By: Donald L Swanson
The doctrine of equitable mootness “is irreconcilable with” the “virtually unflagging obligation” of appellate courts “to exercise the jurisdiction given them.”
–From Amicus Brief of 21 Bankruptcy Law Professors, in Hargreaves v. Nuverra Environmental Solutions Inc., Case No. 21-17, U.S. Supreme Court (Petition for Writ of Certiorari is pending).
The Hargreaves v. Nuverra Petition challenges the validity of the equitable mootness doctrine in the context of plan confirmation orders.
Procedurally, the Hargreaves v. Nuverra Petition is “DISTRIBUTED for Conference of 10/8/2021”—that’s tomorrow!
As noted above, 21 law professors are weighing in before the U.S. Supreme Court on the equitable mootness doctrine, via an Amicus Curiae Brief filed August 31, 2021. These are professors who “regularly teach courses in bankruptcy law” and “have an interest in the orderly development of bankruptcy law and practice.”
These professors express strong disapproval of the equitable mootness doctrine, as currently applied in the Chapter 11 plan confirmation context.
What follows is a summary of their four-part argument.
Argument # 1
Equitable mootness upends statutory appellate rights enacted to ensure meaningful review of bankruptcy court decisions by Article III courts. That’s because:
- The judge-made doctrine of equitable mootness causes Article III courts to refuse to review meritorious, live appeals from bankruptcy court orders; and
- The doctrine does so, even though there is nothing “moot” about cases in which effective relief is available, nor anything “equitable” about immunizing erroneous bankruptcy court decisions from appellate scrutiny.
Argument # 2
Equitable mootness precludes the development and predictability of bankruptcy law. That’s because:
- Equitable mootness, (i) lures appellate courts into abdicating their jurisdiction when they should be exercising it, and (ii) stunts the development of bankruptcy jurisprudence when it is the duty of appellate courts to promote it;
- The doctrine’s application leaves vexing questions of bankruptcy law unresolved by those courts that have the authority—and responsibility—to decide them; and
- The ultimate effect is that important ambiguities and controversies in bankruptcy law never percolate up to the U.S. Supreme Court for review and definitive decision.
Argument # 3
Equitable mootness invites gamesmanship and distorts bankruptcy outcomes. That’s because:
- Sophisticated parties in high stakes cases know how to wield equitable mootness to their advantage, by advocating aggressive legal positions to receptive bankruptcy judges and then rushing to consummate confirmed plans before appeals can run their course; and
- None of this is consistent with Congress’s carefully tailored scheme of appellate review in bankruptcy cases, nor with the federal courts’ duty to decide cases that are within their jurisdiction and properly before them.
Argument # 4
Equitable mootness is applied inconsistently. That’s because:
- The equitable mootness doctrine varies from bankruptcy courtroom to bankruptcy courtroom, depending on the presiding judge;
- Legal analysis of consequential questions is concentrated in the handful of bankruptcy courts that regularly handle the country’s most complex corporate bankruptcies; and
- The resulting uncertainty ripples through the capital markets.
Amici Brief’s Conclusion
The 21 bankruptcy professors urge the Supreme Court to grant the pending Petition, (i) to rein in the abdication by appellate courts of their jurisdictional obligations, (ii) to promote the development of bankruptcy law, and (iii) to level the playing field in bankruptcy cases.
It will be interesting to see whether the Supreme Court justices take up the challenge presented to them by these 21 bankruptcy professors.
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