Rather than disarm the finality trap, the Fifth Circuit found a way to avoid it: an odd, unintuitive, and unnecessary use of Rule 54(b).
May 9, 2020
When plaintiffs lose on some of their claims and then voluntarily dismiss the rest, they risk falling into the finality trap. If the remaining claims were voluntarily dismissed without prejudice, most courts of appeals will hold that the district court has not issued a final, appealable decision under 28 U.S.C. § 1291. This general rule becomes a trap when courts don’t let plaintiffs fix the finality problem. In Williams v. Taylor Seidenbach, Inc., the en banc Fifth Circuit found one way around the trap: a Rule 54(b) certification of the claims that the district court dismissed on the merits. But the court didn’t actually disarm the trap. And its use of Rule 54(b) is an odd, unintuitive one that has the potential for future mischief.
The en banc Williams decision is fascinating and has a lot going on. It comprises four opinions, including a separate concurrence from the author of the majority opinion. Those opinions debate statutory interpretation and the role of appellate courts in creating rules of appellate jurisdiction. In this post, I hit the highlights: the legal, factual, and procedural background of Williams; the main points of the four separate opinions; and my take on the court’s decision. I ultimately find the majority opinion to be both odd and unnecessary. It’s odd in its reading and use of Rule 54(b). And it’s unnecessary given the much better option offered by one of the concurring opinions: letting litigants disclaim any right to refile their voluntarily dismissed claims. This practice is common in the courts of appeals, obviates any finality concerns, and preserves Rule 54(b)’s role.
Dismissals without prejudice and the finality trap
I’ve previously discussed the Williams litigation and the issues it presents on several occasions. I’ll accordingly be brief with background here. (For my analysis of the en banc argument and the court’s options in deciding Williams, see my post The Fifth Circuit & the Finality Trap. For more on the panel decision, see my post The Fifth Circuit Creates a Zombie Action.)
The finality trap stems from courts’ attempts to prevent litigants from manufacturing interlocutory appeals in actions that involve multiple claims or parties. These manufactured appeals come when the district court resolves some (but not all) of the claims on their merits. The resolution of these claims is generally not appealable. Most appeals in federal court must wait until the end of district court proceedings. And when the district court has decided only some of the claims in a multi-claim or multi-party suit, those proceedings are not over. So litigants in multi-claim or multi-party actions generally must wait to appeal until all of the claims are resolved.
Parties have attempted to skirt this limit on immediate appeals by voluntarily dismissing their remaining claims without prejudice. The plan is to dismiss those claims, thereby ending district court proceedings. But those voluntarily dismissed claims aren’t really gone. Because they were dismissed without prejudice, the would-be appellant can reinstate them regardless of the appeal’s outcome. Courts normally see this tactic for what it is: an attempted end-run around the final-judgment rule. And they normally rebuff litigants’ attempts to use it, holding that the voluntary dismissal without prejudice precludes the district court’s decision from being final and appealable.
The rule for dismissals without prejudice is a reasonable one. We don’t want parties trying to manufacture interlocutory appeals and thereby avoid the normal limits on those appeals. The problem—indeed, the “trap”—comes when courts don’t let the parties fix the jurisdictional defect. That’s precisely what happened in Williams.
The finality trap in Williams
Williams involved the asbestos-related claims of deceased engineer Frank Williams, Jr. Simplifying a bit, Williams claimed he was exposed to asbestos while working at NASA. He sued several defendants. The district court granted summary judgment in favor of some of the defendants. For simplicity’s sake, I’ll often refer to those defendants as the “summary-judgment defendants.” The Williams children (who took over as plaintiffs after Frank Williams died) then voluntarily dismissed their claims against the remaining defendants, and three of those dismissals were without prejudice. Again, for simplicity’s sake, I’ll often refer to this latter group of defendants as the “voluntarily dismissed defendants.”
Then things got a little complicated. But the important points are simple. The Williams children moved under Rule 54(b) to certify as a final judgment the dismissal of their claims against the summary-judgment defendants. They also asked the district court to enter a final judgment under Rule 58, as all of their claims had been dismissed and there were no claims or defendants left. The court granted the request for a Rule 58 final judgment and dismissed the Rule 54(b) motion as moot. The Williams children then appealed the dismissal of their claims against the summary-judgment defendants.
The first Williams appeal
The Fifth Circuit dismissed this first appeal (Williams I) for lack of jurisdiction. The court invoked the above-described dismissals-without-prejudice rule—the dismissals were silent as to prejudice, which (under Federal Rule of Civil Procedure 41) means that those claims were dismissed without prejudice. And the district court’s entry of the Rule 58 judgment did not change that, as it did not alter the terms of the voluntary dismissal. So the district court’s decision was not final—some of the plaintiffs’ claims had been dismissed without prejudice, and there was no final, appealable decision.
The second Williams appeal
The Williams children returned to the district court and asked that court to change the terms of their voluntary dismissals to be with prejudice. The district court agreed. It’s not clear, however, what exactly the district court did. (Thanks to Howard Bashman for pointing this out.) The en banc opinion said the district court entered a partial final judgment for “various defendants,” including the summary-judgment defendants. The second Williams decision (Williams II) said that the district court entered “a final judgment under Rule 54(b)” for the voluntarily dismissed defendants (who were not parties to the appeal). One of the en banc briefs says the district court entered a “Rule 54(b) final judgment” as to every defendant in the case. I can’t find the actual order. The Williams children nevertheless appealed again.
Back before the Fifth Circuit, the court held that the district court’s decision was still not final or appealable. The district court had already dismissed the voluntarily dismissed defendants without prejudice, so the case against them was done. And according to the Fifth Circuit, the district court could not alter the terms of the dismissal when these defendants were already gone from the case. The district court could not certify any of its decisions under Rule 54(b) after voluntarily dismissing all remaining claims. The district court’s order thus did not retroactively change the terms of the prior dismissals. Its decision was still not final.
Judge Haynes concurred. She said the decision was consistent with Fifth Circuit caselaw. But she also said that this caselaw is at best “muddled”; at worst, it’s “simply wrong and illogical.” And she called for the case to be reheard en banc. In her view, the better rule would be that when a case is not final for purposes of appeal due to a dismissal without prejudice, the district court retains jurisdiction to fix the lack of finality via a Rule 54(b) certification or by revising the dismissal to be one with prejudice.
The en banc decision
After granting rehearing en banc, a majority of the Fifth Circuit held that a Rule 54(b) partial judgment is proper even after all claims and parties have been dismissed. The district court’s Rule 54(b) partial judgment after the first Williams decision was accordingly sufficient to give the Fifth Circuit jurisdiction over the appeal.
The decision produced four opinions: a majority opinion, a concurrence from Judge Ho (who also authored the majority opinion), a concurrence in the judgment from Judge Willett (joined by Judge Southwick), and a dissent from Judge Oldham (joined by Judges Smith, Costa, and Duncan). Let’s walk through each of them.
The majority: avoiding the finality trap
Again, the majority held that the Rule 54(b) partial judgment in Williams was proper, so the Williams children could appeal. According to the court, “[e]ntry of a partial final judgment is proper under Rule 54(b) regardless of whether it occurs before or after the voluntary dismissal of any remaining defendants under Rule 41(a).” The district court could thus enter a Rule 54(b) partial judgment after the first panel’s decision. And that judgment rendered final the decision dismissing the summary-judgment defendants.
Dismissed but pending
Key to this decision is the premise that an action is still pending even after all claims have been dismissed. (Put a pin into whether this premise makes sense; we’ll come back to that.) The majority seems to say that voluntarily dismissed claims remain part of the action. Indeed, all claims remain pending before the district court despite all of them being dismissed, voluntarily or involuntarily:
A dismissed claim remains a part of the case, absent amendment of the complaint under Rule 15. And that is so regardless of when the Rule 41(a) dismissal occurs. Likewise, the fully litigated claims—such as the partial summary judgment claims that the Williamses hope to appeal here—naturally remain pending before the court as well.
That’s why the Williams action was not over: all claims remained pending in the district court, despite the district court’s having dismissed them all. And that’s why the district court could still enter a partial judgment under Rule 54(b).
The majority finds this premise in Rule 54(b) itself. The rule contains two clauses. The first provides that in multi-claim or multi-party suits, Rule 54(b) permits the district court to enter a judgment on the resolution of some (but not all claims):
(b) Judgment on Multiple Claims or Involving Multiple Parties. When an action presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.
The rule then goes on to say that a decision resolving fewer than all of the claims does not resolve the action:
Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.
Left unsaid in the opinion (but necessarily implied) is that neither district court order in Williams—not the summary-judgment decision dismissing some defendants, and not the voluntary dismissal of the remaining defendants—resolved all of the claims/parties’ rights and liabilities in that action. Granted, put together those orders did so. But standing alone, neither did. So, the majority concluded, the Williams action was not yet over.
An odd reading of Rule 54(b)
If the en banc majority meant what it said, its decision is odd. I see at least three problems.
First, let’s assume for just a moment that the Fifth Circuit is correct: multiple district court decisions that collectively resolve all of the claims, rights, and liabilities in an action do not end that action. The majority appears to have stopped reading Rule 54(b) before it reached the end. The rule goes on to say that those decisions can be revised. That makes sense—because the action is not over, the district court can revise its earlier decisions. But the district court can do so only until the entry of a judgment adjudicating all of the claims, rights, and liabilities. The entry of that judgment would accordingly seem to end the action, as it cuts off the time for revising earlier decisions. So even if multiple decisions cannot collectively end an action, the entry of a judgment should.
Second, the Fifth Circuit is wrong in saying that multiple district court decisions cannot collectively end an action. Courts have long held that multiple district court orders, each resolving some but not all of the claims in action, can combine into a final decision. This is has been the law in the Fifth Circuit since at least 1973’s Jetco Electronic Industries, Inc. v. Gardiner. And for good reason. The second clause of Rule 54(b) means simply that a decision resolving some claims is not final if other claims remain pending. Once all claims have been resolved—via decision by the district court or voluntary dismissal or whatever—nothing remains for the district court to do but enforce the judgment. The action is then over.
A majority of the en banc Fifth Circuit nevertheless appears to have held that, given the text of Rule 54(b), an action decided piecemeal is never over. Because the Williams action was decided piecemeal, it’s still pending. And because it’s still pending, the district court could enter a Rule 54(b) partial judgment.
Third (and as I wrote after the en banc arguments), this is not what Rule 54(b) is for. The rule exists to slice up for appeal an action that involves multiple claims or parties, so that a resolved part of the case does not need to wait for a traditional end-of-proceedings appeal. The Federal Rules allow for the liberal joinder of claims and parties. Before the Federal Rules, some of these combined actions would have been brought as separate suits. Now that they’re brought together, they must generally be appealed together. And that generally makes sense.
But sometimes it makes sense to allow an immediate appeal after the district court’s resolution of some (but not all) of the claims. For example, one party might have been involved only in the resolved claims; it might make sense to allow an immediate appeal of that claim rather than force that party to wait until all other issues are decided. In steps Rule 54(b). Absent the Rule 54(b) partial judgment, the parties to the resolved claims would need to wait until the resolution of all claims to appeal. They would also need to continually monitor the proceedings and watch for the resolution of all other claims.
Rule 54(b) thus exists to permit appeals before the end of district court proceedings. It’s an awkward fit for the task the Williams majority has assigned it. Once all claims have been resolved, there is nothing left to split up in the district court. There is no need for Rule 54(b) in this scenario, as the rule does not exist to deem the actual end of district court proceedings final and appealable. At least, it didn’t until the en banc Williams decision.
Judge Ho’s concurrence: responding to the dissent
Judge Ho, who authored the majority opinion, wrote a separate concurrence. It’s mostly a point-by-point response to that dissent. I’ll note only that he reiterates the majority position that a Rule 41(a) dismissal of all remaining defendants does not end an action. And he makes the point even more forcefully, stating:
It is unclear to me how a series of interlocutory orders ends the entire action when Rule 54(b) says the opposite.
Judge Willet’s concurrence in the judgment: disarming the finality trap
Judge Willett (joined by Judge Southwick) concurred in the judgment. He would hold that parties to resolve any finality issues by “bindingly disclaiming their right to reassert any dismissed-without-prejudice claims.” This is what I have previously endorsed as the “conversion on appeal” option. And Judge Willett made many of the same points I’ve made as to why this is the best approach. For one thing, it actually disarms the finality trap. Once parties disclaim their right to refile they are estopped from pursuing those claims any further. This approach thereby addresses the underlying concerns about refiling that drive the finality trap. Second, this approach keeps the appeal (which has often been fully briefed and even argued) moving along to a decision on the merits. Several courts of appeals have accordingly sanctioned this procedure, allowing parties to disclaim any right to refile dismissed claims in briefing, at oral argument, and even after oral argument.
As Judge Willett noted, this is a simple, elegant solution to the finality trap:
This approach—understandable, administrable, and practicable—is plug-and-play. No required action by the district court. No ad hoc subjectivity. No needless interpretive squabbles over governing statutes or Rules. Just satisfying finality, as the stipulation removes any specter of piecemeal appeals or protracted litigation. The litigant-disclaimer approach elegantly achieves what we set out to do by taking this case en banc. It unsprings the trap—fully, formally, and faithfully.
Judge Willett also explained that the litigant-disclaimer option does not allow parties to circumvent the normal limits on appeals. It instead follows in the pragmatic approach to finality that courts have long used:
The [Supreme Court] instructs us to approach the determination [of finality] not prudishly but prudently. That is, our duty to ensure finality entails discretion. And since § 1291 often poses “a close question,” we must assess finality neither too flexibly nor too inflexibly, but rather with “just right” Goldilocks pragmatism.
Judge Oldham’s dissent: the entire action was dismissed
Judge Oldham (joined by Judges Smith, Costa, and Duncan) dissented. The dissent argued primarily that the voluntary dismissal in Williams dismissed the entire action, not just the claims against the voluntarily dismissed defendants. Rule 41(a), the dissent pointed out, allows for the voluntary dismissal of “actions,” not claims or parties: “[u]nder the Rule, it’s dismissal of the action, or of nothing at all.” And when parties voluntarily dismisses their entire action, they cannot appeal. They instead get exactly what they ask for—dismissal. They’re thus not aggrieved for purposes of an appeal. So as the dissent saw things, Williams was moot by the time it reached the Fifth Circuit.
Note, the majority opinion and Judge Ho’s concurrence responded to this point by suggesting that it was irrelevant to the outcome. As the majority saw things, if the dissent was correct—Rule 41(a) can apply only to entire actions—then the district court’s Rule 41(a) dismissal was a nullity. The majority thus thought that an improper Rule 41(a) order would do nothing, rather than (as the dissent thought) dismiss the entire action. And if the Rule 41(a) order was ineffective, the purportedly dismissed claims were still pending in the district court, making a Rule 54(b) partial judgment even more appropriate. In either case, Rule 54(b) saved the day.
The dissent went on to criticize the majority’s holding that a Rule 54(b) partial judgment is available even after the district court has resolved all claims. Rule 54(b) applies, the dissent explained, only when there is one or more claims remaining in the district court. And once the plaintiff has dismissed an action under Rule 41(a), there are no claims remaining. The Rule 41(a) dismissal adjudicates the remaining claims, thereby ending the action. So after a Rule 41(a) dismissal, there is no role for Rule 54(b) to play.
The dissent also pointed out the oddity of using Rule 54(b)—which requires that the district court determine that there’s no just reason for delaying an appeal—once all claims have been resolved:
Imagine getting to the end of a movie, watching the credits run to the end, and then seeing a screen permitting you to leave the theater “if there’s no just reason for delay.” What else were you going to do?
Other Rule 54(b) requirements raise similar oddities. District courts entering a partial judgment under Rule 54(b) should consider the relationship between the resolved and pending claims, the potential for accelerating the rest of the litigation, and whether the resolved claims might be mooted by future proceedings. These considerations become irrelevant if all claims have been resolved.
As for Judge Willett’s litigant-disclaimer approach, the dissent saw nothing in the Federal Rules or § 1291 that permitted it. I noted this concern after the en banc argument. But as I said then, the lack of an express authority shouldn’t be worrisome in this area. The rule that creates the finality trap—that voluntary dismissals without prejudice are generally not appealable—is itself a judicial construction. So is most of the law governing appellate jurisdiction, much of it built atop interpretations of the term “final decision” in § 1291. And interpreting that term, as Judge Willett noted, requires pragmatism. Because the problem comes from judicial interpretations of § 1291, its solution can, too.
Further thoughts on the decision
As I’ve already noted, I’m with Judge Willett on this one. Ever since the second Williams decision, I’ve said that litigants should be able to fix this issue during the appeal by disclaiming their right to refile the voluntarily dismissed claims. Nothing in any of these opinions makes me think otherwise.
I’m no fan of the majority decision. It thankfully avoids depriving litigants of their right to appeal due to a minor procedural error. But it does so in an odd, unintuitive, and—given the litigant-disclaimer option—ultimately unnecessary way. The reading of Rule 54(b) is particularly odd to me. Multiple decisions can collectively amount to a final decision, and Rule 54(b) is for appealing part of an action while the rest remains pending in the district court.
The majority’s reading of Rule 54(b) also might cause future mischief. The majority necessarily concluded that the district court’s piecemeal resolution of the case—a summary-judgment decision, coupled with a voluntary dismissal—did not amount to a final decision. Perhaps this is limited to cases involving voluntary dismissals without prejudice, which come with finality problems. But what about other kinds of cases that are decided piecemeal? Say a district court dismisses some claims via a motion to dismiss and the rest at summary judgment. Neither decision standing alone resolved all of the claims. Would the Fifth Circuit now say that the case hasn’t reached a final decision? And must the plaintiff obtain a Rule 54(b) partial judgment to appeal either order (or both of them)? I can’t imagine that’s the case. But it’s what the majority opinion seems to mean.
The possible need for Rule 54(b) partial judgment in other cases is not the only problem for future litigants. What if the district court won’t enter the Rule 54(b) judgment? Must litigants now use mandamus to force the district court’s hand? And when litigants do not get a Rule 54(b) partial judgment before taking their appeal, a lot of time might be wasted while they do so. The appellate court will need to dismiss the initial appeal for lack of jurisdiction, after which the parties will return to the district court to get their judgment. Then a new appeal will start.
Other notes of interest
There’s a lot of interesting stuff in these opinions, and I’ve hit only the highlights.
The Rule 41(a) issue is fascinating. And it’s not only about the scope of Rule 41(a); the majority and dissent also disagree with the effect of the plaintiffs’ attempt to dismiss only part of their action. Let’s assume—as the dissent argues and as the majority assumes to be true in deeming the Rule 41(a) issue irrelevant—that Rule 41(a) applies only to entire actions. As the majority sees things, this would make the attempted dismissal in Williams ineffective. The dissent, however, would hold that the plaintiffs’ use of Rule 41(a) unintentionally dismissed their entire action.
That’s not all. The opinions illustrate the issues that come from building most of the law of federal appellate jurisdiction atop § 1291. There’s a back-and-forth on whether a distinction exists between “final decisions” and “final judgments”; Judge Ho’s concurrence suggests that there isn’t, while the dissent says that there must be. Judge Ho and the dissent also appear to disagree on whether dismissals for lack of subject matter jurisdiction are without prejudice (or at least without the same prejudice as a voluntary dismissal without prejudice). There are discussions of textualism, purposivism, and statutory interpretation. And Judge Willett referenced The Princess Bride. The opinions are well worth reading for anyone interested in any of these topics.
Williams v. Taylor Seidenbach, Inc., 2020 WL 2111307 (5th Cir. May 4, 2020) (en banc), available at the Fifth Circuit and Westlaw.