Staying a money judgment in federal court without posting a supersedeas bond.

• Author: Mullins, Edward

Notwithstanding the language of Fed. R. Civ. P. 62(d), which appears to require a bond in order to stay lower court proceedings pending appeal, federal courts have held consistently that a trial court has authority under the rule to stay a money judgment without compelling the posting of a supersedeas bond. The underlying rationale for this interpretation is that justice and the public interest favor reliance on judicial discretion, rather than a fixed mandate, in this context. This article explores how federal courts attempt to strike a balance between protecting the judgment creditor and ensuring that the status of the judgment debtor is not endangered to the detriment of its other creditors and the public.

Discretionary Nature of Rule 62(d) Supersedeas Bond Requirement

Fed. R. Civ. P. 62(d) governs whether an appellant is able to obtain a stay of judgment in federal court pending an appeal. Rule 62(d) states:

Stay upon Appeal. When an appeal is taken the appellant by giving a supersedeas bond may obtain a stay subject to the exceptions contained in subdivision (a) of this rule. The bond may be given at or after the time of the filing the notice of appeal or of procuring the order allowing the appeal, as the case may be. The stay is effective when the supersedeas bond is approved by the court.

The language of Rule 62(d) appears to require that a supersedeas bond be posted before a stay is granted. However, despite this plain reading of the rule, federal courts have opted to interpret Rule 62(d) broadly, giving district courts the discretion to stay execution of money judgments pending appeal without a full supersedeas bond.

Interpretation and Application of Rule 62(d)

Whether Rule 62(d) sets forth a mandatory or discretionary requirement for a supersedeas bond to stay the enforcement of a money judgment pending appeal has been the subject of debate in federal courts for over 20 years. Historically, some courts interpreted the text of Rule 62 narrowly to require the posting of a bond in order to obtain a stay of execution pending appeal, while others permitted the district court, in the exercise of its discretion, to waive or reduce the bond requirement. The modern view, however, follows the latter discretionary approach. Thus, the general consensus is that, although the posting of a supersedeas bond guarantees the appellant a stay "as a matter of right," the discretion to grant or deny a stay in the absence of a bond always belongs to the trial court. (1) While this is the predominant view, some circuits have yet to declare an official position.

The seminal case on the issue is Federal Prescription Servs., Inc. v. Am. Pharm.Ass'n.,636 F.2d at 757. There, the judgment creditor argued that the language of Rule 62(d) explicitly requires that a supersedeas bond be posted in order to obtain a stay. (2) The court rejected this position, concluding instead that, while the posting of a supersedeas bond creates an absolute right to a stay, the district court always has the discretion to grant a stay even without a bond. (3)

The court in Federal Prescription acknowledged that there was a split of authority on this issue. Some courts had held that Rule 62(d) required that a supersedeas bond be posted as a condition to the granting of a stay. (4) Conversely, other courts had held that whether or not to require a bond was within the court's discretion. Considering both lines of cases, the Federal Prescription court concluded that the better view was that espoused by the second group of courts. (5) Thus, the court held that, while Rule 62(d) provides that an appellant always may obtain a stay "as a matter of right by filing a supersedeas bond," Rule 62(d) does not prohibit the district court from entering an unsecured stay based on the court's exercise of its sound discretion. (6)

The court reached this conclusion by analyzing Rule 62, the interplay of that rule with other procedural rules, and the persuasiveness of other courts that had come to the conclusion that a district court has discretion to waive the bond requirement. (7) The court further explained that the only guidance available on the mandatory or discretionary nature of supersedeas bonds was the language of former Fed. R. Civ. P. 73(d), which provided that "when an appellant entitled thereto desired a stay on appeal he could present to the court for its approval a supersedeas bond.... The district court could, however, fix( ) a different amount or order( ) security other than the bond after notice and hearing and for good cause shown." (8)

In addition, the court stated that, even though the enactment of the Federal Rules of Appellate Procedure abrogated this rule, and the new rule did not repeat the language of the old rule, "the substance of Rule 73(d) retains vitality inasmuch as it had simply codified judicial practice." (9) Consequently, the court noted that the explicit language contained in former Rule 73(d) was implicit in its successor, i.e., Rule 62(d), which recognizes "the district court's discretionary power to stay execution of a money judgment without requiring bond." (10)

According to the court in Federal Prescription, this interpretation was necessary if the Federal Rules of Civil Procedure and the Federal Rules of Appellate Procedure were to be interpreted consistently. In the court's view, "Reading Rule 62(d) to make filing a supersedeas bond an indispensable prerequisite to a stay on appeal creates a potential conflict" with the language of Rule 8 of the Federal Rules of Appellate Procedure, (11) which states that the court may condition relief on a party's posting of a bond or "other appropriate security in the district court." (12) The court reasoned that it would be illogical for an appellant to be required to seek an unsecured stay before the district court first, as required by Fed. R. App. P. 8(a), if Fed. R. Civ. P. 62(d) made such a request futile based on Rule 62(d)'s purported mandatory supersedeas bond requirement. (13) In other words, "if the appellate court has power to issue an unsecured stay, as Rule 8(b) clearly implies, then the district court must have that power" to utilize its discretion to set aside the need for...