To appeal or not to appeal – an example using Third Circuit contract appeals.

Switching from the employment-case scenario of my last post, now let’s say you just learned that the district court judge granted the opposing party’s motion for summary judgment in a breach-of-contract case. As before, you’re still within the period you have to file a notice of appeal. My data has 84 contract-case appeals the Third Circuit decided in FY 2013.

A bit of background on those 84 cases: About a third of them involved insurance policies. In about 30% of the 84 cases, the claims were dismissed, usually under Rule 12. In another 39%, the district court granted summary judgment. Judgment was entered after a bench or jury trial in another 12%. These percentages don’t add up to 100 – other cases came to the Third Circuit after decisions on injunctions, Rule 60 motions, as well as other motions. Some other statistics:

Time to disposition:    First quartile – 9.12 months
Median – 11.57 months
Third quartile – 14.73 months

Percent affirmed or dismissed:                      78.57%.

Time to disposition is about what it is for “other civil cases” generally, and the percentage affirmed or dismissed is slightly smaller. See FY 2013 statistics here. The percentage affirmed or dismissed is a good deal smaller than the comparable percentage for my sample of employment cases, though contract-case appeals also appear to take longer. See here.

A quick way to get an idea of whether it makes sense to appeal from the district court’s summary judgment decision in the contract case is to apply the above percentage to what’s on the table. If, for example, $100,000 is at stake – this is what you’ll get (or get to keep) if you win the appeal – then an estimate of the “expected benefit” of the appeal is $21,430. From that, you’ll have to subtract attorney fees and other costs associated with the appeal that you will have to pay.

Why only $21,430? If 78.57% of decisions in contract cases are affirmed or dismissed, then 21.43% (100-78.57) can be taken as an estimate of the chance that there will be some meaningful change to the district court’s decision – either it’s reversed or vacated in whole, or reversed or vacated in part. If you lose the appeal, you’ll be out attorney fees and other costs you have to pay and you will gain nothing (you will still be faced with the adverse district court decision and what that means for what you’ll have to pay or do without). If you are looking at fees and costs likely totaling more than $21,430, then you’ll have a negative expected value of the appeal. Generally, this means you should not appeal.

Now, if there’s $1M at stake, the expected benefit would be $214,300, and, unless your attorney’s fees and other costs are more than that, you’ll be looking at a positive expected value of the appeal.

This expected value example is a simple one; it does not include all the factors that you should consider when deciding whether or not to appeal. But it may give you a good – and objective – starting point.

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