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Analyzing Cross-Appeals in Federal Court

Failure to cross-appeal may result in waiver of certain arguments and, on occasion, have a preclusive effect in further litigation

James Armstrong

  Gaye Gould

James Armstrong

 

Gaye Gould

         

DRI Certworthy

This article appeared in the July 26, 2013, issue of Certworthy, published by the Defense Research Institute

   
 

You have obtained a judgment in federal district court, but celebration is short lived: the other party has appealed. Although the reversal rate for all federal appeals is less than ten percent, appellees could make a big mistake if they sit back, relax and think there is nothing to do except respond to appellant's brief.

In some circuits, failing to cross-appeal could lead to severe repercussions. Still in others, filing an unnecessary cross-appeal may result in sanctions. See, e.g., Aventis Pharma S.A. v. Hospira, 637 F.3d 1341, 1343-44 (Fed. Cir. 2011).

To further complicate matters, the Supreme Court has indicated that cross-appeals may be jurisdictional, contrary to the traditional notion in some circuits that the requirement of cross-appeals is a flexible rule of practice. See, e.g., Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013); El Paso Natural Gas Co. v. Neztsosie, 526 U.S. 473, 479 (1999).

This article will briefly outline some of the issues appellees should consider when deciding whether to cross-appeal. Counsel should carefully analyze the law and practice of the applicable circuit to avoid waiving significant issues.

The Need to Cross-Appeal

Most appellate lawyers are familiar with the general rule that, absent a cross-appeal, an appellee may support a judgment through any matter appearing in the record, even if an argument attacks the lower court's reasoning or raises grounds overlooked or ignored by the court. Ethypharm S.A. France v. Abbott Labs, 707 F.3d 223, 232 n.15 (3d Cir. 2013). An appellee may not, however, "attack the decree with a view either to enlarging his own rights there under or of lessening the rights of his adversary." El Paso Natural Gas, 526 U.S. at 479. If the appellee seeks such an enlargement or lessening of rights, a cross-appeal is required, and must be filed within fourteen days after the initial notice of appeal. Fed. R. App. P. 4(a)(3). Because this time period may be jurisdictional in some circuits, it is critical to quickly analyze whether a cross-appeal is necessary. See In re Johns-Manville Corp., 476 F.3d 118 (2d Cir. 2007).

Most lawyers would have little difficulty recognizing the need to cross-appeal in making certain arguments that plainly enlarge rights. Perhaps most obviously, a request for additional damages requires a cross-appeal. Refuse & Envtl. Sys., Inc. v. Indus. Servs. Of Am., Inc., 932 F.2d 37, 44 (1st Cir. 1991). A cross-appeal is likewise necessary to challenge a district court's attorneys' fee award or failure to award fees. See, e.g., Doherty v. Wireless Broad. Sys. Of Sacramento, Inc., 151 F.3d 1129, 1131 (9th Cir. 1998); Hale v. Cotton Petroleum Corp., 796 F.2d 74, 75 (5th Cir. 1986).

In other situations, however, it can be hard to distinguish between alternative grounds for the judgment and seeking to alter the nature of the judgment. For example, in Genesis Healthcare, the Supreme Court refused to address an issue because the plaintiff failed to preserve it by not filing a cross-petition for certiorari. Plaintiff had alleged two claims: one on her own behalf and the other a collective action on behalf of other employees similarly situated under the Fair Labor Standards Act ("FLSA"), for which she was the sole named plaintiff. With its answer to the complaint, her employer served a Rule 68 offer of judgment providing for complete relief on her individual claim. Plaintiff failed to timely respond to the offer of judgment and the employer then moved to dismiss, arguing that because it had offered complete relief on the individual claim, plaintiff no longer possessed a personal stake in the outcome of the suit, rendering the entire action moot. The district court granted the motion, but the Third Circuit reversed that portion of the judgment holding the collective action moot. On further review, however, the Supreme Court declined to reach the merits of the collective action issue, holding that acceptance of plaintiff's collective action argument would result in an alteration of the Third Circuit judgment with respect to her individual claim, and therefore required a cross-appeal. 133 S. Ct. at 1529.

Many competent appellate attorneys may not have recognized the need for a cross-appeal in the circumstances presented in Genesis Healthcare. Fortunately, most cases present more straight-forward facts where the application of the general rule – requiring a cross appeal if the appellee's contentions would modify the trial court's judgment –is relatively easy to apply. Thus, an argument that would change a dismissal with prejudice to one without prejudice, or vice versa, requires a cross-appeal. For example, in EF Operating Corp. v. Am. Bldgs., 993 F.2d 1046, 1048-49 (3d Cir. 1993), the district court ruled in favor of defendant Flaherty on summary judgment, never addressing Flaherty's motion to dismiss for lack of personal jurisdiction. Flaherty raised absence of personal jurisdiction in response to the plaintiff's opening brief, but did not file a cross-appeal. The Third Circuit held that a cross-appeal was required to preserve the personal jurisdiction issue because a dismissal for lack of personal jurisdiction would be without prejudice, while a grant of summary judgment would result in a dismissal with prejudice. Likewise, in Am. Bottom Conservancy v. U.S. Army Corps of Engineers, 650 F.3d 652, 660 (7th Cir. 2011), the Seventh Circuit reversed the district court's holding that appellant lacked standing, but refused to consider the merits of appellee's summary judgment argument. The court reasoned that because the dismissal for lack of standing was without prejudice, a decision on the merits in favor of appellee would result in a judgment with prejudice, thus requiring a cross-appeal.

Similarly, if an appellant succeeds in convincing the court to reverse on one ground, and another argument made by the appellee below would require reversal of a portion of the district court's judgment, appellee should cross-appeal. For example, in Granite Management Corp. v. United States, 416 F.3d 1373, 1378-80 (Fed. Cir. 2005), the lower court ruled that the United States government had breached its contract with the plaintiff, but granted the government's motion for summary judgment rejecting all of plaintiff's damage theories. The plaintiff appealed and ultimately persuaded the Federal Circuit that one of its rejected damage theories might be viable and required further factual development. In its responsive brief, the United States then challenged the lower court's ruling on liability. Because the government was seeking to modify or change the judgment of the trial court, however, the court refused to consider the argument in the absence of a cross-appeal.

Another variation of these principles is found in Radio Sys. Corp. v. Lalor, 709 F.3d 1124 (Fed. Cir. 2013). There, a patent holder appealed the district court's summary judgment ruling that the appellee had not infringed. On appeal, the appellee argued in its responsive brief that invalidity of the patents was an alternative ground for affirming the district court's judgment. The Federal Circuit refused to consider invalidity without a cross-appeal, however, because a judgment of patent invalidity is broader than a judgment of non-infringement. 709 F.3d at 1132.

Possible preclusive effects

In some circuits a cross-appeal may be required if a portion of the district court ruling could have preclusive effects in later litigation. For example, failure to file a cross-appeal can affect an appellee's right to obtain additional relief on a subsequent remand. See, e.g., Kashner Davidson Sec. Corp. v. Mscisz, 601 F.3d 19, 23 (1st Cir. 2010). Thus, in Lazare Kaplan Int'l, Inc. v. Photoscribe Techs, Inc., 714 F.3d 1289 (Fed. Cir. 2013), the court of appeals held that after the reversal of the district court's finding of non-infringement, the district court on remand erred in reconsidering its previous ruling on patent validity because it was not preserved through a cross-appeal.

Conditional cross-appeal

Some circuits allow a conditional cross-appeal to preserve issues that could become adverse if the appellate court vacates or modifies the district court's judgment. For example, in Gross v. FBL Fin. Servs., Inc., 588 F.3d 614 (8th Cir. 2009), the Eighth Circuit held that a plaintiff in an employment case should have filed a protective cross-appeal urging re-litigation of certain issues if the appellant/employer succeeded on other arguments. In Gross, an age discrimination case, the jury awarded relief for lost wages, but no emotional distress damages. The jury also found that the employer's conduct was not willful. The employer appealed on liability grounds, and the appellate courts reversed. The employee sought a remand order that all issues should be retried, but the Eighth Circuit disagreed because he had not filed a protective cross-appeal to urge a new trial on emotional distress damages and willfulness. 588 F.3d at 621-22.

Sanctions

When faced with uncertainty, the filing of a cross-appeal may seem to be the cautious and most prudent option. However, some circuits frown upon this practice and have threatened sanctions for overuse of the cross-appeal. In Aventis Pharma S.A. v. Hospira, Inc., 637 F.3d 1341 (Fed. Cir. 2011), the court stated that the improper use of a cross-appeal "may meet with sanctions," reasoning that "[a]ttorneys are free to devote as much of their responsive briefing as needed to flesh out additional arguments and alternative grounds for affirming the judgment on appeal. [...] They are not free, however, to game the system by filing a cross-appeal to obtain the final word: this is neither fair to the appellant nor an efficient use of the appellate process." Id. at 1343; see also Weitzenkamp v. Unum Life Ins. Co. of Am., 661 F.3d 323, 332 (7th Cir. 2011) (refusing to consider an argument in an improper cross-appeal that should have been made in the response brief); Leprino Foods Co. v. Factory Mutual Ins. Co., 453 F.3d 1281, 1290 (10th Cir. 2006) (ordering appellee to bear the costs of an unnecessary cross-appeal).

Conclusion

The decision whether to cross-appeal may be critical to the outcome of an appeal. Not only can a failure to cross-appeal result in waiver of certain arguments, but it can also, on occasion, have a preclusive effect in further litigation. At the same time, however, the improper filing of a cross-appeal may also result in serious consequences. Faced with the conflicting approaches of the various circuits, appellate counsel would be wise to carefully analyze the issues early, including potential consultation with local counsel about the approach to cross-appeals taken in the applicable circuit.