2012 D e c i sion s O p inion s of the U nit e d

S t a t e s C our t of Appe al s for the Thir d C ir c uit

7-26-2012


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P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al

D ock e t N o . 11-3257

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UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_________________

No. 11

- 3257

_________________

In R e : PHI LADELPHIA NEWSPAPERS, LLC, et al

.

Debtors

Vahan H. Gureghian, Danielle Gureghian, and Charter School Management , Inc.,

Appellants

_________________

Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Action No. 2

- 10

- c v

- 07 098 ) District Judge: Honorable Eduardo C. Robreno

_________________

Argued May 23, 2012

Bef ore: AMBRO, FUENTES,

and HARDIMAN , Circuit Judges

(Opinion filed July 26, 2012 )2 David A. Barnes, Esquire (Argued) Edmond M. George, Esquire Obermayer, Rebmann, Maxwell & Hippel 1617 John F. Kennedy Boulevard One Penn Center, 19 th Floor Philadelphia, PA 19103

- 0000

Counsel for Appellants

David F. Abernethy, Esquire Andrew J. Flame, Esquire Andrew C. Kassner, Esquire Drinker, Biddle & Reath

18 th & Cherry Streets One Logan Square, Suite 2000 Philadelphia, PA 19103

- 0000

Fred S. Hodara, Esquire Abid Qur eshi, Esquire Sunish Gulati, Esquire (Argued) Akin, Gump, Strauss, Hauer & Feld One Bryant Park, 42 nd Floor New York, NY 10036

Counsel for Appellee

Anne M. Aaronson, Esquire Christie C. Comerford, Esquire Lawrence G. McMichael, Esquire

Catherin e G. Pa ppas, Esquire Laura E. Vendzules, Esquire3 Dilworth Paxson 1500 Market Street, Suite 3500E Philadelphia, PA 19102

Richard J. Corbi, Esquire Michael T. Mervis, Esquire Allison Meyer, Esquire

Proskauer Rose Eleven Times Square, 17 th Floor New York, NY 10 036

- 8299

Paul V. Possinger, Esquire Mark K. Thomas, Esquire Peter J. Young, Esquire

Proskauer Rose 70 West Madison, Suite 3800 Chicago, IL 60602

- 4342

John M. Elliott, Esquire Mark J. Schwemler, Esquire

Elliott Greenleaf & Siedlkowski 925 Harvest Drive, Suite 300 Union Meeting Corporate Center V Blue Bell, PA 19422

- 0000

Counsel for Debtor s

_________________

OPINION OF THE COURT

_________________4 AMBRO, Circuit Judge

Vahan H. Gureghian, Danielle Gureghian, and Charter School Management, Inc. (collectively, the ―CSMI Parties‖) appeal from the judgment of the District Court affirming the Bankruptcy Court‘s decision to deny the CSMI Parties‘ request s for the allowance of administrative expense claim s under 11 U.S.C. § 503(b) in the Chapter 11 bankruptcy proceedings of Philadelphia Newspapers, LLC and certain of its affiliates (collectively, the ―Debtors‖). 1 In affirming the Bankruptcy
Court ‘s decision , the District Court held that the appeal was equitably moot, and alternatively that the C SMI Parties failed to
establish their entitlement to administrative expense claim s

. Though we hold that the appeal is not equitably moot , we affirm
the District Court‘s judgment based on its conclusion s regarding
the a dministrative e xpense r equests

.

I. B ackground

Bankruptcy Court Proceedings

This appeal relates to a defamation action filed by the CSMI Parties against Philadelphia Media Holdings, LLC (one of the Debtors), The Philadelphia Inquirer, and several Inquirer employees in the Court of Common Plea s of Delaware County,

1 The Debtors are PMH Acquisition, LLC

, Broad Street Video,

LLC

, Philadelp hia Newspapers, LLC

, Philadelphia Direct, LLC

, Philly Online, LLC

, PMH Holdings, LLC

, Broad Street Publishing, LLC

, Philadelphia Media, LLC , and Philadelphia Media Holdings, LLC

.5 Pennsylvania. The action concerns certain articles published in print and online by the Inquirer discussing the CSMI Parties‘ contract management of the Chester Community Charter School (the ―Articles‖)

. After the filing of the acti on, the Debtors filed for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101 et seq. The CSMI Parties assert that post

- petition the
Debtors published an article that links to and endorses the
Articles. On August 2, 2010, they timely filed t he

a dministrative expense r equests based on these allegations. 2

Specifically, the CSMI Parties alle ged that pre

- petition the Debtors published a charter school we bpage (the ―Charter Page‖) that contained links to various items published by the Inquirer ab out charter schools, including the A rticles

. 3 They
claimed that these links endorse d the A rticles as accurate reporting and misled the public into believing that the CSMI Parties engaged in wrongdoing similar to the improper or illegal conduct alleged in other linked news items

. They also highlighted that the Articles were displayed beneath the Charter Page‘s title bar as a ―marquee‖ enclosed in a separate box containing photographs, thereby drawing attention to the
Articles

.

2 The CSMI Parties filed one request in each of the Debtors‘ proceedings.

3 The CSMI Parties‘ statements in the materials supporting the administrative expense requests implied that the Charter Page was published for the first time post

- petition. At the hearing before the Bankruptcy Court on the requests, the Debtors

introduce d evidence that the Charter Page was created pre

petition and had not been modified post

- petition. Before the District Court and us, the CSMI Parties abandoned their assertion about the initial publication date of the Charter Page.6 They further alleged that post

- petition the Debtors published an editorial article titled ―Not the Lessons Charters Were Supposed to Teach ‖ by Inquirer columnist Monica Yan t Kinney (the ―Kinney Article‖). It contain ed a link to and a statement endorsing the Charter Page. The Kinn ey Article read:
―Some city charter schools

– think Mastery, KIPP, Independence, Young Scholars

– are soaring. But if you follow the remarkable reporting of my colleague Martha Woodall (http://go.philly.com/charter), you‘ll see greedy grown

- ups pilfering public gold under the guise of enriching children‘s
lives.‖ The CSMI Parties argu e that this link and statement ―republished‖ the A rticles

. 4

Each a dministrative e xpense r equest asserted an
estimated claim of $1,800,000 for the Debtors‘ alleged post

peti tion act of defamation. Each also sought $ 147,140 in alleged damages for the Debtors‘ post

- petition conduct and prosecution of claims against the CSMI Parties. 5

4 The CSMI Parties d id not include this argument in the materials supporting the administrative expense requests. Rather, they first mentioned the Kinney Article in their response to the Debtors‘ objection to the requests. The parties agree that the Bankruptcy Court properl y considered this argument.

5 The $147, 140 is for legal costs related to adversary proceedings before the Bankruptcy Court seeking to stay the prosecution of the Pennsylvania state court action regarding the

Articles . The CSMI Parties do not present any arguments on appeal regarding these fees , nor did they do so in the District

Court

.7 Three weeks after the CSMI Parties made the

a dministrative e xpense r equests

, the Debtors file d on August 23 an objection to the requests a long with a motion for an expedited hearing. The next day, the CSMI Parties objected to the Debtors‘ motion to expedite. The Bankruptcy Court held a hearing on the motion to expedite on August 26

. At that
hea ring, the Debtors stated that they requested an expedited hearing because the closing under the then

- current version of the
Debtors‘ confirmed p lan of r eorganization 6 was scheduled to take place on August 31, and reserving $1.8 mill ion for the

r equests wou ld affect adversely their post

- closing working capital. 7 The Bankruptcy Court granted the motion to expedite and scheduled an evidentiary hearing for August 30

.

Bankruptcy Judge Stephen Raslavich also made preliminary statements regarding the a dministr ative e xpense

r equests. He noted that he could

6 The Bankruptcy Court confirmed the Fourth Amended Joint Chapter 11 Plan (the ―Fourth Amended Plan‖) at the end of June 2010. It contemplated a sale of substantially all of the Debtors‘ assets for a ―base purchase price‖ of $105 million in cash. Under the asset purchase agreement, this cash was to be delivered to the entity designated to distribute funds to holders

of claims under the Fourth Amended Plan.

7 The agre ement for the purchase of substantially all of the Debtors‘ assets provided that the purchaser would assume certain administrative expense claims, the definition of which did not include the claims arising from the CSMI Parties‘ administrative expense requ ests.8 detect virtually no merit to this assertion of an administrative expense claim.

. . . I didn‘t want to mislead you as to what my preliminary sense of
this is . .

. . [I]t‘s going to take an enormous

amount of persuading to convince me that the allegations of damage . . . [provide] some kind of [ ongoing ] recoverable damage in the nature of a bankruptcy estate administrative claim.

Nonetheless, the Judge worked with the CSMI Parties to establish an acceptab le hearing date and time.

At the hearing on the Debtors‘ objection to the

a dministrative e xpense r equests

, Judge Raslavich

, after hearing testimony and oral argument, denied the r equests. He held that
the CSMI Parties had not sustained their burden of proof in establishing entitlement to an administrative expense claim. T he CSMI Parties timely appealed to the District Court on September 10

.

The closing did not take place as anticipated because of failed negotiations with the Debtors‘ labor unions, the acceptable completion of which was a condition to closing . T he Debtors conducted another auction of substantially all of their

assets on September 23

, and the sale was consummated under the terms of the Fifth Amended Joint Chapter 11 Plan (the ―Fifth
Amended Plan‖ or ―Plan‖) for a purchase price of $105 million
in cash

. 8

8 The Bankruptcy Court confirmed the Fifth Amended Plan at the end of September 2010. Similar to the agreement accompanying the Fourth Amended Plan, the final agreement9 District Court Decision

Before the District Court, the CSMI Parties argued that the Bankruptcy Court erred in denying the a dministrative c laims

r equests because the Kinney Article‘s link and reference to the Charter Page provided a post

- petition tort claim . They also
asserted that the Bankruptcy Court prejudged the merits o f the

r equests and infringed on their due process rights by forcing them to proceed on an expedited basis. The Debtors argued that the appeal should be dismissed as equitably moot. 9

The District Court held that the appeal was equitably

moot

, ―as the plan has been substantially consummated and no stay was sought,‖ but nonetheless considered the merits. After

not ing that courts often provide their preliminary impressions on
matters to narrow issues and that expedited hearings are

for the purchase of substantially all of the Debtors‘ assets provided that the purchaser would assume certain administrative expense claims, whose definition did not include the claims arising from the CSMI Parties‘ administrative expense requests. It also similarly provided that the ―base purchase price‖ of $105

million in cash woul d be delivered to the entity designated to

distribute funds to holders of claims under the Fifth Amended

Plan.

9 Before the District Court (per Judge Eduardo Robreno )

, the Appellee was Philadelphia Media Network Inc., which under the Plan, as purchaser of substantially all of the Debtors‘ assets, possesses the rights of a party in interest for all matters related to the Debtors‘ Chapter 11 cases. Before us, Philadelphia Media Network Inc. remains the Appellee. For convenience, we refer

to the Debtors whe n discussing the Appellee.10 ― commonplace and often necessary ‖ in bankruptcy proceedings,
it considered the claims underlying the a dministrative e xpense

r equests. I t affirmed the Bankruptcy Court‘s denial of the

r equests based on its holding that ―merely post[ing] a link to the charter school webpage that contained the original articles . . . ,
as the courts that have had occasion to consider this issue have
uniforml y held, is not distinct tortious conduc t upon which a
defamation claim can be grounded

. ‖

I n addition to advancing the same arguments regarding the Bankruptcy Court‘s actions and decisions as they did before the District Court, the CSMI Parties argue to us that the District Court erred in holding that the appeal is equitably moot.

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) and 1334. We have jurisdiction under 28 U.S.C. §§ 158(d) and 1291.

Our precedent requires us to review for abuse of
discretion a district court‘s decision that an appeal is equitably

moot

. In re Cont’l Airlines , 91 F.3d 553, 5 60 (3d Cir. 1996) (en banc) ( ― Contine ntal I

‖ )

. 10 Because a district court sits as an

10 Then Circuit Judge Alito criticized this standard of review as contradicting our precedent that where the district court sits as an appellate court, we exercise plenary review. Continental I

, 91 F.3d at 568 n.4 (Alito, J., dis senting) (―We are essentially

call ed on to review whether the district court properly decided

not to reach the merits of the

. . . appeal. We are in just as good11 appellate court to review a bankruptcy court, we review a bankruptcy court‘s ―legal determinations de novo , its factual findings for clear error, and its exercises of discretion for abuse
thereof.‖ In re Goo dy’s Family Clothing Inc. , 610 F.3d 812

, 816 (3d Cir. 2010)

.

III. Equitable Mootness

Equitable mootness is a way for an appellate court to avoid deciding the merits of an appeal. In this uncommon act, a court dismisses an appeal even if it has jurisdic tion and can grant relief if ―implementation of that relief would be inequitable .‖ Continental I , 91 F.3d at 559 (quoting In re Chateaugay Corp. , 988 F.2d 322, 325 (2d Cir. 1993) )

. The term
―mootness‖ is a misnomer

. Unlike mootness in the
constitutional sense, where it is impossible for a court to grant any relief, ―mootness‖ here is used ―as a shortcut for a court‘s
decision that the fait accompli of a plan confirmation should preclude further judicial proceedings.‖ Id.

A c ourt arrives at this decisi on through the application of ―prudential‖ considerations that address ―concerns unique to bankruptcy proceedings

. ‖ Id. These concerns relate to the
adverse effects of the unraveling of a confirmed plan that could
result from allowing the appeal to proce ed. The equitable

mootness doctrine recognizes that if a successful appeal would be fatal to a plan, prudence may require the appeal be dismissed because granting relief to the appellant ―would lead to a
perverse outcome

. ‖ United States Tr. v. Official C omm. of

a position to make this determination as was the district court, which sat as an appellate co urt in this case. ‖). He stated: ―[P] lenary review would better serve these ends .‖ Id.12 Equity Sec. Holders (In re Zenith Elecs. Corp.) , 329 F.3d 338

, 343 (3d Cir. 2003)

. A ―perverse outcom e‖ often involves injury to third parties , particularly investors, who have relied on the confirmed plan

, see Nordhoff Invs. Inc. v. Zenith Elecs. Corp.

, 2 58 F.3d 180, 184 (3d Cir. 2001) (―One inequity, in particular, that is often at issue is the effect upon innocent third parties. When transactions following court orders are unraveled, third parties not before us who [took actions] in reliance on those orders will likely suffer adverse effects.‖), or the potential for
chaos in the bankruptcy court

, see Continental I , 91 F.3d at 560

– 61 (citing In re Robert Farms , 652 F.2d 793 (9th Cir. 1981)) (reversal of the plan‘s confirmation would ―create an

un manageable, uncontrollable situation for the Bankruptcy Court‖)

.

The ―prudential‖ factors we consider in evaluating equitable mootness are the following:

(1) whether the reorganization plan has been substantially consummated, (2) whether a stay ha s been obtained, (3) whether the relief 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.

Conti nental I , 91 F.3d at 560

. ―T hese factors are given varying weight, depending on the particular circumstances.‖ In re PWS Holding Corp. , 228 F.3d 224, 236 (3d Cir. 2000)

.

The first factor , typically ―the foremost consideration,‖
id.

, requires that a c ourt consider whether allowing an appeal to13 go forward will undermine the plan , and not merely whether the plan has been substantially consummated under the Bankruptcy
Code‘s definition

. 11 See, e.g.

, Zenith Elecs. , 329 F.3d at 343

 44 ( holding that the dist rict court abused its discretion in finding
the appeal equitably moot because it merely determined that the plan had been substantially consummated in a definitional sense and did not provide a complete analysis of the first factor) ; United Artists Theatre Co. v. Walton (In re United Artists Theatre Co.) , 315 F.3d 217, 228 (3d Cir. 2003) (holding that the substantial consummation factor weighed against equitable mootness, despite the plan satisfying the Bankruptcy Code‘s definition, because the relief sough t ―does not undermine the Plan‘s foundation‖); PWS Holding , 228 F.3d at 236 (declining to dismiss an appeal seeking alterations to a confirmed plan as equitably moot because a successful appeal would not ―knock the props out from under the authorization fo r every transaction that has taken place‖ (quoting In re Chateaugay Corp. , 167 B.R. 776, 780 (S.D.N.Y. 1994) ) )

.

T he second factor principally duplicates the first ― in the sense that a plan cannot be substantially consummated if the appellant has suc cessfully sought a stay.‖ Zenith Elecs. , 329
F.3d at 346 n.4. Thus this factor ― should only weigh heavily against the appellant if, by a failure to secure a stay, a reorganization plan was confirmed, the existence of which is later threatened by the appe llant‘s appeal.‖ Id. See also United

11 T he Bankruptcy Code defines ―substantial consummation‖ as:

― (A) transfer of all or substantially all of the property proposed by the plan to be transferred; (B) as sumption 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 (C) commencement of distribution under the plan.‖ 11 U.S.C. § 1101(2).14 Artists , 315 F.3d at 228 (noting that failure to seek a stay weighed against appellant, but ― because the remedy [appellant]

se eks does not undermine the Plan‘ s foundation, this omission is
not fatal ‖) ; Nordhoff Invs. Inc. v. Zenith Elecs. Corp. , 2 58 F.3d 180, 186

– 87 (3d Cir. 2001) (―[I]t  ̳is obligatory upon appellant

. . . to pursue with diligence all available remedies to obtain a stay of execution o f the objectionable order . . . if the failure to
do so creates a sit uation rendering it inequitable to reverse the orders appealed from .‘‖ (emphasis added) (quoting In re Highway Truck Drivers & Helpers Local Union No. 107 , 8 88 F.2d 293, 297 (3d Cir. 1989) ) )

.

The third factor asks to what extent the relief sought
would adversely affect parties not before the court. Stated differently

, ― [ h ] igh on the list of prudential considerations .

. . is the reliance of third parties, in particular investors, on the finality of the transaction .‖ Continental I

, 91 F.3d at 562. The
fourth factor largely replicates the analysis of the first in that it
considers whether granting the appellant the requested relief
would unravel the plan. See Nordhoff Invs. , 258 F.3d at 189. Finally, t he fifth factor supports the other four by encoura ging
investor s and others to rely on confirmation orders, thereby facilitating successful reorganizations by fostering confidence in the finality of confirmed plan s

. See id. at 190; Continental I , 91 F.3d at 565 (―[T]he importance of allowing approved

reo rganizations to go forward in reliance on bankruptcy court confirmation orders may be the central animating force behind the equitable mootness doctrine.‖).

Taken together, the se factors recognize that a court only should apply the equitable mootness doct rine if doing so will ―unscrambl[e] complex bankruptcy reorganizations when the appealing party should have acted before the plan became extremely difficult to retract.‖ Nordhoff Invs. , 2 58 F.3d at 185

.15 The doctrine is quite rightly ― limited in scope‖ an d ―cautiously applied. ‖ 12 Continental I , 91 F.3d at 559.

In holding that the appeal is equitably moot, t he District Court seemingly relied on the Plan‘s substantial consummation under the Bankruptcy Code‘s definition

. We discern no analysis
of whether a ruling favorable to the CSMI Parties would upset the Plan. The Court also faulted the CSMI Parties for not seeking a stay without explaining whether a stay was critical given the progression of the Debtors‘ bankruptcy proceedings. Moreover, it did not include any analysis of the final three
factors.

12 In Continental I , o ur court sitting en banc invoked the equitable mootness doctrine by a narrow 7

- 6 margin. As referenced above, then Judge Alito dissented, and was joined by five judges. For the dissenters, the extraordinary nature of the equitable moo tness doctrine required, at the very least, a more limited application than the majority provided in weighing the

five factors it set out. Continental I , 91 F.3d at 567 (Alito, J., dissenting). Indeed, the majority did not ―undertake an independent analys is of the origin or scope of the doctrine,‖ but simply assumed its existence and adopted it as our own. Id. at 568. This resulted in an unjustifiably expansive doctrine that ―can easily be used as a weapon to prevent any appellate review of bankruptcy co urt orders confirming reorganization plans. It thus places far too much power in the hands of bankruptcy judges.‖ Nordhoff Invs. , 2 58 F.3d at 191 (Alito, J., concurring);

see also Continental I , 91 F.3d at 568

- 71 (Alito, J., dissenting).16 In our view

, a bala ncing of the equitable mootness factors
calls for allowing th is appeal to proceed. Though the Plan was substantially consummated in a definitional sense after the Bankruptcy Court deni ed the a d ministrative e xpense r equests, a ruling in favor of the CSMI Parties will not upset the Plan. It provides that administrative expense claims will be paid on the
later of the Plan‘s effective date or the date on which the claims
become allowed. I t also establishe s a n account from which a designated entity is to distribute funds to holders of allowed administrative expense claims as provided by the Plan

. If t he CSMI Parties‘ administrative expense requests are allowed, they may be paid under the P lan without upsetting it

.

Indeed, on appeal the Debtors do not argue that allowance of the requests will undermine the Plan. Also , under the agreement for the purchase of s ubstantially all of the
Debtors‘ assets and the Plan, the Debtors are responsible f or paying the requests if they are allowed. These facts make this appeal unlike Continental I , in which the debtor entered into an agreement with investors premised on the limitation of the amount of administrative expense claims that the investors
would assume. Th at agreement was incorporated explicitly into the confirmed plan. 91 F.3d at 556. A holding in favor of the appellant would have provided for an additional (and sizable) administrative expense claim that the investor would be required

to assum e , and thus arguably would have upset the plan. Here, the administrative expense requests were not part of the purchaser‘s calculus at the time of the sale and their allowance

, only 1.7 % of the monies ($105 million) coming into the
Debtors‘ estates from t he purchase of their assets consummated
under the terms of the Fifth Amended Plan

, will not unravel the
sale or the Plan

.17 In addition , at the time of the Bankruptcy Court‘s ruling
on the administrative expense r equests, the then

- current p lan (the Fourth Amended Plan) already had been confirmed. The closing on that plan, scheduled for a day after the hearing on the

r equests

, did not occur

. Instead the Fourth Amended Plan became moot (pun intended) when the Fifth Amended Plan was confirmed a month later.

Though perhaps the CSMI Parties should have sought a stay of the order confirming the Fifth Amended Plan, given the timing of their appeal during the progression of Debtors‘ bankruptcy proceedings, t hey need not be faulted unduly for failing to do so

. Moreover, the CSMI Parties‘ appeal of the Bankruptcy Court‘s disallowance of its requests categorized the requests as disputed administrative expense claims. Under the Plan, the Debtors should have set aside sufficient funds in the
distribution account to fulfill the requests if the CSMI Parties prevailed on appeal and the requests later became allowed claims. As such, the CSMI Parties‘ posting of a bond was not critical to the Debtors or the entities designated to administer the
Plan

.

A s concerns the rights of parties not before us (the third factor)

, the Bankruptcy Code and the Plan establish priority of payment among the Debtors‘ creditors. T he latter provides a mechanism for payment of disputed administrative expense
claims if they are deemed allo wed claims. See Plan §§ 5.04, 7.09, 7.11 , 7.13 ( establishing the distribution account, and detailing powers and duties of the liquidating trustee and distribution agent ). No doubt t he appeal can proceed without causing substantial harm to other creditors

. In this context, it is hard to say that the Plan‘s success , the fourth factor, will be
affected.18 Accordingly, the first four factors weigh in favor of allowing the appeal to proceed. Though the finality of the Bankruptcy Court‘s decision necessarily wi ll be disturbed,
because a holding in favor of the CSMI Parties on appeal will not unscramble the Plan or upset the rights of other parties

, we honor the CSMI Parties‘ statutory right to review of the Court‘s
decision. W e thus hold that the appeal is not equitably moot.

IV. The Bankruptcy Court’s Handling of the Administrative Expense Requests

Expedited Hearing

The CSMI Parties argue that the expedited hearing on August 30, 2010, violated their due process rights and that the Bankruptcy Court abused its discretion in holding the hearing on such an expedited basis

. We review due process claims de novo

. Fadiga v. Att’y Gen. , 488 F.3d 142, 154 (3d Cir. 2007).

Due process generally requires notice and an opportunity
to be heard. See United States v. Jame s Daniel Good Real Prop. , 510 U.S. 43, 48 (1993)

. The CSMI Parties received notice of the hearing on the Debtors‘ objection to the

a dministrative e xpense r equests a week before the hearing took place. They also were given the opportunity to be heard at t he hearing on the motion to expedite. At that hearing, the Bankruptcy Court asked them to propose a schedule (taking into
account the scheduled closing ).

Under Fed. R. Bankr. P. 9006(c)

, ―for c ause shown ‖ a bankruptcy court has the discretion to set an expedited schedule for the hearing of a substantive motion

. In exercising that19 discretion, it should consider the prejudice to parties entitled to notice and weigh this against the reasons for hearing the motion on an expedited basis. See In re Grant Bro ad

. of Phil a. , Inc. , 71
B.R. 390 , 397 (Bankr. E.D. Pa. 1987). T he Debtors stated that they needed to resolve the a dministrative e xpense r equests before the closing under the then

- current Fourth Amended Plan

. The CSMI Parties‘ r equests were for $1. 8 millio n, small relative to the proposed purchase price under the agreement accompanying the Fourth Amended Plan

. However, t he CSMI
Parties had a week to prepare for the expedited hearing

. This
was sufficient time for them to ready witness testimony and
draft a detailed twelve

- page brief in opposition to the Debtors‘ objection to the requests. At the hearing, they present ed this testimony and expounded on their written arguments regarding the requests.

Given the accelerated time frame of bankruptcy proceedi ngs and the facts before us

, we conclude that the CSMI Parties were given more than adequate time to prepare for the expedited hearing. See Hester v. NCNB Nat ’ l Bank (In re Hester) , 899 F.2d 361, 364 n.3 (5th Cir. 1990) (―[M] otions for
material reductions in the notice period are routinely granted by bankruptcy courts. ‖)

. The Bankruptcy Court did not abuse its discretion in hearing the Debtors‘ objection to the r equests on an expedited basis and the expedited hearing did not violate the
CSMI Parties‘ due process rights

.

Preliminary Statements At Hearing On Motion to Expedite

The CSMI Parties argue that Judge Raslavich made improper premature conclusions at the August 26, 2010, hearing on the Debtors‘ motion to expedite . As the District Court noted, judges often inform parties of their preliminary impressions to20 narrow issues and assist the parties in focusing both themselves
and the court

. See, e.g.

, Official Comm. of Asbestos Pers. Injury
Claimants v. Sealed Air Corp. (In re W.R. Grace & Co.) , 285 B.R. 148, 158 (Bankr. D. Del. 2002) (giving preliminary views

as to the appointment of a Chapter 11 trustee before denying the motion to appoint a trustee ―at this time‖). The CSMI Parties elected to proceed, and Judge Raslavich held an evidentiary
hearin g during which they had an opportu nity to present their
full case. This included arguments regarding the Kinney Article that they raised for the first time in response to the Debtors‘ objection , which was filed after the hearing on the motion to expedite

. Indeed, the CSMI Parties focused on the Kinney Article during the August 30 hearing and their arguments regarding the Kinney Article served as the primary basis of their appeal to the District Court and to us. Thus Judge Raslavich‘s
comments at the Augu st 26 hearing on the motion to expedite served their purpose. In giving the CSMI Parties a preview of what they needed to do to counteract his pre

- hearing impressions, which certainly were not irrevocable, he encouraged the CSMI Parties to develop additio nal arguments. Most counsel would prize such insights.

Moreover, a t the end of the August 30 hearing, Judge
Raslavich articulated his reasoning for sustaining the Debtors‘ objection , specifically noting case law cited in the CSMI Parties‘ written respo nse to the Debtors‘ objection

. With this background, we can hardly conclude that his candid preliminary
comments at the August 26 hearing on the motion to expedite prejudiced the CSMI Parties.21 V. Administrative Expense Requests

Administrative Expense Cla ims Under the Bankruptcy Code

Section 503 of the Bankruptcy Code provides that

, ―[a] fter notice and a hearing, there shall be allowed administrative expenses, . . . including

— (1)(A) the actual, necessary costs and expenses of preserving the estate . . . . ‖ 11 U.S.C. § 503(b ). For a claim to be entitled to administrative expense status, it must ―arise from a [post

- petition] transaction
with the debtor

- in

- possession,‖ and ―be beneficial to the debtor

in

- possession in the operation of the business.‖ Calpine Corp. v. O’Brien Envtl. Energy, Inc. (In re O’Brien Envtl. Energy, Inc.) , 181 F.3d 527, 532

 33 (3d Cir. 1999). The party asserting

a n administrative expense claim bears the burden of demonstrating that it deserves administrative expense status

. Id.
at 5 33

.

The Supreme Court has held that fairness may call for the
allowance of post

- petition tort claims as administrative expenses
if those claims arise from actions related to the preservation of a debtor‘s estate despite having no discernable benefit to t he

estate

. Reading Co. v. Brown , 391 U.S. 471, 477 (1968) (deeming costs from fire damage resulting from the negligent
actions of the bankruptcy receiver acting in the scope of his authority an ―actual and necessary‖ expense of reorganization)

. Based on Reading , courts in our Circuit have granted requests for administrative expense claims arising from a variety of tort
actions

. See, e.g.

, In re B. Cohen & Sons Caterers, Inc. , 143 B.R. 27 (E.D. Pa. 1992) (granting an administrative expense claim for injur ies resulting from a slip and fall while on the debtor‘s premises) ; In re Hayes Lemmerz Int’ l, Inc. , 340 B.R.
46 1 (Bankr. D. Del. 2006) (granting an administrative expense22 claim to the lessor of machines that the debtor

- lessee returned damaged where the da mage occurred post

- petition ) ; In re Women First Healthcare, Inc. , 332 B.R. 115 (Bankr. D. Del.
2005 ) (granting the stalking horse bidder an administrative expense claim as compensation for its reliance on the debtor‘s negligent misrepresentations regarding the sale)

. Also based on Reading , c ourts in other jurisdictions have denied administrative
expense requests where the alleged tort claims were spec ulative

or too strained to be considered related to the preservation of a
debtor‘s estate

. See, e.g.

, In r e Aspen Limousine Serv., Inc. , 193 B.R. 325 (D. Colo. 1996) (holding that asserted antitrust damages were too speculative as to their amount and unrelated

to the preservation of the debtor‘s estate) ; In re Pacesetter Designs, Inc. , 114 B.R. 731 (Bankr. D. Colo. 1990) ( granting administrative expense status to certain medical expenses resulting from an injury to an employee of the debtor

- in

possession, but disallowing other expenses as ―too strained‖ and ―too disparate with the language and intent of the Ban kruptcy
Code‖ to be considered costs of administration)

.

In Pa. Dep’t of Envtl. Res. v. Tri

- State Clinical Labs.,

Inc. , 178 F.3d 685 (3d Cir. 1999)

, w e discussed Reading in the
context of whether a criminal fine for post

- petition waste management viol ations was an administrative expense under Chapter 7. We observed that the Supreme Court‘s concept of ―necessary costs‖ as including expenses incident to the preservation of a debtor‘s estate advances the language of § 503(b). ―[R] ead as a whole, [it] s uggests a quid pro quo pursuant to which the estate accrues a debt in exchange for some consideration necessary to the operation or rehabilitation of the

estate. ‖ Id. at 690

– 91

. With this case law context, we turn to the CSMI Parties‘ alleged tort, and w hether it is eligible for administrative expense status.23 Alleged Tort

For the CSMI Parties to be entitled to administrative expense claims, they must demonstrate that their allegations regarding the ―republishing‖ of the Articles support a c ause of
acti on. To state a cause of action for defamation under Pennsylvania law, a plaintiff must establish: ―(1) the defamatory character of the communication; (2) its publication by the defendant; (3) a reference to the plaintiff; (4) a recipient‘s understanding o f the communication‘s defamatory character and its application to plaintiff; (5) special harm resulting from the publication; and (6) abuse of any conditional privilege.‖ Iafrate v. Hadesty , 621 A.2d 1005, 1006 (Pa. Super. Ct. 1993) (quoting Smith v. Wagn er , 588 A.2d 1308, 1311 (Pa. Super. Ct. 1991) )

. The statute of limitations for defamation claims is one year from

t he date of publication. 42 Pa. C ons

. S tat . § 5523

. To avoid the potential for endless re

- triggering of the statute of limitations, Pennsyl vania has adopted the ―single publication rule,‖ which holds that for purpose s of the statute of limitations ―any one edition of a book or newspaper, or any one radio, television broadcast, exhibition of a motion picture or similar aggregate
communication is a single publication.‖ Graham v. Today’s Spirit , 468 A.2d 454, 457 (Pa. 1983) (quoting Restatement (Second) of Torts § 577(A)(3)); s ee also 42 Pa. Cons. Stat. § 341(b). Under this rule, ―it is the original printing of the defamatory material and not t he circulation of it which results in
a cause of action.‖ Graham , 468 A.2d at 457.

Pennsylvania courts have not considered whether the single publication rule applies to Internet publication

. O ther

courts addressing Internet

- based defamation have fo und the rule applicable to information widely available on the Internet

. Noting that ―[c] oncerns regarding the rapid pace of changes in the way information is disseminated, the desire to avoid24 multiplicity of suits and the need to give effect to relevant
Statutes of Limitation

. . . gave rise to the single publication
rule ,‖ th o se courts reason that there is ― no rational basis upon which to distinguish publication of a book or report through traditional printed media and publication through electronic

mean s . . . .‖ Firth v. State

, 706 N.Y.S.2d 835 , 843 (N.Y. Ct. Cl. 2000), aff’d 775 N.E.2d 463 (N.Y. Ct. App. 2002) ; s ee also
Nationwide Bi

- Weekly Admin., Inc. v. Belo Corp. , 512 F.3d 137, 144 (5th Cir. 2007 ) ( ―E very court to consider the issue after
Firth ha s followed suit in holding that the single publication rule applies to information widely available on the Internet

. ‖) ; Oja v. U.S. Army Corps of Eng’ rs , 440 F. 3d 1122, 1131 (9th Cir. 2006). We believe that Penn sylvania courts would extend the single publ ication rule to publicly accessible material on the

Internet based on similar reasoning.

An exception to the single publication rule is the doctrine of republication. Republishing material ( for example, the second edition of a book), editing and reissuin g materi al, or placing it in a new form that includes the allegedly defamatory
material

, resets the statute of limitations. Restatement (Second) of Torts § 577(A ); Davis v. Mitan (In re Davis) , 347 B.R. 607, 611 ( W .D. Ky. 2006). Traditional principles of republication thus require the retransmission of the allegedly defamatory
material itself for the doctrine to apply

. However, c ourts addressing the doctrine in the context of Internet publications generally distinguish between linking, adding unrelated c ontent, or making technical changes to an already published website (which they hold is not republication), and adding substantive material related to the allegedly defamatory material to an already published website (which they hold is republication).
Se e Davis , 347 B.R. at 611

– 12

.25 S everal courts specifically have considered whether linking to previously published material is republication. To date, t hey all hold that it is not based on a determination that a
link is akin to the release of an addition al copy of the same edition of a publication because it does not alter the substance of
the original publication

. See, e.g.

, Sundance Image Tech., Inc. v. Cone Editions Press, Ltd.

, No. 02

- 02258, 2007 WL 935703 (S.D. Cal. Mar. 7, 2007) ; Churchill v. State of N.J. , 876 A.2d 311 (N.J. Super. Ct. 2005)

.

Moreover, i n a case with facts similar to this appeal, the
C ourt held that a link and reference to an allegedly defamatory article did not amount to a republication of the article. In Salyer

v. Southern Po verty Law Center , Inc. , 701 F. Supp. 2d 912 (W.D. Ky. 2009) (Heyburn II, J.) , the defendant posted an allegedly defamatory article to his website. Between the time of
the initial posting and the defendant‘s removal of the article from the website, the def endant linked to the article while referencing it several times in other articles posted on the website. None of the references mentioned the plaintiff by name or restated the allegedly defamatory comments. The C ourt analyzed the link and reference separ ately, holding that neither amounted to republication. As to the link, it cautioned that ―to find that a new link to an unchanged article posted long ago on a website republishes that article would result in a continual retriggering of the limitations per iod,‖ and thus held that a link ―is simply a new means for accessing the referenced article,‖ not a republication. Id. at 916

– 18. As to the reference, it noted that ―[w]hile [a reference] may call the existence of the article to the
attention of a new au dience, it does not present the defamatory

contents of the article to the audience. Therefore, a reference, without more, is not properly a republication.‖ Id. at 916 (emphas e s in original)

.26 We agree with t he distinction in these cases. The s ingle publication rule advances the statute of limitations‘ policy of ensuring that defamation suits are brought within a specific time
after the initial publication. Websites are constantly linked and updated. If each link or technical change w ere an ac t of republication, the statute of limitations would be retriggered endlessly and its effectiveness essentially eliminated

. A publisher w ould remain subject to suit fo r statements made many years prior, and ultimately could be sued repeatedly for a single tortious act the prohibition of which was the genesis of
the single publication rule. See Graham , 468 A.2d at 458. Additionally

, under traditional principles of republication

, a mere reference to an article, re gardless how favorable it is as long as it does not restate the defamatory material, does not republish the material. See Salyer , 701 F. Supp. 2d at 916. These traditional principles are as applicable to Internet publication as traditional publication, if not more so

. P ublish ing

a favorable refe rence with a link on the Internet is significantly
easier. Taken together, though a link and reference may bring readers‘ attention to the existence of an article, they do not republish the article.

Though the Kinney Article‘s link may allow for easy access to the Charter Page , and the reference may speak favorably of the items collected by the Charter Page, including
the A rticles regarding the CSMI Parties

, here they do not amount to the restatement or alteration of the allegedly defamatory mater ial in the Articles necessary for a republication. The Bankruptcy and District Courts were correct in sustaining the Debtors‘ objection to the a dministrative e xpense r equests on the basis that the CSMI Parties cannot advance a sustainable
cause of action t o support the r equests. Though the publication of the Kinney Article occurred during the post

- petition operation of the Debtors‘ newspaper, the claim is so speculative that we27 can discern no benefit conferred on the Debtors‘ estates even
under Reading ‘s v iew of what is a ―necessary‖ expense.

* * * * *

For the reasons stated above, we affirm the District Court‘s judgment, but hold that the appeal is not equitably moot.