Appeals After Unresolved Claims & Theories

The general, well-known, and riddled-with-exceptions rule is that a decision is not final until the district court has resolved all of the parties’ claims. So what should courts do when the district court overlooks a claim or theory of relief that one of the parties had pleaded? A handful of recent decisions have raised this question. And the answer is not always the same.

A Lack of Finality Despite Implicitly Resolved Claims & Theories

Most of the time, courts of appeals hold that overlooked claims and theories preclude finality. That rule holds even if the district court’s decisions have implicitly resolved those claims. We saw a pair of courts do so last month; see my post A Lack of Finality Despite a Final Judgment.

April produced another: International Transport Management Corp. v. Brooks Fitch Apparel Group LLC.

The district court had granted summary judgment to the plaintiff on one of its theories of relief—a theory that involved veil-piercing. That decision rendered moot an alternative, redundant theory of recovery—a theory that involved fraud. The district court did not expressly resolve that fraud theory until a few years later, at which point the defendant appealed. The plaintiff argued that this appeal was late, as the time to appeal started when the district court had granted summary judgment on the veil-piercing theory and practically resolved all claims.

The Third Circuit held that no final decision existed until the district court expressly resolved the fraud theory. The court analogized to cases in which a district court did not expressly resolve a defendant’s counter- or cross-claims. Even if those claims have been rendered groundless by a ruling in the defendant’s favor, the district court must expressly address them for there to be a final decision. To hold otherwise and consider the practical effect on the unresolved theories “would only foster uncertainty in an area of the law that must remain clear.” (Quotation marks omitted.)

Finality with Implicitly Resolved Claims & Theories

Other times, courts of appeals hold that the implicit rejection of a claim is sufficient to produce a final decision. April produced one such decision: Dimas v. Pecos Independent School District Board of Education, in which the Tenth Circuit held that the a decision expressly rejecting one claim implicitly rejected another. The district court in Dimas held that the individual defendants did not violate the constitution. The district court did not, however, expressly address the claim against the employer of those individual defendants. But if the individual defendants did not violate the constitution, their employer could not be liable. According to the Tenth Circuit, the logic of the district court’s order thus implicitly resolved the only remaining claim. So the district court had effectively resolved all claims on the merits, and a final decision existed.

Finality Regardless of Resolved Claims & Theories

More intriguing to me is a third category: courts that deem unresolved claims irrelevant to finality. These courts hold that so long as the district court is finished with the action—often shown by the entry of a final judgment—there is a final, appealable decision. To be sure, the district court’s judgment might be defective because it did not expressly or implicitly resolve the merits of all claims. But that is a problem with the merits, not jurisdiction.

Three courts seemed to follow this approach last month.

First is B.P.J. ex rel. Jackson v. West Virginia State Board of Education. The Fourth Circuit held that a district court decision was final despite not resolving one of the plaintiff’s claims. The district court had entered a judgment and dismissed the action. The plaintiff could have sought reconsideration of that dismissal, given the failure to resolve one of her claims. But that did not affect finality. “[T]he district court’s written judgment—unlike the opinion it implemented—resolved all claims as to all parties and terminated the district court phase of this litigation.” (Quotation marks omitted.)

There was also Klein v. Caterpillar. The plaintiff in Klein bought a two-count complaint, alleging theories of negligence and breach of warranty. The district court granted summary judgment to the defendant and dismissed the complaint with prejudice. But in the course of doing so, the district court addressed only the plaintiff’s negligence theory. The district court did not explain the defect in the breach-of-warranty theory. The Sixth Circuit nevertheless held that it had jurisdiction. The district court had dismissed the action. Its failure to address the breach-of-warranty theory “concern[ed] the merits of the district court’s decision, not whether the decision is final.”

And in Migdon v. 171 Holdings, L.L.C., the Fifth Circuit held that a district court had intended to dispose of all claims by closing the case and declaring that “all claims pending in this litigation were terminated.”

Merits, Not Jurisdiction

I think I side with this last group of cases. Once a district court washes its hands of a case, there should be a final decision. If the district court overlooked a claim, the aggrieved litigant can bring that to the district court’s attention via a post-judgment motion. Or the aggrieved litigant can raise the issue on appeal. Regardless, once a district court is done, a final decision should exist.

Dimas v. Pecos Independent School District Board of Education, 2024 WL 1881076 (10th Cir. Apr. 30, 2024), available at the Tenth Circuit and Westlaw

International Transport Management Corp. v. Brooks Fitch Apparel Group LLC, 2024 WL 1672254 (3d Cir. Apr. 18, 2024), available at the Third Circuit and Westlaw

B.P.J. ex rel. Jackson v. West Virginia State Board of Education, 2024 WL 1627008 (4th Cir. Apr. 16, 2024), available at the Fourth Circuit and Westlaw

Klein v. Caterpillar, 2024 WL 1574672 (6th Cir. Apr. 11, 2024), available at the Sixth Circuit and Westlaw

Migdon v. 171 Holdings, L.L.C., 2024 WL 1531446 (5th Cir. Apr. 9, 2024), available at the Fifth Circuit and Westlaw