The Week in Federal Appellate Jurisdiction: March 14–20, 2021

Last week, the Third Circuit illustrated one side of the split on whether courts must (or even can) address standing and other issues of subject-matter jurisdiction alongside interlocutory appeals. The Sixth Circuit vacated an improper partial judgment under Rule 54(b). The Ninth Circuit used the collateral-order doctrine to review an ERISA dispute that seemed to have stalled in the district court. And the First Circuit refused to use mandamus to order the petitioners’ release from immigration custody, which they had sought due concerns about COVID-19 and overcrowding. Plus an appeal after an implicit denial of immunity and an appeal from a dismissal without prejudice due to a lack of service.

• The Third Circuit Refused to Address Standing in an Arbitration Appeal
• The Sixth Circuit Dismissed a Rule 54(b) Appeal
• The Ninth Circuit on the Collateral-Order Doctrine and the Denial of ERISA Benefits
• The First Circuit Denied a COVID-19 Related Writ of Mandamus to Petitioners Held in Immigration Detention
• Quick Notes

The Third Circuit Refused to Address Standing in an Arbitration Appeal

When a court of appeals hears an interlocutory appeal, must the court ensure that the district court had subject-matter jurisdiction? A Third Circuit decision from earlier this week—O’Hanlon v. Uber Technologies, Inc.—says “no.” In the course of deciding an appeal from the denial of arbitration, the Third Circuit refused to address whether the plaintiffs had standing. The court could resolve arbitrability without considering standing, so standing was outside of the scope of interlocutory review.

I’m not aware of any decisions to the contrary in the context of arbitration appeals. But some courts of appeals have said that they must address the district court’s subject-matter jurisdiction in the course of deciding other kinds of interlocutory appeals. So it seems that a split exists on this general issue.

For more on O’Hanlon and reviewing a district court’s subject-matter jurisdiction alongside an interlocutory appeal, see my post Standing & the Scope of Arbitration Appeals

O’Hanlon v. Uber Technologies, Inc., 2021 WL 1011201 (3d Cir. Mar. 17, 2021), available at the Third Circuit and Westlaw.

The Sixth Circuit Dismissed a Rule 54(b) Appeal

In Carpenter v. Liberty Insurance Corp., the Sixth Circuit concluded that a district court abused its discretion in entering a partial judgment under Federal Rule of Civil Procedure 54(b). The court accordingly dismissed the appeal.

Carpenter involved a dispute over the denial of an insurance claim. After a fire in the plaintiffs’ home, their insurance company refused coverage. The plaintiffs then sued the insurance company, pleading two claims: breach of contract and bad-faith denial. The district court determined that the plaintiffs’ damages for the breach claim were limited to the amount of the policy; they could not recover emotional-distress or punitive damages under that theory. And although the plaintiffs could recover those damages on a bad-faith theory, the district court granted the insurance company summary judgment on that claim. So all that remained was the breach claim, and the plaintiffs could recover only up to the amount of the policy. Before that claim proceeded to trial, the district court entered a partial judgment under Rule 54(b) on both its damages decision and its grant of summary judgment on the bad-faith claim.

Rule 54(b) allows a district court to enter a partial judgment on some of the claims in a multi-claim action. The partial judgment is then final and appealable. But Rule 54(b) is not limitless. The partial judgment must involve a distinct claim. The district court must determine that—in Rule 54(b)’s magic words—“there is no just reason for delay.” And several courts—including the Sixth Circuit—normally require that district court explain their reasons for entering the partial judgment.

The Sixth Circuit ultimately dismissed the appeal, concluding that the district court abused its discretion in entering the partial judgment. As for the damages decision, that was not a separate claim. The district court resolved only what damages were available on a breach-of-contract claim. It did not decide liability or the amount of damages. The Rule 54(b) partial judgment was accordingly improper as to that decision.

The bad-faith claim was a distinct claim. But the district court did not explain why a partial judgment was appropriate. The district court instead merely invoked Rule 54(b)’s magic words, saying, “The Court has weighed the 54(b) factors and finds they balance in favor of certification. . . . The Court finds that there is no just reason for delay” Failure to explain the reasons for the partial judgment is often grounds enough for vacating that judgment.

The Sixth Circuit noted, however, that it occasionally excuses the district court’s failure to explain itself. But the court would not do so in Carpenter. That Sixth Circuit uses several non-exhaustive considerations to determine the propriety of a Rule 54(b) partial judgment:

(1) [T]he relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in set-off against the judgment sought to be made final; [and] (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like.

These factors weighed against the partial judgment. The two claims in Carpenter were closely related. So resolution the pending breach-of-contract claim might moot the need to resolve the bad-faith claim. That close relation could also lead to duplicative review. And the case was not the sort of uncommon one that might warrant a Rule 54(b) partial judgment. Indeed, the Sixth Circuit was concerned that, were it to deem the partial judgment proper, the court would be inundated with Rule 54(b) partial judgments in insurance disputes, which often present both breach and bad-faith claims.

Thanks to Michael Solimine for sending this case to me.

Carpenter v. Liberty Insurance Corp., 2021 WL 957753 (6th Cir. Mar. 15, 2021), available at the Sixth Circuit and Westlaw.

The Ninth Circuit on the Collateral-Order Doctrine and the Denial of ERISA Benefits

In Hoffman v. Screen Actors Guild, the Ninth Circuit held that it could review a denial of ERISA benefits via the collateral-order doctrine.

As the court describes it, the case has an “odd procedural history.” Simplifying quite a bit, the plaintiff in Hoffman was a stunt actress who received disability benefits from the Screen Actors Guild-Producers Pension & Health Plans. She sought to convert her normal disability benefits into “occupational” disability benefits. (For ease of exposition, I’ll call these two types “normal disability benefits” and “occupational disability benefits.”) The plan refused. The plaintiff challenged that decision in a federal district court, and the district court remanded the dispute to the plan for another look.

On remand, the plan stuck by its earlier determination. The plan also retroactively terminated the plaintiff’s normal disability benefits and sought restitution. The plaintiff filed a second suit in federal district court, challenging this termination decision. That dispute was eventually settled. The plaintiff then sought to reopen her initial lawsuit—the one challenging the plan’s refusal to grant her occupational disability benefits—as the district court had not yet reviewed the plan’s decision on remand. But the district court more or less denied that request (again, I’m simplifying quite a bit). The plaintiff then appealed.

The Ninth Circuit ultimately held that it had jurisdiction to review the district court’s refusal to reopen the suit seeking occupational disability benefits. The district court’s decision was not a final one, as it had not fully resolved the plaintiff’s challenge to the plan’s denial of benefits. But the Ninth Circuit thought that the collateral-order doctrine applied. That doctrine deems an otherwise-interlocutory order final when the order (1) conclusively decides an issue, (2) involves an important issue that is separate from the merits, and (3) would be effectively unreviewable in an appeal from a final judgment.

As the Ninth Circuit saw things, all three requirements were satisfied. The district court had practically terminated the case by refusing to reopen proceedings. The decision “amount[ed] to a refusal to adjudicate the merits,” so the decision “plainly present[ed] an important issue separate from the merits.” And if the court of appeals did not review the claim now, there would never be a future opportunity to appeal—neither the plan nor the district court intended to revisit the benefits determination. The case was thus an “extraordinary” one that effectively left the plaintiff out of court.

Decisions applying the collateral-order doctrine are supposed to be categorical—either a type of decision satisfies the doctrine and is always appealable, or it’s not. Courts are not supposed to look to the circumstances of particular cases in deciding appealability. But courts deciding collateral-order cases occasionally engage in case-specific collateral-order reasoning. This reads like one of those non-categorical collateral-order-doctrine decisions.

Hoffman v. Screen Actors Guild, 2021 WL 1041693 (9th Cir. Mar. 18, 2021), available at the Ninth Circuit and Westlaw.

The First Circuit Denied a COVID-19 Related Writ of Mandamus to Petitioners Held in Immigration Detention

In Da Graca v. Souza, the First Circuit declined to use a writ of mandamus to order immigration detainees released on bail due to COVID-19 related concerns about overcrowding. It appears, however, that the Da Graca petitioners’ direct appeal from their denials of bail remain pending.

The petitioners in Da Graca were detained by Immigrations and Customs Enforcement. They filed a habeas class action seeking release on bail, alleging that their detention center was overcrowded and posed an imminent risk of harm due to COVID-19. The district court granted some relief, releasing almost half of the class members on bail. But the district court prioritized members of the class who did not have a history of charges for violent criminal offenses. Five class members—who had been charged with violent offenses before their immigration detention—were not granted bail. The five both appealed and sought a writ of mandamus.

The First Circuit denied the mandamus petition. Mandamus is a discretionary remedy that requires a showing of “no other adequate means to attain their desired relief and . . . a ‘clear and indisputable’ right to issuance of the writ.” The petitioners in Da Graca sought both supervisory and advisory mandamus. The First Circuit determined that neither were appropriate.

Supervisory mandamus requires showing that “the issuance (or nonissuance) of a district court order presents a question about the limits of judicial power, poses some special risk of irreparable harm to the party seeking mandamus, and is palpably erroneous.” (Cleaned up.) In Da Graca, the petitioners could not show that the district court palpably erred. Reducing overcrowding, the court noted, did not require releasing all class members. The district court could instead reduce overcrowding by releasing some class members. And the district court chose to prioritize class members who, based on their criminal history, did not pose a risk of harm to the community or a flight risk. The district court’s individualized bail determinations were thus not palpably erroneous.

Advisory mandamus “is appropriate only where there is an unsettled issue of law of substantial public importance, where the issue is likely to recur, and where deferral of review would potentially impair the opportunity for effective review or relief later on.” (Cleaned up.) Again, the Da Graca petitioners could not make this showing. One issue they raised—whether the pandemic was an exceptional circumstance warranting bail regardless of individual circumstances—was an issue of fact, not law. The other—whether “bail is appropriate either where a habeas petitioner has shown likelihood of success on the merits or where there are exceptional circumstances”—was irrelevant. The district court reasonably concluded that the Da Graca petitioners were unlikely to obtain bail due to their criminal histories. And a partial reduction in the detention-center population addressed any exceptional circumstances that existed.

The First Circuit also noted that it would resolve the petitioners’ direct appeal in a separate and subsequent opinion.

Da Graca v. Souza, 2021 WL 1016428 (1st Cir. Mar. 17, 2021), available at the First Circuit and Westlaw.

Quick Notes

In HIRA Education Services North America v. Augustine, the Third Circuit heard an appeal from the implicit denial of absolute legislative immunity. The underlying case involved a variety of claims against Pennsylvania legislators. The district court denied the legislators’ motions to dismiss without prejudice, deeming them premature due to factual questions about whether the legislators’ conduct amounted to “legitimate” legislative activity. The legislators then appealed.

The Third Circuit determined that it had jurisdiction over the appeal. Denials of absolute immunity are immediately appealable via the collateral-order doctrine. Granted, the district court had thought that the request for immunity was premature and denied the motion without prejudice. But in doing so, the district court effectively denied immunity; the decision required that the legislators be subject to the burdens of litigation. So the denial was immediately appealable.

HIRA Education Services North America v. Augustine, 2021 WL 955948 (3d Cir. Mar. 15, 2021), available at the Third Circuit and Westlaw.

And in Saleem v. COI Doe, the Third Circuit heard an appeal even though the action had been dismissed without prejudice for failure to properly serve the defendants. Courts sometimes deem dismissals without prejudice non-final and non-appealable. But the Third Circuit has held that “an order of dismissal without prejudice for failure to effect service of process is appealable under § 1291 where the complaint was filed by a plaintiff granted leave to proceed in forma pauperis.” The dismissal in Saleem satisfied these criteria and was therefore final.

Saleem v. COI Doe, 2021 WL 1017112 (3d Cir. Mar. 17, 2021), available at the Third Circuit and Westlaw.