Like most high quality appellate
courts, the U.S. Court of Appeals
for the Third Circuit reaches
the correct result in nearly
all of the appeals that it decides.
Occasionally, however, a Third
Circuit panel resolves an important
question of law in a way that,
with the benefit of sufficient
hindsight, seems clearly wrong.
When that happens, other federal
appellate courts may criticize,
and choose not to follow, the
Third Circuit's ruling. Respected
commentators may question the
ruling. And, other Third Circuit
panels may try to evade the
decision's holding in creative,
but not necessarily persuasive,
ways.
Because the Third Circuit follows
a sensible policy that prohibits
a later three-judge panel from
overruling holdings announced
in an earlier panel's published
opinions, there is no easy way
for the court to escape the
consequences of a clearly wrong
decision on an important issue
of law.
If the issue is the subject
of a circuit split, the U.S.
Supreme Court may grant review
and announce a decision overruling
the Third Circuit's earlier
opinion. Or, the Third Circuit
can grant rehearing en banc
in a pending case that presents
the same issue, thereby allowing
a majority of the court's participating
active judges to overrule the
earlier, clearly wrong panel
decision.
Taking a case en banc can be
a cumbersome and time-consuming
process. Yet, the process serves
as an important safety valve
on the mechanism of federal
appellate review and the pressure
to get more cases resolved as
quickly as reasonably possible.
This column highlights three
areas in which existing Third
Circuit law is in serious need
of en banc review. All three
instances involve issues of
great significance that our
local federal appellate court
has incorrectly decided.
First, the Third Circuit has
erroneously restricted the availability
of interlocutory appellate review
of orders denying preliminary
injunctions, and the time has
come to rectify this error.
Second, the Third Circuit has
issued directly conflicting
rulings concerning whether the
principal purpose of federal
criminal restitution is to punish
the offender or compensate the
victim. Rehearing en banc should
be granted to resolve the serious
tension between these rulings.
Third, the court has erroneously
ruled that an order compelling
discovery notwithstanding a
party's claim of privilege or
trade secret protection is subject
to immediate appellate review
under the collateral order doctrine.
The Third Circuit is the only
federal appellate court to have
reached this conclusion, and
respected commentators have
questioned its rulings on this
point. The Third Circuit should
grant rehearing en banc in the
next case that raises the issue
and hold that the only form
of appellate review available
in these circumstances is by
means of a petition for writ
of mandamus.
Interlocutory appellate
review of orders denying preliminary
injunctions: Section
1292(a)(1) of Title 28, United
States Code, gives a federal
appellate court jurisdiction
to review an interlocutory order
refusing to issue a preliminary
injunction. Thus, where a federal
district court directly denies
a party's request for a preliminary
injunction, that party can take
an immediate appeal as of right
to the federal appellate court,
which must then decide whether
the trial court's denial was
correct.
The U.S. Supreme Court ruled
in 1981 that where a federal
district court issues an order
that has only the indirect effect
of denying a injunction, the
party whose injunction was indirectly
denied can appeal pursuant to
Section 1292(a)(1) if the indirect
denial is causing irreparable
injury. Carson v. American
Brands, Inc., 450 U.S.
79 (1981).
The Third Circuit has erroneously
understood the Supreme Court's
ruling in Carson to
require that irreparable harm
be shown in order to appeal
from all denials of preliminary
injunctions, direct or indirect.
Vuitton v. White,
945 F.2d 569, 574 (3d Cir. 1991);
Ross v. Zavarella,
916 F.2d 898, 902 (3d Cir. 1990).
The Supreme Court, however,
has held no such thing, and
requiring an appellant to establish
irreparable harm to appeal a
direct denial of an injunction
eviscerates the appeal as of
right that Section 1292(a)(1)
expressly confers.
As the Seventh Circuit has observed,
"[a]sking whether an order plainly
denying an injunction also caused
irreparable injury would add
a gratuitously complicating
factor to the simple statutory
rule." Holmes v. Fisher,
854 F.2d 229, 232 (7th Cir.
1988). Professors Charles Alan
Wright and Arthur R. Miller,
in their highly respected treatise
"Federal Practice and Procedure"
(hereinafter "FPP"), have disagreed
with the Third Circuit's improperly
restrictive view of Section
1292(a)(1). 16 FPP 2d � 3924.1,
at 157 (1996).
The Third Circuit's rulings
on this issue prove most troublesome
when a district court directly
denies a preliminary injunction
because the movant has failed
to prove irreparable harm. As
a threshold showing to maintaining
the appeal as of right that
Section 1292(a)(1) provides,
the movant must prove to the
Third Circuit's satisfaction
at the outset of the appeal
that the district court's finding
of no irreparable harm was wrong.
Section 1292(a)(1) does not
require this threshold showing,
and the Third Circuit decisions
that impose this requirement
are clearly wrong. Proving irreparable
harm is certainly relevant to
the merits of an appeal challenging
a trial court's order directly
refusing to issue a preliminary
injunction. Nevertheless, the
existence of appellate jurisdiction
over an order directly denying
a preliminary injunction does
not depend on a threshold showing
of irreparable harm.
In an appropriate case, the
Third Circuit should grant rehearing
en banc and hold that orders
directly denying preliminary
injunctive relief are immediately
appealable under Section 1292(a)(1)
without requiring, as a condition
of appealability, a showing
of irreparable harm to the appellant.
Is criminal restitution
principally punitive or compensatory:
In the Mandatory Victims Restitution
Act of 1996, Congress required
federal district courts to sentence
convicted defendants to pay
full restitution to their victims.
Under prior law, the trial court
had discretion to impose a lesser
amount of restitution if the
defendant was financially unable
to pay the full amount. Congress
specified that the MVRA would
apply to sentences imposed after
its effective date, even if
the criminal conduct giving
rise to the restitution obligation
occurred before the law took
effect.
Federal appellate courts have
divided over whether the MVRA
is an unconstitutional ex post
facto law as applied to criminal
conduct occurring before its
passage. That issue only the
U.S. Supreme Court can resolve.
However, the Third Circuit's
rulings on whether the principal
purpose of restitution is punishment
of the offender or compensation
of the victim are themselves
in conflict, and rehearing should
be granted to resolve that intra-circuit
division.
In 1995, a Third Circuit panel
decided that the MVRA was an
unconstitutionally ex post facto
law when applied to restitution
orders arising from criminal
conduct that occurred before
the law took effect. United
States v. Edwards,
162 F.3d 87 (3d Cir. 1998).
As the basis for its ruling,
the panel held that the principal
purpose of restitution in a
federal criminal sentence was
punishment of the offender.
In November 2001, however, a
different Third Circuit panel
concluded that the principal
purpose of restitution under
the MVRA is compensation of
the victim. United States
v. Christopher, 273
F.3d 294 (3d Cir. 2001). Thus,
the panel concluded, an order
of restitution was not nullified
upon the criminal defendant's
death but, rather, could still
be enforced against his estate.
The Third Circuit recognized
in Christopher the
apparent incongruity between
the court's holding there and
the court's holding three years
earlier in Edwards.
After noting the preexisting
intra-circuit conflict on the
principal purpose of federal
criminal restitution, the panel
in Christopher decided
to exacerbate further this conflict,
explaining that "[a] survey
of case law illustrates that
restitution is best classified
as compensatory, punitive, or
a combination of both according
to the context in which the
issue arises."
The Third Circuit should grant
rehearing en banc to resolve
whether the principal purpose
of restitution under the MVRA
is punishment of the offender
or compensation of the victim.
The inconsistency between the
Third Circuit's rulings in Edwards
and Christopher is
obvious and unwarranted, and
this conflict should be resolved
by the full court. The correct
answer to the question appears
to be that the principal purpose
of restitution is, at all times,
compensation of the victim,
and therefore application of
the MVRA to conduct preceding
its enactment does not present
an ex post facto violation.
United States v. Bach,
172 F.3d 520, 523 (7th Cir.),
cert. denied, 528 U.S.
950 (1999).
Appealability of orders
compelling a party to provide
discovery over a claim of privilege
or trade secret protection:
The Third Circuit stands alone
in holding that an order compelling
a party to provide discovery
notwithstanding the party's
assertion of privilege or trade
secret protection is immediately
appealable under the "collateral
order" doctrine. In re Ford
Motor Co., 110 F.3d 954,
964 (3d Cir. 1997). In every
other federal appellate court,
the only available review is
by means of the extraordinary
writ of mandamus. Delwood
Farms, Inc. v. Cargill,
Inc., 128 F.3d 1122, 1125
(7th Cir. 1997).
While the Third Circuit's approach
ensures the careful protection
of the attorney-client and trade
secret privileges, which may
not be a bad policy, the Supreme
Court has never given any indication
that it would be appropriate
to circumvent the generally-applicable
rule that all discovery-related
appeals by parties should await
the final conclusion of a case.
In this instance, again, Professors
Wright and Miller have questioned
the soundness of the Third Circuit's
decisions allowing collateral
order review of district court
rulings that reject claims of
privilege. 15A FPP 2d � 3911.5
(Supp. 2001). Moreover, a Third
Circuit panel in April 2000
declined to extend the court's
rulings in this area to allow
collateral order review of an
order compelling discovery over
a party's claim that the information
sought was confidential and
sensitive. Bacher v.
Allstate Ins. Co.,
211 F.3d 52 (3d Cir.), cert.
dismissed, 530 U.S. 1300
(2000).
One reason why the Third Circuit's
jurisprudence in this area is
especially troublesome is that
the collateral order doctrine
gives the losing party the ability
to appeal the order in question
as of right while the rest of
the case remains pending, unable
to proceed forward, in the trial
court. The alternate available
method of appellate review --
filing a petition for writ of
mandamus -- would still allow
for the correction of the most
egregious denials of legitimate
privilege claims while avoiding
unnecessary delay in the trial
court. Requiring that review
be sought by means of mandamus
would also ensure that the Third
Circuit would not have to hear
and decide on the merits collateral
order appeals presenting less
meritorious claims of privilege.
The Third Circuit should therefore
grant rehearing en banc and
hold that orders compelling
discovery that overrule claims
of privilege or trade secret
protection henceforth will only
be reviewed on mandamus.
This article is reprinted
with permission from the March
11, 2002 issue of The Legal
Intelligencer � 2002 NLP IP
Company.
Back