Cumulative finality, appeals from the denial of state-action immunity, improper Rule 54(b) appeals, intervention appeals, and more.
August 18, 2020
Last week saw the First Circuit join the list of courts with internally inconsistent law on when subsequent events save a premature notice of appeal. An Eleventh Circuit decision produced three separate opinions on the collateral-order doctrine’s application to appeals from the denial of state-action immunity. The D.C. Circuit held that overlap between resolved and unresolved claims made a Rule 54(b) appeal improper. Two courts addressed appeals from without-prejudice denials of intervention. And the Ninth Circuit heard an appeal from an order requiring a criminal defendant to repatriate millions of dollars for potential forfeiture, treating the order as an injunction. Plus a split decision from the Fifth Circuit on its exclusive jurisdiction to review SEC proceedings, which includes really interesting discussions about the adequacy of final-judgment appeals.
- The First Circuit’s Newly Inconsistent Law on Cumulative Finality
- The Eleventh Circuit Split on State-Action-Immunity Appeals
- The D.C. Circuit Rejected a Rule 54(b) Appeal
- The Seventh Circuit Addressed the Appealability of Without-Prejudice Intervention Denials
- The Fourth Circuit Allowed an Appeal From the Denial of a Renewed Motion to Intervene
- The Ninth Circuit Heard an Appeal From a Forfeiture-Related Repatriation Order
- The Fifth Circuit Addressed Its Exclusive Jurisdiction to Review SEC Proceedings
The First Circuit’s Newly Inconsistent Law on Cumulative Finality
In Donahue v. Federal National Mortgage Association, the First Circuit held that the subsequent dismissal of a remaining defendant did not save a premature notice of appeal. The plaintiff in Donahue filed her notice after the district court had dismissed her claims against one of two defendants. So the notice of appeal was premature and technically ineffective. The plaintiff then voluntarily dismissed her claims against the other defendant. But she did not file a new notice of appeal. With no proper notice of appeal, the First Circuit concluded that it lacked jurisdiction.
The outcome would have been different in most courts. Indeed, until last week, I would have thought that the outcome would have been different in Donahue. The courts of appeals have split on when exactly subsequent events save a premature notices of appeal. And several circuits have internally inconsistent decisions. We can now add the First Circuit to that list. In at least two prior decisions, the First Circuit has held that the resolution of all outstanding claims saved a notice of appeal filed after some (but not all) of the claims had been resolved. I don’t see how Donahue can be reconciled with those decisions.
Read more in my post on Donahue, Another Intra-Circuit Conflict on Cumulative Finality.
Donahue v. Federal National Mortgage Association, 2020 WL 4726653 (1st Cir. Aug. 14, 2020), available at the First Circuit and Westlaw.
The Eleventh Circuit Split on State-Action-Immunity Appeals
In SmileDirectClub, LLC v. Battle, the Eleventh Circuit heard an interlocutory appeal from the denial of state-action (or “Parker”) immunity. A circuit split exists on whether denials of state-action immunity are immediately appealable collateral orders. The Eleventh Circuit has held that they are. The decision nevertheless produced three opinions with varying views on appealability. The majority opinion and Judge Tjoflat’s dissent debated the application of the rule for state-action appeals—specifically, whether the district court in SmileDirectClub had conclusively denied immunity. Concurring, Judge Jordan suggested that the Eleventh Circuit reexamine its law in this area.
For more, see my post The Eleventh Circuit Divided Over State-Action Appeals.
SmileDirectClub, LLC v. Battle, 2020 WL 4590098 (11th Cir. Aug. 11, 2020), available at the Eleventh Circuit and Westlaw.
The D.C. Circuit Rejected a Rule 54(b) Appeal
In Attias v. CareFirst, Inc., the D.C. Circuit held that a district court improperly certified the resolution of some claims for an immediate appeal under Federal Rule of Civil Procedure 54(b).
The seven plaintiffs in Attias filed a single action against a health-insurance company. The company had suffered a data breach, and the plaintiffs pleaded a variety of claims. The district court eventually dismissed almost all of the claims. All that remained were two claims under Maryland law, each asserted by two plaintiffs. The district court also certified its resolution of the other claims under Rule 54(b). The plaintiffs—both the five that had all of their claims dismissed and the two that had most of their claims dismissed—appealed.
The D.C. Circuit concluded that the district court abused its discretion in certifying the dismissed claims for an immediate appeal. Rule 54(b) allows for the district court to enter a final, appealable judgment for some (but not all) of the claims in a multi-claim suit. The idea is that some resolved claims (which might not have been joined with the unresolved claims before the liberal joinder rules of modern procedure) don’t need to wait until the end of district court proceedings for an appeal. But courts of appeals are sometimes wary of Rule 54(b) certifications when the appealed claims and the pending claims overlap.
That was the case in Attias. The D.C. Circuit has held that when “claims are so closely related that they would fall afoul of the rule against splitting claims if brought separately, they do not qualify as ‘separate’ claims within the meaning of Rule 54(b).” All of the claims in Attias arose out of the same data breach. So at least for the two plaintiffs who had claims remaining in the district court, there was too much overlap with the appealed claims for the Rule 54(b) certification to be proper.
The D.C. Circuit also questioned the propriety of the certification as to the remaining plaintiffs. Claim preclusion would of course not preclude separate plaintiffs from litigating separately. But substantial overlap still existed, and there was a real risk of piecemeal appeals raising the same issues. But the court ultimately avoided conclusively resolving the propriety of the Rule 54(b) certification for the other plaintiffs. It was not clear that the district court would have certified those decisions for an appeal had it not been able to certify the claims of the two remaining plaintiffs. The D.C. Circuit concluded that this uncertainty deprived it of appellate jurisdiction. So it dismissed the entire appeal.
Attias v. CareFirst, Inc., 2020 WL 4590551 (D.C. Cir. Aug. 11, 2020), available at the D.C. Circuit and Westlaw.
The Seventh Circuit Addressed the Appealability of Without-Prejudice Intervention Denials
In Driftless Area Land Conservancy v. Huesbsch, the Seventh Circuit held that an intervention appeal was proper even though the district court might revisit intervention in the future.
Driftless Area involved two environmental groups’ challenge to the Wisconsin Public Service Commission’s decision to authorize the construction of a power line. The electric-transmission companies that were going to build the line moved to intervene. The district court denied intervention, and the companies appealed.
Normally the denial of a motion to intervene as of right is a final, appealable decision. But the environmental groups argued that the denial in Driftless Area was not final because the district court “left open the possibility of a new intervention motion if things change later in the litigation.”
The Seventh Circuit soundly rejected this argument. The possibility of a second motion to intervene did not preclude finality. “[W]hat matters,” the court explained, “is that the judge addressed the substantive merits of the intervention motion and conclusively denied it, freezing the transmission companies out of the case.” Granted, a decision denying intervention on solely procedural grounds—such as failing to include a proposed pleading with the motion to intervene—is not immediately appealable. But denying intervention without prejudice or allowing the possibility of a successive motion is not a purely procedural rejection of intervention. The Seventh Circuit accordingly had jurisdiction.
Driftless Area Land Conservancy v. Huesbsch, 2020 WL 4592147 (7th Cir. Aug. 11, 2020), available at the Seventh Circuit and Westlaw.
The Fourth Circuit Allowed an Appeal From the Denial of a Renewed Motion to Intervene
In North Carolina State Conference of NAACP v. Berger, a divided Fourth Circuit reviewed an initial denial of a motion to intervene alongside an appeal from the denial of a renewed motion to intervene.
The case involved a challenge to North Carolina’s voter-identification law. The NAACP sued the state governor and several other state officials, challenging the law’s validity on several grounds. The President Pro Tempore of the North Carolina Senate and Speaker of the North Carolina House of Representatives sought to intervene to defend the law. The district court denied that motion. It concluded that the governor and other defendants were defending the suit, such that existing parties were adequately protecting the would-be intervenors’ interests. But the district court also said its decision was without prejudice; the Senate President and House Speaker could seek to intervene again if the defense turned out to be inadequate.
About a month-and-a-half later, the Senate President and House Speaker moved to intervene again, contending that the defendants were not fully defending the voter-identification law. The district court eventually denied that motion to intervene for the same reasons as the first one. The would-be intervenors had no new evidence that their interests were not adequately represented. And this denial was with prejudice.
When the would-be intervenors then appealed from this second denial of intervention, the NAACP argued that the district court’s first decision was outside the scope of appeal. Although denials of intervention are generally immediately appealable, the would-be intervenors had not filed a timely appeal from the initial denial of intervention.
A majority of the Fourth Circuit rejected this argument. Looking to the Supreme Court’s decision in Stringfellow v. Concerned Neighbors in Action, the majority thought that appealability turned on whether the district court’s decision “outright denied the motion and if the Proposed Intervenors’ interests will be irretrievably lost absent an immediate appeal.” The district court’s initial decision was without prejudice, and it “invited a renewed motion upon changed circumstances.” “Because of these provisions, the [initial] order did not outright deny the motion to intervene and lacked the conclusiveness needed to trigger immediate review.” The later denial, in contrast, was with prejudice. So it was “sufficiently conclusive”:
[I]n denying the renewed motion to intervene, the district court referred to its analysis from the [initial] order indicating that it remained in effect. It then addressed and rejected additional arguments from the Proposed Intervenors arising from what they claimed to be new facts and circumstances.
The scope of the appeal thus included the district court’s analysis of its earlier intervention decision. On the merits, the majority concluded that the district court erred in denying intervention.
Judge Harris dissented. In addition to disagreeing with the majority’s analysis of intervention, Judge Harris questioned the court’s appellate jurisdiction to review the would-be intervenors interest in the litigation. The district court had conclusively resolved that issue in its initial decision. And Judge Harris would have held that the failure to timely appeal that decision deprived the Fourth Circuit of jurisdiction over the issue. The district court did not address the would-be intervenors’ interests in its second decision. Judge Harris would accordingly have applied “the familiar rule that ‘once a conclusive resolution has been reached . . . a renewed motion for the same relief, or a belated request for reconsideration, does not reopen the time for appeal.’”
North Carolina State Conference of NAACP v. Berger, 2020 WL 4727277 (4th Cir. Aug. 14, 2020), available at the Fourth Circuit and Westlaw.
The Ninth Circuit Heard an Appeal From a Forfeiture-Related Repatriation Order
In United States v. Oriho, the Ninth Circuit heard an appeal from an order requiring a defendant to repatriate up to $7.2 million.
The defendant in Oriho had been charged with health-care fraud and money laundering. The government contended that the defendant had transferred money traceable to his fraud to foreign bank accounts. Invoking the Comprehensive Forfeiture Act, the government sought an order requiring the defendant to repatriate the funds and transfer them to the Marshals Service, thereby making them available for criminal forfeiture. The district court granted the request. The defendant then appealed.
The Ninth Circuit determined that it had jurisdiction via 28 U.S.C. § 1292(a)(1). That provision allows for appeals from orders “granting, continuing, modifying, refusing or dissolving injunctions.” Courts will apply § 1292(a)(1) to orders that have the “practical effect” of an injunction, i.e., orders that are “directed to a party, enforceable by contempt, and designed to accord some or all of the relief sought by a complaint.” The Ninth Circuit has held that pretrial orders restraining a defendant’s assets qualify as a practical injunction. And the district court’s decision in Oriho was a straightforward “pre-trial order restraining assets.”
United States v. Oriho, 2020 WL 4579478 (9th Cir. Aug. 10, 2020), available at the Ninth Circuit and Westlaw.
The Fifth Circuit Addressed Its Exclusive Jurisdiction to Review SEC Proceedings
In Cochran v. SEC, a divided Fifth Circuit held that its exclusive jurisdiction to review Securities and Exchange Commission proceedings deprived a district court of jurisdiction to hear a mid-proceedings challenge to an enforcement proceeding.
Simplifying a bit, Cochran involved an SEC enforcement action against an accountant for alleged violations of auditing standards. When the SEC brings an enforcement action, it can pick among three venues: a district court, the Commission itself, or an administrative law judge. In Cochran, the SEC elected to proceed before an administrative law judge. But then the Supreme Court decided Lucia v. SEC, which required that the case be assigned to a new judge:
While Cochran’s case was pending, the Supreme Court held that SEC ALJs are Officers of the United States whom the President, a court of law, or a department head must appoint. Before Lucia, SEC staff selected ALJs. Following Lucia, the SEC reassigned all adjudications to judges whose appointments had, by then, been ratified by the Commission.
Despite the reassignment, the accountant still saw a problem with SEC administrative law judges: although they are now properly appointed, they still have for-cause protections from removal. The accountant sued the SEC in a federal district court to raise this issue.
The district court dismissed the action for lack of subject-matter jurisdiction. When the SEC chooses to proceed internally or before an administrative law judge, judicial review of any final decision goes straight to the courts of appeals. The district court concluded that this jurisdictional scheme stripped it of jurisdiction over of the case. Any judicial review of the SEC’s decision would come via a direct appeal to the court of appeals.
On the accountant’s appeal, the Fifth Circuit affirmed. Part of the analysis addressed whether another Fifth Circuit decision had already resolved this issue. But even if it hadn’t, the court concluded that the Securities Exchange Act unambiguously intended to strip the district court of jurisdiction in this circumstance. The relevant provision provides that those aggrieved by SEC decisions “may obtain review of the order in the United States Court of Appeals for the circuit in which he resides or has his principal place of business, or for the District of Columbia Circuit.” The statute goes on to say that this jurisdiction is exclusive. Collateral review in a district court while SEC proceedings were pending would undermine this statutory scheme.
The court also concluded that Congress intended that the specific issue the account raised—a challenge to the constitutional authority of SEC administrative law judges—go through the designated appellate scheme. A post-proceedings appeal to the court of appeals provided meaningful judicial review. The constitutional challenge was “inextricably intertwined” with the enforcement proceeding. And the agency could resolve the enforcement proceeding in a way that avoids addressing the constitutional issue—that is, by ruling for the accountant.
The court also pointed to the practicalities of its decision. Granted, immediate district court review of the constitutional issue might cut short the SEC proceedings. If review of the constitutional issue is delayed, all of the efforts spent before the agency will, in retrospect, have been wasted. “But the costs an individual may face when required to go through a full trial before appealing legal issues—including consequences like imprisonment—usually give way to larger systemic concerns about piecemeal review.” A narrow focus on potential efficiency gains in an individual case thus overlooks the systematic costs:
[The accountant] is viewing efficiency from the lens of her constitutional arguments being winning ones. But what if her claims—and more importantly the claims of other plaintiffs that will follow if we open the gates to early district court adjudication of separation-of-powers challenges to agency proceedings—fail on the merits? Then, instead of the one court Congress authorized, three courts would have devoted time to the agency matter: (1) the district court pre-adjudication; (2) the court of appeals in its review of the pre-adjudication challenge, and (3) another court of appeals panel in the traditional post-adjudication review.
Federal court review both before and after an administrative proceeding could also lead to duplicative, overlapping appeals. And should the accountant win before the SEC, there will be no need to address the constitutional issue.
Judge Haynes dissented. Among her points of disagreement, Judge Haynes contended that post-proceedings appellate review was not meaningful judicial review. That’s because the accountant—should she win before the SEC—would lose any opportunity to argue that the SEC proceedings were constitutionally flawed:
[The accountant] finds herself in a lose-lose situation in front of the SEC. Of course, she loses if the SEC imposes a sanction. In that case, she (now an aggrieved party) could challenge both the substantive securities determination and the constitutional issues in federal court. But if she wins in front of the SEC and no sanction is imposed, she will lose the opportunity to have a court consider her now-moot removal challenge, all while having been subject to a potentially unconstitutional proceeding.
Judge Haynes thought that the other relevant considerations relevant to Congress’s intent to limit judicial review also pointed towards district court jurisdiction.
Cochran v. SEC, 2020 WL 4593226 (5th Cir. Aug. 11, 2020), available at the Fifth Circuit and Westlaw.