Lots of courts dismissing appeals for a lack of jurisdiction, including manufactured appeals, untimely appeals after a remand, premature appeals, and more.
April 27, 2021
Last week was full of courts dismissing appeals for a lack of jurisdiction. The Ninth Circuit rejected two attempts at manufacturing an interlocutory appeal by voluntarily dismissing all outstanding claims. The Fifth Circuit highlighted the need to file another timely notice of appeal when a court of appeals has remanded a case for further district court proceedings. The Tenth Circuit explained that a Tax Court “report” was not a decision that could save a premature notice of appeal. That court also dismissed an appeal from an administrative remand in the IDEA context. And the Fifth Circuit said that it could not review a decision to stay district court proceedings pending the resolution of a related criminal investigation. Plus certificates of appealability on district court recusal decisions and finality after a district court administratively closes a case.
- The Ninth Circuit Rejected a Manufactured Appeal in the Arbitration Context
- More Manufactured Finality in the Ninth Circuit
- The Fifth Circuit on Notices of Appeal After a Remand
- The Tenth Circuit on Tax Court “Reports” and Relating Forward a Notice of Appeal
- The Tenth Circuit Dismissed an Appeal From an Administrative Remand
- The Fifth Circuit Dismissed a Stay Appeal
- Quick Notes
The Ninth Circuit Rejected a Manufactured Appeal in the Arbitration Context
In Sperring v. LLR, Inc., the Ninth Circuit concluded that it lacked jurisdiction when the plaintiffs voluntarily dismissed their claims with prejudice after the district court had ordered arbitration.
Sperring was a putative class action against the operator of an alleged pyramid scheme. The plaintiffs were all consultants for the operator. And the district court compelled arbitration in accordance with the plaintiffs’ contract with the operator. The plaintiffs then voluntarily dismissed their claims with prejudice so that they could appeal the district court’s arbitration decision. As the plaintiffs saw things, it made no economic sense to pursue the case through arbitration. The plaintiffs then tried to appeal.
The Ninth Circuit dismissed for a lack of jurisdiction. Although that court had once allowed appeals after plaintiffs voluntarily dismissed their claims with prejudice, the Supreme Court abrogated that line of cases in Microsoft Corp. v. Baker. Voluntary dismissals, Baker held, generally do not create a final, appealable order from a district court’s class-certification decision. The Ninth Circuit subsequently extended that holding to appeals after a district court’s order compelling arbitration. So the plaintiffs’ voluntary dismissal did not result in an appealable decision.
Sperring v. LLR, Inc., 2021 WL 1586406 (9th Cir. Apr. 23, 2021), available at the Ninth Circuit and Westlaw.
More Manufactured Finality in the Ninth Circuit
In Cincinnati Specialty Underwriters Insurance v. Wood, the Ninth Circuit dismissed an appeal after the parties stipulated to dismissing some unresolved claims without prejudice.
The plaintiff in Cincinnati Specialty was an insurance company that sought a declaration that it had no duty to defend or indemnify the defendants. The defendants responded with some counterclaims regarding the insurer’s denial of coverage. Simplifying a bit, the district court later dismissed some (but not all) of those counterclaims, and it determined at summary judgment that the insurance company had no duty to indemnify. The parties then agreed to dismiss the remaining claims without prejudice, though the stipulated dismissal expressly reserved the defendants’ right to appeal the district court’s decisions. The district court accordingly dismissed the case. The defendants then appealed.
The Ninth Circuit concluded that the district court had not issued a final, appealable decision. As a general rule, parties cannot appeal the district court’s resolution of some claims in an action by voluntarily dismissing the remaining claims without prejudice. Courts are concerned that parties trying to do so are manufacturing an interlocutory appeal. But exceptions to this general rule exist. The Ninth Circuit will allow appeals from these sorts of dismissals if (1) the parties did not intend to manufacture an appeal and (2) the district court meaningfully participated in the dismissal. (A recent cert petition challenged this rule.)
The dismissal in Cincinnati Specialty fell under the general rule. The parties had tried to devise a way to appeal the resolved claims without jeopardizing the defendants’ ability to reinstate the voluntarily dismissed claims. It was a pretty clear manufactured appeal. And the district court did not sufficiently participate in the dismissal. The parties agreed to the dismissal on their own, and there was no indication that the district court considered the propriety of the dismissal.
Cincinnati Specialty Underwriters Insurance v. Wood, 2021 WL 1564354 (9th Cir. Apr. 21, 2021), available at the Ninth Circuit and Westlaw.
The Fifth Circuit on Notices of Appeal After a Remand
In Midcap Media Finance, L.L.C. v. Pathway Data, Inc., the Fifth Circuit explained that after a remand to determine the district court’s jurisdiction, parties must file a new, timely notice of appeal for the court of appeals to have jurisdiction over the initial merits decision.
Midcap Media involved a suit for an unpaid loan. Simplifying a bit, the district court entered three important decision. First was the merits decision, in which the district court largely (but not entirely) sided with the plaintiff. Both parties appealed the merits decision. But in this first appeal, the Fifth Circuit concluded that the parties had failed to establish diversity jurisdiction. The court of appeals accordingly remanded the case for a determination of that issue.
The second important decision was the district court’s jurisdictional decision on remand. The district court concluded that diversity jurisdiction had existed for the entirety of the action and transmitted that decision to the Fifth Circuit. Only the defendant filed a new notice of appeal, in which it purported to appeal both the merits decision and the jurisdictional decision. But the defendant did so 31 days after the jurisdictional decision.
The final important decision was one for attorneys’ fees. Shortly after the jurisdictional decision, the plaintiff asked the district court to award it attorneys’ fees for the proceedings on remand. The district court awarded fees several months later. About two weeks after that, the defendant amended its notice of appeal to include this fees decision.
The Fifth Circuit concluded that it had jurisdiction over only the fees decision. Civil litigants normally must appeal within 30 days of a final decision. The Supreme Court has held that a decision on the merits is final and appealable even if there is an outstanding issue of attorneys’ fees. So the district court’s decision on remand—concluding that the diversity jurisdiction existed—was a final, appealable decision. The defendant’s notice of appeal—filed 31 days after that decision—was accordingly untimely. The amended notice, however, was timely as to the fees decision. So the Fifth Circuit had jurisdiction over that issue.
The Fifth Circuit went on to explain that its decision in the prior appeal was a full remand that required a new notice of appeal. After a limited remand, parties do not need to file a new or amended notice of appeal; the court of appeals retains jurisdiction, and the case merely resumes in that court once the district court completes the limited-remand proceedings. The defendant in Midcap Media argued that the earlier remand was a limited one. The Fifth Circuit disagreed. The prior opinion had not indicated that the Fifth Circuit retained jurisdiction, and the court had issued a mandate shortly after its decision. The remand was full.
The Fifth Circuit also determined that the district court had exceeded its authority in trying to delay the start of the appeal clock. About a month after the jurisdictional decision, the defendant asked the district court to delay entry of the final judgment until after the resolution of the plaintiff’s fee request. A district court can do so under Federal Rule of Civil Procedure 58(e) and Federal Rule of Appellate Procedure 4(a)(4)(A)(iii). This delay allows the parties to appeal the merits and fees together. But the Fifth Circuit requires that any decision to postpone the appeal come before the expiration of the time to appeal the merits judgment. Once that moment has passed, the merits judgment has become unappealable, and the district court lacks any authority to delay its entry. The district court in Midcap Media purported to delay entry of the final judgment only after the time to appeal had expired. So the delay was ineffective.
Finally, the Fifth Circuit added that the district court had not extended the time to appeal for good cause under Federal Rule of Appellate Procedure 4(a)(5). The defendant had not sought relief under that rule—it mentioned only Civil Rule 58(e) in its request to delay the appeal clock.
So neither party had effectively appealed the initial merits decision or the jurisdictional decision. The only timely notice of appeal was that challenging the district court’s fee decision.
Midcap Media Finance, L.L.C. v. Pathway Data, Inc., 2021 WL 1561379 (5th Cir. Apr. 20, 2021), available at the Fifth Circuit and Westlaw.
The Tenth Circuit on Tax Court “Reports” and Relating Forward a Notice of Appeal
In Minemyer v. Commissioner of Internal Revenue, the Tenth Circuit held that a premature notice of appeal from the Tax Court did not relate forward to a “report” that technically didn’t actually resolve the one outstanding issue.
The taxpayer in Minemyer had been convicted of evading taxes. As part of his plea agreement, the taxpayer agreed to pay restitution for all taxes, interest, and penalties due for the two tax years in question, which the parties agreed was roughly $200,000.
The Commissioner of the IRS then sent the taxpayer a notice of deficiency that sought roughly $350,000 in taxes and penalties. When the taxpayer challenged this notice in Tax Court, the court granted partial summary judgment to the Commissioner. The Tax Court upheld the taxes for the two years in question and the penalties for one of those two years. The court left unresolved the propriety of the penalties for the other year. The taxpayer then appealed. And while that appeal was pending, the Tax Court issued a “Memorandum Findings of Fact and Opinion” saying that the penalties for the other tax year were proper. But the Tax Court never issued an actual decision saying as much.
The Tenth Circuit concluded that it lacked jurisdiction. Under 26 U.S.C. § 7482(a)(1), the courts of appeals “have exclusive jurisdiction to review the decisions of the Tax Court . . . in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury.” So a Tax Court decision normally must be final before it can be appealed. A circuit split exists on whether the Tax Court can enter a Federal Rule of Civil Procedure 54(b)-like partial judgment to allow an appeal from the resolution of some (but not all) of the claims in a case. The Tenth Circuit sided with the majority view that allows these partial-judgment appeals so long as the Tax Court determines that there is no just reason for delay.
When the taxpayer in Minemyer appealed, the Tax Court had not entered a final, appealable decision. And the Tax Court had not issued any Rule 54(b)-like partial judgment. So the notice of appeal was premature when filed.
The subsequent Tax Court opinion did not save the premature notice. In civil cases, most courts hold that a premature notice of appeal relates forward to the subsequent resolution of all claims so long as the notice came after a decision that would have been appealable if followed by a Rule 54(b) partial judgment. This is sometimes called “cumulative finality.” And the Tenth Circuit seemed amenable to applying this rule to Tax Court proceedings. But the Tax Court in Minemyer had not entered a subsequent order resolving all claims. It had issued only a “Memorandum Findings of Fact and Opinion,” which is not a “decision” under the Internal Revenue Code. The outstanding penalties issue thus remained unresolved. Once the Tax Court resolved it, the Tax Court proceedings would be final and the parties could appeal.
Minemyer v. Commissioner of Internal Revenue, 2021 WL 1568814 (10th Cir. Apr. 22, 2021), available at the Tenth Circuit and Westlaw.
The Tenth Circuit Dismissed an Appeal From an Administrative Remand
In C.W. ex rel. B.W. v. Denver County School District No. 1, the Tenth Circuit held that it lacked jurisdiction to review an order remanding an IDEA dispute for further proceedings before an administrative law judge.
Simplifying a fair bit, C.W. involved claims that a school district failed to provide to a student the free and appropriate public education that the Individuals with Disabilities Act guarantees. An administrative law judge ruled almost entirely in favor of the student. The district had failed to provide an appropriate education for several years. But, the administrative law judge concluded, the district had eventually prepared an adequate individualized education program.
The student then filed suit in federal district court, challenging the administrative law judge’s conclusion that the education program was eventually adequate. In that suit, the student added damages claims under the Americans with Disabilities Act, the Rehabilitation Act, and the Fourteenth Amendment. On the adequacy of the education program, the district court reversed and remanded for the administrative law judge to determine the appropriate relief. The district court dismissed the remainder of the student’s claims, concluding that the student failed to administratively exhaust them. Both the student and the district appealed.
The Tenth Circuit ultimately concluded that it lacked jurisdiction over both appeals. As a general rule, orders remanding a dispute to an administrative agency are not final. More remains to be done in the agency. An appeal must instead wait until after the proceedings on remand and a return trip to the district court. At that point, all issues can be addressed in a single appeal, rather than piecemeal.
The district court’s remand order was accordingly not final. The remand involved significant further proceedings, namely the relief due to the student. And either party might seek review of the administrative law judge’s conclusion on that relief.
The exception to the normal administrative-remand rule also did not apply. Courts have allowed appeals from administrative remands when that remand might deprive the parties of a future chance to appeal. This generally happens when a district court orders an agency to apply a particular rule in the remand. Administrative agencies normally cannot appeal their own decisions. So if the party challenging the administrative action prevail on remand, the agency will have no chance to challenge the district court’s decision.
There was no risk of that in C.W. Both parties could appeal the administrative law judge’s decision. And once the administrative law judge made that decision and the case returned to the district court, that court could enter a proper final judgment. All interlocutory orders would merge into that judgment. And either party could challenge any part of that judgment in an appeal to the Tenth Circuit.
One last note: the district court labeled its remand a “Final Judgment,” leading the student to argue that appeal was now or never. But that label, the Tenth Circuit explained, was inaccurate. A final judgment could come only after the proceedings on remand and any subsequent challenges to those proceedings.
C.W. ex rel. B.W. v. Denver County School District No. 1, 2021 WL 1540571 (10th Cir. Apr. 20, 2021), available at the Tenth Circuit and Westlaw.
The Fifth Circuit Dismissed a Stay Appeal
In Foret v. Waste Connections Bayou, Inc., the Fifth Circuit dismissed an appeal from an order staying district court proceedings.
Details in Foret are sparse. It appears that some time after the suit had been filed, the district court learned of a criminal investigation that could involve some of the parties or counsel in Foret. The district court accordingly stayed proceedings pending completion of the investigation. The plaintiff then appealed.
The Fifth Circuit held that it lacked jurisdiction over the appeal. Orders staying litigation are not normally final, appealable decisions. And the order in Foret did not fall under an exception to that general rule. The plaintiff failed to show that he would be irreparably harmed absent an immediate appeal. Nor did the case present any important issues that needed immediate review. Finally, mandamus was not appropriate. The district court gave sound reasons for staying the litigation, and the court could revisit the issue if the criminal investigation took an excessive amount of time.
Foret v. Waste Connections Bayou, Inc., 2021 WL 1567969 (5th Cir. Apr. 21, 2021), available at the Fifth Circuit and Westlaw.
Quick Notes
In Pillow v. Burton, the Sixth Circuit avoided addressing whether a certificate of appealability is necessary to challenge the denial of a recusal motion in a habeas proceeding.
Habeas petitioners challenging a state conviction normally must obtain a certificate of appealability to appeal a district court’s final decision. Appeal is normally then limited to the issues identified in the certificate of appealability. Some courts, including the Sixth Circuit, have applied this requirement to a district court’s denial of a recusal motion—unless a court grants a certificate of appealability on the recusal decision, the court of appeals cannot review it.
But some cases suggest that a certificate is not necessary to challenge a recusal decision. And the Supreme Court has held that the certificate of appealability does not determine an appellate court’s jurisdiction. In Pillow, however, the issue had not been briefed. The Sixth Circuit accordingly declined to resolve it.
Pillow v. Burton, 2021 WL 1595411 (6th Cir. Apr. 23, 2021), available at the Sixth Circuit and Westlaw.
And in Digital Advertising Displays, Inc. v. Newforth Partners, LLC, the Tenth Circuit said that the administrative closure of a case was final and appealable, despite the district court’s not entering a final judgment. Digital Advertising involved years-long efforts to reduce a settlement to a consent decree. The district court ultimately concluded that the parties could not produce a decree and closed the case. On appeal, the Tenth Circuit noted that the district court never actually resolved the dispute or entered a final judgment. But the administrative closure ended district court proceedings, separating the district court from the case. District court litigation was complete, so the court of appeals had jurisdiction.
Digital Advertising Displays, Inc. v. Newforth Partners, LLC, 2021 WL 1590010 (10th Cir. Apr. 23, 2021), available at the Tenth Circuit and Westlaw.