480 U.S. 1 (1987), 85-1088, Burlington Northern Railroad Co. v. Woods

Docket NºNo. 85-1088
Citation480 U.S. 1, 107 S.Ct. 967, 94 L.Ed.2d 1, 55 U.S.L.W. 4173
Party NameBurlington Northern Railroad Co. v. Woods
Case DateFebruary 24, 1987
CourtUnited States Supreme Court

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480 U.S. 1 (1987)

107 S.Ct. 967, 94 L.Ed.2d 1, 55 U.S.L.W. 4173

Burlington Northern Railroad Co.



No. 85-1088

United States Supreme Court

Feb. 24, 1987

Argued Nov. 4, 1986




An Alabama statute requires an appellate court, upon affirming a money judgment without substantial modification, to impose a 10% penalty on any appellant who had obtained a stay of that judgment by executing a bond. The statute's purposes are to penalize frivolous appeals and those interposed for delay, and to provide appellees with additional compensation for having to suffer the ordeal of appeal. Upon affirming without modification a judgment for respondents in their federal diversity action arising from a motorcycle accident, the Eleventh Circuit imposed the Alabama statute's penalty on petitioner, which had posted bond to stay the judgment pending appeal.

Held: The Alabama mandatory affirmance penalty statute has no application to judgments entered by federal courts sitting in diversity. Pp. 3-8.

(a) Rule 38 of the Federal Rules of Appellate Procedure affords federal courts of appeals plenary discretion to award damages to an appellee upon determining that the appeal is frivolous. Federal Rule 38's discretionary mode of operation conflicts with the Alabama statute's mandatory operation. Furthermore, the purposes underlying Rule 38 -- to penalize frivolous appeals and to compensate injured appellees for the delay and added expense inherent therein -- are sufficiently coextensive with the statute's purposes to indicate that the Rule occupies the statute's field of operation. The fact that Alabama has a similar Appellate

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Rule coexisting with the statute does not mean that a federal court could impose the mandatory statutory penalty while remaining free to exercise its Federal Rule 38 discretionary authority, since the statute would improperly limit the exercise of that discretion in instances in which the court wished to impose a penalty of less than 10%. Pp. 4-8.

(b) Rule 38 must be applied under the analysis set forth in Hanna v. Plumer, 380 U.S. 460, since (a) it is a constitutional exercise of rulemaking authority in that it regulates matters that can reasonably be classified as procedural, and (b) it affects only the process of enforcing litigants' rights, and not the rights themselves, and therefore does not violate the Rule Enabling Act's prohibition against affecting substantive rights (28 U.S.C. §2072). P. 8.


MARSHALL, J., delivered the opinion for a unanimous Court.

MARSHALL, J., lead opinion

JUSTICE MARSHALL delivered the opinion of the Court.

This case presents the issue whether, in diversity actions, federal courts must apply a state statute that imposes a fixed penalty on appellants who obtain stays of judgment pending unsuccessful appeals.


Respondents brought this tort action in Alabama state court to recover damages for injuries sustained in a motorcycle accident. Petitioner removed the case to a Federal District Court having diversity jurisdiction. A jury trial resulted in a judgment of $300,000 for respondent Alan Woods and $5,000 for respondent Cara Woods. Petitioner posted bond to stay the judgment pending appeal, and the Court of Appeals affirmed without modification. 768 F.2d 1287 (CA11 1985).

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Respondents then moved in the Court of Appeals, pursuant to Ala. Code §12-22-72 (1986), for imposition of that State's mandatory affirmance penalty of 10% of the amount of judgment. Petitioner challenged the application of this statute as violative of the equal protection and due process guarantees of the Fourteenth Amendment and as "a procedural rule . . . inapplicable in federal court under the doctrine of Erie Railroad Company v. Tompkins, 304 U.S. 64 (1938), and its progeny." App. to Pet. for Cert. A-5. The Court of Appeals summarily granted respondents' motion to assess the penalty and subsequently denied a petition for rehearing. The parties have stipulated that the final judgment has been paid, except for the $30,500 statutory affirmance penalty, which petitioner has withheld pending proceedings in this Court.

We granted certiorari to consider the equal protection and due process challenges as well as the Erie claim. 475 U.S. 1080 (1986). Because we conclude that the Alabama statute imposing a mandatory affirmance penalty has no application in federal diversity actions, we decline to reach the Fourteenth Amendment issues.


The Alabama Statute provides in relevant part:

[107 S.Ct. 969]

When a judgment or decree is entered or rendered for money, whether debt or damages, and the same has been stayed on appeal by the execution of bond, with surety, if the appellate court affirms the judgment of the court below, it must also enter judgment against all or any of the obligors on the bond for the amount of the affirmed judgment, 10 percent damages thereon and the costs of the appellate court. . . .

Ala. Code §12-22-72 (1986).1

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As set forth in the statute, then, a combination of three conditions will automatically trigger the 10% penalty: (1) the trial court must enter a money judgment or decree, (2) the judgment or decree must be stayed by the requisite bond,2 and (3) the judgment or decree must be affirmed without substantial modification. E.g., Chapman v. Rivers Construction Co., 284 Ala. 633, 644-645, 227 So.2d 403, 414-415 (1969). The purposes of the mandatory affirmance penalty are to penalize frivolous appeals and appeals interposed for delay, Montgomery Light & Water Power Co. v. Thombs, 204 Ala. 678, 684, 87 So. 205, 211 (1920), and to provide "additional damages" as compensation to the appellees for having to suffer the ordeal of defending the judgments on appeal. Birmingham v. Bowen, 254 Ala. 41, 46-47, 47 So.2d 174, 179-180 (1950).

Petitioner contends that the statute's underlying purposes and mandatory mode of operation conflict with the purposes and operation of Rule 38 of the Federal Rules of Appellate Procedure, and therefore that the statute should not be applied by federal courts sitting in diversity. Entitled "Damages for delay," Rule 38 provides:

If the court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee.

See also 28 U.S.C. §1912. Under this Rule,

damages are awarded by the court in its discretion in the case of a frivolous appeal as a matter of justice to the appellee and as a penalty against the appellant.


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