UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

In Re: COLLINS & AIKMAN CORPORATION, et al., Chapter 11 Case No. 05-55927-R Hon. Steven W. Rhodes

Debtor. _________________________________ BRIEF IN SUPPORT OF MOTION FOR RELIEF FROM AUTOMATIC STAY BY WANDA PATTERSON, ARIE SCHLEGEL, DIXIE AKERS, EDNA DAWSON, PAUL PHILLABAUM AND SHELLY CORNWELL NOW COMES Wanda Patterson, Arie Schlegel, Dixie Akers, Edna Dawson, Paul Phillabaum, and Shelly Cornwell (the "Claimants"), by and through their attorneys, Varnum, Riddering, Schmidt & HowlettLLP, and state the following in support of the Motion for Relief from the Automatic Stay pursuant to 11 U.S.C. 362(d). I. FACTS On March 23, 2004, the Claimants filed a Second Amended Complaint in the case of Wanda Patterson, et. al. v. Heartland Industrial Partners, LLP, et. al., United States District Court for the Northern District of Ohio, Eastern Division (District Court), Case No. 5:03-CV1596 (the "District Court Action"). The case was assigned to Senior District Court Judge David Dowd, Jr. The District Court action was filed against several defendants, including Collins & Aikman Corporation, Collins & Aikman Products Co. and Collins & Aikman Accessory Mats, Inc. (the "Debtor Defendants"). The other defendants are Heartland Industrial Partners, LLP (Heartland), which is an investment company that has an ownership interest in the Debtor Defendants, and the United Steel, Paper, and Forestry, Rubber, Manufacturing, Energy, Allied

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Industrial and Service Workers International Union (the USW), which is a labor organization.1 The Debtor Defendants, Heartland and USW are collectively the "Defendant". Claimants are individual employees who work at a facility owned and operated by the Defendant Debtors. The District Court Action involves the legality of certain labor agreements to which the Defendants are signatory called the Side Letter and Framework for a Constructive Collective Bargaining Relationship (the Framework). The Second Amended Complaint alleges that Defendants entering into and enforcing the Side Letter and Framework Agreements violates Section 302 of the Labor-Management Relations Act, 29 U.S.C. 186 ( 186). Section 186(a) generally makes it unlawful for an employer to deliver money or other thing of value to a labor organization. Section 186(b) conversely makes it unlawful for a labor organization or its agents to request or receive money or other thing of value from an employer. Section 186(e) provides a private cause of action to restrain violations of 186(a) and (b). See Local 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581 (1993). With regard to the Debtor Defendants, the Second Amended Complaint alleges that Debtor Defendants violate 186(a) by delivering and agreeing to deliver certain forms of valuable organizing assistance to the USW during union organizing campaigns at certain facilities of the Debtor Defendants. The overarching legal issue is whether certain forms of organizing assistance constitute a thing of value that an employer cannot provide a union under 186. The District Court Action requests only declaratory and injunctive relief against the Debtor Defendants and the other defendants for violations of 186. No monetary relief is sought in the suit. Indeed, monetary relief cannot be recovered under 186(e), which provides
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The USW was formerly known as the United Steelworkers of America, AFL-CIO.

a private cause of action for injunctive relief only. See Sellers v. O'Connell, 701 F.2d 575, 578 (6th Cir. 1983). On January 12, 2004, Judge Dowd of the District Court denied, in part, Defendants Motion to Dismiss the Complaint. The Sixth Circuit then denied a Petition for a Writ of Mandamus filed by Defendant USW on April 28, 2004. The parties then engaged in and completed extensive discovery. All parties to the District Court Action filed cross motions for summary judgment by April 25, 2005. On May 12, 2005, all parties filed their respective opposition briefs. Reply briefs were to be filed on June 6, 2005. However, the reply briefs were never filed because Debtor Defendants filed a notice of bankruptcy and automatic stay on June 1, 2005. All parties to the District Court Action, including the Debtor Defendants, represented in their respective briefs to the District Court that there were no material facts in dispute and that summary judgment as a matter of law was appropriate in their favor. The case is thereby ripe for a decision on the merits by the District Court. All that remains is for the automatic stay to be lifted so that reply briefs may be filed and the District Court can issue a decision on the crossmotions for summary jdugement. II. DISCUSSION This Court can grant relief from the automatic stay for good cause on request of a party and after notice and a hearing pursuant to 11 U.S.C. 362(d)(1). Good cause exists for

modifying the stay pursuant to 11 U.S.C. 362(d)(1) for purposes of allowing the District Court Action to continue, including: (1) the District Court is a more appropriate forum for resolving the issues present in the District Court Action; (2) the District Court can timely adjudicate the District Court Action; (3) an adjudication of the District Court Action will have no effect on the Debtor

Defendants effective reorganization; and (4) an adjudication of the District Court Action is necessary to protect the Claimants from current and future harm. First, The District Court is a more appropriate forum for resolving the issues present in the District Court Action. The District Court Action involves federal labor law issues under 186 that are squarely within the jurisdiction of federal district courts. See Local 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581, 585 (1993); Hospital Employees' Div. of Local 79, SEIU v. Mercy-Memorial Hosp. Corp., 862 F.2d 606 (6th Cir. 1988), vacated on other grounds, 492 U.S. 914 (1989); Reinforcing Iron Workers Local Union 426 v. Bechtel Power Corp., 634 F.2d 258 (6th Cir. 1981); Sellers v. OConnell, 701 F.2d 575 (6th Cir. 1983); W.J. Dunn, Civil Actions Involving Union Welfare Funds Subject to 302 of the Taft-Hartley Act, 88 A.L.R.2d 493 (1963) (collecting civil cases). Moreover, Judge Dowd of the District Court is familiar with the issues in involved in the case. He has already reviewed and considered the merits of the case in Defendants Motion to Dismiss. Judge Dowd has also ruled upon several discovery motions, including issuing a

published opinion concerning a major discovery dispute. See Patterson v. Heartland Industrial Partners, LLP, 225 F.R.D. 204 (N.D.Ohio, 2004). Considering Judge Dowds familiarity with the issues presented in the District Court Action, the District Court is a more appropriate forum for resolving the case. Second the District Court Action can timely adjudicate the District Court Action. The

District Court was on the cusp of considering and ruling upon dispositive motions for summary judgment when the automatic stay was imposed. Briefing on cross-motions for summary

judgment was virtually complete. Only reply briefs need to be filed for the case to be fully briefed.

All parties to the District Court Action, including the Debtor Defendants, represented in their respective summary judgment briefs that there were no material facts in dispute and that summary judgment was appropriate in their favor. Judge Dowd will be able to quickly

determine if summary judgment as a matter of law is appropriate after the automatic stay is lifted. By contrast, adjudicating the District Court Action in Bankruptcy Court would unnecessarily delay the issuance of a ruling in the District Court Action. Not only would the Bankruptcy Court have to familiarize itself with the myriad issues presented in the District Court Action, but the parties to the action would have to start their extensive briefing anew. Since the District Court is so close to issuing a likely decision on the merits, it is clear that the District Court Action is in the best position to timely adjudicate the District Court Action. Third, the adjudication of the District Court Action has no effect on the Debtor Defendants' effective reorganization. This lawsuit seeks only injunctive and declaratory relief against Debtor Defendants. No monetary relief is being sought from Debtor Defendants. Indeed, monetary cannot be sought under 186(e) in any event, as the provision provides for only injunctive relief. Defendant Debtors will not be hampered in their effective reorganization by the District Court Action. If the District Court Action goes against the Debtor Defendants, the primary ramification will be that Debtor Defendants will be enjoined from delivering, and from agreeing to deliver, certain forms of organizing assistance to the USW during union organizing campaigns at certain facilities of the Debtor Defendants. Debtor Defendants being enjoined from assisting USW organizing campaigns does not and will not effect Debtor Defendants effective reorganization.

Fourth, an adjudication of the District Court Action is necessary to protect the Claimants from current and future harm. Claimants are individual employees who work at a facility owned and operated by Debtor Defendants. Claimants are seeking injunctive relief under 186(e) to stop their employer from unlawfully assisting the organizing campaigns the USW wages against them and their co-workers. While such injunctive relief will not have any appreciable impact on the operations or effective reorganization of the Debtor Defendants, it is crucial to protecting the rights and interests of the Claimants. It is thereby imperative that the automatic stay be

expeditiously lifted and the District Court Action be permitted to proceed. III. CONCLUSION For the reasons stated above, this Court should enter an order modifying the automatic stay, pursuant to 11 U.S.C. 362(d), and permitting the District Court Action to continue in the District Court. Respectfully submitted, VARNUM, RIDDERING, SCHMIDT & HOWLETTLLP Attorneys for Claimants

Date: September 13, 2005

By:

/s/ Mary Kay Shaver Timothy J. Curtin (P-12410) Mary Kay Shaver (P-60411) Business Address: Bridgewater Place P. O. Box 352 Grand Rapids, MI 49501-0352 (616) 336-6000

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