MEMORANDUM OPINION AND ORDER
W. KEITH WATKINS, District Judge.
The Bankruptcy Administrator for this district accused Defendants of attorney misconduct. Defendants moved to dismiss the Administrator's complaint for failure to state a claim. But the Bankruptcy Court denied Defendants' motion, invoked its inherent authority, and ordered the Administrator to investigate Defendants. After the Administrator finishes her investigation, Defendants may refile their motion to dismiss. Yet Defendants seek leave to file an interlocutory appeal from the denial of their motion to dismiss. For the reasons below, leave to appeal is due to be denied.
I. JURISDICTION AND VENUE
The Bankruptcy Court had jurisdiction under 28 U.S.C. §§ 157(b) and 1334. Defendants seek leave to appeal under 28 U.S.C. § 158(a)(3). Venue is proper. The parties do not dispute personal jurisdiction.
II. BACKGROUND
Law Solutions Chicago LLC, which does business as Upright Law, markets itself as a nationwide law firm. Consumer bankruptcy is its bread and butter. When a debtor calls Upright Law, an agent (not always an attorney) collects the debtor's financial information. After the debtor pays a flat fee, Upright Law assigns a local "partner" attorney to the debtor's case.1 The debtor then interacts with both the local attorney and Upright Law's Chicago office.
But according to Teresa Jacobs, the Bankruptcy Administrator for the Middle District of Alabama, Upright Law and its local attorneys are not always upright. The Administrator claims that they charge excessive fees, unreasonably limit the scope of representation, facilitate the unauthorized practice of law, misrepresent how they apportion fees, and fail to exercise reasonable care when preparing court filings. (Bankr. Doc. # 1.)2
The Administrator first voiced her concerns in May 2017. That is when she moved to examine the transactions between Mariellen Morrison, a local Upright Law attorney, and her clients.3 Then in early 2018, the Administrator moved to examine the transactions between specific debtors and other Upright Law attorneys.4 Finally, in June 2018, the Administrator moved to consolidate these proceedings into one action against Upright Law and three Alabama attorneys (collectively, Defendants). (Bankr. Doc. # 1.)
Defendants moved to dismiss the June 2018 complaint for failure to state a claim. (Bankr. Doc. # 9.) They argued the complaint duplicated the earlier motions against Upright Law and local attorneys, that it was a "shotgun complaint," and that the allegations were both conclusory and implausible. (Bankr. Doc. # 10.)
But the Bankruptcy Court provisionally denied the motion to dismiss. It did not address whether the Administrator's complaint was duplicative, whether it was a shotgun pleading, or whether the allegations stated a plausible claim. Instead, the court invoked its "supervisory powers" and "inherent authority to supervise lawyers who practice before it." (Bankr. Doc. # 14, at 3.) In its view, it was irrelevant that the Administrator filed a complaint; what mattered was that someone had accused attorneys of misconduct. (Bankr. Doc. # 14, at 5, 10.) So the Bankruptcy Court consolidated the proceedings against Defendants and ordered the Administrator to investigate the transactions between debtors and Upright Law and the agreements between Upright Law and the local lawyers. (Bankr. Doc. # 15, at 1.)
In support of its decision, the Bankruptcy Court noted that in 2018, other jurisdictions sanctioned Upright Law. The Northern District of Alabama sanctioned Upright Law $150,000, suspended it from practicing law in the district for eighteen months, and ordered it to disgorge attorney's fees. In re White, No. 17-bk-40093, 2018 WL 1902491, at *9-10 (Bankr. N.D. Ala. Apr. 18, 2018). The Western District of Virginia sanctioned Upright Law $250,000 and revoked its privilege to practice law in the district for five years. In re Williams, No. 16-ap-7024, 2018 WL 832894, at *30 (Bankr. W.D. Va. Feb. 12, 2018). And the Western District of Louisiana sanctioned Upright Law $5,000, ordered it to disgorge attorney's fees, and imposed a ninety-day ban on practicing law in the district. In re Banks, No. 17-bk-10456, 2018 WL 735351, at *21 (Bankr. W.D. La. Feb. 6, 2018), aff'd sub nom., Law Solutions Chi. LLC v. U.S. Trustee, 592 B.R. 624 (W.D. La. 2018). That is just a partial list. In the Eastern District of Tennessee, for example, Upright Law agreed to pay $320,000 to trustees; to disgorge attorney's fees; and not to practice in the district for four years. In re Wright, No. 16-bk-30917, Docs. # 419, 420 (Bankr. E.D. Tenn. Aug. 23, 2018); In re Elrod, No. 16-bk-12562, Doc. # 217 (Bankr. E.D. Tenn. Aug. 23, 2018).5
The Bankruptcy Court refused to stay the Administrator's investigation pending this appeal. (Bankr. Docs. # 41, 44.) The Administrator must complete her investigation by February 28, 2019, and file a report by April 1, 2019. (Bankr. Docs. # 15, 46.) Defendants may move to dismiss when they respond to the investigation. (Dist. Doc. # 7-1, at 30.)
Defendants filed a notice of interlocutory appeal to this court. (Dist. Doc. # 1-1.) They identify three issues on appeal. The first issue is whether a court can order an investigation "without first addressing whether the allegations giving rise to that investigation meet the minimum pleading standards." The second is whether a court "may rely on other cases not before it for purposes of declining to evaluate the pleading sufficiency of an adversary complaint." The third is whether a court may pleading standards to an adversary complaint." (Dist. Doc. # 1-2, at 2-3.) The Administrator opposes Defendants' motion for leave to appeal. (Dist. Doc. # 2.)
III. LEGAL STANDARD
District courts have limited jurisdiction over appeals from bankruptcy judges:
The district courts of the United States shall have jurisdiction to hear appeals
(1) from final judgments, orders, and decrees;
(2) from interlocutory orders and decrees issued under section 1121(d) of title 11 increasing or reducing the time periods referred to in section 1121 of such title; and
(3) with leave of the court, from other interlocutory orders and decrees;
of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges under section 157 of this title.
28 U.S.C. § 158(a). Defendants do not challenge a final judgment, order, or decree. See Foy v. Schantz, Schatzman & Aaronson, P.A., 108 F.3d 1347, 1350 (11th Cir. 1997) (noting "the denial of a motion to dismiss is not a final order"). Nor do they challenge an order under 11 U.S.C. § 1121. As a result, they may appeal only "with leave of the court" under 28 U.S.C. § 158(a)(3).
Section 158(a)(3) "does not indicate the standard a district court should use in determining whether to grant leave to appeal." In re Ichinose, 946 F.2d 1169, 1177 (5th Cir. 1991). But 28 U.S.C. § 1292(b) governs interlocutory appeals to the court of appeals, and every district court in the Eleventh Circuit uses § 1292(b) to decide whether to grant leave to appeal under § 158(a)(3).6
The court applies the § 1292(b) standard here. As a result, Defendants must satisfy four conditions before the court will grant leave to appeal. First, the issue on appeal must be a pure question of law. Second, the issue must control a substantial part of the case. Third, there must be substantial grounds for a difference of opinion. And fourth, it must be at least possible that resolving the issue will reduce the amount of litigation necessary on remand. Mamani v. Berzain, 825 F.3d 1304, 1312 (11th Cir. 2016); McFarlin v. Conseco Servs., LLC, 381 F.3d 1251, 1264 (11th Cir. 2004). These conditions are hard to meet. See OFS Fitel, LLC v. Epstein, Becker & Green, P.C., 549 F.3d 1344, 1359 (11th Cir. 2008). And even if all conditions are met, the court still has the discretion to turn down an interlocutory appeal. See Nice v. L-3 Commc'ns Vertex Aerospace LLC, 885 F.3d 1308, 1313 n.8 (11th Cir. 2018).
IV. DISCUSSION
Defendants' motion for leave to appeal is due to be denied. Even if the issues presented are pure questions of law (they are not), they do not control a substantial portion of the case. Nor would resolving them substantially reduce the amount of litigation below.
An interlocutory appeal is no place to decide whether the Administrator stated a plausible claim. That is because determining whether specific allegations state a plausible claim is not a pure question of law; it is the application of law to facts. Mamani, 825 F.3d at 1313. Defendants are thus resigned to arguing simply that the Bankruptcy Court should have applied the motion to dismiss standard — not that the Administrator's complaint should be dismissed under that standard. That distinction matters. It means that even if Defendants prevailed on appeal, the Bankruptcy Court would only have to decide whether the Administrator stated a plausible claim. That is something the Bankruptcy Court will do anyway after the Administrator files her report. And when the Bankruptcy Court rules on a motion to dismiss, there is no guarantee it will grant the motion. It might find that the Administrator's claims are plausible. Thus, the issues Defendants raise on appeal are not controlling, and resolving them now would not reduce the amount of litigation necessary on remand. Barbella v. Pergament, No. 16-mc-1221, 2018 WL 317778, at *3-4 (E.D.N.Y. Jan. 8, 2018).
Of course, motions to dismiss are designed to prevent unwarranted discovery. See Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1215 (10th Cir. 2011). That, however, is not reason enough for an interlocutory appeal. A motion to dismiss may be filed in any action, and every defendant who files one wants to avoid discovery. Yet the denial of a motion to dismiss is rarely grounds for an immediate appeal.
Even if Defendants meet every condition for bringing an interlocutory appeal, the court still has discretion to deny an appeal. Nice, 885 F.3d at 1313 n.8. It exercises that discretion here. Interlocutory appeals "are inherently disruptive, time-consuming, and expensive," so they "are generally disfavored." Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1276 (11th Cir. 2000) (cleaned up). A court may deny leave to file one "for any reason, including docket congestion." Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978). The court has a crowded docket, so it denies leave to appeal. Moreover, the Administrator will soon file a report on her investigation, so Defendants may soon file another motion to dismiss in Bankruptcy Court. Wading into this case at this stage could easily become futile.
V. CONCLUSION
For these reasons, it is ORDERED that:
1. Defendants' Motion for Leave to Appeal (Doc. # 1-2) is DENIED; and
2. The Clerk of the Court is DIRECTED to close this case.
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on December 1, 2013, the fee to file an appeal is $505.00
CIVIL APPEALS JURISDICTION CHECKLIST
1. Appealable Orders: Courts of Appeals have jurisdiction conferred and strictly limited by statute:
(a) Appeals from final orders pursuant to 28 U.S.C. § 1291: Final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under 28 U.S.C. § 158, generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365, 1368 (11th Cir. 1983) (citing Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 S.Ct. 911 (1945)). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. 28 U.S.C. § 636(b); Perez-Priego v. Alachua County Clerk of Court, 148 F.3d 1272 (11th Cir. 1998). However, under 28 U.S.C. § 636(c)(3), the Courts of Appeals have jurisdiction over an appeal from a final judgment entered by a magistrate judge, but only if the parties consented to the magistrate's jurisdiction. McNab v. J & J Marine, Inc., 240 F.3d 1326, 1327-28 (11th Cir. 2001).
(b) In cases involving multiple parties or multiple claims, a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. 54(b). Williams v. Bishop, 732 F.2d 885, 885-86 (11th Cir. 1984). A judgment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 201, 108 S.Ct. 1717, 1721-22, 100 L.Ed.2d 178 (1988); LaChance v. Duffy's Draft House, Inc., 146 F.3d 832, 837 (11th Cir. 1998).
(c) Appeals pursuant to 28 U.S.C. § 1292(a): Under this section, appeals are permitted from the following types of orders:
i. Orders granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions; However, interlocutory appeals from orders denying temporary restraining orders are not permitted. McDougald v. Jenson, 786 F.2d 1465, 1472-73 (11th Cir. 1986);
ii. Orders appointing receivers or refusing to wind up receiverships; and
iii. Orders determining the rights and liabilities of parties in admiralty cases.
(d) Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: The certification specified in 28 U.S.C. § 1292(b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable.
(e) Appeals pursuant to judicially created exceptions to the finality rule: Limited exceptions are discussed in cases including, but not limited to: Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225-26, 93 S.Ct. 1528 (1949); Atlantic Fed. Sav. & Loan Ass'n v. Blythe Eastman Paine Webber, Inc., 890 F.2d 371, 376 (11th Cir. 1989); Gillespie v. United States Steel Corp., 379 U.S. 148, 157, 85 S.Ct. 308, 312, 13 L.Ed.2d 199 (1964).
2. Time for Filing: The timely filing of a notice of appeal is mandatory and jurisdictional. Rinaldo v. Corbett, 256 F.3d 1276, 1278 (11th Cir. 2001). In civil cases, Fed.R.App.P. 4(a) and (c) set the following time limits:
(a) Fed.R.App.P. 4(a)(1): A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. 3 must be filed in the district court within 30 days after the order or judgment appealed from is entered. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Special filing provisions for inmates are discussed below.
(b) Fed.R.App.P. 4(a)(3): "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later."
(c) Fed.R.App.P. 4(a)(4): If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion.
(d) Fed.R.App.P. 4(a)(5) and 4(a)(6): Under certain limited circumstances, the district court may extend or reopen the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time to file an appeal may be reopened if the district court finds, upon motion, that the following conditions are satisfied: the moving party did not receive notice of the entry of the judgment or order within 21 days after entry; the motion is filed within 180 days after the judgment or order is entered or within 14 days after the moving party receives notice, whichever is earlier; and no party would be prejudiced by the reopening.
(e) Fed.R.App.P. 4(c): If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with 28 U.S.C. § 1746 or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid.
3. Format of the notice of appeal: Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. See also Fed.R.App.P. 3(c). A pro se notice of appeal must be signed by the appellant.
4. Effect of a notice of appeal: A district court lacks jurisdiction, i.e., authority, to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. 4(a)(4).
