2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-21-2015

In Re: One2One Communications

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 13-3410

_____________

In re: ONE2ONE COMMUNICATIONS, LLC,

 Debtor

QUAD/GRAPHICS, INC.,

 Appellant 

_____________

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF NEW JERSEY

(D.C. Civ. Action No. 2-13-cv-01675)

District Judge: Honorable Jose L. Linares

Argued: October 29, 2014

_________________

Before: MCKEE, Chief Judge, GREENAWAY, JR., and 

KRAUSE, Circuit Judges.

(Filed: July 21, 2015)
2

Courtney A. Schael, Esq. (Argued)

Ashford Schael

1371 Morris Avenue

Union, NJ 07083

Timothy F. Nixon, Esq.

Godfrey & Kahn

333 Main Street

Suite 600, P.O. Box 13067

Green Bay, WI 54307

Attorneys for Appellant

Michael D. Sirota, Esq. (Argued)

David M. Bass, Esq.

Cole Schotz

25 Main Street

Court Plaza North, P.O. Box 800

Hackensack, NJ 07601

Joseph DiPasquale, Esq.

Henry M. Karwowski, Esq.

Richard D. Trenk, Esq.

Trenk, DiPasquale, Della Fera & Sodono

347 Mount Pleasant Avenue

Suite 300

West Orange, NJ 07052

Attorneys for Debtor

Kenneth A. Rosen, Esq.

Lowenstein Sandler

65 Livingston Avenue
3

Roseland, NJ 07068

Attorney for the Official Committee of Unsecured 

Creditors, Defendant

Martha R. Hildebrandt, Esq.

Office of United States Trustee

One Newark Center

Suite 2100

Newark, NJ 07102

Attorney for the Office of United States Trustee

__________________

OPINION

__________________

GREENAWAY, JR., Circuit Judge.

Appellant Quad/Graphics Inc. appeals from the 

judgment of the District Court affirming the Bankruptcy 

Court’s confirmation of One2One Communications, LLC’s 

(the “Debtor”) Chapter 11 plan of reorganization and

dismissing Appellant’s bankruptcy appeal as equitably moot. 

Appellant contends that the District Court abused its 

discretion in dismissing its appeal as equitably moot. 

Appellant also asks us to use this appeal to overrule our 

adoption of equitable mootness in In re Continental Airlines, 

91 F.3d 553, 560 (3d Cir. 1996) (en banc) (‘‘Continental’’), 

contending that the doctrine is unconstitutional and contrary 

to the Bankruptcy Code. Continental remains the law of this 

circuit. This panel is not free to overturn a precedential 
4

opinion. In the absence of an en banc reversal, we are bound 

by Continental. Because the District Court abused its 

discretion under Continental, we will reverse the District 

Court’s judgment and remand for consideration of the merits 

of Appellant’s bankruptcy appeal.

I. Background

The Debtor, a billing services technology company, is 

a limited liability business and its sole member is Joli, Inc. 

Joanne Heverly owns seventy-five percent of Joli, Inc., and 

Richard Brammer, a former officer of the Debtor, owns the 

remaining twenty-five percent. Appellant, a printing 

company, holds the single largest claim against the Debtor 

and the Debtor’s CEO, Bruce Heverly, husband of Joanne 

Heverly, for $9,359,630.91, which stems from a judgment 

entered in the District Court for the Eastern District of 

Wisconsin.1 The Court of Appeals for the Seventh Circuit

has since affirmed that judgment. See Quad/Graphics, Inc. v. 

One2One Commc’ns, LLC, 529 F. App’x 784, 793 (7th Cir. 

2013). 

The Debtor filed a voluntary petition for relief under 

Chapter 11 of the United State Bankruptcy Code, 11 U.S.C. § 

101 et seq. (the “Bankruptcy Code”), in the Bankruptcy Court 

for the District of New Jersey (the “Bankruptcy Court”). 

Thereafter, the Office of the United States Trustee formed an 

official unsecured creditors committee (the “Committee”) 

 

1 The Debtor’s unsecured claims, not including 

Appellant’s claim, total less than $1.3 million. 
5

consisting of Appellant, Ricoh Production Print Solutions, 

LLC, and Enterprise Group.

Between September 2012 and January 2014, the 

Debtor filed the First,

2 Second, and Third Amended Plans of 

Reorganization. After the Bankruptcy Court denied 

confirmation of the First Amended Plan of Reorganization, 

Bela Szigethy (“Szigethy”) agreed to make an investment in 

the Debtor.3 The Debtor filed a Fourth Amended Plan of 

Reorganization (the “Plan”) on January 25, 2013, under 

which a third-party, One2One Holdings, LLC (“Plan 

Sponsor”) would acquire a membership interest in the Debtor. 

The Plan incorporated a Plan Support Agreement which

provided the Plan Sponsor with the exclusive right to 

purchase 100% of the Debtor’s equity for $200,000. Neither

the Plan Sponsor nor any third-party was to contribute any 

additional capital to fund the Plan. The Plan also 

incorporated the terms of the Committee Agreement with 

respect to distributions and the waiver of preference actions 

against unsecured creditors. 

 

2 The First Amended Plan incorporated an agreement 

with the Committee (the “Committee Agreement”) providing 

for: (i) a distribution to unsecured creditors of $1.25 million 

over seven years, (ii) a non-compete clause binding the 

Heverlys and their relatives until all payments were made to 

unsecured creditors, and (iii) waiver of preference actions

against unsecured creditors.

3 Szigethy is the founder, co-owner, and Co-CEO of 

The Riverside Company, a global private equity firm holding 

over $3 billion in assets.
6

On March 5, 2013, after holding a five-day 

confirmation hearing, and over the objection of Appellant, 

Bankruptcy Judge Winfield entered an order (the 

“Confirmation Order”) confirming the Plan.

4

 The 

Confirmation Order was automatically stayed for fourteen 

days pursuant to Federal Rule of Bankruptcy Procedure

3020(e). Appellant moved for a stay pending appeal, which 

was denied. The Bankruptcy Court also denied a request by 

the Debtor to shorten the automatic fourteen-day stay.5 The 

parties briefed the merits of the appeal, but the District Court 

 

4 Appellant, the sole objector to the Plan, opposed 

confirmation on the basis that, inter alia, the Plan violated the 

absolute priority rule under 11 U.S.C. § 1129(b) by allowing 

equity holders to retain property without paying unsecured 

creditors in full.

5 On March 18, 2013, Appellant filed Notices of 

Appeal from the Bankruptcy Court’s Confirmation Order and 

the Bankruptcy Court’s Order denying Appellant’s motion for 

a stay pending appeal. On March 19, 2013, the final day of 

the automatic stay, Appellant filed an emergency application 

pursuant to Federal Rule of Bankruptcy Procedure 8005 

seeking to temporarily stay the Confirmation Order, and

requesting that the Court order appellees to show cause as to 

why a stay pending appeal should not issue. Once the District 

Court denied its application, Appellant appealed that decision 

to the Third Circuit, which upheld the denial of the stay. 

Appellant subsequently sought injunctive relief from the 

District Court, which was denied pursuant to the law of the 

case doctrine.
7

never reached those issues, as it granted the Debtor’s motion 

to dismiss the appeal as equitably moot on June 24, 2013.

II. Jurisdiction and Standard of Review

The Bankruptcy Court had jurisdiction under 28 

U.S.C. § 157(b). The District Court had jurisdiction under 28 

U.S.C. § 158(a). We have jurisdiction under 28 U.S.C. §§ 

158(d) and 1291.

We review for abuse of discretion a district court’s 

decision that a bankruptcy appeal is equitably moot. 

Continental, 91 F.3d at 560. 

III. Analysis

a. Appellant’s Challenge to the Equitable 

Mootness Doctrine

As an initial matter, Appellant asserts that the 

equitable mootness doctrine is unconstitutional and contrary 

to the Bankruptcy Code. Because we have already approved 

the doctrine of equitable mootness in Continental,

6 only the 

 

6

It should be noted that nearly all of the other Courts 

of Appeals with jurisdiction to hear bankruptcy appeals have 

endorsed some form of the equitable mootness doctrine. See

In re Healthco Int’l, Inc., 136 F.3d 45, 48 (1st Cir. 1998); In 

re Charter Commc’ns, Inc., 691 F.3d 476, 481 (2d Cir. 2012); 

Behrmann v. Nat’l Heritage Found., 663 F.3d 704, 713–14 

(4th Cir. 2011); In re Scopac, 624 F.3d 274, 281–82 (5th Cir. 

2010); In re Am. HomePatient, Inc., 420 F.3d 559, 563–65 

(6th Cir. 2005); In re UNR Indus., Inc., 20 F.3d 766, 769 (7th 
8

Court sitting en banc would have the authority to reevaluate 

our prior holding. See United States v. White, 748 F.3d 507, 

512–13 (3d Cir. 2014).7 This Court may only decline to 

follow a prior decision of our Court without the necessity of 

an en banc decision when the prior decision conflicts with a 

Supreme Court decision. See Chester ex rel. N.L.R.B. v. 

Grane Healthcare Co., 666 F.3d 87, 94 (3d Cir. 2011); see 

also Morrow v. Balaski, 719 F.3d 160, 179 (3d Cir. 2013) (en 

banc) (Smith, J., concurring) (“‘[E]ven in constitutional 

cases’ . . . , the doctrine of stare decisis ‘carries such 

persuasive force’ that departing from it has ‘always required’ 

some ‘special justification.’”) (quoting Arizona v. Rumsey, 

467 U.S. 203, 212 (1984)). 

 

Cir. 1994); In re Thorpe Insulation Co., 677 F.3d 869, 879–

83 (9th Cir. 2012); In re Paige, 584 F.3d 1327, 1337–38 (10th 

Cir. 2009); In re Lett, 632 F.3d 1216, 1225–26 (11th Cir. 

2011); In re AOV Indus., Inc., 792 F.2d 1140, 1147–48 (D.C. 

Cir. 1986). The Eighth Circuit has yet to address the merits 

of the doctrine’s applicability in a precedential opinion. 

Compare In re Nevel Props. Corp., 765 F.3d 846, 848 & n.3 

(8th Cir. 2014) (affirming on the merits and denying as moot

appellee’s motion to dismiss the appeal as equitably moot),

with In re President Casinos, Inc., 409 F. App’x 31, 31–32 

(8th Cir. 2010) (per curiam) (affirming district court’s 

dismissal of bankruptcy appeal as equitably moot). 

7 See also 3d Cir. I.O.P. 9.1 (2010) (“[N]o subsequent 

panel overrules the holding in a precedential opinion of a 

previous panel. Court en banc consideration is required to do 

so.”).
9

Appellant argues that our equitable mootness 

jurisprudence should be reevaluated in light of the Supreme 

Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011). 

Appellant contends that after Stern, a bankruptcy court’s 

ability to enter binding, final judgments in “core” bankruptcy 

proceedings—like plan confirmations—must be subject to 

district court review on appeal under traditional appellate 

standards. Stern alone does not permit us to depart from 

Continental. 

In Stern, the Supreme Court granted certiorari to 

resolve the question of whether 28 U.S.C. § 157(b)(2)(C) is 

unconstitutional because it gives non-Article III judges the 

power to render final judgments on common law compulsory 

counterclaims that are not necessarily resolved in the process 

of allowing or disallowing the defendant’s proof of claim. 

The Court in Stern found that the provision unconstitutionally 

delegated the judicial power of the United States to nonArticle III bankruptcy judges. Justice Roberts’s opinion 

relied heavily on Murray’s Lessee v. Hoboken Land & 

Improvement Co., 59 U.S. 272, 284 (1855), which stated that

with the exception of certain “public rights,” Congress cannot 

“withdraw from judicial cognizance any matter which, from 

its nature, is the subject of a suit at common law, or in equity, 

or admiralty.” Because the counterclaim at issue in Stern was 

a tort claim at common law, the Court held that “[t]he 

Bankruptcy Court below lacked the constitutional authority to 

enter a final judgment on [this] state law counterclaim.” 

Stern, 131 S. Ct. at 2620. 

Thus, the Court in Stern made clear that non-Article III 

bankruptcy judges do not have the constitutional authority to 

adjudicate a claim that is exclusively based upon a legal right 

grounded in state law despite appellate review of the 
10

bankruptcy judge’s decision by an Article III judge. 

However, Stern did not consider the authority of bankruptcy 

judges to make final determinations regarding other kinds of 

claims and counterclaims brought by debtors and creditors, 

nor did Stern consider whether Article III requires appellate 

review of a bankruptcy judge’s decisions by an Article III 

judge. Accordingly, we are obligated to apply this Court’s 

equitable mootness doctrine notwithstanding Stern. 

b. Equitable Mootness Analysis

Following confirmation of a reorganization plan by a 

bankruptcy court, an aggrieved party has the statutory right to 

appeal the court’s ruling. Once a bankruptcy appeal has been 

filed, federal courts have a ‘‘‘virtually unflagging 

obligation’’’ to exercise the jurisdiction conferred on them. 

In re Semcrude, L.P., 728 F.3d 314, 320 (3d Cir. 2013)

(quoting Colo. River Water Conservation Dist. v. United 

States, 424 U.S. 800, 817 (1976)). Before there is a basis to 

avoid deciding the merits of an appeal, we must first 

determine that granting the requested relief is almost certain 

to produce a ‘‘perverse’’ outcome— significant ‘‘injury to 

third parties’’ and/or ‘‘chaos in the bankruptcy court’’ from a 

plan in tatters. In re Phila. Newspapers, LLC, 690 F.3d 161, 

168 (3d Cir. 2012). Only in such circumstances is equitable 

mootness a valid consideration.

A court decides to dismiss an appeal as equitably moot 

through the consideration of the following ‘‘prudential’’

factors:

(1) whether the reorganization plan has been 

substantially consummated, (2) whether a stay 

has been obtained, (3) whether the relief 
11

requested would affect the rights of parties not 

before the court, (4) whether the relief requested 

would affect the success of the plan, and (5) the 

public policy of affording finality to bankruptcy 

judgments.

Id. (citing Continental, 91 F.3d at 560). Depending on the 

circumstances, each factor is given varying weight. Id. 

(citing In re PWS Holding Corp., 228 F.3d 224, 236 (3d Cir. 

2000)). 

These factors are interconnected and overlapping. 

Semcrude, 728 F.3d at 320 (citing Phila. Newspapers, 690 

F.3d at 168–69). ‘‘The second factor principally duplicates 

the first in the sense that a plan cannot be substantially 

consummated if the appellant has successfully sought a stay.’’ 

Phila. Newspapers, 690 F.3d at 169 (internal quotation marks 

omitted). In analyzing the first factor, courts have considered

‘‘whether allowing an appeal to go forward will undermine 

the plan, and not merely whether the plan has been 

substantially consummated under the Bankruptcy Code’s 

definition.’’8Id. at 168–69. This collapses the first and 

 

8 Substantial consummation is defined in the Bankruptcy 

Code to mean the

(A) transfer of all or substantially all of the property 

proposed by the plan to be

transferred;

(B) assumption by the debtor or by the successor to the 

debtor under the plan of the business or of the 

management of all or substantially all of the property 

dealt with by the plan; and
12

fourth factors. The third factor adds an additional 

consideration—whether granting relief will undermine ‘‘the 

reliance of third parties, in particular investors, on the finality 

of the transaction.’’ Id. at 169 (internal quotation marks

omitted). ‘‘Finally, the fifth factor supports the other four by 

encouraging investors and others to rely on confirmation 

orders, thereby facilitating successful reorganizations by 

fostering confidence in the finality of confirmed plans.’’ Id.

Taken together, these factors require that the equitable 

mootness doctrine be applied only to “prevent[] a court from 

unscrambling complex bankruptcy reorganizations when the 

appealing party should have acted before the plan became 

extremely difficult to retract.” Nordhoff Invs., Inc. v. Zenith 

Elecs. Corp., 258 F.3d 180, 185 (3d Cir. 2001). The party 

seeking dismissal bears the burden to demonstrate that, 

weighing the relevant factors, dismissal is warranted. 

Semcrude, 728 F.3d at 321.

In practice, equitable mootness proceeds in two 

analytical steps: “(1) whether a confirmed plan has been 

substantially consummated; and (2) if so, whether granting 

the relief requested in the appeal will (a) fatally scramble the 

plan and/or (b) significantly harm third parties who have 

justifiably relied on the plan’s confirmation.” Id.

“Satisfaction of [the] statutory standard indicates that 

implementation of the plan has progressed to the point that 

turning back may be imprudent.” Id.

 

(C) commencement of distribution under the plan. 

11 U.S.C. § 1101.
13

If the confirmed plan has been substantially 

consummated, a court should next determine whether 

granting relief will require undoing the plan as opposed to 

modifying it in a manner that does not cause its collapse. See 

In re Zenith Elecs. Corp., 329 F.3d 338, 346–47 (3d Cir.

2003) (appeal not equitably moot where disgorgement of 

professional fees would not unravel plan); United Artists 

Theatre Co. v. Walton, 315 F.3d 217, 228 (3d Cir. 2003) 

(appeal not equitably moot where striking indemnification 

provision would leave the plan otherwise intact); PWS, 228 

F.3d at 236 (appeal not equitably moot where plan could go 

forward even if certain releases were stricken). A court

should also consider the extent a successful appeal, by 

altering the plan or otherwise, will harm third parties who 

have acted reasonably in reliance on the finality of plan 

confirmation. Semcrude, 728 F.3d at 321.

c. Application of the Equitable Mootness 

Doctrine

Since this Court’s adoption of the equitable mootness 

doctrine in Continental, we have emphasized that the doctrine 

must be construed narrowly and applied in limited

circumstances. In Philadelphia Newspapers, this Court 

emphasized “that a court only should apply the equitable 

mootness doctrine . . . ‘[in] complex bankruptcy 

reorganizations when the appealing party should have acted 

before the plan became extremely difficult to retract.’” 690 

F.3d at 169 (quoting Nordhoff, 258 F.3d at 185). “The 

doctrine is quite rightly ‘limited in scope’ and ‘cautiously 

applied.’” Id. (quoting Continental, 91 F.3d at 559). Further, 

the doctrine’s “judge-made origin, coupled with the 

responsibility of federal courts to exercise their jurisdictional 

mandate, obliges us . . . to proceed most carefully before 
14

dismissing an appeal as equitably moot.” Semcrude, 728 F.3d 

at 318. 

Our prior dismissals pursuant to the equitable 

mootness doctrine are inapposite here. Those prior 

applications of the doctrine involved complex bankruptcy 

reorganizations that included multiple related debtors, 

hundreds of millions of dollars in assets, liabilities and 

claims, and hundreds or thousands of creditors. For example, 

Continental involved the merger of fifty-three debtors with 

Continental, a $110 million investment in the reorganized 

debtor, the transfer by foreign governments of route 

authorities, and the assumption of leases and executory 

contracts worth over five billion dollars. 91 F.3d at 567. 

Similarly, in Nordhoff, the reorganization plan required 

eighteen months of preparation between several parties, the 

exchange of over $100 million in bonds, the issuance of new 

stock, the extension of a sixty million dollar credit facility, 

and the exchange and cancellation of over $100 million of

debt. 258 F.3d at 182, 186.

In contrast here, the Debtor’s reorganization involved 

a $200,000 investment in the reorganized debtor and only one 

secured creditor that held a blanket lien on the Debtor’s assets 

for less than $100,000. Further, the Debtor had only 

seventeen unsecured creditors, not including insiders. In 

addition, the Plan did not provide for new financing, mergers 

or dissolutions of entities, issuance of stock or bonds, name 

change, change of business location, change in management 

or any other significant transactions. The record illustrates

that this case did not involve a sufficiently complex 

bankruptcy reorganization such that dismissal on the basis of 

equitable mootness would be appropriate. 
15

Consideration of the prudential factors also 

demonstrates that the District Court abused its discretion. 

The District Court found that the Plan was substantially 

consummated. The Debtor transferred all property required 

to be transferred on or shortly after the effective date of the 

Plan, and the reorganized debtor commenced distributions

under the Plan. See 11 U.S.C. § 1101(2)(C) (requiring only 

the “commencement of distribution under the plan”). The 

District Court observed that Appellant failed to obtain a stay. 

We do not dispute those determinations. However, the 

District Court also found that granting relief to Appellant

would lead to a perverse outcome by causing the Plan to be 

fully unraveled, resulting in significant harm to third parties. 

We disagree. In our judgment, the proper application of the 

prudential factors does not permit dismissal on equitable 

mootness grounds. 

As noted, the first and fourth prudential factors require 

that a court consider whether allowing an appeal to go 

forward will undermine the plan. Semcrude, 728 F.3d at 321. 

In finding that these factors weigh in favor of equitable 

mootness, the District Court found that Appellant “offered no 

options which would allow the Court to grant it relief without 

[unscrambling the Plan] entirely.” In re One 2 One 

Commc’ns, LLC, No. 13-1675, 2013 WL 3864056, at *6 

(D.N.J. July 24, 2013). In reaching this conclusion, the 

District Court erred in two fundamental respects: it placed

the burden on Appellant to demonstrate that this factor 

weighed in its favor, and it concluded that because granting 

Appellant’s requested relief would reverse the Plan, this 

factor necessarily favored the Debtor. 

To the contrary, it was the Debtor’s burden, as the 

party seeking dismissal, to demonstrate that the prudential 
16

factors weighed in its favor. See Semcrude, 728 F.3d at 321. 

Further, courts are obligated to consider not only whether 

granting the requested relief would require reversal of the 

plan, but also whether the plan could be retracted without 

great difficulty and inequity. See Nordhoff, 258 F.3d at 186. 

We have noted in prior cases that reversal of a confirmation 

order is more likely to lead to an inequitable result “where the 

reorganization involves intricate transactions or where outside 

investors have relied on the confirmation of the plan.” 

Continental, 91 F.3d at 560–61 (citations omitted); see also 

Nordhoff, 258 F.3d at 186 (finding that plan that involved 

hundreds of millions of dollars, the issuance of unretractable

bonds, and restructuring the debt, assets, and management of 

a major corporation “could [not] be reversed without great 

difficulty and inequity”). We have most frequently found that 

a plan could not be retracted when the reorganized debtor 

issued publically traded debt or securities. See, e.g.,

Nordhoff, 258 F.3d at 186.

Here, the Plan did not involve intricate transactions 

and the Debtor did not present sufficient evidence that the 

Plan would be difficult to unravel. Instead, the Debtor

identified various post-confirmation transactions entered into

in the ordinary course of the reorganized Debtor’s business. 

These routine transactions, including the investment by the 

Plan Sponsor, the commencement of distributions, the hiring

of new employees and entering into various agreements with 

existing and new customers are likely to transpire in almost 

every bankruptcy reorganization where the appealing party is 

unsuccessful in obtaining (or fails to seek) a stay. Further, the 

Plan did not involve the issuance of any publicly traded 

securities, bonds, or other circumstances that would make it 

difficult to retract the Plan. Accordingly, the District Court
17

abused its discretion in finding that the first and fourth factors

favored the Debtor. 

Furthermore, under the third factor, “the reliance by

third parties, in particular investors, on the finality of the 

[Plan’s confirmation]” is minimal. Continental, 91 F.3d at 

562. The District Court articulated no specific harm that 

would inure to the detriment of third parties and instead stated 

that, “One2One argues that the relief Appellant seeks would 

unravel the Plan in its entirety and call into question the 

continued viability of One2One to the detriment of third 

parties.” One 2 One Commc’ns, 2013 WL 3864056, at *8.9 

However, as the District Court noted, “[t]his is not a case 

where a debtor issued publicly traded securities or debt 

pursuant to a plan that third parties to the bankruptcy case 

could have purchased on the open market.” Id. at *7

(alteration in original) (internal quotation marks omitted). 

Nevertheless, the Debtor now argues that allowing 

Appellant’s appeal to be heard on the merits would inevitably

affect the rights of parties not before the court such as 

creditors, employees, and third-party workers. 

This type of minimal third-party reliance is present in 

nearly all bankruptcy reorganizations and cannot be 

characterized as almost certain to cause significant injury to 

 

9

Indeed, the Debtor concedes on appeal that the risk of 

harm is speculative: “granting the Appellant’s requested relief 

would potentially jeopardize the Reorganized Debtor’s 

successful emergence from chapter 11 and seriously threaten 

the viability of its ongoing business.” Appellee’s Br. 42 

(quoting App. 3161) (internal quotation marks omitted). 
18

third parties. Cf. Continental, 91 F.3d at 556 (emphasizing 

that the record was replete with evidence that investing 

parties not before the court relied on the confirmation order in 

making decision to enter into a $450 million investment 

agreement under a complex arrangement). In light of the 

limited evidence of potential third-party injury, the District 

Court also abused its discretion in determining that this factor 

favored the Debtor. 

Finally, the prudential consideration of public policy 

weighs in favor of providing Appellant with appellate review 

of its bankruptcy appeal. “Though the finality of the 

Bankruptcy Court’s decision necessarily will be disturbed,” 

this Court has recognized an appealing party’s “statutory right

to review of the [Bankruptcy] Court’s decision.” Phila. 

Newspapers, 690 F.3d at 171. Further, “[t]he presumptive 

position remains that federal courts should hear and decide on 

the merits cases properly before them.” Semcrude, 728 F.3d 

at 326. 

Here, Appellant has repeatedly advanced the 

contention that it is entitled to appellate review. Appellant 

objected to the Plan, applied for a stay, filed an appeal of the

Confirmation Order and sought emergency appellate review. 

In light of the other prudential factors, denying Appellant

review now would be distinctly inequitable.10 

 

10 Appellant also argues on appeal that the District 

Court abused its discretion by dismissing its appeal of the 

third-party releases in the Plan. In light of our finding that the 

District Court abused its discretion in dismissing Appellant’s 
19

IV. Conclusion

Absent en banc reconsideration, we cannot entertain 

Appellant’s challenge to equitable mootness, as Continental

remains the law of this circuit. Because the District Court 

abused its discretion under Continental, we will reverse the 

District Court’s dismissal and remand for its consideration of 

Appellant’s bankruptcy appeal on its merits. 

 

entire appeal as equitably moot, we need not consider 

Appellant’s separate argument as to the third-party releases. 
In re: One2One Communications, LLC, No. 13-3410

KRAUSE, Circuit Judge, concurring:

I agree wholeheartedly with the majority’s equitable 

mootness analysis, which we are compelled to undertake 

under our controlling precedent. I write separately, however, 

because I do not believe we should persist in our failed 

attempts to cabin this legally ungrounded and practically 

unadministrable “judge-made abstention doctrine.” In re 

Semcrude, L.P., 728 F.3d 314, 317 (3d Cir. 2013). Rather, 

the time has come to reconsider whether it should exist at all, 

and, if we conclude it should, to reform it substantially.

Although we adopted equitable mootness en banc in In 

re Continental Airlines, 91 F.3d 553 (3d Cir. 1996) (en banc),

neither the constitutional nor the statutory basis for the 

doctrine were challenged in that case, and the Court was still 

nearly evenly divided—with then-Judge Alito leading the 

dissent. See id. at 568 (Alito, J., dissenting). The doctrine 

was designed to be “limited in scope and cautiously applied,”

specifically in highly complex cases where limited relief was 

not feasible and upsetting a reorganization would cause 

substantial harm to numerous third parties. Id. at 559 

(majority opinion). In the nearly twenty years since we 

launched that experiment, it has proved highly problematic,

with district courts continuing to dismiss appeals in the 

simplest of bankruptcies. Further, as courts and litigants 

(including Appellees) have struggled to identify a statutory 

basis for the doctrine, it has become painfully apparent that 

there is none. Moreover, a series of Supreme Court decisions 

since our adoption of the doctrine makes clear that, whatever 

doubts we set aside twenty years ago to embrace the doctrine, 

it cannot survive constitutional scrutiny today. I therefore 
2

urge our Court to consider eliminating, or at the very least,

reforming, equitable mootness.

I.

I begin with our experience with the doctrine. 

Equitable mootness was intended to “provide[] a vehicle 

whereby the court can prevent substantial harm to numerous 

parties,” namely where “the reorganization involves intricate 

transactions or where outside investors have relied on the 

confirmation of the plan.” Cont’l Airlines, 91 F.3d at 559-60 

(citations omitted). What Continental Airlines spawned is a 

different species altogether. We have repeatedly admonished

that the doctrine applies only to attempts to “unscrambl[e] 

complex bankruptcy reorganizations,” Nordhoff Invs., Inc. v. 

Zenith Elecs. Corp., 258 F.3d 180, 185 (3d Cir. 2001) 

(emphasis added),1and even then “‘is limited in scope and 

should be cautiously applied,’” id. (quoting In re PWS 

Holding Corp., 228 F.3d 224, 236 (3d Cir. 2000)),

2

as well as

that it is inapplicable when limited relief is available on 

appeal, Semcrude, 728 F.3d at 323.3 Yet district courts have 

 

1 See also In re Phila. Newspapers, 690 F.3d 161, 169 

(3d Cir. 2012) (reciting Nordhoff Investments); In re Zenith 

Elecs. Corp., 329 F.3d 338, 340 (3d Cir. 2003) (same).

2 See also Phila. Newspapers, 690 F.3d at 170 (reciting 

the same proposition as stated in Cont’l Airlines); Zenith 

Elecs. Corp., 329 F.3d at 343 (same).

3 See also Phila. Newspapers, 690 F.3d at 170; Zenith 

Elecs. Corp., 329 F.3d at 346; United Artists Theatre Co. v. 

Walton, 315 F.3d 217, 228 (3d Cir. 2003); PWS, 228 F.3d at 

236.
3

continued to invoke the doctrine in modest, non-complex 

bankruptcies and where appellants have sought limited relief. 

We have also rejected invitations to extend equitable 

mootness outside its intended context, i.e., appeals from 

confirmation orders. See In re Diet Drugs, 582 F.3d 524, 552 

n.55 (3d Cir. 2009) (declining to decide whether equitable 

mootness applied to class settlement); id at 557 (Ambro, J., 

dissenting) (cautioning that extending “the controversial 

doctrine of equitable mootness, which applies only to 

attempts to unscrambl[e] complex bankruptcy 

reorganizations,” to class settlement was inappropriate 

(alteration in original) (internal quotation marks omitted)).

But our district courts have not been so discriminating. See 

In re Jevic Holding Corp., Nos. 13-104 & 13-105, 2014 WL 

268613, at *4 (D. Del. Jan. 24, 2014) (applying equitable 

mootness to dismiss an appeal from an order approving a 

settlement and structured dismissal). In fact, the doctrine has 

even been invoked by bankruptcy courts to dismiss motions 

to revoke reorganization plans. See, e.g., In re Innovative 

Clinical Solutions, Ltd., 302 B.R. 136, 140-42 (Bankr. D. Del. 

2003); cf. In re Machne Menachem, Inc., 371 B.R. 63, 73-75 

(Bankr. M.D. Pa. 2006) (applying equitable mootness factors 

but declining to dismiss on equitable mootness grounds). 

Since Continental Airlines, we have reversed findings 

of equitable mootness or declined to dismiss appeals as 

equitably moot no less than seven times. See In re SCH 

Corp., 569 F. App’x 119, 122 (3d Cir. 2014) (not 

precedential) (reversing a finding of equitable mootness); 

Semcrude, 728 F.3d 314 at 323 (same); Phila. Newspapers, 

690 F.3d at 170 (same); Zenith Elecs. Corp., 329 F.3d at 346 

(same); United Artists, 315 F.3d at 228 (declining to dismiss 

as equitably moot an appeal from a district court exercising 
4

original jurisdiction over a bankruptcy case); PWS, 228 F.3d 

at 237 (same); In re Cont’l Airlines (Continental II), 203 F.3d 

203, 210 (3d Cir. 2000) (declining to dismiss appeal as 

equitably moot because the debtor had not preserved the 

issue, but noting that equitable mootness did not apply).

This case is only the most recent example, but it 

epitomizes the problem. As the majority explains, what we 

have is a small, garden-variety bankruptcy. Quad’s appeal 

did not implicate intricate transactions that would be difficult 

to unravel, nor did it pose a significant risk of injuring third 

parties. Further, in the event the Plan could not be undone, 

Quad urged the District Court to grant the limited relief of 

striking third-party releases from the Plan. The District Court 

nonetheless dismissed Quad’s timely and repeated requests 

for appellate review on “equitable mootness” grounds. That

yet another thoughtful and diligent District Judge has 

misconstrued our case law as permitting the abdication of

jurisdiction in these circumstances reflects a doctrine adrift 

and in need of reconsideration by our Court. 

II.

So what is the constitutional or statutory anchor for 

declining to exercise jurisdiction over bankruptcy appeals 

dubbed “equitably moot”? Simply put, there is none.

The mandate that federal courts hear cases within their 

statutory jurisdiction is a bedrock principle of our judiciary. 

As Chief Justice Marshall wrote long ago, “[w]e have no 

more right to decline the exercise of jurisdiction which is 

given, than to usurp that which is not given. The one or the 

other would be treason to the [C]onstitution.” Cohens v. 

Virginia, 19 U.S. (6 Wheat.) 264, 404 (1821). Dismissing 
5

appeals in the name of equitable mootness violates this

“virtually unflagging obligation of the federal courts to 

exercise the jurisdiction given them.” Colo. River Water 

Conservation Dist. v. United States, 424 U.S. 800, 817 

(1976). Then-Judge Alito recognized as much in Continental

Airlines, rebuking the majority for “throw[ing] [the 

appellants] out of court without reaching the merits of their 

arguments . . . even though (a) th[e] case [was] clearly not 

‘moot’ in any proper sense of the term, (b) we unquestionably 

ha[d] statutory jurisdiction, and (c) we have a ‘virtually 

unflagging obligation’ to exercise the jurisdiction that we 

have been given.” Cont’l Airlines, 91 F.3d at 568 (Alito, J., 

dissenting) (quoting Colo. River, 424 U.S. at 817). 

While we have referred to equitable mootness as a 

“judge-made abstention doctrine,” Semcrude, 728 F.3d at 

317, it is not among the handful of narrow and deeply rooted 

abstention doctrines recognized by the Supreme Court, 

namely, Pullman, Burford, Younger, and Colorado River.

4

 

 

4 See Colo. River, 424 U.S. at 818 (abstaining from 

hearing cases that are duplicative of a pending state 

proceeding); Younger v. Harris, 401 U.S. 37, 49-54 (1971)

(abstaining from hearing cases that would interfere with a 

pending state criminal proceeding); Burford v. Sun Oil Co., 

319 U.S. 315, 333-34 (1943) (abstaining where adjudication 

in federal court would unduly intrude into the processes of 

state government or undermine the state’s ability to maintain 

desired uniformity); R.R. Comm’n of Tex. v. Pullman Co., 312 

U.S. 496, 501 (1941) (abstaining from cases in which the 

resolution of a federal constitutional question might be 

obviated if the state courts were given the opportunity to 

interpret ambiguous state law); see also Quackenbush v. 
6

Those doctrines, much like the doctrine of forum non 

conveniens, proceed from the premise that “[i]n rare 

circumstances, federal courts can relinquish their jurisdiction 

in favor of another forum.” Quackenbush v. Allstate Ins. Co., 

517 U.S. 706, 722 (1996) (emphasis added).5 Moreover, the 

Supreme Court has “on several occasions explicitly 

recognized that abstention ‘does not, of course, involve the 

abdication of federal jurisdiction, but only the postponement

of its exercise.’” England v. La. State Bd. of Med. Exam’rs, 

375 U.S. 411, 465 (1964) (emphasis added) (quoting 

Harrison v. NAACP, 360 U.S. 167, 177 (1959)). But where 

there is no other forum and and no later exercise of 

jurisdiction, as in the case of equitable mootness, 

relinquishing jurisdiction is not abstention; it’s abdication. In 

short, there is no analogue for equitable mootness among the 

abstention doctrines.

Nor is there a likely prospect of the Supreme Court 

either taking an expansive view of an existing doctrine to 

encompass equitable mootness or recognizing equitable 

mootness as a wholly new abstention doctrine. On the 

contrary, the Court has repeatedly endeavored to narrow the 

scope of the abstention doctrines, particularly within the past 

 

Allstate Ins. Co., 517 U.S. 706, 716-23 (1996) (explaining the 

contours of the abstention doctrines).

5 See generally David L. Shapiro, Jurisdiction and 

Discretion, 60 N.Y.U. L. Rev. 543, 548-57, 579-87 (1985) 

(describing practices of judicial abstention sounding in 

justiciability, comity, forum non conveniens, separation of 

powers, and other principles and explaining that the range of 

judges’ equitable discretion is affected by governing statutes).
7

few years. In Sprint Communications, Inc. v. Jacobs, 134 S. 

Ct. 584 (2013), for instance, the Court refused to extend the 

three “exceptional” situations where Younger abstention is 

appropriate, reaffirming Chief Justice Marshall’s “early and 

famous[]” assertion of federal courts’ obligation to hear and 

decide cases within their jurisdiction. Sprint Commc’ns, 134 

S. Ct. at 590-91 (citing Cohens, 6 Wheat. at 404). The Court 

relied on that assertion again when declining to expand the 

political question doctrine in Zivotofsky ex rel. Zivotofsky v. 

Clinton, 132 S. Ct. 1421 (2012), explaining that “the 

Judiciary has a responsibility to decide cases properly before 

it, even those it ‘would gladly avoid.’” Id. at 1427 (quoting 

Cohens, 6 Wheat. at 404).

And just last year, in Lexmark International, Inc. v. 

Static Control Components, Inc., 134 S. Ct. 1377 (2014), the 

Court confirmed its disapproval of doctrines that permit 

courts to decline to decide claims on “prudential” rather than 

statutory or constitutional grounds, admonishing that such 

doctrines conflict with the Court’s “recent reaffirmation [in 

Sprint Communications] of the principle that a federal court’s 

obligation to hear and decide cases within its jurisdiction is 

virtually unflagging.” Id. at 1386 (quoting Sprint Commc’ns, 

134 S. Ct. at 591) (internal quotation marks omitted). After 

concluding the plaintiff’s claim “present[ed] a case or 

controversy that [was] properly within federal courts’ Article 

III jurisdiction,” the Court refused to frame the question 

before it, which was whether the plaintiff had a cause of 

action under a federal statute, as a question of “prudential 

standing” despite using that label in the past. Id. at 1386-87. 

The Court reasoned: 

We do not ask whether in our judgment 

Congress should have authorized [the 
8

plaintiff’s] suit, but whether Congress in fact 

did so. Just as a court cannot apply its 

independent policy judgment to recognize a 

cause of action that Congress has denied, it 

cannot limit a cause of action that Congress has 

created merely because “prudence” dictates.

Id. at 1388 (citation omitted).

These recent decisions counsel that equitable mootness 

is not a logical extension of the narrow abstention doctrines 

recognized by the Court and will not be viewed favorably as a 

relatively new prudential one. See New Orleans Pub. Serv., 

Inc. v. Council of City of New Orleans, 491 U.S. 350, 358 

(1989) [hereinafter “NOPSI”] (explaining that the Court’s 

cases “have long supported the proposition that federal courts 

lack the authority to abstain from the exercise of jurisdiction 

that has been conferred”). Rather, this judge-made doctrine

can survive only if grounded in the Bankruptcy Code or the 

federal statutes conferring bankruptcy jurisdiction—the 

subject to which we now turn. 

III.

A.

The majority opinion in Continental Airlines did not 

engage with any statutory arguments in favor of equitable 

mootness because none were raised. A review of the 

statutory language, however, reveals that the Bankruptcy 

Code and related jurisdictional statutes provide no support for 

equitable mootness and actually undermine it. 
9

Title 28 outlines federal courts’ bankruptcy 

jurisdiction. Section 1334 gives district courts original 

jurisdiction over bankruptcy cases, while § 157 allows them 

to refer cases to bankruptcy courts. 28 U.S.C. §§ 157(a), 

1334(a). The statute explicitly makes the bankruptcy court’s 

authority to enter orders, including confirmation orders, 

“subject to review” by the referring district court. Id. § 

157(b)(1). In turn, § 158 provides that the district courts 

“shall have jurisdiction to hear appeals” from bankruptcy 

courts. Id. § 158(a). Neither § 157 nor § 158 states or 

implies that district courts may decline to exercise that 

jurisdiction by dismissing an appeal as equitably moot.

Appellees point to § 1334(c)(1), which provides that 

“nothing in this section prevents a district court in the interest 

of justice, or in the interest of comity with State courts or 

respect for State law, from abstaining from hearing a

particular proceeding arising under title 11 or arising in or 

related to a case under title 11.” Id. § 1334(c)(1). That 

provision, however, provides no support for equitable 

mootness. To begin, § 1334 cannot be read to authorize 

district courts to abstain from exercising their appellate 

jurisdiction when it refers to the original jurisdiction of the 

district courts, not to appellate jurisdiction at all. See id. § 

1334(a); In re Mystic Tank Lines Corp., 544 F.3d 524, 528 

(3d Cir. 2008). 

Moreover, § 1334 allows abstention “in the interest of 

justice, or in the interest of comity with State courts or respect 

for State law.” Equitable mootness no doubt does not involve 

the latter. As to the former, it could be argued that preserving 

a reorganization plan may serve the “interest of justice.” But 

how is it “just” to bar a potentially meritorious appeal when

an appellate court—after hearing the merits of the appeal—
10

instead could use its equitable authority to fashion a limited 

remedy while still protecting third parties that may be harmed 

if a plan is undone? See Semcrude, 728 F.3d at 324-25 (citing 

Cont’l Airlines, 91 F.3d at 571-72 (Alito, J., dissenting))

(“[T]he feared consequences of a successful appeal are often 

more appropriately dealt with by fashioning limited relief at 

the remedial stage than by refusing to hear the merits of an 

appeal at its outset.”); see also NOPSI, 491 U.S. at 358-59 

(noting that while federal courts “lack the authority to abstain 

from the exercise of jurisdiction that has been conferred,” 

they retain “discretion in determining whether to grant certain 

types of relief”).

Additionally, if § 1334(c) were the basis for equitable 

mootness, our construction of the doctrine (and every other 

Circuit’s) would violate § 1334(d), which provides: “Any 

decision to abstain or not to abstain made under subsection 

(c) . . . is not reviewable by appeal or otherwise by the court 

of appeals under section 158(d), 1291, or 1292 of this title or 

by the Supreme Court of the United States under section 1254 

of this title.” 28 U.S.C. § 1334(d) (emphasis added).

6

 Yet we 

have never interpreted § 1334 to bar our review of district 

court orders dismissing bankruptcy appeals on equitable 

mootness grounds. On the contrary, dating back to 

Continental Airlines, we have not only reviewed such 

decisions, but have often reversed them. Thus, interpreting § 

1334(c) as the statutory basis for equitable mootness would 

 

6 Section 1334(d) operates much like § 1447(d), which 

precludes review of orders remanding removed cases to state 

court. See 28 U.S.C. § 1447(d) (“An order remanding a case 

to the State court from which it was removed is not 

reviewable on appeal or otherwise . . . .”). 
11

be incompatible with our case law, as well as the language 

and structure of § 1334.

Finally, the legislative history of § 1334(c) is devoid of 

any mention of equitable mootness. It indicates the provision 

was enacted to respond to the Supreme Court’s decision in 

Northern Pipeline Construction Co. v. Marathon Pipe Line 

Co., 458 U.S. 50 (1982), and to avoid constitutional concerns 

with having state law claims resolved in federal courts. See 

H.R. Rep. No. 98-882 (1984), reprinted in 1984 

U.S.C.C.A.N. 576, 1984 WL 37391. The Supreme Court’s 

interpretation of § 1334 in Stern v. Marshall, 131 S. Ct. 2594 

(2011), reinforces that Congress’s intent was to authorize 

bankruptcy courts to abstain from hearing state law claims in 

certain circumstances—not to allow district courts to abdicate 

their appellate jurisdiction:

[T]he framework Congress adopted in the 1984 

Act . . . contemplates that certain state law 

matters in bankruptcy cases will be resolved by 

judges other than those of the bankruptcy 

courts. Section 1334(c)(2), for example, 

requires that bankruptcy courts abstain from 

hearing specified non-core, state law claims that 

“can be timely adjudicated[ ] in a State forum of 

appropriate jurisdiction.” Section 1334(c)(1) 

similarly provides that bankruptcy courts may 

abstain from hearing any proceeding, including 

core matters, “in the interest of comity with 

State courts or respect for State law.”

Id. at 2619-20 (second alteration in original). Thus, the 

language, structure, and legislative history of § 1334, as well 

as its interpretation by the Supreme Court, indicate that 
12

Congress did not intend an equitable mootness exception to 

the federal courts’ appellate jurisdiction in bankruptcy cases.

Appellees urge that the “most plausible” basis for the 

doctrine is that the Bankruptcy Code “express[es] a policy 

favoring the finality of bankruptcy decisions” through 11 

U.S.C. §§ 363(m),7 364(e),8and 1127(b),

9

and equitable 

 

7 Section 363(m) provides: “The reversal or 

modification on appeal of an authorization under subsection 

(b) or (c) of this section of a sale or lease of property does not 

affect the validity of a sale or lease under such authorization 

to an entity that purchased or leased such property in good 

faith, whether or not such entity knew of the pendency of the 

appeal, unless such authorization and such sale or lease were 

stayed pending appeal.” 11 U.S.C. § 363(m). 

8 Section 364(e) provides: “The reversal or 

modification on appeal of an authorization under this section 

to obtain credit or incur debt, or of a grant under this section 

of a priority or a lien, does not affect the validity of any debt 

so incurred, or any priority or lien so granted, to an entity that 

extended such credit in good faith, whether or not such entity 

knew of the pendency of the appeal, unless such authorization 

and the incurring of such debt, or the granting of such priority 

or lien, were stayed pending appeal.” 11 U.S.C. § 364(e).

9 Section 1127(b) provides: “The proponent of a plan 

or the reorganized debtor may modify such plan at any time 

after confirmation of such plan and before substantial 

consummation of such plan, but may not modify such plan so 

that such plan as modified fails to meet the requirements of 

sections 1122 and 1123 of this title. Such plan as modified 
13

mootness fills a gap in the Code created by the absence of a 

provision limiting appellate review of plan confirmation 

orders. Semcrude, 728 F.3d at 317-18. But then-Judge Alito 

aptly explained why we should reject this argument in his 

Continental Airlines dissent: “[N]arrow provisions” such as 

§§ 363(m) and 364(e), “which merely prevent the upsetting of 

certain specific transactions if stays are not obtained,” cannot 

support the broad doctrine of equitable mootness. 91 F.3d at 

570 (Alito, J., dissenting) (emphasis added). By their terms, 

§§ 363(m) and 364(e) do not prevent an appellate court from 

hearing an appeal, or even from granting a particular remedy; 

they simply prevent the appellate court’s remedy from 

affecting certain transactions. See Krebs Chrysler-Plymouth, 

Inc. v. Valley Motors, Inc., 141 F.3d 490, 499 (3d Cir. 1998). 

Section 1127(b) provides even less support for equitable 

mootness, as it only restricts a party’s ability to modify a plan 

before confirmation; it says nothing about the powers of 

bankruptcy courts or appellate courts. 

Moreover, rather than establish a general “policy” 

supporting equitable mootness, these provisions weigh 

against the doctrine. Because Congress specified certain 

orders that cannot be disturbed on appeal absent a stay, basic 

canons of statutory construction compel us to presume that 

Congress did not intend for other orders to be immune from 

appeal. See Russello v. United States, 464 U.S. 16, 23 (1983); 

Andrus v. Glover Const. Co., 446 U.S. 608, 616-17 (1980). 

While the federal courts must fill statutory gaps in some 

 

under this subsection becomes the plan only if circumstances 

warrant such modification and the court, after notice and a 

hearing, confirms such plan as modified, under section 1129 

of this title.” 11 U.S.C. § 1127(b).
14

exceptional circumstances, see, e.g., United States v. Little 

Lake Misere Land Co., 412 U.S. 580, 593 (1973), we may not 

stretch a statute to create such gaps, and we generally 

acknowledge gaps to provide relief, not to deny relief which

is the consequence of denying appellate review.
15

B.

Even if there were a reading of the statute that 

supported equitable mootness, we would be compelled to 

reject it because of the serious constitutional questions that 

reading would raise. See Edward J. DeBartolo Corp. v. Fla. 

Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 

575 (1988); Sandoval v. Reno, 166 F.3d 225, 237 (3d Cir. 

1999).

Article III of the Constitution imposes certain 

requirements on officials who exercise the judicial power of 

the United States, U.S. Const. art. III § 1, but Congress often 

charges officials who are not required to meet those criteria 

with ruling on certain kinds of claims. Adjudication by such 

non-Article III tribunals, including bankruptcy courts, raises 

two distinct constitutional concerns. The first is the 

infringement on a litigant’s “entitlement to an Article III 

adjudicator,” a personal right recently reaffirmed in Wellness 

International Network, Ltd. v. Sharif, 135 S. Ct. 1932, 1944 

(2015). While that right can be waived, id., bankruptcy 

appellants whose appeals are dismissed as equitably moot 

clearly do not do so. Moreover, because they lack an 

alternative forum in which to pursue their claims against a 

debtor, most creditors do not truly consent to bankruptcy 

adjudication in the first place, see Stern, 131 S. Ct. at 2614, 

let alone adjudication without any appellate review.

The second is a non-waivable, structural concern that a 

“congressional decision to authorize the adjudication of 

Article III business in a non-Article III tribunal” would 

“impermissibly threaten[] the institutional integrity of the 

Judicial Branch.” Commodity Futures Trading Comm’n v. 
16

Schor, 478 U.S. 833, 851 (1986); see Wellness Int’l, 135 S. 

Ct. at 1944. In determining whether such an intrusion occurs, 

the Court scrutinizes among other things “the extent to which 

the ‘essential attributes of judicial power’ are reserved to 

Article III courts.” Schor, 478 U.S. at 851. Appellate review 

by an Article III judge is crucial to that determination. See, 

e.g., id. at 853.10

Accordingly, over eighty years ago in Crowell v. 

Benson, 285 U.S. 22 (1932), the Supreme Court upheld a 

system of adjudication by an administrative agency on the 

rationale that “the reservation of full authority to [an Article 

III] court to deal with matters of law provide[d] for the 

appropriate exercise of the judicial function.” Id. at 54. The 

availability of Article III review was also essential to the 

Court’s approvals of agency adjudications in Thomas v. 

Union Carbide Agricultural Products Co., 473 U.S. 568, 593 

(1985), and Commodity Futures Trading Commission v. 

Schor, 478 U.S. 833, 853 (1986). Similarly, in United States 

v. Raddatz, 447 U.S. 667 (1980), the Court upheld decisionmaking by magistrate judges only because “the ultimate 

decision is made by the district court.” Id. at 683; see also 

Northern Pipeline, 458 U.S. at 83 (“Critical to the Court’s 

decision to uphold the Magistrates Act was the fact that the 

ultimate decision was made by the district court.”). 

 

10 One prominent commentator has argued that review 

by an Article III judge is both necessary and sufficient to 

uphold adjudication by any non-Article III judge. See 

Richard H. Fallon, Jr., Of Legislative Courts, Administrative 

Agencies, and Article III, 101 Harv. L. Rev. 915, 916 (1988).
17

Applying these principles in the bankruptcy context, 

the Supreme Court held in Northern Pipeline and Stern that 

because a bankruptcy court is not an Article III court, it may 

not enter final judgments regarding certain kinds of claims 

(which have since been dubbed “Stern claims”) even when 

the bankruptcy judge’s decision will be reviewed on appeal 

by an Article III judge. See Stern, 131 S. Ct. at 2620; 

Northern Pipeline, 458 U.S. at 86-87 (plurality opinion); see 

also id. at 91 (Rehnquist, J., concurring in the judgment). 

Most recently, in Wellness International, the Court approved 

adjudication of Stern claims by bankruptcy judges where the

parties consent, but explicitly premised its decision on the 

existence of appellate review by Article III courts, reasoning 

that “allowing Article I adjudicators to decide claims 

submitted to them by consent does not offend the separation 

of powers so long as Article III courts retain supervisory 

authority over the process.” 135 S. Ct. at 1944 (emphasis 

added).

Equitable mootness drastically weakens that 

supervisory authority, and therefore threatens a far greater

“impermissibl[e] intru[sion] on the province of the judiciary,”

Schor, 478 U.S. at 851-52, than the Court confronted in 

Northern Pipeline, Stern, or Wellness International. The 

doctrine not only prevents appellate review of a non-Article

III judge’s decision; it effectively delegates the power to 

prevent that review to the very non-Article III tribunal whose 

decision is at issue. Although Article III judges decide 

whether an appeal is equitably moot, bankruptcy courts 

control nearly all of the variables in the equation, including 

whether a reorganization plan is initially approved, whether a 

stay of plan implementation is granted, whether settlements or 

releases crucial to a plan are approved and executed, whether 
18

property is transferred, whether new entities (in which third 

parties may invest) are formed, and whether distributions 

(including to third parties) under the plan begin—all before 

plan challengers reach an Article III court. 

Put another way, whereas magistrate judges’ and 

administrative agencies’ decisions are at least subject to 

appellate review, equitable mootness not only allows 

bankruptcy court decisions to avoid review, but also enables 

bankruptcy judges to insulate their decisions from review at 

their discretion. In turn, opportunistic plan proponents can

(and as discussed below, regularly do) use this to their 

advantage. As then-Judge Alito warned in Nordhoff 

Investments, “our court’s equitable mootness doctrine can 

easily be used as a weapon to prevent any appellate review of 

bankruptcy court orders confirming reorganization plans. It 

thus places far too much power in the hands of bankruptcy 

judges.” 258 F.3d at 192 (Alito, J., concurring in the 

judgment). 

While historical precedent can justify a delegation of 

judicial power to a non-Article III tribunal,

11 equitable 

 

11 See Northern Pipeline, 458 U.S. at 70 (plurality 

opinion) (“In sum, this Court has identified three situations in 

which Art. III does not bar the creation of legislative courts. 

In each of these situations, the Court has recognized certain 

exceptional powers bestowed upon Congress by the 

Constitution or by historical consensus. Only in the face of 

such an exceptional grant of power has the Court declined to 

hold the authority of Congress subject to the general 

prescriptions of Art. III.”); see also Stern, 131 S. Ct. at 2621 

(Scalia, J., concurring) (citing Thomas E. Plank, Why 

Bankruptcy Judges Need Not and Should Not Be Article III 
19

mootness cannot lay claim to such historical support. Despite 

the doctrine’s recent acceptance by district courts and courts 

of appeals, the decisions of bankruptcy commissioners, 

referees, and, most recently, judges have always been subject 

to review in courts of law or equity.12 Abdicating that review 

is a modern trend not started by Congress or the Supreme 

Court.

At the very least, equitable mootness raises serious 

constitutional concerns by failing to provide appellate review 

of bankruptcy judges’ decisions in an Article III court—a 

protection that was present, yet ultimately insufficient to cure 

similar concerns in Northern Pipeline and Stern. With no 

indication that Congress or the Supreme Court has authorized

an exception to our “virtually unflagging obligation” to 

exercise our jurisdiction that supports equitable mootness, it 

is not hard to see why the six dissenting members of our 

Court in Continental Airlines were “puzzled and troubled” by 

our adoption of the doctrine without any analysis of its 

origins. 91 F.3d at 568 (Alito, J., dissenting).

IV.

Beyond the issues with equitable mootness’s 

legitimacy, I also question its efficacy. The doctrine was 

intended to promote finality, but it has proven far more likely 

to promote uncertainty and delay. Ironically, as Chief Judge 

 

Judges, 72 Am. Bankr. L.J. 567, 607-09 (1998)) (positing that 

“[p]erhaps historical practice permits non-Article III judges to 

process claims against the bankruptcy estate,” but declining to 

reach the issue).

12 See Plank, supra note 11, at 574.
20

McKee noted at oral argument in this case, a motion to 

dismiss an appeal as equitably moot has become “part of the 

Plan.”13 Proponents of reorganization plans now rush to 

implement them so they may avail themselves of an equitable 

mootness defense, much like Appellees did here.14 Rather 

than litigate the merits of an appeal, parties then litigate 

equitable mootness. And even if an appeal is dismissed as 

equitably moot by a district court, that dismissal is appealed 

to our Court, often resulting, in turn, in a remand and further 

proceedings. 

 

13 Oral Argument at 48:05-49:35, available at 

http://www.ca3.uscourts.gov/oral-argument-recordings.

14 Appellees closed the transactions contemplated by 

the Plan and began distributions under the Plan the day the 

Plan took effect, March 21, 2013. App. 1522. Even before 

that, however, Appellees advised the District Court that they 

intended to move to dismiss Quad’s appeal as equitably moot, 

specifically, two days before the Plan took effect during a 

hearing on Quad’s emergency motion for a stay pending 

appeal. App. 1519; see also Oral Argument at 48:05-48:40, 

available at http://www.ca3.uscourts.gov/oral-argumentrecordings. One month later, Appellees again argued the 

appeal was equitably moot during a hearing on Quad’s 

preliminary injunction motion, which was before the appeal 

had been briefed. App. 3226. This is the same kind of 

opportunistic conduct that worried then-Judge Alito in 

Nordhoff Investments. See 258 F.3d at 191 (Alito, J., 

concurring in the judgment) (“It is disturbing that Zenith, in a 

seeming attempt to moot any appeal prior to filing, succeeded 

in implementing most of the plan before the appellants even 

received notice that the plan had been confirmed.”).
21

This appeal proves the point. The Bankruptcy Court 

approved the Plan on March 5, 2013. Quad then made 

multiple unsuccessful attempts to obtain a stay from the 

Bankruptcy Court and the District Court, eventually filing its 

brief on appeal in the District Court on May 23, about two 

months after the Plan took effect. One2One filed its brief in 

response about two weeks later, and then filed its motion to 

dismiss the appeal as equitably moot the next day. All of the 

briefing on both the merits and the motion to dismiss was 

complete by June 25, 2013. Because the appeal was 

dismissed on equitable mootness grounds, however, we find 

ourselves, nearly two years later and after the parties have 

expended considerable resources on full briefing and 

argument before this Court, concluding that the District Court 

improperly applied the equitable mootness factors and 

remanding for a ruling on the merits—a ruling that itself

eventually may be appealed. 

How, then, does refusing to hear the merits of the 

appeal achieve finality? Even if we were affirming the 

District Court’s finding of equitable mootness, there would 

not have been finality until this point, as the possibility of 

reversal has loomed all along. Without the equitable 

mootness doctrine, on the other hand, the District Court 

would have ruled on the merits long ago. 

Even if the doctrine worked as intended and 

consistently promoted finality, its deleterious effect on our 

system of bankruptcy adjudication presents an independent 

reason to reject it. By excising appellate review, equitable 

mootness not only tends to insulate errors by bankruptcy 

judges or district courts, but also stunts the development of 
22

uniformity in the law of bankruptcy.15 Moreover, the 

significant consequences of a confirmation order, as recently 

recited by the Supreme Court, necessitate appellate review:

[P]lan confirmation . . . alters the status quo and 

fixes the rights and obligations of the parties. 

When the bankruptcy court confirms a plan, its 

terms become binding on debtor and creditor 

alike. Confirmation has preclusive effect, 

foreclosing relitigation of any issue actually 

litigated by the parties and any issue necessarily 

determined by the confirmation order. Subject 

to certain exceptions, confirmation vests all of 

the property of the bankruptcy estate in the 

debtor, and renders that property free and clear 

of any claim or interest of any creditor provided 

for by the plan. Confirmation also triggers the 

Chapter 13 trustee’s duty to distribute to 

creditors those funds already received from the 

debtor.

 

15 Indeed, the desire for clarity and uniformity led 

Congress to enact 28 U.S.C. § 158(d)(2), the “new statutory 

provision for certification of bankruptcy appeals directly to 

the courts of appeals.” See In re Pac. Lumber Co., 584 F.3d 

229, 241 (5th Cir. 2009). “The twin purposes of the provision 

were to expedite appeals in significant cases and to generate 

binding appellate precedent in bankruptcy, whose caselaw has 

been plagued by indeterminacy.” Id. at 241-42 (citing H.R. 

Rep. No. 109-31 pt. I, at 148 (2005), as reprinted in 2005 

U.C.C.C.A.N. 88, 206)).
23

Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1692 (2015) 

(alterations, citations, and internal quotation marks omitted).

Particularly troubling are dismissals of appeals 

challenging plans that “classify similar claims differently in 

order to gerrymander an affirmative vote on reorganization.” 

In re Pac. Lumber Co., 584 F.3d 229, 251 (5th Cir. 2009) 

(quoting In re Greystone III Joint Venture, 995 F.2d 1274, 

1279 (5th Cir. 1991)) (internal quotation mark omitted). 

Even if appellants challenging such violations can 

demonstrate “apparent arbitrariness” in the treatment of 

different creditors, courts are likely to find their appeals 

equitably moot, as often “no remedy . . . is practicable other 

than unwinding the plan.” Id.; accord In re Charter 

Commc’ns 691 F.3d 476, 487-88 (2d Cir. 2012). Under such 

circumstances, equitable mootness merely serves as part of a 

blueprint for implementing a questionable plan that favors 

certain creditors over others without oversight by Article III 

judges.16 In short, even equitable and prudential concerns 

weigh against equitable mootness.

 

16 See Brief of Bankruptcy Law Professors in Support 

of Granting the Petition for Certiorari at 5, Law Debenture 

Trust Co. of N.Y. v. Charter Commc’ns, Inc., 133 S. Ct. 2021 

(2013) (No. 12-847), 2013 WL 543337 [hereinafter “Brief of 

Bankruptcy Law Professors”] (“[S]ophisticated parties have 

learned that a ‘pre-packaged’ reorganization plan that is 

designed to be consummated over a weekend may be 

insulated from review by an Article III court even though the 

plan contains terms that would be determined to be unlawful 

if the plan were subjected to judicial review, and those parties 

are increasingly exploiting that opportunity.”); Ryan M. 

Murphy, Equitable Mootness Should Be Used as a Scalpel 
24

V.

We must consider whether to end or endure the 

mischief of equitable mootness. Although the doctrine has 

been accepted de facto across the Circuits, its legitimacy has 

rarely been scrutinized,17 and this appeal appears to be the 

first in our Circuit in which an appellant has properly 

preserved and disputed the validity of equitable mootness 

under the Bankruptcy Code, the federal statutes conferring 

bankruptcy jurisdiction, and the Constitution. In fact, aside 

from numerous petitions for certiorari, the doctrine has gone 

virtually unchallenged.18 This may be because litigants—and 

 

Rather than an Axe in Bankruptcy Appeals, 19 J. Bankr. L. & 

Prac. 1 Art. 2 (2010) (“[T]he importance of substantial 

consummation in rendering a claim equitably moot raises 

concerns that a debtor can ‘stack the deck’ in its favor to 

expedite implementation of its plan and foreclose review of 

questionable plan components.”).

 

17 See Semcrude, 728 F.3d at 317 (“Courts have rarely 

analyzed the source of their authority to refuse to hear an 

appeal on equitable mootness grounds.”); Murphy, supra note 

16 (“In light of the analysis provided by the dissent in 

Continental Airlines and the scarcity of opinions that tackle 

the question of the origin of equitable mootness, it is difficult 

to discern a coherent underlying rationale that justifies such a 

radical concept.” (footnote omitted)). 

18 It is therefore not surprising that the Supreme Court 

has denied those petitions, as the courts of appeals have rarely 

grappled with the doctrine’s constitutional and statutory 
25

bankruptcy attorneys—wield the weapon of equitable 

mootness just as often as they suffer its blows. But it is time 

for the challenge, and I am not alone in urging it. A coalition

of bankruptcy law professors and the United States 

Government have both urged the Supreme Court to hear 

challenges to equitable mootness.19 In any event, the 

doctrine’s widespread acceptance, standing alone, does not 

establish its validity. After all, the system of bankruptcy 

 

underpinnings. Regardless, there is no basis for Appellees’ 

contention that the Supreme Court’s denial of certiorari 

reflects the Court’s tacit approval of the equitable mootness 

doctrine. As the Court “ha[s] often stated, the denial of a writ 

of certiorari imports no expression of opinion upon the merits 

of the case. The variety of considerations [that] underlie 

denials of the writ counsels against according denials of 

certiorari any precedential value.” Teague v. Lane, 489 U.S. 

288, 296 (1989) (second alteration in original) (citations and 

internal quotation marks omitted); accord United States ex 

rel. Smith v. Baldi, 192 F.2d 540, 544 (3d Cir. 1951) (reciting 

the “well established rule that a denial of certiorari does not 

prove anything except that certiorari was denied”). 

19 See Brief of Bankruptcy Law Professors, supra note 

16, at 2; Petition for a Writ of Certiorari, United States v. 

GWI PCS 1, Inc., 533 U.S. 964 (2001) (No. 00-1621), 2001 

WL 34124814. 
26

adjudication struck down in Stern had been unanimously 

upheld by district courts and courts of appeals.20 

Moreover, principles of stare decisis do not compel us 

to continue on this course. “Revisiting precedent is 

particularly appropriate where, as here, . . . the precedent 

consists of a judge-made rule that was recently adopted to 

improve the operation of the courts, and experience has 

pointed up the precedent’s shortcomings,” Pearson v. 

Callahan, 555 U.S. 223, 233 (2009), and where “subsequent 

legal developments have unmoored the case from its doctrinal 

anchors,” Morrow v. Balaski, 719 F.3d 160, 180 (3d Cir. 

2013) (en banc) (Smith, J., concurring); see Dickerson v. 

United States, 530 U.S. 428, 443 (2000) (“[W]e have 

overruled our precedents when subsequent cases have 

undermined their doctrinal underpinnings.”); see also Leegin 

Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 

900 (2007) (quoting Dickerson and collecting cases). 

Considering that equitable mootness barely had doctrinal 

anchors to begin with, our dismal experience with it obliges 

us to reconsider Continental Airlines. 

While proponents of the doctrine will emphasize its 

practical importance to the administration of bankruptcy

estates, there are effective alternatives that do not suffer from 

the prudential, statutory, and constitutional defects of 

equitable mootness. For instance, in an appropriate case, 

parties can deploy the equitable defense of laches, which 

requires “establish[ing] (1) an inexcusable delay in bringing 

 

20 See Brook E. Gotberg, Restructuring the Bankruptcy 

System: A Strategic Response to Stern v. Marshall, 87 Am. 

Bankr. L.J. 191, 205 & n.74 (2013).
27

the action and (2) prejudice.” In re Mushroom Transp. Co., 

382 F.3d 325, 337 (3d Cir. 2004) (quoting U.S. Fire Ins. Co. 

v. Asbestospray, Inc., 182 F.3d 201, 208 (3d Cir. 1999)) 

(internal quotation mark omitted). Similarly, where an 

appellant’s bad faith delay prejudices other parties, courts 

have discretion to impose an appropriate remedy, including 

dismissal. See In re Harris, 464 F.3d 263, 273 (2d Cir. 2006) 

(Sotomayor, J.); In re SPR Corp., 45 F.3d 70, 74 (4th Cir. 

1995); In re Comer, 716 F.2d 168, 177 (3d Cir. 1983); see 

also Fed. R. Bankr. P. 8003(a)(2) (“An appellant’s failure to 

take any step other than the timely filing of a notice of appeal 

does not affect the validity of the appeal, but is ground only 

for the district court or BAP to act as it considers appropriate, 

including dismissing the appeal.”). And, of course, appellate 

courts can expedite briefing schedules and issue orders with 

necessary instructions for the parties and bankruptcy courts in 

advance of full opinions. 

More broadly, courts can address the concerns behind 

equitable mootness, including the extent to which granting 

requested relief will “fatally scramble” an otherwise lawful 

plan or “significantly harm third parties who have justifiably 

relied on the plan’s confirmation,” in fashioning an 

appropriate remedy, rather than abstaining from exercising 

their jurisdiction. Semcrude, 728 F.3d at 321; see also id. at 

324-25 (citing Cont’l Airlines, 91 F.3d at 571-72 (Alito, J., 

dissenting)) (“As then-Judge Alito explained, the feared 

consequences of a successful appeal are often more 

appropriately dealt with by fashioning limited relief at the 

remedial stage than by refusing to hear the merits of an appeal 

at its outset.”). 

In many cases, district courts may conclude that all or 

substantially all of the relief requested is feasible despite the 
28

plan’s consummation. See In re Res. Tech. Corp., 430 F.3d 

884, 886-87 (7th Cir. 2005) (Easterbrook, J.) (“Unscrambling 

a transaction may be difficult, but it can be done. No one (to 

our knowledge) thinks that an antitrust or corporate-law 

challenge to a merger becomes moot as soon as the deal is 

consummated. Courts can and do order divestiture or 

damages in such situations.”); In re Kmart Corp., 359 F.3d 

866 (7th Cir. 2004) (Easterbrook, J.) (“Money had changed 

hands and, we are told, cannot be refunded. But why not? 

Reversing preferential transfers is an ordinary feature of 

bankruptcy practice, often continuing under a confirmed plan 

of reorganization.” (citation omitted)); Matter of Envirodyne 

Indus., Inc., 29 F.3d 301, 304 (7th Cir. 1994) (Posner, J.) 

(“We could order the bankruptcy judge to modify the plan of 

reorganization to reallocate $20 million worth of the stock 

that the 14% noteholders received to the appellants, the 

13.5% noteholders. Some of the 14% noteholders, it is true, 

have already sold their stock, but they could be ordered to 

surrender some or all of the proceeds to the appellants.”).

In other cases, the interests of finality and protecting 

third parties will weigh against granting an appellant’s 

requested relief in its entirety. The availability of only

limited relief, however, should not prevent adjudication on 

the merits. “[T]otal relief . . . is not essential to jurisdiction,” 

as “relatively few plaintiffs get all they are seeking in their 

lawsuit.” Envirodyne, 29 F.3d at 304. Even if a “bankruptcy

court might determine that full relief is no longer available to 

[appellants] after substantial consummation,” certainly 

appellants “would readily accept some fractional recovery 

that does not impair feasibility or affect parties not before this 

Court, rather than suffer the mootness of [their] appeal as a 

whole.” In re Chateaugay Corp., 10 F.3d 944, 954 (2d Cir. 
29

1993). 

Accordingly, several courts have analyzed equitable 

mootness only after addressing the merits, including the 

Seventh Circuit in Envirodyne, a decision written by Judge 

Posner. There, following Judge Easterbrook’s decision in In 

re UNR Industries, Inc., 20 F.3d 766, 769 (7th Cir. 1994),

which banished the term “equitable mootness” from that

Circuit, the court reasoned that the “[t]he now nameless 

doctrine is perhaps best described as merely an application of 

the age-old principle that in formulating equitable relief a 

court must consider the effects of the relief on innocent third 

parties” and “not a jurisdictional doctrine.” Envirodyne, 29 

F.3d at 304 (citing Int’l Brotherhood of Teamsters v. United 

States, 431 U.S. 324, 375 (1977)). As such, the court 

“elide[d] the question of [the doctrine’s] applicability” and 

affirmed the bankruptcy appeal before it on the merits. Id.21 

 

21 See also SEC v. Wealth Mgmt. LLC, 628 F.3d 323, 

332 (7th Cir. 2010) (affirming on the merits rather than 

analyzing equitable mootness); UNR, 20 F.3d at 770 

(considering whether plan challengers had demonstrated a 

“powerful reason” to alter a reorganization plan); cf. United 

States v. Buchman, 646 F.3d 409, 411 (7th Cir. 2011) 

(Easterbrook, C.J.) (“Circuits that use [the equitable 

mootness] doctrine dismiss an appeal once a bankruptcy 

auction has been completed or a plan of reorganization 

confirmed and implemented without a stay. But this circuit 

does not follow that approach. We have held that the 

possibility of financial adjustments among the parties keeps a 

proceeding alive even if the sale cannot be upset and rights 

under a plan of reorganization cannot be revised.”); United 

States v. Segal, 432 F.3d 767, 774 (7th Cir. 2005) (“[W]hile 
30

At least two courts have followed Judge Posner’s lead.

In In re Metromedia Fiber Network, Inc., 416 F.3d 136 (2d 

Cir. 2005), a Second Circuit panel analyzed the merits of an 

appeal before equitable mootness, reasoning that “[b]ecause 

equitable mootness bears only upon the proper remedy, and 

does not raise a threshold question of our power to rule, a 

court is not inhibited from considering the merits before 

considering equitable mootness.” Id. at 144 (citing 

Envirodyne, 29 F.3d at 303-04). The court further observed 

that “[o]ften, an appraisal of the merits is essential to the 

framing of an equitable remedy.” Id. And the Fourth Circuit, 

in its most recent equitable mootness decision, cited 

Metromedia in adopting the same approach. Behrmann v. 

Nat’l Heritage Foundation, 663 F.3d 704, 713 n.3 (4th Cir. 

2011).

Considering the equities after the merits, at the 

remedial stage, offers several advantages over abstaining 

from hearing the appeal altogether. In many cases, deciding 

the merits of a bankruptcy appeal may require the same if not 

less effort than deciding equitable mootness, especially given 

that a bankruptcy judge’s findings of fact are reviewed for 

clear error. If so, a court can conserve resources by ruling 

first on the merits, as the court did in Envirodyne. See 29 

F.3d at 304. If not, requiring a ruling on the merits can at 

 

we are concerned about trying to unwind the settlement, it is 

difficult to determine the precise effects of such an action . . . 

. This prevents us from conclusively holding that the 

settlement was so complex or that the changes after the 

settlement have been so sweeping that it would be foolish for 

us to even consider reversing the deal. Therefore, with some 

reservations, we move on.”).
31

least prevent one cycle of appeals (as a ruling by the District 

Court on the merits of Quad’s appeal might have obviated the 

need for a remand here).22 

Even in an exceptional case, like Continental Airlines,

where a court arguably cannot grant any relief without 

inequitably harming innocent parties, having a decision on the 

merits is beneficial. In Metromedia, for instance, the Second 

Circuit determined that the bankruptcy court had improperly 

approved certain nondebtor releases, but ultimately concluded 

it would be inequitable to grant relief considering that the 

appellants had not sought a stay and “none of the completed 

transactions c[ould] be undone without violence to the overall 

arrangements.” 416 F.3d at 144-45. Nevertheless, the court’s 

decision on the merits has been cited numerous times by 

courts analyzing similar provisions in reorganization plans. 

See, e.g., In re Vitro S.A.B. de CV, 701 F.3d 1031, 1061 (5th 

Cir. 2012) (relying on Metromedia in analyzing nondebtor 

releases); In re Genco Shipping & Trading Ltd., 513 B.R. 

233, 269 (Bankr. S.D.N.Y. 2014) (same). Thus, a ruling on 

the merits of a bankruptcy appeal will promote accuracy and 

uniformity in the law of bankruptcy even if the reviewing 

court finds it impossible to fashion an appropriate remedy.

 

22 As a recent example, in In re Jevic Holding Corp., --

- F.3d ----, No. 14-1465, 2015 WL 2403443 (3d Cir. May 21, 

2015), the district court there ruled on both the merits of the 

appeal before it and equitable mootness. We did not address 

equitable mootness, but rather affirmed on the merits. Had 

the district court not ruled on the merits, we might have had 

to remand for further proceedings. See id. at *9; see also id. 

at *11 (Scirica, J., concurring in part and dissenting in part) 

(agreeing that equitable mootness did not apply).
32

Such cases should be exceedingly rare, however, 

because as long as any remedy, including monetary relief, is 

available, an appellant’s claims are “not ‘moot’ in any proper 

sense of the term,” Cont’l Airlines, 91 F.3d at 568 (Alito, J., 

dissenting), and should be heard on their merits. See Parents 

Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 551 U.S. 

701, 720 (2007) (reasoning that a case is not moot where a 

plaintiff seeks monetary relief in their complaint); Church of 

Scientology v. United States, 506 U.S. 9, 12 (1992) 

(explaining that a case is not moot where, although “a court 

may not be able to return the parties to the status quo ante,” it

“can fashion some form of meaningful relief”); see also 13C 

Charles Alan Wright et al., Federal Practice & Procedure § 

3533.3 (3d ed. 2015) (“Untold numbers of cases illustrate the 

rule that a claim for money damages is not moot . . . .”). 
33

VI.

Even if we decide not to revisit equitable mootness, we 

should delineate its contours more precisely and provide 

clearer guidance to the district courts on its appropriate use. 

We made valiant efforts in Semcrude, where we placed the 

burden of demonstrating equitable mootness on the party 

seeking dismissal, emphasized that speculative “Chicken 

Little” statements prophesizing harm to a plan or to third 

parties cannot fulfill that burden, and stressed that “[t]he 

presumptive position remains that federal courts should hear 

and decide on the merits cases properly before them.” 728 

F.3d at 321-22, 324-26. But the persistent problems in the 

doctrine’s application by district courts reflect that more must 

be done, and there are at least four reforms we could consider 

if we opted to maintain equitable mootness as an abstention 

doctrine. 

First, we could place greater weight on an appellant’s 

attempts to obtain a stay, perhaps permitting dismissal only 

where an appellant does not seek one.

23 In such cases, we can 

fairly say “the appealing party should have acted before the 

plan became extremely difficult to retract.” Nordhoff Invs., 

258 F.3d at 185 (majority opinion). Indeed, every time we 

 

23 The inequity of granting relief where an appellant 

has been less than diligent in obtaining a stay motivated the 

earliest equitable mootness decisions. See, e.g., In re Roberts 

Farms, Inc., 652 F.2d 793, 798 (9th Cir. 1981). More recent 

decisions from other Circuits have also placed great weight 

on a failure to seek a stay. See, e.g., In re Thorpe Insulation 

Co., 677 F.3d 869, 881 (9th Cir. 2012); In re Paige, 584 F.3d 

1327, 1341 (10th Cir. 2009); Metromedia, 416 F.3d at 144.
34

have affirmed a finding of equitable mootness after 

Continental Airlines, the appellant failed to file a motion for a 

stay. See In re SemCrude L.P., 456 F. App’x 167, 171 (3d 

Cir. 2012) (not precedential) (appellant made an oral motion 

for a stay in the bankruptcy court, but never filed a written 

motion or made any other attempts to obtain a stay); In re

Genesis Health Ventures, Inc., 204 F. App’x 144, 146 (3d 

Cir. 2006) (not precedential) (appellant made no attempt to 

obtain a stay); In re SGPA, Inc., 34 F. App’x 49, 52 (3d Cir. 

2002) (not precedential) (same); Nordhoff Invs., 258 F.3d at 

185 (same); see also id. at 191-92 (Alito, J., concurring in the 

judgment) (agreeing that an appeal was equitably moot 

“primarily” because the appellants had failed to seek a stay).

Second, we could clarify what constitutes 

“significant[] harm” to “third parties who have justifiably 

relied on plan confirmation.” Semcrude, 728 F.3d at 321. 

Specifically, who is a “third party,” and when is their reliance 

“justifiable”? While we should be hesitant to grant relief 

where the effects on third parties would be inequitable, we

may be less concerned where purported third parties have had 

the opportunity to participate in the bankruptcy proceedings

or on appeal. Just as opponents of a reorganization plan must 

diligently pursue their claims, so must plan proponents. See 

Charter Commc’ns, 691 F.3d at 484 (“[T]he relief 

[Appellants] seek would not adversely affect parties without 

an opportunity to participate in the appeal . . . . Even 

assuming that the relief requested would send Charter back 

into bankruptcy, the parties most affected . . . are either 

parties to this appeal or participated actively in the 

bankruptcy proceedings.” (emphasis added) (citation 

omitted)); Paige, 584 F.3d at 1344 (“[B]ecause of 

ConsumerInfo’s pivotal role in the bankruptcy proceedings, it 
35

is hard to consider it a ‘third party’ or at least an innocent 

third party.”). 

And we should be even less solicitous of parties who 

act opportunistically or advocate unlawful plan provisions 

during confirmation. See Charter Commc’ns, 691 F.3d at 484 

(“[I]f the Allen Settlement were unlawful, it would not be 

inequitable to require the parties to that agreement to disgorge

their ill-gotten gains, participation in the appeal or not.”);

Paige, 584 F.3d at 1343 (“[W]here . . . the parties attempting 

to convince the court not to reach the merits have accelerated 

the consummation of the plan despite their knowledge of a 

pending appeal . . . we are less inclined to grant their wish 

that the court abstain from reaching the merits on appeal.”); 

Pac. Lumber Co., 584 F.3d at 244 (“That there might be 

adverse consequences to MRC/Marathon is not only a natural 

result of any ordinary appeal—one side goes away 

disappointed—but adverse appellate consequences were 

foreseeable to them as sophisticated investors who opted to 

press the limits of bankruptcy confirmation and valuation 

rules.”); id. at 244 n.19 (“Equitable mootness should protect 

legitimate expectation of parties to bankruptcy cases but 

should not be a shield for sharp or unauthorized practices.”).

Third, we could reconsider our standard of review of 

determinations of equitable mootness. While we opted for 

abuse of discretion review in Continental Airlines, several 

Circuits apply de novo review instead. See In re United 

Producers, Inc., 526 F.3d 942, 946 (6th Cir. 2007); In re GWI 

PCS 1 Inc., 230 F.3d 788, 799-800 (5th Cir. 2000); In re 

Baker & Drake, Inc., 35 F.3d 1348, 1351 (9th Cir. 1994); In 
36

re Club Assocs., 956 F.2d 1065, 1069 (11th Cir. 1992).24 The 

Continental Airlines dissent argued that we chose the wrong 

side of this split, as “there is an unbroken and wellestablished line of authority from this court holding that 

‘[b]ecause the district court sits as an appellate court in 

bankruptcy cases, our review of the district court’s decision is 

plenary.’” 91 F.3d at 568 n.4 (Alito, J., dissenting) (alteration 

in original) (quoting In re Visual Indus., Inc., 57 F.3d 321, 

324 (3d Cir. 1995)). Then-Judge Alito added that de novo 

review is appropriate because “[w]e are essentially called on 

to review whether the district court properly decided not to 

reach the merits of [an] appeal,” and “[w]e are in just as good 

a position to make this determination as [a] district court.” Id. 

Further, equitable mootness is intended to be “limited in 

scope and cautiously applied,” and “plenary review would 

better serve th[o]se ends.” Id. (internal quotation marks 

omitted). Then-Judge Alito repeated his criticisms in his 

Nordhoff Investments opinion, see 258 F.3d at 192, and we 

echoed his concerns in Semcrude, see 728 F.3d at 320 n.6 

(“We are inclined to agree with this criticism, but nonetheless 

are bound to review for abuse of discretion.”). Our repeated 

reversals of district courts’ equitable mootness decisions 

indicate a more stringent standard of review would be a 

helpful reform. 

 

24 Of course, the fact “[t]hat the courts are creating a 

doctrine unmoored to the Code is illustrated by their 

divergence concerning the appropriate test for equitable 

mootness.” Brief of Bankruptcy Law Professors, supra note 

16, at 11 & n.3 (citing Phila. Newspapers, 690 F.3d at 168-

69; In re Paige, 584 F.3d 1327, 1338-39 (10th Cir. 2009)).
37

Finally, we could incorporate into our equitable 

mootness test “a quick look at the merits of [an] appellant’s 

challenge” to determine if it is “legally meritorious or 

equitably compelling.” Paige, 584 F.3d at 1339. While no 

substitute for full consideration on the merits that could 

provide guidance for future courts and litigants, a brief look at 

the merits of an appeal and the importance of the issues raised 

is better than none. See In re Stephens, 704 F.3d 1279, 1283 

(10th Cir. 2013) (observing that until a novel legal question at 

issue on appeal was resolved, “debtors and creditors in every 

individual Chapter 11 case must anticipate the possibility of 

the expense and delay associated with litigation over this 

issue”). Merits review is particularly important for complex 

questions, like whether a plan comports with the Bankruptcy 

Code’s cram down provisions, an issue that “often cries out 

for appellate review,” Pac. Lumber Co., 584 F.3d at 244, or 

claims involving conflicts of interest or preferential treatment 

that “go to the very integrity of the bankruptcy process,” 

Paige, 584 F.3d at 1348; see also Pac. Lumber Co., 584 F.3d 

at 251 (quoting In re Hilal, 534 F.3d 498, 500 (5th Cir. 

2008)) (“[E]quity strongly supports appellate review of issues 

consequential to the integrity and transparency of the Chapter 

11 process.” (alteration in original) (internal quotation marks 

omitted)). Further, even a preliminary consideration of the 

merits can guide the court’s assessment of the effects of 

granting different forms of relief. See Metromedia, 416 F.3d 

at 144 (“Often, an appraisal of the merits is essential to the 

framing of an equitable remedy.”). 

What we should not do is ignore the serious problems

with equitable mootness that are squarely and properly raised 

by this appeal. Indeed, waiting to resolve the questions 

surrounding the doctrine will only lead other parties and 
38

district courts, like those in this case, to waste resources 

litigating equitable mootness. In sum, while I agree with the 

majority’s application of the precedent that binds our panel, 

that precedent is ripe for reconsideration, and we should 

revisit or at least reform the equitable mootness doctrine.