Nintendo (NOA) VS. Patient

This is the only Law Suite  That  NintendoBeyond was to get their twitchy gameing fingers on!!! Enjoy!  NintendoCosmos will be getting other Law Suites battles when we can find them.

            UNITED STATES COURT OF APPEALS
                            Office of the Clerk
                    Byron White United States Courthouse
                             1823 Stout Street
                              Denver, CO 80257


Patrick Fisher                                          Elisabeth Shumaker
Clerk                                                   Chief Deputy Clerk



                     December 12, 1995



TO:  ALL RECIPIENTS OF THE CAPTIONED OPINION

RE:  94-1384, 94-1417, Nintendo v. Patten
     Filed December 4, 1995, by Judge Moore




        Please be advised that pages 4 and 5 of the captioned
decision have been amended.  Attached are substitute pages.




                                     Very truly yours,

                                     Patrick Fisher,
                                     Clerk

                                    
                                     By:
                                    
                                     Barbara Schermerhorn
                                     Deputy Clerk
                                    

Attachments
     Filed 12/04/95

                             PUBLISH

                 UNITED STATES COURT OF APPEALS

                      FOR THE TENTH CIRCUIT

                      ____________________



In re:  ALPEX COMPUTER CORPOR-  )
ATION,                          )
                                )
     Debtor.                    )
------------------------------- )
                                )
NINTENDO COMPANY, LTD.;         )
NINTENDO OF AMERICA, INC.,      )
                                )
     Appellants/Cross-Appellees,)
                                )
v.                              )       Nos. 94-1384, 94-1417
                                )
LESLIE A. PATTEN, Liquidating   )
Trustee of Alpex Computer       )
Corporation,                    )
                                )
     Appellee/Cross-Appellant.  )


                      _____________________

          Appeal from the United States District Court
                  For the District of Colorado
                       D.C. No. 93-N-2457
                      _____________________


Thomas G. Gallatin, Jr. (John J. Kirby, Jr. and John T. Brennan,
Mudge Rose Guthrie Alexander & Ferdon, New York, New York; and
Jack L. Smith and Risa Wolf-Smith, Holland & Hart, Denver,
Colorado, with him on the briefs), Mudge Rose Guthrie Alexander &
Ferdon, New York, New York, for Appellants/Cross-Appellees.

Brent R. Cohen (Thomas H. Young and JoAnn L. Vogt with him on the
briefs), Rothgerber, Appel, Powers & Johnson, Denver, Colorado,
for Appellee/Cross Appellant.

                      ____________________


Before MOORE, Circuit Judge; MCKAY, Senior Circuit Judge; and
BRETT, Chief District Judge.*

                      ____________________

MOORE, Circuit Judge.

                      ____________________


---------------

*    Honorable Thomas R. Brett, Chief Judge for the United States
District Court for the Northern District of Oklahoma, sitting by
designation.

     On our checklist assuring the justiciability of claims, the

question of standing is often dwarfed by the substantive issue we

are urged to resolve.  Nevertheless, this threshold question, St.

Francis Regional Med. Ctr. v. Blue Cross & Blue Shield of Kan.,

Inc., 49 F.3d 1460, 1465 (10th Cir. 1995), requires we ask, as

Alpex Computer Corporation urges, whether Nintendo Company, Ltd.

is the proper party to reopen a confirmed plan of reorganization

under Chapter 11 of the Bankruptcy Code.  Nintendo was neither a

party in the confirmation proceedings nor was it dealt with in the

plan.  In this case, Nintendo nonetheless attempts to press its

interpretation of that plan.  Because its interest in another

lawsuit cannot metamorphose Nintendo into a party in interest

here, we hold Nintendo lacks standing under 11 U.S.C.  350(b) and

dismiss. 

                               

                         I.  Background

     Alpex was a publicly held corporation which invested in and

developed various patents for computer-related technologies.

Among those patents was U.S. Patent No 4,026,555 (the 555 patent),

which Alpex alleged several companies including Nintendo Company

Ltd. and Nintendo of America Inc. infringed.  In 1983, however,

before defending the 555 patent, Alpex filed a voluntary petition

for relief under Chapter 11 of the Bankruptcy Code.  In 1988, the

Liquidating Trustee and the Official Committee of Unsecured

Creditors filed an Amended Joint Plan of Reorganization (the Plan)

and a revised Disclosure Statement.  The bankruptcy court

subsequently confirmed the Plan after an appropriate hearing. 



     Under the Plan, all of Alpex's assets were to be transferred

to the Trustee for distribution to Alpex's creditors and

stockholders according to the claims and interests of the five

classes created.2  It also authorized the Trustee to litigate the

Alpex patent claims, specifically the patent infringement lawsuit

filed in the Southern District of New York against Nintendo.

Indeed, when the Plan was confirmed, the estate's only assets were

potential recoveries in Alpex's 555 patent infringement suits

against Coleco, Parker Brothers, and Nintendo.  None of these

companies had agreed to settle their alleged liabilities at that

time.

     In 1993, however, five years after confirmation of the Plan,

Sega Enterprises purchased a worldwide, nonexclusive license from

the Alpex estate in settlement of a similar patent infringement

claim.  The Trustee informed Nintendo of the settlement.

Calculating the impact of that capital infusion into the estate,

Nintendo filed a motion in the bankruptcy court which had

confirmed the Plan to "Compel Liquidating Trustee to Comply with

Chapter 11 Plan of Reorganization" and "to discontinue, with

prejudice, litigation pending against Nintendo."  In the motion,

Nintendo offered $3.9 million in settlement of the patent

infringement suit based on information in the Disclosure Statement3

that the claims of stockholders totalled approximately

---------------



2    The five classes are:  Class 1, administrative claims; Class
2, priority claims; Class 3, tax claims; Class 4, allowed general
unsecured claims; and Class 5, allowed interest of stockholders. 

3    Prior to confirmation, the plan proponent must file and
circulate a statement fairly describing the plan and its purposes.
11 U.S.C.  1125(b). 

$2.2 million.  Added to Sega's settlement, Nintendo's $3.9 million

offer would then fully satisfy shareholders and meet the Trustee's

obligation "to comply with the Plan," Nintendo argued.  Under this

interpretation, the bankruptcy court should integrate the plain

language of the Plan with that of the Disclosure Statement and

compel the Trustee to place a cap on the recovery of Class 5

shareholders.  Thus, Nintendo requested the bankruptcy court

reopen the Plan for the single purpose of enforcing this

interpretation.  Further, Nintendo argued the Trustee's pursuing

the patent litigation, given the cap on recovery, would either

afford shareholders a windfall they never anticipated when the

Plan was confirmed or necessitate abandonment. 

     The bankruptcy court denied the motion on November 4, 1993,

after a hearing.  It concluded neither the integration of the

Disclosure Statement with the Plan nor the plain meaning of those

provisions Nintendo challenged supported the theory the Plan's

drafters intended to cap shareholder recovery at $2.2 million.

Although the Trustee disputed Nintendo's standing to reopen the

Plan, the bankruptcy court presumed jurisdiction, believing the

issue was conceded once the court allowed Nintendo to appear and

argue the motion. 

     On June 2, 1994, a New York jury found the Alpex 555 patent

valid and Nintendo wilfully infringed the patent.  The jury

awarded Alpex $208.27 million in damages to which the United

States District Court for the Southern District of New York later

added $40 million in prejudgment interest and $4 million in

damages for royalties from December 1, 1992, to May 31, 1994, the

date the patent expired.  Nintendo has appealed the judgment. 



     In July 1994, the United States District Court in Colorado

affirmed the bankruptcy court on the merits while supplying

jurisprudential support for Nintendo's standing to reopen.  Under

the authority of In re Kaiser Steel Corp., 998 F.2d 783, 788 (10th

Cir. 1993), the district court characterized Nintendo as "a debtor

of a debtor" with "sufficient stake in the proceeding to qualify

as a party in interest."  Reasoning that a debtor is "anyone who

may be compelled to pay a claim or demand; anyone liable on a

claim, whether due or to become due," Black's Law Dictionary  364

(5th ed. 1979), the district court theorized Nintendo fits the

definition because it "may be compelled to pay to the debtor

(Alpex) whatever damages are determined with regard to the patent

infringement claim." 

     The Trustee now appeals Nintendo's standing to reopen the

Plan to compel him to cap shareholders' recovery, contending

Nintendo is not a party in interest as circumscribed by Bankruptcy

Rule 5010.  In its cross-appeal, Nintendo asserts the Plan

mandates a cap on shareholder recovery necessitating the Trustee's

abandonment of the Nintendo lawsuit.  Although the question of

standing thwarts the bankruptcy court's jurisdiction and ends the

inquiry, Nintendo's notion of capping shareholder recovery defies

its straightforward language and plays with the underlying

structure of the confirmed Plan.





                          II.  Standing

     Under 11 U.S.C.  350(b), "a case may be reopened in the

court in which such case was closed to administer assets, to

accord relief to the debtor, or for other cause."  Federal Rule of

Bankruptcy Procedure 5010 specifies the parties who may invoke

 350(b).  It states:  "A case may be reopened on motion of the

debtor or other party in interest pursuant to  350(b) of the

Code." 

     While the decision to reopen remains within the broad

discretion of the bankruptcy court, 2 Collier on Bankruptcy

 350.03 (15th ed. 1995), it must be tethered to the parameters of

 350(b), or it is an abuse of discretion.  Because standing is "a

prudential requirement," Travelers Ins. Co. v. H. K. Porter Co.,

45 F.3d 737, 741 (3d Cir. 1995) (citation omitted), our review is

de novo.  Kaiser, 998 F.2d at 788. 

     Although 11 U.S.C.  1109(b) broadly defines a "party in

interest,"4 the phrase invites interpretation and "is generally

understood to include all persons whose pecuniary interests are,

directly affected by the bankruptcy proceedings."  Yadkin Valley

---------------



4    11 U.S.C.  1109(b) provides:

     A party in interest, including the debtor, the
trustee, a creditors' committee, an equity security
holders' committee, a creditor, an equity security
holder, or any indenture trustee, may raise and may
appear and be heard on any issue in a case under this
chapter.

     We stated in In re Kaiser Steel Corp., 998 F.2d 783, 788
(10th Cir. 1993), citing 11 U.S.C.  102(3), "the word `including'
is not a limiting term, and therefore, `party in interest' is not
confined to the list of examples provided in section 1109(b)."
Id. (citation omitted). 

Bank & Trust Co. v. McGee (In re Hutchinson), 5 F.3d 750, 756 (4th
Cir. 1993) (citations omitted).  Indeed capitalizing on this
concept, Nintendo urges, "Here, the Plan by its terms
significantly impacts the prosecution of the Nintendo Lawsuit,
which was pending at the time of confirmation and described in the
Disclosure Statement. . . .  Nintendo plainly has a significant
economic interest in ensuring that the substituted plaintiff
abides by the Plan and it only seeks an order requiring compliance
with the Plan."
     This expansive view notwithstanding, when we peruse the case
law on standing under these circumstances, we find that concept
implicitly confined to debtors, creditors, or trustees, each with
a particular and direct stake in reopening cognizable under the
Bankruptcy Code.  For the debtor, that stake may be listing
additional creditors, In re Scism, 41 B.R. 384 (Bankr. W.D. Okla.
1994); avoiding a lien creditor, In re Ricks, 89 B.R. 73 (Bankr.
9th Cir. 1988); or determining the dischargeability of a
pre-petition debt, In re Hicks, 184 B.R. 954 (Bankr. C.D. Cal.
1995).  A creditor may seek to reopen to ask the bankruptcy court
to administer discovered assets or determine nondischargeability.
In re Banks-Davis, 148 B.R. 810 (Bankr. E.D. Va. 1992).  A trustee
may seek to enforce the administration of a plan of reorganization
or realize assets for the estate.  In re Winebrenner, 170 B.R. 878
(Bankr. E.D. Va. 1994). 
     In fact, while these three entities -- debtor, creditor,
trustee -- are the only designated players under  350(b), there
is disagreement in the case law over whether even a trustee is an
appropriate party in interest to reopen.  See In re Ayoub, 72 B.R.
808 (Bankr. M.D. Fla. 1987); contra In re Stanke, 41 B.R. 379
(Bankr. W.D. Mo. 1984).  Otherwise, aside from peculiar facts that
may align a case with these parameters, for example, In re Young,
70 B.R. 968 (Bankr. E.D. Pa. 1987),5 upon which Nintendo relies,
the only divergence is a bankruptcy court's sua sponte reopening a
case, In re Searles, 70 B.R. 266 (D. R.I. 1987), nevertheless
pinioned to a creditor's motion to clarify a consent order. 
     While Kaiser is not to the contrary, it is also not
dispositive here as the district court believed.  In Kaiser,
Pittsburg and Midway Coal Mining Company (P & M) and Vermejo
Mineral Corporation, two purchasers of properties owned by Kaiser
Coal Corporation, the Chapter 11 debtor, filed objections to a
settlement agreement Kaiser reached with Southwestern Public
Service Company to resolve an adversary proceeding.  The
bankruptcy court denied the purchasers' standing upon finding
neither party had an interest in the subject matter of the
settlement agreement.  The district court affirmed, and we agreed.
We concluded P & M and Vermejo did not qualify as debtors of a
debtor.  Neither purchaser had to pay any additional money to
Kaiser in their respective acquisition agreements on account of
the settlement agreement, nor did either participate in the
settlement agreement itself.  Absent a specific financial
interest, we rejected the purchasers' generalized stake based on
---------------

5    In that case, the court described the mother of a daughter
who had inherited the most significant asset in what had been the
debtor's estate as a representative of the successor-in-interest
so that she could renegotiate the mortgage. 

their ownership of New Mexico coal property.  We cautioned that
while certain circumstances may qualify a debtor of a debtor as a
party in interest, "[b]ankruptcy courts `must determine on a case
by case basis whether the prospective party in interest has a
sufficient stake in the proceeding so as to require
representation.'"  Id. at 788 (quoting In re Amatex Corp., 755
F.2d 1034, 1042 (3d Cir. 1985)). 
     In this case, Nintendo is neither a debtor, a creditor, nor a
trustee.  Indeed, when the Plan was confirmed, Nintendo received
no notice of the Plan or its confirmation, nor was notice
required.6  At confirmation, Alpex held an unresolved claim against
Nintendo; therefore, Nintendo's debt was inchoate at best.
Although the district court defined Nintendo's status as that of a
debtor of a debtor, its counsel has advised us his client is
appealing the judgment in the patent litigation, which is
tantamount to disclaiming Nintendo's debt in the first instance. 
     Nevertheless, in this appeal, Nintendo distinguishes it does
not contend it has standing under Bankruptcy Rule 5010 or because
it is a debtor of a debtor.  Instead, Nintendo maintains it is a
party aggrieved.  Nintendo explains the effect of the decisions in
the district and bankruptcy courts gives Alpex shareholders an
unlimited right to pursue litigation against Nintendo for another
ten years.  Thus, its status is specifically affected by how the
Trustee interprets and enforces the Plan, and it assuredly becomes
a "party in interest" and a "debtor of a debtor."  Under this
---------------

6    In oral argument, Nintendo stated it became aware of the
confirmation some time into its patent litigation with Alpex. 

view, then, if the Trustee's ability to pursue claims is
circumscribed by the Plan, the putative claim against Nintendo
endows it with standing to challenge the Plan.
     We disagree.  First, a plan, once confirmed, takes on a life
of its own, ordering the parties to perform obligations to which
each has agreed at the time the plan comes into existence.  While
an entity that owes a debt to the debtor may affect the plan in
terms of infusing or depleting assets, that entity may challenge
its status in an adversary proceeding incident to the plan.  Once
the plan is confirmed, however, the debtor of the debtor does not
necessarily become clothed with the mantle of a party aggrieved to
collaterally attack the plan.7
     Nintendo cannot have it both ways, urging in New York it is
not liable for the judgment and, here, it is a debtor of a debtor
who "plainly has a significant economic interest in ensuring that
the substituted plaintiff abides by the Plan and it only seeks an
order requiring compliance with the Plan."  Nor can Nintendo
---------------

7    In fact, we confine that garb to analyzing our appellate
standing when we require an appellant to establish he is a "person
aggrieved" by the challenged bankruptcy court order.  In re
American Ready Mix, Inc., 14 F.3d 1497, 1500 (10th Cir.), cert.
denied, 115 S. Ct. 77 (1994).  "The `person aggrieved' test is
meant to be a limitation on appellate standing to avoid `endless
appeals brought by a myriad of parties who are indirectly affected
by every bankruptcy court order.'"  Id. (quoting Holmes v. Silver
Wings Aviation, Inc., 881 F.2d 939, 940 (10th Cir. 1989)).  The
standing requirement is more stringent in bankruptcy appeals "than
the `case or controversy' standing requirement of Article III,
which `need not be financial and need only be fairly traceable to
the alleged illegal action.'"  Travelers Ins. Co. v. H.K. Porter
Co., 45 F.3d 737, 741 (3d Cir. 1995) (quoting Kane v.
Johns-Manville Corp., 843 F.2d 636, 642 n.2 (2d Cir. 1988))
(citations omitted). 

support its position with its cited authority.8  Nintendo's
obligation to the Plan arises from its litigation with Alpex in a
separate civil action in New York.  The obligation is not affected
by the Plan but by the course of the New York proceedings.
Nintendo's status as a defendant in a civil suit does not create
standing here.  Matter of Irvin, 950 F.2d 1318, 1321 (7th Cir.
1991).
     Nintendo's rights and liabilities derive from its stake in
the 555 patent litigation with Alpex.  It cannot claim a similar
stake by implanting that status into a bankruptcy proceeding in
which it has never participated.  Consequently, Nintendo lacks
standing to reopen the confirmed Alpex Plan to compel the Trustee
to accept its settlement.  Indeed, given the present stance of the
patent litigation, Nintendo's urging the Trustee, representing
Alpex shareholders, should reject the jury's judgment and embrace
this settlement offer is remarkable.  Attempting to enlist the
bankruptcy court's imprimatur then is chutzpah.9 

---------------

8    Nintendo relies upon In re Young, 70 B.R. 968 (Bankr. E.D.
Pa. 1987), a Chapter 13 case, which, we noted, permitted a mother
of the person who would inherit the estate's most valuable asset
to renegotiate the mortgage on that property.  In In re Wilson, 94
B.R. 886 (Bankr. E.D. Va. 1989), the court refused to permit
several Iran-Contra defendants to intervene to prevent the trustee
from abandoning a civil suit.  In In re Yoder, 158 B.R. 99 (Bankr.
N.D. Ohio 1993), the court refused reopening to permit the
purchaser of the debtor company to gain protection from products
liability suits filed against the company.  Finally, in In re Wolf
Creek Valley Metro. Dist. No. IV, 138 B.R. 610 (D. Colo. 1992),
the court found the debtor of the Chapter 9 debtor has a special
interest and definite relationship to the plan of reorganization. 

9    We add this instance to the catalog Judge Kozinski and Eugene
Volokh have documented.  See A. Kozinski & E. Volokh, Lawsuit,
Shmawsuit, 103 Yale Law Journal 468 (1993). 

     Despite this resolution, we note our examination of the Plan
leads us into agreement with the bankruptcy court.  No provisions,
and most notably  4.5 and the use of the terms "claim" and
"interest," support Nintendo's interpretation.  Nor is there merit
to integrating the statements in the Disclosure Statement,
estimating "disputed claims" at approximately $2,235,203.39, with
the language of the Plan to establish the Plan intended to cap the
Class 5 recovery.  We are unimpressed by Nintendo's effort to
place its interpretation into the historical context of 1989
shareholders who had no expectation of recouping their
investments.  While that may be so, the nature of a shareholder's
interest is a risk taken.  However bleak that risk may have looked
in 1989, the investor's outlook has since been brightened by the
New York judgment.  Nintendo cannot use the bankruptcy court to
relitigate its patent liability. 
     We, therefore, REVERSE the district court's conclusion
Nintendo has standing in the bankruptcy court, and order it to
DISMISS the case.

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