Case: 09-41259 Document: 00511292548 Page: 1 Date Filed: 11/12/2010




             IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                      Fifth Circuit

                                                   FILED
                                                                            November 12, 2010

                                          No. 09-41259                         Lyle W. Cayce
                                                                                    Clerk



In the Matter of: ASARCO L.L.C., ET AL,

                                                     Debtor

-----------------------------------
UNITED STEEL, PAPER AND FORESTRY, RUBBER MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS
INTERNATIONAL UNION AFL-CIO, STERLITE (USA) INC.; STERLITE
INDUSTRIES (INDIA) LTD,

                                                      Appellants
v.

ASARCO INCORPORATED; AMERICAS MINING CORPORATION,

                                                      Appellees




                      Appeal from the United States District Court
                           for the Southern District of Texas
                                 USDC No. 2:09-CV-177


Before GARZA and BENAVIDES, Circuit Judges, and CRONE * , District Judge.
PER CURIAM:**

       *
            District Judge for the Eastern District of Texas, sitting by designation.
       **
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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                                       No. 09-41259

       Appellants Sterlite (USA) Inc. and Sterlite Industries (India), Ltd.
(“Sterlite”), and the AFL-CIO (“Union”) appeal the district court’s order
confirming the reorganization plan proposed by Americas Mining Company
(“AMC”) and ASARCO. AMC and ASARCO (“Appellees”) have moved to dismiss
the present appeal, arguing that it is equitably moot. For reasons explained
within, we GRANT the motion to dismiss.1
                                              I
       In 1999, AMC purchased debtor ASARCO, a mining conglomerate with
operations in several states and countries. During the next several years,
ASARCO faced substantial environmental problems due to its operations, which
resulted in billions of dollars of liability to the United States and several states.
ASARCO also faced significant liability related to asbestos litigation.
Concurrently, the price of copper declined, cutting into the company’s
profitability. As ASARCO limited its spending in an effort to save money,
employee relations deteriorated, leading to a strike that further harmed the
company. ASARCO entered bankruptcy in 2005.
           While this matter was before the bankruptcy court, Sterlite proposed a
reorganization plan (“Debtor’s Plan”) under which it would gain control of
ASARCO and all creditors would be paid in full. The Appellees also proposed a
reorganization plan (“Parent’s Plan”), which would pay creditors in full, but
would leave equity control with AMC.
       The bankruptcy court issued a report and recommendation indicating that
both plans were confirmable under 11 U.S.C. § 1129(a) and (b). The bankruptcy
court then applied a four-factor analysis under § 1129(c) and concluded that the
Parent’s Plan should be confirmed. The parties objected to the bankruptcy
court’s report and recommendation, but the district court overruled the


       1
        In the motion to dismiss, Appellees also argue that Sterlite lacks standing to appeal.
We do not address this argument because of our holding on the question of equitable mootness.

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                                 No. 09-41259

objections. The district court considered the competing plans under § 1129(c),
concurred with the bankruptcy court’s recommendation, and confirmed the
Parent’s Plan.
      The Appellants did not seek a stay of the district court’s order and the
Parent’s Plan was enacted.      Among other things, the plan administrator
distributed approximately $3.359 billion to pay numerous creditors, to fund
environmental remediation efforts, and to create reserve funds for disputed
claims. In addition, a federal settlement and more than one hundred state
settlements became effective, resolving $6.5 billion of asserted environmental
claims. Some of these settlements involved the transfer of real property to
various governmental entities.    Dissatisfied with the district court’s order,
Appellants filed the present appeal.       The Appellees contend the appeal is
equitably moot and must be dismissed.
                                       II
      In bankruptcy, this court uses the “concept of mootness to address
equitable concerns unique to bankruptcy proceedings.” Manges v. Seattle First
Nat’l Bank, 

, 1038 (5th Cir. 1994) (internal citations and quotations
omitted).   Mootness, in this context, is not an inquiry into whether a live
controversy exists, but rather it recognizes “a point beyond which [appellate
courts] cannot order fundamental changes in reorganization actions.” 

   “[A] reviewing court may decline to consider the merits of a
confirmation order when there has been substantial consummation of the plan
such that effective judicial relief is no longer available—even though there may
still be a viable dispute between the parties on appeal.” 

      A court considers three factors in determining whether to apply equitable
mootness: “(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 of

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                                  No. 09-41259

reorganization.” 

There is “no set weight given to the
respective prongs.” In re Blast Energy Servs., Inc., 

, 424 (5th Cir.
2010). The third prong, however, indicates equitable mootness when “no stay
has been obtained and the plan has been substantially consummated. . . .” 

see also In re GWI PCS 1 Inc., 

, 802-03 (5th Cir. 2000).
      Here, Appellants have not sought a stay and the plan has been
substantially consummated with the distribution of billions of dollars to pay
creditors’ claims. In addition, settlements of environmental claims have been
reached with the federal government and numerous states, and numerous other
transactions, including real property transfers, have already occurred.
      Under the final prong of the mootness inquiry, we consider whether the
requested relief would affect the rights of parties not before the court or would
jeopardize the success of the reorganization plan. Appellants argue that this
factor weighs against a finding of equitable mootness because they do not want
to unravel the Parent’s Plan. Rather, Appellants assert that they seek a limited
remedy: an order that would substitute Sterlite as the primary equity holder.
This finite relief, Appellants argue, would not affect third parties. We disagree.
      There is ample reason to think that substituting Sterlite as the primary
equity-holder would have a far-reaching impact.         It would be difficult to
maintain anything resembling the status quo if the primary equity holder were
replaced by Sterlite. See In re GWI PCI 1 

. Here, the
inquiry under the third prong favors a finding of equitable mootness because a
change in the equity holder’s identity would affect numerous complex financial
transactions.
      Therefore, all three prongs of the equitable mootness inquiry favor
dismissal.




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                            No. 09-41259

                                  III
 Accordingly, the motion to dismiss is GRANTED, and the appeal is DISMISSED.




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