‘Interventionist’ Judge in Eastern Case : Lifland’s Style Borders on the Eccentric, Some Lawyers Say

Eastern Airlines’ tortuous path has taken it through multimillion-dollar losses into a crippling strike and the refuge of bankruptcy court. Now its fate rests with a powerful judge known for biting sarcasm, a penchant for popcorn and a determination to get the airline flying again.

In the 2 1/2 months since Burton R. Lifland has been overseeing Eastern’s reorganization, his actions have chafed the carrier and its lawyers. Even representatives of Eastern’s unions, who applaud many of Lifland’s decisions, privately call him “a loose cannon.”

Lifland, 60, has a style that some lawyers and acquaintances privately say borders on the eccentric.

During one tense, closed-door negotiation, he made bowls of popcorn for everybody. His courtroom utterances are liberally sprinkled with humor and jibes. He can reduce high-powered, haughty attorneys to the level of red-faced, stammering schoolboys standing nervously before him.

Besides the rows of law books lining the walls, a huge poster of Rumpole of the Bailey, the fictional British barrister, dominates Lifland’s chambers in the federal bankruptcy courthouse. The high-ceilinged rooms in the turn-of-the-century Customs House Building in lower Manhattan command a splendid view of the Hudson River.

Lifland rarely talks to reporters and declined to be interviewed.

Lectures at Schools

As the chief U.S. bankruptcy judge for the Southern District of New York, Lifland has presided over some of the biggest and most complex cases in history. They include former asbestos maker Manville Corp., steelmaker LTV Corp. and farm machinery maker Allis-Chalmers Corp.

He’s a graduate of Syracuse University and Fordham University Law School, and frequently lectures at law schools and legal conferences.

Lifland’s primary concern for the past 2 1/2 months has been Eastern, since parent Texas Air Corp. put it into Chapter 11 protection from creditors on March 9, five days after a crippling strike.

In the Eastern case, as in others, Lifland has departed from the historically neutral role many bankruptcy judges take, in the view of some lawyers.

“He has been interventionist at the far end of the spectrum,” said Karen Gross, a professor at New York Law School and a director of the National Bankruptcy Institute.

Early in the case, Lifland ordered the appointment of a bankruptcy examiner for Eastern with extraordinary powers. He later ordered all parties to explain why he shouldn’t put the airline up for auction.

He has continually said it’s in the public interest to get Eastern back to a full schedule quickly.

“What I’m hearing is a reflection of parochial interests; what I’m not hearing is the public interest here,” Lifland scolded attorneys for Eastern and the unions at one hearing.

“The public is a main player here,” he said, citing the consumers who “have scrimped and saved” to buy Eastern tickets and can’t use them.

Statements like that have riled a number of bankruptcy attorneys who are not involved in the Eastern case but say they are worried about precedents that may be set by Lifland.

Some believe that the judge has lost his impartiality, has sided with Eastern’s unions and is pushing the airline into a hasty “bargain-basement” sale.

They dismiss Lifland’s public interest argument, asserting that a bankruptcy court is charged only with protecting the interests of creditors and shareholders. The public, they say, can find seats on other airlines if needed.

“He’s grandstanding and that’s counterproductive,” said a bankruptcy attorney unconnected with the Eastern case who requested anonymity.

Even union representatives, who have liked many of Lifland’s moves, complain privately that he has raised their expectations too high and has subsequently backed down on several occasions.

“He really has painted himself into a corner; there doesn’t seem to be any easy way out of it,” said a union team member who asked not to be identified. “Bankruptcy judges do not do heroic things very often.”

In mid-April, sources say, Lifland was persuaded under pressure to back down when he came close to appointing a powerful temporary trustee to run Eastern, which in effect would have invalidated management’s authority.

Insisted on Trustee

The trustee issue was at the heart of the collapse of ex-Baseball Commissioner Peter V. Ueberroth’s $464-million deal to buy Eastern from Texas Air Chairman Frank Lorenzo.

Eastern’s three unions, which had agreed to accept a reported $210 million in labor concessions in exchange for a 30% share in the airline, insisted on a trustee to replace Lorenzo before Ueberroth took over.

Lorenzo refused to accept the appointment of a trustee, which is rarely done in bankruptcy cases and usually implies fraud or mismanagement on the part of a company’s bosses.

Sources say Eastern’s lead bankruptcy attorney, Harvey Miller, mobilized other lawyers to warn Lifland against naming a trustee and the signal that would send. Miller, widely considered one of the most prominent bankruptcy lawyers in the country, declined comment on the matter.

“I think he (Lifland) saw he was going to have a battle” if he opted for a trustee, said a source close to the situation.

Lifland does have defenders in the legal community, however.

“I know him to be a dedicated, sincere judge. He’s very well motivated,” said Joseph Gassen, a former bankruptcy judge who is now an attorney in Miami.

Lifland is trying to find a timely solution to revive Eastern, he said.

The judge’s razor-sharp humor is relentless.

In one hearing, after making a lengthy speech, Miller somberly presented a towering stack of documents to Lifland. He waved them away, telling the attorney, “I had planned to devour a Robert Ludlum novel tonight.”

On another occasion, Lifland expressed disappointment that “no members of the female gender graced” the lawyers’ bench at that particular hearing.

At a hearing on Eastern in late April, pilots union attorney Bruce Simon said he was so angered by Miller’s remarks that “I am moved to stand.”

“Would you be less moved if you sat down?” Lifland shot back.