Court Opinion

ID: 4709290
Source: CourtListenerOpinion
Date Created: 2021-08-05 15:01:10.863686+00
Date Added: 2024-06-11T08:06:55.473025
License: Public Domain

United States Court of Appeals
                For the Eighth Circuit
            ___________________________

                    No. 19-3413
                    No. 19-3487
            ___________________________

            In re: VeroBlue Farms USA, Inc.

                    lllllllllllllllllllllDebtor

                  ------------------------------

                           FishDish, LLP

lllllllllllllllllllll              Appellant/Cross-Appellee

                                  v.

   VeroBlue Farms USA, Inc.; Alder Aqua, LTD.

                        lllllllllllllllAppellees

                 Broadmoor Financial, L.P.

                                   Appellee/Cross-Appellant

                           ____________

     Appeals from United States District Court
    for the Northern District of Iowa - Ft. Dodge
                   ____________

                Submitted: January 12, 2021
                  Filed: August 5, 2021
                      ____________
Before LOKEN, GRASZ, and KOBES, Circuit Judges.
                           ____________

LOKEN, Circuit Judge.

       Debtors in this Chapter 11 bankruptcy proceeding are VeroBlue Farms USA,
Inc., and affiliated entities (“Debtors”). A VeroBlue preferred shareholder, FishDish,
LLP (“FishDish”), appeals the district court’s order granting appellees’ motions to
dismiss FishDish’s appeal of the bankruptcy court order confirming Debtors’ Chapter
11 plan of reorganization over FishDish’s objections, and certain pre-confirmation
orders. Appellees are VeroBlue Farms, the reorganized debtor; Alder Aqua, Ltd.
(“Alder Aqua”), Debtors’ plan of reorganization sponsor; and senior secured creditor
Broadmoor Financial, L.P. (“Broadmoor”). In dismissing the appeal, the district court
invoked equitable mootness, a bankruptcy doctrine adopted by our sister circuits
(though not uniformly), and by the Eighth Circuit Bankruptcy Appellate Panel and
Eighth Circuit district courts. We have never expressly adopted the doctrine,1 nor has
the Supreme Court. Alternatively, the court considered appellees’ jurisdictional
defenses, including timeliness, and concluded it did have subject matter jurisdiction.
Broadmoor cross appeals the district court’s ruling that FishDish’s appeal from one
order, the “Claim Objection Order,” though untimely under Rule 8002(a)(1) of the
Federal Rules of Bankruptcy Procedure, was not subject to dismissal under 28 U.S.C.
§ 158(c)(2) because the statute only applies to appeals from the “final judgments,
orders, and decrees” referred to in § 158(a)(1).

      1
       We upheld the district court’s invocation of “equitable mootness” without
discussion in In re President Casinos, Inc., 409 F. App’x. 31, 31-32 (8th Cir. 2010),
an unpublished, non-precedential opinion. In In re Nevel Props. Corp., 765 F.3d 846
(8th Cir. 2014), we affirmed on the merits and denied as moot a motion to dismiss the
appeal under the equitable mootness doctrine. As we will explain, this should almost
always be the preferred disposition.

                                         -2-
       We agree that the district court and this court have statutory subject matter
jurisdiction. However, we conclude the district court erred in limiting the mandatory
but non-jurisdictional timeliness requirements of Rule 8002 to appeals from final
bankruptcy court orders. As FishDish has conceded its appeal from the pre-
confirmation Claim Objection Order was untimely under Rule 8002, we affirm the
grant of appellees’ Partial Motion to Dismiss Appeal on this alternative ground.

       Regarding the central issue on appeal, what has misleadingly come to be
known as “equitable mootness,” like the Tenth Circuit we agree with “[e]very other
circuit to consider the issue . . . that ‘equitable,’ ‘prudential,’ or ‘pragmatic’
considerations can render an appeal of a bankruptcy court decision moot even when
the appeal is not constitutionally moot.” In re Paige, 584 F.3d 1327, 1337 (10th Cir.
2009). However, invoking this doctrine often results in “the refusal of the Article III
courts to entertain a live appeal over which they indisputably possess statutory
jurisdiction and in which meaningful relief can be awarded.” In re Cont’l Airlines,
91 F.3d 553, 571 (3d Cir. 1996) (Alito, J., dissenting), cert. denied sub nom. Bank of
N.Y. v. Cont’l Airlines, Inc., 519 U.S. 1057 (1997). An Article III appellate court has
a “virtually unflagging obligation” to exercise its subject matter jurisdiction. In re
Semcrude, L.P., 728 F.3d 314, 320 (3d Cir. 2013) (quotation omitted). Therefore, as
in Paige, Semcrude, and numerous other circuit court decisions, we conclude that the
district court did not apply a sufficiently rigorous test to determine when bankruptcy
equities and pragmatics justify foregoing Article III judicial review of a bankruptcy
court order confirming a Chapter 11 plan. Accordingly, we remand for further district
court proceedings.

                                   I. Background.

       Founded in 2014, Debtors were in the aquaculture business -- farming fish and
selling those fish through wholesalers to restaurants and grocery chains. Kenneth
Lockard, an Iowa businessman, formed FishDish to invest in the Debtors. In the

                                         -3-
summer of 2016, Debtors sold $6 million in preferred shares to FishDish and $28
million to Alder Aqua, a British Virgin Islands entity allegedly owned and controlled
by Dr. Otto Happel and his family. In addition, certain Debtors borrowed $29 million
from Amstar Group, LLC (the “Credit Facility”), also allegedly owned and controlled
by Dr. Happel, a loan secured by substantially all of Debtors’ assets. As a result,
Lockard and Alder Aqua representatives sat on the Debtors’ board. Lockard often
voted en bloc with the founders. In December 2017, Amstar transferred its rights
under the Credit Facility to Broadmoor. Alder Aqua loaned Debtors additional funds
in 2018 and acquired a participation interest in the Credit Facility. By early 2018,
Alder Aqua had taken control of the Debtors, terminating the founders and installing
their appointees to the board and causing Lockard to resign from the board.

       The Debtors filed a voluntary Chapter 11 bankruptcy petition on September 21,
2018, listing an undisputed obligation to the Credit Facility as approximately $54
million -- well in excess of Debtors’ assets. On motion of the Debtors, the
bankruptcy court promptly entered an interim post-petition financing order
authorizing Debtors to borrow $2 million from Alder Aqua as Lender to finance post-
petition obligations and to grant Lender a “first priority priming lien” under 11 U.S.C.
§ 364(d) on its business assets, and granting Broadmoor an Adequate Protection Lien
equal to the diminution in value of any valid pre-petition lien.

       No interested party objected to the interim order. On October 17, the
bankruptcy court entered a final debtor-in-possession financing order (the “DIP
Order”). The DIP Order provided that “the Broadmoor Secured Debt and Broadmoor
Lien shall be deemed to be allowed for all purposes in the Chapter 11 Cases . . . and
shall not be subject to challenge by any party in interest as to extent, validity, priority,
or otherwise” unless “(i) the Debtors receive notice of a potential Challenge during
the Investigation Period from the Committee and (ii) the Court rules in favor of the
plaintiff in any timely and properly filed Challenge resulting therefrom.” The DIP
Order defined “Committee” as an “official committee in the Chapter 11 case.” See

                                            -4-
11 U.S.C. § 1102. Section 8(a) defined the Challenge Procedure. Section 8(b)
provided that if “a Challenge is not timely commenced,” the Broadmoor Secured Debt
and Lien “shall be deemed to be allowed for all purposes . . . and shall not be subject
to challenge by any party in interest.” No party appealed the DIP Order.

       On October 24, the United States Trustee appointed the Official Committee of
Unsecured Creditors (“Creditors Committee”) under 11 U.S.C. § 1102. The Creditors
Committee investigated the Broadmoor claim and on December 19 sent Debtors a
lengthy and timely challenge notice under Section 8(a) of the DIP Order demanding
that Debtors initiate an adversary proceeding against Broadmoor, Aqua Alder,
Amstar, and others, or consent to the Creditors Committee’s standing to prosecute an
adversary proceeding, for breaches of fiduciary duty, corporate waste and usurpation
of corporate opportunities, equitable subordination or recharacterization of
Broadmoor’s claim under the Credit Facility, and fraud (the “Challenge Notice”).
The next day, an unofficial Ad Hoc Committee of Equity Security Holders (“AHC”)
-- consisting of FishDish and certain common shareholders of the Debtors -- sent
Debtors a letter joining the Creditors Committee Challenge Notice. The AHC also
filed an Objection to approval of Debtors’ Disclosure Statement for the plan. See 11
U.S.C. § 1125(b).

      On January 14, 2019, the bankruptcy court held a hearing limited to the
Debtors’ disclosures. Debtors filed a Modified Chapter 11 Plan and Modified
Disclosure Statement on February 16. The bankruptcy court approved the amended
disclosure statement and scheduled a preliminary confirmation hearing on March 20
(the “Disclosure Order”).

      On January 13, the AHC moved for an order “extending the procedural
protections of paragraph 8 of the Final DIP Order” to the AHC. In early February,
the AHC moved for an order “confirming” its derivative standing to pursue the claims

                                         -5-
demanded in the Challenge Notice (the “Standing Motion”). See generally In re
Racing Servs., Inc., 540 F.3d 892, 904-05 (8th Cir. 2008). After a hearing on
February 4, the bankruptcy court entered an order deferring ruling on AHC’s
Standing Motion pending plan confirmation proceedings.

       On March 5, the Creditors Committee notified the bankruptcy court it had
settled its claims against Debtors in return for proposed plan amendment providing
relief for the unsecured creditors. Broadmoor moved to enforce the DIP Order’s
Section 8 claim bar against the AHC, and Debtors moved to bar AHC from further
participation under Bankruptcy Rule 2019. After hearings, the bankruptcy court
issued an order on April 3, 2019 (the “AHC Standing Order”) stating in relevant part:

            IT IS FURTHER ORDERED THAT, for all parties in interest,
      objections to the Broadmoor Secured Debt . . . as well as any and all
      claims held by debtor, or derivative of Debtor’s rights, for the
      recharacterization or equitable subordination of the Broadmoor Secured
      Debt, are barred, because no timely challenge was made pursuant to the
      DIP Order and for other reasons set forth on the record.

            IT IS FURTHER ORDERED THAT, for all parties in interest,
      any objections relating to the allegations and claims set forth in the
      Challenge Notice attached as an exhibit to the Motion are barred, as
      those claims are not colorable and for other reasons set forth on the
      record.2

      FishDish then 1) objected to Broadmoor’s claim, 2) moved for leave to initiate
discovery, and 3) objected to the amended disclosure statement. After a pre-
confirmation hearing, the bankruptcy court denied FishDish’s motion for discovery.

      2
       The order also granted the Debtors’ motion under Rule 2019. The AHC’s
separate appeal of that order is pending in the United States District Court for the
Northern District of Iowa.

                                         -6-
(the “Discovery Order”). It clarified at the April 17 confirmation hearing that
FishDish’s objections to the Broadmoor claim were barred but offered FishDish an
opportunity to make an offer of proof to bolster the record on appeal. After the
confirmation hearing concluded on April 18, the court entered a text order denying
the FishDish’s claim objection (the “Claim Objection Order”). On April 22 the
bankruptcy court approved the Plan of reorganization (“Plan Confirmation Order”).

      On May 6, FishDish filed a notice of appeal identifying as the matters being
appealed the Plan Confirmation Order, the Disclosure Order, the AHC Standing
Order, the Discovery Order, and the Claim Objection Order. FishDish elected an
appeal to the Bankruptcy Appellate Panel, but Alder Aqua timely transferred the
appeal to the District Court for the Northern District of Iowa. See 28 U.S.C.
§ 158(c)(1)(B); Bankruptcy Rule 8005. The bankruptcy court entered an order
confirming the Plan, as amended, on May 7, 2019.

       The limited record on appeal reveals that, after confirmation of the Plan: (1)
Alder Aqua funded the Plan with $13.5 million; (2) Debtors cancelled all the
outstanding common and preferred stock and re-issued stock to Alder Aqua; (3) the
Class 3 claimants received $294,700; (4) the Class 5 creditor trust received $620,000,
which has since paid or settled claims in the amount of $272,000; (5) Broadmoor
received $6,000,000; and (6) Alder Aqua released its $5,025,000 claim under the
credit facility, as well as its $2,000,000 claim for the DIP bridge financing. Alder
Aqua, as plan sponsor and sole shareholder of the reorganized Debtors, assumed
management, and deferred its commitment to invest $21,400,000 “for capital
investments for the Debtors retrofit and additional working capital.” The bankruptcy
court closed the case. See Fed. R. Bankr. P. 3022; 11 U.S.C. § 350.3

      3
          We grant the motion to supplement the record with the closure order.

                                          -7-
       In its appeal of the Plan Confirmation Order, FishDish argued the Plan (1)
unfairly discriminates between members of the same class of shareholders; (2)
violates the absolute priority rule; (3) was proposed in bad faith; (4) is not in the best
interests of the creditors for failure to investigate and value the Challenge Notice
claims; and (5) is not feasible for want of funding. Alder Aqua moved to dismiss
based on the “doctrine of equitable mootness,” bankruptcy standing, and waiver.
Broadmoor filed a partial motion to dismiss the appeal of the Claim Objection Order
as untimely. Without reaching the merits, the district court dismissed FishDish’s
appeal as “equitably moot.” It further ruled FishDish as a “person aggrieved” has
standing to appeal the Plan’s confirmation, and that FishDish’s appeal of the Claim
Objection Order is timely because it was not a final order. FishDish appeals the
equitable mootness dismissal; Broadmoor cross-appeals the timeliness issue.

                  II. Timeliness, a Potential Jurisdictional Issue.

       Bankruptcy Rule 8002(a)(1) provides: “Except as provided in subdivisions (b)
and (c) [which are not at issue], a notice of appeal must be filed with the bankruptcy
clerk within 14 days after entry of the judgment, order, or decree being appealed.”
“Bankruptcy Rules prescribed by [the Supreme Court] for the practice and procedure
in cases under title 11 . . . do not create or withdraw federal jurisdiction.” Kontrick
v. Ryan, 540 U.S. 443, 453 (2004). But “a rule is jurisdictional if the legislature
clearly states that a threshold limitation on a statute’s scope shall count as
jurisdictional.” Gonzalez v. Thaler, 565 U.S. 134, 141 (2012).

      The appellate jurisdiction of a district court, a court of appeals, or a bankruptcy
appellate panel (“BAP”) to review a bankruptcy court order is governed by 28 U.S.C.
§ 158. Subsection § 158(a) provides:

                                           -8-
        (a) The district courts of the United States shall have jurisdiction to
      hear appeals
             (1) from final judgments, orders, and decrees;
             (2) from interlocutory orders and decrees issued under section
      1121(d) of title 11 increasing or reducing the time periods referred to in
      section 1121 . . .; and
             (3) with leave of court, from other interlocutory orders and
      decrees;
      of bankruptcy judges . . . .

Subsection § 158(c)(2) provides: “An appeal under subsection[] (a) . . . shall be taken
in the same manner as appeals in civil proceedings generally are taken to the courts
of appeals from the district courts, and in the time provided by Rule 8002 of the
Bankruptcy Rules.” The jurisdictional issue is whether the incorporation of Rule
8002(a)(1)’s time-limit in 28 U.S.C. § 158(c)(2) creates a statutory limitation on
federal district courts’ subject-matter jurisdiction. See Kontrick, 540 U.S. at 453. If
it does, then the district court should have addressed this issue before the non-
jurisdictional issue of equitable mootness because “a court cannot issue a ruling on
the merits when it has no jurisdiction because to do so is, by very definition, for a
court to act ultra vires.” Brownback v. King, 141 S. Ct. 740, 749 (2021) (cleaned up);
see In re AFY, 734 F.3d 810, 816 (8th Cir. 2013), cert. denied sub. nom Sears v.
Badami, 572 U.S. 1117 (2014). Therefore, we address this issue -- the crux of
Broadmoor’s cross appeal regarding the Claim Objection Order -- before addressing
equitable mootness.

       We upheld the dismissal of a bankruptcy appeal for failure to comply with Rule
8002 in In re Delta Engineering Intern., Inc., 270 F.3d 584, 586 (8th Cir. 2001). But
we have not held that Rule 8002's 14-day deadline for filing appeals from bankruptcy
court decisions is jurisdictional. (The Eighth Circuit BAP has, but its rulings are not
controlling on this Article III issue.) A number of our sister circuits have concluded
that Rule 8002 is jurisdictional, like Rule 4(a)(6) of the Federal Rules of Appellate

                                         -9-
Procedure. See the cases cited in In re Tennial, 978 F.3d 1022, 1026-27 (6th Cir.
2020). But after careful consideration of these contrary cases, we agree with the
careful analysis in Tennial and conclude that Rule 8002's 14-day deadline is
mandatory but not jurisdictional. Judge Sutton explained in Tennial, 978 F.3d at
1025-26, 1028:

      In [28 U.S.C. § 158(c)(2)], Congress merely referred to any appeal
      deadlines created by the Bankruptcy Rules. Nothing about that
      reference indicates that Congress meant to attach subject matter
      jurisdiction consequences to deadlines established by the Bankruptcy
      Rules. Much less did it do so “clearly” with that modest reference.

                                  *   *     *     *   *

      [I]f deadlines established by the rules process alone created
      jurisdictional limits, that would mean the rules committee could change
      the scope of federal court subject matter jurisdiction on its own. . . . But
      the Constitution gives that power to Congress alone. . . . The rules
      committees, as it happens, have changed the bankruptcy appeal deadline
      since 28 U.S.C. § 158 was enacted -- from 10 to 14 days. . . . How, then,
      can we say that Congress “specified” [that] deadline . . . .?

                                  *    *    *     *   *

      Bankruptcy Rule 8002(a)(1)-s 14-day time limit for filing a notice of
      appeal does not create a jurisdictional imperative.
            Even so, the deadline remains mandatory. . . .
            Because the appeal deadline is mandatory, because Tennial
      missed it, and because REI raised the issue in its motion to dismiss, the
      appeal must be dismissed as dilatory.

      As in Tennial, FishDish missed the mandatory 14-day time limit in appealing
the Claim Objection Order, and appellees’ Partial Motion to Dismiss raised the issue.
The district court denied that motion because “‘An appeal [from final judgments,

                                           -10-
orders, and decrees] shall be taken . . . in the time provided by Rule 8002,’" and the
Claim Objection Order was not a final order. The bracketed limitation inserted by the
court in quoting § 158(c)(2) was an error of law. The statute applies to appeals
“under subsections (a) and (b).” Those appeals include appeals to district courts
“from other interlocutory orders and decrees.” § 158(a)(3). Rule 8002(a)(1)
mandates filing a notice of appeal “within 14 days after entry of the judgment, order,
or decree being appealed.” Thus, it is not limited to final orders, and rightly so,
because the need for expedited appellate processing in bankruptcy applies to appeals
of interlocutory orders to the district court or to the BAP, as well as to final orders
that can then be appealed to the court of appeals under § 158(d). Cf. In re Farmland
Indus., Inc., 397 F.3d 647, 649-50 (8th Cir. 2005).

       For this reason, we need not decide whether the Claim Objection Order was a
“final judgment, order, [or] decree[]” under § 158(a)(1). See generally Ritzen Grp.,
Inc., v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020); Bullard v. Blue Hill Banks,
575 U.S. 496 (2016). As it is undisputed that FishDish missed the mandatory 14-day
time limit, the district court’s order dismissing the appeal of the Claim Objection
Order is affirmed.

                           III. Equitable Dismissal Issues.

       The district court declined to address the merits of FishDish’s appeal, invoking
the “doctrine of equitable mootness.” The doctrine’s name is misleading. A case is
moot, that is, beyond a federal court’s Article III jurisdiction, only if “it is impossible
for a court to grant any effectual relief whatsoever.” Mission Prod. Holdings, Inc. v.
Tempnology, LLC, 139 S. Ct. 1652, 1660 (2019) (quotation omitted). “There is a big
difference between inability to alter the outcome (real mootness) and unwillingness
to alter the outcome (‘equitable mootness’). Using one word for two different
concepts breeds confusion. Accordingly, we banish ‘equitable mootness’ from the

                                           -11-
(local) lexicon.” In re UNR Indus., Inc., 20 F.3d 766, 769 (7th Cir.) (emphasis in
original), cert. denied sub nom. UNARCO Bloomington Factory Workers v. UNR
Indus., Inc., 513 U.S. 999 (1994). But the name lives on elsewhere.4

       The equitable mootness doctrine is based on a recognition that “even when the
moving party is not entitled to dismissal on Article III grounds, common sense or
equitable considerations may justify a decision not to decide a case on the merits.”
In re Manges, 29 F.3d 1034, 1039 (5th Cir. 1994) (quotation omitted; cleaned up),
cert. denied sub nom. Manges v. Seattle-First Nat. Bank, 513 U.S. 1152 (1995).
Numerous Chapter 11 plan confirmation appeals have been dismissed “when, even
though effective relief could conceivably be fashioned, implementation of that relief
would be inequitable.” In re Chateaugay Corp., 988 F.2d 322, 325 (2d Cir. 1993).
“If limited in scope and cautiously applied, this doctrine provides a vehicle whereby
the court can prevent substantial harm to numerous parties.” Cont’l Airlines, 91 F.3d
at 559.

       As with any equitable determination, a variety of factors may be relevant in a
particular case. Our sister circuits have fashioned many different routes to answer the
ultimate question.5 Most have adopted either the two-factor analysis in In re Tribune
Media Co., 799 F.3d 272, 277 (3d Cir. 2015), cert. denied sub nom. Aurelius Cap.

      4
        FishDish contends the doctrine is constitutionally infirm, a contention some
circuits have addressed but none has adopted. See In re One2One Comm’cns, LLC,
805 F.3d 428, 432-33 (3d Cir. 2015). FishDish did not make this argument to the
district court, and we decline to consider it for the first time on appeal.
      5
        There is a conflict among the circuits whether a district court decision to
invoke equitable mootness is reviewed de novo or for abuse of discretion, an issue the
parties debate on appeal. We apparently applied the de novo standard of review in
In re President Casinos, 409 F. App’x at 31, a non-binding opinion. Given our
decision that a remand is required, we need not decide this issue.

                                         -12-
Mgmt., L.P. v. Tribune Media Co., 136 S. Ct. 1459 (2016), or a variation of the five-
factor analysis adopted by the Eighth Circuit BAP in In re Williams, 256 B.R. 885,
896 n.11 (8th Cir. B.A.P. 2001). We decline the parties’ invitation to adopt a specific
multi-factor test. “The ultimate question to be decided is whether the Court can grant
relief without undermining the plan and, thereby, affecting third parties.” In re SI
Restructuring, Inc., 542 F.3d 131, 136 (5th Cir. 2008). The most important factors
are whether the confirmed plan has been substantially consummated and, if so, what
effects reversal of the plan would likely have on third parties.” Paige, 584 F.3d at
1339. Whether appellant sought or obtained a stay pending appeal is relevant but not
determinative. See, e.g., Manges, 29 F.3d at 1039-40.

        The equitable mootness doctrine as frequently applied has been thoughtfully
criticized by many circuit judges. Perhaps the most thorough survey of the subject
is the concurring opinion of Third Circuit Judge Cheryl Krause in In re One2One, 805
F.3d at 438-54, where the Third Circuit reversed the district court’s equitable
mootness dismissal and remanded for consideration of a bankruptcy appeal on the
merits. After discussing at length issues regarding the judge-made doctrine’s
legitimacy, Judge Krause turned to the doctrine’s efficacy, id. at 446-47:

      The doctrine was intended to promote finality, but it has proven far more
      likely to promote uncertainty and delay. Ironically . . . a motion to
      dismiss an appeal as equitably moot has become “part of the Plan.”
      Proponents of reorganization plans now rush to implement them so they
      may avail themselves of an equitable mootness defense, much like
      Appellees did here. Rather than litigate the merits of an appeal, parties
      then litigate equitable mootness. And even if an appeal is dismissed as
      equitably moot by a district court, that dismissal is appealed to our
      Court, often resulting, in turn, in a remand and further proceedings.

                                   *   * * *      *

                                         -13-
      Even if we were affirming the District Court’s finding of equitable
      mootness, there would not have been finality until this point . . . .
      Without the equitable mootness doctrine, on the other hand, the District
      Court would have ruled on the merits long ago.

       The record on appeal suggests that the Chapter 11 proceedings in this case may
have followed that pattern, yet the district court made no such inquiry. Of the $12
million paid under the Plan to creditors, presumably from the $13.5 million in funding
provided by Alder, one half was paid to Broadmoor, and Alder Aqua as plan sponsor
assumed management of the reorganized Debtors. These appellees are not third
parties that the equitable mootness doctrine is intended to protect. Moreover, the only
transfer that did not take place was Alder Aqua’s commitment to invest substantial
working capital. If that did not take place because the reorganized Debtors were
preparing for a quick asset sale instead of resuming operations, the case takes on the
look of the type of Chapter 11 plan that Judge Krause defined as one needing review
on the merits by an Article III appellate court. And if the confirmed plan must be set
aside on the merits, the district court may be able to fashion effective relief for those
whose rights were impaired by the plan even if the business assets have been sold to
a third party purchaser relying on the confirmed plan, such as disgorgement of the
proceeds. We do not assume how these factual inquiries may be resolved. We decide
only that the inquiry must be made.

       The panel in One2One was bound to apply the equitable mootness doctrine as
adopted by the Third Circuit’s 7-6 en banc decision in Continental Airlines. Writing
on a clean Eighth Circuit slate, we conclude that an inquiry into these issues is
required before equitable mootness may be invoked in this case. This means that, on
remand, the district court must make at least a preliminary review of the merits of
FishDish’s appeal to determine the strength of FishDish’s claims, the amount of time
that would likely be required to resolve the merits of those claims on an expedited
basis, and the equitable remedies available -- including possible dismissal -- to avoid

                                          -14-
undermining the plan and thereby harming third parties. See Abengoa Bioenergy
Biomass of Kan., LLC, 958 F.3d 949, 960 (10th Cir. 2020); In re Charter Commc’ns
Inc., 691 F.3d 476, 482 (2d Cir. 2012), cert. denied sub nom Law Debenture Tr. Co.
v. Charter Commc’ns, Inc., 569 U.S. 968 (2013).6

       “In many cases,” Judge Krause observed, “district courts may conclude that all
or substantially all of the relief requested is feasible despite the plan’s
consummation.” One2One, 805 F.3d at 450; see Paige, 584 F.3d at 1339; SI
Restructuring, 542 F.3d at 136 (appellants “do not seek any return of money . . . from
third party creditors”); In re Envirodyne Inds., Inc., 29 F.3d 301, 304 (7th Cir. 1994).
A “quick look at the merits of an appellant’s challenge” is also important, Judge
Krause urged, because “[m]erits review is particularly important for complex
questions, like whether a plan comports with the Bankruptcy Code’s cram down
provisions, an issue that often cries out for appellate review . . . or claims involving
conflicts of interest or preferential treatment that go to the very integrity of the
bankruptcy process.” 805 F.3d at 454 (cleaned up). We agree. Those are precisely
the kinds of issues FishDish raises in this appeal.

      In resolving a different but somewhat analogous issue, the Supreme Court
recently held that “allowing Article I adjudicators to decide claims submitted to them
by consent does not offend the separation of powers so long as Article III courts
retain supervisory authority over the process.” Wellness Int’l Network, Ltd. v.

      6
        For example, in Manges, a Chapter 11 proceeding where the debtors’ principal
assets were a large Texas ranch and mineral rights under the ranch, the district court
affirmed the bankruptcy court’s confirmation of the principal creditors’ proposed
plan. 29 F.3d at 1036. Debtors appealed, and the Fifth Circuit granted appellees’
motion to dismiss based on equitable mootness because the relief sought by debtors
was “nothing less than a wholesale annihilation of the Plan,” and the ranch had been
sold to third party purchasers. Id. at 1043.

                                         -15-
Sharif, 135 S. Ct. 1932, 1944 (2015) (emphasis added). When a district court (or a
court of appeals reviewing a BAP decision) is asked to invoke equitable mootness to
preclude a party whose rights have been impaired by a Chapter 11 confirmation order
from obtaining supervisory review of the merits of the plan by an Article III court that
has an “unflagging obligation” to exercise its appellate jurisdiction, the request
should be granted only in extremely rare circumstances. “The presumptive position
remains that federal courts should hear and decide on the merits cases properly before
them.” Semcrude, 728 F.3d at 326. If equitable mootness instead becomes the rule
of appellate bankruptcy jurisprudence, rather than an exception to the Article III-
based rule that jurisdiction should be exercised, we predict the Supreme Court, having
up to now denied petitions for certiorari to review the doctrine, will step in and
severely curtail -- perhaps even abolish -- its use, just as the Court curtailed lower
courts’ excessive use of the “Rooker-Feldman doctrine” to avoid difficult claim and
issue preclusion analysis in Exxon Mobil Corp. v. Saudi Basic Indus., Corp., 544 U.S.
280, 283-84 (2005).

                                   IV. Conclusion.

       In summary, we affirm the decision of the district court dismissing FishDish’s
appeal of the Claim Objection Order. We reverse and remand for reconsideration the
district court’s dismissal of FishDish’s appeal of the Plan Confirmation Order on the
ground of equitable mootness. We conclude that appellees’ contention that FishDish
lacks bankruptcy case standing to appeal because it is not a “person aggrieved,” see
Opportunity Fin., LLC, v. Kelley, 822 F.3d 451, 457-58 (8th Cir. 2016), should not
be decided on this record. Accordingly, we remand the case to the district court for
further proceedings not inconsistent with this opinion.
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