The Week in Federal Appellate Jurisdiction: September 22–28, 2019

There weren’t too many federal appellate-jurisdiction decisions last week. But the few we got were interesting. The Second Circuit had to untangle the interplay between state sovereign immunity appeals and redistricting challenges. The First Circuit applied its approach to appeals from denials of relief from bankruptcy’s automatic stay (an issue currently before the Supreme Court). And the Eleventh Circuit dealt with an imperfect notice of appeal.

The Second Circuit heard a state sovereign immunity appeal in the challenge to Connecticut’s redistricting plan

In NAACP v. Merrill, the Second Circuit tackled a single district court judge’s denial of state sovereign immunity in a constitutional challenge to Connecticut’s redistricting plan.

First some background. The plaintiffs in Merrill alleged that Connecticut had violated the Fourteenth Amendment’s principle of “one person, one vote” by counting prisoners in the district where their prison is located, not where they permanently reside. This artificially inflated the representation of the largely rural districts where the prisons were and deflated representation in more urban districts. The defendants (the Governor and Secretary of State of Connecticut) moved to dismiss for lack of jurisdiction and failure to state a claim, arguing (among other things) state sovereign immunity. The district court rejected the motions, and the defendants appealed.

The appeal presented a mix of jurisdictional issues. Two points were clear: (1) denials of state sovereign immunity are normally appealable under the collateral-order doctrine, and (2) constitutional challenges to apportionment must be heard by a three-judge district court. In Merrill, a single district court judge had denied the motion to dismiss for state sovereign immunity. It was thus not clear whether the district court had jurisdiction to do so.

The Second Circuit ultimately concluded that the district court had jurisdiction (so the court of appeals did, too). A single district court judge normally has jurisdiction in an apportionment case only to send the case to a three-judge district court. But in doing so, the single district court judge can determine whether federal subject-matter jurisdiction exists. And state sovereign immunity goes to the district court’s subject-matter jurisdiction; it deprives those courts of power to to hear suits against the states. The single district court judge could thus address the state sovereign immunity issue without first referring the case to a three-judge district court.

The Second Circuit went on to hold that the suit was not barred by sovereign immunity. As to the motion to dismiss, that should have been referred to a three-judge district court. The Second Circuit accordingly remanded the case to be so referred.

NAACP v. Merrill, 2019 WL 4616716 (2d Cir. 2019), available at the Second Circuit and Westlaw.

The First Circuit applied its unique approach to appeals from orders denying automatic-stay relief

In In re Financial Oversight and Management Board for Puerto Rico, the First Circuit held that it had jurisdiction to review a district court order denying relief from an automatic stay in Puerto Rico’s restructuring.

The case involved duplicate auto insurance premiums that citizens of Puerto Rico had paid to the Commonwealth. After years of litigation, the parties eventually settled on a procedure for citizens to claim erroneous payments. But shortly after agreeing on this procedure, the Commonwealth was taken into restructuring proceedings by the Financial Oversight and Management Board for Puerto Rico. This automatically stayed all collection actions against the Commonwealth, including those for duplicate auto insurance premiums. The district court largely denied the auto-insurance claimants’ request to lift the automatic stay, and the claimants appealed.

Since Puerto Rico’s restructuring is a type of bankruptcy, the First Circuit treated the appeal as essentially one from normal bankruptcy proceedings. The court noted that in most circuits the appellate-jurisdiction issue would be straightforward: “[a]s the law stands in seven circuits, . . . denials of motions for relief from an automatic stay are categorically deemed final and appealable.” But the First Circuit had rejected this rule in In re Atlas IT Export Corp. It instead approaches the issue on a case-by-case basis, “scout[ing] for finality indicators, like whether the disputed order conclusively decided a discrete, fully-developed issue—an order that, at the time of appeal, will not be changed or be mooted and is not reviewable elsewhere.”

Here, the order denying automatic-stay relief was final. The district court gave no indication that it would revisit the issue. And the issue would not be reviewed elsewhere. The First Circuit accordingly held that it had appellate jurisdiction.

On the merits, the court partially affirmed and partially vacated the denial of stay relief.

Note, in Ritzen Group, Inc. v. Jackson Masonry, LLC the Supreme Court will address the appealability of denials of relief from an automatic stay in normal bankruptcy proceedings.

In re Financial Oversight and Management Board for Puerto Rico, 2019 WL 4667518 (1st Cir. 2019), available at the First Circuit and Westlaw.

The Eleventh Circuit addressed the content and timeliness of a notice of appeal

In PlayNation Play Systems, Inc. v. Velex Corp., the Eleventh Circuit held that a notice of appeal naming only a corporation was sufficient for the corporation’s officers to appeal. The court also noted that the order in question—one imposing contempt sanctions—was not final until the amount of sanctions was determined.

The case was a trademark dispute between two companies that make and sell children’s playground equipment. The defendant had been permanently enjoined from infringing on the plaintiff’s mark—and that injunction was upheld on appeal—but the defendant nevertheless continued to sell goods using the infringing mark. The district court held the defendant and its two officers in contempt and ordered them all to pay about $48,000 in damages, fees, and costs. The defendants then appealed.

The Eleventh Circuit rejected both of the plaintiff’s jurisdictional arguments.

It first held that the notice of appeal was sufficient to give the court jurisdiction over all three defendants, even though the notice named only the corporation. Appellate Rule 3(c)(1) requires that a notice “specify the party or parties taking the appeal.” But Rule 3(c)(4) provides that “[a]n appeal must not be dismissed . . . for failure to name a party whose intent to appeal is otherwise clear from the notice.”

In PlayNation Play Systems, the officers’ intent was clear. The notice said that the appeal was from (among other orders) the order awarding sanctions, for which the corporation and its offers were jointly and severally liable. The defendant officers were the corporation’s only officers and shareholders. And it would have made little sense for only the corporation to appeal, as even a successful appeal would have left the officers liable for the sanctions. The Eleventh Circuit accordingly held that all of the defendants intended to appeal.

The Eleventh Circuit then held that the notice of appeal was timely. The district court had found the defendants in contempt but put off calculating the amount of sanctions. It was only after the sanction was finalized that the defendants filed their notice. And that was okay. Orders that determine liability but leave open the amount of damages are not final; they become final once the amount of damages is calculated. (There is a minor exception to this rule when determining the amount of damages is a ministerial or technical matter.) The same goes for orders holding someone in contempt but leaving open the amount of sanctions. The defendants were thus correct to wait until after the determination of sanctions to appeal.

On the merits, the Eleventh Circuit affirmed the contempt and sanctions.

PlayNation Play Systems, Inc. v. Velex Corp., 2019 WL 4620403 (11th Cir. 2019), available at the Eleventh Circuit and Westlaw.