Legal News

Will the Supreme Court Stay the Chrysler/Fiat Deal?

By Ashby Jones

So here’s the situation: In a little less than an hour, we’ll know if Supreme Court justice Ruth Bader Ginsburg has stayed the Second Circuit’s ruling — made on Friday — to let the Fiat/Chrysler deal go down. If she does agree to a stay, she’ll presumably allow the full court enough time to weigh whether to hear the merits of the case. If she rejects it, or if she just lets the deadline pass without doing anything, the Second Circuit’s stay will expire and the parties will get the go-ahead to wrap things up.

So what will she do? Our colleagues over at the Deal Journal looked into the issue and, from where we sit, it doesn’t look all that good for the groups challenging the deal.

The pension funds are claiming that the Treasury department improperly used TARP funds to finance Chrysler’s restructuring. The main hurdle, according to Edward Morrison, a professor at Columbia Law School, involves a legal theory near and dear to our hearts: standing. The pension funds may likely have trouble proving that the Treasury department’s allocation of money to Chrysler harmed them. "You can't sue unless you have suffered harm," says Morrison, who attended the Second Circuit hearing on Friday at which the judge approved the Fiat deal.

Michael Corkery, the Deal Journal author, asked Morrison if there existed any group that would have standing to legally challenge the government for doling out TARP money to the car companies. "To have standing in a case you have show that the injury is concrete and particular," Morrison says. "An injury that is felt by all taxpayers is not sufficient."

In a separate brief arguing against a stay, the Solicitor General today suggested that the Indiana pension funds are reading the TARP legislation too narrowly.

We’ll keep you posted when we hear more.

Full post as published by Law Blog - WSJ.com on June 08, 2009 (boomark / email).