When There Is a Change in Law after Motion Decided But before Trial and Judgment, a Party That Does Not Seek Reconsideration Waives Arguments on Appeal Based on That Change in Law

From Douglas Asphalt Co. v. QORE, Inc., 2011 U.S. App. LEXIS 19266 (11th Cir. Sept. 20, 2011):

The district court dismissed Douglas's RICO claims predicated on mail and wire fraud because Douglas had not pleaded that it relied on the defendants' misrepresentations. The parties agree that in doing so the court correctly applied the law that existed at the time: We had held that by providing a civil claim to persons injured "by reason of" a RICO violation under § 1964(c), Congress gave standing only to persons whose injuries "flowed directly" from a RICO violation, and that therefore only persons who had detrimentally relied on the defendants' misrepresentations could succeed on a RICO claim based on mail or wire fraud. See Pelletier v. Zweifel, 921 F.2d 1465, 1499-1500 (11th Cir.1991); Byrne v. Nezhat, 261 F.3d 1075, 1110 (11th Cir. 2001); see also Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1025 (11th Cir.1996). Here Douglas admittedly did not plead that it relied on any of the defendants' alleged misrepresentations about the lack of lime in the asphalt and, in fact, alleged that when accused of not adding enough lime, Douglas had told GDOT that the road damage had nothing to do with the asphalt's composition.

But ten months after the district court's ruling, the Supreme Court held to the contrary, resolving a split in the circuits and rejecting our interpretation of the statute. Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 128 S. Ct. 2131, 170 L.Ed.2d 1012 (2008). The Court held that plaintiffs who had not themselves relied on the misrepresentations could bring a civil RICO claim based on mail or wire fraud. Although the district court did not enter a final judgment in the present case until nearly two years after Bridge was decided, Douglas did nothing during that time to bring that Supreme Court decision to the court's attention. Had Douglas done so, by motion for reconsideration or otherwise, the court plainly could have revisited the issue: "Every order short of a final decree is subject to reopening at the discretion of the district judge." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12, 103 S. Ct. 927, 74 L. Ed.2d 765 (1983); see Fed. R. Civ. P. 54(b). We note also that many cases recognize that a change in controlling law is one of the core reasons for filing and granting a motion for reconsideration. See e.g., Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 167 (2d Cir. 2003); Static Control Components, Inc. v. Lexmark Int'l, Inc., 615 F. Supp. 2d 575, 578 (E.D. Ky. 2009); Applera Corp. v. MJ Research, Inc., 297 F. Supp. 2d 453, 455 (D. Conn. 2004); cf. North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995). The case proceeded without the RICO claims; the parties filed additional motions and completed discovery; and the court conducted a trial on the remaining claims and entered final judgment. Douglas now argues for the first time on appeal that its RICO claims should be reinstated based on Bridge. We do not consider Douglas's argument because it comes too late.

It is well settled that issues not raised in the district court in the first instance are forfeited. . . . Though we have not addressed these particular circumstances — a change in controlling law after the district court disposes of a claim — we see no reason not to apply that principle here. We find strong support for our conclusion in a Federal Circuit case that holds "that when there is a relevant change in the law before entry of final judgment, a party generally must notify the district court; if the party fails to do so, it waives arguments on appeal that are based on that change in the law." Rentrop v. Spectranetics Corp., 550 F.3d 1112, 1117 (Fed. Cir. 2008).

In Rentrop, the appellant challenged a jury instruction on appeal by relying on a Supreme Court case that was decided while post-trial motions were pending in the district court and almost four months before the entry of final judgment. The Federal Circuit determined that the appellant had had "ample time" during the four months to bring the new case to the district court's attention and had waived its right to rely on the case by failing to do so. The court asserted that the district court could not be found to have "overlooked" an argument that had not been presented to it, concluding that "this court does not 'review' that which was not presented to the district court." Id. The court also noted that efficiency could have been served by raising the issue earlier: "the trial court - if it agreed ... could have taken appropriate action and possibly obviated the need for this appeal." Id.

Here the district court did not even arguably "overlook" an argument because the Bridge opinion did not exist when it dismissed the RICO claims; as we have said, it correctly applied the law at the time. And Douglas had almost two years, not four, to tell the district court about the case. Also, the law changed more than fifteen months before trial, which, we believe, made it all the more important that the district court be notified: If the Bridge decision meant that the RICO claims in Douglas's complaint were viable — and we express no opinion on that matter — the parties could have conducted discovery on those claims and the court could have tried them along with the others, thereby obviating the possibility of an additional trial, with its significant costs in money, effort, and time. We conclude that Douglas, by failing to ask the district court to reconsider its ruling based on a holding in Bridge, has forfeited its right to rely on that argument, and so we uphold the court's dismissal of Douglas's claims under §1962(c) of RICO.

Share this article:

Share on facebook
Share on twitter
Share on linkedin
Share on email

Recent Posts