Opinion ID: 187055
Heading Depth: 2
Heading Rank: 3

Heading: Mootness Resulting From MQF's Divestment of its Meat Processing Facility

Text: Simply stated, a case is moot when the issues presented are no longer `live' or the parties lack a legally cognizable interest in the outcome. County of Los Angeles v. Davis, 440 U.S. 625, 631, 99 S.Ct. 1379, 59 L.Ed.2d 642 (1979) (quoting Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969)). [F]ederal courts are without power to decide questions that cannot affect the rights of litigants in the case before them. The inability of the federal judiciary to review moot cases derives from the requirement of Art. III of the Constitution under which the exercise of judicial power depends upon the existence of a case or controversy. DeFunis v. Odegaard, 416 U.S. 312, 316, 94 S.Ct. 1704, 40 L.Ed.2d 164 (1974) (internal quotation marks and citations omitted). This means that a controversy may become moot if a regulated business challenges a government regulatory policy or action and then terminates its operation during the pendency of the litigation. Normally, once a regulated business has voluntarily removed itself from the ambit of government oversight, it no longer has a legally cognizable interest in the outcome of litigation that seeks to challenge a government regulatory policy or action. This point was made clear by the Supreme Court in City News & Novelty, Inc. v. City of Waukesha, 531 U.S. 278, 121 S.Ct. 743, 148 L.Ed.2d 757 (2001). In City of Waukesha, the owner of an adult-oriented establishment sought judicial review when the city denied its license renewal application. During the pendency of the litigation, the owner gave notice that it intended to withdraw its license renewal application and close its business. Citing City of Erie v. Pap's A.M., 529 U.S. 277, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000), the owner argued that the case should not be dismissed as moot, because the terminated City News business might apply for a license in the future. The Supreme Court ruled that the case was moot, holding that a live controversy is not maintained by speculation that claimant might reenter a business that it has left. In reaching this result, the Court carefully limited the holding of City of Erie: In our view, Erie differs critically from this case. In Erie, we similarly granted a petition to review a state-court judgment addressing an adult business' First Amendment challenge to a city ordinance. We concluded that the controversy persisted, even though the adult business had shut down. We reached that conclusion, it is true, in part because the business could again decide to operate. That speculation standing alone, however, did not shield the case from a mootness determination. Another factor figured prominently. The nude dancing entrepreneur in Erie sought to have the case declared moot after the business had prevailed below, obtaining a judgment that invalidated Erie's ordinance. Had we accepted the entrepreneur's plea, then consistent with our practice when a case becomes moot on review from a state court, we would have dismissed the petition, leaving intact the judgment below. Thus, had we declared Erie moot, the defendant municipality would have been saddled with an ongoing injury, i.e., the judgment striking its law. And the plaintiff arguably would have prevailed in an attempt to manipulate the Court's jurisdiction to insulate a favorable decision from review. 531 U.S. at 283-84, 121 S.Ct. 743 (internal citations and quotation marks omitted). The decision in City of Waukesha strongly supports the principle that a case on appeal normally is rendered moot when the appellant closes its business and, as a result, no longer has a cognizable interest in the outcome of the dispute. The City of Erie exception applies only when the party who prevailed below attempts to manipulate the Court's jurisdiction to avoid having its favorable judgment overturned on appeal. Id. at 284, 120 S.Ct. 1382. City of Waukesha guides the disposition of this case. In August of 2005, while this case was still pending before the District Court, Munsell divested MQF of its meat processing operation. Decl. of John W. Munsell ¶ 2, JA 185. As a result, Munsell/MQF are no longer subject to USDA oversight. Munsell claims that he anticipates re-enter[ing] a role in meat processing subject directly to agency regulation. Id. But Munsell has offered no clear plans to reopen MQF as a regulated entity. Rather, Munsell essentially claims that the retaliatory actions taken by FSIS officials resulted in his exit from the meat processing business and that a favorable ruling by this court would allow him to return to the industry, and again become subject to USDA oversight. He points out that he has maintained MQF as a corporate entity in good standing, which, he suggests, gives evidence of his desire to return to the meat processing business. Id. These claims are insufficient to avoid mootness. A matter is moot if events have so transpired that the decision will neither presently affect the parties' rights nor have a more-than-speculative chance of affecting them in the future. 21st Century Telesis Joint Venture v. FCC, 318 F.3d 192, 198 (D.C.Cir.2003) (internal quotation marks omitted). As the Court noted in City of Waukesha, speculation that a business could again decide to operate, without more, does not shield the case from a mootness determination. 531 U.S. at 283, 121 S.Ct. 743. Because Munsell/MQF are not subject to USDA oversight, a favorable ruling by this court on their APA claims will not affect their rights. No order from this court is assured more than a speculative chance of giving any relief to these appellants, because Munsell has no definite plans to reopen MQF as a regulated entity. Munsell/MQF point to the decision in Supreme Beef Processors, Inc. v. USDA, 275 F.3d 432 (5th Cir.2001), in support of their argument that their action for declaratory and injunctive relief is not moot. In Supreme Beef, the court held that a meat processor's action against USDA was not rendered moot by its subsequent bankruptcy filing, because the business retained a sufficient stake in the case to meet the case or controversy threshold. Id. at 436-37. Appellants draw on the obvious parallel to the facts of this case  in both instances, a meat processing business failed, allegedly due to regulatory misconduct. Nonetheless, Supreme Beef is easily distinguished from the facts presented here. Supreme Beef Processors filed for Chapter 11 bankruptcy during the pendency of its action against USDA. The agency then moved to have the case dismissed on mootness grounds. In response, the company argued that it intended to resume operations after reorganization and that the injunction [it sought] . . . was critical to that reorganization. Id. at 436. The Fifth Circuit denied USDA's motion to remand the case with instructions to dismiss. Subsequently, the Bankruptcy Court converted the case into a Chapter 7 liquidation. The company asserted that it had substantial assets and could emerge solvent from the Chapter 7 liquidation proceedings. Id. The Supreme Beef court held that [t]he possibility that [appellant] may continue to function as a meat processor even after its Chapter 7 proceeding satisfies Article III. Id. at 436-37 (footnote omitted). The most salient distinction between Supreme Beef and the current case is that the appellant in that case had not divested itself of its meat processing facility. While it was possible  as the court recognized  that Supreme will not . . . emerge from bankruptcy and [will] be dissolved, perhaps during the pendency of any petition for panel rehearing, rehearing en banc, or writ of certiorari before the U.S. Supreme Court, id. at 437, that had not happened when the court's decision was rendered. As a consequence, Supreme continued to have a legally cognizable interest throughout the litigation. Here, Munsell/MQF are fully divested of their meat processing facility and are no longer subject to USDA oversight. The possibility of dissolution was not sufficient to moot the case in Supreme Beef, but the reality of divestment is sufficient here. Munsell/MQF's actions for declaratory and injunctive relief are thus moot.