A divided Fifth Circuit held that a motions panel had erred in permitting a certified appeal under 28 U.S.C. § 1292(b).
January 4, 2025
In Silverthorne Seismic, L.L.C. v. Sterling Seismic Services, Ltd., a majority of the Fifth Circuit held that a motions panel had erred in permitting a certified appeal under 28 U.S.C. § 1292(b). The district court had certified for an immediate appeal a decision on how the plaintiffs could prove reasonable-royalty damages in a trade-secret case. The majority thought that no immediate guidance was necessary on this damages issue, which—if the defendants prevailed at the pending trial—would never arise. And an immediate appeal would delay—not accelerate—the resolution of the action. Judge Higginson dissented, contending that the majority had read § 1292(b) too strictly and immediate appellate review of this damages issue was warranted.
Like many courts, the Fifth Circuit treated § 1292(b)’s criteria—a substantial ground for difference of opinion, a controlling question of law, and material advancement of the litigation—as prerequisites to an appeal. The order in Silverthorne Seismic failed two of those requirements and was thus ineligible for certification.
But I doubt that courts should treat § 1292(b) as imposing eligibility requirements that must be satisfied in every case. The criteria should instead serve as guidelines for the exercise of discretion. That is, § 1292(b)’s criteria should not determine whether a court can hear an interlocutory appeal. They should instead guide the decision of whether that court should hear the appeal.
The Temporarily Certified Appeal in Silverthorne Seismic
Silverthorne Seismic stemmed from an action involving alleged trade-secret misappropriation. For damages, the plaintiff sought a “reasonable royalty” under the Defend Trade Secrets Act. And five days before trial, the district court set out standards for calculating a reasonable royalty.
At the plaintiff’s request, the district court certified that decision for an immediate appeal under § 1292(b). The district court also stayed the forthcoming trial pending resolution of the appeal.
Sometime thereafter, a Fifth Circuit motions panel granted the plaintiff’s petition for permission to appeal under § 1292(b). The case then proceeded to full briefing and argument before a different panel.
Decertifying the Appeal
A majority of that panel held that the motions panel had erred in allowing the appeal.
The majority determined that the certified order did not satisfy the requirements for a § 1292(b) appeal. One of those requirements is that the appealed order involve a controlling question of law. The appellate court’s answer to the question must have an immediate effect on the proceedings, such as resolving the action.
According to a majority of the Fifth Circuit, this means that courts cannot use § 1292(b) to address issues that will merely influence further proceedings in the district court. For that reason, damages issues are not normally eligible for a § 1292(b) appeal until liability has been determined. Without a finding that the defendant is liable, damages issues might never arise. So unless a damages issue is dispositive (such as a dismissal of claims because the damages sought were not available under the relevant statute), there can be no § 1292(b) appeal.
In Silverthorne Seismic, the district court had determined only what the plaintiff would need to prove to obtain reasonable-royalty damages. Because the defendant had not yet been found liable, a reversal of that decision would have no immediate impact on the action. The district court had not barred the plaintiff from proving damages. And a trial would happen regardless of the Fifth Circuit’s decision.
The majority added that the order in question did not satisfy another § 1292(b) requirement: that an immediate appeal materially advance the litigation. Again, a trial would happen regardless of the appeal’s outcome. The only potential benefit here would be avoiding a post-judgment appeal on the damages issue. But that was not enough. If it were, every district court decision would be eligible for a § 1292(b) appeal.
The majority concluded that the order in question was not eligible for a § 1292(b) appeal. The motions panel had accordingly erred in granting permission to appeal. The Fifth Circuit vacated that ruling and dismissed the appeal for a lack of jurisdiction.
Judge Higginson’s Dissent
Judge Higginson dissented. He emphasized that courts of appeals have unfettered discretion to allow § 1292(b) appeals. The controlling-question-of-law requirement means only that the appeal must involve a relatively abstract legal issue that does not require enmeshment in the facts. And the order need not involve a dispositive issue—indeed, it’s sometimes difficult to know what issues will end up being dispositive. Judge Higginson also noted the wasted time and effort that decertification would cause.
§ 1292(b)’s Needless Requirements
Notably, the majority in Silverthorne Seismic did not hold that the motions panel abused its discretion in allowing the appeal. The majority instead held that the order at issue was ineligible for an appeal under § 1292(b). This sort of decision stems from courts reading § 1292(b) to impose requirements that an order must satisfy to be eligible for a certified appeal. And I have doubts about that reading.
I’ve written about this elsewhere. (See in particular pages 645–49 of the linked article.) Briefly, § 1292(b) sets out several criteria for district courts deciding whether to certify an appeal:
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order.
If the district court certifies the order, the court of appeals then has “discretion[ to] permit an appeal to be taken.”
These criteria—a substantial ground for difference of opinion, a controlling question of law, and material advancement of the litigation—are helpful guidelines in determining when an interlocutory appeal is proper. But courts often speak of these criteria as prerequisites to or requirements for certification. If an order doesn’t satisfy them all, the order is ineligible for an appeal under § 1292(b), and certification is improper.
This reading of § 1292(b) is problematic. For one thing, it unnecessarily limits the types of orders to which § 1292(b) could apply. The criteria are relevant. But they’re underinclusive—lots of district court decisions that fail to meet all of these requirements might merit an immediate appeal.
For another thing, these are vague and fuzzy requirements. That creates uncertainty (and litigation) over whether an order is eligible for § 1292(b) certification. This uncertainty is then coupled with the uncertainty that comes from the discretionary decision of whether an eligible order should be certified. That creates two potential points of dispute instead of one. And in practice, those to disputes will overlap. A lot of time and effort could be saved by instead focusing directly on the question of whether an order should be immediately appealed.
Silverthorne Seismic, L.L.C. v. Sterling Seismic Services, Ltd., 2025 WL 25413 (5th Cir. Jan. 3, 2025), available at the Fifth Circuit and Westlaw