Why Do Plaintiffs Lose Appeals? Biased Trial Courts, Litigious Losers, or Low Trial Win Rates?

Abstract

Multiple studies find that plaintiffs who lose at trial and subsequently appeal are less successful on appeal than are losing defendants who appeal. The studies attribute this to a perception by appellate judges that trial courts are biased in favor of plaintiffs. However, at least two alternative explanations exist. First, losing plaintiffs may appeal at higher rates independent of the potential merits. Second, if plaintiffs tend to pursue to trial lawsuits where they should win on the merits less than half the time, then potentially reversible outcomes at trial will be more likely to be adverse to defendants. This study revisits the analysis of the appellate process with a statistical model that ties together win rates at trial, appeals rates, and success rates on appeal. The model can distinguish the competing explanations for differential appellate success rates, and we estimate this model using matched data on Federal District Court trials and appeals to the U.S. Circuit Courts of Appeal. We find consistent evidence that the lower plaintiff success rate on appeal is due to plaintiffs’ pursuing lawsuits where they should win on the merits (which we define to be an outcome that would not be reversed or remanded on appeal) less than half the time. We find no evidence that asymmetric success on appeal is attributable either to trial courts favoring plaintiffs or to higher rates of appeal by losing plaintiffs. (JEL: K41)