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Rule 50 and Purely Legal Arguments: A Circuit Split

By Kelli Benham Bills – June 27, 2013


As the appellate practitioner knows all too well, error-preservation issues can close the door to a successful appeal. Counsel is often faced with the unenviable task of informing the client that, despite counsel’s best efforts, an appeal’s likelihood of success is minimal due to a failure-to-preserve error at the district-court level. However, before giving such bad news to the client, consider this: A majority of the federal courts of appeals have held that counsel need not raise in a Rule 50 motion those “purely legal” arguments that have previously been rejected at the summary-judgment stage. Thus, when the subject of appeal is a purely legal issue—claim preclusion, for example—that has been raised but rejected at the summary-judgment stage, appellate counsel may be able to press that argument on appeal despite a failure to re-raise the argument in a Rule 50 motion.


The Purpose of Rule 50 and Its Implications
A Rule 50 motion preserves for appeal a challenge to the legal sufficiency of the evidence presented. Such motions test whether there is a “legally sufficient evidentiary basis for a reasonable jury to find” for the moving party. Ruyle v. Continental Oil Co., 44 F.3d 837, 841 (10th Cir. 1994). Although a party can also lodge a legal-sufficiency challenge at the summary-judgment stage, such a challenge does not preserve the evidentiary-sufficiency issue for appeal. A trial court’s denial of summary judgment on an evidentiary-sufficiency ground does not constitute a final decision on that issue; rather, the trial court has simply found enough evidence to raise a fact issue as to whether the elements of the cause of action are present. Feld v. Feld, 688 F.3d 779, 782 (D.C. Cir. 2012). Evidence presented at trial may encompass more than that presented at the summary-judgment stage, but still may not be legally sufficient to sustain a cause of action after the case is submitted to the trier of fact. Thus, “once evidence is presented at trial, any challenge to evidentiary sufficiency at summary judgment becomes moot.”


Purely legal arguments, on the other hand, should not change from the summary-judgment stage to the Rule 50 motion stage, as nothing that occurs at trial should impact such questions. Id. Purely legal issues do not hinge on the facts presented or credibility determinations made by the fact finder. Because trial should not impact a purely legal argument, the majority of circuits have held that a movant that loses a purely legal issue at the summary-judgment stage does not need to press that argument again in a Rule 50 motion to preserve it for appeal.


Yet, two circuits have clearly split from the majority, holding that purely legal arguments, just like evidentiary-sufficiency arguments, must be re-raised in a Rule 50 motion. And, the position of three other circuits—the Fifth, Eighth, and Eleventh—is unclear.


Notably, the U.S. Supreme Court has left open the question of whether purely legal arguments must be re-raised in a Rule 50 motion. See Ortiz v. Jordan, 131 S. Ct. 884, 892 (2011). In Ortiz, the Court acknowledged the majority position allowing review of “purely legal” issues denied at summary judgment even in the absence of a Rule 50 motion. However, the Supreme Court did not ultimately decide that issue because the qualified-immunity defense in that case did not involve purely legal issues, but rather disputed facts about what occurred and what actions were taken or omitted.


The Circuit Split
Given the current circuit split, counsel should be cognizant of the position of the circuit in which counsel is practicing to ensure proper preservation of error for purely legal as well as factual issues raised and rejected at the summary-judgment stage.


The majority position—“purely legal” issues do not need to be re-raised in a Rule 50 motion. The majority of the circuits—the Second, Sixth, Seventh, Ninth, Tenth, D.C., and Federal—have held that a “purely legal” issue denied at the summary-judgment stage does not need to be re-raised in a Rule 50 motion to preserve such an issue for appeal. See, e.g., Rothstein v. Carriere, 373 F.3d 275, 284 (2d Cir. 2004); In re AmTrust Fin. Corp., 694 F.3d 741, 751 (6th Cir. 2012); Houskins v. Sheahan, 549 F.3d 480, 489 (7th Cir. 2008); Banuelos v. Constr. Laborers’ Trust Funds for S. Calif., 382 F.3d 897, 902–03 (9th Cir. 2004); Wilson v. Union Pac. R.R. Co., 56 F.3d 1226, 1229 (10th Cir. 1995); Feld, 688 F.3d at 783.


Recently, the D.C. Circuit joined this majority, recognizing that “[t]he rationale for requiring a Rule 50 motion does not apply to purely legal questions.” Feld, 688 F.3d at 782–83. The purely legal issue in that case involved whether D.C. law permitted a condominium owner to use force to exclude another individual from a building’s common areas. The court noted that once a party presents evidence at trial, any challenge to evidentiary sufficiency at summary judgment becomes moot, as the question of whether the evidence was sufficient for summary judgment has been overcome by the trial. Such a justification does not apply when the district court rejects a purely legal argument at summary judgment, as a purely legal argument presented in a Rule 50 motion would be the same argument previously presented to the trial court at summary judgment. After finding that it had jurisdiction to hear the legal argument, the court rejected that argument on the merits.


Other “purely legal” issues considered by the majority circuits despite a failure to re-raise those issues in a Rule 50 motion include: collateral estoppel (Ruyle, 444 F.3d at 841–42); governmental immunity (McPherson v. Kelsey, 125 F.3d 989, 995 (6th Cir. 1997)); claim preclusion (Pavon v. Swift Transp. Co., Inc., 192 F.3d 902, 906 (9th Cir. 1999)); whether a district court could hear evidence outside the administrative record (Banuelos, 382 F.3d at 903); whether a contract provision was ambiguous (In re AmTrust Fin. Corp., 694 F.3d at 751); and whether speech is constitutionally protected (Houskins, 549 F.3d at 489).


Thus, the majority position holds that a party who has properly raised an issue of law before the case goes to the jury does not need to include that issue in a motion for directed verdict for preservation purposes. See Ruyle, 44 F.3d at 841; Chemetall GMBH v. ZR Energy, Inc., 320 F.3d 714, 720 (7th Cir. 2003) (“But if the legal question can be separated from the factual one, then we see no bar to reviewing the legal question notwithstanding the party’s failure to raise it in a motion for judgment as a matter of law at trial.”).


The majority position is alluring: Why should a party have to re-raise a purely legal argument that has already been pressed to and rejected by the district court at the summary-judgment stage? If nothing presented during trial can impact the merits of that legal argument, re-raising that argument in a Rule 50 motion seems futile. However, two circuits require parties to re-urge even a purely legal argument in a Rule 50 motion, with the Fourth Circuit also persuasively reasoning that difficulties in distinguishing purely legal from factual issues warrant the use of Rule 50 motions to preserve error for appeal.


The minority position—the First and Fourth circuits require preservation of purely legal arguments in a Rule 50 motion. The First and Fourth Circuits require a party to re-urge legal issues in a Rule 50 motion even if those same legal arguments have been previously denied by the district court at the summary-judgment stage. See Chesapeake Paper Prods. Co. v. Stone & Webster Eng’g Corp., 51 F.3d 1229, 1235 (4th Cir. 1995); Ji v. Bose Corp., 626 F.3d 116, 127 (1st Cir. 2010) (“We have not recognized an exception . . . when a party’s challenge is based on a circumscribed legal error, as opposed to an error concerning the existence of fact issues.”); Mauser v. Raytheon Co. Pension Plan for Salaried Employees, 239 F.3d 51, 55 (1st Cir. 2001) (“[T]o be preserved for review, a denial of summary judgment must be perfected by making a motion for judgment as a matter of law at the close of the evidence.”).


In so holding, the Fourth Circuit rejected the distinction the majority position tried to make between legal and factual bases for denial of summary judgment. Chesapeake Paper, 51 F.3d at 1235. The court noted that “all summary judgment decisions are legal decisions in that they do not rest on disputed facts”; such a factual-legal dichotomy would require courts to “engage in the dubious undertaking of determining the bases for denial of summary judgment and how to qualify those bases.” In Chesapeake Paper, the appellant claimed that it sought partial summary judgment on a discrete legal issue—a judicial determination of which contract governed the parties’ relationship. However, the Court found that the motion actually sought resolution of conflicting factual inferences from competing contract documentation. Resolving such factual disputes was an appropriate task for the fact finder after a full trial on the merits. In rejecting bifurcation of summary-judgment decisions based on law and fact, the court further observed that parties have adequate remedies other than seeking review of the denial of summary judgment after a full trial. Id. at 1236–37 (citing Rule 50 motions and certification of an interlocutory appeal pursuant to 28 U.S.C. § 1292(b)). The court noted the injustice of depriving a “party of a jury verdict after the evidence was fully presented, on the basis of an appellate court’s review of whether the pleadings and affidavits at the time of the summary judgment motion demonstrated the need for a trial.” Id. at 1237 (quoting Locricchio v. Legal Servs. Corp., 833 F.2d 1352, 1359 n.4 (9th Cir. 1987)).


Although Chesapeake Paper could have been limited to its facts—conflicting factual inferences resolved at trial—the Fourth Circuit later reaffirmed and expanded that case, applying it to a purely legal issue raised and denied at the summary-judgment stage. See Varghese v. Honeywell Int’l, Inc., 424 F.3d 411, 422–23 (4th Cir. 2005) (dismissing appeal based on an ERISA preemption argument because that issue was not presented in a motion for judgment as a matter of law after a full trial on the merits).


Thus, the minority position requires counsel to re-raise both legal and factual arguments denied at the summary-judgment stage. The Fourth Circuit gave a logical reason for doing so—namely, the difficulty in distinguishing between purely legal and factual issues raised at summary judgment.


The unclear positions of the Fifth, Eighth, and Eleventh Circuits. The Fifth and Eighth Circuits have issued seemingly contradictory opinions on whether a purely legal issue denied at summary judgment must be re-raised in a Rule 50 motion. While opinions from the Fifth and Eleventh Circuit indicate that those circuits follow the minority position, it does not seem that either circuit has squarely addressed and explicitly stated its view.


Looking first at the Eighth Circuit, while older opinions from the Eighth Circuit indicate its agreement with the minority view, more recent opinions from the court indicate its alignment with the majority position. Compare Metro. Life Ins. Co. v. Golden Triangle, 121 F.3d 351, 355 (8th Cir. 1997) (citing the reasoning in Chesapeake Paper, and further stating that because district courts were not required to delineate why they denied summary judgment, the proposed approach would invite “potentially confusing and inconsistent case law to benefit only those summary judgment movants who have failed to abide by the Federal Rules of Civil Procedure”), and Johnson Int’l Co. v. Jackson Nat’l Life Ins. Co., 19 F.3d 431, 434 n.4 (8th Cir. 1994) with White Consol. Indus., Inc. v. McGill Mfg. Co., 165 F.3d 1185, 1190 (8th Cir. 1999) (stating that the issue of which document set forth the terms of the parties’ contract “was not phrased as, nor understood by the district court to be, a challenge to the sufficiency of the evidence”; rather, the motion for partial summary judgment raised a purely legal question that was properly reviewable on appeal), and Estate of Blume v. Marian Health Ctr., 516 F.3d 705, 707–08 (8th Cir. 2008) (applying the majority position).


The Eighth Circuit recently recognized this disharmony in its case law. See Owatonna Clinic—Mayo Health Sys. v. Med. Protective Co. of Fort Wayne, Ind., 639 F.3d 806, 809–10 (8th Cir. 2011). Yet, the court found it “unnecessary to resolve this apparent conflict in our cases, if that is possible, or decide which of them state the correct rule,” as the party’s complaint in that case dealt with the granting—rather than denial—of a summary-judgment motion, which eliminated certain issues from the trial. So, whether the Eighth Circuit is part of the majority or the minority remains unclear.


Turning to the Fifth Circuit, that court seems to lean toward the minority position. The Fifth Circuit has indicated that review of a summary-judgment motion that was at least arguably based on legal grounds was apparently foreclosed by circuit precedent. Black v. JI Case Co., 22 F.3d 568, 571 n.5 (5th Cir. 1994) (citing Wells v. Hico ISD, 736 F.2d 243, 251 n.9 (5th Cir. 1984)). Further, and regardless of precedent, the Fifth Circuit stated that distinguishing between “factual” and “legal” issues would be difficult and “hampered in instances (which are by no means rare) where the district court gives no, or only very generalized, reasons for denying the motion.” Several opinions from the court simply state that “orders denying summary judgment are not reviewable on appeal where a final judgment adverse to the movant has been rendered on the basis of a subsequent trial on the merits.” See, e.g., Hand v. UNUM Provident Corp., 202 F. App’x 689, 692 (5th Cir. 2006) (addressing a contract ambiguity issue); cf. Downey v. Denton Cnty., 119 F.3d 381, 385 (5th Cir. 1997) (“The denied motion for summary judgment does not need to be reviewed, as the reviewing court is free to review the legal and factual issues on a motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50.”).


Yet, the Fifth Circuit acknowledged the majority position allowing review of the denial of a summary judgment motion when there was a ruling by the district court on an issue of law. Becker v. Tidewater, Inc., 586 F.3d 358, 365 n.4 (5th Cir. 2009) (citing the Ninth Circuit’s decision in Banuelos, 382 F.3d at 902). However, that case also involved a bench trial, and the court noted that Rule 50 motions were not required after a bench trial. Thus, although acknowledging the potential for review of “the district court’s legal conclusions in denying summary judgment,” that the case involved a bench trial clouded the Fifth Circuit’s statement of its position in Becker. See Gonzales v. Fresenius Med. Care N. Am., 689 F.3d 470, 474 n.3 (5th Cir. 2012) (citing Becker as basing its review of the denial of summary judgment on the fact that the lower court conducted a bench trial).


The Eleventh Circuit also seems to adopt the minority position, given its broad pronouncement that it will not review pretrial denial of a motion for summary judgment after a full trial and judgment on the merits. See, e.g., Lind v. United Parcel Serv., Inc., 254 F.3d 1281, 1285–86 (11th Cir. 2001); Warfield v. Stewart, 434 F. App’x 777, 780–81 (11th Cir. 2011) (citing Ortiz and Lind, stating that “a party may not appeal an order denying summary judgment after a full trial and judgment on the merits”); cf. Trade Am Int’l, Inc. v. Cincinnati Ins. Co., No. 12-10486, 2013 WL 310045, at *1 (11th Cir. Jan. 28, 2013) (per curiam) (noting in dicta that no Eleventh Circuit cases were on point, but citing the Eighth Circuit’s Owatonna decision as holding that a Rule 50(a) motion was not required to preserve a challenge to a partial summary-judgment ruling that eliminated certain issues from trial).


A Word of Warning
Unless and until the U.S. Supreme Court resolves the current circuit split, counsel should always research and consider the position of the circuit in which he or she is practicing. If in a majority circuit, and the trial court denied summary judgment on a purely legal issue divorced from any disputed facts, counsel should not need to re-raise in a Rule 50 motion that purely legal issue to preserve it for appeal. However, in the First and Fourth—and possibly the Fifth, Eighth, and Eleventh—Circuits, failure to re-raise both purely legal and evidentiary sufficiency issues in a Rule 50 motion after a trial on the merits will likely result in counsel losing the opportunity to present those arguments on appeal.


Prudent counsel should also consider the “vexing” problem—identified by the Fourth Circuit—of distinguishing purely legal from factual issues. Counsel should always renew arguments that might debatably involve some combination of legal and factual determinations in a Rule 50 motion. See Chemetall GMBH, 320 F.3d at 719–20 (noting that the Fourth Circuit’s reasoning “has merit in cases in which the basis for the court’s denial of summary judgment may be difficult to discern, and therefore prudent counsel would do well to preserve the issue in a Rule 50 motion”); Pediatrix Screening, Inc. v. TeleChem Int’l, Inc., 602 F.3d 541, 551 (3d Cir. 2010) (Jordan, J., dissenting) (stating that “a Rule 50 motion may very well be required when a legal question depends on the resolution of factual issues, such that the legal question cannot be resolved without reference to the evidence amassed at trial”). And, although the majority position is that purely legal issues do not need to be re-raised in a Rule 50 motion, counsel may nonetheless find it a wise strategy to present such issues in a Rule 50 motion to ensure error preservation.


Keywords: litigation, appellate practice, error preservation, summary judgment, Rule 50, purely legal argument


Kelli Benham Bills is an associate with Haynes and Boone LLP in Dallas, Texas.


 
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