598 U.S. 288
SCOTUS2023Background
- Sears filed Chapter 11 and agreed to sell most assets to Transform, including the right to designate assignees for Sears’ leases.
- The Mall of America lease (MOAC) was designated for assignment to a Transform affiliate; MOAC objected under 11 U.S.C. §365(f)(2)(B) / §365(b)(3) for lack of adequate assurance of future performance.
- The Bankruptcy Court approved the assignment (Assignment Order) and denied MOAC’s request for a stay; Transform initially disclaimed invoking §363(m).
- Sears assigned the lease; MOAC appealed. The District Court found inadequate assurance and vacated the assignment, but then dismissed the appeal after Transform invoked §363(m) as jurisdictional; the Second Circuit affirmed.
- The Supreme Court granted certiorari to resolve whether 11 U.S.C. §363(m) is jurisdictional and to consider Transform’s mootness argument.
- The Court held §363(m) is not jurisdictional, rejected Transform’s mootness defense, vacated the Second Circuit judgment, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §363(m) is jurisdictional | MOAC: §363(m) is a nonjurisdictional statutory limitation; Congress did not clearly state it limits courts' adjudicatory power | Transform: §363(m) limits courts (in rem principles and Rule 805 history show jurisdictional character) | Court: §363(m) is not jurisdictional (no clear congressional statement; reads as a limit on effect of judgments) |
| Mootness of MOAC’s appeal | MOAC: Not moot; typical appellate relief (vacatur/reversal) remains possible and the argument that no relief exists is a merits question | Transform: Moot because the lease left the estate and no statutory vehicle (e.g., §549) remains to reconstitute it | Court: Not moot; cannot assume Transform’s merits-based claim that relief is impossible; Chafin controls |
| Relevance of in rem principles and former Rule 805 | MOAC: Historical practices or in rem doctrines do not supply a clear-statement jurisdictional rule here | Transform: In rem tradition and Rule 805’s history show Congress intended §363(m) to be jurisdictional | Court: Historical practices and Rule 805 do not produce a clear jurisdictional statement; §363(m)’s text and context point to a nonjurisdictional statutory limitation |
Key Cases Cited
- Chafin v. Chafin, 568 U.S. 165 (2013) (mootness: typical appellate relief can preserve jurisdiction; merits arguments do not automatically render a case moot)
- Zivotofsky v. Clinton, 566 U.S. 189 (2012) (courts should not assume in the first instance that complex remedial or statutory gaps make relief impossible)
- Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010) (statutory preconditions are often nonjurisdictional; exceptions in text weigh against jurisdictional reading)
- Henderson v. Shinseki, 562 U.S. 428 (2011) (requires clear statement for treating a statutory rule as jurisdictional)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (distinguishing jurisdictional conditions from elements or other statutory limits)
- Scarborough v. Principi, 541 U.S. 401 (2004) (statutory provision concerning proceedings auxiliary to cases already within court’s authority is nonjurisdictional)
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (bankruptcy jurisdiction stems from congressional conferral; in rem labels do not substitute for clear statutory jurisdictional prescriptions)
- United States v. Detroit Timber & Lumber Co., 200 U.S. 321 (1906) (syllabus note cited on release of syllabi; illustrates background on opinion structure)
- United States v. Kwai Fun Wong, 575 U.S. 402 (2015) (filing deadlines and procedural preconditions can be important but are not necessarily jurisdictional)
- Musacchio v. United States, 577 U.S. 237 (2016) (illustrates Court’s approach to statutory commands and whether they are jurisdictional)