Lead Opinion
delivered the opinion of the court in which McKEAGUE, J., joined. MOORE, J. (pp. 805-14), delivered a separate dissenting opinion.
OPINION
ALICE M. BATCHELDER, Circuit Judge.
This appeal arises out of the City of Detroit, Michigan’s municipal bankruptcy under Chapter 9 of the Bankruptcy Code, 11 U.S.C. § 109(c). In resolving its bankruptcy, the City crafted a complex network of settlements and agreements with its thousands of creditors and stakeholders, memorialized those agreements in a comprehensive Plan, and obtained the bankruptcy court’s ratification of that Plan in a final Confirmation Order. One aspect of the plan involved the reduction of certain municipal-employee pension benefits under the City’s General Retirement System (GRS). Several GRS pensioners, resisting any reduction in their benefits, challenged the Confirmation Order in the district court. The City moved the district court to dismiss those actions as equitably moot and the court agreed, dismissing them pursuant to Federal Rule of Civil Procedure 12(b)(1). When those pensioners appealed here, we consolidated their appeals and, finding that equitable mootness applies and prohibits their challenges to the Confirmation Order, we AFFIRM.
I.
• The City of Detroit filed for municipal bankruptcy on July 18, 2013, pursuant to Chapter 9 of the Bankruptcy Code, 11 U.S.C. § 109(c). At the time of filing, the City had over $18 billion in escalating debt, over 100,000 creditors, hundreds of millions of dollars of negative cash flow, crumbling infrastructure (e.g., some 78,000 abandoned structures, half classified as “dangerous”; another 66,000 blighted vacant lots; a crumbling water and sewer system; 40% nonfunctioning streetlights; outdated computer systems and software), and could not provide “the basic police, fire[,] and emergency medical services that its residents need[ed] for their basic health and safety.” In re City of Detroit,
In bankruptcy, the City crafted a series of “intricate and carefully woven” settlements with almost all of its creditors and stakeholders. Those settlements were memorialized in the Eighth Amended Plan for the Adjustment of Debts of the City of Detroit (“Plan”). After extensive hearings, the bankruptcy court confirmed the Plan in a Confirmation Order dated November 12, 2014.
The appellants here are párticipants ’ in the City’s General Retirement System (“GRS”)—City employees, retirees, or beneficiaries thereof—who oppose the provi
Moreover, the Pension Plan was underfunded by some $1,879 billion and the City did not have, and would not have, the resources to fully fund it over time. The City was therefore faced with having to reduce each GRS pension by 27%. Instead, the City . orchestrated the “Grand Bargain,” in which-it obtained “outside funding” to bolster the Pension Plan in exchange for a settlement of GRS claims at less than the full promised pension amount. The outside funding, which totaled $816 million, came from agreements by and among the City, the State of Michigan, and certain philanthropic foundations. The “Global Retiree Settlement” between the City and the GRS Board of Trustees
Overall, the Plan eliminated approximately $7 billion in debt and freed approximately $1.7 billion in revenue for reinvestment into City services and infrastructure, including public services, blight remediation, information technology, and public transportation. The Plan took effect on December 10, 2014, and the City began implementation' immediately. As the district court noted in an opinion dated September 29, 2015, the City had by that date already issued $287.5 million in bonds and $720 million in new notes; irrevocably transferred all Detroit Institute of Art assets to a perpetual charitable trust; recouped money from all but five ASF account holders; transferred certain real property interests pursuant to separate settlement agreements within the Plan; and implemented a two-year City budget. See In re City of Detroit, No. 14-CV-14872, 2015. WL 5697702, at *3 (E.D. Mich.
Several GRS pensioners (Class 11 claimants) appealed to the district court, challenging the reduction in their pensions, the ASF Recoupment, and other things, including a release provision that prevented retirees from asserting claims against the State of Michigan. They urged the court to strike the challenged provisions from the Confirmation Order and remand to the bankruptcy court with instructions to exempt pensions from adjustment. In response, the City moved to dismiss the appeals as equitably moot and the court agreed, concluding that “[a]ll three factors of the equitable mootness analysis weigh in favor of dismissing appellants’ appeal as moot: appellants did not obtain a stay; the confirmed Plan has been substantially consummated; and reversal of the Plan would adversely impact third parties and the success of the Plan.” In re City of Detroit,
When those GRS pensioners appealed here, we consolidated their five separate appeals.
II.
We review the district court’s equitable mootness determination de novo. In re United Producers, Inc.,
More akin to waiver or forfeiture (or perhaps estoppel) than to conventional mootness, equitable mootness is “grounded in the notion that, with the passage of time after a judgment in equity and implementation of that judgment, effective relief on appeal becomes impractical, imprudent, and therefore inequitable,” See In re United Producers,
We analyze equitable mootness under a three-part test: (1) whether a stay has been obtained; (2) whether the plan has been “substantially consummated!’; and (3) whether the relief requested would significantly and irrevocably -disrupt, the implementation of the plan or disproportionately harm the reliance interests of other parties not before the court. See In re United Producers,
When an appellant does not obtain a stay of the implementation of a confirmation plan, the debtor will normally implement the plan and reliance interests will be created. Thus, the failure to obtain a stay will count against the appellant in determining whether an appeal should be denied on equitable mootness grounds. The failure to seek a stay ... is not necessarily fatal ... [but neither is merely seeking a stay sufficient in and of itself, as] a stay not sought, and a stay sought and denied, lead*799 equally to the implementation of the plan of reorganization.
Id. at 948 (quotation marks, editorial marks, citations, and paragraph break omitted).
We measure “substantial consummation” by the Bankruptcy Code definition, which considers the extent of the debtor’s transfer of property, assumption of responsibilities, and distribution of assets as prescribed by the plan. See 11 U.S.C. § 1101(2). “If a plan has been .substantially consummated there is a greater likelihood that overturning the confirmation plan will have adverse effects on the success of the plan and on third parties.” In re United Producers,
In this case, all three factors favor the application of equitable mootness: the appellants did not obtain a stay; the Plan has been substantially consummated, inasmuch as numerous significant—even colossal—actions have been undertaken or completed, many irreversible; and the requested relief of omitting the bargained-for (and by majority vote agreed-upon) pension reduction would necessarily rescind the Grand Bargain, its $816 million in outside funding, and the series of other settlements and agreements contingent upon the Global Retiree Settlement, thereby unravelling the entire Plan and adversely affecting countless third parties, including, among others, the entire City population. See In re City of Detroit,
This is not a close call. In fact, the doctrine of equitable mootness was created and intended for exactly this type of scenario, to “prevent[ ] a court from unscrambling complex bankruptcy reorganizations” after “the plan [has become] extremely difficult to retract.” See Nordhoff Investments, Inc. v. Zenith Elecs. Corp.,
III.
The appellants raise two challenges without regard to the particular facts of this case. First, they argue that equitable mootness, being an abdication of our jurisdiction on prudential grounds, is no longer a viable doctrine under the Supreme Court’s evolving ease law. In the alternative, they argue that equitable mootness does not apply in Chapter 9
A.
The appellants point to recent Supreme Court opinions in which the Court reversed judgments that had dismissed cases on prudential grounds, and emphasize the Court’s language in those opinions about the obligation of the federal courts to decide cases' within them jurisdiction. See, e,g., Lexmark Intern., Inc. v. Static Control Components, Inc., — U.S.-,
That is a fair reading of those cases and the inference drawn is not unreasonable; the Supreme Court has expressed disfavor for prudential doctrines that abdicate jurisdiction and has emphasized the duty federal courts have to exercise jurisdiction. But those are not bankruptcy cases and their holdings neither expressly nor necessarily extend to equitable mootness.
More importantly, even if the Supreme Court would abolish equitable mootness, it has not yet done so (nor has any circuit). Equitable mootness is the law of the Sixth Circuit, see In re United Producers,
B.
The appellants also argue that even if equitable mootness survives, it does not apply in Chapter 9 cases.
The appellants, however, rely on the only other opinion to consider equitable mootness in the Chapter 9 context, an Alabama district court case (currently pending on appeal in the 11th Circuit) that declared equitable mootness inapplicable in Chapter 9 cases: Bennett v. Jefferson County,
The Ratepayers are not investors or shareholders whose stake in this case is limited to the amount of their investment; they are citizens of the County dependant [sic] upon the' County for provision of basic sewer service. As such, they are the revenue source for payment of the New Sewer Warrants; however, their interest is not limited to a finite financial amount. Rather, their interest in continuing to receive essential sewer service is not protected by the political system of County governance nor do they have a voice in future rate-making.
Id. at 638 (footnote omitted). The Bennett court denied Jefferson County’s motion to dismiss on the basis of equitable mootness and allowed the appeal to proceed on the merits. Id. at 640.
Even though the circumstances in Bennett are validly distinguished from the usual equitable mootness scenario, this does not require the conclusion that equitable mootness does not apply in any Chapter 9 case. Instead, the better conclusion drawn from Bennett's facts is that Jefferson County could not meet the third equitable mootness factor under a “‘case-by-case’ assessment,” see In re United Producers,
In the present case, the GRS pensioners/appellants were promised an amount certain and, though perhaps not traditional “creditors” in the most ordinary sense, they are—importantly—not non-party, captive customers like the Ratepayers in Bennett, at risk of being subjected to an unlimited financial obligation, namely, a 365% rate increase to continue forever.
The facts in Bennett are drastically different from the facts in this case, and Bennett’s rationale and conclusion are simply not applicable here, where we do not have a deprivation of the political process, a class of otherwise uninvolved participants (captive customers) as creditors, or imposition of an unlimited price increase on them. Moreover, one could reasonably submit that Bennett’s especially unusual facts make it a poorly suited case for a universal proclamation that- equitable mootness never applies in Chapter 9 bankruptcies. But the Bennett opinion contains no hesitancy or self-restraint, announcing unequivocally that “equitable mootness does not apply to challenges to a Confirmation Order in Chapter 9 proceedings.” Bennett,
In rejecting Jefferson County’s contention that equitable mootness applies “in Chapter 9 appeals exactly as it applies in Chapter 11 appeals,” id., the Bennett opinion touts the differences between Chapter 9 “municipal reorganization” and Chapter 11 “general reorganization”: “first, the law must be sensitive to the issue of the sovereignty of the States; [ ] second, a municipality is generally not a business enterprise operating for profit[ ] and there are no stockholders.” Id. at 636 (quotation marks, editorial marks, citations, and footnote omitted). And, third, the “prudential concerns” or “underlying policies” are different: the “policies underlying Chapter 11 are preserving going concerns and maximizing property available to satisfy creditors,” whereas “[t]he policy underlying Chapter 9 is not future profit, but rather continued provision of public services.” Id. (quotation marks, editorial marks, and citations omitted). This is an accurate description of differences, to be sure, but the Bennett opinion never explains why these differences matter, why, based on these differences, would equitable mootness apply in Chapter 11 but not Chapter 9?
Moreover, the fact that a municipality does not operate for profit, have shareholders, or risk- liquidation (factors warranting a plan’s “maximizing property available to satisfy creditors” upon liquidation) does not mean that a municipality has any less interest in finality or good faith reliance on the effectuation of its bankruptcy plan. In this case, the City of Detroit not only had numerous stakeholders and employees—on a scale equivalent to even a very large business enterprise— it also had over 100,000 creditors and 685,-000 residents relying on its Plan. As the district court put it: “If the interests of finality and reliance are paramount to a Chapter 11 private business entity with investors, shareholders, ahd employees, [thus justifying equitable mootness,] then these interests surely apply with greater force to the City’s Chapter 9 Plan, which affects thousands of creditors and residents.” In re City of Detroit,
On appeal, the appellants attempt to complete Bennett’s reasoning as to why, based on the differences between Chapter 11 and Chapter 9, equitable mootness should apply in Chapter 11 but not Chapter 9. They have three basic theories. In one, they argue that the purpose of equitable mootness is to protect a business in Chapter 11 reorganization from the “catastrophic consequence” of compelled liquidation and, because liquidation is not an option in Chapter 9, equitable mootness does not apply in Chapter 9. This is not persuasive. We do not agree that protection against liquidation is the sole purpose of equitable mootness, or even a necessary purpose. Rather, the dual purposes most commonly attributed to equitable mootness are to achieve finality in bankruptcy proceedings and to protect the good faith reliance interests created by . implementation of the bankruptcy plan. But as we have already explained, these purposes apply with as much force in Chapter 9 cases—particularly this one—as in Chapter 11, and possibly more.
Their second theory is premised on the fact that “substantial consummation,” the
The third theory on which the appellants proceed- starts with the fact' that, while Chapter 11 empowers the court to modify the plan, Chapter 9 authorizes only the debtor municipality to modify the plan; the court cannot. See 11 U.S.C. §§ 941, 942. From this they argue that a debtor municipality could refuse all but the most extreme modification, one that would necessitate a wholesale rewriting of the plan and detrimentally affect the rights of third parties, thereby satisfying the main equitable mootness element in any Chapter 9 case. But such a refusal would be an act of bad faith, if the claimants were to seek only a “piecemeal revision” of the plan (that would neither disrupt its overall implementation nor- harm the reliance interests springing from it) but the debtor municipality stubbornly and without cause refuses that modification. So this argument is that the municipal debtor could act in bad faith and the court would be powerless to stop it. We are confident that a court would recognize such obvious bad faith misconduct, or the appellant would bring it to the court’s attention, and that the court could capably determine what lesser modification a debtor municipality could enact if so inclined. Moreover, given that equitable mootness is an equitable doctrine, the court would, be obliged to fully consider that bad faith misconduct.
Ultimately, we do not find any of these three theories any more persuasive than Bennett itself, which we do not find compelling in the present circumstances. Considering the foregoing and the reasons
IY.
For the foregoing reasons, we AFFIRM the judgment of the district court.
Notes
. The GRS is a separate legal entity; a fiduciary trust acting on behalf of the City to administer the retirement plans. It is a named defendant and appellee, but is not a participant ' in this appeal.
. The district court opinion explains the details of the ASF recoupment process. See In re City of Detroit, No. 14-CV-14872,
. Class 11 claimants cast 8,541 votes; 6,248 (73%) in favor and 2,293 (27%) against. See Ballot Summary Report, In re City of Detroit, No. 13-53846, Docket No. 6179, p. 19,
. The five appeals here came from five separate district court cases and judgments, each with its own docket and case number, but the same judge decided all five and issued consistent opinions that differed only by an appellant’s individualized claim or argument. Unless specifically noted, any difference is immaterial or irrelevant here and we cite only to the opinion from the Ochadleus case, No. 2:14-cv-14872, as representative of all five.
. In those five separate appeals, appellant Ochadleus (15-2194) represented 129 other named appellants; Taubitz (15-2353) represented one other named appellant; and Quinn (15-2337), Darrah (15-2371), and Davis (15-2379) each represented only themselves. For perspective: a total of 8,541 Class 11 claimants voted on the Grand Bargain and Global Retiree Settlement, meaning these 135 appel
. A frequent misnomer in the appellants' briefing warrants mention here: despite their misleading headings and attempts at limiting language, many of the appellants’ specific reasons or arguments against extending equitable mootness beyond its established Chapter 11 context and into Chapter 9 are actually arguments against the viability of equitable mootness at all, in any bankruptcy chapter. If we were to accept these arguments as a reason to preclude equitable mootness in Chapter 9, we would correspondingly be accepting izad endorsing) a reason to abolish equitable mootness altogether. But, as we explain in § III.A, that is something we cannot do. We, therefore, decline to address any of these arguments or reasons individually and instead reject them all categorically under the reasoning in § III.A. In § III.B, we address only the arguments that distinguish Chapter 9 from Chapter 11.
. See footnote 6, supra.
. Note that the parameters of these two "votes” are drastically different, in that the vote denied the Ratepayers in Bennett was either a public referendum on the sewer rate increase or a county-wide general election of the responsible public office-holders, whereas the vote here was merely a majority vote on the acceptance or rejection of the Global Retiree Settlement by the bankruptcy’s specific “Class 11 claimant” creditors. .
. The Bennett opinion does explain at length why one difference matters and, ultimately, relies exclusively on that one difference to justify its rejection of equitable mootness; that difference is that municipalities, unlike business enterprises, provide public services and engage in the political process. See Bennett,
Importantly, that is the very difference discussed in the preceding four paragraphs above, the difference that necessarily distinguishes Bennett from the present case. Because this concern about public services and political process does not arise in every Chapter 9 bankruptcy case—as it clearly does not arise in the present case—it is not a valid reason to conclude that equitable mootness
. Because Bennett’s forceful but aimless language about this sovereignty issue does not articulate why it matters to the applicability of equitable mootness, and therefore could be misread as questioning the constitutionality of municipal bankruptcy itself, see
. This provision' says: "In this chapter [Chapter 11] ... ‘substantial consummation’ means—(A) transfer of all or substantially all of the property proposed by the plan to be transferred; (B) assumption by the debtor or by the successor to the debtor under the plan of the business or of the management of all or substantially all of the property dealt with by the plan; and (C) commencement of distribution under the plan." 11 U.S.C. § 1101(2).
. Another way of looking at this is to recognize, as the appellants themselves have in their briefs, that Congress intended § 1101(2) to apply to specific Code provisions establishing cause for conversion or dismissal, • § 1112(b)(4)(M), - and limiting the time for ' plan modification, § 1127(b), not to equitable ■mootness.
Dissenting Opinion
DISSENT
dissenting.
Judicial restraint is an undeniable virtue, but its pursuit should not lead to judicial abdication. This case illustrates how a decision not to decide a case can be the most consequential decision of all.
As every first-year law student learns, it is our job as judges “to say what the law is.” Marbury v. Madison,
The current trend at the Supreme Court is toward a greater recognition of our “virtually unflagging obligation ... to exercise the jurisdiction given [us].” Quackenbush v. Allstate Ins. Co.,
In its zeal to avoid the merits of this case, the - Majority- extends an already questionable prudential doctrine to a context in which it-has no place. This is not only a delegation of our “virtually unflagging obligation” to decide cases within our jurisdiction, Quackenbush,
The doctrine that the Majority uses to avoid the retirees’ legal claims is “equitable mootness.” As applied here, equitable mootness suggests that the importance of adjudicating the retirees’ rights pales in comparison to the importance of protecting the expectations of lenders and others who have chosen to rely on Detroit’s bankruptcy plan before appellate challenges to it were resolved. I fear that using such a justification to brush aside the retirees’ legal claims will leave them with the impression that their rights do not matter. That the doctrine used to avoid their claims is a judicial invention with almost no legal basis only pours salt on the wound. Whatever the merits of the retirees’ claims, this is lamentable, and I respectfully dissent.
I.
The doctrine of equitable mootness hypothesizes that many will rely on a bankruptcy plan after’ it has been confirmed by a bankruptcy court, but before an appeal of that confirmation has been resolved. Equitable mootness suggests that protecting these reliance interests can be important enough that an appeal contesting the confirmation of a bankruptcy plan should not be heard. It is, as then-Judge Alito put it, a “curious doctrine,” which “permit[s] federal district courts and courts of appeals to refuse to entertain the merits of live bankruptcy appeals over which they indisputably possess statutory jurisdiction and in which they can plainly provide relief.” In re Continental Airlines,
Although the doctrine of equitable mootness has been adopted by our circuit—and, I admit, every other circuit to consider its vitality—its legal foundations are shaky, at best. I recognize that our panel is bound to our precedent applying the doctrine, but the City of Detroit does not request a straightforward application of that precedent. Rather, the City asks us to extend the doctrine from its roots in Chapter 11 of the Bankruptcy Code to a case arising under the municipal-bankruptcy provisions of Chapter 9. The Majority agrees to do so, holding that the same need to protect reliance interests that motivated our adoption of the doctrine in Chapter 11 cases are present in Chapter 9 cases. That misses the point. Equitable mootness cannot apply every time that a district court’s decision engenders strong reliance interests; if that were the case, it could apply to every appeal we hear. Rather, there must be some legal basis for us to decline' to hear appeals that may upset such reliance interests in the first place. Although there is but a thin veneer of legal grounding for such a doctrine in Chapter 11 cases, this justification rubs off when the case is a Chapter 9 bankruptcy. I begin by analyzing in Part A the meager textual basis proffered for the equitable-mootness doctrine. I then turn in Part B to other concerns with the doctrine. In Part C, I explain why these concerns, along with the specific context of Chapter 9, suggest that we are neither bound nor able to hold that equitable mootness applies to Chapter 9 cases.
A. Equitable Mootness Is Not Justified by the Bankruptcy Code.
Our circuit’s decisions adopting equitable mootness provide little explanation of the legal basis for the doctrine, so I begin with an overview of the doctrine’s history. Equitable mootness was initially grounded in the 1976 version of Bankruptcy Rule 805, which had the same effect as current provisions of the Bankruptcy Code codified at 11 U.S.C. §§ 363(m) and 364(e):
Unless an order approving a sale of property or issuance of a certificate of indebtedness is stayed pending appeal, the sale to a good faith purchaser or the issuance of a certificate to a good faith holder shall not be affected by the reversal or modification of such order on appeal, whether or not the purchaser or holder knows of the pendency of the appeal.
In re Roberts Farms, Inc.,
Despite this seemingly clear way to cabin Roberts Farms, the Seventh Circuit subsequently constructed a fuller explanation for the budding doctrine of equitable
The doctrine quickly made its way to our circuit, although we have never examined the legal basis for it. In an unpublished decision in 1995, we applied what seemed to be equitable mootness, holding that a bankruptcy appeal was moot because “[i]t would be a hardship and unfair to all parties to go back [on the reorganization plan],” and equating this to a finding that “this court is without the ability to provide the relief requested.” Bennett v. Veale, Nos. 93-3016, 93-4180,
Other circuits have adopted the doctrine with similarly minimal exploration of. its legal basis. See In re Semcrude, L.P.,
Given the dearth of explanation of the legal basis for the equitable-mootness doctrine, criticism has begun to mount. This criticism focuses on the doctrine’s questionable textual moorings: “Although the Bankruptcy Code forbids appellate review of certain un-stayed orders and restricts post-confirmation plan modifications, it does not expressly limit appellate review of plan confirmation orders.” In re Pacific Lumber Co.,
The Seventh Circuit’s UNR decision does not supply a persuasive explanation of the doctrine’s source. The provisions on which UNR was based are specifically targeted, and do not apply to orders confirming bankruptcy reorganization plans. 11 U.S.C. § 363(m) provides a basis for finding statutory mootness when an appeal is from an un-stayed order authorizing the bankruptcy trustee to. sell or lease property from the debtor’s estate. See Made in Detroit,
Not. only is it a stretch to find textual support for equitable mootness, but statutory provisions regarding bankruptcy appeals arguably preclude the doctrine. Congress has plainly authorized .appeals' from confirmation orders, 28 U.S.C. §§ 157-158, so UNR’s federal-common-law theory suggests that federal courts may refuse to hear appeals that are plainly permitted by statute solely because 11 U.S.C. §§ 363(m) and 1127(b) imply a general policy against
In sum, the doctrine of equitable mootness enjoys minimal textual support, if any; at the same time, it contradicts the relevant appellate-jurisdiction statutes and purports to authorize the making of federal common law despite the complete lack of evidence that Congress intended to delegate such authority to the courts. This is not a strong foothold.
B. Equitable Mootness Is an Inappropriate Prudential Doctrine that Upsets the Constitutional Balance on which the Bankruptcy-Court System is Based.
Applying a doctrine that has no basis in the text of any statute or in Article III to avoid hearing appeals from bankruptcy-court decisions also raises separation-of-powers • concerns. Divorced as it is from any statutory basis, equitable mootness is nothing but a prudential doctrine of “judicially self-imposed limits.” Newdow,
Similar concerns with decisions not to decide cases properly within a court’s jurisdiction have led the Supreme Court to cast doubt on other “prudential” doctrines that are not based in the text of any statute or in Article III principles. For example, the Supreme Court recently described a request “that we should decline to adjudicate [a] claim on [standing] grounds that are ‘prudential,’ rather than constitutional” as “in some tension with our recent reaffirmation of the principle that ‘a federal court’s obligation to hear and decide’ cases within its jurisdiction ‘is virtually unflagging.’ ” Lexmark,
Nor am I convinced by the City’s argument that equitable mootness can be based in the same equitable powers that underlie the Supreme Court’s abstention doctrines. Those doctrines are an exception to our “virtually unflagging obligation” to hear cases within our jurisdiction, Quackenbush,
A final concern with equitable mootness is that it undermines the delicate constitutional balance on which bankruptcy adjudication is based. See id. at 444-46 (Krause, J., concurring).. Bankruptcy courts are given the authority to “hear and determine all cases under title 11 and.all.core proceedings arising under title 11 ... subject to review under section 158,” 28 U.S.C. § 157(b)(1), which provides that “[t]he district courts of the United States shall have jurisdiction to hear.appeals . from final judgments, orders, and decrees” of bankruptcy courts, 28 U.S.C. § 158(a)(1), and that “[t]he courts of appeals shall have jurisdiction of appeals from all final decisions” of district courts in such appeals, 28 U.S.C. § 158(d)(1). This right to review in Article III courts remains key to the Supreme Court’s decisions setting forth the limitations on a bankruptcy court’s authority to decide cases. See, e.g., Wellness,
C. No Legal Basis Exists for Applying Equitable Mootness to Chapter 9.
The flaws in our equitable-mootness doctrine are many. It has, little basis in the text of the Bankruptcy Code, creates precisely the type of prudential limitation on our jurisdiction that the Supreme Court has criticized, and undermines the delicate constitutional balance on which the bankruptcy-court system is based. These concerns suggest that it is high time for-us to review the. doctrine’s basis as a full court sitting en banc.
The Majority reads our precedent extremely broadly to demand the application of equitable mootness in any case involving strong reliance interests. I cannot discern the basis for such a broad rule from our precedent, which applied cases from other circuits without adding analysis. I also fear
The best reading of our precedent must look to the precise rationale of the cases that our court cited to support our adoption of equitable mootness. Our equitable-mootness cases all trace back to City of Covington, see supra at 798-99, which did not explain the legal' basis for equitable mootness, except to cite the Seventh Circuit’s decision in UNR. See
Nor is there any other compelling reason to apply the. doctrine of equitable mootness to Chapter 9 appeals. As I have discussed, equitable mootness is highly questionable, even under Chapter 11. And, of the three decisions applying the doctrine of equitable;mootness to Chapter 9 appeals, two provided no analysis of why the doctrine applied in Chapter 9. See In re City of Vallejo,
II.
In deciding not to decide this ease, the Majority decides much. The Majority extends our ill-reasoned equitable-mootness doctrine to a new context, imposing an unsupported and damaging limit on our appellate review that will be impossible to cabin in a principled way. There is no textual support for this limitation, even accepting the minimal textual support for applying equitable mootness to Chapter 11 cases. Instead, the Majority expands a species of prudential mootness, the precise kind of pseudo-jurisdictional doctrine that the Supreme Court has suggested conflicts with our “virtually unflagging obligation ... to exercise the jurisdiction given [us].” Quackenbush,
. In 1999, we declined to dismiss an appeal as equitably moot, but did so because the relief sought would not upset the bankruptcy plan. See In re Arbors of Houston Assocs. Ltd. P’ship, No. 97-2099,
. I also note that the policy justifications for equitable mootness are not necessarily as strong as courts have presumed. The idea is that the reliance interests generated by a bankruptcy court’s confirmation of a reorganization plan can be so strong that it becomes inequitable to upset them. Yet, in any'other context, we would not hesitate to add that a party should not rely blindly on the decision of a trial court when timely appellate proceedings are commenced. Those relying on a bankruptcy court’s decision should be aware of the risk that an appeal will disrupt it, Nonetheless, equitable mootness "rests on the notion that, once a plan has taken effect, its beneficiaries—even parties in the bankruptcy court who pushed for confirmation over the legal objections of dissenting creditors—are entitled to rely on the challenged plan’s not changing, whether or not it was infected by legal error.” Pet’n for Writ of Certiorari, Aurelius Capital Mgmt., LP v. Tribune Media Co., No. 15-891,