Appellate Decisions

Manufacturing Finality via a Conditional Dismissal

The Eighth Circuit rejected an attempt to manufacture a final decision by conditionally dismissing unresolved claims.

July 21, 2023

By Bryan Lammon

In In re Municipal Stormwater Pond Coordinated Litigation, a split Eighth Circuit held that it lacked jurisdiction to review the resolution of some claims when the parties conditionally dismissed other claims.

The parties agreed that, should the Eighth Circuit reverse, the voluntarily dismissed claims could be reinstated. But if the Eighth Circuit affirmed, the voluntarily dismissed claims were forever lost.

A majority of the Eighth Circuit held that this conditional dismissal did not result in a final, appealable decision. Judge Kelly dissented, contending that the dismissal was not actually conditional because the district court did not approve of the dismissal’s terms.

The Voluntary Dismissal in Municipal Stormwater

Simplifying a bit, Municipal Stormwater stemmed from several cities’ claims against refiners and manufacturers of tar. The district court dismissed the cities’ claims against the refiners. That left only claims against four manufacturers.

The cities wanted to appeal this dismissal. But the district court refused refused to enter a partial judgment under Federal Rule of Civil Procedure 54(b).

So the cities and manufacturers agreed to voluntarily dismiss the remaining claims. This dismissal, however, was conditional. The parties agreed that if the Eighth Circuit reversed the dismissal of claims against the refiners, the cities could reinstate their claims against the manufacturers. In that scenario, the statute of limitations would be tolled, and the manufacturers could not raise a timeliness defense. But if the Eighth Circuit affirmed, the cities would “unconditionally release and forever discharge” the manufacturers.

Appeals After Conditional Dismissals

The Eighth Circuit held that the parties had impermissibly tried to manufacture an interlocutory appeal.

Conditional dismissals are one kind of manufactured finality. Like other kinds of manufactured finality, the district court either issues an interlocutory decision that affects or effectively decides claims, or the court expressly resolves some (but not all) of the claims. The parties then agree to dismiss all unresolved claims.

That dismissal is often with prejudice. But it also comes with conditions. Most commonly, the parties agree that if the court of appeals reverses, the voluntarily dismissed claims will spring back to life. This might require waiving defenses that would prevent reinstating the voluntarily dismissed claims, like a statute of limitations.

Nearly all courts hold that these conditional dismissals do not result in a final decision. Courts reason that district court proceedings are not truly over, as the voluntarily dismissed claims might pop back up in the future. Conditional dismissals also circumvent the established avenues for interlocutory appeals, particularly 28 U.S.C. § 1292(b) and Rule 54(b).

Reiterating these reasons, the Eighth Circuit dismissed the appeal in Municipal Stormwater.

Judge Kelly’s Dissent: Not Really a Conditional Dismissal

Judge Kelly dissented. She agreed with the majority that parties could not appeal after a conditional dismissal. But she thought that the dismissal in Municipal Stormwater was not actually conditional.

In other cases involving conditional dismissals, the district court was involved and approved the terms of the dismissal. But in Municipal Stormwater, the parties noticed the dismissal under Federal Rule of Civil Procedure 41(a)(1)(A)(ii). So the district court wasn’t involved. The parties could not, by agreement, control the district court’s future action. And the district court was unlikely to reinstate the voluntarily dismissed claims.

The terms of the stipulated dismissal were thus irrelevant. That meant the dismissal involved a different kind of manufactured finality: the voluntary, with-prejudice dismissal of unresolved claims. And courts (including the Eighth Circuit) hold that these dismissals result in a final decision.

In re Municipal Stormwater Pond Coordinated Litigation, 2023 WL 4612995 (8th Cir. July 19, 2023), available at the Eighth Circuit and Westlaw

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