RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 08a0201p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Debtor. -
In re: UNITED PRODUCERS, INC.,
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No. 06-4429
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CURREYS OF NEBRASKA, INC., GERALD EGGERLING, >
JAMES EGGERLING, MARCELLA EGGERLING, NANCY -
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EGGERLING, EGGERLING FARMS, INC., G.E. CATTLE
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CO., INC., HARRY HAYES, DIANE KUCHTA, RICK
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KUCHTA, KUCHTA FARMS, INC., RANDY OERTWICH,
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PRODUCERS LIVESTOCK CREDIT CORP., R L
FINANCIAL, INC., -
Appellants, -
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v.
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UNITED PRODUCERS, INC.,
Appellee. -
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Appeal from the Sixth Circuit
Bankruptcy Appellate Panel.
No. 05-55272—Charles M. Caldwell, Bankruptcy Judge.
Argued: November 30, 2007
Decided and Filed: May 28, 2008
Before: KENNEDY, MARTIN, and CLAY, Circuit Judges.
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COUNSEL
ARGUED: David A. Domina, DOMINA LAW GROUP, Omaha, Nebraska, for Appellants. Philip
F. Downey, VORYS, SATER, SEYMOUR & PEASE, Columbus, Ohio, for Appellee. ON BRIEF:
David A. Domina, DOMINA LAW GROUP, Omaha, Nebraska, Elias T. Xenos, Troy, Michigan,
for Appellants. Philip F. Downey, VORYS, SATER, SEYMOUR & PEASE, Columbus, Ohio, for
Appellee.
CLAY, J., delivered the opinion of the court, in which MARTIN, J., joined. KENNEDY,
J. (pp. 9-10), delivered a separate opinion concurring in the judgment.
1
No. 06-4429 In re United Producers, Inc. Page 2
_________________
OPINION
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CLAY, Circuit Judge. Creditors Curreys of Nebraska, Inc., Gerald Eggerling, James
Eggerling, Marcella Eggerling, Nancy Eggerling, Eggerling Farms, Inc., G.E. Cattle Co., Inc., Harry
Hayes, Diane Kuchta, Rick Kuchta, Kuchta Farms, Inc., Randy Oertwich, Producers Livestock
Credit Corp, and R L Financial, Inc. appeal the decision of the Bankruptcy Appellate Panel granting
Debtor United Producer’s motion to dismiss Creditors’ appeal of the bankruptcy court’s plan
confirmation orders. For the reasons stated below, this Court AFFIRMS the decision of the
Bankruptcy Appellate Panel.
BACKGROUND
Debtor United Producers, Inc. (“United Producers”) is an agricultural cooperative that
provides financing to farmers through its subsidiary Producers Credit Corp. (“PCC”). Creditors
Curreys of Nebraska, Inc., Gerald Eggerling, James Eggerling, Marcella Eggerling, Nancy
Eggerling, Eggerling Farms, Inc., G.E. Cattle Co., Inc., Harry Hayes, Diane Kuchta, Rick Kuchta,
Kuchta Farms, Inc., Randy Oertwich, Producers Livestock Credit Corp, and R L Financial, Inc.
(“Creditors”) are former investors in United Producers. United Producers and PCC filed for Chapter
11 bankruptcy relief on April 1, 2005 after Creditors were awarded over $17 million in damages for
United Producers’ breach of contract, fraud, conversion and Packers and Stockyards Act violations
regarding cattle marketing. United Producers and PCC created a joint amended plan of
reorganization that provided for the cancellation of ownership interests and the issuance of new
interests and stock after the plan’s confirmation. Under the reorganization plan, Creditors would
receive only a fraction of the judgments owed to them by United Producers and PCC. One of
Creditors’ central objections to the plan was that it left management in place despite management’s
pre-petition misconduct. Creditors claimed that this plan provision did not protect the interest of
creditors and equity security holders and was against public policy. Creditors also claimed that the
plan was not proposed in good faith.
The bankruptcy court held a confirmation hearing on September 28 and 29, 2005. On
September 30, 2005, the court entered an order finding that the amended plan met all the
confirmation standards of the Bankruptcy Code and directing the submission of a separate
confirmation order. The court subsequently confirmed the amended plan on October 6, 2005.
Creditors timely appealed the September 30 and October 6, 2005 orders to the Bankruptcy Appellate
Panel of the Sixth Circuit but did not seek a stay of the confirmation order.
On November 21, 2005, United Producers and PCC filed a motion to dismiss Creditors’
appeal as equitably moot because the plan of reorganization had been substantially consummated
and the relief sought on appeal would be detrimental to third parties not before the court and to the
success of the plan. The motion was accompanied by a memorandum of law and the affidavit of
Dennis Bolling, president and chief executive officer of both United Producers and PCC, describing
the post-confirmation transactions of the companies. Because Creditors disputed the evidence
contained in the affidavit, the Bankruptcy Appellate Panel remanded the matter to the bankruptcy
court to determine whether the plan had been substantially consummated and the extent to which
third parties relied upon the confirmed plan.
The bankruptcy court oversaw discovery and conducted an evidentiary hearing on June 29,
2006 at which Dennis Bolling was the only witness. At the hearing Creditors conceded that the plan
was substantially consummated. Based upon the evidence presented, the bankruptcy court issued
supplemental findings of fact and conclusions of law regarding substantial consummation and third-
No. 06-4429 In re United Producers, Inc. Page 3
party reliance upon the confirmed plan. The bankruptcy court found that the plan was substantially
consummated and that innocent third parties would be adversely affected if the plan were to be
vacated due to Creditors’ appeal. In support of these conclusions, the bankruptcy court listed thirty
findings of fact detailing the extent to which the reorganization had progressed and the possible
consequences of the plan’s vacation for third parties.
Following remand the Bankruptcy Appellate Panel granted United Producer and PCC’s
motion to dismiss the appeal as equitably moot. Relying upon the bankruptcy court’s findings of
fact, the Bankruptcy Appellate Panel concluded that the appeal should be dismissed as equitably
moot because the plan had been substantially consummated and vacating the plan as a result of a
successful appeal would harm innocent third parties who relied upon the confirmed plan. Creditors
filed a timely appeal from the Bankruptcy Appellate Panel’s October 6, 2006 judgment.
DISCUSSION
A. Standard of Review
This court independently reviews a decision of the bankruptcy court that has been appealed
to the Bankruptcy Appellate Panel. Curry v. Curry (In re Curry), 509 F.3d 735, 735 (6th Cir. 2007).
The bankruptcy court's findings of fact are reviewed for clear error, while its conclusions of law are
reviewed de novo. Behlke v. Eisen (In re Behlke), 358 F.3d 429, 433 (6th Cir. 2004). While these
general principles regarding review of bankruptcy court decisions are well established, the parties
disagree regarding the standard of review to be applied to the Bankruptcy Appellate Panel’s
equitable mootness determination.
As with many aspects of the equitable mootness inquiry, the case law is sparse regarding the
standard of review to be applied. The Third Circuit reviews equitable mootness decisions under an
abuse of discretion standard because such a decision “involves a discretionary balancing of equitable
and prudential factors rather than the limits of the federal courts’ authority under Article III.” In re
Continental Airlines, 91 F.3d 553, 560 (3d Cir. 1996).1 Such review of equitable mootness
determinations is consistent with the standard of review applied to other equitable determinations
made by lower courts. See In re Behlke, 358 F.3d at 433 (“[T]he bankruptcy court’s equitable
determinations are reviewed for an abuse of discretion.” (citation omitted)). However, the dissent
in In re Continental Airlines espoused the opposite view, arguing that a district court’s equitable
mootness determination should be reviewed de novo because the district court acts as an appellate
court in bankruptcy cases. In re Continental Airlines, 91 F.3d at 568 n.4 (Alito, J., dissenting). Such
a standard of review would be appropriate because the court of appeals is “in just as good a position
to make this determination as was the district court.” Id.
The standard of review for equitable mootness decisions proposed by the dissent in
Continental Airlines is more consistent with this Circuit’s precedent than is the Continental Airlines
majority’s position. Although only clearly setting forth a de novo standard of review for equitable
mootness determinations in an unpublished case, Unofficial Committee of Co-Defendants v. Eagle-
Picher Indus., Inc. (In re Eagle Picher Indus., Inc.), 172 F.3d 48, 1998 WL 939869, at *3 (6th Cir.
1998) (unpublished table decision), this Court has reviewed determinations of equitable mootness
de novo. See, e.g. Bank of Montreal v. Official Comm. of Unsecured Creditors (In re American
HomePatient, Inc.), 420 F.3d 559, 564-65 (6th Cir. 2005). Such a standard of review is consistent
1
The equitable mootness determination at issue in Continental Airlines was made by a district court and not
a Bankruptcy Appellate Panel. This distinction makes no difference to the applicability of the reasoning of Continental
Airlines to the instant case because the judgments of Bankruptcy Appellate Panels are equivalent to the judgments of
district courts. Specker Motor Sales Co. v. Eisen, 393 F.3d 659, 663 n.3 (6th Cir. 2004) (“[T]he opinion of a Bankruptcy
Appellate Panel . . . is equivalent to review by a district court . . .”). See 28 U.S.C. § 158.
No. 06-4429 In re United Producers, Inc. Page 4
with this Court’s plenary review of the decisions of a lower court exercising its appellate
jurisdiction. See In re Big Rivers Elec. Corp., 355 F.3d 415, 428-29 (6th Cir. 2004) (noting that
review for abuse of discretion is appropriate when a district court is exercising its original
jurisdiction and not when it is exercising its appellate jurisdiction over a bankruptcy case). See also
United States v. GWI PCS 1 Inc. (In re GWI PCS 1 Inc.), 230 F.3d 788, 799-800 (5th Cir. 2000)
(holding that a district court’s dismissal of an appeal as equitably moot is reviewed de novo); First
Union Real Estate Equity & Mortgage Invs. v. Club Assocs. (In re Club Assocs.), 956 F.2d 1065,
1069 (11th Cir. 1992) (reviewing de novo equitable mootness determination by a district court). As
a result, we review the Bankruptcy Appellate Panel’s equitable mootness determination de novo.
B. Analysis
The equitable mootness doctrine is applied in appeals from bankruptcy confirmations in
order to protect parties relying upon the successful confirmation of a bankruptcy plan from a drastic
change after appeal. City of Covington v. Covington Landing Ltd. P’ship, 71 F.3d 1221, 1225 (6th
Cir.1995) (“[A] plan of reorganization, once implemented, should be disturbed only for compelling
reasons.”). Unlike mootness in the constitutional sense, equitable mootness does not follow from
Article III standing principles but is an equitable doctrine applied to protect parties’ settled
expectations and the ability of a debtor to emerge from bankruptcy. United Steelworkers v. Ormet
Corp. (In re Ormet), 2005 WL 2000704, at *4 (S.D. Ohio 2005). See Mac Panel Co. v. Virginia
Panel Corp., 283 F.3d 622, 625 (4th Cir. 2002) (“[T]he doctrine of equitable mootness is a
pragmatic principle, 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.”). Although bankruptcy courts have always had broad equitable powers, the
equitable mootness doctrine has only been formally recognized within the last twenty years. In re
American HomePatient, 420 F.3d at 563 (discussing Sixth Circuit cases that have applied the
equitable mootness doctrine).
Issues relating to equitable mootness have rarely been decided in the Sixth Circuit. Early
cases treated equitable mootness similarly to traditional Article III mootness despite incorporating
some equitable factors. In re Eagle Picher Indus., Inc., 1998 WL 939869 (discussing equitable
mootness in context of constitutional mootness); Bennett v. Veale, 60 F.3d 828 (6th Cir. 1995)
(same). The leading Sixth Circuit case on equitable mootness issues is In re American HomePatient
in which we adopted the Fifth Circuit’s three-part test for determining whether an appeal from the
confirmation of a bankruptcy plan should be dismissed as equitably moot. In re American
HomePatient, 420 F.3d at 563-64. In making this determination, a court must weigh three factors:2
“(1) whether a stay has been obtained; (2) whether the plan has been ‘substantially consummated’;
and (3) whether the relief requested would affect either the rights of parties not before the court or
the success of the plan.” City of Covington, 71 F.3d at 1225 (citing Manges v. Seattle-First Nat’l
Bank (In re Manges), 29 F.3d 1034, 1039 (5th Cir. 1994)).
1. Existence of a Stay
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. In re Manges, 29 F.3d at 1040. “The failure to seek a stay, however,
is not necessarily fatal to the appellant’s ability to proceed.” City of Covington, 71 F.3d at 1225-26.
2
Creditor attempts to add a fourth factor to this Court’s equitable mootness analysis, namely “the public policy
for affording finality to bankruptcy judgments.” (Cr. Br. at 29.) This Court has previously adopted a three-factor
analysis, and this panel will not modify this precedent absent an intervening Supreme Court decision. Sixth Cir. R.
206(c). Meeks v. Illinois Cent. Gulf R.R., 738 F.2d 748, 751 (6th Cir. 1984).
No. 06-4429 In re United Producers, Inc. Page 5
It is undisputed that Creditors did not seek a stay in this case. Although Creditors attribute
this omission to their poverty which was caused by Debtor’s actions, the reason for the absence of
a stay is immaterial to the equitable mootness analysis. As we have stated, “[a] stay not sought, and
a stay sought and denied, lead equally to the implementation of the plan of reorganization. And it
is the reliance interests engendered by the plan, coupled with the difficulty of reversing the critical
transactions, that counsels against attempts to unwind things on appeal.” City of Covington, 71 F.3d
at 1226 (quoting In re UNR Indus., 20 F.3d 766, 769-70 (7th Cir. 1994)). Thus, Creditors failure
to seek a stay weighs in favor of Debtors.
2. Substantial Consummation
“Substantial consummation” is a statutory term used to determine whether a bankruptcy
court may modify or amend a reorganization plan. 11 U.S.C.A. § 1127 (“The proponent of a plan
or the reorganized debtor may modify such plan at any time after confirmation of such plan and
before substantial consummation of such plan . . .”). The Bankruptcy Code defines substantial
consummation as:
(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). This standard has been adopted in the equitable mootness analysis to
determine the extent to which the plan has progressed. In re Manges, 29 F.3d at 1040-41. 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.
Although Creditors did not dispute the fact that the plan has been substantially consummated
at the Bankruptcy Appellate Panel, they qualify their concession before this Court by contending
that the plan can only be deemed substantially consummated because Debtor continues as it did pre-3
bankruptcy and that the deficient plan requires no more than maintenance of the status quo.
Creditors’ arguments, which are more relevant to the merits of their claim than to the equitable
mootness determination, are forestalled by the factual findings of the bankruptcy court. As the
Bankruptcy Appellate Panel summarized, the bankruptcy court found that Debtor had taken
numerous steps to effectuate the reorganization plan:
These actions include the termination and issuance of new membership interests in
UPI; the collection by UPI of $495,000 in new membership fees and $400,000 in
new per unit retains; the liquidation and dissolution of the related entity UPHC, LLC,
which permitted the transfer to UPI of 14 parcels of real property and capital stock;
the cancellation of 208 shares of PCC’s preferred stock held by Southern States
Cooperative, Inc.; the closing and funding of exit financing of CoBank in the amount
of $75 million, secured by UPI’s new stock in PCC and various mortgages,
permitting the Appellees to pay off the debtor-in-possession loan and fund plan
distributions; the settlement of a $5 million claim against the Appellees and final
distribution on that claim; plan distribution to priority and general unsecured
creditors which represented the distribution of approximately all of the remaining
balance in the pool established to pay claims; and the sale by UPI of its West Plains,
Missouri facility.
3
However, Creditors also implicitly concede the issue of substantial consummation by stating in their brief that
“[t]he only question is whether third-parties will be harmed if the Plan is vacated . . .” (Cr. Br. 23.)
No. 06-4429 In re United Producers, Inc. Page 6
(J.A. 936-37 (internal quotations and4 alterations omitted).) No evidence has been presented that
these findings are clearly erroneous. Creditors’ conclusory allegations that Debtor would have
taken the same actions absent the confirmed reorganization plan are unsupported by any evidence
in the record.
As Creditors have previously conceded, Debtor’s actions demonstrate that the plan is
substantially consummated. Thus, this factor weighs in favor of Debtor.
3. Rights of Third Parties and Success of the Plan
Even when a plan has been substantially consummated, it is “not necessarily . . . impossible
or inequitable for an appellate court to grant effective relief.” Manges, 29 F.3d at 1042-43. The
most important factor this Court must consider is “whether the relief requested would affect either
the rights of parties not before the court or the success of the plan.” In re American HomePatient,
420 F.3d at 564. “Determinations of mootness . . . require a case-by-case judgment regarding, the
feasibility or futility of effective relief should a litigant prevail.” In re AOV Indus., Inc., 792 F.2d
1140, 1147-48 (DC Cir. 1986).
As part of our analysis of the feasibility of granting relief, this Court considers the nature of
the relief requested and whether it amounts to a piecemeal revision of the plan or a wholesale
rewriting of it. In re Manges, 29 F.3d. at 1043 (“We must evaluate [actions taken pursuant to the
Plan], many of which appear irreversible, against the backdrop of the relief sought– nothing less than
a wholesale annihilation of the Plan.”). In Guardian Savings & Loan Association v. Arbors of
Houston Associates (In re Arbors of Houston Associates), 172 F.3d 47, 1999 WL 17649 (6th Cir.
1999) (unpublished table decision), we held that equitable mootness did not apply where the creditor
contested the interpretation of a provision of a reorganization plan. We found that the adoption of
the creditor’s interpretation “would not substantially upset the plan of reorganization itself. The
refinancing would go through and no other term of the reorganization would be affected.” In re
Arbors of Houston Assocs., 1999 WL 17649, at *3. We have also declined to declare an appeal
equitably moot when there is uncontested evidence that the creditor’s requested relief would not
require abandonment of the plan. In In re American HomePatient we determined that despite the
substantial consummation of the plan, the lenders’ appeal was not equitably moot. In re American
HomePatient, 420 F.3d at 565. In light of the debtor’s failure to present evidence specifically
rebutting the lenders’ arguments, we determined that the lenders presented a plausible argument that
the implementation of their suggested changes to the confirmation plan would not require any of the
actions undertaken pursuant to the plan to be reversed. Id. at 564-65.
In this case, Creditors offer little detail regarding the requested revision of the confirmation
plan. Creditors claim that their requested relief is limited and that they are asking that this Court
vacate only the portion of the plan that requires management to remain in place. (Cr. Br. 32.)
However, Creditors also ask that they be allowed to propose an entirely new reorganization plan.
(Cr. Br. 29.) They claim that their plan would “treat every creditor identically with the approved
plan, except that they will change the debtors’ business model, by: (a) modernizing it; (b) replacing
expensive management, which answers to no one in the current context; (c) improving profitability;
and (d) making some payments toward Appellants’ own judgments.” (Cr. Br. 29.) Creditors
present the unsupported assertion that no third parties will be harmed because the reorganization
4
The record on appeal contains no transcript of the hearing upon which the bankruptcy court based its
supplemental findings. As a result, Creditors may not challenge the bankruptcy court’s findings of fact. Fed. R. App.
P. 10(b)(2) (“If the appellant intends to urge on appeal that a finding or conclusion is unsupported by the evidence or
is contrary to the evidence, the appellant must include in the record a transcript of all evidence relevant to that finding
or conclusion.”). See Knowles Building Co. v. Zinni (In re Zinni), 261 B.R. 196, 202 (BAP 6th Cir. 2001) (holding that
the failure to include a transcript while not fatal to appellants case could “hinder its ability to argue on appeal that the
bankruptcy court made an unsupported finding of fact or conclusion of law”).
No. 06-4429 In re United Producers, Inc. Page 7
plan they would propose would benefit Debtor’s business. (Cr. Br. 29.) Creditors misapprehend
the focus of the equitable mootness inquiry. They claim that because their alternative plan would
be more successful than the confirmed plan, their appeal should not be dismissed as equitably moot.
However, the analysis of the third factor of the equitable mootness inquiry does not look at the
merits of the Creditors’ alternative plan as if it were being proposed on a blank slate. This Court
must determine what the consequences of reversal of the confirmed plan would be for the success
of the reorganization and for interests of third parties who have relied upon the confirmed plan.
The bankruptcy court found that reversal of the confirmation order would threaten the
success of Debtor’s reorganization in part because of the effect a reversal would have on the
financing of the reorganization. Debtor’s reorganization was financed in large part by CoBank,
ACB (“CoBank”), one of Debtor’s pre-bankruptcy creditors. The loan agreement between Debtor
and CoBank made confirmation of Debtor’s reorganization plan a condition precedent to the
disbursement of loan funds. Pursuant to the agreement, Debtor would be in default on the loan if
it failed to comply with the bankruptcy court’s confirmation order, suspended business operations,
made changes in management, or made any adverse change as determined by CoBank. Counsel for
CoBank stated before the bankruptcy court that the reversal of the reorganization plan’s
confirmation would be considered a default upon Debtor’s loan and would result in the bank halting
continued financing. In addition, the specific relief requested by Creditors, a change in Debtor’s
management, would also be seen by CoBank as a default. The loss of CoBank’s financing would
not only negatively impact the success of the plan but would also jeopardize Debtor’s ability to
make loans to the 68,000 farmers who are its members and customers.
The bankruptcy court also noted the disruption to Debtor’s continuing operations that would
be caused by reversal of the confirmation order. Debtor would be required to halt payments for the
livestock transactions it engages in on a daily basis or face the possibility of up to $9 million in
checks being dishonored as a result of a return to bankruptcy. Debtor’s delivery of livestock to
packing customers would also be disrupted. The bankruptcy court found that such occurrences
could lead to a loss of customer confidence in Debtor and negatively impact its successful
emergence from bankruptcy.
The bankruptcy court also noted the legal uncertainty that would be created by a reversal of
confirmation. Debtor has established new business relationships to operate an auction facility,
service loans, and to make investments for farmers’ associations. Debtor has also made distributions
to creditors, made changes to its Articles of Incorporation, issued new stock and membership
interests, sold real property, and received and issued releases. A reversal of confirmation would
make uncertain the validity of such transactions.
This Court has decided that equitable mootness applied in a case similar to the case at bar
due to the effect reversing a confirmation order would have on third parties. The In re Eagle Picher
Industries Court dismissed the creditors’ appeal on equitable mootness grounds after finding that
no stay was issued and the plan was substantially consummated. We explained the basis of our
decision as follows:
To the extent that Debtors seek to reverse the substantially consummated Plan, we
find that reversal is not possible or desirable. The Plan represents the culmination of
seven years of litigation and negotiations among the various constituencies in
Debtors' Chapter 11 cases. The existing common stock of Debtors has been canceled
and new shares of common stock have been issued to the trust. Debtors have made
distributions to thousands of creditors. Debtors have also entered into an unsecured
credit facility valued at sixty million dollars with a new lender. New trade creditors
have been dealing with Debtors as reorganized companies with the belief that
confirmation of the Plan is fully effective. Reversal of the Confirmation Order as
No. 06-4429 In re United Producers, Inc. Page 8
sought by Co-Defendants would require the invalidation of thousands of good-faith
transfers made pursuant to the Plan.
In re Eagle Picher Indus., 1998 WL 939869, at *5. The amount of third party reliance upon the In
re Eagle Picher Industries plan is similar to, if not less, than that of Debtor’s plan. See also
Rochman v. Northeast Util. Serv. Group (In re Public Serv. Co.), 963 F.2d 469, 475 (1st Cir. 1992)
(finding an appeal equitably moot where unraveling the plan “would work incalculable inequity to
many thousands of innocent third parties who have extended credit, settled claims, relinquished
collateral and transferred or acquired property in legitimate reliance on the unstayed order of
confirmation”).
Because the bankruptcy court’s findings of fact establish that granting Creditors’ requested
relief would negatively affect the success of the plan and harm innocent third parties, this factor
weighs in favor of Debtor.
CONCLUSION
All three factors of the equitable mootness inquiry weigh in favor of dismissing Creditors’
appeal as moot: Creditors did not seek a stay; the confirmed plan has been substantially
consummated, and reversal of the plan would adversely impact third parties not before this court and
the success of the plan. As a result, we AFFIRM the Bankruptcy Appellate Panel’s dismissal of
Creditors’ appeal as equitably moot.
No. 06-4429 In re United Producers, Inc. Page 9
__________________________________
CONCURRING IN THE JUDGMENT
__________________________________
KENNEDY, Circuit Judge, concurring in judgment. Because I believe that it is unnecessary
to decide the standard of review in this case, I respectfully concur in the judgment. The majority
decides that we should conduct de novo review of the BAP’s equitable mootness determination.
This is the standard the creditor-appellants request in this case. Under their requested standard,
however, we have determined that their claim fails. I believe, therefore, that we should assume a
de novo standard, rather than decide what standard applies. The majority leaves the party aggrieved
by this decision, the debtor-appellee, unable to appeal; since the debtor has won, it has no way to
seek further review of our decision that a de novo standard of review should be employed. This
alone, in my view, should warrant avoidance of the issue. Also counseling avoidance is the fact that
four circuits have split on the standard of review to be applied, which could make this a case
warranting further review should the debtor-appellee have been in a position to seek it.
I also believe that the standard of review in this case is a complicated question. First, this
case is unlike other bankruptcy appeals from the BAP or a district court because that forum will be
deciding the issue of equitable mootness for the first time. Generally, the BAP is reviewing the
bankruptcy court’s decision and not making an equitable determination in the first instance, as it
does here. As best I can tell, this is the only type of case where the BAP will be deciding an issue
for the first time. Given this, I believe that our general statements that we engage in de novo review
of BAP decisions are not informative. Those general statements come from cases where we are
conducting direct review of the bankruptcy court’s decision, which is not present in this case
because the first decision regarding equitable mootness was properly the BAP’s.
There is also good reason to think an abuse of discretion standard of review should be
applied to the BAP’s equitable mootness determination. We generally review a forum’s
discretionary decisions not to exercise its authority under an abuse of discretion. For instance, while
a district court may have the power to decide pendent state law claims, it continues to have
discretion to decline jurisdiction over such claims. See United Mine Workers of Am. v. Gibbs, 383
U.S. 715, 726 (1966). We then review a district court’s decision to decline such jurisdiction under
an abuse of discretion standard. Brandenburg v. Hous. Auth. of Irvine, 253 F.3d 891, 900 (6th Cir.
2001). The same is true for a district court’s determination that it should refrain from exercising its
authority based on the doctrine of laches. See Bridgeport Music, Inc. v. Justin Combs Publ’g, 507
F.3d 470, 493 (6th Cir. 2007).
The dissent in Continental Airlines, which advocates a de novo standard of review and is
relied upon by the majority, seems to me to have missed the uniqueness of this situation. First, it
should be noted that the primary disagreement in the case was whether equitable mootness was a
valid doctrine under which a court could refrain from exercising its authority and whether, if valid,
it was as expansive as the majority in the case held. See, e.g., Continental Airlines, 91 F.3d 567-68
(Alito, J., dissenting). The dissent’s thoughts on the standard of review were relegated to a footnote.
Id. at 568 n.4. In that footnote, the dissent stated that the court of appeals generally conducted de
novo review of district court bankruptcy decisions because the district court is functioning as an
intermediate appellate court. Id. This misses the point that this situation is the only one, as far as
I can tell, where the intermediate court will be deciding an equitable issue for the first time and is
the proper body to decide that issue for the first time.
The dissent’s only other reason for using a de novo standard of review is equally
unpersuasive to me. The dissent believed a heightened standard of review proper because the court
of appeals was in as good of a position as the district court to make an equitable mootness
No. 06-4429 In re United Producers, Inc. Page 10
determination. Id. While this may be true, this is not the only element considered when determining
the standard1 of review to be applied, and, indeed, is likely one of the weakest elements to be
considered. After a tribunal has found facts, we are arguably in as good of a position as it is to
weigh those facts against one another. We do not, however, generally re-weigh factors when
reviewing a discretionary, equitable decision. See, e.g., Wonderland Shopping Ctr. Venture Ltd. v.
CDC Mortgage Capital, Inc., 274 F.3d 1085, 1097 (6th Cir.22001) (noting that the denial of a
preliminary injunction is reviewed for an abuse of discretion).
Because I believe that we should not decide what standard of review applies in this case, I
respectfully concur in the judgment.
1
Indeed, it may well be that the BAP is in a better position to decide this issue than we are. The BAP is
composed of seasoned bankruptcy judges who have extensive experience in the management of bankruptcy cases and
therefore may be better at determining if unwinding a confirmed and implemented plan will have severe enough
consequences that should cause an appellate court to stay its hand.
2
One unique and unexplored factor in this case is the potential for a double determination of equitable
mootness. If, under any standard of review, the BAP was incorrect and the appeal was not equitably moot, I think that
we may have to determine whether the case has become equitably moot by the time the appeal is before us and therefore
whether we should exercise our authority over the case. Just because we may have to make our own determination,
however, does not mean that we should disregard the BAP’s decision on the issue. The first step to the case is review.
If upon review it is determined that the BAP’s decision was correct, we need not reach the question of whether we should
exercise our authority and upset the status quo in the case.