Lifting the Stay

According to SCOTUS Blog, the Supreme Court today lifted the stay postponing the sale of ‘zombie’ Chrysler (h/t AoSHQ). I am sure there will be all sorts of rumbings and grumblings about this, especially among conservatives opposed to the sale. Before the rumblings get too loud, I would like to make a couple points.

First, this was a unanimous decision. That means conservative-stalwart Scalia and strictest-of-strict-constructionists Thomas did not object to the lifting of the stay. It is possible there was some internal politics involved, but on a big case like this I think it is far more likely that they simply did not see any merit in the stay application. Unanimous action by the Court, especially on big cases, is not the norm, so it is probably safe to say that this decision was pretty cut and dry.

My second, and related, point is that a stay is an unusual creature in the law. Courts very rarely act preemptively, which is what the creditors were asking the Court to do — and it is even more rare for the Supreme Court to do so. There are a lot of reasons for that, but most of them are addressed by one of the prerequisites for a stay in federal (and most, if not all, state) courts: irreparable harm. In order for a court to act preemptively, it requires that the party requesting the action show that it will be irreparably harmed if the court does not step in. A lot of people — including lawyers — tend to think that any ‘harm’ ought to qualify, but it does not. The easy rule of thumb is that if the court can sort things out after the fact and order one side to cough up money to the other (or otherwise ‘make them whole’) then harm is not irreparable.

Here, where the issues boil down to arguments over who gets how much money out of Chrysler (even, ultimately, the constitutional issues), I cannot imagine a court finding irreparable harm. On top of that, the Court went out of its way to avoid in any manner giving its blessing to the sale itself. If — or more likely, when — this ends up back on the Court’s docket, that is when the issues will be addressed and sparks will fly. The initial stay was meaningless, and there is no reason to get excited about the Court lifting it.