United States Court of Appeals
For the First Circuit
No. 02-1234
FEDERAL INSURANCE COMPANY
Plaintiff, Appellee,
v.
MAINE YANKEE ATOMIC POWER COMPANY
Defendant, Appellee,
STONE & WEBSTER, INCORPORATED, and
STONE & WEBSTER ENGINEERING CORPORATION
Debtors, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
Before
Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and B. Fletcher,* Senior Circuit Judge.
*
Hon. Betty B. Fletcher, of the Ninth Circuit, sitting by
designation.
Michael D. Blanchard, with whom Edward J. Meehan, David
E. Carney, Gregg M. Galardi, and Skadden, Arps, Slate, Meagher &
Flom LLP, were on brief, for appellants.
William J. Kayatta, Jr., with whom Pierce Atwood was on
brief, for appellee Maine Yankee Atomic Power Company.
November 19, 2002
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B. FLETCHER, Senior Circuit Judge. Non-party appellants
Stone & Webster Engineering Corporation and Stone & Webster, Inc.,
appeal the district court’s decision to permit discovery from them
in a dispute between plaintiff-appellee Federal Insurance Company
and defendant-appellee Maine Yankee Atomic Power Company. The
underlying case between Federal Insurance and Maine Yankee settled
before trial. Because there is no live controversy as to the
propriety of the discovery that appellants challenge, we dismiss
appellants’ appeal as moot.
I. FACTUAL BACKGROUND & PROCEDURAL HISTORY
This appeal arises out of a dispute over decommissioning
Maine Yankee Atomic Power’s retired nuclear plant in Wiscasset,
Maine. In 1998, Maine Yankee contracted with Stone & Webster
Engineering Corporation to decommission the plant. Stone &
Webster, Inc., as a parent of Stone & Webster Engineering, secured
its subsidiary’s performance. Maine Yankee, following industry
practice, also obtained payment and performance bonds from Federal
Insurance as additional security for Stone & Webster Engineering’s
performance.
In May, 2000, Maine Yankee terminated the decommissioning
contract for cause and demanded that Federal Insurance perform its
obligations under the additional bonds. Shortly thereafter, Stone
& Webster and its subsidiaries filed for bankruptcy reorganization
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under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 101-1330, in
federal district court in Delaware. In the Delaware bankruptcy
action, Maine Yankee filed a proof of claim for approximately $78
million against Stone & Webster Engineering. Federal Insurance
filed a contingent proof of claim against Stone & Webster for
indemnification if Maine Yankee recovered under the bonds.
Almost simultaneously, in the Delaware bankruptcy court,
Federal Insurance sought a separate declaratory judgment with
respect to its liability under the performance bond. Over the
opposition of Stone & Webster, as intervenor, and Federal
Insurance, Maine Yankee successfully petitioned for the instant,
separate action to be transferred to federal district court in
Maine.
Shortly after the transfer, Maine Yankee served two
subpoenas against Stone & Webster and Stone & Webster Engineering.
Both companies objected and claimed that the subpoenas violated the
automatic stay provision of Chapter 11, 11 U.S.C. § 362(a)(2). The
matter was argued before a magistrate judge who ordered Stone &
Webster and Stone & Webster Engineering to comply. The companies
timely objected to the decision, but the district court upheld it.
Stone & Webster and Stone & Webster Engineering sought
review in this court and simultaneously petitioned the Delaware
bankruptcy court for a preliminary injunction against enforcement
of the subpoenas. We disposed of the appeal on jurisdictional
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grounds because we determined that the discovery order at issue, in
the posture presented, was neither a final order within the meaning
of 28 U.S.C. § 1291, nor was it appealable as a collateral order.
We noted, in an unpublished order, that “[n]on parties can gain the
right of appeal from a discovery order by defying it, being held in
contempt, and then appealing the contempt order.” The bankruptcy
court independently rejected the companies’ request for a
preliminary injunction. Stone & Webster and Stone & Webster
Engineering then complied fully with the subpoenas.
Maine Yankee and Federal Insurance’s action did not reach
trial. The parties settled their dispute and filed a stipulation
of dismissal with prejudice, pursuant to which Federal Insurance
agreed to pay Maine Yankee approximately $44 million under its bond
obligations. Upon dismissal of the action, Stone & Webster and
Stone & Webster Engineering took this appeal.
II. DISCUSSION
Appellants ask this court to reverse the district court’s
decision upholding the subpoenas or to vacate the district court’s
orders enforcing them. We may grant neither form of relief because
appellants’ acquiescence in the discovery compelled by the
subpoenas deprives this court of jurisdiction over their appeal.
Federal jurisdiction, of course, is limited to “Cases
[and] . . . Controversies.” U.S. Const. Art. III. And, in each
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case, the issues that we are called upon to decide must present an
actual, live controversy. Allende v. Shultz, 845 F.2d 1111, 1115
n.7 (1st Cir. 1988). In addition to the constitutional boundaries
of our jurisdiction, Congress, as a general matter, has granted the
courts of appeals jurisdiction over only final orders in cases from
lower courts. See 28 U.S.C. § 1291. Some exceptions exist. For
instance, a litigant may appeal certain collateral orders. See,
e.g., Anderson v. City of Boston, 244 F.3d 236, 240 (1st Cir. 2001)
(stating when collateral orders are appealable under Cohen v.
Beneficial Indus. Loan Corp., 337 U.S. 541 (1949)). Routine
discovery orders – such as the orders enforcing the subpoenas at
issue here – are not final orders, and no statute or doctrine
invests us with jurisdiction to decide an appeal of a routine
discovery order.
This is not to say that appellate scrutiny of such orders
is unavailable. As we explained to appellants in their prior
appeal, appellate review is available to litigants who are cited
for contempt. See In re Grand Jury Subpoenas, 123 F.3d 695, 696
(1st Cir. 1997). This is because when a litigant is adjudged to be
in contempt, “the contempt order is appealable . . . because as
far as that party is concerned the order is final because he or she
could not appeal from the final judgment of the action.” 6 James
Wm. Moore et al., Moore’s Federal Practice ¶ 26.07[2][g] (3d ed.
1999).
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If a litigant, however, complies with a discovery order,
the question of its propriety ordinarily becomes moot.1 See United
States v. Anderson, 623 F.2d 720, 724 (1st Cir.), cert. denied, 449
U.S. 1021 (1980); see also Office of Thrift Supervision v. Dobbs,
931 F.2d 956, 957 (D.C. Cir. 1991). This rule is firmly rooted and
long-settled. It is merely an expression of the principle that
guided the Supreme Court’s decision in United States v.
Munsingwear, Inc., 340 U.S. 26 (1950). In Munsingwear the Court
explained that an appeal by the United States which sought vacatur
of an opinion in a dismissed case was moot. The Court reasoned
that the government had “slept on its rights,” id. at 41, by
failing to seek vacatur before the case was dismissed below and the
Court therefore lacked jurisdiction to grant relief.
Appellants argue that contempt is not the only route by
which they may obtain such review, and they contend that their
failure to risk contempt has not mooted their appeal. Appellants
are correct that, in certain cases, risk of contempt is not
necessary for an appeal. See Church of Scientology of California
v. United States, 506 U.S. 9 (1992). But a nonparty who has
complied with a discovery order faces a difficult hurdle.
1
We have consistently held that a case becomes moot when
the issues presented are no longer “live” or the parties lack a
legally cognizable interest in the outcome of the controversy.
See Thomas R.W. v. Mass. Dept. of Educ., 130 F.3d 477, 479 (1st
Cir. 1997) (quoting Boston and Me. Corp. v. Bhd. of Maintenance
of Way Employees, 94 F.3d 15, 20 (1st Cir. 1996)).
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The Supreme Court’s decision in Church of Scientology
did not alter the Munsingwear rule. In Church of Scientology, the
Court explained that if a court may “fashion some form of
meaningful relief,” id. (emphasis in original), a case is not moot.
Id. There, the Court concluded that the Church’s interest in
maintaining the privacy of its papers could be served by the
“partial remedy” of ordering the government to destroy or return
all copies in its possession. The Court therefore concluded that
the case was not moot even though a “fully satisfactory remedy” was
unavailable.
In their effort to invoke Church of Scientology by
pointing to the possibility of “meaningful relief,” appellants
invoke 11 U.S.C. § 362(h), which provides for damages, actual and
punitive, for a “willful violation” of an automatic stay.
Appellants did not raise this argument in their opening brief, and
we question whether it has been preserved adequately. In any
event, we note that bankruptcy and district judges in Delaware and
a magistrate judge and a district judge in Maine all have assumed
implicitly or directly recognized the legitimacy of the challenged
discovery. Against such a background, the prospect of securing
meaningful relief for a willful violation of the automatic stay is
far too insubstantial to counter mootness. Appellants’ decision to
comply with the subpoenas thus mooted the dispute and forecloses
our review.
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The Supreme Court’s decision in U.S. Bancorp Mortgage Co.
v. Bonner Mall P’ship, 513 U.S. 18 (1994), a case decided after
Church of Scientology, is instructive. In U.S. Bancorp, the
appellant sought vacatur of an opinion in a case that had settled.
The Court refused to vacate the opinion and explained:
The principal condition to which we have
looked, is whether the party seeking relief
from the judgment below caused the mootness by
voluntary action. . . . A party who seeks
review of the merits of an adverse ruling, but
is frustrated by the vagaries of circumstance,
ought not in fairness be forced to acquiesce
in the judgment. The same is true when
mootness results from unilateral action of the
party who prevailed below. Where mootness
results from settlement, however, the losing
party has voluntarily forfeited his legal
remedy by the ordinary processes of appeal or
certiorari . . . . The judgment is not
unreviewable, but simply unreviewed by his own
choice.
Id. at 24-25. Although the instant case does not involve a
settlement between appellants and appellees, the considerations
that determined the decision in U.S. Bancorp apply just as easily
here.
Our conclusion is not draconian. Contempt citations can
– and often do – carry significant penalties. But if a party risks
contempt to obtain review, lower courts are free to consider the
circumstances in determining appropriate sanctions and to stay
those sanctions pending appeal. The fact that the risk of contempt
may be uncomfortable for a litigant, however, does not provide a
basis for courts to act when they are without jurisdiction.
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III. CONCLUSION
Appellants chose to acquiesce in the orders they now
ask us to review. Their decision to comply rather than to risk
contempt sanctions, however, ended the controversy and mooted the
issue. We dismiss their appeal.
DISMISSED. Costs shall be taxed in favor of appellee
Maine Yankee.
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