2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-26-2012

In Re Philadelphia Newspapers

Precedential or Non-Precedential: Precedential

Docket No. 11-3257

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Recommended Citation

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_________________

No. 11-3257

_________________

In Re: PHILADELPHIA 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-cv-07098)

District Judge: Honorable Eduardo C. Robreno

_________________

Argued May 23, 2012

Before: 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, 19th Floor

Philadelphia, PA 19103-0000

Counsel for Appellants

David F. Abernethy, Esquire

Andrew J. Flame, Esquire

Andrew C. Kassner, Esquire

Drinker, Biddle & Reath

18th & Cherry Streets

One Logan Square, Suite 2000

Philadelphia, PA 19103-0000

Fred S. Hodara, Esquire

Abid Qureshi, Esquire

Sunish Gulati, Esquire (Argued)

Akin, Gump, Strauss, Hauer & Feld

One Bryant Park, 42nd Floor

New York, NY 10036

Counsel for Appellee

Anne M. Aaronson, Esquire

Christie C. Comerford, Esquire

Lawrence G. McMichael, Esquire

Catherine G. Pappas, Esquire

Laura E. Vendzules, Esquire
3

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, 17th Floor

New York, NY 10036-8299

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 Debtors

_________________

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‘ requests

for the allowance of administrative expense claims 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 CSMI Parties failed to 

establish their entitlement to administrative expense claims. 

Though we hold that the appeal is not equitably moot, we affirm

the District Court‘s judgment based on its conclusionsregarding 

the administrative expense requests.

I. Background

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 Pleas of Delaware County, 

 

1

The Debtors are PMH Acquisition, LLC, Broad Street Video, 

LLC, Philadelphia 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 action, 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 the 

administrative expense requests based on these allegations.2

Specifically, the CSMI Parties alleged that pre-petition 

the Debtors published a charter school webpage (the ―Charter 

Page‖) that contained links to various items published by the 

Inquirer about charter schools, including the Articles.

3

 They 

claimed that these links endorsed the Articles 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 

introduced evidence that the Charter Page was created prepetition 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 Yant 

Kinney (the ―Kinney Article‖). It contained a link to and a 

statement endorsing the Charter Page. The Kinney 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 argue that this link and statement

―republished‖ the Articles.

4

Each administrative expense request asserted an 

estimated claim of $1,800,000 for the Debtors‘ alleged postpetition 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 did 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 properly 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 

administrative expense requests, the Debtors filed on August 23

an objection to the requests along 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

hearing, the Debtors stated that they requested an expedited 

hearing because the closing under the then-current version of the 

Debtors‘ confirmed plan of reorganization6 was scheduled to 

take place on August 31, and reserving $1.8 million for the 

requests would affect adversely their post-closing working 

capital.7The 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 administrative expense 

requests. 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 agreement 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 requests. 
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 acceptable hearing date and time. 

At the hearing on the Debtors‘ objection to the 

administrative expense requests, Judge Raslavich, after hearing

testimony and oral argument, denied the requests. He held that 

the CSMI Parties had not sustained their burden of proof in 

establishing entitlement to an administrative expense claim. The 

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. The 

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 agreement 
9

District Court Decision

Before the District Court, the CSMI Parties argued that 

the Bankruptcy Court erred in denying the administrative claims 

requests 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 of the 

requests 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 

noting 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 would 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 when discussing the Appellee.
10

―commonplace and often necessary‖ in bankruptcy proceedings,

it considered the claims underlying the administrative expense 

requests. It affirmed the Bankruptcy Court‘s denial of the 

requests 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 

uniformly held, is not distinct tortious conduct upon which a 

defamation claim can be grounded.‖ 

In 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, 560 (3d Cir. 1996) (en 

banc) (―Continental 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., dissenting) (―We are essentially 

called on to review whether the district court properly decided 

not to reach the merits of the . . . appeal. We are in just as good 
11

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 Goody’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 jurisdiction 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 court arrives at this decision 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 proceed. 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 Comm. of 

 

a position to make this determination as was the district court, 

which sat as an appellate court 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 outcome‖ often involves injury 

to third parties, particularly investors, who have relied on the 

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

258 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 

unmanageable, 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 has 

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.

Continental I, 91 F.3d at 560. ―These 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 court consider whether allowing an appeal to 
13

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 district 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 sought ―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 for every transaction 

that has taken place‖ (quoting In re Chateaugay Corp., 167 B.R. 

776, 780 (S.D.N.Y. 1994))). 

The second factor principally duplicates the first ―in the 

sense that a plan cannot be substantially consummated if the 

appellant has successfully sought a stay.‖ 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 appellant‘s appeal.‖ Id. See also United 

 

11The Bankruptcy Code defines ―substantial consummation‖ as: 

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

by the plan to be transferred; (B) assumption by the debtor or by 

the successor to the debtor under the plan of the business or of 

the management of all or substantially all of the property dealt 

with by the plan; and (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]

seeks does not undermine the Plan‘s foundation, this omission is 

not fatal‖); Nordhoff Invs. Inc. v. Zenith Elecs. Corp., 258 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 of the objectionable order . . . if the failure to 

do so creates a situation rendering it inequitable to reverse the 

orders appealed from.‘‖ (emphasis added) (quoting In re 

Highway Truck Drivers & Helpers Local Union No. 107, 888 

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, the fifth factor supports the other four by encouraging 

investors and others to rely on confirmation orders, thereby 

facilitating successful reorganizations by fostering confidence in 

the finality of confirmed plans. See id. at 190; Continental I, 91 

F.3d at 565 (―[T]he importance of allowing approved 

reorganizations to go forward in reliance on bankruptcy court 

confirmation orders may be the central animating force behind 

the equitable mootness doctrine.‖).

Taken together, these factors recognize that a court only 

should apply the equitable mootness doctrine 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., 258 F.3d at 185.
15

The doctrine is quite rightly ―limited in scope‖ and ―cautiously

applied.‖

12

 Continental I, 91 F.3d at 559. 

In holding that the appeal is equitably moot, the 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, our 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 mootness 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 analysis 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 court orders confirming reorganization plans. It 

thus places far too much power in the hands of bankruptcy 

judges.‖ Nordhoff Invs., 258 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 balancing of the equitable mootness factors

calls for allowing this appeal to proceed. Though the Plan was 

substantially consummated in a definitional sense after the 

Bankruptcy Court denied the administrative expense requests, 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. It also establishes an account from which a 

designated entity is to distribute funds to holders of allowed 

administrative expense claims as provided by the Plan. If the 

CSMI Parties‘ administrative expense requests are allowed, they 

may be paid under the Plan 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 substantially all of the 

Debtors‘ assets and the Plan, the Debtors are responsible for 

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. That 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 assume, 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 the 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 requests, the then-current plan

(the Fourth Amended Plan) already had been confirmed. The 

closing on that plan, scheduled for a day after the hearing on the 

requests, 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, they 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. 

As 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. The latter provides a 

mechanism for payment of disputed administrative expense 

claims if they are deemed allowed 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 the 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 will 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. We 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. James Daniel Good Real 

Prop., 510 U.S. 43, 48 (1993). The CSMI Parties received 

notice of the hearing on the Debtors‘ objection to the 

administrative expense requests a week before the hearing took 

place. They also were given the opportunity to be heard at the 

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 cause shown‖ a 

bankruptcy court has the discretion to set an expedited schedule

for the hearing of a substantive motion. In exercising that
19

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 Broad. of Phila., Inc., 71 

B.R. 390, 397 (Bankr. E.D. Pa. 1987). The Debtors stated that 

they needed to resolve the administrative expense requests

before the closing under the then-current Fourth Amended Plan. 

The CSMI Parties‘ requests were for $1.8 million, small relative 

to the proposed purchase price under the agreement 

accompanying the Fourth Amended Plan. However, the 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 presented this

testimony and expounded on their written arguments regarding 

the requests. 

Given the accelerated time frame of bankruptcy 

proceedings 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 requests 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 to 
20

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 

hearing during which they had an opportunity 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 August 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 additional arguments. 

Most counsel would prize such insights.

Moreover, at 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 response 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 Claims 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 debtorin-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 

an administrative expense claim bears the burden of 

demonstrating that it deserves administrative expense status. Id. 

at 533.

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 the 

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 injuries resulting from a slip and fall while on the 

debtor‘s premises); In re Hayes Lemmerz Int’l, Inc., 340 B.R. 

461 (Bankr. D. Del. 2006) (granting an administrative expense 
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claim to the lessor of machines that the debtor-lessee returned 

damaged where the damage 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, courtsin other jurisdictions have denied administrative 

expense requests where the alleged tort claims were speculative 

or too strained to be considered related to the preservation of a 

debtor‘s estate. See, e.g., In re 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-inpossession, but disallowing other expenses as ―too strained‖ and 

―too disparate with the language and intent of the Bankruptcy 

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), we discussed Reading in the 

context of whether a criminal fine for post-petition waste 

management violations 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] suggests 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 whether 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 cause of 

action. 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 of 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. Wagner, 588 A.2d 1308, 1311 (Pa. Super. Ct. 1991)). 

The statute of limitations for defamation claims is one year from 

the date of publication. 42 Pa. Cons. Stat. § 5523. To avoid the 

potential for endless re-triggering of the statute of limitations, 

Pennsylvania has adopted the ―single publication rule,‖ which 

holds that for purposes 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)); see also 42 Pa. Cons. Stat. 

§ 341(b). Under this rule, ―it is the original printing of the 

defamatory material and not the 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. Other 

courts addressing Internet-based defamation have found 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 avoid 
24

multiplicity of suits and the need to give effect to relevant 

Statutes of Limitation . . . gave rise to the single publication 

rule,‖ those 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 

means . . . .‖ 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); see also

Nationwide Bi-Weekly Admin., Inc. v. Belo Corp., 512 F.3d 137, 

144 (5th Cir. 2007) (―Every court to consider the issue after 

Firth has 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 Pennsylvania courts would extend the

single publication 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 reissuing material, 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, courts 

addressing the doctrine in the context of Internet publications

generally distinguish between linking, adding unrelated content, 

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). 

See Davis, 347 B.R. at 611–12. 
25

Several courts specifically have considered whether

linking to previously published material is republication. To 

date, they all hold that it is not based on a determination that a 

link is akin to the release of an additional 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, in a case with facts similar to this appeal, the

Court held that a link and reference to an allegedly defamatory 

article did not amount to a republication of the article. In Salyer 

v. Southern Poverty 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 defendant 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 Court 

analyzed the link and reference separately, 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 period,‖ 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 audience, 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

(emphases in original). 
26

We agree with the distinction in these cases. The single 

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 were an act of 

republication, the statute of limitations would be retriggered 

endlessly and its effectiveness essentially eliminated. A

publisher would remain subject to suit for 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, regardless 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. Publishing 

a favorable reference 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 Articles regarding the CSMI Parties, here they do not 

amount to the restatement or alteration of the allegedly 

defamatory material in the Articles necessary for a republication.

The Bankruptcy and District Courts were correct in sustaining 

the Debtors‘ objection to the administrative expense requests on 

the basis that the CSMI Parties cannot advance a sustainable 

cause of action to support the requests. Though the publication 

of the Kinney Article occurred during the post-petition operation 

of the Debtors‘ newspaper, the claim is so speculative that we 
27

can discern no benefit conferred on the Debtors‘ estates even 

under Reading‘s view 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.