The en banc Fifth Circuit can disarm its finality trap, which occasionally precludes appeals when plaintiffs voluntarily dismiss some of their claims.
January 28, 2020
Last week, the en banc Fifth Circuit heard argument in Williams v. Taylor Seidenbach, Inc. The case gives that court the opportunity to clean up the “finality trap” it has created for litigants. The Fifth Circuit has held that parties may not appeal when they’ve voluntarily dismissed some of their claims without prejudice; the voluntary dismissal precludes the district court’s decision from being final. But those same parties also cannot return to the district court to change the dismissal to one with prejudice, as district court proceedings are finished. Cases that fall into this finality trap exist in a sort of litigation limbo. I’ve accordingly called them “zombie actions”: they are final and unalterable in the district court, but they are not final—and will never become final—for appeal.
The Fifth Circuit has several options for fixing its finality trap. In this post, I discuss those options, as well as the finality trap’s origins, its application in Williams, the en banc argument, and the larger problems in this area of appellate jurisdiction.
The finality trap’s origins
Ryan v. Occidental Petroleum Corp.
The Fifth Circuit’s finality trap traces back to that court’s 1978 decision in Ryan v. Occidental Petroleum Corp., in which a plaintiff tried to manufacture an interlocutory appeal by voluntarily dismissing its one remaining claim without prejudice. The district court in Ryan had dismissed or struck all but one of the plaintiff’s claims. (Technically, the opinion speaks of the district court dismissing or striking six “paragraphs” in the complaint and leaving one substantive paragraph behind; given that most of the paragraphs were dismissed under Rule 12(b)(6), I’m assuming that they were each claims.) The plaintiff then voluntarily dismissed that last claim without prejudice and tried to appeal the dismissal of his other claims.
The Fifth Circuit held that it lacked jurisdiction because the district court’s decision was not final. The court acknowledged the general rule that several adverse rulings can combine to resolve an action and amount to a final decision. But the voluntary dismissal did not terminate the litigation. The plaintiff was free to re-institute the dismissed claim regardless of the appeal’s outcome; indeed, it appeared that the plaintiff intended to do so.
Ryan explained that Federal Rule of Civil Procedure 54(b) would have been the proper tool for appealing the dismissed claims without losing the last one. Rule 54(b) allows the district court to certify for immediate appeal the resolution of some (but not all) claims in a multi-claim or multi-party action. So the plaintiff should have asked the district court to certify its dismissal under Rule 54(b). He didn’t. So the the Fifth Circuit dismissed the appeal.
The general rule for voluntary dismissals without prejudice
There’s actually nothing too objectionable with the Ryan decision. The plaintiff in Ryan was trying to circumvent the general final-judgment rule, under which the courts of appeals have jurisdiction to review only final decisions of the district courts. Most appeals accordingly must wait until all issues have been decided and all that remains is enforcing the judgment. Granted, the final-judgment rule has exceptions. But for the most part, appeals come at the end of district court proceedings.
Ryan was a relatively straightforward illustration of the rule that voluntary dismissals without prejudice preclude an appeal. The concern underlying this rule is that parties will try to circumvent the normal limits on interlocutory appeals by voluntarily dismissing part of their case. We don’t want parties who are unhappy with a district court’s interlocutory decision to manufacture an appeal by voluntarily dismissing their outstanding claims without prejudice, appealing, and then refiling the voluntarily dismissed claims regardless of the appeal’s outcome. That would be an end-run around the final-judgment rule and frustrate that rule’s purposes. And that’s precisely what the plaintiff tried to do in Ryan.
So when a district court has resolved some of the claims in a multi-claim suit, parties cannot transform that non-final decision into a final one by dismissing their remaining claims without prejudice. Parties instead must obtain a Rule 54(b) certification. Or they can dismiss their remaining claims with prejudice. Otherwise, the voluntary dismissal without prejudice deprives the court of appellate jurisdiction.
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, including Taylor-Seidenbach, Inc., McCarty Corporation, Boeing Company, and Lockheed Martin. The district court granted summary judgment in favor of the four just-named defendants. Williams’s children (who took over as plaintiffs after Frank Williams died) then voluntarily dismissed their claims against the four remaining defendants. One of those dismissals was with prejudice. But the other three were silent as to prejudice.
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 four defendants who had prevailed at summary judgment. 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 summary-judgment decision.
The first Williams appeal
The Fifth Circuit dismissed this appeal (Williams I) for lack of jurisdiction. The court recognized that under the final-judgment rule it generally had jurisdiction once district court proceedings had ended. But the district court’s labeling its order “final” did not make it so. And when a case involves multiple claims or parties, resolution of only some of the claims is not a final decision; the case is not final until all claims against all parties have been resolved.
The Fifth Circuit then invoked the dismissals-without-prejudice rule to hold that the voluntarily dismissed claims had not been resolved. Recall that the voluntary dismissal of three defendants did not specify whether that dismissal was with or without prejudice. Under Rule 41(a), a dismissal is normally without prejudice unless it says otherwise. So the voluntary dismissal of those three defendants was deemed 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, and the Williams children appealed again.
Back before the Fifth Circuit, the court held in Williams II that the district court’s decision was still not final or appealable. The district court had already dismissed the remaining defendants without prejudice, so the case against them was done. 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’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 pointed out the absurdity of this decision:
[I]n this case, the exact same judgment is both final and not final. In the John Minor Wisdom Courthouse (housing the Fifth Circuit), this decision was “not final.” But as the case traipses along the courtyard of fewer than 100 feet to the Hale Boggs Federal Building (housing this district court), it suddenly becomes final again. How does that make any sense?
New Orleans tourists often revel in the numerous ghost tours available throughout the city. But, as courts, we should not allow ghostly magic to transform a decision from not final to final and vice-versa merely because it crosses (virtually) a courtyard between a district court building and circuit court building.
Judge Haynes accordingly called for the Fifth Circuit to take the case en banc to correct this “egregious mess.” 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.
Rehearing en banc
The Fifth Circuit granted the Williams’s petition for rehearing en banc and heard argument last Thursday. It’s normally precarious to try and intuit from oral argument what a court will do. But the court seemed inclined to hold that the Williams could appeal the summary judgment loss.
That’s the right outcome. To hold that parties cannot fix the jurisdictional defect—as the Fifth Circuit did in Williams II—is what makes this rule a trap. The case is forever over in the district court, but it can never be appealed. No good comes of trapping litigants in this state of final-but-not-really-final. Granted, the plaintiff created this problem by voluntarily dismissing its claims without prejudice and attempting to appeal. That was improper. But the punishment—losing the right to appeal—does not fit the crime. The rules of appellate jurisdiction are complex, and they’re scattered throughout statutes, rules of procedure, and hundreds of judicial decisions. I’ve seen enough instances of plaintiffs appealing dismissals without prejudice to conclude that they are probably going to keep making this mistake.
The issue—which was explored pretty extensively during argument—is how to fix the finality trap. The court and advocates discussed several options. I take them up in what I think is the order of best to worst.
Option one: conversion on appeal
The first and best option is to allow parties to convert a dismissal to one with prejudice while the case is on appeal. This conversion-on-appeal procedure requires only that parties disclaim any intent to refile the dismissed claims. The party is then estopped from pursuing those claims any further, which addresses the underlying concerns about refiling. Several courts of appeals have sanctioned this procedure, allowing parties to disclaim any intent to refile dismissed claims in briefing, at oral argument, and even after oral argument.
And for good reason. Conversion on appeal keeps the appeal (which has often been fully briefed and even argued) moving along to a decision on the merits. Also, the concern about parties manufacturing an interlocutory appeal disappears. There is thus little to gain from dismissing the appeal for lack of jurisdiction. All the dismissal does is force the parties to return to the district court to fix the dismissal and then bring a second appeal. Granted, disclaiming an intent to refile at oral argument can be awkward. But rarely is there any harm in allowing the parties to fix a voluntary dismissal in the course of the appeal.
Courts have used similar fixed-on-appeal procedures for other defects in appellate jurisdiction. For example, courts have allowed parties to cure the jurisdictional issues created when district courts dismiss complaints without prejudice and with leave to amend. Like voluntary dismissals without prejudice, these involuntary dismissals are not final because the plaintiff can file an amended complaint. Yet plaintiffs sometimes appeal rather than amend. And courts often interpret this appeal as the plaintiff’s intent to stand on the complaint on the dismissed complaint and forgo the opportunity to amend. Any uncertainty as to the plaintiff’s intent can be cleared up in the briefing or oral argument.
A similar practice can be seen in the context of courts allowing parties on appeal to abandon entire claims to cure a jurisdictional defect. This occasionally becomes necessary when a district court resolves the main claims in an action, but some other claims (often counterclaims and cross-claims) remain outstanding. The parties nevertheless appeal. Only later do they realize that the district court’s decision is not final due to the unresolved claims. The courts of appeals have allowed parties in this scenario to abandon entire claims—again, even at oral argument—to cure the jurisdictional defect. If parties can abandon unresolved claims while on appeal, there’s little reason why they cannot also abandon claims that were voluntarily dismissed without prejudice.
There is, however, one potential hitch: under what authority can parties change the terms of a voluntary dismissal while a case is on appeal? No statute or rule of procedure technically authorizes this practice. And some remarks during the Williams argument suggested that this lack of express authority undermined the conversion-on-appeal tactic.
I’m not all that bothered by the lack of express authority. After all, the general rule for voluntary dismissals without prejudice is itself a judicial construction. No statute or rule says that voluntary dismissals without prejudice preclude an action’s finality. That comes from judicial interpretation of 28 U.S.C. § 1291 and its grant of appellate jurisdiction over “final decisions.” The dismissals-without-prejudice rule—like much of the law of federal appellate jurisdiction—is built atop the various meanings of “final” that courts have given to § 1291. So nothing should stand in the way of courts converting dismissals to be with prejudice, even while a case is on appeal.
Option two: conversion on return
But perhaps a court of appeals is uncomfortable with parties changing the terms of a dismissal while the case is on appeal. Maybe the court of appeals thinks it doesn’t have the authority to itself change the terms of a dismissal. Or perhaps the court does not want any awkward exchanges at oral argument when counsel has to make sure the client is okay with a with-prejudice dismissal.
The court of appeals should at least allow the parties to return to the district court to change the terms of the dismissal. Under this conversion-on-return procedure, the court of appeals dismisses the appeal for lack of jurisdiction. The parties then return to the district court to convert the voluntary dismissal to one with prejudice. After that, they appeal again.
The reasons for allowing this tactic are the same as those for the conversion-on-appeal procedure. The only real difference is that fixing the appellate-jurisdiction defect takes more time and effort. There is also more express authority for the district court to change the terms of the dismissal: Rule 60(b)(6). Granted, Rule 60(b)(6) relief is generally appropriate only in extraordinary circumstances, and the frequency with which litigants fall into the finality trap might make these circumstances seem too ordinary. But the consequences of the finality trap are extraordinary. Parties lose their right to appeal due to a minor and often harmless procedural misstep. And the rules governing that misstep—unlike, for example, the deadline for filing a notice of appeal—are not clearly spelled out in the rules of procedure.
Option three: Rule 54(b)
Another option is to allow the plaintiff to return to the district court and obtain a Rule 54(b) certification. Recall that Rule 54(b) allows the district court to certify for immediate appeal a decision that resolves some (but not all) of the claims in a multi-claim or multi-party suit. So another potential fix is to allow parties to return to the district court and, instead of changing the terms of the dismissal, obtain a Rule 54(b) certification for the claims decided on the merits.
But this isn’t what Rule 54(b) is for. Rule 54(b) certification allows some parts of a case to go up for appeal while other parts remain pending in the district court. And the certified claims generally need to be separate from those that remain. In the dismissals-without-prejudice context, there’s nothing left in the district court; the unresolved claims have been dismissed without prejudice and are no longer pending. Rule 54(b) is thus an awkward fit for this scenario.
Option four: treat the dismissal as final
One option explored a bit during argument was to deem the voluntary dismissal without prejudice “final.” After all, the dismissal ended litigation in the district court, which is normally the meaning of final. The case would be final and appealable. But in that appeal, the court of appeals would not review the voluntarily dismissed claims.
This makes some sense. Intuitively speaking, the district court litigation seems final. All claims have been addressed one way or another, and there’s nothing left for the district court to do. And so long as the voluntarily dismissed parties or claims did not need to be joined in the original action, the plaintiff is slicing off parts of the case that could have been filed separately. Why should a plaintiff be precluded from appealing when it has voluntarily dismissed claims that it could have been brought in a separate suit?
But calling these dismissals final invites the very problem that the dismissals-without-prejudice rule is meant to avoid: manufactured interlocutory appeals. If a party can voluntarily dismiss its outstanding claims without prejudice and thereby render the action final and appealable, there’s nothing stopping that party from re-instituting those claims after the appeal.
And final is a term of art in the context of appellate jurisdiction. Courts have given that term a variety of meanings in their effort to create all sorts of rules of appellate jurisdiction. Sometimes those meanings are intuitive—what is deemed “final” really looks final. But not always. Sometimes the actual end of district court proceedings is not final, such as when parties voluntarily dismiss their claims with prejudice in an effort to appeal a class-certification decision. Sometimes decisions that come long before the end of district court proceedings are deemed final, such as decisions appealable under the collateral-order doctrine. And sometimes only parts of decisions are final, such as the limits on the scope of interlocutory qualified-immunity appeals.
Courts should accordingly avoid calling an action “final” when some of the claims have been voluntarily dismissed without prejudice. Doing so would just invite further confusion about what that term means.
Option five: tough luck
A few questions from the court seemed to suggest that perhaps the plaintiffs were to blame for their predicament. After all, Ryan and other cases had told plaintiffs to obtain a Rule 54(b) certification in this scenario, and the Williams children had not done so.
There are a few problems with that line of thought. First, in the context of the Williams litigation, the plaintiffs sought a Rule 54(b) certification. The district court denied that motion and instead entered a Rule 58 final judgment. What, then, were the plaintiffs supposed to do? Perhaps the plaintiffs could have petitioned the court of appeals for a writ of mandamus that would have ordered the district court to certify its decision for a Rule 54(b) appeal. But that seems like a lot of work, and it’s not clear that mandamus would even be appropriate in this circumstance.
More generally, and for the same reasons mentioned above, Rule 54(b) certification is probably not proper once all of the outstanding claims have been dismissed without prejudice. After that dismissal, proceedings are over in the district court. So there’s nothing to divide up via Rule 54(b). Perhaps the plaintiffs should not have dismissed their remaining claims in the first place and instead sought a Rule 54(b) certification while those claims were still pending. But that seems inefficient. If a party is willing to dismiss its claims—and that dismissal will have to be with prejudice if the party is to appeal—all the better. That’s fewer claims for the district court to deal with and fewer parties involved in litigation. And there’s no guarantee that a Rule 54(b) certification would be proper or forthcoming.
The larger problem
The Willaims decisions also illustrate one of the major problems with the current system of federal appellate jurisdiction: we’ve built an immense body of law atop interpretations of the term “final decisions” in 28 U.S.C. § 1291. I recently wrote about how interpretations of § 1291 account for the bulk of the law of federal appellate jurisdiction. And necessarily so; the statutes and procedural rules governing federal appellate jurisdiction are few, and the practicalities of modern federal litigation have required more than this handful of statutes and rules if the system is to work.
But the results aren’t always pretty, as Williams illustrates. District court proceedings in Williams were over, but the decision was still not “final” for purposes of appeal. Something similar happened in 2017’s Microsoft Corp. v. Baker. The Baker plaintiffs had tried to avoid the normal limits on appealing class-certification decisions by voluntarily dismissing their claims and then appealing the denial of class certification (the Ninth Circuit had denied their petition to appeal class-certification under Rule 23(f)). The Supreme Court rightly rejected this maneuver—the plaintiffs were trying to circumvent Rule 23(f) and manufacture the appeal of an order that they should not have been able to appeal. But the Court did so by saying the voluntary dismissal was not a final decision under § 1291. That’s odd. As Justice Thomas pointed out in his concurrence, district court proceedings in Baker were over; the district court had entered an order dismissing all of the plaintiffs’ claims with prejudice. So all issues had been resolved, and there was nothing left for the district court to do. Again, under any straightforward understanding of the term, Baker reached a final decision.
Williams and Baker are thus zombie actions—over in the district court, but not final for purposes of appeal. And they’re made possible by building so much of the law on what it means for a decision to be “final.” Williams is actually much worse than Baker; at least the ultimate outcome in Baker made practical sense. And it appears that some plaintiffs (but not all) who relied on pre-Baker caselaw in dismissing their claims have been able to undo those dismissals via Rule 60. Williams is just silly.
The use of “final” to build these and so many other rules of federal appellate jurisdiction has led to much of the confusion and complexity in this area of the law. And it’s one of the main reasons we should be thinking about appellate-jurisdiction reform.
Williams I: Williams v. Taylor-Seidenbach, Inc., 748 F. App’x 584 (5th Cir. 2018), available at Google Scholar and Westlaw.
Williams II: Williams v. Taylor-Seidenbach, Inc., 935 F.3d 358 (5th Cir. 2019), available at Google Scholar and Westlaw.
Oral Argument Recording, Williams v. Taylor Seidenbach, Inc., No. 18-31159 (consolidated with 18-31161).