Practical Insights for Business Owners
Client Q&A: My company just lost a lawsuit. Can we appeal?
My company just lost a lawsuit. Can we appeal?
To err is human, and judges don't always get it right. If your claims or defenses have been defeated in court, you may want to appeal. When and how? That depends on which court you are in and what kind of ruling you are planning to appeal.
Whether You Can Appeal Depends on the Type of Order and the Court You Are In
Court orders can be classified as either final or interlocutory. A final order disposes of the entire case, whereas an interlocutory one decides various issues in the litigation but allows it to proceed. For instance, an order granting a motion to dismiss will be final if the case is dismissed in its entirety, but an order denying a motion to dismiss will be interlocutory because it means that the case goes on. Likewise, an order granting summary judgment on all claims will normally be final, as it will result in a judgment (whether for the plaintiff or the defendant) – but an order denying summary judgment (or granting partial summary judgment) will not be final, as it will mean that the case proceeds to trial. And, of course, most orders dealing with discovery, provisional remedies, and other intermediate issues are interlocutory.
Final orders are almost always appealable immediately. As for interlocutory orders, it depends. In the state court system, most rulings by a trial court can be appealed to the Appellate Division immediately as well. Not so in federal court. There, most interlocutory orders are not appealable until the whole case comes to a final resolution (which of course may take years).
There are exceptions, however. For instance, orders concerning injunctions and appointing receivers are considered sufficiently important to warrant immediate appellate review in federal court. Another notable but more nebulous exception is the so-called collateral order doctrine, allowing immediate appeal from an order that presents an important legal issue distinct from the merits that will become effectively unreviewable at the end of the case. In addition, the federal district court may allow an immediate appeal from its order if it involves a controlling and potentially controversial legal issue.
Do You Have Grounds to Appeal?
But whether an appeal is possible is only the first question. Assuming that you can appeal, do you have good grounds to do so, and what will the appellate court consider? One common misconception is that every single aspect of the case may be challenged on appeal, and any "mistaken" view of the trial court will be addressed and "corrected" by the appellate court. The reality is very different.
One key notion in the appellate court system is the standard of review. Underlying this notion is the idea that some kinds of issues (such as questions of law and policy) are the primary domain of the appellate courts, while others (such as determination of specific facts based on the evidence presented) are within the trial court's area of expertise, and others still (such as case schedule and many other procedural matters) are relegated to the trial court's discretion. Accordingly, different issues are subject to a different level of scrutiny on appeal.
Questions of pure law (for instance, interpretation of statutes and the interplay between different laws) are generally reviewed "de novo" – which means that the appellate court will consider such questions from scratch and issue its opinion. If it agrees with the trial court, it will affirm; if it disagrees, it will reverse – but ultimately it is the appellate court's opinion that matters. The trial court must follow it, in this particular case and in others.
Questions of fact, however, are generally reviewed for "clear error." This standard implies a certain degree of deference to the trial court's determination; since the trial court is more familiar with the parties and the record, and can see live witnesses to assess their credibility, the appellate court will not substitute its own view of the evidence for that of the trial court. Instead, where a factual determination could reasonably go either way, the appellate court will normally defer to the trial court’s decision and affirm it. It is only where the record clearly cannot support the decision that the appellate court will reverse.
As for discretionary matters, the standard of review is "abuse of discretion," which is even more deferential. On such matters, the appellate court will not reverse unless it finds that the ruling was truly out of line or that the discretionary decision was based on a legal or factual error.
The Appeal Process
Procedurally, an appeal normally consists of all parties presenting their briefs to the appellate court, accompanied by a record on appeal (which contains all the materials that were before the trial court when it rendered its decision, and transcripts of any trial court hearings), usually followed by an oral argument. As a rule, the appellate court will not consider any evidence or arguments that were never presented to the court below, although it may take judicial notice of subsequent court filings and other public records. For this reason, a complete presentation to the trial court is essential—new evidence is almost never accepted on appeal.
Appealing the Appellate Court's Decision
What if you don't like the appellate court's decision – can you appeal further? Sometimes you can, but more often the answer is no. In the New York state court system, a ruling of the Appellate Division can be further appealed to the Court of Appeals, the highest court of the state – but rarely as of right; most cases require the court's permission, which is given only where the appeal concerns novel and important questions of law. From the federal Court of Appeals, the only further appeal lies to the Supreme Court of the United States, which chooses to consider only a small percentage of cases presented to it.
Things to Consider
In considering any appeal, it is important to weigh the costs and benefits. Appeals may take a long time and require significant resources – but in the meantime the litigation in the trial court may continue. Indeed, in complex cases in state court it is common to have several appeals from various interlocutory orders moving forward concurrently with ongoing proceedings at the trial level.
It is also important to realize that filing an appeal does not necessarily place the trial court's decision on hold. For example, if the trial court orders property or funds turned over, or issues a money judgment in one party's favor, the winning party can take the property or funds or attempt to collect the judgment even if an appeal is pending. To avoid such a result, a stay pending appeal must be obtained, which in most circumstances requires a motion and a separate ruling from either the trial court or the appellate court.
Appeals are an important part of the judicial system, and appellate practice requires special knowledge and expertise. Schlam Stone & Dolan has an excellent track record of successfully pursuing and defending appeals in state and federal appellate courts. If you have questions about an appeal, feel free to call us.