663 B.R. 731
8th Cir. BAP2024Background
- TooBaRoo, LLC and InfoDeli, LLC (Appellants) appealed the bankruptcy court’s order allowing the Chapter 7 Trustee to employ Spencer Fane LLP as special counsel in ongoing federal litigation related to Western Robidoux, Inc. (WRI).
- The litigation involved complex disputes among family members controlling WRI, with core issues like copyright infringement and counterclaims in the federal suit; Appellants are controlled by a family member (Breht Burri) adverse to WRI.
- WRI's request to employ attorney Daniel Blegen (and later Spencer Fane) as special counsel was initially approved over Appellants' conflict of interest objections; approvals were later clarified by the Trustee after case conversion to Chapter 7.
- Appellants continued to object, arguing that Spencer Fane held adverse interests after Blegen moved to that firm and questioned the appropriateness and allocation of legal fees.
- The bankruptcy court overruled these objections, finding no actual conflicts and confirming the propriety and cost-effectiveness of special counsel, prompting this appeal on the order approving employment.
- The appellate panel’s jurisdiction to review the order was contested, focusing on whether the employment order was "final" under bankruptcy appellate standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the bankruptcy order approving special counsel final? | Order is final, resolves discrete dispute, immediate appealable | Not final; court remains involved, issues not conclusively resolved | Order not final; no appellate jurisdiction under 158(a)(1) |
| Should the court grant interlocutory (non-final) review? | Did not seek interlocutory review, believed order was final | Both parties agree interlocutory review inappropriate | Declined review under 158(a)(3), not exceptional case |
| Do alleged adverse interests by special counsel disqualify employment? | Counsel holds/represents adverse interests, future conflicts possible | No actual conflict, interests are aligned or merely hypothetical | No actual conflict; speculative issues not grounds for disqualification |
| Should employment of professionals orders generally be appealable as final? | Orders like this should be treated as final per Ritchie case | Orders not final; distinguished from trustee appointments | Orders employing professionals generally not final |
Key Cases Cited
- In re Cont’l Inv., 637 F.2d 1 (1st Cir. 1980) (order authorizing employment of professionals not a final, appealable order)
- Ritchie Special Credit Invs. v. U.S. Tr., 620 F.3d 847 (8th Cir. 2010) (finality for appeal in bankruptcy appointments, but distinguishable)
- Bullard v. Blue Hills Bank, 575 U.S. 496 (2015) (bankruptcy orders are only final if they fully resolve discrete disputes)
- Matter of Devlieg, Inc., 56 F.3d 32 (7th Cir. 1995) (employment of professionals is not a final order for appeal)