April 2015

Failure to Read Mislabeled Court Orders Alone Does Not Constitute Good Cause or Excusable Neglect Required for Extending Appeal Period
Hongbiao (Bill) Yu

In Two-Way Media LLC v. AT&T, Inc., No. 14-1302 (Fed. Cir. Mar. 19, 2015), the Federal Circuit affirmed the district court’s denial of a motion to extend or reopen the appeal period under Fed. R. App. P. 4(a)(5) and (6) because the movant failed to show good cause or excusable neglect required by Rule 4(a)(5) and did not meet the lack of notice requirement of Rule 4(a)(6).

Two-Way Media LLC (“TWM”) filed suit against AT&T, Inc.; AT&T Corp.; AT&T Operations, Inc.; AT&T Services, Inc.; SBC Internet Services, Inc.; and Southwestern Bell Telephone Co. (collectively “AT&T”), alleging infringement of two patents.  After a jury trial, the district court entered final judgment, and AT&T timely filed four motions for renewed JMOL or a new trial, three of which were confidential and filed under seal.  The district court denied all of AT&T’s motions and granted TWM’s request for costs.  When the court initially docketed the denials, it labeled the three orders addressing the confidential motions as orders granting the motions to seal, without indicating that the same orders denied the relief sought in the underlying motions.  The parties received notice of electronic filings (“NEFs”) for each of those orders.  The underlying orders, which could be accessed by clicking on the hyperlink in the NEFs, denied the merits of AT&T’s JMOL motions.  The district court also docketed its order denying AT&T’s fourth, nonconfidential JMOL and its order on TWM’s Bill of Costs.  Three days later, the district court updated the description of the orders on the docket to reflect that AT&T’s motions for JMOL had been denied, but did not send new NEFs to the parties.  After the appeal period expired, AT&T filed a motion to extend or reopen the appeal period under Rules 4(a)(5) and (6).  The district court denied AT&T’s motion.  AT&T appealed.

On appeal, the Federal Circuit held that the district court did not abuse its discretion in denying AT&T’s motion to extend or reopen the appeal period under Rules 4(a)(5) or (6).  Rule 4(a)(5) provides that, to qualify for an extension of the appeal period, the moving party must show excusable neglect or good cause.  Rule 4(a)(6) provides that a court may reopen the appeal period if the court finds that the moving party did not receive notice of the entry of the judgment or order.  The Court held that AT&T failed to show good cause or excusable neglect required by Rule 4(a)(5), and that Rule 4(a)(6) is inapplicable because AT&T received the notice.

“[E]ven a complete lack of notice would not qualify as excusable neglect under Rule 4(a)(5), without some additional showing.”  Slip op. at 6.

The Federal Circuit first addressed the issue of whether AT&T’s failure to read the underlying district court order constituted good cause or excusable neglect under Rule 4(a)(5).  The Court rejected AT&T’s argument that its delay should be excused because it received incomplete NEFs and the district court did not reissue new NEFs when it corrected the docket entries.  The Court agreed with the district court that even a complete lack of notice would not qualify as excusable neglect under Rule 4(a)(5), without some additional showing.  Otherwise, as explained by the Court, allowing Rule 4(a)(5) to be triggered so easily would render Fed. R. Civ. P. 77(d)(2) a nullity.  Fed. R. Civ. P. 77(d)(2) provides that “[l]ack of notice of the entry does not affect the time for appeal or relieve—or authorize the court to relieve—a party for failing to appeal within the time allowed, except as allowed by Federal Rule of Appellate Procedure 4(a).” 

The Federal Circuit also rejected AT&T’s argument that this is not just a “lack of notice” case, but a case involving an “affirmatively misleading notice” that violated Fed. R. Civ. P. 79.  Slip op. at 7.  The Court held that AT&T was wrong in arguing that the notice violated Rule 79 because it applies to the civil docket, not to electronic email notices.  The Court noted that, although the district court did not send updated NEFs, the district court promptly corrected the docket entries to state that the orders denied the underlying JMOL motions.  

The Federal Circuit disagreed with AT&T’s argument that its failure to read the district court’s order was excusable, because it was misled into doing so by the district court itself.  The Court recognized that excusable neglect is not limited strictly to omission caused by circumstances beyond the control of the movant, and that a court’s own conduct, such as misleading entries or statements to counsel, is relevant to determine whether neglect not predicated only on a failure to receive notice of an entry of judgment can, or should, be deemed excusable.  The Court noted that the trial court examined all relevant circumstances surrounding the admitted neglect by AT&T’s counsel, including the fact that AT&T received an order denying its unsealed JMOL motion and an order assigning costs at the same time it received the allegedly misleading NEFs.  The Court explained that an order assessing costs was a clear indication to AT&T that TWM was the prevailing party.  The Court also noted that the orders and NEFs had been sent to eighteen different counsel and legal assistants representing AT&T, and that at least some of those recipients downloaded the full text of the orders.  Given these circumstances, the Court held that the district court did not abuse its discretion in concluding that it was inexcusable for AT&T’s counsel to fail to read all of the underlying orders they received.

The Federal Circuit then addressed the issue of whether AT&T satisfied the requirement for reopening the appeal period under Rule 4(a)(6).  Agreeing with the district court’s finding that AT&T received the notice of the entry of judgment when it received and downloaded those judgments, the Court held that the trial court did not err in finding that AT&T failed to establish that it did not receive the notice contemplated in Rule 4(a)(6)(A).  The Court also held that the trial court did not abuse its discretion in denying AT&T’s motion solely because it did not receive an NEF of the corrected docket entry. 

Like the district court, the Federal Circuit declined to hold that the actual receipt of the text of a judgment or order does not constitute notice of the entry of that judgment within the meaning of Rule 4(a)(6)(A), noting that Rule 4(a)(6) does not apply when a party simply shows it did not read a court order.  Thus, the Court held that AT&T’s argument that it never read the orders because it was confused by the NEFs was irrelevant to Rule 4(a)(6).

The Federal Circuit also rejected AT&T’s argument that it never received the type of notice contemplated by Rule 4(a)(6)(A) because it never received an NEF describing the type of docket entry required by Rule 79.  The Court noted that, although the NEF was inaccurate, AT&T was notified both that the orders had been entered on the docket and that the order contained final judgments. 

Judge Dyk dissented from the majority’s holding that the district court did not have discretion to reopen the appeal period under Fed. R. App. P. 4(a)(6).  Judge Dyk would have held that Rule 4(a)(6) applied because the substantive orders were not entered on the docket at the time AT&T arguably received notice of the orders, and the required notice of the entry was not provided.  Judge Dyk reasoned that the three docket entries concerning the sealing orders did not constitute the required entry with respect to the substantive motion orders because they merely stated that the sealing orders had been granted and did not mention that the substantive orders were denied.  Judge Dyk further reasoned that, because the NEFs were never sent concerning the substantive order docket entries, AT&T never received notice of the entry of the order required by Fed. R. Civ. P. 77(d). 

In response to Judge Dyk’s dissent, the majority first distinguished the present suit over the cases cited by Judge Dyk, explaining that the facts-at-issue in those cases were not relevant to the question-at-issue, and that neither Rule 4(a)(6) nor the meaning of notice thereunder was at issue in those cases.  The majority noted that, regardless of which docket entry—the initial one or the corrected one—triggered AT&T’s time for appeal, the appeal was untimely by a large margin.  Moreover, the Court noted that the NEFs AT&T did receive stated that all the cited orders were entered on the docket and links to all the orders were provided.  The Court found no abuse of discretion for the district court to impose an obligation to monitor an electronic docket for entry of an order which a party and its counsel already have in their possession and know that the clerk at least attempted to enter.

Accordingly, the Federal Circuit affirmed the district court’s denial of AT&T’s request for relief under both Rules 4(a)(5) and (6).