New opinion — an equitable-mootness reversal and a call to abolish it

In re: ONE2ONE Communications — bankruptcy — reversal — Greenaway

A company filed for Chapter 11 bankruptcy reorganization. Over one creditor’s objections, the bankruptcy court confirmed the reorganization plan. The creditor appealed to the district court, which ruled that its appeal was equitably moot. The creditor then appealed to the Third Circuit, urging the court to overrule its prior adoption of the equitable mootness doctrine.

Today, the Third Circuit reversed. The panel could not overrule prior circuit precedent, but the court held that the district court’s application of the doctrine was an abuse of discretion.

Joining Greenaway were McKee and Krause. Krause filed a long and thoughtful concurrence urging the en banc court to abolish or at least reform the “legally ungrounded and practically unadministerable” equitable mootness doctrine. Arguing counsel were Courtney Schael for the creditor and Michael Sirota for the debtor.

4 thoughts on “New opinion — an equitable-mootness reversal and a call to abolish it

  1. John

    Krause concurring opinion was terrific — read like an en banc/cert petition for overthrowing equitable mootness. Question is, who will petition for en banc review? Appellants won and appellees would gain nothing from seeking further review in the Third Circuit. Can the Third Circuit pick up a case for en banc review sua sponte?

  2. Matthew Stiegler Post author

    Yes, they can and do grant en banc review sua sponte. But, based on their track record in recent years, the fact that they did not to grant en banc review before issuing the panel opinion provides some reason to think they would not grant it now. As I wrote here back in March: “When the Third Circuit grants rehearing en banc to overrule a prior decision, it usually does so before the panel rules, per 3d Cir. IOP 5.5.4 (requiring internal circulation of all published and split-panel unpublished opinion drafts). Of the 6 cases I see where the court overruled a precedent, rehearing was granted before the panel had ruled in 5; only once since 2010 has the en banc court overruled a precedent after the panel had ruled.”

    Given that the panel reversed on the merits here, I’d guess the court thought it better to wait for the next case.

  3. John

    That makes sense. Given that Krause’s detailed opinion basically begs for a re-argument en banc, it probably is safe to assume her benchmates considered, and declined, the invitation. Interesting.

  4. Matthew Stiegler Post author

    Yes. She obviously crafted the opinion with care, as you mention, even though (if my hunch is correct) she already know that en banc review wasn’t in the cards for this case. Perhaps it was intended to serve a function similar to when Supreme Court justices write separate opinions in connection with a cert denial spotlighting an issue for future litigants to bring to the court.

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