A Third Circuit Debate About Waiver (or Forfeiture) of Arguments Not Raised Below

Tri-M Group, LLC v. Sharp, 638 F.3d 406 (3d Cir. 2011).  In this case, the Third Circuit affirmed a district court ruling that Delaware’s Prevailing Wage Regulations unlawfully discriminated against out-of-state contractors, in violation of the dormant Commerce Clause.  For appellate practitioners, however, the interesting aspect of this case is the debate between Judge Rendell, who wrote the majority opinion, and Judge Hardiman, who issued a concurrence, on the question of whether Delaware should have been held to have waived or, as Judge Hardiman put it, “forfeited,” one of its arguments.

Judge Rendell noted that arguments raised for the first time on appeal are waived absent “exceptional circumstances.”  The waiver principle, she wrote, is an issue of discretion and “may be relaxed whenever the public interest or justice so warrants.”  Judge Rendell found multiple reasonsnot to apply the waiver doctrine in this case.  Her discussion offers a checklist of justifications that appellate practitioners may find useful in defending their ability to present new contentions on appeal. 

First, there was a strong public interest in considering all arguments, since the case involved “crucial and unresolved issues of state sovereignty and state procurement spending, and tests the limits of the dormant Commerce Clause in this field.”  Given that public interest, it was better to address the issue than to ignore it.  Second, the fact that the Third Circuit has not yet considered an issue may itself be an “institutional consideration” that would constitute exceptional circumstances.  Third, citing another recent Third Circuit case that had declined to bar a newly-raised argument, Judge Rendell found that the omitted argument in Tri-M Group was sufficiently “intertwined” with other contentions that had been made below so as to counsel against a finding of waiver.  Fourth, the Third Circuit has been “reluctant to apply the waiver doctrine when only an issue of law is raised.”  Judge Rendell found that Delaware’s new argument presented only a “pure question of law.”  Finally, addressing that pure legal issue would “conserve judicial resources.”

Judge Hardiman concurred in the ultimate result, but viewed the waiver issue very differently.  He agreed that the appeal “implicates significant issues of state sovereignty” and “raises a pure question of law,” but found that those facts did not constitute “exceptional circumstances.”  To him, because the construction project at issue had been completed, all that was at issue was “some $10,000 in wages” that had been paid to six apprentices.  The legal issue that Delaware belatedly raised could be presented in another case, on a full trial court record.

Judge Hardiman also saw nothing to indicate that Delaware had inadvertently failed to make its argument below.  That argument was a “recognized exception” to the dormant Commerce Clause, and it was therefore “unlikely” that Delaware’s counsel had simply missed it.  It was just as plausible that Delaware had decided to pursue other arguments after evaluating the merits of that particular contention.  He quoted a vivid simile:  a party may not “jump from theory to theory like a bee buzzing from flower to flower” absent exceptional circumstances.  In his view, Delaware had “forfeited” its argument rather than waiving it, since forfeiture is the failure to assert a right in timely fashion, while waiver connotes an intentional relinquishment or abandonment of a right.