Commercial Litigation and Arbitration

May a Party Raise a New Legal Argument before the District Judge in Objecting to a Report and Recommendation of a Magistrate Judge? — Three-Way Circuit Split — Second Circuit Standard for Considering New Arguments on Motion for Reconsideration

Amadasu v. Ngati, 2012 U.S. Dist. LEXIS 129283 (E.D.N.Y. Sept. 9, 2012):

Whether a party may raise a new legal argument, or present an entire previously unasserted cross-motion or opposition, for the first time in objections to an R&R has not yet been decided in this Circuit. See Wells Fargo Bank N.A. v. Sinnot, 2010 WL 297830, at *2 (D. Vt. Jan. 19, 2010). Some Circuits have held that the de novo nature of a district court's review of an R&R requires the court to consider all arguments regardless of whether they were raised before the magistrate judge. Id. at *2 (citing United States v. George, 971 F.2d 1113, 1118 (4th Cir. 1992)). Others have held that a district court should not consider such arguments because to do so would negate efficiencies gained through the Magistrates Act and would permit litigants to change tactics after the issuance of an R&R. See, e.g., Paterson-Leitch Co. v. Massachusetts Municipal Wholesale Electric Co., 840 F.2d 985, 990-91 (1st Cir. 1988) ("an unsuccessful party is not entitled as of right to de novo review by the judge of an argument never seasonably raised before the magistrate."); Cupit v. Whitley, 28 F.3d 532, 535 & n.5 (5th Cir. 1994) (holding that a party waived an argument by failing to raise it before the magistrate judge); Greenhow v. Sec'y of Health & Human Servs., 863 F.2d 633, 638 (9th Cir. 1988) ("allowing parties to litigate fully their case before the magistrate and, if unsuccessful, to change their strategy and present a different theory to the district court would frustrate the purpose of the Magistrates Act"), overruled on other grounds by United States v. Hardesty, 977 F.2d 1347, 1348 (9th Cir. 1992) (en banc); Marshall v. Chater, 75 F.3d 1421, 1426 (10th Cir. 1996) ("Issues raised for the first time in objections to the magistrate judge's recommendation are deemed waived."). In Williams v. McNeil, 557 F.3d 1287, 1291-92 (11th Cir. 2009), the Eleventh Circuit adopted a standard that preserves the systemic efficiencies afforded by the Magistrates Act, while recognizing that the district court is vested with "ultimate adjudicatory power over dispositive motions." Accordingly, it held "that a district court has discretion to decline to consider a party's argument when that argument was not first presented to the magistrate judge." Id. at 1292. The Eleventh Circuit's approach has gained acceptance in some district courts in this Circuit. See, e.g., Wells Fargo, 2010 WL 297830, at *2-4; see also Machicote v. Ercole, 2011 WL 3809920, at *6 & n.5 (S.D.N.Y. Aug. 25, 2011).

In so doing, courts have looked to a six-factor test to determine if new legal arguments should be allowed: (1) the reason for the litigant's previous failure to raise the new legal argument; (2) whether an intervening case or statute has changed the state of the law; (3) whether the new issue is a pure issue of law for which no additional fact-finding is required; (4) whether the resolution of the new legal issue is not open to serious question; (5) whether efficiency and fairness militate in favor or against consideration of the new argument; and (6) whether manifest injustice will result if the new argument is not considered. Wells Fargo, 2010 WL 297830, at *4. In applying the six factors, the Wells Fargo court noted that it was "[g]uided by the Second Circuit's standards for consideration of new legal arguments raised for the first time in a motion for reconsideration, and its standard for considering new evidence in an objection to a magistrate judge's report and recommendation." Id.

In deciding whether to consider an argument raised for the first time on a motion for reconsideration, the Second Circuit looks to whether the argument is a "purely legal question" for which "there is no need for additional factfinding." Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 159 (2d Cir. 2003). Consideration of a new argument is generally further confined to a legal issue "where the proper resolution is beyond any doubt." Id. With regard to whether a court should consider new evidence in an objection to an R&R, the Second Circuit has stated that "[c]onsiderations of efficiency and fairness militate in favor of a full evidentiary submission for the Magistrate Judge's consideration." Hynes, 143 F.3d at 656.

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