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The Bankruptcy StrategistFeaturesBankruptcyCivil ProcedureLitigation

Update on Bankruptcy Appellate Practice: Part Two — Equitable Mootness

By Michael L. Cook
January 01, 2022

This installment of our appellate practice series reviews recent cases addressing the equitable mootness doctrine. The issue ultimately often turns on whether it is practical and fair for an appellate court to review an appeal on the merits, enabling that court to avoid review altogether. Academics have failed to persuade the U.S. Supreme Court on petitions for certiorari that sophisticated parties have abused the system by relying on the doctrine. See, e.g., In re One2One Communications, LLC, 805 F.3d 428, 448-49 (3d Cir. 2015) (Krause, J., concurring); In re Abengoa Bioenergy Biomass of Kansas, LLC, 958 F.3d 949, 950 (10th Cir. 2020), citing Bruce A. Markell, "The Need of the Many: Equitable Mootness' Pernicious Effects," 93 Am. Bank. L. 377, 396-413 (2019).

Equitable mootness is premised on the notion that practical considerations and fairness to third parties may justify the court's decision not to decide a case on the merits. In other words, even when the court could conceivably fashion some effective relief, "implementation of that relief would be inequitable." In re Chateaugay Corp., 988 F.2d 322, 325 (2d Cir. 1993). This limited doctrine purportedly enables the court to prevent harm to third parties. Courts ask whether they can grant relief without undermining the reorganization plan and affecting third parties. See, e.g., In re Nordhoff Invs. v. Zenith Elecs. Corp., 258 F.3d 180, 185 (3d Cir. 2001) ("doctrine prevents court from unscrambling complex reorganization plans"). Whether the "confirmed plan has been substantially consummated, and, if so, whether the relief sought would affect third parties not before the court" are critical considerations. In re Transwest Resort Properties, Inc., 791 F.3d 1140, 1142 (9th Cir. 2015) (2-1).

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