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August 31, 2017 Articles

First-Time Issues on Appeal: May They Ever Be Heard?

Finding unpreserved issues need not be met with despair.

By Sanford Hausler – August 31, 2017

As we all learned in law school, “[i]t is the general rule, of course, that a federal appellate court does not consider an issue not passed upon below.” Singleton v. Wulff, 428 U.S. 106, 120 (1976). Because of this well-known rule, the first thing that we as appellate lawyers do in evaluating any appeal is check to ensure that any appealable issues have been properly preserved. Finding unpreserved issues is often met with despair.

But there are exceptions to this general rule. Courts have held that “the rule against considering arguments raised for the first time on appeal ‘is prudential, not jurisdictional.’” United States v. Brunner, 726 F.3d 299, 304 (2d Cir. 2013) (quoting Sniado v. Bank Austria AG, 378 F.3d 210, 213 (2d Cir. 2004)). Over time, courts have found the rule not to be applicable in a number of situations.

Of course, when applying such exceptions, courts often note that a determination to consider an issue raised for the first time on appeal is a matter of discretion, not right. Sniado, 378 F.3d at 213. Hence, the fact that a case arguably fits within an exception to the general rule does not mean that the circuit court must hear the issue. It only means that it may hear the issue.

The term exception may itself be a misnomer. While judicial opinions often refer to “exceptions” where courts might not apply the general rule, these “exceptions” are actually factors considered by courts in deciding whether to deviate from the rule, rather than clear exceptions. Appellate courts will usually abide by the general rule and decline to hear issues not raised in the district court, but, in the rare case, a knowledge of the factors may enable an attorney to convince a court to hear the appeal even though the issue had not been properly preserved.

Injustice is the factor most likely to convince a court to hear an unpreserved issue. The Singleton Court, which stated the general rule, also noted that “there are circumstances in which a federal appellate court is justified in resolving an issue not passed on below, as where . . . ‘injustice might otherwise result.’” 428 U.S. at 121 (citations omitted; quoting Hormel v. Helvering, 312 U.S. 552, 557 (1941)). While a circuit court may hear an issue for the first time on appeal where there is no injustice, injustice will be the likely reason for such a circumstance.

This factor seems flexible—isn’t it unjust that your client lost his case?—but such is not the case. While no court has set out a standard by which the injustice required for a court to hear an issue for the first time on appeal may be definitively determined, the mere fact that an appeal may result in reversal of a judgment is unlikely to be sufficient. Indeed, in National Ass’n of Social Workers v. Harwood, 69 F.3d 622, 628 n.5 (1st Cir. 1995), the court stated that “‘miscarriage of justice’ means more than the individualized harm that occurs whenever the failure . . . to raise a claim or defense alters the outcome of a case. Rather, courts ordinarily will relax the raise-or-waive principle . . . only if a failure to do so threatens the frustration of some broadly important right.”

Beyond Any Doubt
The “issue is beyond doubt” factor relates to legal issues, which the courts find easy to resolve. This is another factor that the Singleton Court mentioned as a justifiable reason to hear an issue for the first time on appeal.

In Telco Leasing, Inc. v. Transwestern Title Co., 630 F.2d 691 (9th Cir. 1980), the court decided an issue relating to attorney fees and what law applied after the case was transferred from Illinois to a district court in California. The contract at issue specifically stated that Illinois law applied, but the appellant never objected to the application of California law in the district court. The court of appeals noted that the case had been transferred from the Northern District of Illinois and that the transferor court would have decided that Illinois law applied. Under these circumstances, the court found that there was no doubt but that Illinois law applied. Id. at 693. Having so found, the court reversed the award of attorney fees, which were not allowed under Illinois law but were available under California law.

In Thompson v. Brule, 37 F.3d 1297 (8th Cir. 1994), the court considered the appellant’s right to an offset, even though that issue had not been raised in the district court. The court found that the issue was beyond doubt because the appellee, in her brief, had acknowledged that the appellant was correct on this point. Id. at 1302.

In Estate of Barney v. PNC Bank, N.A., 714 F.3d 920 (6th Cir. 2013), the court allowed an argument relating to whether a motion to dismiss could be based on an affirmative defense. There, the defendant had based his motion to dismiss on an Ohio statute that the Ohio Supreme Court had held was an affirmative defense and on clear Sixth Circuit precedent that a motion to dismiss may be based on an affirmative defense. Id. at 925–26. Because this exception only applies when the issue is without doubt, it would appear that, under Barney, the exception applies when the issue has been decided in the past by the state supreme court or the U.S. Supreme Court or if the issue has been decided numerous times in the same way without exception.

Purely Legal Issue
Another factor is “purely legal issue.” Unlike the prior factor, this factor does not require that the legal issue be “without doubt” but only that it be a purely legal issue that does not require any additional fact finding. As the Third Circuit in Comite de Apoyo a los Trabajadores Agricolas v. Perez, 774 F.3d 173 (3d Cir. 2014), noted, “it is ‘generally appropriate’ for an appellate court to reach the merits of an issue even if the district court has not done so, provided that . . . ‘the factual record is developed and the issues provide purely legal question upon which an appellate court exercises plenary review.’” Id. at 182 (quoting Hudson United Bank v. LiTenda Mortg. Corp., 142 F.3d 151, 159 (3d Cir. 1998)).

Of course, the application of this factor, like all of the factors, are matters of discretion, and circuit courts are not likely to decide legal issues that were not raised in the district court absent something more. In Vento v. Director of Virgin Islands Bureau of Internal Revenue, 715 F.3d 455 (3d Cir. 2013), the Third Circuit stated:

The Taxpayers also argue that we should exercise our discretion to hear the burden of proof issue because it is a pure question of law. We “may consider a pure question of law even if not raised below where refusal to reach the issue would result in a miscarriage of justice or where the issue’s resolution is of public importance.” Here, the parties are sophisticated and were represented by able counsel. . . . [W]e will not exercise our discretion to adjudicate the issue.

Id. at 470 (quoting Huber v. Taylor, 469 F.3d 67, 74–75 (3d Cir. 2006) (emphasis in original)).

In Readco, Inc. v. Marine Midland Bank, 81 F.3d 295 (2d Cir. 1996), the plaintiffs asserted an equitable estoppel theory that was not raised before the district court. The Second Circuit, while acknowledging the general rule that issues raised for the first time on appeal should not be considered, stated, “This general rule may be disregarded in two circumstances: (1) where consideration of the issue is necessary to avoid manifest injustice or (2) where the issue is purely legal and there is no need for additional fact-finding.” Id. at 302. Appellate courts do not engage in fact finding, but if an issue is a pure issue of law, it, as a matter of course, will not involve additional fact finding.

Important Issues
Another factor considered by circuit courts in deciding whether to consider issues raised for the first time on appeal is whether the issue is important.

In Lo Duca v. United States, 93 F.3d 1100 (2d Cir. 1996), for example, Lo Duca sought to evade extradition to Italy by claiming that “the legal framework established by the extradition statute is unconstitutional.” Id. at 1104. That issue was raised for the first time on appeal. The Second Circuit cited the general rule set out in Singleton, but stated, “We retain broad discretion to consider issues not raised initially in the District Court. Since the argument proffered by Lo Duca involves constitutional notions of separation of powers, the Government’s response that Lo Duca has waived his claims ‘cannot be dispositive.’” Id. (citations omitted). The court decided that “the constitutional issues advanced by Lo Duca are sufficiently important that they should be assessed on their merits.” Id.

And in National Ass’n of Social Workers, the court considered an issue raised for the first time on appeal where “the omitted issue implicates matters of great public moment, and touches upon policies as basic as federalism, comity, and respect for the independence of democratic institutions.” 69 F.3d at 628.

Courts have also held that the waiver rules may be relaxed “‘whenever the public interest so warrants.’” MD Mall Assocs., LLC v. CSX Transp., Inc., 715 F.3d 479, 486 (3d Cir. 2013) (citation omitted).

No Tactical Advantage
Whether a party is attempting to obtain tactical advantage is also a consideration.

In National Association of Social Workers, the court explained that an appellate court might consider whether the failure to raise the issue below was “entirely inadvertent rather than deliberate” and yielded no tactical advantage to the appellant. 69 F.3d at 628. This factor seems more like a reason not to decide an issue: if the appellant has been engaging in gamesmanship, a court would be far less likely to exercise its discretion in the appellant’s favor.

Change in Law
A circuit court may also consider whether there has been a change in law between the hearing in the district court and the briefing on appeal.

In Spokane County v. Air Base Housing, Inc., 304 F.2d 494 (9th Cir. 1962), the Ninth Circuit held that a point not raised in the district court might nevertheless be raised on appeal “where that point was developed for the first time in a controlling decision handed down after hearing in the trial court.” Id. at 499. Such a change in law might require a remand to the district court for further fact finding, if such is necessary. Id. at 499–500.

Similarly, in Holland v. Big River Minerals Corp., 181 F.3d 597 (4th Cir. 1999), the court stated that “[t]he intervening law exception to the general rule . . . applies where ‘there was strong precedent’ prior to the change, such that the failure to raise the issue was not unreasonable and the opposing party was not prejudiced by the failure to raise the issue sooner.” Id. at 605–06 (citation omitted; quoting Curtis Publishing Co. v. Butts, 388 U.S. 130, 143 (1967) (plurality opinion)). This “precedent” limitation makes sense because a legal issue may be raised even if it has not been definitively decided in a controlling court decision. However, when there is strong precedent indicating that the issue would be decided adverse to the appellant, it makes sense for that party not to raise the issue. When a decision comes down after the district court decision that indicates that the “strong precedent” is no longer the law, it is reasonable to allow the appellant to raise an issue not raised before the district court.

Related Issue
“Related issues” are sometimes seen as nothing more than “a more detailed exposition of . . . issue[s] already placed before the district court.” Mission Group Kan., Inc. v. Riley, 146 F.3d 775, 783 n.11 (10th Cir. 1998). As such, they are not viewed as new issues but merely as a new way of looking at issues that were already preserved for appeal.

In Ford v. Bernard Fineson Development Center, 81 F.3d 304 (2d Cir. 1996), the court stated that issues raised on appeal “need not be identical to those made below if they involve only questions of law and additional findings of fact are not required.” Id. at 307 (quoting In re McLean Indus., Inc., 30 F.3d 385, 387 (2d Cir. 1994) (per curiam)). There, the court agreed to hear an issue that “concern[ed] an issue already considered at some length by the district court” and that was based “exclusively on legal authorities, and on an inter-agency compact the authenticity of which is not contested by the parties and which operates pursuant to and in the manner of a governmental regulation.” 81 F.3d at 307.

Class Actions
In the special context of class actions, an issue raised for the first time on appeal may be considered by the circuit court.

In In re National Football League Players Concussion Injury Litigation, 821 F.3d 410, 430 (3d Cir. 2016), the Third Circuit noted that “some courts have relaxed the standards for waiver in class action.” In that case, the objectors in a class action brought by professional football players against the National Football League based on the risks of concussion asserted for the first time on appeal that counsel for a subclass was not an adequate representative because of his representation of players outside the subclass, raising a possible conflict in interest. The Third Circuit stated its rationale as follows:

We agree that the usual waiver rules should not be applied mechanically in class actions. We have an independent obligation to protect the interest of the class, and in many instances class members are far removed from the litigation and lack the information and incentive to object. Accordingly, we retain discretion to consider arguments that go to the heart of the class settlement’s adequacy and fairness.

Id. (citation omitted). The court considered the issue and found that there was no conflict.

Of course, an appellate attorney will always groan when he finds a meritorious issue that has not been preserved for appeal. But the failure to raise the issue in the district court will not, in all cases, mean that review is foreclosed. While a circuit court will only rarely allow an unpreserved issue to be decided on appeal, relief may be available in appropriate cases. Close understanding of the factors considered by courts in making such a decision is necessary if you want to convince a circuit court to exercise its discretion in your client’s favor to consider an issue for the first time on appeal.

Sanford Hausler is of counsel with Cox Padmore Skolnik & Shakarchy LLP in New York, New York.

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