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The Finality Trap: Accidentally Losing Your Right To Appeal (Part II)

Eight separate Circuit Courts of Appeals regularly enforce the so-called “finality trap,” the rule that dismissal of claims without prejudice during litigation may undermine the finality of any resulting judgment and thereby bar appeal at the litigation’s end. The rule is as harsh as it is often overlooked. A party that concludes an action in the trial court, without finally disposing of any parties’ voluntarily-dismissed claims, may be banished from the appellate court without opportunity to revive the case below. The party loses its case in the trial court and forfeits its right to appeal.1 A more distressing circumstance is difficult to imagine. The first installment of this two-part article substantiated this majority position across the country, listed the decisions and courts enforcing it, and noted its rationale. Because of discomfort at the rule’s harshness on unsuspecting litigants, however, Courts of Appeals applying the majority position have carved often-unpredictable exceptions into its application. This article addresses those exceptions. The article also addresses the two primary minority positions – those of the Sixth and Eighth Circuits – which, while tempering the rule, do so inconsistently and thus render the right to appeal in those Circuits uncertain. Those uncertainties pose a real threat. Determination of when a party may appeal an order as “final,” after all, equally determines when that party must appeal or forever lose the right after 30 days. The inconsistency in finality rules today creates a hidden minefield in appellate practice. This article first addresses the exceptions to the majority rule, which typically fall into one of two types: (i) those imparting finality to, and thus permitting appeals from, case dispositions containing non-final dismissals of claims that the party cannot refile in any event; and (ii) those permitting appeals where a party invoked the dismissal without intent to manufacture appellate jurisdiction over an otherwise interlocutory order. Many of these exceptions address involuntary dismissals, not the Rule 41(a) voluntary dismissals subject to the finality trap rationale, and they are thus less germane to the discussion here. They deserve mention only because the Sixth and Eighth Circuits occasionally cite such dismissals as authority to support their rejection of the majority rule. This article secondly follows the perambulations of these dissenting circuits to illustrate the confusion that these decisions create. A caution is warranted. These exceptions, and much of the dissenting circuit opinions, often represent random judicial acts to save a party’s right to appeal; they are not necessarily principled decisions assured of adherence in the future. While some of these exceptions truly may serve in appellate planning, others are isolated stopgaps that courts may later ignore. The appellate litigant should be forewarned that judicial departures from finality trap enforcement might not always redeem the shaken litigator. The anxiety of malpractice will only dissipate when Congress or the Judicial Conference resolves the trap by statute or rule, as this article proposes in its conclusion. I. EXCEPTIONS WITHIN THE MAJORITY RULE

    A. Eleventh Circuit Exceptions for Appellants Not Attempting to Manipulate Appellate Jurisdiction
Attempting to limit the finality trap to cases where parties manufacture appellate jurisdiction, the Eleventh Circuit has tempered its treatment of finality issues where the dismissals without prejudice occurred before the final order from which an appeal is taken.2 Provided that an order disposes of all then-existing parties and claims, that order can be a final judgment subject to appeal without Rule 54(b) certification, notwithstanding prior dismissals without prejudice. The qualification thus permits normal appeals from judgments at the close of a case where parties had, during the litigation, unthinkingly dismissed claims without prejudice and left them unresolved. One must question whether the Circuits will enforce this exception where parties clearly have used the earlier dismissal to manufacture appellate jurisdiction for an anticipated, forthcoming legal ruling. Just as parties can, after an important ruling, agree to a dismissal of remaining claims to grant themselves an immediate final judgment appeal, perceptive litigants also can foresee the future importance of a forthcoming ruling. When parties realize that they desire an interlocutory appeal on a significant issue, they may attempt to fit themselves within the Eleventh Circuit rule: they first agree to a Rule 41(a)(1) dismissal of all other claims and then file the summary judgment motion on the remaining claim that, upon resolution, becomes immediately appealable. If successful on appeal, the party then can reassert the dismissed claims in the remanded action and go forward. The Eleventh Circuit may find its exception no longer palatable in the face of manipulations that are as serious as the post-order manipulation that first brought the finality rule to that Circuit’s attention. Also following the “clean hands” logic, the Eleventh Circuit last year in CSX Transportation, Inc. v. City of Garden City3 created an arguably much broader exception to the standard finality rule of Ryan v. Occidental Petroleum Corp.4 In CSX, successful defendants voluntarily dismissed claims among themselves without prejudice and claimed that their unresolved claims left the plaintiffs’ adverse judgment non-final and therefore unappealable. The CSX Court ruled that, if the appellant was not attempting to manipulate appellate jurisdiction, voluntary dismissal of remaining third-party claims without prejudice would produce a final judgment, even if it followed entry of a non-final judgment.5 Underlying the Court’s analysis was the concern that no party should control another’s right to appeal. Noting that the Fifth Circuit in Ryan was troubled by the appellant’s attempt to manufacture appealabilty, the Court described CSX as Ryan’s “mirror image”: successful third-party defendants sought to undermine jurisdiction for the losing plaintiff’s appeal. The potentially broad CSX exception, however, did not survive long. The Eleventh Circuit recently limited CSX to third-party scenarios, evading its rationale while adhering only to the literal wording of its holding. The Court dismissed for lack of jurisdiction an appeal in which one plaintiff’s voluntary dismissal destroyed the right of two others to appeal.6
    B. Dismissals of Claims Where Facts or Law Otherwise Bar Reassertion
Because the finality defect following Rule 41(a) dismissals results from the parties’ ability to reassert the dismissed claims elsewhere, some Circuits carve exceptions where, for practical or legal reasons, the relevant party could not reassert the dismissed claim in any event. The Third Circuit thus notes that dismissals without prejudice do not bar finality determinations where the statute of limitations would effectively bar the dismissed claim.7 The Third likewise so holds for dismissals without prejudice when, for particular reasons in that case, a party will not reinstate the dismissed claim.8 The Fourth and Seventh Circuits have similarly declared finality in actions with claims unresolved in dismissals without prejudice, simply by noting that the defendant was no longer “vulnerable to judgment,”9 or the claim “no longer susceptible to re-opening.”10 The Tenth Circuit likewise has declared an order final when, for given reasons, a party could or would not further prosecute the action.11 Even the Ninth Circuit, one of the strictest adherents to the finality rule, considers a judgment final despite unresolved claims that it believes the district court will never reach.12 One must wonder whether these cases are sufficiently strong precedent to risk playing with the fire of non-final dismissals. In Jung v. K & D Mining Co.,13 for example, the Supreme Court held a lower court dismissal non-final, and thus not subject to appeal, even though the trial court had dismissed the plaintiff’s claim without prejudice to refiling within 30 days, a period that had long since expired when the Supreme Court visited the issue. The plaintiff in Jung legally had neither right nor ability to reassert the dismissed claim, yet that fact did not attribute finality to an otherwise non-final order. The Supreme Court refused to declare that the dismissed claim, though no longer assertable, was final and appealable. Other bases used by courts as exceptions to this rule, like limitations periods and orders dismissing claims for failure to prosecute, involve no greater bar to reassertion of a claim. One ought never to rely on these exceptions. At best, these rulings predicate finality on the precarious determination of the likelihood that litigation might continue. The Supreme Court generally has insisted to the contrary, however, requiring absolute, not potential finality before permitting appeals. Under 28 U.S.C. Section 1291, the decision appealed must provide a certain end to the action. “[A]n order that may terminate the proceeding is insufficient.”14 Conditional dismissals do not ensure finality. Dismissed claims that a party potentially can revive on remand following appeal, given satisfaction of certain conditions, generally preclude finality for appeal.
    C. Dismissals Without Prejudice That Decide the Merits of the Complaint And, Through Collateral Estoppel, Bar Reassertion
Although not within the majority position, the Eighth Circuit, in Great Rivers of Southeastern Iowa, Inc. v. Farmland Industries, Inc.,15 identified in citation one of the exceptions to that position. The Eighth there rejected the notion that dismissals without prejudice fail to produce finality, citing United States v. Wallace & Tiernan Co.,16 and United States v. National City Lines, Inc.17 The cases reflect the exception to the finality rule for orders that involuntarily dismiss a claim, though without prejudice, but with final collateral estoppel effect that bars the claim as previously filed. The best illustration of such an order occurs in dismissals under Rule 12(b), Fed. R. Civ. P., which reject a plaintiff’s complaint for failure to state a claim, for example, based on a legal defect, for defective subject matter jurisdiction, or for improper venue or process. While the dismissal without prejudice enables the party to correct the defect and refile the action – for example, in the proper venue, or with proper process, or with jurisdictional requirements met – the prior order bars the claim as originally filed. If the plaintiff attempted simply to refile the prior action as previously formulated – again employing the same jurisdictional basis or the same process or in the same venue – the new court would again dismiss the claim based on the prior court’s binding determination of the issue. Should a defeated plaintiff instead choose to stand on his complaint as sufficient, however, or to contest the finding of improper venue or process, the plaintiff may appeal the order that involuntarily ended his action as filed.18 The party may not, however, simply refile his case without correcting the deficiency that barred his original complaint. Involuntary dismissals that terminate the litigation as filed thus differ from voluntary dismissals that foreclose nothing about refiling.19 The latter orders permit the parties to refile precisely what the earlier court had before it; the former orders do not. Once a complaint is dismissed for failure to state a claim, for example, principles of collateral estoppel would compel the identical dismissal of the identical complaint if the plaintiff refiled it elsewhere without change.20 The two cases cited in the Eighth Circuit, National City Lines and Wallace & Tiernan, are both involuntary dismissals that foreclose further litigation. Wallace & Tiernan, like United States v. Proctor & Gamble,21 permits the government to appeal from an involuntary dismissal as a sanction for failure to comply with a discovery order. The exception, which allows the government to challenge a production order without risking contempt, falls into this category. If the government attempted to take the non-final dismissal and refile its claim elsewhere, for a second bite at the issue on which the earlier case foundered, the government would face an identical second ruling. In that sense, immediate appeal is no surprise. National City Lines merely raises the collateral order rule of Cohen v. Beneficial Industrial Loan Corp.22 as an exception to the finality trap. The decision allows an appeal from a dismissal for forum non conveniens, which by definition is without prejudice to refiling the action in a more convenient forum. After the Supreme Court included such orders within the Cohen collateral order doctrine, which treats such orders as final under 28 U.S.C. Section 1291, appealability is commonplace. Voluntary dismissals, however, which foreclose nothing and permit refiling of an action as originally filed, are not Cohen collateral orders and are not otherwise appealable. Dismissals for reasons of forum non conveniens permanently deprive parties from litigation in the selected forum, and potentially in any forum.23 The earlier judgment would bar reassertion of the same claim in the same forum. Because the Court does not necessarily predicate a forum non conveniens dismissal on the availability of any other forum, the Supreme Court declares such orders final and appealable, even while orders transferring a case to a different forum under 28 U.S.C. Section 1404(a), where the litigation simply continues as if in the transferor court, are not.24
    D. Circuit Court Conversion of Dismissals Without Prejudice to Dismissals with Prejudice
Though no rule creates such authority, some circuits reach the merits of appeals by permitting or even encouraging litigants on appeal to “convert” the non-final judgments below into final judgments, either in their briefs or in person before the panel at oral argument. The Seventh permits parties at oral argument to agree to the court’s treatment of dismissals without prejudice as dismissals with prejudice, “thus winding up the litigation and eliminating the bar to our jurisdiction.”25 The Third permits litigants to “represent” that they withdraw with prejudice claims dismissed below without prejudice; the appropriate verbiage in a brief thereby confers “jurisdiction under 28 U.S.C. Section 1291.”26 The Eighth Circuit presents a further twist to this judicial manufacture of appellate jurisdiction. In Minnesota Pet Breeders v. Schell & Kampeter, Inc.,27 the Court chastised the appellants for attempting to manufacture appellate jurisdiction by dismissing remaining counts without prejudice after partial summary judgment. Rather than dismissing the appeal for lack of jurisdiction, however, the court – without citing any authority – simply “deemed” those claims dismissed with prejudice.28 The Court did so without the consent of the appellant. It is questionable whether this statement could legally bar the appellant from reasserting these claims in another forum. II. THE EIGHTH AND SIXTH CIRCUITS ALLOW BROADER APPEALS
    A. The Sixth Circuit Allows Parties and Trial Courts to Certify Appeals of Claims Beyond Rule 54
With one exception,29 the Sixth Circuit has employed a rule whereby parties can stipulate under Rule 41(a) to dismissals of remaining claims without prejudice to obtain finality for an otherwise interlocutory order that the parties seek to appeal before proceeding to trial. In two cases a decade apart, the Court has addressed the problems inherent in the finality trap and the harshness of the potential consequences.30 While the Court refuses to permit the parties alone to stipulate to non-final dismissals to create their own finality, the Court approves such dismissals if the trial court signs the stipulation.31 This odd circumstance effectively creates appellate jurisdiction whenever the parties, with trial court approval, dismiss all remaining claims in the litigation without prejudice by satisfying both Rule 41(a)(1) and (a)(2). The practice would permit these parties then to reassert the dismissed claims within the same litigation following any remand from the Court of Appeals, thus creating appellate jurisdiction in the trial court outside Rule 54(b) and 28 U.S.C. Section 1292(b). This Sixth Circuit procedure highlights its own weakness. When parties otherwise receive an interlocutory ruling during the course of litigation, only a few bases exist to permit appeal: (i) request certification of a controlling legal question under 28 U.S.C. Section 1292(b), which requires trial court approval and Circuit acceptance; (ii) request certification of finality for “final” resolutions of separate claims or discreet parties, which requires trial court approval limited by the parameters of Rule 54(b); and (iii) directly appeal under 28 U.S.C. Section 1292(a) any injunction or other order falling within the Cohen collateral order doctrine. Under the practice within the Sixth Circuit, however, parties and the trial court can simply circumvent these mechanisms and designate a piece of a case as a final judgment that, under 28 U.S.C. Section 1291, the Circuit must review, irrespective of the limitations to certification under these other rules.
    B. The Perambulations of the Eighth Circuit
More than any other Circuit, the Eighth has struggled in successive cases in addressing this difficult problem. The Circuit’s position today is uncertain. The Court certainly does not follow any other Circuit, and because appeals may proceed in the Eighth despite the lack of finality, the right to appeal today exists more broadly in the Eighth Circuit than perhaps in any other in the nation. 1. The Beginning of the Adventure in Merchants & Planters Bank The anomalous path of the Eighth Circuit began with Merchants & Planters Bank v. Smith,32 some fifteen years before a series of cases tumbled the Circuit into uncertainty. The Eighth Circuit there held that a trial court’s decision was appealable in a bifurcated case, where no decision had yet issued in the severed part of the action, and where the district court had not entered a Rule 54(b) certification for the decision on appeal.33 Two banks had challenged a regulatory decision authorizing a new competitor’s business. The competitor intervened and counterclaimed under the antitrust laws. The district court administratively separated that counterclaim from plaintiffs’ claim, granted judgment against plaintiffs and deferred ruling on the counterclaim. Id. Plaintiffs then appealed, despite the lack of any resolution of the bifurcated counterclaim. The Merchants & Planters panel on appeal noted that, in these limited circumstances, “there [was] no difficulty regarding the jurisdiction of this Court under Fed.R.Civ.P. 54(b).” Id. (emphasis added). The trial court had not, however, “express[ly] determin[ed]” that “no just reason for delay” existed for the appeal, as Rule 54(b) explicitly requires; neither did the trial court provide, as the Rule requires, the “express direction” that judgment be entered. Arguably the Circuit’s decision of “implicit” certification was error, given that Rule 54(b) requires mandatory compliance with its literal terms.34 Rule 54 requires an explicit announcement that finality exists, a requirement that unsurprisingly reflects the origin of the rule in resolving the historic uncertainty in the early 20th century over when appellate jurisdiction would arise, and thus when a party must appeal or forever lose the right. Acceptance of “implicit” certifications of finality under Rule 54(b) today resurrects all the original problems plaguing practitioners before 1939, when every litigator had to guess whether disposition of a claim in the action was “implicitly” a final judgment available for, and thus requiring, appeal within 30 days. Years after the Court’s decision in Merchants & Planters, the Eighth Circuit announced its clarification that the Court there had predicated appellate jurisdiction on just such an assumption of “implicit” Rule 54(b) certification. The Circuit found that the trial court had “made a de facto Rule 54(b) certification by administratively separating” the two claims.35 Because an appeal always lies from a final judgment certified under Rule 54(b), the determination of appellate jurisdiction in Merchants & Planters seemed to follow reasonably, if only based on its highly unconventional procedural underpinning. 2. The Circuit Waffles in the Early 1990s Over a period of four years, from 1990 to 1994, the Eighth Circuit resurrected its earlier decision in Merchants & Planters to create the first serious departure from finality rules. During this period, the Circuit issued a series of three decisions that first enforced the finality rule, then ignored it, and then enforced it again. Not aiding in the analysis, none of the three decisions discussed any of the others. The indecision, which baffled other Circuits,36 set the stage for the end-of-the-decade debacle in reformulating finality. The saga began in 1990 with DuBose v. Minnesota,37 which rejected jurisdiction over an appeal from trial court proceedings in which earlier rulings had rejected the plaintiffs’ principal claims. After losing these principal claims, the plaintiff simply failed thereafter to pursue the remaining claims. The district court then dismissed these claims involuntarily, with prejudice under Fed. R. Civ. P. 41(b), for failure to prosecute. The plaintiff then filed an appeal from the final judgment to contest the earlier rulings. The Circuit dismissed the appeal. Over the dissent of then Chief Judge Richard Arnold, the majority enforced the finality rule in its strictest sense, determining that no final judgment existed below notwithstanding the final dismissal with prejudice. The Court assumed that the plaintiff acted without improper motive – plaintiff had not “deliberately subjected [himself] to a dismissal in order to obtain a review of the earlier interlocutory order of dismissal.”38 Fearing that a contrary ruling would encourage contrived non-final dismissals to manufacture finality, the Court in DuBose reluctantly dismissed the plaintiff’s appeal as a prophylactic against future evasion of Rule 54. “To hold otherwise would leave the way open for an abuse of judicial process.”39 Other courts had likewise rejected finality when the final order in the trial court disposed of a case for failure to prosecute.40 In dissent, Chief Judge Arnold noted that, absent a finding of an improper motive to manipulate appellate jurisdiction, the plaintiff was suffering a penalty far too serious for the crime. The Judge identified the harsh consequence of the finality trap: the plaintiff likely could never appeal the substantive ruling that disposed of his principal claims.41 The Chief Judge felt that such a result should only obtain where an appellant had manipulated procedural rulings to fabricate appellate jurisdiction where none otherwise existed. His voice in dissent, however, stood alone. Thus at the beginning of the decade, the Eighth Circuit stood squarely in the procedural mainstream among the Circuits on the finality rule. One year later, however, the Court decided Chrysler Motors Corp. v. Thomas Auto Co.,42 which began the mischief. The Court in Chrysler inexplicably, and without discussion or analysis, permitted an appeal of earlier rulings following a plaintiff’s non-final dismissal of its remaining claims, to fabricate the very finality for appeal that the same Court had warned against the year before in DuBose. The Court ignored DuBose, however, and for authority cited only Merchants & Planters.43 The Court in Chrysler simply noted, in a single sentence, that a Rule 41(a) stipulation below had made the court’s earlier substantive order “a final judgment for purposes of appeal.”44 Chrysler failed to reference the earlier discussion of this issue in DuBose, the Supreme Court holding in Jung, or the law of other Circuits that Rule 41(a) dismissals do not manufacture jurisdiction over otherwise interlocutory orders. One reading of Chrysler treats the citation to Merchants & Planters as an indication that appellate jurisdiction existed under a de facto Rule 54(b) certification theory.45 Chrysler arguably exercised jurisdiction over a ruling on specific counts that the trial court could have, but had not, certified under Rule 54(b). By citing Merchants & Planters, the Court in Chrysler could have been recognizing that jurisdiction over a partial summary judgment exists, if at all, under Rule 54(b). Chrysler thus could have merely extended the rule for “implicit” Rule 54(b) certifications announced fifteen years before; namely, that Rule 54(b) may confer appellate jurisdiction, even absent express certification, if the trial court order is “a de facto Rule 54(b) certification.”46 The Eighth Circuit had so limited Merchants & Planters just 75 days before the Court decided Chrysler, though the Court in Chrysler likewise did not remark upon that decision.47 A less charitable reading of Chrysler would describe it simply as an accidental error. The parties were unaware of the finality rule; the parties did not contest jurisdiction, and the Court and clerks on their own did not find the issue. The Court’s single passing reference to the existence of jurisdiction, however, would work serious havoc in later Circuit attempts to develop a finality rule. In the final case in the mid-1990s trilogy, the Court in Minnesota Pet Breeders v. Schell & Kampeter, Inc.,48 without citing Chrysler, again invoked the strong finality rule from DuBose. The Court there rejected a plaintiff’s attempt to manufacture appellate jurisdiction over an interlocutory partial summary judgment. The district court had granted summary judgment against the plaintiff on one of two claims.49 Plaintiff then dismissed the remaining claim without prejudice, attempting to make the prior ruling appealable while declaring the intention to refile the claim following any successful appeal. By failing to abandon its remaining claim permanently, however, the plaintiff in Minnesota Pet “badly miscalculated” the rules for appellate jurisdiction.50 The Circuit called plaintiff’s proposed appellate short-cut “a tongue-in-cheek dismissal” that does “not evade the final judgment principle and end-run Rule 54(b).”51 Because the summary judgment “did not resolve all” plaintiff’s claims, it “therefore was not appealable absent a Fed.R.Civ.P. 54(b) determination.”52 The Court held that Rule 54(b) certification would have abused trial court discretion; only a dismissal of the remaining counts with prejudice conferred jurisdiction for appeal. The Court in Minnesota Pet then invoked the authority to convert the dismissal of the remaining claim into a dismissal “with prejudice.” Finding that appellate jurisdiction would not exist absent such treatment, the Court proceeded to affirm the judgment with the declaration that no claims could be reasserted from the action below. Thus at the end of the decade, the finality rule in the Circuit, with Minnesota Pet and DuBose, still looked to be in the mainstream, though with the puzzling single sentence declaration in Chrysler that remained unexplained. The Circuit had condemned in DuBose and Minnesota Pet the evasion of Rule 54(b) through “tongue-in-cheek dismissals,” but Minnesota Pet had not distinguished Chrysler either. Jurisdiction to appeal interlocutory orders did not exist under Section 1291 without certification under Rule 54(b).53 The passing reference in Chrysler would, however, soon turn the Circuit around and stand it virtually alone in the nation in permitting appeals. 3. The Final Trilogy B Plus One: Do They Create The New Standard? After a hiatus of five years, the Circuit returned to the issue in three cases, decided within barely a year, that tried to reconcile the Circuit’s own precedent. The trilogy of cases now stands for the proposition that finality for appeal arises in the Circuit when the trial court dismisses claims without prejudice, under Rule 41(a)(2), but not when parties dismiss their own claims by stipulation under Rule 41(a)(1). Moreover, finality arises following a Rule 41(a)(2) dismissal only where the trial court, in signing the dismissal without prejudice, thereby intends to end its involvement with the litigation. Whether jurisdiction for the appeal exists thus turns on trial court discretion and intent.54 Though attempting to resolve Circuit precedent, the rule curiously would overrule Chrysler, where the Court sustained jurisdiction despite the dismissal of claims by stipulation, not court order. The Eighth Circuit today thus reviews whether finality for an appeal exists, following Rule 41(b)(2) dismissals, under the “abuse of discretion” standard, examining the appropriateness of the trial court’s entry of the order of dismissal.55 Nowhere has the Court discussed why trial court dismissals without prejudice create finality when dismissals by stipulation do not. Outside of the authority in Rule 54(b), trial courts have no greater power to create finality for appellate jurisdiction than do the parties themselves. The trio of cases begins with Coeur d’Alene, where the court indicated that the finality rule applies with less force to the dismissal of parties than it does to the dismissal of claims. The State of Missouri, unamused at the Coeur d’Alene Tribe’s operation of Internet gambling, there sued the Tribe and its contractor for violating Missouri’s anti-gambling statutes. The Tribe argued successfully in the district court that it was immune to such claims under the Indian Gaming Regulatory Act. The trial court granted the Tribe’s 12(b)(6) motion and dismissed it from the case, but the contractor remained a defendant. To appeal the dismissal of the Tribe, the State dismissed the contractor without prejudice under Rule 41(a)(1)(i). On appeal, the Tribe argued that the Eighth Circuit lacked jurisdiction because voluntary dismissal of the claims against the contractor did not result in a final, appealable judgment of all claims in the litigation. The Court bristled at the inequity of the finality trap and the suggestion that the State, through its act of dismissal, had undermined its right to appeal. “A less equitable position is hard to imagine.” Surprisingly, it blamed the Tribe for the inequity: “First, we note that . . . the Tribe offers no suggestion as to when the order dismissing it would be appealable.”56 Citing Chrysler as authority, but ignoring DuBose and Minnesota Pet, the Court reached the merits of the appeal, holding that nothing prevented a party from “unjoining,” by voluntary dismissal, parties previously joined to an action. Because such a dismissal “leaves the action in the same posture as if the suit had never been brought against the dismissed defendants,” the presence of unresolved claims involving those parties did not preclude finality.57 In a single sentence, the Circuit obviated the need for the 1961 amendment to Rule 54(b), which set forth the limited circumstance for appeals of judgments as to fewer than all parties. The Court effectively nullified the amendment to Rule 54(b). The second case of the trilogy soon followed. In Great Rivers, plaintiffs in a securities fraud and RICO case lost on summary judgment their central securities claim in a ruling that cooperative patronage certificates were not securities. Seeking an appellate ruling on the issue before trying the common law case that included no statutory attorney fee, plaintiffs asked the trial court for, and received, certification of the decision under both 28 U.S.C. Section 1292(b), as a controlling legal question, and Rule 54(b), as a final judgment on the securities counts. In separate, unpublished orders issued without opinion, the Circuit dismissed both appeals as improperly certified. The plaintiffs thereafter returned to the trial court, like the plaintiffs in the Fifth Circuit case in Ryan, and dismissed the remaining claims without prejudice to facilitate an appeal. The defendant then moved again in the Circuit to dismiss the appeal; in a 2-1 decision without opinion, the Court denied this motion. The Clerk’s notice of ruling indicated that Judge Lay would have granted the motion to dismiss this last appeal for lack of appellate jurisdiction. In its decision on the appeal’s merits, the Circuit in Great Rivers expounded at length on the finality rule that obtains in the Circuit, confronting some earlier cases, but still not addressing Minnesota Pet and DuBose. Citing to court-ordered dismissals without prejudice following rulings on forum non conveniens or for failure to accede to discovery, the Court found that judicial dismissals of cases without prejudice do not necessarily lack finality. Whenever a court orders a case or claim dismissed, intending thereby to end its involvement in that case, then the dismissal is final for appeal purposes even if the dismissal is without prejudice under Rule 41(a)(2). Finding that the trial court in Great Rivers had intended by its dismissal to terminate its involvement in the case, the Circuit found that the dismissal of remaining claims without prejudice, though clearly intended by plaintiffs for reassertion following any successful appeal, did not deprive the judgment of finality. The Court reached the merits of the appeal even while the dismissed common law claims remained available for reassertion in the action below or elsewhere. To confuse matters even more, amidst this trio of cases the Court decided Orion Financial v. American Foods Group,58 in a panel decision authored by Judge Lay, a consistent proponent of the finality rule in the Circuit, and the dissenter from the Circuit’s refusal to dismiss the appeal in Great Rivers. The Orion Court rejected the propriety of appellate jurisdiction after the parties dismissed remaining claims without prejudice to take an immediate appeal. The Court noted that the holding in Great Rivers permitted trial courts, under an abuse of discretion standard, to create finality, and thus appellate jurisdiction, through court-ordered, non-final dismissals. The Court then cited the Ninth Circuit rule as denying finality merely when parties stipulate to dismissals.59 The Orion court acknowledged the Circuit’s invocation of the finality trap only in those cases where parties, rather than the trial court, have authored the dismissal without prejudice. The Court did not note or explain that this interpretation overruled the Court’s earlier decision in Chrysler, which the Circuit previously had invoked to justify such departures. In the last of the cases on this topic, Helm Financial Corp. v. MNVA R.R.,60 the Court’s confusion descended to its arbitrary nadir. The plaintiffs in Helm moved unsuccessfully for summary judgment on their principal claims and then dismissed their remaining claims – some with and some without prejudice – to appeal from the denial of summary judgment. Citing Coeur d’Alene and two Sixth Circuit cases as authority, the Court held that “the ‘expedite review’ exception” to the finality rule applied to this scenario.61 Under this rule, a voluntary dismissal – with or without prejudice and expressly for the purpose of expediting an appeal – converts a denial of summary judgment into an appealable final judgment. The rule confers appellate jurisdiction over claims that produced no judgment whatsoever, and leaves the rules of appellate jurisdiction in the Circuit virtually indecipherable. The Circuit has returned appellate litigators to the circumstances extant at the end of the 19th century, undoing the benefits that the earlier Rule 54 amendments meant to provide.
The right to appeal is one of the most fundamental rights of any litigant. Difficulties and differences across the various Circuits in administering the finality rule, however, today create a crazy-quilt pattern of ad hoc rules that control the scope of appellate rights. Certainty of a rule, and uniform application of that rule across the country, are essential for fair administration of our judicial system. It does not serve justice when a litigant in the Eighth Circuit may appeal while a litigant in the Sixth may not, or when a litigant in the Sixth Circuit may appeal when one in the Tenth and Eleventh cannot. Neither does it serve the profession when well-intentioned but uninformed litigators lose their right to appeal because of the fortuity of geography. Parties need to know in advance precisely when they can, and therefore must, appeal or forfeit the right to do so later. The problem addressed herein likely does not permit of resolution through certiorari from the Supreme Court. That Court only can address circumstances piecemeal; the Court cannot announce a broad rule resolving all possibilities in a single case. That Court itself would risk the same arbitrariness that infects the lower court attempts at delineation that have only confused the issue. The problem demands a broad, uniform rule that reaches all Circuits in a single stroke. The problem of the finality trap is, after all, one of policy, much like that regarding statutes of limitations. The problem exists because of uninformed litigants who first learn of their problem in the appellate court, too late to correct the problem that arose in the trial court. The remedy must therefore lie in the trial court, in both announcing the finality rule there and affording those courts the power to address their dispositions of claims to make clear the appellate right. Announcement of a policy – any policy – defining finality in the trial court both alerts trial court participants to the potential problem and puts in place a clear, uniform procedure to correct it. The United States Congress already has granted the U.S. Supreme Court “the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States District Courts . . . and Courts of Appeals.”62 The same mandate provides that A[s]uch rules may define when a ruling of a district court is final for purposes of appeal under Section 1291 of this title.”63 Rather than waiting for a piecemeal resolution of this issue through precedent, the U.S. Supreme Court and the Judicial Conference can resolve this issue by a rule that defines that finality. One potential solution lies in defining the requirements of finality in the trial court when parties have dismissed claims or parties without prejudice. The Court could do so through amending Rule 54, Fed. R. Civ. P., drawing from any of the judicial attempts at definition mentioned here. The Court could provide that dismissals without prejudice entered prior to a final order disposing of all claims would not bar finality. Alternatively, the rule might be limited only to dismissals entered at least 90 days prior to the order, avoiding the potential for parties to manufacture appellate jurisdiction before disposition of the order they seek to appeal. The actual terms of the definition are less important than that a definition – any definition – exists. There is perhaps an easier way to resolve this issue: amend Rule 60, Fed. R. Civ. P., to grant trial courts express authority to act post-judgment, even while an appeal pends, to convert prior dismissals without prejudice into ones with prejudice to support finality for appeal. The problem of the finality trap arises from the inability, once the notice of appeal is filed, to return to the trial court to change the character of such dismissals. The Circuits thus have “deemed” dismissals without prejudice to be with prejudice,64 or allowed counsel in briefs or in oral argument to make that conversion.65 No court has yet offered any authority for a party’s post-judgment conversion of trial court judgments that even the trial court itself cannot touch. Courts merely allow these perambulations sua sponte to reach a just result. These pronouncements may, however, penalize others who are unable to guess the next ad hoc application of the rule that controls when they must appeal. Federal rules can provide a public and uniform remedy. When a litigant first realizes on appeal that an earlier dismissal without prejudice may undermine the finality of the judgment appealed, that litigant should then be able to do, by rule, what some courts of appeals arbitrarily allow some, but not others, to do: alter the judgment below to fix the problem. This is a simple remedy. Rule 60 already authorizes the trial court for certain purposes to revisit a final judgment; Rule 60(a) permits that court to correct clerical errors in a judgment, even during appeal, with appellate court approval. The Rule could likewise permit the trial court, with appellate approval, to close outstanding issues of finality, as the parties desire, to permit a pending appeal to proceed. This article will not suggest how the Judicial Conference should attend its business. Litigants should, however, suggest that the Conference do something – anything – to resolve this issue. All litigators with appeals in federal courts now face an uncertainty that should not, and need not, exist. The trap threatens uninformed litigators with malpractice. This situation should not long continue. * Mr. Pickens is a partner and practices in the firm’s appellate litigation group. He served as counsel in Great Rivers Cooperative v. Farmland Industries, Inc., 198 F.3d 685 (8th Cir. 1999), and Interstate Power Co. v. Kansas City Power & Light Co., 992 F.2d 804, 806-08 (8th Cir. 1993), among other appeals addressing the issues discussed herein. He wishes to thank Mr. Lawrence Jenab for his assistance in case research and their valuable comments in producing these two articles. 1 Commercial Space Management Co. v. Boeing Co., 193 F.3d 1074 (9th Cir. 1999); Safeguard Bus. Sys., Inc. v. Hoeffel, 907 F.2d 861, 864 (8th Cir. 1990) (order entered after dismissal without prejudice is “void for want of jurisdiction”). 2 E.g., Schoenfeld v. Babbit, 168 F.3d 1257, 1264-66 (11th Cir. 1999). 3 235 F.3d 1325 (11th Cir. 2000). 4 577 F.2d 298, 301-303 (5th Cir. 1978). 5 In CSX, the City contracted with CSX to use CSX’s right-of-ways during a construction project and to indemnify CSX for any damages arising therefrom. When a City contractor caused a wreck, CSX paid damages to those injured and sued the City for indemnification. The City impleaded the contractor, but dismissed that claim after it obtained summary judgment against CSX. When CSX appealed, the Court held that “voluntary dismissal with or without prejudice of a defendant’s remaining third party claim in an otherwise terminated lawsuit does not bar the plaintiff’s right to appeal the judgment against it.” 235 F.3d at 1329. 6 Hood v. Plantation Gen. Medical Cent., 251 F.3d 932 (11th Cir. 2001). Plaintiffs Hood and Maden filed race claims under 42 U.S.C. Sections 1981 and 2000d. The court dismissed all but Hood’s 1981 claim. Both plaintiffs then appealed, while amending the complaint to add a third plaintiff in the trial court. Hood then dismissed his 1981 claim with prejudice, which he argued on appeal rendered “final” the district court’s original dismissal of Hood and Maden’s claims. The district court dismissed the new plaintiff without prejudice. The Court of Appeals then dismissed the appeal because “the litigation as a whole still involve[d] parties with pending claims.” The Court distinguished CSX by noting that Hood involved no third-party claims. The court thus left Hood and Maden’s right to appeal entirely – and fatally – in the hands of another party, the third plaintiff. 7 Fassett v. Delta Kappa Epsilon, 807 F.2d 1150 (3rd Cir. 1986). 8 Trent v. Dial Medical of Florida, Inc., 33 F.3d 217, 220 (3rd Cir. 1994). 9 Equipment Fin. Group, Inc. v. Traverse Computer Brokers, 973 F.2d 345 (4th Cir. 1992). 10 United States v. Graffia, 215 F.3d 1331 (7th Cir. 2000). 11 Pell v. Azar Nut Co., 711 F.2d 949, 950 (10th Cir. 1983). That Court declared final a partial judgment on liability where the parties had agreed, and the court ordered, that damages be resolved by arbitration. Final resolution of the only issue before the court produced a final judgment. The Servants of Paraclete v. Does, 204 F.3d 1005 (10th Cir. 2000). The Tenth Circuit has similarly ruled when the judgment on federal claims enabled the trial court to decline subject matter jurisdiction for the unresolved state claims, which the court dismissed without prejudice. Amazon, Inc. v. Dirt Camp, Inc., 2001 WL 1554060 (10th Cir., Dec. 6, 2001). 12 Horn v. Berdon, Inc. Defined Benefit Plan, 938 F.2d 125 (9th Cir. 1991) (unresolved counterclaim for indemnification required plaintiff’s success to state claim; defendant’s judgment eliminated that predicate and produced finality for appeal). 13 356 U.S. 335 (1958). 14 Cheng v. Comm’r, 878 F.2d 306, 310 (9th Cir. 1989) (emphasis supplied). In DuBose, 893 F.2d at 171, the Eighth Circuit did the same. DuBose rejected an appeal where claims dismissed with prejudice under Rule 41(b) were subject to “possible resuscitation” on remand. 15 198 F.3d 685, 688 (8th Cir. 1989). 16 336 U.S. 793 (1949). 17 334 U.S. 573 (1948). 18 Elfenbein v. Gulf & Western Ind., Inc., 590 F.2d 445, 449 (2nd Cir. 1978); Gray v. Dane County, 845 F.2d 179, 182 (7th Cir. 1988); Justice v. United States, 6 F.3d 1474, 1481 (11th Cir. 1993). 19 North Carolina Nat’l. Bank v. Montilla, 600 F.2d 333, 334-35 n.1 (2nd Cir. 1979). 20 Wright & Miller, Federal Practice and Procedure: Civil 2d Section 2368. 21 356 U.S. 677, 680-81 (1958). 22 337 U.S. 541 (1949). 23 Norwood v. Kirkpatrick, 349 U.S. 29, 31 (1956); Fed. R. Civ. P. 41(b). 24 Compare Piper Aircraft Co. v. Reyno, 454 U.S. 235, 237 (1981), and Picco v. Global Marine Drilling Co., 900 F.2d 846, 849 n.4 (5th Cir. 1990), with All States Freight v. Modarelli, 196 F.2d 1010, 1011 (3rd Cir. 1952), and D’Ippolito v. American Oil Co., 401 F.2d 764 (2nd Cir. 1968). 25 JTC Petroleum Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 777 (7th Cir. 1999). As authority, the Court cites Health Cost Controls of Illinois, Inc. v. Washington, 187 F.3d 703, 708 (7th Cir. 1999), which permitted parties on appeal to clarify “ambiguities” of the judgment and thus create appellate jurisdiction. The Court there cited two cases and a treatise, none of which convincingly support the proposition. See also Itofca, Inc. v. Megatrans Logistics, Inc., 235 F.3d 360 (7th Cir. 2000) (agreement at oral argument to treat non-final dismissal of counterclaims as with prejudice “winds up” case for appeal); but see Sunny Industries, Inc. v. Rockwell Int’l Corp., 248 F.3d 1160 (7th Cir. 2001) (“simply because the litigants agree that a judicial determination is a final decision . . . does not make it so”); Central States Southeast & Southwest Areas Pension Fund v. Quickee Transport Co., 248 F.3d 1157 (7th Cir. 2000) (concession at oral argument requires litigants to return to district court to change dismissal without prejudice to one with prejudice). 26 Erie County Retirees Ass’n v. County of Erie, 220 F.3d 193, 201-02 (3rd Cir. 2000). 27 41 F.3d 1242 (8th Cir. 1994). 28 41 F.3d at 1245. 29 The Circuit, without comment on prior inconsistent cases, enforced the finality rule consistently with the majority rule. Florida State Bd. of Admin. v. Brick, 210 F.3d 371 (6th Cir. 2000). 30 Patel v. Hallmark Cards, Inc., 121 F.3d 709 (6th Cir. 1997); Hicks v. NLO, Inc., 825 F.2d 118 (6th Cir. 1987). 31 Hicks v. NLO, Inc., 825 F.2d 118. 32 516 F.2d 355, 356 n.3 (8th Cir. 1975). 33 Merchants & Planters, 516 F.2d at 356 n.3. 34 10 Moore on Federal Procedure’s paragraph 54.22. 35 See Thomas v. Basham, 931 F.2d 521, 523 (8th Cir. 1991). 36 Other Circuits viewed the cases as inconsistent. See, e.g., Dannenberg, 16 F.3d at 1077 & n.4 (comparing DuBose with Chrysler; Eighth Circuit “appear[s] undecided on the issue”). 37 893 F.2d 169, 171. 38 893 F.2d at 171. 39 Id. 40 See, e.g., Sullivan v. Pacific Indem. Co., 566 F.2d 444, 445-46 (3rd Cir. 1977). 41 893 F.2d at 171. 42 939 F.2d 538, 540 (8th Cir. 1991). 43 939 F.2d at 540. 44 939 F.2d at 140. 45 939 F.2d at 540 (citing Merchants & Planters Bank, 516 F.2d at 356 n.3). 46 Id. 47 Thomas, 931 F.2d at 523. 48 41 F.3d 1242 (8th Cir. 1994). 49 41 F.3d at 1245. 50 Id. 51 Id. 52 Id. 53 Compare Minnesota Pet, 41 F.3d at 1245, with Ryan, 577 F.2d at 301-03. 54 State ex rel. Nixon v. Coeur d’Alene Tribe, 164 F.3d 1102, 1105-06 (8th Cir. 1999); Great Rivers, 198 F.3d 685, 688-89 (8th Cir. 1999); Helm Financial Corp. v. MNVA R.R., 212 F.3d 1076 (8th Cir. 2000). 55 Great Rivers, 198 F.3d at 690. 56 Id. at 1105-06 (emphasis in original). 57 Id. at 1106. 58 201 F.3d 1047, 1048-49 (8th Cir. 2000). 59 Id. (citing Cheng v. Commissioner, 878 F.2d 306 (9th Cir. 1989)). 60 212 F.3d 1076 (8th Cir. 2000). 61 Id. at 1080. 62 28 U.S.C. Section 2072(a). 63 28 U.S.C. Section 2072(c). 64 Minnesota Pet, 41 F.3d 1242. 65 Erie County Retirees, 220 F.3d at 201-02.