Sanctions: Rule 38 and Section 1912
Sanctions in appeals are governed by Rule 38 of the Federal Rules of Appellate Procedure and by 28 U.S.C. § 1912. Rule 38 provides that “[i]f a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.” Similarly, 28 U.S.C. § 1912 states, “Where a judgment is affirmed by the Supreme Court or a court of appeals, the court in its discretion may adjudge to the prevailing party just damages for his delay, and single or double costs.”
Intersection of Rule 38 and Section 1912
While the rule and the statute seem similar, there are differences that can be seen from their language. In particular, Rule 38 allows damages when a court of appeals determines that an appeal is frivolous, but the sanctions under section 1912 are based on the “just damages” that are caused by the delay suffered by the appellee.
On its face, section 1912 does not require a finding that the appeal was frivolous, but only whether the judgment was affirmed on appeal. Applying section 1912 sanctions based simply on whether the appellant won or lost, however, would run the risk of deterring not only frivolous appeals but all appeals. Many appeals involve close issues, and granting sanctions merely because an appellant loses its appeal would deter the proper development of the law.
Not surprisingly, therefore, section 1912 has never been understood as an award granted to prevailing respondents merely because they have suffered just damages. Indeed, cases discussing appellate sanctions uniformly discuss the requirement that the appeal be frivolous, whether under Rule 38 or section 1912. For example, the U.S. Court of Appeals for the Tenth Circuit held that an appeal “[did] not justify the assessment of penalties against the appellant pursuant to [Rule 38] or 28 U.S.C. § 1912” because there was no showing that the appeal was frivolous. Autorama Corp. v. Stewart, 802 F.2d 1284, 1288–89 (10th Cir. 1986). Furthermore, that court has recognized the importance of not deterring potential appeals through the application of Rule 38 and section 1912 sanctions:
Both Rule 38 [of the Federal Rules of Appellate Procedure] and [28 U.S.C.] § 1912 allow for single or double damages if the court determines that an appeal is frivolous or brought for purposes of delay. However, “[a] nonprevailing party should not be penalized for merely prosecuting or defending a lawsuit,” so long as the appeal contains “legitimate disputes whose outcomes reasonable persons could differ upon.”
Miller v. State Farm Fire & Cas. Ins. Co., Nos. 92-6353 & 92-6359, 1993 WL 265145, at *4 (10th Cir. July 15, 1993) (quoting U.S. Indus., Inc. v. Touche Ross & Co., 854 F.2d 1223, 1241, 1244 (10th Cir. 1988); Autorama Corp., 802 F.2d at 1288) (citations omitted) (alterations in Miller); accord Webster v. Sowders, 846 F.2d 1032, 1040 (6th Cir. 1988) (holding that “[a]ppeals that are frivolous or are interposed for delay are sanctionable against a party by this Court under 28 U.S.C. § 1912 and [Rule] 38” (emphasis in original)).
To the extent that delay is mentioned in Miller and Webster, it applies to an appeal brought for a non-merits-based reason—to delay a party from obtaining the benefit of the ruling rendered by the district court. See A/S Siljestad v. Hideca Trading, Inc., 678 F.2d 391, 392 (2d Cir. 1982) (sanctioning appellant because his appeal was frivolous and because the appeal “was taken solely for the purpose of delaying payment of the judgment to the last possible moment”).
The U.S. Court of Appeals for the Seventh Circuit’s discussion of the method for determining when to order sanctions is a good explanation of the process:
[T]he appellate court in order to award damages makes two determinations. First, it must determine that the appeal is frivolous. “A frivolous appeal means something more to us than an unsuccessful appeal.” Second, the appellate court, in its discretion, must examine whether the appeal is an appropriate one for the imposition of a sanction. “[D]amages are awarded by the court in its discretion in the case of a frivolous appeal as a matter of justice to the appellee and as a penalty against the appellant.” Typically the courts have looked for some indication of the appellant’s bad faith suggesting that the appeal was prosecuted with no reasonable expectation of altering the district court’s judgment and for the purpose of delay or harassment or out of sheer obstinacy.
The purpose of the rule is two-fold. First it operates to compensate winners of judgments in the district court for the expense and delay of defending against meritless arguments in the court of appeals. Second, it seeks to deter such appeals and thus to preserve the appellate court calendar for cases worthy of consideration. The penalty aspect of the rule serves to vindicate public interests which go beyond compensating the appellee. Consequently, we believe that although ordinarily an award of damages and double costs would only be appropriate upon the motion of the appellee, in extraordinary cases such as this we may make such an award sua sponte.
Ruderer v. Fines, 614 F.2d 1128, 1132 (7th Cir. 1980) (per curiam) (citations omitted) (second alteration in original); see also Gilles v. Burton Constr. Co., 736 F.3d 1142, 1146–47 (7th Cir. 1984).
Courts have described the circumstances in which an appeal will be deemed frivolous in a variety of ways:
- Where “the result is obvious or if the claims of error are wholly without merit.” Malhiot v. S. Cal. Retail Clerks Union, 735 F.2d 1133, 1137 (9th Cir. 1984); see also Autorama, 802 F.2d at 1288.
- Where the appellant “had no basis for appeal” and “[n]either of its claims possessed a foundation in fact or law.” Glanzman v. Uniroyal, Inc., 892 F.2d 58, 61 (9th Cir. 1989).
- Where “‘the arguments made are merely conclusory.’” Alliance for Water Efficiency v. Fryer, 892 F.3d 280, 287 (7th Cir. 2018) (quoting Duff v. Cent. Sleep Diagnostics, LLC, 801 F.3d 833, 844 (7th Cir. 2015)).
- Where the arguments are “‘wholly undeveloped.’” Alliance for Water Efficiency, 892 F.3d at 287 (quoting Smeigh v. Johns Manville, Inc., 643 F.3d 554, 566 (7th Cir. 2011)).
- Where the appeal is “‘lacking in substance and foreordained to lose.’” Alliance for Water Efficiency, 892 F.3d at 287 (quoting Berwick Grain Co. v. Ill. Dep’t of Agric., 217 F.3d 502, 505 (7th Cir. 2000)).
Any appeal meeting these standards runs the risk of Rule 38 and section 1912 sanctions.
Extent of Damages
If an appeal is found to be frivolous, the appellee may be entitled to just damages and single or double costs under Rule 38 and section 1912.
The just damages award frequently includes some form of attorney fees related to defending against the appeal. See, e.g., Blixseth v. Yellowstone Mountain Club, LLC, 854 F.3d 626, 630–31 (9th Cir. 2017); NLRB v. Unbelievable, Inc., 71 F.3d 1434, 1441 (9th Cir. 1995).
Double costs, however, go beyond the appellee’s actual damages from defending against a frivolous appeal and are a punishment imposed on the appellant for bringing the appeal. Hence, double costs have not been deemed appropriate merely for bringing an appeal that has been found to be frivolous; rather, double costs require that the appellant has engaged in an “extensive history of persistent, repetitive and vexatious litigation.” Bridgewater Operating Corp. v. Feldstein, 346 F.3d 27, 31 (2d Cir. 2003).
Lack of Jurisdiction: Not a Bar
The fact that the appellate court lacks jurisdiction over the appeal does not mean that it cannot sanction the appellant for bringing such an appeal. Okon v. Comm’r, 26 F.3d 1025, 1027 (10th Cir. 1994) (stating that lack of jurisdiction did not prevent court from awarding sanctions, though it found that sanctions were not warranted on the facts of the case). It can be easily imagined that bringing an appeal where there is no jurisdiction might be seen as frivolous regardless of the merits of the appeal. According to the Tenth Circuit, the question is the “obviousness of the jurisdictional deficiency undermining the petitioner’s appeal,” along with the appellant’s past litigation conduct. Okon, 26 F.3d at 1027.
Appellate lawyers’ knowledge of the substantive and procedural law is the best assurance that they will not commit sanctionable behavior. The threat of sanctions should not prevent an advocate from pursuing colorable arguments that may advance the law. But an argument that is not colorable and is advanced to delay the day of reckoning for your client should be avoided at all costs.
Sanford Hausler is of counsel with Cox Padmore Skolnik & Shakarchy LLP in New York, New York.