Stays Pending Appeal: The Status Quo’s Best Friend

When it doesn’t end in settlement, litigation will inevitably end with winners and losers. That is, one side will obtain a favorable outcome or ruling, while the other side does not. Often, the aggrieved party will seek review of the trial court’s decision in an appellate court. When filing an appeal, the aggrieved party may ask, “Why can’t this decision just be postponed until after my appeal is resolved?” Enter the concept of a stay pending appeal.

In modern day appellate practice, the quintessential “stay pending appeal” plays a pivotal role in ensuring that a reviewing court has the opportunity to engage in meaningful deliberations. When a party seeks a “stay” of a lower court’s decision pending appeal, they are essentially asking the appellate court to halt enforcement of the ruling until the appeal can be decided on the merits. Ultimately, a stay is considered an “extraordinary remedy” for which the moving party bears a heavy burden. See Adams v. Walker, 488 F.2d 1064, 1065 (7th Cir. 1973).

Over time, federal courts have developed a robust body of case law regarding when a stay pending appeal is appropriate. As Chief Justice Roberts explained in Nken v. Holder,

See 556 U.S. 418, 421 (2009) (cleaned up). To guide this general analysis, the U.S. Supreme Court has advised courts to consider the following four factors in deciding whether to stay a lower court’s ruling pending the outcome of the appeal: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Id. at 434 (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). “The first two factors . . . are the most critical.” Id.

The four Nken factors underscore the value of maintaining fairness and justice within the judicial system. First off, a primary reason for seeking a stay is to preserve the status quo. In many cases, when a trial court issues a ruling or judgment, that decision might lead to substantial changes in or alterations to the parties’ behavior or conduct. Staying enforcement of the decision preserves the status quo and gives the appellate court time to decide the issues. Additionally, a stay also promotes fairness by protecting the aggrieved party from any harm caused by the ruling and otherwise accounts for injury to the non-moving (or non-aggrieved) party. This ensures that both parties‘ rights are not compromised while the appeal is being considered. Finally, this test ensures that the public’s interest is accounted for in determining whether to stay a ruling pending appeal.

Of course, a stay of a ruling or judgment is not the only type of stay available—during the pendency of an interlocutory appeal, for example, a party can seek a stay of the district court’s underlying (and otherwise ongoing) proceedings pending the appeal. See Landis v. North American, 299 U.S. 248, 254 (1936). As courts have recognized in this context, “Application for an appeal does not automatically stay proceedings in the district court; a stay pending appeal will only exist if the district judge or the Court of Appeals shall so order.” See Graham v. Dhar, 2020 WL 8184344 (S.D. W. Va. Aug. 28, 2020). When considering this type of stay request, courts consider three factors: “(1) the interests of judicial economy; (2) hardship and equity to the moving party if the action is not stayed; and (3) potential prejudice to the non-moving party.” See Johnson v. DePuy Orthopaedics, Inc., 2012 WL 4538642, at *2 (D.S.C. Oct. 1, 2012).

Sometimes, a stay of the district court’s proceedings pending an interlocutory appeal is automatic. Recently, in the context of the Federal Arbitration Act (FAA), the Supreme Court recognized that, when a federal district court denies a party’s motion to compel arbitration under the FAA, the lower court “must stay its proceedings” while the appeal is ongoing. See Coinbase, Inc. v. Bielski, 559 U.S. 736, 738 (2023). As the Supreme Court explained, “Absent an automatic stay of district court proceedings, Congress’s decision in § 16(a) [of the FAA] to afford a right to an interlocutory appeal would be largely nullified.” Id. at 743. More specifically, “[i]f the district court could move forward with pre-trial and trial proceedings while the appeal on arbitrability was ongoing, then many of the asserted benefits of arbitration (efficiency, less expense, less intrusive discovery, and the like) would be irretrievably lost—even if the court of appeals later concluded that the case actually had belonged in arbitration all along.” Id.

Suffice it to say, when you are pursuing an appeal, it is wise to consider whether it is appropriate to seek a stay pending that appeal. As a practical point, keep in mind that Federal Rule of Appellate Procedure 8(a)(1)(A) provides that a party seeking a stay “must ordinarily move first in the district court” for “a stay of the judgment or order of a district court pending appeal.” Like many rules, this is one with exceptions. For instance, without moving the district court, a party can seek a stay from the appellate court if it can show that either “moving first in the district court would be impracticable,” or “state that, a motion having been made, the district court denied the motion or failed to afford the relief requested and state any reasons given by the district court for its action.” See Fed. R. App. P. 8(a)(2)(A)(i)-(ii).

At its core, the concept of a stay pending appeal ensures fairness and justice within the legal system. It allows the appellate court to review the case without forcing the aggrieved party to comply with a potentially erroneous judgment. This is especially important in cases where the lower court’s ruling is controversial or where there are significant legal questions at stake.