarity with this Court's March 31 Opinion and all prior opinions in this case, particularly that of the Court of Appeals, reported at 173 F.3d 454 (2d Cir. 1999), and Judge Mukasey's opinion on summary judgment, reported at 1997 WL 528283 (S.D.N.Y. August 27, 1997). For the reasons that follow, I adhere to the holding expressed in the March 31 Opinion, and certify the accompanying March 31 Order for interlocutory appeal.

I. Motion for Reconsideration

Civil Rule 6.3 of this Court requires that a motion for reconsideration be accompanied by "a memorandum setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked."

Plaintiffs' letter brief in support of their motion for reconsideration is well organized and lucidly written. It shares those characteristics with all the briefs of counsel for the parties that have been submitted on this taxing question. What Plaintiffs' brief does not do is identify controlling decisions that this Court overlooked in its March 31 Opinion. Plaintiffs can scarcely be faulted for that omission, since it is common ground that no prior court decision (controlling or otherwise) squarely addresses the § 507(b) question presented. Nor does Plaintiffs' present brief identify factual matters requiring a different result that the Court overlooked. The present motion reasserts arguments made in prior briefs which I found unpersuasive, whether or not the March 31 Opinion discussed them all with particularity. Local Rule 6.3 "is to be narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been fully considered by the court." Wishner v. Continental Airlines, 1997 WL 615401 (S.D.N Y 1997) at *1.

Accordingly, Plaintiffs' motion for reconsideration is denied.

II. Certification for Interlocutory Appeal

28 U.S.C. § 1292(b) provides in part:

When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order.

I conclude without difficulty that this Court's March 31 Order meets those criteria. Indeed, this is a paradigmatic case for application of the judicial efficiency-enhancing purpose that underlies § 1292(b).

That truth is revealed by the history of the litigation. Plaintiffs' principal — or, Defendants say, their only claim — is that the Defendant Trustees delayed imprudently before making a lift stay/adequate protection motion, resulting in economic loss by the Plaintiff Bondholders. Central to that claim is the question of whether the bankruptcy court's denial of any relief, followed by erosion of the collateral's value, would have conferred superpriority status upon the Plaintiffs' claims (as they contend) or not (as Defendants contend).

On appeal following the first trial and its judgment in favor of Defendants, the Court of Appeals held that Judge Mukasey's jury instruction erred "because it required the jury to decide the legal question whether the Motion, if promptly filed and denied, would have resulted in superpriority status for the Bondholders' claims." 173 F.3d at 466. The Court of Appeals reasoned that "[b]y posing the superpriority issue as a question to the jury, the court improperly invited the jury to decide itself an issue of law that turns on the proper construction of § 507(b)." Id. at 468. The court concluded: "On remand, the district court should therefore decide the issue and determine what type of charge on superpriority and causation is appropriate in light of any factual disputes remaining in the new trial." Id. (footnote omitted).

In a footnote discussing the law of the case doctrine, the Second Circuit recognized the practical inevitability of its own consideration of the superpriority issue. See 173 F.3d at 467 n. 12: "Moreover, even if under the law of the case doctrine and the circumstances of this case, the district court was required to give an instruction that conformed to its prior ruling, we would still need to review the superpriority instruction de novo." While the Court of Appeals refrained from reaching the issue following the first trial because "it has not been adequately briefed and argued before this Court," id. at 468, it observed that "the parties can address the merits of the district court's legal ruling in post-verdict motions to the district court and in a second appeal to this Court, if one is filed." Id. at 469. The question within the § 1292(b) context is whether the Court of Appeals' review of the superpriority issue at this stage of the litigation furthers the purposes of the statute.

There is, of course, no doubt that the § 507(b) issue presents a question of law "as to which there is a substantial ground for difference of opinion," one of the three § 1292(b) criteria. As I noted in the March 31 Opinion, the First Circuit has characterized § 507(b) and its related sections as creating "a complex maze of ambiguous statutory provisions and opaque, inconsistent case law." 2000 WL 343891 at *3 (citing and quotingBaybank-Middlesex v. Ralar Distributors, Inc, 69 F.3d 1200, 1204 (1st Cir. 1995)). Judge Mukasey, a judge of great ability, said of the precise issue presented that there were few subjects in his judicial experience "in which I have as little confidence as I have in either of the expressions about superpriority at this point." Id. at *11 n. 4 (quoting the trial transcript at 950). A district court's lack of confidence in its conclusion may arise from the absence of any binding authority on point, which is the situation here.

§ 1292(b) also requires that the certified question of law be "controlling." "Controlling" does not mean "dispositive." As the Ninth Circuit has said, "[c]ourts have refused to interpret the phrase so narrowly as to require that reversal of the district court's order terminate the litigation. . . . Rather, all that must be shown in order for a question to be "controlling' is that resolution of the issue on appeal could materially affect the outcome of litigation in the district court." In re Cement Antiturst Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982) (citation omitted; emphasis added), aff'd., 459 U.S. 1190 (1983). The Second Circuit has recently accepted § 1292(b) certifications of questions of law having that more limited effect. See In re Air Crash off Long Island, New York, on July 17, 1996, 2000 WL 329022 (2nd Cir., March 29, 2000) (construing applicability of the Death on the High Seas Act and its limitations on recoverable damages to pending claims arising out of crash of TWA Flight 800 eight nautical miles south of the shore of Long Island, N.Y.) (affirming the district court); In re U.S. Lines, Inc., 197 F.3d 631 (2d Cir. 1999) (holding that claims for declaration of insurance coverage were "core" claims in bankruptcy, and bankruptcy court's refusal to refer proceeding to arbitration was not an abuse of discretion) (reversing the district court).

Just as in Air Crash and U.S. Lines, the Court of Appeals' resolution of the certified question of law construing § 507(b) of the Bankruptcy Code would "materially affect" the outcome of the litigation in the district court. If in the Court of Appeals' view I correctly concluded that the stated circumstances would not confer superpriority status upon the Plaintiffs' claims, then their prospects on the retrial of proving (a) imprudence on the part of the Defendant Trustees that is (b) causally related to the Plaintiffs' losses are both rendered materially more difficult.

On the other hand, if the Court of Appeals, reversing my opinion, holds that an earlier motion by the Defendants would have guaranteed superpriority status for the Plaintiffs even if denied, then Plaintiffs' prospects on the imprudence element are materially improved. Moreover, a finding in their favor on causation becomes virtually assured, given the concessions of counsel for the Defendants at the in limine hearing on April 14, 2000. See Remarks of counsel for First Fidelity Bank: "As the circuit court said, you only need a dollar. We acknowledge that there would have been some money in the estate available for a § 507(b) claim. . . . There is no question there would have been some money in the estate. . . . As I just stated, had he gotten superpriority, there would have been some money in the estate, assuming under § 507(b) he would have been entitled to it, to pay that claim." Tr. 20-21. See also Remarks of counsel for United Jersey Bank and National Westminster Bank, N.J.: "You can instruct the jury, as far as we are concerned, that there would have been, if a superpriority had been granted, there would have been some money available to satisfy the superpriority. How much is not before this jury. But there would have been some money. I think that disposes of the whole issue of the fact of damage." Tr. 21.

These circumstances also make it clear that an appellate decision on the superpriority question at this time will "materially advance the ultimate termination of the litigation," the third § 1292(b) criterion. There is a great deal of money at stake in this case, and (absent settlement, of which there is no present indication) one may reasonably anticipate the exhaustion of all available appeals. The liability phase of the case has already been tried once. It must be tried a second time because the trial judge did not decide the superpriority question. I have now decided that question. If the parties are subjected to a full plenary trial and on appeal the Second Circuit concludes that I decided that question incorrectly, then there will have to be a third trial. The superpriority question can be presented to the Court of Appeals with a minimum of effort and expense, on briefs that are for all practical purposes already written. It is a single, discrete question which will not require the Court of Appeals to master a complicated evidentiary record.

All these circumstances make it apparent, at least to this writer, that certification of this Court's March 31 Order for interlocutory appeal is not only appropriate under § 1292(b), it is highly desirable.

The Defendants oppose the certification. I have considered their arguments and am not persuaded by them. Only two require comment.

Counsel for United Jersey Bank and National Westminster Bank contend in their letter brief dated April 17, 2000 at 1 that "Judge Mukasey expressly considered and rejected a certification of this very same issue." Judge Mukasey's quoted comments, upon which these Defendants rely, were uttered on March 4, 1998, before the first trial and perforce before the appeal. Judge Mukasey had not rendered a formal opinion on the superpriority question, and, as noted in my March 31 Opinion at *11 n. 4, changed his mind on the question throughout the first trial process. It is the Second Circuit's subsequent opinion, and the procedural posture of the litigation in the wake of that opinion, that bring my formal March 31 Opinion within the ambit of § 1292(b).

Counsel for these same defendants argue in their April 18, 2000 letter brief at 1 that Plaintiffs are precluded from making a § 1292(b) certification motion by words their counsel included in a brief dated April 17, 2000 and which Defendants' counsel quote in part. The quoted words, preceded by an ellipsis, are taken from Plaintiffs' brief in support of their certification motion. The full sentence in question reads: "Although the March 31, 2000 Order is dispositive with respect to plaintiffs' theory that a superpriority claim would be available regardless of the outcome of a lift stay/adequate protection motion, the ruling is not dispositive of the action." Defendants' counsel quoted only the emphasized words.

Plaintiffs' counsel acknowledge, as they must, that the March 31 Order, if not overturned, is fatal to a contention that lies at the heart of their case. It is precisely for that reason that they seek a § 1292(b) certification, and the cases cited supra show that a question of law need not be dispositive to be "controlling" for § 1292(b) purposes. To be sure, as Defendants' brief observes in its continuing quotation, Plaintiffs asserted that they had additional claims, including "a § 507(a)(1) administrative expense claim." But these Defendants' reference to such a claim in an effort to shore up their opposition to certification of this Court's § 507(b) decision has a hollow ring. Counsel for First Fidelity Bank contend that Plaintiffs have no viable § 507(a) claim because the complaint "cannot be read as alleging any independent failure to request a first priority administrative expense claim for collateral deficiency," and that "Plaintiffs should not be permitted to try an issue that was not pled, raised or otherwise addressed prior to trial." Brief at 4. Presumably the other Defendants make the same contention. I do not decide that issue now. It is sufficient to say that, in the § 1292(b) context, Defendants cannot have it both ways.

For the foregoing reasons, I certify the March 31, 2000 Opinion and Order for interlocutory appeal under 28 U.S.C. § 1292(b).

It is SO ORDERED.

Dated: New York, New York April 18, 2000.