Two-Way Media, LLC v. AT&T Inc.

Addressing the requirements for extending and reopening the time to appeal under Fed. R. App. Pro. 4(a), the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s denial to either extend or reopen the time to appeal a final judgment where it was undisputed that multiple attorneys for the appellant had received electronic notice, albeit erroneous, that a final order had been entered on the docket and where the substance of that order triggered the start time to file an appeal.  Two-Way Media, LLC v. AT&T Inc., Case No. 14-1302 (Fed. Cir., Mar. 19, 2015) (O’Malley, J.) (Dyk, J. dissenting).

The plaintiff, Two-Way Media (TWM), sued various AT&T defendants (AT&T) for patent infringement.  A jury found that AT&T infringed valid claims of two asserted patents and awarded damages.  AT&T filed four motions for judgment as a matter of law (JMOL) or for new trial.  AT&T moved to place three of the four motions under seal for confidentiality reasons.  The pendency of the four motions stayed the time to file an appeal until all were decided.

Several weeks later, the district court denied all four of the JMOL motions, granted TWM’s request for cost, and entered judgment against AT&T on all pending claims.  AT&T’s attorneys and staff received Notice of Electronic Filing (NEF) relating to the clerk’s entry of the orders, but some of the corresponding NEF’s and docket descriptions incorrectly described the substance of the filed orders as pertaining only to AT&T’s motions to seal, rather than substantive orders directed to the underlying JMOL motions.  Three days later, the clerk corrected the docket text to accurately describe the substance of each of the filed orders, but no NEF was sent notifying AT&T’s attorneys of the update.  After those corrections, the docket sheet accurately reflected that all of the motions had been denied and that final judgment had been entered.

AT&T’s attorneys discovered the proper content of the earlier erroneously described orders after the appeal deadline.  Almost immediately, AT&T moved to either extend or reopen the time to file an appeal under Fed. R. App. Pro. 4(a)(5) and (6).  The district court denied AT&T’s motion, noting that 18 attorneys or law-firm personnel for AT&T had been notified of the entry of the substantively correct orders, some of those recipients had downloaded the actual orders and the notice regarding the motions to seal and entry of costs should have alerted AT&T that all issues affecting the trigger date for an appeal had been resolved.

Applying U.S. Court of Appeals Fifth Circuit law, the Federal Circuit majority found that the district court had not abused its discretion in denying a late appeal.  The Court found that Rule 4(a)(5) required a showing of excusable neglect or good cause to extend the appeal period.  The Court found that the district court did not abuse its discretion in finding that AT&T had not met the standard given the number of recipients who received notice of the correct filing of the orders, the fact that the non-confidential orders entered at the same time were correctly labelled and that the entry of costs order was available only upon a complete disposition.  The Court also found that something more than lack of receipt of notice of the orders by the clerk was required to establish excusable neglect, i.e., lack of notice plus an attempt to discover the previous orders.  The Federal Circuit agreed with the district court that AT&T’s lawyers could have discovered the correct final orders by checking the docket sheet and that they had an obligation to do so.  The Court agreed that the clerk’s erroneous description was relevant to the AT&T’s request for relief, but not determinative given the other attendant facts.

The Court also found that the district court did not abuse its discretion in refusing to reopen the appeals period under Rule 4(a)(6).  The Court explained that the rule requires that there was no notice of the entry of judgment.  The Court agreed that electronic notice of the district court’s orders via the NEF, although flawed, was sufficient where the substance of the orders accurately and unequivocally reflected intent to enter final judgment.

The majority distinguished the authority cited by Judge Dyk in his dissent, noting that the cases cited in the dissent involved instances where the substance of the underlying order was not clear.  Analogizing to situations where a recipient of a notice chooses not to open its mail, the majority found that the only question for purposes of Rule 4(a)(6) is whether a party receives notice of an order.  The Court found that where an order is actually received, but ignored, Rule 4(a)(5) is the procedural vehicle counsel must pursue to seek relief from its failure to read or digest the order.