OCTOBER TERM, 1994
Syllabus
u. S. BANCORP MORTGAGE CO.
v. BONNER MALL PARTNERSHIP
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
No. 93-714. Argued October 4, 1994-Decided November 8,1994
After this Court granted the petition for a writ of certiorari
and received briefing on the merits, the parties entered into a
settlement and agreed that the case was thereby mooted. Petitioner,
however, also requested that the Court exercise its power under 28
U. S. C. § 2106 to vacate the judgment of the Court of Appeals.
Respondent opposed the motion.
Held:
1. This Court does not lack the power to entertain petitioner's
motion to vacate. Section 2106 supplies the vacatur power, and
respondent's suggestion is rejected that Article Ill's case or
controversy requirement
prohibits the exercise of that power
when no live dispute exists due to a settlement that has mooted the
case. Although Article III prevents the Court from considering the
merits of a judgment that has become moot while awaiting review,
the Court may nevertheless make such disposition of the whole case
as justice may require.
Walling v.
James V. Reuter,
Inc., 321 U. S.
671, 677. Pp. 20-22.
2. Mootness by reason of settlement does not justify vacatur of
a federal civil judgment under review.
United States v.
Munsingwear, Inc., 340 U. S. 36, 39-40, and
subsequent cases distinguished. Equitable principles have always
been implicit in this Court's exercise of the vacatur power, and
the principal equitable factor to which the Court has looked is
whether the party seeking vacatur caused the mootness by voluntary
action. Where mootness results from settlement, the losing party
has voluntarily forfeited his legal remedy by the ordinary
processes of appeal or certiorari, thereby surrendering his claim
to the extraordinary equitable remedy of vacatur. It is irrelevant
that the party who won below also agreed to the settlement, since
it is the losing party who has the burden of demonstrating
equitable entitlement to vacatur. This result is supported by the
public interest in the orderly operation of the federal judicial
system; petitioner's countervailing policy arguments are not
persuasive. Although exceptional circumstances may conceivably
justify vacatur when mootness results from settlement, such
circumstances do not include the mere fact that the settlement
agreement provides for vacatur. Pp. 22-29.
19
Motion to vacate denied and case dismissed as moot. Reported
below:
2 F.3d
899.
SCALIA, J., delivered the opinion for a unanimous Court.
Brandford Anderson argued the cause for petitioner.
With him on the briefs were
Dale G.
Higer and
David B. Levant.
Deputy Solicitor General Kneedler argued the cause for the
United States as amicus curiae in support of petitioner. With him
on the brief were Solicitor General Days, Assistant Attorney
General Hunger, Ronald
J. Mann, Leonard Schaitman, and John
P. Schnitker.
John Ford Elsaesser, Jr., argued the cause for
respondent.
With him on the brief were Isaac M. Pachulski, K. John Shaffer,
and Barbara Buchanan.
*
JUSTICE SCALIA delivered the opinion of the Court.
The question in this case is whether appellate courts in the
federal system should vacate civil judgments of subordinate courts
in cases that are settled after appeal is filed or certiorari
sought.
I
In 1984 and 1985, Northtown Investments built the Bonner Mall in
Bonner County, Idaho, with financing from a bank in that State. In
1986, respondent Bonner Mall Partnership (Bonner) acquired the
mall, while petitioner U. S. Bancorp Mortgage Co. (Bancorp)
acquired the loan and mortgage from the Idaho bank. In 1990, Bonner
defaulted on its real estate taxes and Bancorp scheduled a
foreclosure sale.
The day before the sale, Bonner filed a petition under Chapter
11 of the Bankruptcy Code, 11 U. S. C. § 1101
et seq.,
*Briefs of amici curiae were filed for Izumi Seimitsu Kogyo
Kabushiki Kaisha et al. by Herbert H. Mintz, Robert D. Litowitz,
Jean Burke Fordis, David S. Forman, and William L. Androlia; and
for Trial Lawyers for Public Justice, P. C., by Jill E. Fisch,
Arthur H. Bryant, and Leslie A. Brueckner.
20
in the United States Bankruptcy Court for the District of Idaho.
It filed a reorganization plan that depended on the "new value
exception" to the absolute priority rule.1 Bancorp moved to suspend
the automatic stay of its foreclosure imposed by 11 U. S. C. §
362(a), arguing that Bonner's plan was unconfirmable as a matter of
law for a number of reasons, including unavailability of the new
value exception. The Bankruptcy Court eventually granted the
motion, concluding that the new value exception had not survived
enactment of the Bankruptcy Code. The court stayed its order
pending an appeal by Bonner. The United States District Court for
the District of Idaho reversed,
In re Bonner Mall
Partnership, 142 B. R. 911 (1992); Bancorp took an appeal in
turn, but the Court of Appeals for the Ninth Circuit affirmed,
In re Bonner Mall Partnership, 2 F.3d
899 (1993).
Bancorp then petitioned for a writ of certiorari. After we
granted the petition, 510 U. S. 1039 (1994), and received briefing
on the merits, Bancorp and Bonner stipulated to a consensual plan
of reorganization, which received the approval of the Bankruptcy
Court. The parties agreed that confirmation of the plan constituted
a settlement that mooted the case. Bancorp, however, also requested
that we exercise our power under 28 U. S. C. § 2106 to vacate the
judgment of the Court of Appeals. Bonner opposed the motion. We set
the vacatur question for briefing and argument. 511 U. S. 1002-1003
(1994).
II
Respondent questions our power to entertain petitioner's motion
to vacate, suggesting that the limitations on the judi-
1 As described by the Court of Appeals for the Ninth Circuit,
the new value exception "allows the shareholders of a corporation
in bankruptcy to obtain an interest in the reorganized debtor in
exchange for new capital contributions over the objections of a
class of creditors that has not received full payment on its
claims."
In re Bonner Mall Partnership, 2 F.3d
899, 901 (1993). We express no view on the existence of such an
exception under the Bankruptcy Code.
21
cial power conferred by Article III, see U. S. Const., Art. III,
§ 1, "may, at least in some cases,
prohibit an act of
vacatur when no live dispute exists due to a settlement that has
rendered a case moot." Brief for Respondent 21 (emphasis in
original).
The statute that supplies the power of vacatur provides:
"The Supreme Court or any other court of appellate jurisdiction
may affirm, modify, vacate, set aside or reverse any judgment,
decree, or order of a court lawfully brought before it for review,
and may remand the cause and direct the entry of such appropriate
judgment, decree, or order, or require such further proceedings to
be had as may be just under the circumstances." 28 U. S. C. §
2106.
Of course, no statute could authorize a federal court to decide
the merits of a legal question not posed in an Article III case or
controversy. For that purpose, a case must exist at all the stages
of appellate review.
Preiser v.
Newkirk, 422 U. S. 395,401 (1975);
Mills v.
Green, 159 U. S. 651, 653
(1895). But reason and authority refute the quite different notion
that a federal appellate court may not take any action with regard
to a piece of litigation once it has been determined that the
requirements of Article III no longer are (or indeed never were)
met. That proposition is contradicted whenever an appellate court
holds that a district court lacked Article III jurisdiction in the
first instance, vacates the decision, and remands with directions
to dismiss. In cases that become moot while awaiting review,
respondent's logic would hold the Court powerless to award costs,
e. g., Heitmuller v.
Stokes, 256 U. S. 359, 362-363
(1921), or even to enter an order of dismissal.
Article III does not prescribe such paralysis. "If a judgment
has become moot [while awaiting review], this Court may not
consider its merits, but may make such disposition of the whole
case as justice may require."
Walling v.
James
22
v:
Reuter, Inc., 321 U. S. 671, 677
(1944). As with other matters of judicial administration and
practice "reasonably ancillary to the primary, dispute-deciding
function" of the federal courts,
Chandler v.
Judicial
Council of Tenth Circuit, 398 U. S. 74, 111 (1970) (Harlan, J.,
concurring in denial of writ), Congress may authorize us to enter
orders necessary and appropriate to the final disposition of a suit
that is before us for review. See
Mistretta v.
United
States, 488 U. S.
361, 389-390 (1989); see also
id., at 417 (SCALIA, J.,
dissenting).
III
The leading case on vacatur is
United States v.
Munsingwear, Inc., 340 U. S. 36 (1950), in
which the United States sought injunctive and monetary relief for
violation of a price control regulation. The damages claim was held
in abeyance pending a decision on the injunction. The District
Court held that the respondent's prices complied with the
regulations and dismissed the complaint. While the United States'
appeal was pending, the commodity at issue was decontrolled; at the
respondent's request, the case was dismissed as moot, a disposition
in which the United States acquiesced. The respondent then obtained
dismissal of the damages action on the ground of res judicata, and
we took the case to review that ruling. The United States protested
the unfairness of according preclusive effect to a decision that it
had tried to appeal but could not. We saw no such unfairness,
reasoning that the United States should have asked the Court of
Appeals to vacate the District Court's decision before the appeal
was dismissed. We stated that "[t]he established practice of the
Court in dealing with a civil case from a court in the federal
system which has become moot while on its way here or pending our
decision on the merits is to reverse or vacate the judgment below
and remand with a direction to dismiss."
Id., at 39. We
explained that vacatur "clears the path for future relitigation of
the issues between the parties and eliminates a judgment, re-
23
view of which was prevented through happenstance."
Id.,
at 40. Finding that the United States had "slept on its rights,"
id., at 41, we affirmed.
The parties in the present case agree that vacatur must be
decreed for those judgments whose review is, in the words of
Munsingwear, "'prevented through happenstance'" -that is to
say, where a controversy presented for review has "become moot due
to circumstances unattributable to any of the parties."
Karcher v.
May, 484 U. S. 72, 82, 83
(1987). They also agree that vacatur must be granted where mootness
results from the unilateral action of the party who prevailed in
the lower court. The contested question is whether courts should
vacate where mootness results from a settlement. The centerpiece of
petitioner's argument is that the
Munsingwear procedure has
already been held to apply in such cases.
Munsingwear's
description of the "established practice" (the argument runs) drew
no distinctions between categories of moot cases; opinions in later
cases granting vacatur have reiterated the breadth of the rule,
see,
e. g., Great Western Sugar Co. v.
Nelson,
442 U. S. 92, 93
(1979)
(per curiam); and at least some of those cases
specifically involved mootness by reason of settlement, see,
e.
g., Lake Coal Co. v.
Roberts &
Schaeffer Co.,
474 U. S. 120
(1985)
(per curiam).
But
Munsingwear, and the
post-Munsingwear
practice, cannot bear the weight of the present case. To begin
with, the portion of Justice Douglas' opinion in
Munsingwear
describing the "established practice" for vacatur was dictum; all
that was needful for the decision was (at most) the proposition
that vacatur should have been sought, not that it necessarily would
have been granted. Moreover, as
Munsingwear itself
acknowledged, see 340 U. S., at 40, n. 2, the "established
practice" (in addition to being unconsidered) was not entirely
uniform, at least three cases having been dismissed for mootness
without vacatur within the four Terms preceding
Munsingwear.
See,
e. g., Schenley Distilling Corp. v.
Anderson,
333 U. S. 878 (1948)
(per curiam).
24
Nor has the
post-Munsingwear practice been as uniform as
petitioner claims. See,
e. g., Allen &
Co. v.
Pacific Dunlop Holdings, Inc., 510 U. S. 1160 (1994);
Minnesota Newspaper Assn., Inc. v.
Postmaster
General, 488 U. S. 998 (1989);
St. Luke's Federation of
Nurses and Health Professionals v.
Presbyterian/St. Lukes
Medical Center, 459 U. S. 1025 (1982).2 Of course all of those
decisions, both granting vacatur and denying it, were
per
curiam, with the single exception of
Karcher v.
May,
supra, in which we declined to vacate. This seems to us a prime
occasion for invoking our customary refusal to be bound by dicta,
e. g., McCray v.
Illinois, 386 U. S. 300, 312, n. 11
(1967), and our customary skepticism toward
per curiam
dispositions that lack the reasoned consideration of a full
opinion, see
Edelman v.
Jordan, 415 U. S. 651, 670-671
(1974). Today we examine vacatur once more in the light shed by
adversary presentation.
The principles that have always been implicit in our treatment
of moot cases counsel against extending
Munsingwear to
settlement. From the beginning we have disposed of moot cases in
the manner " 'most consonant to justice' ... in view of the nature
and character of the conditions which have caused the case to
become moot."
United States v.
Ham burg- Amerikanische
Packetfahrt- Actien Gesellschaft, 239 U. S. 466, 477-478
(1916) (quoting
South Spring Hill Gold Mining Co. v.
Amador Medean Gold Mining Co., 145 U. S. 300, 302
(1892)). The principal condition to which we have looked is whether
the party seeking relief from the judgment below caused the
mootness by voluntary action. See
Hamburg-Amerikanische,
supra, at 478 (remanding a moot case for dismissal because "the
ends of justice exact
2 The Solicitor General, who has filed an
amicus brief in
support of petitioner, would apparently distinguish these unvacated
cases on the ground that the dismissal was pursuant to this Court's
Rule 46.1 (or its predecessor), which provides for dismissal when
"all parties ... agre[e]." But such an exception to vacatur for
mootness is not mentioned in
Munsingwear; nor, we may add,
do we see any reason of policy to commend it.
25
that the judgment below should not be permitted to stand when
without any fault of the [petitioner] there is no power to review
it upon the merits");
Heitmuller v.
Stokes, 256 U.
S., at 362 (remanding for dismissal because "without fault of the
plaintiff in error, the defendant in error, after the proceedings
below, ... caus[ed] the case to become moot").
The reference to "happenstance" in
Munsingwear must be
understood as an allusion to this equitable tradition of vacatur. 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.3 See
Hamburg-Amerikanische, supra, at 477478. The same is true
when mootness results from unilateral action of the party who
prevailed below. See
Walling, 321 U. S., at 675;
Heitmuller, supra, at 362. Where mootness results from
settlement, however, the losing party has voluntarily forfeited his
legal remedy by the ordinary processes of appeal or certiorari,
thereby surrendering his claim to the equitable remedy of vacatur.
The judgment is not unreviewable, but simply unreviewed by his own
choice. The denial of vacatur is merely one application of the
principle that "[a] suitor's conduct in relation to the matter at
hand may disentitle him to the relief he seeks."
Sanders v.
United States, 373 U. S. 1, 17 (1963)
(citing
Fay v.
Noia, 372 U. S. 391, 438 (1963)).
In these respects the case stands no differently than it would
if jurisdiction were lacking because the losing party failed to
appeal at all. In
Karcher v.
May, supra, two
state
3We thus stand by
Munsingwear's dictum that mootness by
happenstance provides sufficient reason to vacate. Whether that
principle was correctly applied to the circumstances of that case
is another matter. The suit for injunctive relief in
Munsingwear became moot on appeal because the regulations
sought to be enforced by the United States were annulled by
Executive Order. See
Fleming v.
Munsingwear, Inc.,
162 F.2d 125, 127
(CA8 1947). We express no view on
Munsingwear's implicit conclusion that repeal of
administrative regulations cannot fairly be attributed to the
Executive Branch when it litigates in the name of the United
States.
26
legislators, acting in their capacities as presiding officers of
the legislature, appealed from a federal judgment that invalidated
a state statute on constitutional grounds. After the jurisdictional
statement was filed the legislators lost their posts, and their
successors in office withdrew the appeal. Holding that we lacked
jurisdiction for want of a proper appellant, we dismissed. The
legislators then argued that the judgments should be vacated under
Munsingwear. But we denied the request, noting that "[t]his
controversy did not become moot due to circumstances unattributable
to any of the parties. The controversy ended when the losing
partythe [State] Legislature-declined to pursue its appeal.
Accordingly, the
Munsingwear procedure is inapplicable to
this case."
Karcher, 484 U. S., at 83. So, too, here.
It is true, of course, that respondent agreed to the settlement
that caused the mootness. Petitioner argues that vacatur is
therefore fair to respondent, and seeks to distinguish our prior
cases on that ground. But that misconceives the emphasis on fault
in our decisions. That the parties are jointly responsible for
settling may in some sense put them on even footing, but
petitioner's case needs more than that. Respondent won below. It is
petitioner's burden, as the party seeking relief from the status
quo of the appellate judgment, to demonstrate not merely equivalent
responsibility for the mootness, but equitable entitlement to the
extraordinary remedy of vacatur. Petitioner's voluntary forfeiture
of review constitutes a failure of equity that makes the burden
decisive, whatever respondent's share in the mooting of the case
might have been.
As always when federal courts contemplate equitable relief, our
holding must also take account of the public interest. "Judicial
precedents are presumptively correct and valuable to the legal
community as a whole. They are not merely the property of private
litigants and should stand unless a court concludes that the public
interest would be served by a vacatur."
Izumi Seimitsu Kogyo
Kabushiki Kaisha v.
U. S.
27
Philips Corp., 510 U. S. 27, 40 (1993)
(STEVENS, J., dissenting). Congress has prescribed a primary route,
by appeal as of right and certiorari, through which parties may
seek relief from the legal consequences of judicial judgments. To
allow a party who steps off the statutory path to employ the
secondary remedy of vacatur as a refined form of collateral attack
on the judgment would-quite apart from any considerations of
fairness to the parties-disturb the orderly operation of the
federal judicial system.
Munsingwear establishes that the
public interest is best served by granting relief when the demands
of "orderly procedure," 340 U. S., at 41, cannot be honored; we
think conversely that the public interest requires those demands to
be honored when they can.
Petitioner advances two arguments meant to justify vacatur on
systemic grounds. The first is that appellate judgments in cases
that we have consented to review by writ of certiorari are reversed
more often than they are affirmed, are therefore suspect, and
should be vacated as a sort of prophylactic against legal error. It
seems to us inappropriate, however, to vacate mooted cases, in
which we have no constitutional power to decide the merits, on the
basis of assumptions about the merits. Second, petitioner suggests
that "[v]acating a moot decision, and thereby leaving an issue ...
temporarily unresolved in a Circuit, can facilitate the ultimate
resolution of the issue by encouraging its continued examination
and debate." Brief for Petitioner 33. We have found, however, that
debate
among the courts of appeals sufficiently illuminates
the questions that come before us for review. The value of
additional intracircuit debate seems to us far outweighed by the
benefits that flow to litigants and the public from the resolution
of legal questions.
A final policy justification urged by petitioner is the
facilitation of settlement, with the resulting economies for the
federal courts. But while the availability of vacatur may
facilitate settlement after the judgment under review has
28
been rendered and certiorari granted (or appeal filed), it may
deter settlement at an earlier stage.
Some litigants,
at least, may think it worthwhile to roll the dice rather than
settle in the district court, or in the court of appeals, if, but
only if, an unfavorable outcome can be washed away by a
settlement-related vacatur. And the judicial economies achieved by
settlement at the district-court level are ordinarily much more
extensive than those achieved by settlement on appeal. We find it
quite impossible to assess the effect of our holding, either way,
upon the frequency or systemic value of settlement.
Although the case before us involves only a motion to vacate, by
reason of settlement, the judgment of a court of appeals (with, of
course, the consequential vacation of the underlying judgment of
the district court), it is appropriate to discuss the relevance of
our holding to motions at the court-of-appeals level for vacatur of
district-court judgments. Some opinions have suggested that vacatur
motions at that level should be more freely granted, since
district-court judgments are subject to review as of right. See,
e. g., Manufacturers Hanover Trust Co. v.
Yanakas, 11 F.3d
381, 384 (CA2 1993). Obviously, this factor does not affect the
primary basis for our denying vacatur. Whether the appellate
court's seizure of the case is the consequence of an appellant's
right or of a petitioner's good luck has no bearing upon the lack
of equity of a litigant who has voluntarily abandoned review. If
the point of the proposed distinction is that district-court
judgments, being subject to review as of right, are more likely to
be overturned and hence presumptively less valid: We again assert
the inappropriateness of disposing of cases, whose merits are
beyond judicial power to consider, on the basis of judicial
estimates regarding their merits. Moreover, as petitioner's own
argument described two paragraphs above points out, the reversal
rate for cases in which this Court grants certiorari (a
precondition for our vacatur) is over 50%-more than double the
reversal rate for appeals
29
to the courts of appeals. See Fisch, Rewriting History: The
Propriety of Eradicating Prior Decisional Law Through Settlement
and Vacatur, 76 Cornell L. Rev. 589, 595, n. 25 (1991) (citing
studies).
We hold that mootness by reason of settlement does not justify
vacatur of a judgment under review. This is not to say that vacatur
can never be granted when mootness is produced in that fashion. As
we have described, the determination is an equitable one, and
exceptional circumstances may conceivably counsel in favor of such
a course. It should be clear from our discussion, however, that
those exceptional circumstances do not include the mere fact that
the settlement agreement provides for vacatur-which neither
diminishes the voluntariness of the abandonment of review nor
alters any of the policy considerations we have discussed. Of
course even in the absence of, or before considering the existence
of, extraordinary circumstances, a court of appeals presented with
a request for vacatur of a district-court judgment may remand the
case with instructions that the district court consider the
request, which it may do pursuant to Federal Rule of Civil
Procedure 60(b).
***
Petitioner's motion to vacate the judgment of the Court of
Appeals for the Ninth Circuit is denied. The case is dismissed as
moot. See this Court's Rule 46.
It is so ordered.
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