FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT April 23, 2008 THOMAS K. KAH

N CLERK [ P U B L I S H ] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 07- 13429

________________________ D . C . D ocketN o. 06 -025 75 -C V -T C B -1 B K C Y N o. 02- 93973 T R U S T E D N E T M E D I A H O L D I N G S , L L C , D e b t o r . __________________________________________________ T R U S T E D N E T M E D I A H O L D I N G S , L L C , P la in tif f - A p p e lla n t, v ersu s T H E M O R R I S O N A G E N C Y , I N C ., D e f e n d a n t- A p p e lle e .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e N o r th e r n D is tr ic t o f G e o r g ia

_________________________ ( A p r i l 23, 2008)Honora ble Will iam H. Albritton, III , United States District Judg e for the Middle District * of Alaba ma, sitting by

designation. B ef ore H U L L and W IL S O N , C i rc ui tJudg es , and A L B R IT T O N , D i stri ctJudg e. * H U L L , C i rc ui tJudg e: T h is ap p ea l p re se n ts th e q u es ti o n o f w h eth er1 1 U .S .C . § 3 0 3 (b )’s re qu i re m ent s f

or fi l i ng an i nv ol un t ary bankrup t cy pet i t i on ar e s ubj ec tm att er j uri sdi ct i on al i n n ature. B oth the di stri ctcourtand t he bank rupt cy courthel d that the y a r e not . O urpr e c e de nt , though, s a y s othe r w i s e . T hus , a l though w e be l i e ve o u rp r e c e d e n t s h o u ld b e r e e x a m in e d , w e m u s t r e v e r s e . I . B AC KG RO UN D A ppe l l e e T he M or r i s on A ge nc y , I nc . ( “ M or r i s on” ) i s a c r e di t orof A ppe l l a nt T rus t e d N e tM e di a H ol di ngs , L L C ( “ T rus t e d N e t ” ) . O n A pr i l 20, 2002, M or r i s on, as a c re di t or, fi l ed an i nv ol un t ary bankrup t cy pet i t i on agai nsti t s debt or T rust ed N e t , r e que s t i ng l i qui da t i on of T rus t e d N e t ’ s a s s e t s pur s ua ntt o C hapt e r7 of the B a nkrupt c y C ode . M or r i s on’ s pe t i t i on l i s t e d M or r i s on a s the onl y pe t i t i oni ng cr edi t or of T rust ed N et , and d es cr i bed M orri son’ s c l ai m agai nstT rust ed N etas “T r a d e D e b t/J u d g m e n t” in a n a m o u n t “[ n ]o t le s s th a n [ $ ]5 3 4 ,0 0 0 .0 0 .” M o r r is o n ’s in v o lu n ta r y p e titio n s ta te d th a t M o r r is o n w a s “e lig ib le to f ile th is p e titio n p u r s u a n t to 1 1 U .S .C . § 3 0 3 ( b ) .” A s d e s c r ib e d in m o r e d e ta il b e lo w , § 3 0 3 ( b ) p e r m its th e c o m m e n c e m e n t o f a n in v o lu n ta r y b a n k ru p tc y c a s e a g a in s t a3

d e b t o r( 1 ) b y th r e e o rmo r e c r e d i t o r s h o l d i n g n o n - c o n t i n g e n t , u n d i s p u t e d c l a i ms a g a in s t th a t d e b to r , o r( 2 ) b y a s in g le h o ld e ro f a n o n - c o n tin g e n t, u n d is p u te d c la im i f the r e a r e f

e w e rtha n tw e l ve s uc h c r e di t or s of the de bt or . A tthe t i m e M or r i s on f i l e d i t s i nvol unt a r y pe t i t i on a ga i ns tT rus t e d N e t , § 303( b) a l s o r e qui r e d tha tthe pe t i t i oni ng c r e di t or ( s ) ’ non- c ont i nge nt , undi s put e d c l a i m s a ga i ns tthe de bt or a g g r e g a te a t le a s t $ 1 1 ,6 2 5 ( th e th r e s h o ld s u m is n o w $ 1 3 ,4 7 5 ) . S e e 1 1 U .S .C . § 3 0 3 ( b ) ( 2 0 0 8 ) ; 1 1 U .S .C . § 3 0 3 ( b ) ( 2 0 0 1 ) . T he debt or T rust ed N et , w ho se as se t s w er e a tthatt i m e und erthe cont rol of a st at e- court -app oi nt ed re ce i ver, fi l ed no re spon se t o M orri son’ s i nv ol un t ary pet i t i on . A cc ordi ng l y, the bank rupt cy courtent er ed an O rderfor R el i ef on M ay 1 5 , 2 0 0 2 an d ap p o in ted a C h ap ter 7 tru stee . T h e tru stee m ar sh aled T ru sted N et’s a s s e ts in p r e p a r a tio n f

o rliq u id a tio n . T he bank rupt cy ca se proceeded throu gh adm i ni stra t i on for tw o yea rs . In A p r il 2 0 0 4 , D a v id W . H u f f m a n , a n o f

f ic e ra n d c o n tr o llin g m e m b e ro f T ru s te d N e t, fi l ed a m ot i on t o d i sm i ss the ca se . H uffm an w as al so a c re di t or of T rust ed N etas t o h i s d eferred sal ary. H u ffm an ’ s m o t i o n t o d i sm i ss arg u ed , am o n g o th er th i n g s, th a t M o r r is o n ’s p e titio n v io la te d § 3 0 3 ( b ) in tw o w a y s : ( 1 ) M o rr is o n ’s c la im a g a in s t T ru s te d N e t w a s s u b je c t to a b o n a f

id e d is p u te , a n d th e r e f

o r e M o r r is o n d id n o t h o ld a n o n -c o n ti n g en t, u n d isp u ted claim ag ain st th e d eb to r; an d (2 ) M o rr iso n ’s4

si ng l e- cr edi t or pet i t i on w as i nsuffi ci entbecause T rust ed N ethad t w el ve or m ore c r e di t or s hol di ng non- c ont i nge nt , undi s put e d c l a i m s . H uf f m a n a r gue d tha tthe i nvol unt a r y pe t i t i on’ s f

a i l ur e t o s a t i s f

y § 303( b) di ve s t e d the ba nkrupt c y c our tof s ubj e c tm a tt e rj ur i s di c t i on. T he C hapt e r7 trus t e e oppos e d the m ot i on. T he b an k ru p tcy c o u rt co n d u cted a h ea rin g an d , o n M ay 1 3 , 2 0 0 4 , d en ied H u ff m an ’s m ot i on t o di s m i s s . N o appe a l w a s t a ke n f r om the ba nkrupt c y c our t ’ s de ni a l of H u ffm an ’ s m o t i o n t o d i sm i ss. A n o th er tw o years l at er, i n A p ri l 2 0 0 6 , fi v e o f T ru st ed N et ’ s cred i t o rs, i nc l udi ng M or r i s on ( butnoti nc l udi ng H uf f m a n) , s e tt l e d w i th the trus t e e a s t o the a m ountof

the i rr e s pe c t i ve c l a i m s . H uf f m a n obj e c t e d t o the s e tt l e m e ntof the c l a i m s of thr e e of the c r e di t or s , i nc l udi ng M or r i s on. O n J ul y 14, 2006, the b a n k ru p tc y c o u r t o v e r ru le d H u f f m a n ’s o b je c tio n s a n d ap p r o v e d th e s e ttle m e n ts . S hor t l y the r e a f

t e r , a nd m or e tha n f

oury e a r s a f

t e rc om m e nc e m e ntof

the c a s e , T ru s te d N e t ( th r o u g h c o u n s e l r e ta in e d a t H u f f m a n ’s b e h e s t) f

ile d a m o tio n to di sm i ss the ent i re bank rupt cy ca se for l ac k o f s ubj ec tm att erj uri sdi ct i on . S i m i l ar to H u ff m an ’s m o ti o n tw o ye ar s e ar li er , T ru sted N et ar g u ed th at § 3 0 3 (b )’s re qu i re m ent s m ustbe m etfor the bank rupt cy courtt o h ave s ubj ec tm att er j u r i s d i c t i o n , a n d th a tM o r r i s o n ’ s p e t i t i o n v i o l a t e d § 3 0 3 ( b ) b e c a u s e : ( 1 ) a tth e t i me it f ile d its in v o lu n ta r y p e titio n , M o r r is o n w a s n o t th e h o ld e ro f a n o n - c o n tin g e n t,5

un di sput ed cl ai m , and (2) M orri son’ s i nv ol un t ary C hapt er7 p et i t i on w as no tj oi ned b y th r e e h o ld e r s o f

n o n - c o n tin g e n t, u n d is p u te d c la im s . O n O c to b e r1 0 , 2 0 0 6 , th e b a n k ru p tc y c o u r t d e n ie d T ru s te d N e t’s m o tio n to di s m i s s . W i th r e ga r d t o T rus t e d N e t ’ s s ubj e c tm a tt e rj ur i s di c t i on a r gum e nt , the bank rupt cy courthel d that§ 3 03 (b) of the B ankrup t cy C od e w as no tj uri sdi ct i on al a nd tha t“ a ny a r gum e ntby the D e bt ortha tthe pe t i t i oni ng c r e di t or ’ s c l a i m s a r e the subj ec tof a bon a f

i de di sput e or thatm ore than o ne pet i t i on i ng cr edi t or w as r e q u ir e d to p u t th is D e b to rin to b a n k ru p tc y h a s b e e n w a iv e d .” T rus t e d N e tappe a l e d the ba nkrupt c y c our t ’ s rul i ng t o the di s tr i c tc our t . T he d is tr ic t c o u r t a f

f ir m e d w ith o u t e la b o r a tio n , f in d in g th e b a n k ru p tc y c o u r t’s o r d e rto be “ tho roug h, w el l -r ea soned, and correc ti n every re spec t . ” T rust ed N etappeal ed to th is C o u r t. I n thi s appe a l , T rus t e d N e tdoe s notc ont e s tthe ba nkrupt c y c our t ’ s f i ndi ng th at T ru sted N et, th ro u g h it s f o u r- ye ard elay , w aiv ed it s a rg u m en ts th at M o rr iso n ’s c l a i m s a r e s ubj e c tt o bona f i de di s put e a nd tha tm or e tha n one pe t i t i oni ng c r e di t or w as req u i red . R ath er, T ru st ed N etrai ses a si n g l e j u ri sd i ct i o n al cl ai m : th atth ese r e qui r e m e nt s i n § 303( b) a r e s ubj e c tm a tt e rj ur i s di c t i ona l , a nd thus c a nnotbe w a i ve d. I I . STA N D A R D O F R EVI EW6

I n ba nkrupt c y appe a l s , thi s C our ti nde pe nde nt l y e xa m i ne s the f a c tua l a nd l egal fi nd i ng s of the bank rupt cy courtusi ng the sa m e s t andards as di d the di stri ct court . In re E l ec . M ac h. E nt er s. , 47 9 F . 3d 79 1, 79 5 (11 th C i r. 20 07 ). W here , as h e r e , w e r e v ie w th e b a n k ru p tc y c o u r t’s le g a l d e te r m in a tio n s , w e d o s o d e n o v o . I d . I I I . DI S CUS S I ON T he i s s ue T rus t e d N e tr a i s e s –w he the r11 U . S . C . § 303( b) ’ s r e qui r e m e nt s f or the f i l i ng of a n i nvol unt a r y ba nkrupt c y pe t i t i on m us tbe m e tt o be s t ow upon the bank rupt cy courtsubj ec tm att erj uri sdi ct i on –h as di vi ded t he ci rc ui t s a nd l ow er c our t s tha tha ve c ons i de r e d i t . W e appr oa c h the i s s ue by f i r s ts e tt i ng f

or th the s t a tut or y f

r a m e w or k f

orba nkrupt c y c our tj ur i s di c t i on a nd the c om m e nc e m e ntof i nvol unt a r y ba nkrupt c y c a s e s . W e the n di s c us s br i e f l y the s pl i ti n a uthor i ty on the is s u e a n d , f

in a lly , th e c a s e o f

I n r e A ll M e d ia P r o p e r tie s , I n c ., 6 4 6 F .2 d 1 9 3 ( 5 th C i r. U ni tA M ay 19 81 ), af f’ g 5 B . R . 12 6 (B ankr. S . D . T ex. 19 80 ), w hi ch T rust ed N e t c o n te n d s s e ttle s th e is s u e f o rth is c ir c u it. A. S t a t u t o r y S c h e me 1. T i t l e 28 C o n g r e s s e s ta b lis h e d th e ju r is d ic tio n o f th e b a n k ru p tc y c o u r ts in T itle 2 8 . K ontr i c k v. R y a n, 540 U . S . 443, 453, 124 S . C t . 906, 914 ( 2004) . S e c t i on 1334 of T i t l e 28 pr ovi de s tha t“ the di s tr i c tc our t s s ha l l ha ve or i gi na l a nd e xc l us i veFor non-core proc eeding s that are“other wise re lated to a c ase under title 11,” the 1 bankruptc y

court may

hear the proc eedingbut “shall submit proposed finding s of fact and conclusions of lawto the district court, and a ny final order or judgment shall be entered by the district judgeafter considering thebankruptc y judge ’s proposed f

indings a nd conclusions and after reviewingde novo those matter s to which any party has timely

and spec ifically

objected.” 28 U.S.C. § 157(c)(1) . 7 j ur i s di c t i on of

a l l c a s e s unde rt i t l e 11 [ the B a nkrupt c y C ode ] , ” a nd “ or i gi na l but note xc l us i ve j ur i s di c t i on of a l l c i vi l pr oc e e di ngs a r i s i ng unde rt i t l e 11, ora r i s i ng in o rr e la te d to c a s e s u n d e rtitle 1 1 .” 2 8 U .S .C . § 1 3 3 4 ( a ) - ( b ) . S e c t i on 151 of

T i t l e 28 pr ovi de s tha tthe ba nkrupt c y c our t s a r e “ a uni tof the di stri ctcourt . ” 28 U . S . C . § 1 51 . P ursuantt o 2 8 U . S . C . § 1 57 (a ), “ [e ] ac h d i stri ct c our tm a y pr ovi de tha ta ny ora l l c a s e s unde rt i t l e 11 [ the B a nkrupt c y C ode ] a nd any or a l l proceedi ng s a ri si ng un der t i t l e 11 o r a ri si ng i n o r r el at ed t o a ca se un der title 1 1 s h a ll b e r e f

e r r e d to th e b a n k ru p tc y ju d g e s f o rth e d is tr ic t.” 2 8 U .S .C . § 157( a ) . S e c t i on 157( b) ( 1) f ur the rpr ovi de s tha tba nkrupt c y c our t s “ m a y he a ra nd de t e r m i ne a l l c a s e s unde rt i t l e 11 a nd a l l c or e pr oc e e di ngs a r i s i ng unde rt i t l e 11, or a r i s i ng i n a c a s e unde rt i t l e 11, r e f e r r e d unde rs ubs e c t i on ( a ) of thi s s e c t i on, a nd m a y e nt e rappr opr i a t e or de r s a nd j udgm e nt s , s ubj e c tt o [ appe l l a t e ] r e vi e w ” by the d i stri ctco u rt . 2 8 U . S . C . § 1 5 7 (b )(1 ). T h u s, b an k ru p t cy co u rtj u ri sd i ct i o n ex i st s, 1 by re fe re nce f

rom the di stri ctcourt s, “ i n three ca t egori es of proceedi ng s: tho se that ‘a r is e u n d e rtitle 1 1 ,’ th o s e th a t ‘a r is e in c a s e s u n d e rtitle 1 1 ,’ a n d th o s e ‘r e la te d to c a s e s unde rt i t l e 11. ’ ” I n r e T ol e do, 170 F . 3d 1340, 1344 ( 11th C i r . 1999) ( c i t a t i onChapter 1 ( General Provisions), Chapter 3 ( Case Administration), and Chapter 5 2 (Creditors, the D ebtor, a

nd the Estate) apply , with some exceptions, to all debtor-re lief ca ses brought u nd e r t heB ank ru ptcy Codeoth e r t

ha n th os ec on c e rningmunic ipal debts . Se e11 U. S.C. § 1 03 . Ch a

pter 1 5 (An c ill ary

and Other C ro ss- B order C a se s) a dd re sse s c a se s invo lvingc ro ssborder insolvency . 11 U.S.C. §§ 1501 et seq. The remaining f ive cha pters g overn thedifferent forms of ba

nkruptcy relief that areavailableunder theCode. They are : Chapter 7 (Liquidation), Chapter 9 (Adjustment of Debts of a Municipality), Chapter

11 (Reorg anization), Chapter 12 (Adjustment of Debts of a F amily Fa rmer or Fisher man with Regular Annual Income) , and Chapter 13 (Adjustment of Debts of a n Individual with Regula

r Income) . See g enerally

Title 11, U.S. Code. 8 o m itte d ) ; s e e a ls o I n r e A tla n ta R e ta il, I n c ., 4 5 6 F .3 d 1 2 7 7 , 1 2 8 7 ( 1 1 th C ir .) , c e r t. d e n ie d , 1 2 7 S . C t. 8 3 6 ( 2 0 0 6 ) . 2. T i t l e 11 I n tur n, T i t l e 11, the B a nkrupt c y C ode , c ont a i ns ni ne c hapt e r s . C hapt e r7, gove r ni ng l i qui da t i on, i s the s ubs t a nt i ve c hapt e rope r a t i ve i n thi s c a s e , a nd § 3 0 3 (b ), th e p ro ced u ral st atu t e ati ssu e, i s co n t ai n ed i n C h ap t er 3 , en t i t l ed C ase A d m i n i strat i o n . F u rth er, C h ap t er 3 o f T i t l e 1 1 i s d i v i d ed i n t o fo u r su b ch ap t ers, 2 i nc l udi ng S ubc hapt e rI , e nt i t l e d “ C om m e nc e m e ntof a C a s e . ” S e e 11 U . S . C . §§ 30 1-30 8. S ec t i on s 301 and 3 02 of S ub chapt erI c on ce rn the com m ence m entof, r e s p e c tiv e ly , v o lu n ta r y b a n k ru p tc y c a s e s a n d jo in t c a s e s f ile d b y a d e b to ra n d h is orhe rs pous e . S e e 11 U . S . C . §§ 301- 302. S e c t i on 303 of S ubc hapt e rI , a ti s s ue he r e , a ddr e s s e s the c om m e nc e m e ntof i nvol unt a r y c a s e s . S e e 11 U . S . C . § 303. Al th o u g h b a n k ru p t c y c a s e s a r e o f t e n c o m m e n c e d o n th e d e b t o r ’ s o wn i ni t i at i ve, “ S ec t i on 30 3 o f the B ankrup t cy C od e a l l ow s c re di t ors i n som e i nst ance sWe quote the 2001 ver sion of the statute, which w as in eff ect at the time Morrison filed 3 its invol untary

petition. Section 303(b)(1) ha s since been amende d to add af ter the term “a

bona fide dispute” that the claims must not be the subject of a bona fidedispute “as to liability or 9 t o h al e adebt or i nt o b ankrup t cy courtby fi l i ng an i nv ol un t ary pet i t i on . ” 2 W i l l i am L . N o r to n , J r . & W illia m L . N o r to n I I I , N o r to n B a n k ru p tc y L a w & P r a c tic e § 2 2 :1 ( 3d e d. 2008) . S e c t i on 303( a ) pr ovi de s tha t“ [ a ] n i nvol unt a r y c a s e m a y be c o m m e n c e d o n ly u n d e rc h ap te r7 o r1 1 o f th is title , a n d o n ly a g a in s t a p e r s o n . . . tha tm a y be a de bt orunde rthe c hapt e runde rw hi c h s uc h c a s e i s c om m e nc e d. ” 11 U .S .C . § 3 0 3 ( a ) . S e c tio n 3 0 3 ( b ) , th e s u b s e c tio n w ith w h ic h w e a r e p r im a r ily c onc e r ne d, s e t s f

or th the pr e r e qui s i t e s f

orc om m e nc i ng a n i nvol unt a r y pe t i t i on, sp eci fi cal l y w h o i s q u al i fi ed t o d o so , as fo l l o w s: A n i nvol unt a r y ca s e a ga i ns ta pe r s on is c om m e n c e d b y th e f ilin g w ith the bank rupt cy courtof a pet i t i on un der c hapt er7 o r 11 o f thi s t i t l e– (1 ) byt hr e e orm or e e ntitie s, e ac h of wh ic h is e it

he ra hol

der o f a c la im ag a in s t s u c h p e rs o n th a t is n o t c o n tin g e n t a s to lia b ility o rth e s u b

je c t o f a b o n a f

ide dis p u te , or an in d enture trust ee repres ent i ng such a hol der, i f s uch cl ai m s a gg re gat e a t l east $11, 625 m or e tha n the va l ue of a ny l i e n on pr ope r ty of the d eb t o r secu ri n g su ch cla im s h el d b y th e h o l d ers o f su ch cl ai m s; [or] (2) i f th e r e a re few er t

h a n 1 2 su ch h o lders , e xc l udi ng a ny em pl oyee or i nsi der of s uch p er son a n d an y tra nsfe re e of a tr a ns f e rtha ti s voi da bl e unde rs e c t i on 544, 545, 547, 548, 549, o r 7 2 4 ( a ) o f th i s t i t l e , b y o n e o r m o re o

f su ch h o lders th a t h o ld in th e a g g r e g a te a t le a s t $ 1 1 ,6 2 5 o f s u c h c la im s . . . . 11 U . S . C . § 3 03 (b) ( 20 01 ) ( em ph as i s a dd ed) ( foot no t es om i tt ed). 3amount.” 11 U.S.C. § 303(b)(1) (2008). Additionally , in the current § 303(b), theminimum

ag greg ate c laim value for petitioning creditors is $13,475 rather than $11,625, as it was at the tim eof Mo rriso n’ s p e tition . Co mpa re11 U. S.C. § 3 03 (b ) ( 20 08 ), wi th i d. (2 00 1) . Se efo otn ote 9, infra. Th e re a ft e r, § 3 03 (h) p ro vide s: “ Otherw ise , a fte r t ri a l, t hec ourt sh a ll o rde r re lie f ag ains t 4 thedebto r . . . on ly

if –( 1) thedebto r i s g e nerally no t pa yingsu c h d ebto r’ s d ebts a s suc h d ebts becomedue unless such debts are thesubject of a bona fidedispute as to liability or amount; or (2) within 120 days before the date of the f iling of thepetition, a custodian . . . wa s appointed or took possession [ of the debtor’s property].” 11 U.S.C. § 303(h). 10 O nc e the i nvol unt a r y pe t i t i on ha s be e n f i l e d, § 303( h) pr ovi de s tha t“ [ i ] f the p e titio n is n o t tim e ly c o n tr o v e r te d , th e c o u r t s h a ll o r d e rr e lie f a g a in s t th e d e b to rin a n i nvol unt a r y c a s e unde rthe c hapt e runde rw hi c h the pe t i t i on w a s f i l e d. ” 11 U . S . C . § 3 03 (h). M oreover, § 3 03 (c ) s t at es thataf t erthe fi l i ng of an i nv ol un t ary 4 pe t i t i on, othe rc r e di t or s w i th non- c ont i nge nt , uns e c ur e d c l a i m s m a y j oi n i n the p et i t i o n as i f th ey w ere o ri g i n al p et i t i o n i n g cred i t o rs, as fo l l o w s: A f te rth e f ilin g o f a p e titio n u n d e rth is s e c tio n b u t b e f o r e th e c a s e is d is m is s e d o rr e lie f

is o r d e r e d , a c r e d it o r h o ld in g a n u n s e c u r e d c la im tha ti s notc ont i nge nt , othe rtha n a c r e di t orf i l i ng un d e rs ubs e c t i on ( b) of thi s s ec t i on , m ay j oi n i n the pet i t i on w ith the sa m e e ff ec tas i f s uch jo in in g c r e d ito rw e r e a p e titio n i n g c r e d ito ru n d e rs u b s e c tio n ( b ) o f th is s e c t i on. 1 1 U .S .C . § 3 0 3 ( c ) . A g a i n s tth i s s t a tu t o r y b a c k g r o u n d , Tru s t e d N e ta s s e r t s th a t , a tth e t i me M orri son’ s i nv ol un t ary pet i t i on w as fi l ed, M orri son’ s pet i t i on fa i l ed t o m ee tthe § 303( b) r e qui r e m e nt s be c a us e : ( 1) M or r i s on’ s c l a i m a ga i ns tT rus t e d N e tw a s the subj ec tof a bon a f

i de di sput e; and (2) T rust ed N ethad t w el ve or m ore non -i nsi der11

ho l ders of un di sput ed, no n-cont i ng entcl ai m s, ye tM orri son’ s pet i t i on w as no tfi l ed by thr e e pe t i t i oni ng c r e di t or s . I n r e s pons e , M or r i s on a r gue s tha ti t s pe t i t i on es t abl i shed the pri m a f

ac i e groun ds for c om m enci ng an i nv ol un t ary bankrup t cy ca se an d , i n an y e v en t, T ru sted N et w aiv ed an y p o ten ti al o b jectio n s to M o rr iso n ’s p e titio n b y w a itin g f

o u ry e a r s to r a is e th e m . T ru s te d N e t d o e s n o t c o n te s t th a t its four-y ea r del ay w ou l d n orm al l y c on st i tut e aw ai ver; i nst ea d, i tcont ends thatthe § 303( b) r e qui r e m e nt s a r e s ubj e c tm a tt e rj ur i s di c t i ona l a nd he nc e i nc apa bl e of be i ng w a iv e d . B . C ir c u it S p lit A s m e nt i one d a bove , the c i r c ui t s , a nd othe rc our t s , a r e s pl i ton w he the rthe r e qui r e m e nt s of

§ 303( b) m us tbe s a t i s f i e d t o c onve y s ubj e c tm a tt e rj ur i s di c t i on ov eran i nv ol un t ary c as e upo n the bank rupt cy courtor w hether, i nst ea d, they a re m e r e l y “ s ubs t a nt i ve m a tt e r s w hi c h m us tbe pr ove d orw a i ve d f orpe t i t i oni ng c r e di t or s t o pr e va i l i n i nvol unt a r y pr oc e e di ngs . ” I n r e R ubi n, 769 F . 2d 611, 614 n. 3 (9t h C i r. 19 85 ). In ot her w ords, do the com m ence m entre qu i re m ent s of § 30 3(b) i n T i t l e 11 add re ss the j uri sdi ct i on al po w erof the courtt o h ea r a n i nvol unt a r y c a s e or , r a the r , doe s T i t l e 28 c ont a i n the j ur i s di c t i ona l gr a nta nd do § 3 0 3 ( b ) ’s r e q u ir e m e n ts s im p ly c o n s titu te e le m e n ts th a t m u s t b e e s ta b lis h e d to s us t a i n a n i nvol unt a r y pr oc e e di ng?12

T h e N in th C ir c u it h a s c o n c lu d e d th a t “[ p ]e titio n in g c r e d ito r s c a n n o t p r e v a il unl e s s the y s how tha tthe i rc l a i m s a r e nots ubj e c tt o bona f i de di s put e s , butthe ba nkrupt c y c our ti s notw i thoutj ur i s di c t i on pr i ort o thi s de t e r m i na t i on. ” R ubi n, 76 9 F . 2d at61 5. T he N i nth C i rc ui tdet erm i ned t hatthe bank rupt cy courti s ves t ed w ith g e n e r a l p o w e ru n d e rT itle 2 8 “to e x e r c is e ju r is d ic tio n o f a ll c a s e s u n d e rtitle 11 , ” a s w el l as “ excl usi ve j uri sdi ct i on of al l the prop erty of debt ors i n such cas es . ” I d . ( q u o ta tio n m a r k s a n d c ita tio n o m itte d ) . T h e r e f o r e , th e N in th C ir c u it h a s h e ld thatbo th the “ bo na fi de di sput e” and t hree -pet i t i on i ng -c re di t or re qu i re m ent s of § 30 3(b) can be w ai ved and hence ar e notsubj ec tm att erj uri sdi ct i on al . S ee i d. at 6 1 4 - 1 5 ; I n r e M a s o n , 7 0 9 F .2 d 1 3 1 3 , 1 3 1 8 - 1 9 ( 9 th C ir . 1 9 8 3 ) . T h e S e c o n d C ir c u it, o n th e o th e rh a n d , h a s h e ld th a t § 3 0 3 ( b ) ’s r e q u ir e m e n ts ar e s ubj ec tm att erj uri sdi ct i on al . In re B D C 56 L L C , 33 0 F . 3d 11 1, 11 8 (2d C i r. 2003) . I tr e a s one d tha t“ [ w ] he the ra n a l l e ge d de bt ori s pr ope r l y be f or e the ba nkrupt c y c our ti n a n i nvol unt a r y c a s e i s a thr e s hol d de t e r m i na t i on tha ts houl d be m a d e a t th e e a r lie s t p o s s ib le s ta g e o f th e p r o c e e d in g s ,” a n d th e b o n a f id e d is p u te r e q u ir e m e n t o f

§ 3 0 3 ( b ) , a s a p r e r e q u is ite to b r in g in g a n in v o lu n ta r y p o s itio n , is s uc h a thr e s hol d de t e r m i na t i on. I d. T he S e c ond C i r c ui tf ur the rr e a s one d: A n y c r e d ito rw is h in g to i n v o k e th e b a n k ru p tc y c o u r t’s ju r is d ic tio n in an i n v o l u n t ary case s h o u ld b e req u i red t o d em o n strat e atth e earl i est p r a c tic a b l e p o in t th a t its p e titio n s a tis f ie s th is r e q u ir e m e n t. O th erw i se, cred i t o rs co u l d , o n th e b asi s o f rel at i v el y u n t est ed cl ai m s,Although somebankruptc y courts ea rlier had reached thesame c onclusion as the Second 5 Circuit, that § 303(b) is subject matter jurisdictional, they

did so without explanation. See In re Paczesny , 283 B.R. 715, 718 (B ankr. N .D. I ll. 2002); In re O ny xTelec omms., Ltd., 60 B.R. 492, 496 (B ankr. S.D.N.Y . 1985); In re N ew Me x ico Props., Inc., 18 B .R. 936, 939-40 (B ankr. D.N.M. 1982). 13 h a u l a s o lv e n t d e b to rw ith w h o m th e y h a v e le g itim a te d is p u te s in to ba nkrupt c y c our t a nd f or c e i t t o de f

e nd a n i nvol unt a r y p ro ceedi ng w hi l e the ba nkrupt c y c our tl e av es f ora l a t e rm e r i t s de t e r m i na t i on w h e th e rth e d e b to ris e v e n p r o p e r ly b e f o r e it. I d. a t118- 19. T hus , the S e c ond C i r c ui the l d tha t“ the r e qui r e m e nttha ta pe t i t i oni ng c r e di t or ’ s c l a i m notbe s ubj e c tt o a bona f i de di s put e [ i s ] both a n e l e m e ntof the c ondi t i on upon w hi c h a c ontr ove r t e d or de rf orr e l i e f m a y be e nt e r e d a nd a ne c e s s a r y pr e r e qui s i t e f orthe ba nkrupt c y c our t ’ s j ur i s di c t i on. ” I d. a t118 ( q u o ta tio n m a r k s a n d c ita tio n s o m itte d ) . M o st co u rts to co n sid erth e iss u e h av e r ea ch ed th e c o n clu sio n th at § 3 0 3 (b )’s f i l i ng r e qui r e m e nt s a r e nots ubj e c tm a tt e rj ur i s di c t i ona l . S e e , e . g. , R ubi n, 769 F . 2d at61 4-15 ; In re E ar l ’ s T i re S erv. , 6 B . R . 10 19 , 10 22 -23 (D . D el . 19 80 ); In re S a unde r s , 379 B . R . 847, 855- 57 ( B a nkr . D . M i nn. 2007) ; I n r e M a r ke tX T H ol di ngs C o rp . , 3 4 7 B . R . 1 5 6 , 1 6 1 -6 2 (B an k r. S . D . N . Y . 2 0 0 6 ); In re C o p p ert o n e C o m m c’ n s, I n c . , 9 6 B. R. 2 3 3 , 2 3 4 - 3 5 ( Ba n k r . W . D . M o . 1 9 8 9 ) ; I n r e A l t a Ti t l e Co . , 5 5 B. R. 13 3, 13 6-37 (B ankr. D . U t ah 19 85 ). T he l ea di ng com m ent at ors a gree . S ee 2 A l an 5 N . R es ni ck & H enry J. S om m er , C ol l i eron B ankrup t cy (15t h ed. 20 07 ) ¶ 30 3. 04 [9] (“ T he bet t erar gu m ent. . . i s thatthe [three -c re di t or] re qu i re m ent[of §14

30 3(b)] ca n b e w ai ved, w hi ch sugg es t s thati ti s nota j uri sdi ct i on al re qu i re m ent . ”) ; 2 Wi l l i a m L . No r t o n , J r . & Wi l l i a m L . No r t o n I I I , No rt o n B a n k ru p t c y L a w & P r a c t i c e § 22: 3 ( 3d e d. 2008) ( “ L i ke the thr e e - pe t i t i one rr e qui r e m e nt , the undi s put e d- c l a i m r e qui r e m e nt[ of § 303( b) ] i s notj ur i s di c t i ona l , butgoe s t o the m er i t s. If

the po i nti s c on t es t ed, pet i t i on er s c anno tprevai l un l es s they s ho w that the i rc l a i m s a r e nots ubj e c tt o bona f i de di s put e , butthe ba nkrupt c y c our ti s not w i tho utj uri sdi ct i on pri or t o the det erm i nat i on . ”) . M o re o v er , w e f

in d th e r ea so n in g o f th e d ec isio n s th at h o ld § 3 0 3 (b )’s re qu i re m ent s a re no tsubj ec tm att erj uri sdi ct i on al t o b e m ore pers uasi ve, for s ever al re as on s. F i rs t , thi s c on cl usi on com po rt s w i th the basi c nature of s ubj ec tm att er j u ri sd i ct i o n – i . e. , th ati ti s th e st atu t o ri l y co n ferred p o w er o f th e co u rtt o h ear a class o f cases. A s a cl ass o f cases, i n v o l u n t ary b an k ru p t cy cases u n q u est i o n ab l y ari se unde rT i t l e 11 ( the B a nkrupt c y C ode ) , a nd thus f a l l w i thi n the C ongr e s s i ona l gr a nt of subj ec tm att erj uri sdi ct i on t o the bank rupt cy court s. S ee 28 U . S . C . § 1 57 (a ) ( a u th o r iz in g b a n k ru p tc y c o u r ts to h e a ra n d d e te r m in e “a n y o ra ll c a s e s u n d e rtitle 1 1 an d an y o r al l p ro ceed i n g s ari si n g u n d er t i t l e 1 1 o r ari si n g i n o r rel at ed t o a case u n d e rtitle 1 1 ” ) . S ec on d, the ho l di ng that§ 3 03 (b) i n T i t l e 11 i s notsubj ec tm att er j uri sdi ct i on al i s c on si st entw i th § 30 3’ s s t atut ory l angu age. S ec t i on 30 3(b) do es15

n o t c o n ta in a n y e x p lic it r e f e r e n c e to its r e q u ir e m e n ts b e in g ju r is d ic tio n a l in n a tu r e . A nd , § 3 03 (h) provi des that“ [i ] f the pet i t i on i s nott i m el y c on trovert ed, the court shal l order r el i ef

agai nstthe debt or i n an i nv ol un t ary c as e und erthe chapt erun der w hi c h the pe t i t i on w a s f i l e d. ” A c c or d F e d. R . B a nkr . P . 1013( b) ( “ I f no pl e a di ng orothe rde f

e ns e t o a pe t i t i on i s f

i l e d w i thi n the t i m e pr ovi de d . . . , the c our t , on the nextday, or as soon there af t eras prac t i cabl e, shal l ent eran order for the re l i ef re qu es t ed i n the pet i t i on . ”) . T hu s, the st atut ory s chem e c l ea rl y c on t em pl at es that r e lie f w ill b e im m e d ia te ly g r a n te d if n o tim e ly r e s p o n s e is f

ile d . H o w e v e r , a f a i l ur e t o t i m e l y obj e c tt o a n i nvol unt a r y pe t i t i on’ s c om pl i a nc e w i th § 303( b) a r g u a b ly s h o u ld n o t r e s u lt in r e lie f b e in g im m e d ia te ly e n te r e d a g a in s t th e d e b to rif th e s ta tu to r y r e q u ir e m e n ts a r e s u b je c t m a tte rju r is d ic tio n a l a n d n o t w a iv a b le . F ur the r m or e , § 303( c ) s t a t e s tha ta c r e di t orw ho ha s notj oi ne d i n the in v o lu n ta r y p e titio n m a y b e a d d e d a s a p e titio n in g c r e d ito rb e f o r e th e c a s e is di s m i s s e d orr e l i e f

i s or de r e d. 11 U . S . C . § 303( c ) . T he s t a tut e the r e f or e gr a nt s the courtthe po w ert o p erm i ton e or m ore c re di t ors t o j oi n a pet i t i on thatm ay otherw i se be di sm i ss ed. B ut , i tse em s a no m al ou s a tbestt o h ol d thata bankrup t cy court , w hi ch l ac ks j uri sdi ct i on ov eran i nv ol un t ary c as e bec ause the pet i t i on w as de f e c t i ve l y f i l e d, m a y s ubs e que nt l y c r e a t e j ur i s di c t i on f ori t s e l f by pe r m i tt i ng a ddi t i ona l c r e di t or s t o j oi n the pe t i t i on. C f . N e w m a n- G r e e n, I nc . v. A l f onz o-16

L a r r a in , 4 9 0 U .S . 8 2 6 , 8 3 2 , 1 0 9 S . C t. 2 2 1 8 , 2 2 2 2 ( 1 9 8 9 ) ( in te rp r e tin g 2 8 U .S .C . § 1 6 5 3 to p e r m it a tr ia l o rap p e lla te c o u r t to a llo w a p a r ty to a m e n d its p le a d in g s “to re m edy i nadequ at e j uri sdi ct i on al al l egat i on s, bu tno tdefe ct i ve j uri sdi ct i on al f a c ts ” ) ; E le n d v . B a s h a m , 4 7 1 F .3 d 1 1 9 9 , 1 2 0 6 ( 1 1 th C ir . 2 0 0 6 ) ( h o ld in g , w ith r e ga r d t o s t a ndi ng, tha ta c our t“ l a c ks the pow e rt o c r e a t e j ur i s di c t i on by e m be l l i s hi ng a de f

i c i e nta l l e ga t i on of

i nj ur y ” ) ( quot a t i on m a r ks a nd c i t a t i on om i tt ed). T here fore , i f § 30 3(b) i s r ea d t o b e am att erof subj ec tm att er j ur i s di c t i on, s om e t e ns i on a r i s e s be tw e e n s ubs e c t i on ( b) a nd s ubs e c t i ons ( c ) a nd ( h) of § 303. I nt e rpr e t i ng § 303( b) a s non- j ur i s di c t i ona l , on the othe rha nd, r e s ul t s i n a h a r m o n io u s o p e r a tio n o f th e s ta tu to r y s u b s e c tio n s . T hi rd, the S ec on d C i rc ui t ’ s r ea soni ng i n B D C –that§ 3 03 (b) i s s ubj ec tm att er j ur i s di c t i ona l be c a us e a n e a r l y , thr e s hol d de t e r m i na t i on of the § 303( b) r e qui r e m e nt s i s ne e de d–i s unpe r s ua s i ve . A pa r tf r om B D C ’ s f

a i l ur e t o a c c ountf

or the i m po rtof § 3 03 (c ) a nd § 3 03 (h), i ti gn ores the fa ctthatsubj ec tm att er j uri sdi ct i on turns on l y upo n w hether the courthas the st atut ori l y- conferr ed po w er t o he a rthe c a s e be f

or e i t , a nd the r e f

or e ha s nothi ng ne c e s s a r i l y t o do w i th the s p e e d y d e te r m in a tio n o f c la im s o rw h e th e ra n a lle g e d d e b to r– o ra n y o th e rp a r ty

– is “p r o p e r ly b e f

o r e th e . . . c o u r t.” B D C , 3 3 0 F .3 d a t 1 1 8 . B D C ’s r a tio n a le a ls o f a ils on i t s ow n t erm s, as the fa ct s of thi s c as e s ho w . If § 3 03 (b)’ s r equi re m ent s a re17

s ubj e c tm a tt e rj ur i s di c t i ona l , a n i nvol unt a r y de bt orc oul d r a i s e a § 303( b) c ha l l e nge a ta ny poi nti n the pr oc e e di ngs , w he r e a s i f § 303( b) i s notj ur i s di c t i ona l , § 303( h) and R ul e 101 3 w ou l d requi re thatthe i ss ue of the pet i t i on i ng cr edi t ors’ com pl i ance w i th § 30 3(b) be det erm i ned atthe ou t se t–as athres ho l d m att er–o r be f orever w ai ved. C on se qu ent l y, a pol i cy i n favor of det erm i ni ng the suff i ci ency of an i nv ol un t ary pet i t i on atthe ou t se tof the ca se i s bes tse rved by a non -j uri sdi ct i on al re adi ng of § 3 03 (b). F ou rth, thi s C ou rthas i nt erpret ed si m i l ar“ com m ence m entof a c as e” l angu age, foun d el se w here i n the B ankrup t cy C od e, t o b e non -j uri sdi ct i on al . In In r e P ugh, 158 F . 3d 530, 530 ( 11th C i r . 1998) , w e c ons i de r e d w he the r11 U . S . C . §§ 5 4 6 (a ) a n d 5 4 9 (d ), w h ich es tab li sh li m it atio n s p er io d s o n a b an k ru p tcy tru stee ’s c om m e nc e m e ntof

a dve r s a r y pr oc e e di ngs t o a voi d c e r t a i n pr e - a nd pos t - pe t i t i on tr a n s f e r s , lie n s , a n d o f

f s e ts in v o lv in g th e d e b to r ’s a s s e ts , “o p e r a te to d iv e s t a b a n k ru p tc y c o u r t o f

s u b je c t m a tte rju r is d ic tio n o n c e th e y h a v e e lap s e d , o r. . . const i tut e s t atut es of l i m i t at i on s thatca n b e w ai ved. ” S ec t i on 54 6(a) prov i ded, at the t i m e the P ug h b ankrup t cy ca se began, that“ [a ] n act i on or proceedi ng un der s e c tio n 5 4 4 , 5 4 5 , 5 4 7 , 5 4 8 , o r5 5 3 o f th is title [ g o v e r n in g th e tru s te e ’s a u th o r ity to a voi d c e r t a i n pr e - pe t i t i on tr a ns a c t i ons i nvol vi ng the de bt or ’ s a s s e t s ] m a y notbe c o m m e n c e d a f

te rth e e a r lie ro f

– ( 1 ) tw o y e a r s a f

te rth e ap p o in tm e n t o f

a tru s te e . . .18

or (2) the t i m e the [bankrup t cy ] ca se i s c l osed or di sm i ss ed. ” 11 U . S . C . § 5 46 (a ) ( 1988) . S e c t i on 549( d) pr ovi de d ( a nd s t i l l pr ovi de s ) tha t“ [ a ] n a c t i on or pr oc e e di ng [ t o a voi d pos t - pe t i t i on tr a ns f e r s ] m a y notbe c om m e nc e d a f t e rthe e a r l i e rof –( 1) tw o y e a r s a f

t e rthe da t e of

the tr a ns f

e rs oughtt o be a voi de d; or( 2) th e tim e th e [ b a n k ru p tc y ] c a s e is c lo s e d o rd is m is s e d .” 1 1 U .S .C . § 5 4 9 ( d ) . S e c tio n s 5 4 6 ( a ) a n d 5 4 9 ( d ) a r e s im ila rto § 3 0 3 ( b ) in th a t b o th s ta tu te s e x p r e s s ly prov i de cond i t i on s und erw hi ch a procee di ng un der T i t l e 11 m ay be “ com m ence d. ” In P ug h, the debt ors l ostan avoi dance ac t i on t o w hi ch they had no tra i se d the l i m i t a t i ons de f

e ns e , a nd on appe a l the y a r gue d tha tthe l i m i t a t i ons pe r i ods e s t a bl i s he d i n §§ 546( a ) a nd 549( d) w e r e s ubj e c tm a tt e rj ur i s di c t i ona l , s uc h tha tthe f a i l ur e t o e a r l i e rr a i s e the m c oul d notc ons t i tut e a w a i ve r . P ugh, 158 F . 3d a t530- 32. T hi s C our ta c know l e dge d tha tw e ha d notc ons i de r e d the que s t i on be f or e , but tha tthe r e w a s a s pl i tof

a uthor i ty e l s e w he r e r e ga r di ng w hether these code prov isions const i tut e gra nt s of s ubj ec tm att er ju r is d ic tio n th a t le a v e a c o u r t w ith o u t a n y a u th o r ity t o h e a rc e r ta in pr oc e e di ngs –i . e . , tha te xt i ngui s h t h e ri ghtof a c t i on i t s e l f

by di ve s t i ng a c ou rtof i t s s ubj ect m att erj uri sdi ct i on ov erce rt ai n p roce edi ng s–af t er the l i m i t a t i on s pe r i od ha s e l aps e d, orw he the rthe y a r e true s t a tut e s of l i m it atio n s thatre stri ctthe po w erof a c ou rtt o g ra ntce rt ai n rem edi es i n a pr oc e e di ng ove rw hi c h i tha s s ubj e c tm a tt e rj ur i s di c t i on. Id . at5 3 3 -3 4 . A ft er co n si d eri n g th e st atu t o ry l an g u ag e, ex i st i n g au th o ri ty, l e gi s l a t i ve hi s t or y , a nd ove r a l l s t a tut or y s c he m e , thi s C our tc onc l ude d tha t§§19

546( a ) a nd 549( d) a r e w a i va bl e s t a tut e s of l i m i t a t i on r a the rtha n r e s tr i c t i ons on the bank rupt cy court s’ subj ec tm att erj uri sdi ct i on . S ee i d. at53 4-38 . A m on g o ther thi ngs , thi s C our ti n P ugh r e l i e d upon the f a c ttha tthe s ubj e c tm a tt e rj ur i s di c t i on of the bank rupt cy court s der i ves f rom 28 U . S . C . § 1 57 , and t hatnei ther § 54 6(a) no r § 5 4 9 ( d ) e x p lic itly r e f

e r s to ju r is d ic tio n . I d . a t 5 3 8 . T h u s , f o rr e a s o n s th a t ap p ly e q u a lly w e ll to § 3 0 3 ( b ) , th is C o u r t in P u g h h e ld th a t s ta tu to r y c o n d itio n s w ith in the B a nkrupt c y C ode upon the “ c om m e nc e [ m e nt ] ” of a ba nkrupt c y a c t i on a r e not subj ec tm att erj uri sdi ct i on al . P ug h, 15 8 F . 3d at53 2-33 ; 11 U . S . C . §§ 54 6(a) , 5 4 9 ( d ) . C . A ll M e d ia O r di na r i l y , ourdi s c us s i on w oul d e nd he r e . H ow e ve r , T rus t e d N e tc ont e nds tha tw e a r e notf

r e e t o appl y ourow n j udgm e ntt o the i nt e rpr e t a t i on of § 303( b) be c a us e thi s C our t ’ s pr e de c e s s or , i n A l l M e di a , a l r e a dy de c i de d the i s s ue p re se n ted . S ee In re A ll M ed ia P ro p er ti es , In c., 6 4 6 F .2 d 1 9 3 (5 th C ir. 1 9 8 1 ), af f’g 5 B . R . 12 6 (B ankr. S . D . T ex. 19 80 ). In A l l M edi a, the form erF i fth C i rc ui ti ss ued a s um m ary a ff

i rm ance “ on the basi s of the M em orandu m O pi ni on of B ankrup t cy J u d g e E .H . P a tto n , J r ., r e p o r te d a t 5 B .R . 1 2 6 ( B k r tc y ., 1 9 8 0 ) .” I d . a t 1 9 3 . T h u s , it adop t ed bo th the ho l di ng and t he re as on i ng of the bank rupt cy court ’ s pub l i shedHenc efor th, when discussingthe All Media c ase w e re fer to the bankruptc y

court’s 6 opinion unless otherwise stated. In B onner v . Ci ty

of Pric ha rd , 6 61 F .2 d 1 20 6, 12 07 (1 1th Cir . 1 98 1) (en b anc ), thi s 7 Co urt ac c ep te d

a s b in dingp r e c e d e nt allF if th Circ u it c a s e s d e c ide d

b e f o r eO c tob e r

1 , 1 9 8 1 . We have also held that when a n earlier pane l of this Court has expressly adopted a

lower c ourt’s order, that order i s b inding pre c e dent u

nle ss a nd untilov e rr

ule d b y theSup remeCourt

or thi s Court sitt ing en banc. SeeDicker son v. Alachua County Comm’n, 200 F.3d 761, 768 &n.8 (11th Cir. 2000) (holdingthat a plaintiff’ s 42 U.S.C. § 1985(3) civil rights conspirac y claim was c ontroll e d b y

Cha mbl iss v. F oo te , 5 62 F .2 d 1 01 5, 10 15 (5 th C ir . 1 97 7) , a fo rm e r F if

th C irc uit casethat, like the circuit court opinion in All Media, affir med simply

“on the ba sis of the district court’s [published] opi nion”). Be fore1979, bankruptc y

rights and ac tions were g overne d by the B ankruptc y

Act of 8 1898 (the “Act”) . In re A lvare z, 224 F.3d 1273, 1278 n.13 (11th Cir. 2000). Eff ective O ctober 1, 1979, the Act wa s repe aled a nd replaced by

the cur rent B ankruptc y

Code (the “ Code”). Id.; Mitsubis hi Int’l Corp. v. Clark Pipe & Supply Co., 735 F.2d 160, 162 n.2 (5th Cir. 1984). 20 op i ni on i n the ca se . 6 T h e p a r tie s d o n o t d is p u te th a t th e A ll M e d ia d e c is io n is b in d in g u p o n th is C o u rt . W h atth ey d o co n t esti s w h eth er A l l M ed i a co n tro l s: In o th er w o rd s,

7 w hether A l l M edi a a ctual l y a nd square l y hel d that§ 3 03 (b)’ s r equi re m ent s a re s u b je c t m a tte rju r is d ic tio n a l. Al l Me d i a c o n c e r n e d i n v o l u n t a r y C h ap t e r1 1 p e t i t i o n s b r o u g h ta g a i n s ttwo r e l a t e d ( pa r e nta nd w hol l y ow ne d s ubs i di a r y ) c om pa ni e s i nvol ve d i n the ope r a t i on o f a rad i o st at i o n . T h e i n v o l u n t ary p et i t i o n s w ere b ro u g h tu n d er th e th en -recen t l ye n a c te d B a n k ru p tc y C o d e . A ll M e d ia , 5 B .R . a t 1 3 0 - 3 1 . T h e tw o d e b to r s , A ll 8 M e di a a nd A r t l i t e , c ont e s t e d the pe t i t i ons ; the ba nkrupt c y c our tc ons ol i da t e d the c a s e s a nd c onduc t e d a tr i a l . I d. a t131. T he c our tthe n i s s ue d i t s m e m or a ndumAt the time the involuntary petitions were f

iled in All Media, § 303(b) of the B ankruptc y 9 Codeprov ide d th at: An involuntary ca se is commence d by the filingwith the bankruptc y court of a petition under cha

pter 7 or 11 of

this ti tle–, (1 ) b y thre eor moree nti tie s, e a c h o f which is e ith e r a ho ld er of a c laim ag ainst such per son that is not contingent a s to liab i l i ty or an indenture trustee repr es en ting suc h a holder , if such claims ag greg ate at least $5,000 more than the value of any lien on proper

ty of the debtor securing such claims held by the holders of such c laims; [ or] (2) if there are few er than 12 such holders, e x cludingany employee or

insider . . . , by one or more of such holders that hold in the ag greg ate at least $5,000 of such claims . . . . 11 U.S.C. § 303(b) (1980). L ater amendments to § 303(b) incre ased thethreshold dollar value of petitioning creditors’ c laims and adde d the re quirement that their c laims not be “the subjec t of a bona fidedispute as to liability or amount.” Id. (2008). (As mentioned in footnote 3 supra , the version of § 303(b) in eff ect when Morrison filed its involuntary petition did not i nclude the phrase“as to liability

or amount.”) Ex cept f or the $5,000 minimum ag greg ate c laim amount, which was $11,625 f or Morrison and is $13,475 at pre sent, every requirement that exis ted in § 303(b) at the time of the All Media dec ision ex isted in § 303(b) as of the date Mor

rison filed its petition. 21 op i ni on on the debt ors’ chal l enges t o the i nv ol un t ary pet i t i on s. A s the court d e s c r ib e d it, [ t ] he i ssu es t o be de t e r m i ne d i nc l ude w he the re a c h of the pe t i t i oni ng c r e di t or s m e e t s the C ode r e qui r e m e nt s f o ra c r e di t ore nt i t l e d t o br i ng a n i n v o l u n t a r y p e t i t i o n , w h e th e rth e r e q u i s i t e j u r i s d i c t i o n a l g r o u n ds e xi s ta nd w he the re a c h of the a l l e ge d de bt or s i s ge ne r a l l y notpa y i ng i t s debt s a s s uch d ebt s bec om e due. I d. 9 T he bank rupt cy courtfi rs tanal yz ed i nv ol un t ary proce edi ng s und erthe new C o d e f ra m ew o rk , d iscu ss in g h o w to d eter m in e w h eth era p etit io n in g cr ed it o r’s c la im is “n o t c o n tin g e n t a s to liab ility .” I d . a t 1 3 1 - 3 3 . N e x t, s in c e b o th d eb t o rs– A l l M ed i a an d A rt l i t e– h ad assert ed d efen ses t o th e p et i t i o n i n g cred i t o rs’22

c la im s , th e b a n k ru p tc y c o u r t e x a m in e d “to w h a t e x te n t d e f e n s e s c a n b e a s s e r te d to de f e a ta n i nvol unt a r y pe t i t i on unde rthe C ode . ” I d. a t133- 36. A f t e rr e vi e w i ng the e vi de nc e , the c our tc onc l ude d tha tthe pe t i t i oni ng c r e di t or s ’ c l a i m s w e r e not c o n tin g e n t a s to liab ility a n d th e r e f o r e th e y s a tis f

ie d th e r e q u ir e m e n ts o f

§ 3 0 3 ( b ) . I d . a t 1 3 6 - 4 2 . C o n s e q u e n tly , th e c o u r t h e ld , it w a s e n title d to r e a c h th e u ltim a te is s u e o f w h e th e rA ll M e d ia a n d A r tlite h a d b e e n f a ilin g g e n e r a lly to p a y th e ird e b ts as such became du e. Id. at13 8, 14 2. Itdeci ded t hi s f i nal i ss ue, as t o eac h d ebt or, in f a v o ro f th e p e titio n in g c r e d ito r s . I d . a t 1 4 2 - 4 8 . T he pr oc e dur a l pos tur e of A l l M e di a di f

f e r e d dr a m a t i c a l l y f

r om tha tof

the pres entca se , i n thatbo th A l l M edi a debt ors i m m edi at el y app ea re d and chal l enged the pe t i t i oni ng c r e di t or s ’ s t a tus a nd, thus , the r e w a s no w a i ve ri s s ue . R a the r , the rel ev an ti ssu e b efo re th e A l l M ed i a co u rtw as w h eth er th e p et i t i o n i n g cred i t o rs’ cl ai m s w er e non -c on t i ng entas t o l i abi l i ty a nd w er e val ued, i n the aggregat e, at l ea st$5 , 00 0 m ore than t he val ue of any l i ens on t he debt or’ s property thatse cure d the cl ai m s, as re qu i re d b y § 30 3(b). N ever thel es s, the A l l M edi a opi ni on i s r i dd l ed w i th r e f e r e nc e s t o § 303( b) ’ s r e qui r e m e nt s a s “ j ur i s di c t i ona l . ” F ore xa m pl e , the c our ts t a t e d, T hi s i s nott o s a y tha tthe r e qui rem en ttha tthe pe t i t i oni ng c r e di t or s be hol de r s of

c l a i m s tha ta r e n o t co n t i nge nta s t o l i a bi l i ty i s not j ur i s di c t i on a l . I t i s on l y t o s a y tha t thi s r e qu i r e me nt do e s notm ea n tha ta l l c l a i m s m us tne c e s s a r i l y be l i qui da t e d, undi s put e d, m a tur e d, or23

r e duc e d t o j udgm e ntf

orthe c our tt o ha ve j ur i s di c t i on. I d. a t133. A ddi t i ona l l y , the c our ts t a t e d tha t“ [ s ] i nc e [ A l l M e di a ’ s pe t i t i oni ng c r e d ito r s ] a r e h o ld e r s o f c la im s n o t c o n tin g e n t a s to liab ility a n d to g e th e rth e ir c la im s e x c e e d $ 5 ,0 0 0 th is c o u r t h a s ju r is d ic tio n to d e te r m in e w h e th e rA ll M e d ia h a s b e e n g e n e r a lly p a y in g its d e b ts a s th e y b e c o m e d u e .” I d . a t 1 4 2 . A n d , w ith re spec tt o A rt l i t e, the courtconcl ud ed thatbecause i t s pet i t i on i ng cr edi t ors po ss es se d n on -l i abi l i ty- cont i ng entcl ai m s, “ the j uri sdi ct i on al re qu i re m ent s of § 3 0 3 ( h ) ( 1 ) h a v e b e e n m e t a n d . . . th e r e is ju r is d ic tio n to d e te r m in e w h e th e rA r tlite w a s g e n e r a lly n o t p a y in g its d e b ts a s th e y b e c a m e d u e .” I d . a t 1 3 8 . I n th is c a s e , M o r r is o n a r g u e s th a t a lth o u g h A ll M e d ia r e p e a te d ly r e f e r r e d to the i nv ol un t ary pet i t i on fi l i ng re qu i re m ent s a s j uri sdi ct i on al , i tnever s t at ed that they a re su bjec t

m atterj uri sdi ct i on al . M orri son i s c orre ctthatA l l M edi a never a c tu a l l y u s e d th e t e r m “ s u b j e c tma tt e rj u r i s d i c t i o n . ” M o r e o v e r , th e r e i s s o me l a ngua ge i n the A l l M e di a opi ni on tha ts ugge s t s tha tthe c our t , i n s pe a ki ng of j uri sdi ct i on , m ay have been ref erri ng no tt o the court ’ s pow ert o h ea r i nv ol un t ary ba nkrupt c y c a s e s , butr a the rt o the c our t ’ s a uthor i ty t o br i ng a n i nvol unt a r y de bt or be f or e i t , ort o a s ubs t a nt i ve m a tt e rtha tm us tbe pr ove n onl y i f puti n i s s ue . S e e i d. a t137 ( “ T he i nt e ntof

§ 303( b) i s tha tthos e w ho a r e notm e e t i ng the i robl i ga t i ons ca n b e f orce d t o sub m i tt o the j uri sdi ct i on of the bank rupt cy court . ”) ; se e a l so i d. atSection 303(b) require s that an involuntary petition be brought by

a creditor or c reditors 10 wh o h old no n- c onting e nt, un dispute d c laims a g ains t th edebto r t hat arewo rt

h a c e rt ain, sp e c if

ic dollar amount “morethan the valueof any lien on proper

ty of the debtor securing suc h claims . . . .” 11 U.S.C. § 303(b). As mentioned above, at the time of the All Media c ase the 24 134 ( “ [ W ] he r e the i s s ue s c onc e r ni ng de f e ns e s t o a c l a i m of

a pe t i t i oni ng c r e di t or ar e notcl ea r a nd re qu i re adj ud i ca t i on of ei ther s ub st ant i al fa ctual or l egal que s t i ons , the c r e di t ors houl d be r e c ogni z e d a s qua l i f i e d t o j oi n i n the br i ngi ng of a n in v o lu n ta r y b a n k ru p tc y p e titio n . O n th e o th e rh a n d , if it is c le a rth a t th e c la im is ba r r e d a nd the a l l e ge d de bt orr a i s e s tha tde f e ns e , the n tha tc r e di t ors houl d notbe a llo w e d to p a r tic ip a te in th e in v o lu n ta r y p e titio n .” ) . H ow ever , i n spi t e of thi s s om ew hatl oo se l angu age, the A l l M edi a c ou rt m a d e c le a re ls e w h e r e in its o p in io n th a t th e “ju r is d ic tio n a l” n a tu r e o f § 3 0 3 ( b ) to w hi c h i tr e f

e r r e d w a s i n f

a c tof the non- w a i va bl e , s ubj e c tm a tt e rj ur i s di c t i on va r i e ty . I n the c l e a r e s te xa m pl e , the c our ts t a t e d: In i t s bri ef

A l l M edi a s t at es thatB es t , Inc. i s notenti tl ed t o b ri ng an i nvo l unt a r y pe t i t i on be c a us e i t s c l a i m s a r e f ul l y s e c ur e d. A l though th i s i s s u e w a s n o t r a is e d b y th e p le a d in g s o ra t tr ia l, it m a y g o to j u ri sdi ct i on and i tshou l d b e c on si dere d si nce acourtca n t ake not i ce a nd di s m i s s a c l a i m f

orl a c k of

j ur i s di c t i on on i t s ow n m ot i on. I d . a t 1 4 0 . T o p la c e th is s ta te m e n t in c o n te x t, th e d e b to rA ll M e d ia ( a f te rth e tr ia l) m a de a “ f

ul l s e c ur i ty ” a r gum e nt , c ont e ndi ng tha tthe c r e di t orB e s t , I nc . c oul d not c om pl y w i th the § 303( b) r e qui r e m e nttha tde btt o pe t i t i oni ng c r e di t or s e xc e e d the v alu e o f a n y lien s s ec u rin g th at d eb t. A lth o u g h th e c o u rt re jected A ll M ed ia’s 10threshold amount was $5,000; the current amount is $13,475. Compareid. (2008), with id.

(1980). Al l Me dia ’s e xpre ss c on side ratio n o f t hea lle g e d § 30 3(b) vio latio ns a s n on -w aiva ble 11 jurisdictional defe cts distinguishes the c ase f rom the sort of “ drive-by

jurisdictional rulings”that the Supreme Court ha s held “should be accorded no pre cedential effe ct on the question whe ther the fe deral court had a

uthority to adjudicate theclaim in suit.” Arbaugh v. Y &H Corp., 546 U.S. 500, 511, 126 S. C t. 1235, 1242-43 (2006) ( quotation marks and c itation omitted). Adm i tt ed l y , P u ghdi d

n o tci t e o r r el y

o nth e A l lM ed i a o p i n i o n . Ho we v er , P u gh 12 concerned theinterpre tation of 11 U.S.C. §§ 546(a) a nd 549(d), not 11 U.S.C. § 303(b). In re Pugh, 158 F .3d at 530. 25 ar gu m entabou tB es t ’ s c l ai m on the fa ct s, the courtexpres sl y r ea ched the i ss ue, despi t e A l l M edi a’ s f

ai l ure t o p l ea d i tor ra i se i tattri al . T he abov e- qu ot ed l angu age dem on stra t es thatthe courtdi d so b ec ause i tconsi dere d n on -c om pl i ance w ith § 3 0 3 ( b ) to b e a n o n - w a iv a b le ju r is d ic tio n a l d e f e c t. I d . a t 1 4 0 - 4 1 . 11 U nd erou r pri or panel prec edentrul e, ho l di ng s m ade or adopt ed by an ear l i er p a n e l– in c lu d in g e x p r e s s ju r is d ic tio n a l h o ld in g s – m u s t b e f o llo w e d . S e e M a in

12 D rug, Inc. v. A etna U . S . H ea l thcar e, Inc. , 47 5 F . 3d 12 28 , 12 31 (11t h C i r. 20 07 ); K n ig h t v . C o lu m b u s, G a., 1 9 F .3 d 5 7 9 , 5 8 5 (1 1 th C ir. 1 9 9 4 ). A n d A ll M ed ia’s c h a r a c te r iz a tio n o f

§ 3 0 3 ( b ) a s im p o s in g n o n - w a iv a b le ju r is d ic tio n a l r e q u ir e m e n ts upon the ba nkrupt c y c our ti s hol di ng, r a the rtha n di c tum , be c a us e a de t e r m i na t i on tha t§ 303( b) i s s ubj e c tm a tt e rj ur i s di c t i ona l w a s a ne c e s s a r y pr e di c a t e f orthe c our t ’ s c ons i de r a t i on of A l l M e di a ’ s a r gum e nt–w hi c h w a s r a i s e d ne i the ri n the pl ea di ng s nor attri al–thatthe cr edi t or B es t , Inc. di d n otsa t i sf y the st atut ory re qu i re m entof havi ng an un se cure d o r und er se cure d cl ai m . S ee B l ac k v . U ni t ed26

S t at es , 37 3 F . 3d 11 40 , 11 44 (11t h C i r. 20 04 ) ( “ D i ctum i s at erm thathas bee n va r i ous l y de f

i ne d a s a s t a t e m e nttha tne i the rc ons t i tut e s the hol di ng of a c a s e , nor ar i se s f rom a par tof the op i ni on thati s nec es sa ry t o the ho l di ng of the ca se . ”) ; se e al so U ni t ed S t at es v. S hi el ds, 49 F . 3d 70 7, 71 0 n . 11 (11t h C i r. ) ( i nt erpret i ng U ni t ed S t a t e s v. O s bur n, 955 F . 2d 1500 ( 11th C i r . 1992) , a nd s t a t i ng tha tc e r t a i n l a ngua ge w a s “ h o l d i n g r a th e rth a n d i c tu m b e c a u s e a d e t e r mi n a t i o n th a tth e s t a tu t o r y s c h e me i n f a c tf a vor e d gr ow e r s w ho ha ve j us tc om pl e t e d the i rha r ve s tove rgr ow e r s w ho ha ve noty e tha r ve s t e d the i rm a r i j ua na pl a nt s w a s a ne c e s s a r y pr e di c a t e t o the O sburn cou rt ’ s s ub se qu entconsi dera t i on of the defendant s’ const i tut i on al c ha l l e nge t o tha ts e nt e nc i ng di s t i nc t i on” ) , va c a t e d, 65 F . 3d 900 ( 11th C i r . 1995) ( e n b a n c ) . T he r e f or e , w e c onc l ude tha tw e a r e bound by A l l M e di a ’ s de c i s i on tha tthe r e q u ir e m e n ts o f

§ 3 0 3 ( b ) m u s t b e s a tis f ie d in o r d e rf

o rth e b a n k ru p tc y c o u r t to h a v e s u b je c t m a tte rju r is d ic tio n o v e ra n in v o lu n ta r y b a n k ru p tc y c a s e . W e r e c o g n iz e th a t th e w e ig h t o f a u th o r ity

– a n d , in o u rv ie w , th e s u p e r io rr e a s o n in g – lie a ga i ns ttha thol di ng. N e ve r the l e s s , A l l M e di a ’ s hol di ng i n thi s r e ga r d i s pr i or pa ne l pr e c e de nt , a nd the r e f or e c ontr ol s . S e e U ni t e d S t a t e s v. S t e e l e , 147 F . 3d 13 16 , 13 17 -18 (11 th C i r. 19 98 ) ( en banc) (“ U nd erou r pri or prece dentrul e, a panel c a n n o t o v e r ru le a p r io ro n e ’s h o ld in g e v e n th o u g h c o n v in c e d it is w r o n g .” ) .27 I V . CONCL US I ON A cc ordi ng l y, w e r ever se the di stri ctcourt ’ s orderaf fi rm i ng the bank rupt cy court ’ s deni al of T rust ed N et ’ s m ot i on t o d i sm i ss on w ai ver groun ds. T he di stri ct courti s i nstruct ed t o rem and t he ca se t o the bank rupt cy courtso thatthe l att erm ay c o n s id e rw h e th e rth e r e q u ir e m e n ts o f 1 1 U .S .C . § 3 0 3 ( b ) h a v e b e e n s a tis f ie d . RE V E RS E D A ND RE MAND E D.