Your client has received an unfavorable decision from the District Court. You take an appeal to the Minnesota Court of Appeals but don’t fare much better there. Still, you believe that you have a solid legal argument. You file a petition for review to the Minnesota Supreme Court. Finally, the light goes on for your opponent, who sees another year or more of litigation, and a very real possibility of the case turning around. Settlement discussions are promising, but your client is concerned about the collateral effect of the lower court’s decisions.
What now? Well, one approach is to try to make the bad decision go away as part of a settlement. Sometimes ending the litigation on your terms is far more advantageous than continuing the battle, with the attendant uncertainty of the ultimate outcome.
A seldom used but available alternative to an appeal to a higher court is to obtain an agreed vacatur of the decision of the lower court. See, e.g., Larson v. Lakeview Lofts, L.L.C., 804 N.W.2d 250 (Minn. Ct. App. 2011), opinion vacated (Nov. 9, 2011). In that case, Lakeview Lofts, LLC was only partially successful in the Court of Appeals, obtaining reversal of a portion of an adverse judgment issued by the District Court. Defendants filed a timely petition for further review, and while that petition was pending, negotiated a settlement of the dispute with the respondents, plaintiffs below. The parties subsequently filed a joint motion and stipulation for vacatur of the decisions of both the Court of Appeals and the District Court, and dismissal of the proceedings.
The stipulation was premised on the Supreme Court’s authority to vacate lower court decisions. First, the Supreme Court has the power to decide cases coming before it, even if the parties have settled. Kahn v. Griffin, 701 N.W.2d 815, 821-22 (Minn. 2005) (holding that mootness is a “flexible discretionary doctrine, not a mechanical rule that is invoked automatically,” such that the Court will retain jurisdiction if a case is “functionally justiciable”) (internal quotation marks omitted) (citations omitted). The high court also has broad authority to reverse, modify and vacate decisions of the Court of Appeals. See State v. Ramey, 721 N.W.2d 294, 302 n.6 (Minn. 2006) (observing that the Minnesota Supreme Court reserves “supervisory powers” over other Minnesota courts); Powell v. Anderson, 660 N.W.2d 107, 113, 124 (Minn. 2003) (acknowledging that the Minnesota Rule of Civil Appellate Procedure 102, as well as the court’s supervisory powers permit it to vacate a prior opinion of a lower court under special circumstances).
The U.S. Supreme Court and the federal circuit courts also have recognized that federal appellate courts have the power to vacate the decisions of lower courts. The U.S. Supreme Court, however, has decided to use this power sparingly. See U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 29 (1994) (holding that mootness of an appeal as a result of settlement is not a reason to vacate prior decision under federal law).
Notwithstanding the Supreme Court’s decision in Bonner Mall, state supreme courts that have considered this issue broadly embrace the doctrine of stipulated vacatur. Texas, for example, automatically vacates upon settlement. See Panterra Corp. v. Am. Dairy Queen, 908 S.W.2d 300, 301 (Tex. Ct. App. 1995) (recognizing the long-standing state rule that when appeal becomes moot as a result of settlement, all previous orders and judgments must be set aside, not only the appeal); see also LeMans Corp. v. Provenza, No. 51026, 2011 WL 1077766, at *1 (Nev. Mar. 22, 2011) (remanding to the District Court for dismissal); Mason Shoe Mfg. v. Firstar Bank Eau Claire, 596 N.W.2d 373, 374 (Wis. 1999) (summarily vacating the decisions of both the Court of Appeals and the Circuit Court and remanding to the circuit court for judgment of dismissal with prejudice); State ex rel. Clay Chastain v. Kansas City, 968 S.W.2d 232, 243 (Mo. Ct. App. 1998) (“[T]he normal practice [of the Missouri Court of Appeals] should be to vacate the judgment when one or more parties requests such action in a case moot on appeal.”).
Second, stipulated vacatur is supported by strong public policy considerations, the value of which has been recognized by commentators. See Henry E. Klingeman, Settlement Pending Appeal: An Argument for Vacatur, 58 Fordham L. Rev. 233, 236 (1989); Richard Birke, Bargaining in the High Courts: Settlements and the Oregon Court of Appeals, 31 Willamette L. Rev. 569, 591-96 (1995). According to these commentators, one reason stipulated vacatur is valuable is that it encourages settlement. “Refusing to allow vacatur may discourage settlement by appellants who consider vacatur an important part of settlement. Refusal to vacate may force parties to continue an appeal, at cost to themselves, their adversaries, the overburdened appellate courts, and, by extension, the public.” Klingeman, 58 Fordham L. Rev. at 236. Vacatur and dismissal in Minnesota are consistent with the long-standing judicial policy to favor and encourage settlements. See, e.g., Vandenheuvel v. Wagner, 690 N.W.2d 753, 756 (Minn. 2005) (noting that Minn. R. Civ. P. 68 was modified “to encourage settlement by all parties”).
While the circumstances giving rise to appropriate vacatur may be relatively uncommon, it is an alternative to completing proceedings on appeal. Timing, however, is crucial. Stipulated vacatur is a procedure that should be available with respect to any decision, so long as the court to which the request is directed has not yet decided the case with finality. After a decision has become final in a particular court, the governing rules may limit the ability of the court to take action. For example, in Minnesota District Courts, while Rule 54 expressly provides that all orders of the court are subject to revision at any time before final judgment, there is no clear provision under Rule 60 allowing the District Court to un-ring the bell of that final judgment. Likewise, there is no procedure in the Minnesota Court of Appeals for rehearing or modification of an opinion once it is issued. If vacatur is sought, the request probably needs to be made before judgment is entered in the District Court, or an opinion is filed in the appellate court, or while a petition for review by a higher appellate court is pending.
Finally, you have to give some consideration to the question of what’s left once an opinion is vacated. Clearly as to the parties, the status quo ante has been restored. Their relationship is no longer governed by the judgment, but rather by the terms of any settlement agreement they have reached. Likewise, the vacated decision cannot support a claim of collateral estoppel or res judicata. However, vacated judgments do not disappear completely. The record of their entry echoes on in the permanent court records.
In a thoughtful article appearing in the Journal of Appellate Practice and Process, the author concludes that vacated precedent does not disappear, but morphs from being binding to merely persuasive, or “non-precedential precedent.” Michael D. Moberly, This Is Unprecedented: Examining The Impact Of Vacated State Appellate Court Opinions, 13 J.A.P.P. 231, 265 (2012), quoting Thomas L. Fowler, Holding, Dictum . . . Whatever, 25 N. C. Cent. L. J. 139, 142 (2003). Moberly’s article contains a thorough review of the law on vacatur, and an analysis of the impact of such action on the case itself and future cases. It is well worth reading if you are considering trying to make a bad case disappear.
Eric Magnuson is a shareholder at Briggs and Morgan, P.A. and served as Chief Justice of the Minnesota Supreme Court from 2008 to 2010. He can be reached at [email protected].