FOMB v. Cooperativa de Ahorro y Credito, 52 F.4th 465

Background

PROMESA created the Financial Oversight and Management Board (the Board) and authorized Title III bankruptcy-style proceedings to restructure Puerto Rico's debts.
In August–December 2020–2021 Puerto Rico enacted Acts 80–82 (including Act 81 which granted enhanced retirement benefits); appellants retired after Aug. 3, 2020 and sought benefits under Act 81 but received benefits under the older Act 3.
The Board sued the Governor and AAFAF in an adversary proceeding (filed Dec. 20, 2021) seeking to invalidate Acts 80–82; the parties executed a Stipulation and the district court entered an Approval Order on Dec. 28, 2021 invalidating the Acts as inconsistent with the certified fiscal plan.
Appellants did not intervene in or appeal the adversary proceeding/Approval Order; the Title III court later entered Findings of Fact & Conclusions of Law and a Confirmation Order for the Plan on Jan. 18, 2022.
Appellants appealed the FF/CL and Confirmation Order, arguing (inter alia) that the Confirmation/FF/CL incorporated or merged the Approval Order such that their appeal timely encompassed the adversary ruling; appellees raised jurisdiction, standing, and mootness defenses.
The First Circuit dismissed the appeal for lack of appellate jurisdiction, holding the Approval Order was a final, separate order in the adversary proceeding that was not incorporated into or merged with the later Confirmation Order and therefore had to be appealed separately and timely.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court's FF/CL and Confirmation Order incorporated by reference the adversary Approval Order invalidating Acts 80–82	FF/CL's reference to the Approval Order amounted to incorporation of its substantive invalidation, so appealing the Confirmation captured the Approval Order	The FF/CL merely acknowledged the Approval Order's existence and mooted the preemption request; no legal incorporation occurred	Rejected: passing reference did not incorporate the Approval Order into the FF/CL/Confirmation Order
Whether the Approval Order merged into the Confirmation Order for appellate-notice purposes (merger doctrine)	Appealing the final Confirmation Order necessarily brought all earlier interlocutory/final adversary rulings (including the Approval Order) before the court	The adversary proceeding was a discrete, final proceeding; Rule 3 merger does not sweep a separate adversary final order into a main-case appeal	Rejected: adversary proceeding was separate and its Approval Order was independently final and appealable; it did not merge into the Confirmation Order
Whether the appeal is timely such that the court has appellate jurisdiction under 28 U.S.C. § 158(d)/28 U.S.C. § 1291	By designating the FF/CL/Confirmation as final, appellants preserved review of the Approval Order	The clock for appealing the Approval Order ran from its entry; appellants failed to timely appeal that separate final order	Held: appeal dismissed for lack of appellate jurisdiction because the Approval Order was not timely appealed
Standing and mootness (threshold defenses raised by appellees)	Appellants asserted entitlement to benefits under Act 81 (implying injury)	Appellees argued no cognizable injury traceable to the FF/CL/Confirmation and mootness; but these were alternative defenses	Court did not reach standing or mootness—dismissal rested on lack of appellate jurisdiction

Key Cases Cited

Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020) (discrete adversary disputes can be final and immediately appealable)
In re Saco Loc. Dev. Corp., 711 F.2d 441 (1st Cir. 1983) (bankruptcy orders that finally dispose of discrete disputes are appealable)
In re Cleveland Imaging & Surgical Hosp., L.L.C., 26 F.4th 285 (5th Cir. 2022) (a notice of appeal in the main bankruptcy case does not suffice to appeal a separate adversary proceeding)
Dorsey v. U.S. Dep't of Educ. (In re Dorsey), 870 F.3d 359 (5th Cir. 2017) (main case and adversary are distinct for appeal purposes)
Colón-Torres v. Negrón-Fernández, 997 F.3d 63 (1st Cir. 2021) (a passing reference to a settlement in a judgment does not incorporate the settlement's terms)
Gonpo v. Sonam's Stonewalls & Art, LLC, 41 F.4th 1 (1st Cir. 2022) (an appeal encompasses orders fairly raised in the notice of appeal)
Watchtower Bible & Tract Soc'y of N.Y., Inc. v. Colombani, 712 F.3d 6 (1st Cir. 2013) (appellate courts have an independent duty to inquire into jurisdiction)
In re Unanue Casal, 998 F.2d 28 (1st Cir. 1993) (ordinary finality concepts apply within discrete adversary proceedings)