The Seventh Circuit addressed whether voluntary dismissals implicate appellate jurisdiction (and said “no”) or Article III jurisdiction (and said “yes”). But the issue isn’t jurisdictional at all. Voluntary dismissals instead implicate the possible waiver of appellate review.
August 12, 2022
Litigants sometimes try to create a final, appealable decision by voluntarily dismissing some or all of their claims. These dismissals fall under the banner of manufactured finality, and they come in several forms. A litigant who loses on some claims might voluntarily dismiss its remaining claims and then appeal the loss. A litigant who faces an adverse interlocutory decision—one that makes a claim less attractive but does not actually decide it—might voluntarily dismiss its claims and try to appeal the interlocutory order. Or a litigant who faces a dispositive interlocutory order—one that effectively, though not technically, resolves all of the claims—might do the same.
When litigants try to manufacture a final decision, most courts of appeals see potential appellate-jurisdiction issues. But in Wednesday’s Levy v. West Coast Life Insurance Co., the Seventh Circuit said that voluntary dismissals do not implicate statutory appellate jurisdiction. They instead implicate Article III. The court ultimately held that it could review the dismissal of the plaintiffs’ claim, despite the plaintiffs’ having voluntarily dismissed that claim after the district court rejected their theories of liability. But in the course of doing so, the Seventh Circuit said that an appellant who consents to a judgment against it might not suffer the injury in fact that Article III requires.
The outcome in Levy was right—the plaintiffs had suffered a dispositive interlocutory order, and their voluntary dismissal merely accelerated the inevitable end of district court proceedings. And the Seventh Circuit was correct that voluntary dismissals should not raise appellate-jurisdiction issues. But most courts—including perhaps the Supreme Court—disagree on that point. And I don’t see how voluntary dismissals implicate Article III. The issue is instead one of waiver: a litigant who voluntarily dismisses its claims might waive any right to appellate review.
I’m writing a paper on this topic right now. So in this post, in addition to discussing Levy, I give an overview of my thoughts. Comments are very much welcome.
The Levy Litigation
Levy was a breach of contract suit stemming from the cancellation of a life insurance policy. The insured missed a payment on the policy about five months before her death. Once the insured died, the insurance company declared the policy forfeited and refused to pay any benefits. The beneficiaries sued, arguing that the cancellation of the policy violated Illinois law.
When the insurer moved to dismiss, the district court rejected nearly every possible theory of liability. The district court thought, however, that the complaint might support one theory: that the notice required to cancel the policy was sent to the wrong address. The district court accordingly denied the motion to dismiss.
Soon thereafter, the plaintiffs conceded that they never meant to suggest that the notice was sent to the wrong address. So they did not want to pursue that theory of liability—the only theory that the district court thought might have legs. The plaintiffs accordingly asked the district court to enter judgment against them so that they could appeal the rejection of their actual theories of liability. The district court eventually dismissed the case with prejudice, stating that the plaintiffs had “voluntarily dismisse[d] any remaining claim that the Court has not already dismissed.”
The Levy Appeal
The appeal presented a number of procedural issues.
The Lack of a Rule 58 Judgment
For one thing, the district court never set out its judgment in a separate document as required by Federal Rule of Civil Procedure 58. That was not fatal to the appeal—Bankers Trust Co. v. Mallis allows appellants to waive the separate-document requirement. Still, the Seventh Circuit took the opportunity to “remind the parties, the district courts, and the bar as a whole that Federal Rule of Civil Procedure 58 requires (with only a few exceptions not applicable here) that ‘[e]very judgment and amended judgment . . . be set out in a separate document.’”
Conflating Claims and Theories of Relief
For another thing, the language of the order dismissing the case was inaccurate. The district court said that it was dismissing “any remaining claim that [it had] not already dismissed.” But there was only one claim in Levy—the claim for breach of contract. There might have been multiple theories of liability. But those all concerned the same injury: the failure to pay benefits under the life-insurance contract. The case was accordingly not one in which the district court had resolved some claims and the plaintiffs had voluntarily dismissed others. There was a single claim, and the plaintiffs voluntarily dismissed it.
The Voluntary Dismissal
The voluntary dismissal of the plaintiffs’ only claim led to the third procedural question. Did the voluntary dismissal deprive the Seventh Circuit of jurisdiction? The Seventh Circuit said that it didn’t; the court’s jurisdiction was secure. In the course of doing so, the Seventh Circuit addressed both statutory appellate jurisdiction and Article III jurisdiction.
As to the former, the Seventh Circuit explained that the voluntary dismissal did not affect appellate jurisdiction. The statutes governing appellate jurisdiction don’t care whether a judgment is adverse or consented. They require only a final decision (under 28 U.S.C. § 1291) and a timely notice of appeal (under 28 U.S.C. § 2107).
Both existed in Levy. The district court had finished with the case, despite the Rule 58 judgment not being set out in a separate document. And the plaintiffs notice of appeal was timely. In fact, it was quite early—given the lack of a Rule 58 judgment, the time to appeal didn’t begin running until 150 days after the district court’s order dismissing the case.
As to the latter, the Seventh Circuit thought that voluntary dismissals could affect Article III jurisdiction. That’s because a party who consents to a judgment isn’t normally aggrieved by that judgment—“litigants aren’t aggrieved when the judge does what they want.” (Cleaned up.) This inability to grant relief, the court said, implicated Article III jurisdiction: “It is difficult to see how a party has an ‘injury in fact’ for purposes of Article III standing to sue when it receives exactly the judgment it requests.”
The plaintiffs in Levy suffered a sufficient “injury in fact,” as they did not get what they sought: payment under the life-insurance policy. The district court rejected all of the theories of liability that the plaintiffs wanted to pursue. They disclaimed any intent to pursue any others. The plaintiffs’ subsequent request for a judgment against them thus did not consent to the district court’s rejection of their theories.
Waiver, Not Jurisdiction
Levy’s jurisdictional outcome was correct—the court’s jurisdiction was secure. The Seventh Circuit was also correct that voluntary dismissals shouldn’t create issues of statutory jurisdiction (though many courts, including the Supreme Court, seem to disagree). But voluntary dismissals also do not create Article III issues. The real issue is waiver.
As I said, I’m currently working on a paper making this point, which is too much for a blog post. I’ll hit the highlights here.
Not Statutory Jurisdiction
Levy is correct that voluntary dismissals should not present any issue of statutory appellate jurisdiction. The only potentially relevant requirement is that of a final decision under § 1291. A final decision normally marks the end of district court proceedings on the merits. So when a district court is done with a case, it has issued a final decision. And a district court is done once a party has voluntarily dismissed all unresolved claims.
The thing is, most courts—including the Supreme Court—think differently. They hold that the voluntary dismissal of all unresolved claims—whether after an adverse interlocutory decision or a decision resolving some (but not all) of the parties’ claims—might not result in a final decision. And the Supreme Court suggested as much in Microsoft Corp. v. Baker. There, the Court held that plaintiffs cannot appeal from the denial of class certification by voluntarily dismissing their individual claims with prejudice. That outcome was correct. The Court’s formal holding, however, was odd. It said that the voluntary dismissal did not produce a final decision under § 1291 because the plaintiffs were trying to undermine Federal Rule of Civil Procedure 23(f) and the general policy against piecemeal appeals. But as the concurrence in Microsoft pointed out, proceedings in the district court were over once the plaintiffs voluntarily dismissed their claims. So the voluntary dismissal resulted in a final decision.
The Seventh Circuit recognized that some of its cases said that voluntary dismissals raise jurisdictional issues. But it attributed those cases to imprecise uses of the term “jurisdiction.” So while the Seventh Circuit has this issue right, it stands in conflict with several other courts of appeals.
Not Article III Jurisdiction, Either
But Levy was wrong in suggesting that this is an Article III issue. Justice Thomas suggested the same thing in his Microsoft concurrence, contending that the parties were no longer adverse after the plaintiffs voluntarily dismissed their claims.
I don’t see the Article III issue. It seems to be a reference to appellate standing. Issues of appellate standing can arise when an appeal is a litigant’s first opportunity to show standing. For example, when seeking direct review of an administrative decision in a federal appellate court, the petitioner must establish Article III standing. Appellate standing issues also arise when a third party tries to appeal a decision that none of the original parties want to challenge. Those third parties must establish an injury to pursue the appeal.
But as Ryan Scott has explained, Article III does not require that litigants re-establish standing at each level of the federal courts. A party must establish Article III’s case-or-controversy requirements, including standing, to invoke the federal judicial power. That power is the power of the judicial department, which Congress has separated into three levels of Article III courts. As a case moves between those levels, it remains in the judicial department. An appeal accordingly does not mark “the end of one case or controversy and the beginning of a new one.” It instead marks the the movement of the same case from one part of the judicial department to another.
I also don’t see any mootness or adversity problems. A case is moot when it’s impossible to award any relief. When a party voluntarily dismisses a claim and then tries to appeal a prior order, it’s entirely possible for the court of appeals to grant relief. That a court of appeals might be unlikely to do so goes to the merits, not jurisdiction. As for adversity generally, the parties continue to disagree about the propriety of the district court’s decision, and the plaintiff has a judgment against it. That sounds adverse to me.
Waiving Appellate Review
The real issue is waiver. By consenting to a judgment, a litigant can waive any right to appellate review. This rule of federal practice goes back to at least 1881’s United States v. Babbitt and probably earlier. Given this waiver, the appellate court can do nothing but affirm.
But the waiver doesn’t affect an appellate court’s jurisdiction. The Supreme Court explained as much in Pacific Railroad v. Ketchum. The Court’s jurisdictional statute at that time (1879) gave it jurisdiction over final decrees. Finality was thus the only required ingredient for appellate jurisdiction. An appellant’s consent to a judgment affected only what the Court could do with the appeal:
This makes appeals to this court, within the prescribed limits, a matter of right, and requires us, when they are taken, to hear and decide them. If, when the case gets here, it appears that the decree appealed from was assented to by the appellant, we cannot consider any errors that may be assigned which were in law waived by the consent, but we must still receive and decide the case. If all the errors complained of come within the waiver, the decree below will be affirmed, but only after hearing. We have, therefore, jurisdiction of this appeal.
Although the end result is similar (an affirmance of the district court’s decision rather than a dismissal of the appeal), the distinction between waiver and jurisdiction is important. A finality understanding injects further uncertainty and complexity into the already-Byzantine law of federal appellate jurisdiction. And the Article III understanding risks undermining valuable, longstanding federal practices. For example, as Adam Steinman has shown, Justice Thomas’s Article III/adversity rationale in Microsoft suggests that Federal Rule of Criminal Procedure 11(a)(2) is unconstitutional.
So when appellants have voluntarily dismissed some or all of their claims, the only issue that creates for the court of appeals is waiver.
Levy v. West Coast Life Insurance Company, 2022 WL 3221836 (7th Cir. Aug. 10, 2022), available at the Seventh Circuit and Westlaw