Stays Pending Appeal

In re Revel AC, Inc., 802 F.3d 558 (3d Cir. 2015).  “We seldom focus on how to balance the four factors that determine whether to grant a stay pending appeal despite the practical and legal importance of these procedural standstills.  So we take this opportunity to do just that.”  So began Judge Ambro’s majority opinion, for himself and Judge Krause in this opinion, issued yesterday.  The case is an outgrowth of the bankruptcy of the Revel casino in Atlantic City.

The four factors are “(1) whether the appellant has made a strong showing of the likelihood of success on the merits; (2) will the appellant suffer irreparable injury absent a stay; (3) would a stay substantially harm other parties with an interest in the litigation; and (4) whether a stay is in the public interest.”  Applying the abuse of discretion standard of review to the District Court’s denial of a stay, but exercising de novo review of the District Court’s conclusion on likelihood of success, a purely legal issue, Judge Ambro laid out a sliding-scale approach to balancing the stay factors,” citing other Circuit Courts of Appeal that had made efforts to “balance them all.”

In particular, the sliding scale approach balances likelihood of success and irreparable injury, the two factors that the Supreme Court of the United States has said are the most important ones in this calculus.  “[The more likely the plaintiff is to win, the less heavily need the balance of harms weigh in [its] favor; the less likely [it] is to win, the more need it weigh in [its] favor.”  But all four factors ultimately are “interconnected.”

Judge Ambro provided the following roadmap.  “Did the applicant make a sufficient showing that (a) it can win on the merits (significantly better than negligible but not greater than 50%) and (b) will suffer irreparable harm absent a stay?  If it has, we balance the relative harms considering all four factors using a sliding scale approach.  However, if the movant does not make the requisite showings on either of these [first] two factors, the [ ] inquiry into the balance of harms [and the public interest] is unnecessary, and the stay should be denied without further analysis.”  Applying this test, the majority proceeded to find both likelihood of success and irreparable harm.  Accordingly, the denial of a stay pending appeal was reversed.

Judge Shwartz dissented.  She would have affirmed the District Court’s denial of a stay.  She rejected the majority’s sliding scale approach, and stated that all four factors must be proven in order for a stay to issue.  She also differed with the majority on all four factors as applied to this case.  But her view did not prevail.