MOAC Mall Holdings v. Transform Holdco

by Supreme Court of the United States

Note: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

MOAC MALL HOLDINGS LLC v. TRANSFORM HOLDCO LLC ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
No. 21–1270. Argued December 5, 2022—Decided April 19, 2023

The question presented—whether 11 U. S. C. §363(m) of the Bankruptcy Code is jurisdictional—arises in the context of the Chapter 11 bankruptcy of Sears, Roebuck and Co. Sears sold most of its pre-bankruptcy assets to respondent Transform Holdco LLC, including the right to designate to whom a lease between Sears and petitioner MOAC Mall Holdings LLC should be assigned. MOAC leases space to tenants at the Minnesota Mall of America. The agreement with Transform required Sears to assign the lease to any assignee duly designated by Transform. When Transform later designated the Mall of America lease for assignment to its wholly owned subsidiary, MOAC filed an objection with the Bankruptcy Court, arguing that Sears had not shown “adequate assurance of future performance by the assignee” as the Code requires, §365(f)(2)(B). The Bankruptcy Court disagreed with MOAC’s adequate-assurance argument and issued an order authorizing the lease assignment (Assignment Order). The Code contemplates that interested parties like MOAC may appeal such an order, but the effect of a successful appeal is limited by §363(m), which states that “[t]he reversal or modification on appeal of an authorization under [§363(b) or §363(c)] of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith … unless such authorization and such sale or lease were stayed pending appeal.” Fearing the implications of §363(m) on an appeal, MOAC sought to stay the Assignment Order. The Bankruptcy Court denied the stay, reasoning that an appeal of the Assignment Order did not qualify as an appeal of an authorization described in §363(m), and emphasizing Transform’s explicit representation that it would not invoke §363(m) against MOAC’s appeal. After the Assignment Order became effective, Sears assigned the lease to Transform’s designee, and MOAC appealed the Assignment Order. The District Court sided with MOAC on the adequate-assurance issue. Transform filed for rehearing, arguing that §363(m) deprived the District Court of jurisdiction. The District Court determined that Second Circuit precedent bound it to treat §363(m) as jurisdictional and dismissed the appeal. The Second Circuit affirmed.

Held: Section 363(m) is not a jurisdictional provision. Pp. 5–15.

(a) This case is not moot. Transform argues that this case is moot because MOAC’s ultimate relief hinges on the Bankruptcy Court’s ability to reconstitute the Mall of America lease as property of the estate, and no legal vehicle remains available for undoing the lease transfer under the Code or otherwise. A case remains live “[a]s long as the parties have a concrete interest, however small, in the outcome of the litigation,” and it “ ‘becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.’ ” Chafin v. Chafin, 568 U. S. 165, 172. As in Chafin, MOAC simply seeks “typical appellate relief,” id., at 173, and it cannot be said that the parties have “no ‘concrete interest,’ ” id., at 176, in whether MOAC obtains that relief. Transform’s response—which MOAC vigorously disputes—is that any ultimate vacatur of the Assignment Order will not matter irrespective of the Court’s answer to the question presented. This kind of argument is foreclosed by Chafin. This Court declines to act as a court of “first view” to determine if Transform is correct that no relief remains legally available. Zivotofsky v. Clinton, 566 U. S. 189, 201. Pp. 5–6.

(b) Section 363(m) is not a jurisdictional provision under this Court’s clear-statement precedents. Pp. 7–15.

(1) Congressional statutes are replete with “preconditions to relief,” Fort Bend County v. Davis, 587 U. S. ___, ___, such as filing deadlines, see United States v. Kwai Fun Wong, 575 U. S. 402, 410, and exhaustion requirements, see Reed Elsevier, Inc. v. Muchnick, 559 U. S. 154, 157–158, 166, and n. 6. Congress can, if it chooses, make compliance with such rules “important and mandatory,” Henderson v. Shinseki, 562 U. S. 428, 435, but that does not, in itself, make such rules jurisdictional. Because the “jurisdictional” label is consequential and has sometimes been loosely used by this Court, the Court has endeavored “to bring some discipline” to this area. Ibid. This Court has clarified that the jurisdictional label bears “on the power of the court, rather than [on] the rights or obligations of the parties.” Reed Elsevier, 559 U. S., at 161. The Court will only treat a provision as jurisdictional if Congress “ ‘clearly states’ ” as much. Boechler v. Commissioner, 596 U. S. ___, ___. This clear-statement rule does not require Congress to use “ ‘magic words,’ ” but Congress’s statement must be clear and not merely “plausible” or “better” than nonjurisdictional alternatives. Id., at ___. Pp. 7–8.

(2) The Court identifies nothing in §363(m)’s limits that purports to “gover[n] a court’s adjudicatory capacity.” Henderson, 562 U. S., at 435. The text does not address a court’s authority or refer to the jurisdiction of district courts. Instead, the provision takes as a given the exercise of judicial power over any “authorization under subsection (b)” and explicitly contemplates that appellate courts might “revers[e] or modif[y]” any covered authorization, even though a reversal or modification of a covered authorization may not “affect the validity of a sale or lease under such authorization” to a good-faith purchaser or lessee under certain prescribed circumstances. This is not the stuff of which clear statements are made. Rather, this Court has treated similar statutory caveats as “significan[t] evidence of nonjurisdictional status.” Reed Elsevier, 559 U. S., at 165. Given §363(m)’s clear expectation that courts will exercise jurisdiction over any covered authorization, its text can be read as merely cloaking certain good-faith purchasers or lessees with a targeted protection of their newly acquired property interest, applicable even when an appellate court properly exercises jurisdiction. See Scarborough v. Principi, 541 U. S. 401, 414. Section 363(m) reads like a “statutory limitation,” Arbaugh v. Y & H Corp., 546 U. S. 500, 516, that is tied in some instances to the need for a party to take “certain procedural steps at certain specified times,” Henderson, 562 U. S., at 435.

Statutory context further clinches the case. Section 363(m) is separated from the Code provisions that recognize federal courts’ jurisdiction over bankruptcy matters, 28 U. S. C. §§1334(a)–(b), (e). And unlike other Code provisions, see §305(c), §363(m) contains no “clear tie” to the Code’s plainly jurisdictional provisions, Boechler, 596 U. S., at ___. That §363(m) issues directions does not suffice to make it jurisdictional, as the Court routinely holds statutory commands nonjurisdictional notwithstanding emphatic directives. Pp. 9–11.

(3) Transform’s creative arguments do not excavate a clear statement from §363(m)’s unassuming text. First, appealing to supposed traditional principles of in rem jurisdiction, Transform insists that §363(m) is jurisdictional because it reflects those principles. This follows, Transform says, because §363(m) operates to ensure that (absent a stay) courts cannot disturb a transfer to a good-faith purchaser, thereby confirming that the court lacks a basis to exercise in rem jurisdiction over it. Setting aside MOAC’s credible retort to this argument, Transform’s contentions merely offer a reason to think Congress intended §363(m) to be jurisdictional. That, without more, does not show a clear jurisdictional statement. See Boechler, 596 U. S., at ___. Second, Transform maintains that former Federal Rule of Bankruptcy Procedure 805 was understood to be jurisdictional because some appellate courts relied upon it to dismiss appeals that challenged the validity of a sale, without a consideration of the merits. Transform says that Congress transplanted Rule 805 wholesale into §363(m). But this argument fails at the gate: every lower court case Transform cites for support predates §363(m)’s 1978 enactment, and thus long predates the Court’s modern efforts on jurisdictional nomenclature. The Court routinely rejects such arguments, and does so here. Pp. 11–15.

Vacated and remanded.

Jackson, J., delivered the opinion for a unanimous Court.

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