To obtain a stay pending appeal, a moving party has to demonstrate to the trial court that they are likely to succeed on the merits of the appeal. In other words, the moving party has to convince the trial court that just ruled against them that the ruling is likely to be overturned on appeal. Needless to say, this is not an easy task. To prevent trial courts from contradicting themselves, a moving party can satisfy the “likelihood of success” prong by showing that the issue on appeal is a “substantial case on the merits”—i.e., that it raises a serious issue of first impression. Here, although the court had rejected the protester’s legal theory, it granted a stay pending appeal, finding that the protester had raised a substantial issue of first impression.
Swift & Staley Inc. v. United States, COFC No. 21-1279
Background
The SBA’s Office of Hearings and Appeals found that Swift & Staley did not qualify as a small business for a particular procurement. OHA reasoned that Swift was affiliated with another through negative control.
Swift filed suit with the Court of Federal Claims challenging the OHA decision. Swift argued that OHA had violated SBA regulations when it considered the issue of negative control sua sponte. Swift contended that the regulations prohibit OHA from considering issues raised for the first time on appeal. The court, however, found that OHA had not violated this regulation, because the negative control issue had been previously raised with the SBA Area Office.
Swift appealed the court’s decision to the Federal Circuit. Swift also filed a motion with the COFC to stay the judgment pending the appeal.
Legal Analysis
To obtain a stay pending appeal, a moving party must show (1) that it is likely to prevail on the merits of its appeal, (2) it will suffer irreparable harm absent a stay, (3) the balance of hardships favors the moving party, and (4) a stay will not be contrary to the public interest.
The court noted that a movant seeking an stay pending appeal has the daunting task of convincing a court that just ruled against the movant that the movant is likely to succeed on appeal. A court would have difficulty finding that a movant is likely to succeed on an appeal without contradicting its own opinion. A court may, however, reasonably consider whether the issue on appeal constitutes a substantial case on the merits. An issue is a substantial case on the merits when it is an issue of first impression that raises serious, difficult, or doubtful questions.
Here, the court found that the issue on appeal was a substantial case on the merits. The meaning of the word “raised” in the SBA regulation was an issue of first impressions. While the court rejected Swift’s arguments, it nonetheless believed that Swift’s appeal raised a substantial issue that may have a reasonable possibility of success on appeal.
The court found that the other factors also weighed in favor of a stay. Absent a stay, Swift would suffer irreparable injury. Swift obtained a majority of its revenue as the incumbent for the contract at issue. If the government continued with another contractor, Swift could go out of business.
Additionally, the balance of harms favored Swift. The government had not demonstrated that it would be harmed by a stay. In fact, throughout the litigation, the government had expressed a willingness to maintain the status quo, that is, to continue with Swift performing as the incumbent. Moreover, a stay would not be contrary to the public interest, which in this case, favored maintaining the status quo with Swift continuing to perform during the appeal.
