I know, I know, Elizabeth Warren supporters don’t care about the truth.  But the truth still matters, and will be preserved at The Elizabeth Warren File regardless of the election result.

So one last new bit of truth before the election.

In her incomplete list of cases she released to The Boston Globe shortly before one of the debates, Warren described her involvement in the Fairchild Aircraft case as follows (emphasis mine):

• In re Fairchild Aircraft Corp., 184 B.R. 910 (Bankr. W.D. Tex. 1995), vacated 220 B.R. 909 (Bankr. W.D. Tex. 1998). This was a tragic case, involving a plane crash that killed four people. The NTSB and a jury found that the aircraft manufacturer was not at fault. Elizabeth got involved to try to protect hundreds of jobs at the company after new investors had saved it from closing its doors and laying off its workers. In the end, the company survived and 1,000 people had jobs because of it. The bankruptcy court initially ruled against Elizabeth’s position but later vacated that decision.

This is a highly misleading description.  There is nothing to suggest that Warren was trying to rescue hundreds of jobs, and contrary to the suggestion in the last sentence, Warren’s legal position was not in any way vindicated by the purely procedural vacatur of a prior court decision.

The underlying case is here (184 B.R. 910, Bankr. W.D. Texas 1995).  Unfortunately, there is no public link I could find to the subsequent case vacating the first decision, but for those with access to Westlaw or other legal databases, the cite is 220 B.R. 909 (Bankr. W.D. Texas 1998).  (There is a brief discussion of the second case in this law review article.) Read them, and you will see that my description below is accurate, and Warren’s at best misleading.

The actual cases, which The Boston Globe and other media never bothered to read or understand, reveal that Warren tried unsuccessfully to deprive four families of loved ones killed in a plane crash of getting their day in court.

Fairchild Aircraft Corp. (FAC) filed for bankruptcy in 1990 in the Western District of Texas.  As part of the bankruptcy, a group of investors formed Fairchild Aircraft Inc. (FAI) to purchase the assets of FAC rather than reorganizing FAC.  The asset purchase was supposed to be free and clear of liabilities.

In 1993, after the banktuptcy was over, one of the planes manufactured by FAC prior to the bankruptcy crashed, and four families commenced suit against FAI and numerous other corporate defendants, which ended up consolidated in federal court in Tennessee.

In 1994, when she still was at U. Penn. Law School, Elizabeth Warren got involved and tried to convince the Texas bankruptcy court to issue an injunction preventing the families from continuing their suit in Tennessee on the ground the the bankruptcy asset purchase extinguished future claims against FAI.

Had she been successful, Elizabeth Warren would have deprived these families of any means of receiving compensation for the death of their loved ones even though the claims were unknown at the time of the bankruptcy because the plane crash had not yet taken place.

There is nothing in the decision to indicate these families’ claims would have caused FAI to go out of business, or the loss of hundreds of jobs, as Warren claims in her description to The Globe.  There were numerous other corporate defendants in those cases.

In 1995, the issue of extinguishing future claims was considered by bankruptcy court and it rejected Warren’s position, finding that the purchase of assets free and clear did not extend to future liabilities for events that had not yet taken place.  The court allowed the families’ cases to proceed to trial in Tennessee.

Warren’s client took an appeal from the bankruptcy court in Texas to the District Court in Texas.  That appeal sat unresolved.

The families got their day in court in Tennesse, but lost at trial.  The families then appealed to the federal appeals court, and the case was settled before the appeal was decided.

FAI wanted to wipe the prior Texas banktruptcy court decision off the books, presumably because the ruling that it could be liable for accidents on planes it purchased in the bankruptcy left it exposed to more potential claims should there be another crash.  It’s not clear if Warren was involved at this stage; her name was listed as one of the counsel, but it also listed her as being at U. Penn Law School, but by this time she was at Harvard.  The court may simply have carried over the prior list of counsel.

In 1998, FAI then went back to the Texas bankruptcy court and asked it to vacate its prior decision on the basis that the case had been settled, not on the merits of the prior decision.  That was unusual, since normally after a case is settled the case simply is dismissed, prior rulings are not “vacated.”  But again, FAI had a strategic reason to want the prior decision vacated.

After struggling with the issue, which presented numerous procedural issues, the Texas Bankrutpcy Court agreed to vacate the prior ruling because the settlement rendered the entire case moot.

Bottom line:  Elizabeth Warren worked to deprive four families whose loved ones were killed in a plane crash of getting their day in court based on a legal theory rejected by the bankruptcy court for deaths which resulted from a plane crash after the bankruptcy was over.  Had Warren prevailed, not only these families but other families whose loved ones were killed in future plane crashes would have been deprived of a chance for justice.  That decision later was vacated on purely procedural grounds after a settlement, not because Warren’s position was vindicated.  There is nothing to suggest that Warren was working to protect hundreds of jobs, as she claimed to The Globe.

Once again, Elizabeth Warren served the interests of her corporate client against the interests of the little guys and gals she now claims to champion.  There’s nothing wrong with that.  It’s a question of being honest with the public.

Related — For those of you interested in other cases Warren handled in which she incorrectly portrayed herself as fighting for the little guys and gals, see: