More Tales From The Minefield—Or Why Appellate Counsel Is A Must During Litigation

July 20, 2021 / CM Reports

by Melinda S. Kollross

In this quarter’s Sidebar, we report on two recent federal appellate decisions illustrating the wisdom of employing trained appellate practitioners.

Rexing Quality Eggs v. Rembrandt Enterprises, Inc., Nos. 20-1726 & 20-1727 (7th Cir. 4-22-21).

There are important lessons to be learned from the Seventh Circuit decision in Rexing Quality Eggs v. Rembrandt Enterprises, Inc., Nos. 20-1726 & 20-1727 (7th Cir. 4-22-21). First, as this author has counseled her clients may times, it is wise to utilize appellate counsel during trials to ensure all arguments are preserved for appellate review; secondly, Rexing teaches the importance of reviewing the pertinent rules each time legal work is performed.

Facts

Rexing involved the sale of eggs to a buyer (Rexing) from a supplier (Rembrandt). Rexing began refusing shipments of the eggs from Rembrandt because of alleged quality issues. Rexing sued contending it was excused from purchasing the eggs. Rembrandt counterclaimed seeking damages for Rexing’s repudiation of the contract. The trial court ruled in Rembrandt’s favor on liability, and a damages trial was held. The jury awarded Rembrandt $1,268,481 for losses on eggs it had resold, based on the difference between the contract price and the resale price, and another $193,752 for losses on eggs that it was not able to resell. Rexing appealed the damages to the Seventh Circuit.

Rexing’s Appeal

Rexing appealed two aspects of the jury’s resale award. First, it argued that there was no evidence that the eggs sold by Rembrandt met the case-weight requirement of the Purchase Agreement, and thus those eggs could not form the basis of a resale remedy, and Rembrandt should not have received any damages under the law. Second, Rexing argued there was no evidence of actual market transactions to support the calculation of damages for the eggs that Rembrandt could not resell and used for its own purposes. Consequently, according to Rexing, the jury lacked critical evidence to calculate Rembrandt’s damages based on market price. Rexing sought judgment in its favor on these damages, and not merely a new trial.

Rexing’s Arguments Are Waived

The Seventh Circuit dispatched Rexing’s damages arguments finding both arguments waived because of Rexing’s failure to follow the dictates of the Federal Rules of Civil Procedure—specifically Rules 50(a) and 50(b). 

As to Rexing’s case-weight argument, the Court found that while Rexing raised this point in a Rule 50(a) motion prior to jury deliberations, it did not make the argument again in a Rule 50(b) motion following the jury’s verdict. The federal rules require both a pre-verdict and post-verdict motion to be made. In the absence of a timely filed and made Rule 50(b) motion following the verdict, Rexing’s case-weight arguments were not preserved for review. Rexing’s arguments that it was not seeking a new trial and that its Rule 50(a) motion was sufficient were rejected. The 50(b) motion could have been utilized by Rexing to obtain the ruling it sought on appeal—judgment in its favor on the resale damages. And regardless of how sufficient Rexing’s 50(a) motion was, it preserved nothing without a 50(b) motion made after verdict. These same reasons applied to Rexing’s arguments regarding the award for the eggs Rembrandt could not resell—the absence of a Rule 50(b) post-verdict motion on the point was fatal to Rexing. 

Additionally, the Court found that Rexing failed to make its pre-verdict Rule 50(a) motions on both damage points with the necessary specificity. According to the Court, Rule 50(a) required that a party challenging the sufficiency of the evidence specify “the law and facts” upon which the motion is based. Rexing only complained of the evidence regarding case-weight without discussing the erroneous market value calculations.

Learning Point: Appellate counsel would have known that to preserve Rexing’s damage arguments for review to challenge the award of $1,462,233, both a Rule 50(a) and Rule 50(b) had to be made and made with specificity. In fact, Rexing’s Rule 50(b) post-verdict motion should have been a part of a larger, global post-trial motion seeking not only judgment, but a new trial and remittitur, as is this author’s post-trial practice. And appellate counsel would have known this because prudent attorneys read the rules before embarking on any motion preparation. Reading the rules governing various procedures is akin to a pilot’s checklist before operating a plane. No matter how many times a pilot may have flown a plane, she reads the checklist before embarking to make sure everything is proper. The same is true with reading rules of procedure, such as Rules 50(a) and 50(b). Had Rexing retained experienced appellate counsel to work this case, it might not have had to pay this $1,462,233 award. 

Newcomb v. Wyndham Vacation Ownership, Inc., Nos. 19-3109, 19-3111
(8th Cir. 6-8-11)

Newcomb demonstrates why only a trained appellate practitioner should prepare a notice of appeal.

The notice of appeal may only be one or two pages long—but it is the single most important document in any appeal because it is the one and only document that transfers subject matter jurisdiction from the trial court to the appellate tribunal. Unless all the rules are followed and all the “t’s” are crossed and “i’s” dotted, a notice of appeal may be found deficient, and it will not properly transfer jurisdiction to the appellate tribunal.

That is what happened in Newcomb. The Court found that the notice of appeal was so deficient that it failed to properly transfer jurisdiction, and the court dismissed the appeal. 

The notice of appeal was apparently prepared by an attorney, albeit not a trained appellate practitioner. It was prepared supposedly by a real estate attorney, but perhaps he just “lujacked” it off to his paralegal or secretary, thinking it was “just a notice” and no big deal. As the Court described it, the notice of appeal had the incorrect date of the order appealed from, and misdescribed the names of both the lower court and Court of Appeals. The Eighth Circuit held: 

The complete failure by parties who are attorneys engaged in multi-state litigation to comply with multiple essential elements of Rule 3(c)(1) is not “imperfect but substantial compliance with a technical requirement” that we may excuse; it is an absolute bar to appeal.

Learning Point: A notice of appeal should not be left to trial counsel, or his/her secretary, paralegal, or law clerk. The notice of appeal is not “just a notice” and no “big deal”. The notice of appeal is the “biggest deal” in any appeal. And regardless of the court, whether federal or state, a notice of appeal should only be prepared by an appellate practitioner. A word to the wise.

IN MY NEXT SIDEBAR

SCOTUS Issues Significant Jurisdictional Decision Concerning The Standing Necessary To Sue: TransUnion LLC v. Ramirez, No. 20-297 (U.S. 6-25-21)

We also wish to alert our friends in the insurance and defense industries of a recent development that may impact the rights of plaintiff class action lawyers to bring actions in federal court alleging mere technical violations of a statute as a basis for pursuing class action cases and huge recoveries for mostly attorney’s fees. On June 25, 2121, the United States Supreme Court decided TransUnion LLC v. Ramirez, No. 20-297 (U.S. 6-25-21). Ramirez involved a class action brought for violating the Fair Credit Reporting Act, which regulates credit reporting and provides a private right of action for violations of the statute. For most of the class members, the Court held that inaccurate information in a credit file, while violating the credit act, did not by itself give a person standing to sue for damages. The Court did rule, however, that some class members could sue where the inaccurate information was turned over to third parties—those class members suffered a concrete injury that was enough to meet the federal standing requirements. We are currently analyzing the impact Ramirez may have on statutory claims being prosecuted in federal court and will report on same in the next Sidebar of the CM Report.

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