What are appellate courts?
Definition
An appellate court (also called a court of appeals) is a higher-level court that reviews decisions made by trial courts or other lower tribunals. Its role is to determine whether the law was applied correctly and whether the lower court’s decision is supported by the record. Appellate courts do not retry facts with a jury; they examine the written record, legal arguments, and, in many cases, oral argument from attorneys.
How appellate courts work — step by step
1. Loss at trial: A party dissatisfied with a trial-level judgment files a notice of appeal within a required deadline.
2. Record on appeal: The appellate court reviews the trial transcript, exhibits, and any procedural filings (the “record”).
3. Briefing: Each side submits written briefs explaining legal errors claimed and the remedy requested.
4. Oral argument (optional): Courts may allow a short oral presentation to clarify points from the briefs.
5. Standard of review: The court applies legal standards (for example, reviewing legal conclusions de novo, i.e., anew; and factual findings for clear error) to determine whether the lower court’s decision stands.
6. Decision: The appellate court may affirm (leave the ruling in place), reverse (overturn), modify, or remand (send back for further proceedings). It can also issue a stay to pause enforcement while the appeal is pending.
Key distinctions: appellate courts vs. supreme courts
– Appellate courts are intermediate reviewing bodies at state and federal levels. They handle most appeals and ease the workload of the highest court.
– A supreme court (state or the U.S. Supreme Court) is the highest legal authority in its jurisdiction. It typically reviews a smaller set of appeals, often those with broad legal significance or conflicts between lower courts.
– Federal system example: there are 13 federal appellate courts — 12 regional circuit courts and one Federal Circuit — and the U.S. Supreme Court sits above them.
Fast facts and practical notes
– Appellate courts exist both federally and within most states. Many states maintain intermediate appellate courts; 41 states have at least one intermediate level.
– Appellate review focuses on legal error and the sufficiency of the record; appellate panels do not hold new trials or use juries.
– A successful appeal can reverse an adverse judgment and may materially affect corporate outcomes; an unsuccessful appeal can be further appealed to a supreme court, but that court accepts relatively few cases.
Checklist for investors and corporate managers monitoring an appeal
– Confirm the level of court hearing the appeal (state intermediate, state supreme, federal circuit, or the U.S. Supreme Court).
– Check whether a stay was granted (temporary pause of enforcement). A stay can limit immediate financial exposure.
– Note the issue on appeal: is it narrow (affecting one party) or broad (affecting industry or regulatory precedent)?
– Track timing: appellate timelines vary; decisions can take months to years.
– Watch for remand orders that send cases back to trial court for additional proceedings.
– Assess disclosure and market communications: companies should disclose material legal developments per securities rules.
– Consider escalation risk: will the losing party likely ask a supreme court to review the case?
Worked numeric example (illustrative only)
Scenario: A publicly traded company receives an unfavorable trial judgment that markets view as material.
– Before judgment: stock = $50.00.
– After the trial judgment: market re-prices the stock down 15% → new price = $42.50.
– Company files an appeal and an appellate court grants a stay while it reviews the case; the stay reduces immediate legal risk and the market partly recovers (hypothetical 8% rise from $42.50) → new price ≈ $45.90.
– If the appellate court later affirms the trial judgment, the stock could fall further; if the appellate court reverses, the stock could recover toward pre-judgment levels. (These movements are illustrative — actual market reactions vary and reflect many factors.)
Example from recent events (summary)
In 2020–2021, appellate proceedings in California affected ride-hailing companies’ legal status for drivers. An appeals court temporarily delayed enforcement of a state labor law (a “stay”), causing short-term investor responses; later appellate and supreme-court rulings confirmed the law, ending the uncertainty. That example shows how appellate action and stays can change legal risk and investor expectations.
Sources
– Investopedia — Appellate Courts: https://www.investopedia.com/terms/a/appellate-courts.asp
– U.S. Courts — Appeal Basics: https://www.uscourts.gov/about-federal-courts/types-cases/appeals
– Cornell Legal Information Institute — Appellate Review: https://www.law.cornell.edu/wex/appellate_court
– Supreme Court of the United States — Official website: https://www.supremecourt.gov/
Educational disclaimer
This explainer is for educational purposes only and does not constitute legal or investment advice. If you need guidance for a specific legal or financial situation, consult a licensed attorney or a qualified financial professional.