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March 05, 2015 Articles

Parsing the Overhaul of the Bankruptcy Appeals Rules

Learn why these revisions will aid the smooth flow of traffic through various courts.

By Gregory W. Werkheiser

On December 1, 2014, the first comprehensive overhaul of Part VIII of the Federal Rules of Bankruptcy Procedure (FRBP) became effective. The revisions to the Part VIII rules, the product of a multiyear review project of the Judicial Conference and Advisory Committee, function to (1) bring the Part VIII rules into closer alignment, both structurally and substantively, with the Federal Rules of Appellate Procedure, while retaining features distinct to bankruptcy appeals; (2) incorporate a presumption favoring the electronic transmission, filing, and service of court documents; and (3) adopt a clearer and simpler style. In addition, as part of this holistic review of rules governing bankruptcy appeals, Rule 6 of the Federal Rules of Appellate Procedure has been revised and updated.

Highlights of Specific FRBP Part VIII Revisions

FRBP 8001(c). Rule 8001(c) expresses the preference for electronic transmission of documents under the Part VIII rules, unless they are being sent by or to an unrepresented individual or the court’s local rules provide otherwise.

FRBP 8003. This rule is an amalgam of several former rules. Subdivision (a) incorporates the substance of existing Rule 8001(a) but adds the requirement that the appellant attach to the notice of appeal a copy of the order under appeal. Subdivision (b) is new and adapts Federal Rule of Appellate Procedure 3(b) permitting the filing of a joint notice of appeal by multiple appellants with similar interests and the consolidation of related appeals in the district court or bankruptcy appellate panel (BAP). Subdivision (c) combines elements of existing Rule 8004 and Federal Rule of Appellate Procedure 3(d) and adds a directive that service should ordinarily be made by electronic means. Finally, subdivision (d) borrows from Federal Rules of Appellate Procedure 3(d) and 12(a) to modify existing Rule 8007(b) to require prompt docketing of appeals in the district court or BAP. This mandate for prompt docketing recognizes that docketing an appeal ordinarily no longer requires the physical movement of masses of papers and is intended to facilitate the docketing of motions and other filings on a single appeal docket, even before the appellate record is fully assembled.

FRBP 8004. Rule 8004 incorporates elements of existing Rules 8001(b) and 8003, as well as Federal Rule of Appellate Procedure 5. Although motions for leave to appeal and related notices of appeal are still to be filed in the bankruptcy court, given the mandate for prompt docketing of appeals, any cross-motions or responses to a motion for leave to appeal must now be filed in the district court or BAP.

FRBP 8005. Rule 8005, derived from former Rule 8001(e), applies only in judicial districts in which a BAP has been appointed. One significant change from the former rule concerns disputes regarding the appellant’s election to have the appeal heard by the district court instead of the BAP. New Rule 8005(c) requires any appeal party that disputes such an election to do so by filing a motion within 14 days after the notice of election is filed. Subdivision (d) clarifies that when a party fails to file a separate notice of appeal accompanying a motion for leave to appeal pursuant to Rule 8004, the date of filing of the motion will be used to determine the timeliness of the election.

FRBP 8006. New Rule 8006, governing certification of appeals for direct review by a court of appeals per 28 U.S.C. § 158(d)(2), is derived from former Rule 8001(f). One notable difference between new Rule 8006 and the former rule is that Rule 8006(b) now deems the appellate matter to remain pending before the bankruptcy court for 30 days from the filing of the first notice of appeal to allow the bankruptcy judge an opportunity to determine whether certification is warranted. After the 30-day window expires, a certification request may only be made to or acted upon by the district court or BAP, as applicable.

FRBP 8007. This rule is derived from former Rule 8005 and largely leaves unaltered the existing procedures for seeking a stay in connection with a bankruptcy appeal. The advisory committee notes, however, contain one important clarification respecting motions for an appellate stay (or to vacate or modify an existing appellate stay) filed in a district court or BAP (or court of appeals if a direct appeal is pending): “[A] notice of appeal need not be filed with respect to a bankruptcy court’s order granting or denying such a motion.”

FRBP 8008. Rule 8008 memorializes the existing practice of allowing a bankruptcy court to issue an indicative ruling if it believes that it lacks jurisdiction to grant the requested relief due to a pending appeal. The procedure largely parallels that of Rule 62.1 of the Federal Rules of Civil Procedure. Accordingly, after an indicative ruling, only the court where the appeal is pending may remand for further proceedings in the bankruptcy court. Jurisdiction over the appeal is not lost unless the appellate court expressly dismisses the appeal.

FRBP 8009. Rule 8009 expands former Rule 8006. Under subdivision (c), if a transcript of the bankruptcy court proceedings is unavailable, the parties may prepare a statement of evidence that recounts the proceedings, which statement must be approved by the bankruptcy court. Subdivision (d) permits the parties to prepare a statement of the case in lieu of the record on appeal. To be certified as the record on appeal, it must also be approved by the bankruptcy court. Subdivision (f) deals with sealed documents that a party to an appeal wishes to include in the record on appeal. If the document remains under seal by the bankruptcy court, the party wishing to use it must first move the appellate court to accept the document under seal. Only after the motion is granted will the document be transmitted from the bankruptcy clerk to the appellate court.

FRBP 8010. Rule 8010 largely retains the substance of former Rule 8007, with one notable exception. Because appeals are now deemed docketed in the appellate court immediately upon filing of a notice of appeal, Rule 8010(b) requires the clerk to transmit notice to the parties once the appeal record is complete. This notice determines the briefing schedule for Rule 8018(a).

FRBP 8011. Rule 8011 derives from former Rule 8008. The most significant changes reflect the rules’ new emphasis on electronic transmission. For example, Rule 8011(c) provides that, except in narrow circumstances, service should be made electronically and that such service will be effective upon transmission.

FRBP 8012. A new addition that derives from Federal Rule of Appellate Procedure 26.1, Rule 8012 requires nongovernmental corporate parties to an appeal to file a statement disclosing any parent corporation or other publicly held corporation that owns more than 10 percent of its stock. This statement will normally be filed with a party’s principal brief, although it may have to be filed earlier if, for example, the appeal involves motions.

FRBP 8013. Rule 8013, which derives from former Rule 8011, includes several noteworthy changes. First, Rule 8013 prescribes page limits for motions and replies (20 and 10 pages, respectively). Second, it now prohibits the filing of separate briefs in support of motions. Third, it adds a procedure for parties wishing to intervene in an appeal. Such a motion must be filed within 30 days of the docketing of the appeal.

FRBP 8014–8015. These rules retain much of the substance of former Rule 8010, governing appellate briefs. Subdivision 8015(a)(7) alters the appropriate length of briefs and replies. Now principal briefs may not exceed 30 pages and reply briefs may not exceed 15 pages (versus 50 and 25 pages, respectively, under the former rule). Alternatively, the total word counts may not exceed 14,000 words for a principal brief or 7,000 words for a reply brief. Per subdivision 8015(a)(7)(C), any party availing itself of the word-count limitation must certify that its brief is in compliance. A further notable feature of Rule 8014 is that subdivisions 8014(f) memorializes the prevailing practice in many jurisdictions of allowing parties to cite supplemental authorities to the appellate court. The submission must identify its relevance to the already completed briefing or oral argument, and its body may not exceed 350 words. Similarly limited responses are authorized if filed within 7 days.

FRBP 8016. Venturing into territory not addressed in the former Part VIII rules, Rule 8016 (adapted from Federal Rule of Appellate Procedure 28.1) sets forth the procedures that govern the filing of cross-appeals.

FRBP 8017. Rule 8017 is adapted from Federal Rule of Appellate Procedure 29 and addresses motions for leave to file amicus briefs and the contents of amicus briefs.

FRBP 8018. Rule 8018 retains many of the filing and service requirements for briefs seen in former Rule 8009. However, it extends the time for filing the principal briefs from 14 days to 30 days and provides for the time for filing the opening brief to commence when the clerk provides notice of completion of the record. The time for the appellant to file a reply to the appellee’s answering brief remains 14 days and must be filed at least 7 days prior to any oral argument. The rule also includes a new provision (borrowed from Federal Rule of Appellate Procedure 31(c)) identifying certain actions that may be taken if a party fails to file its brief.

FRBP 8019. This rule expands on former Rule 8012, governing oral arguments, so as to mirror the corresponding Federal Rule of Appellate Procedure. Notable additions include the ability of a party to submit a statement showing why oral argument is not necessary (the former rule allows only for statements showing why it is necessary), allowing parties to agree to submit a case for decision on the briefs, and establishing procedures for the use of physical exhibits at argument.

FRBP 8020. Rule 8020 retains former Rule 8020’s procedure for shifting costs for frivolous appeals but adds a subdivision that allows the appellate court to sanction any attorney appearing before it for other misconduct, such as the failure to comply with a local court rule or court order.

FRBP 8025. This rule incorporates the substance of former Rule 8017 but adds one new subdivision. Under subdivision 8025(c), if an appellate judgment affirming the bankruptcy court is stayed, then the stay automatically extends to the underlying bankruptcy court order for the extent of the appellate stay.

FRBP 8027. Rule 8027 is new and applies in situations where the district court or BAP has mediation procedures for bankruptcy appeals. In those cases, this rule requires the appellate court clerk to promptly notify the parties after docketing the appeal of the existence of such procedures and how they affect the time for filing briefs.

Revised Federal Rule of Appellate Procedure 6

Several changes have been made to Rule 6 of the Federal Rules of Appellate Procedure to conform its terms to the renumbered Part VIII Bankruptcy Rules and to reflect the shift to electronic filing and transmission of the record that now prevails under the Part VIII rules. New subdivision (c) has been added to govern permissive direct appeals from the bankruptcy court to the court of appeals under 28 U.S.C. § 158(d)(2).

Relationship to Local Rules and Practice

One aspect of the overhaul of the Part VIII rules that has garnered little attention is the shifting relationship between the Part VIII rules and local rules and practices that have heretofore prevailed in bankruptcy appeals. In several places, the former Part VIII rules expressly endorsed the ability of individual courts to modify their requirements by qualifying the rules’ applicability whenever “the district court or the bankruptcy appellate panel by local rule otherwise provides.” See, e.g., former Fed. R. Bankr. P. 8009(a) (fixing schedule for filing of briefs); former Fed. R. Bankr. P. 8010(a) (specifying form of briefs); former Fed. R. Bankr. P. 8010(c) (specifying page limits for appeal briefs); former Fed. R. Bankr. P. 8015 (establishing procedures for motion for rehearing). Accordingly, appeal parties could encounter dramatic differences in different district courts and BAPs depending on the vagaries of their local rules and practices. In the United States District Court for the District of Delaware, for example, the Local Civil Rules allow only 7 days for replies (versus 14 in former FRBP 8009(a)) and limit principal briefs to 20 pages and reply briefs to 10 pages (versus 50 pages and 25 pages in former FRBP 8010(c)). See D. Del. R. 7.1.2 & 7.1.3(a)(4).

In an effort to achieve greater uniformity, the revised Part VIII rules contain several new directives limiting the ability of district courts and BAPs to vary the Part VIII rule requirements or to refuse to accept filings that, while not in compliance with local rules or practice, satisfy the applicable Part VIII rules. The rule governing the form and length of appeal briefs now provides that “[a] district court or BAP must accept documents that comply with the applicable requirements of this rule.” Fed. R. Bankr. P. 8015(f). See also Fed. R. Bankr. P. 8011(a)(3) (same, as applied to other appeal filings). Indeed, when the drafters of the revised Part VIII rules want to endorse variations among individual courts, they expressly say so. See, e.g., Fed. R. Bankr. P. 8022(a)(1) (“Unless the time is shortened or extended by order or local rule, any motion for rehearing by the district court or BAP must be filed within 14 days after entry of judgment on appeal.”)

Accordingly, participants in bankruptcy appeals will need to educate themselves (as well as district court and BAP judges and clerks) about which local rules and practices that historically have been applied to bankruptcy appeals may no longer apply going forward.

Implications for Bankruptcy Appellate Practice

Although it was once famously written by Ralph Waldo Emerson that “foolish consistency is the hobgoblin of little minds,” the thoughtful consistency generally evident in this reworking of the Part VIII rules appears to be the product of a group of formidable minds employing such consistency with the Federal Rules of Appellate Procedure to good effect. The revised rules governing bankruptcy appeals eventually should help streamline bankruptcy appeals and increase the perception of fairness attendant to bankruptcy appeals, especially for attorneys who are appearing outside their home courts.

The former Part VIII rules were silent on several important aspects of bankruptcy appeals, thereby leaving appeal parties to fend for themselves in a forest of local rules, standing orders, chambers procedures, and bankruptcy lore. These revised Part VIII rules have filled many (though not all) of those gaps and have done so in a way that allows bankruptcy appeal participants to reliably consult precedent, practices, and procedures developed under the Federal Rules of Appellate Procedure for guidance in most situations.

Yet, as with implementing any major alteration in the way things get done, it can be expected that there may be a brief, but sharp period of adjustment in which litigants may be caught unaware of some of these changes. Not unlike the first few days after September 3, 1967, when Sweden abandoned a 233-year tradition of driving on the left side of the road, there are sure to be a few snarls as courts and participants in bankruptcy appeals adapt to the new structure and provisions of the Part VIII rules. Eventually, however, once word gets out about the revisions, there is every reason to believe that these revisions will aid the smooth flow of bankruptcy appeal traffic through the district courts, BAPs, and courts of appeals.

Keywords: bankruptcy and insolvency litigation, bankruptcy appeals, bankruptcy procedure, Part VIII, Federal Rules of Appellate Procedure

Gregory W. Werkheiser – March 5, 2015