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In re New York Skyline, Inc.

United States District Court, S.D. New York

August 1, 2014

In re NEW YORK SKYLINE, INC., Debtor.
v.
EMPIRE STATE BUILDING COMPANY L.L.C., EMPIRE STATE BUILDING, INC. and EMPIRE STATE BUILDING ASSOCIATES, L.L.C., Appellees NEW YORK SKYLINE, INC., Appellant,

Decided July 31, 2014

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For Appellant: James Wilson Perkins, Esq., Greenberg Traurig, LLP New York, NY; Charles Addison Stewart, III, Esq., Elin M. Frey, Esq., Stewart Occhipinti, LLP, New York, NY; Howard J. Berman, Esq., Ellenoff Grossman & Schole LLP, New York, NY.

For Appellees: David Scott Tannenbaum, Esq., Francine Nisim, Esq., Karen S. Frieman, Esq., Stern, Tannenbaum & Bell, L.L.P., New York, NY; William Heur, Esq., Duane Morris LLP, New York, NY.

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OPINION AND ORDER

Shira A. Scheindlin, United States District Judge.

I. INTRODUCTION

On June 16, 2014, this Court issued an Opinion and Order which vacated an Order and Final Judgment issued by Judge Stuart Bernstein (the " Judgment" ) and remanded the case for further proceedings.[1] As detailed in the Opinion,[2] the Judgment was entered in an adversary proceeding involving a former debtor, Appellant New York Skyline, Inc. (" Skyline" ), and Appellees (" ESB" ). Skyline is ESB's tenant and licensee under a Lease and License entered into in 1993 and assumed by Skyline in the early stages of its chapter 11 bankruptcy case.[3]

Among other things, the Judgment enjoined Skyline from engaging in certain activities, including paying commissions to independent contractors working within specific areas outside the Empire State Building and selling particular items in the Building's gift shop (the " Injunctions" ). On July 7, 2014, ESB filed an appeal from the Opinion. ESB now moves pursuant to Rule 62(c) and (g) of the Federal Rules of Civil Procedure for an injunction or stay of the vacatur of the Judgment, and restoration of the Injunctions, pending the appeal.[4] Oral argument was held on the

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motion on July 24, 2014. For the reasons set forth below, ESB's motion is DENIED.

The standard for obtaining a stay pending appeal is well-established, as is the burden of proof. The court must consider: " '(1) whether the stay applicant has made a strong showing that [it] is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.'" [5] The first two factors are the most critical.[6] " It is not enough that the chance of success on the merits be 'better than negligible.'" [7] " By the same token, simply showing some

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possibility of irreparable injury fails to satisfy the second factor." [8] The burden is on the moving party to establish these elements. A stay of a judgment pending an appeal is an exercise of judicial discretion and is not a matter of right, even if irreparable injury might otherwise result.[9] Unlike a recent decision issued by a panel of the United States Court of Appeals for the Second Circuit, I take seriously the need to analyze and evaluate each of these stay factors.[10]

II. DISCUSSION

A. Success on the Merits Is Not Likely or Substantially Possible

1. Vacatur Was Not Premature

ESB argues that where " there are undecided issues relating to the propriety of injunctive relief, the injunction should remain in effect pending remand and further review." [11] ESB contends that relevant issues remain undecided because the Opinion " remanded the case for the Bankruptcy Court to determine, inter alia, the underlying issue of whether any of the claims on which it had ruled were core." [12] However, the counterclaims that gave rise to the Injunctions cannot be considered core. They did not arise under title 11 or in Skyline's bankruptcy case. In 2013, when trial was held on the counterclaims and the Judgment and Injunction were entered, these counterclaims were irrelevant to the assumption of the Lease and License.[13] The counterclaims had no bearing on the administration of ...


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