First Circuit

Appellate Jurisdiction: Finality of Judgments and Notices of Appeal
Caribbean Mgmt. Group, Inc. v. Erikon LLC, 966 F.3d 35 (1st Cir. 2020)

The First Circuit’s decision in Caribbean Management Group, Inc. v. Erikon LLC provides a reminder of the importance of careful drafting for notices of appeal. As a general rule, appellate jurisdiction extends only to orders and judgments specifically enumerated in the notice of appeal.

Caribbean Management Group involved an effort to collect a judgment. The defendant, CMG, had stipulated to judgment but then failed to pay. As a result of related litigation and settlement discussions, the issue of CMG’s failure to make payments under the judgment languished for a period of years. Eventually the plaintiff, Erikon, moved for leave to execute on the judgment, but the district court denied the motion because of Erikon’s six-year delay. Erikon filed a motion for reconsideration, which the district court denied. Erikon then appealed.

Before reaching the merits of the issue, the First Circuit took up the question of appellate jurisdiction. It confronted two questions – the existence of appellate jurisdiction under 28 U.S.C. § 1291 and the scope of appellate jurisdiction under the notice of appeal.

As to the first question, the First Circuit concluded that the district court order denying the motion for leave to execute the judgment was final. An order is final if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” As the First Circuit noted, post-judgment orders are generally treated as part of a lawsuit distinct from the suit that generated the underlying judgment. “Consequently, an order entered after judgment is final if it leaves the district court with no further work to resolve the post-judgment dispute and, thus, ends the post-judgment proceeding.” The Court found that the order satisfied this standard because it ended the dispute between the parties over Erikon’s post-judgment collection efforts.

As to the second question, the First Circuit ultimately chose to address the merits of the appeal despite deficiencies in the notice of appeal. The notice of appeal identified only the order denying the motion for reconsideration, but Erikon’s brief also asked the Court to vacate the order denying its motion for leave to execute the judgment. “This mismatch raise[d] the obvious question about whether the notice of appeal suffice[d] to confer appellate jurisdiction to review the underlying order.” The Court stated that, “[a]s a general rule, a circuit court’s jurisdiction extends only to review of the orders and judgments specifically enumerated in the notice of appeal.” This rule has exceptions, however, and an appellant’s failure to designate a particular order in the notice of appeal does not necessarily deprive the Court of jurisdiction. Notices of appeal are to be construed “liberally” and are examined “in the context of the record as a whole” to determine the appellant’s intent. Thus, the Court has on occasion concluded that a notice of appeal targeting only a denial of a motion for reconsideration permits review of the underlying order after considering “whether the defect in the notice of appeal has prejudiced the appellee and whether the appellant’s intent to appeal the underlying order is manifest.” Applying this standard, the Court found no prejudice to CMG because CMG defended the underlying order on the merits. The Court, however, found it more difficult to determine whether Erikon had demonstrated a clear intent to challenge the underlying order given the lack of clarity in Erikon’s briefing. Ultimately, the Court chose to “bypass” the jurisdictional issue raised by the notice of appeal because the merits issues were “easily resolved in favor of the party who would benefit from a finding that jurisdiction is wanting.” Thus, the Court avoided the “thorny questions about the meaning and effect of an inartfully drafted notice of appeal and assumed jurisdiction to review” the underlying order instead of the order on reconsideration alone.

Appellate Jurisdiction: Appeals of Orders Denying Relief Under Anti-SLAPP Laws
Franchini v. Investor’s Business Daily, Inc., 981 F.3d 1 (1st Cir. 2020)

In Franchini v. Investor’s Business Daily, Inc., the First Circuit affirmed that a defendant has the right to bring an interlocutory appeal of an order denying a special motion to dismiss based on state anti-SLAPP laws. Thus, substantive decisions applying anti-SLAPP statutes are immediately appealable.

The facts of Franchini are straightforward. Investor’s Business Daily published an op-ed regarding practices at Veterans Administration hospitals, and a target of that editorial – Thomas Franchini, a doctor – contended that the editorial was defamatory. The publisher, IBD, filed a motion to dismiss based on Maine’s anti-SLAPP law. The district court denied the motion, and IBD appealed. The First Circuit asked the parties to brief whether the Court had jurisdiction over the appeal. The First Circuit ultimately held that jurisdiction existed.

While the general rule is that a court may not “hear appeals from judgments that are not . . . final,” there is an exception for those orders that “fall in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” For this exception to the finality rule to apply, there must be “(1) a conclusive decision, (2) distinct from the merits of the action, (3) on an important issue, (4) which would effectively be unreviewable on appeal from a final judgment.”

The First Circuit found that these factors favored jurisdiction over the appeal from the order denying IBD relief under the anti-SLAPP law. First, “IBD ha[d] been conclusively denied the protection of Maine’s anti-SLAPP law.” Second, the Court concluded that the order on the special motion to dismiss was “distinct from the merits of the action” because it raised legal issues that would not be addressed in a final decision. Third, the Court also concluded that the decision concerned an important issue of law because anti-SLAPP laws create a substantive right against meritless lawsuits, and thus the appeal presented important societal issues regarding First Amendment protections. Fourth, and finally, the Court concluded that the decision would be effectively unreviewable on appeal, because a ruling at a later date would circumvent the anti-SLAPP law’s purpose of shielding defendants from meritless litigation. The Court therefore exercised its jurisdiction and reached the merits of the appeal.

Joshua D. Dunlap
Pierce Atwood LLP
Portland, ME

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Second Circuit

Appellate Jurisdiction – Success on Merits of Individual Claims Does Not Moot Lead Class Action Plaintiff’s Interest in Appealing Class Decertification Order
Jianmin Jin v. Shanghai Original, Inc., 990 F.3d 251 (2d Cir. Mar. 9, 2021)

In Jin, the Second Circuit addressed whether it had jurisdiction to decide a plaintiff’s appeal in a putative class action on behalf of himself and similarly-situated employees of a restaurant alleging violations of the New York Labor Law. At the district court, plaintiff-appellant Jianmin Jin (“Jin”) had successfully moved to certify a Rule 23 class action. However, several days before the class trial, the district court sua sponte decertified the class based on class counsel’s inadequate representation. Specifically, the district court identified class counsel’s plan to call only two class members as witnesses at the trial as the “significant intervening event” prompting decertification. Id. at 256. Thereafter, the district court held a bench trial on Jin’s individual claims only; he prevailed on the merits and was awarded damages, attorneys’ fees, and costs.

Jin appealed from the district court judgment in his favor, challenging the court’s pre-trial decertification of the class notwithstanding his victory on his individual claims. Although not raised by the parties, the Second Circuit analyzed the threshold question of whether Jin’s appeal was moot on the class decertification issue.

The Second Circuit explained that, in order to invoke federal-court jurisdiction, “a plaintiff must demonstrate that he possesses a legally cognizable interest, or personal stake, in the outcome of the action” and that if a “live” controversy no longer exists or “the parties lack a legally cognizable interest in the outcome, the case becomes moot.” Id. at 257. Here, the Court held that “[t]he underlying controversy in this case remains for the putative class members.” Id. The Court stated that a damages claim “remains live until it is settled, judicially resolved, or barred by a statute of limitations,” and here, “[n]one of these events occurred with respect to the claims of all the putative class members” as Jin was the only class member who obtained relief after winning on the merits of his New York Labor Law claims. Id. Accordingly, the Second Circuit determined that the putative class members still possessed “an adversarial relationship” with the restaurant owners “sufficient for a live controversy.” Id. at 258.

Lastly, on the merits, the Court held that because “class counsel was no longer ‘fairly and adequately representing the interests of the class” within the meaning of Fed. R. Civ. P. 23(g)(4), the district court acted within its discretion in decertifying the class. Id. at 263.

Erik A. Goergen
Nixon Peabody LLP
Buffalo, New York

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Sixth Circuit

Appellate Jurisdiction: Local Rule Requiring Electronic Notice of Appeal Not Jurisdictional
Pierce v. Ocwen Loan Servicing, LLC, 987 F.3d 577 (6th Cir. 2021)

In Pierce v. Ocwen Loan Servicing, LLC, the Sixth Circuit considered the timeliness of a notice of appeal filed on the deadline in paper, when the local rules required electronic filing. Denying the appellee’s motion to dismiss, the court held that “[t]he power to enact local rules, generally speaking, does not include the power to deny appellate jurisdiction.”

After the Pierces fell behind on their mortgage payments, they brought suit against their lenders to enjoin foreclosure. The district court granted summary judgment to the lenders and later denied a timely motion to alter judgment.

On a Friday, the 30th day after judgment—and the deadline under Fed. R. App. P. 4(a)(1)(A), 4(a)(4)(A)(iv); 28 U.S.C. § 2107(a)—the Pierces’ counsel placed a paper notice of appeal and a cashier’s check for the filing fee in the “drop box provided by the court.” The next Monday, the clerk kept the check but returned the notice of appeal, notifying counsel by email that the local rules required electronic filing. Counsel filed an electronic notice of appeal that same day.

The lenders moved to dismiss the appeal as untimely, arguing that the 30-day deadline is jurisdictional, the local rules require electronic filing, and the electronic notice of appeal was filed more than 30 days after judgment.

The Sixth Circuit disagreed: “A court’s drop box serves as an invitation to file court documents, precluding a court from treating its use by a party as a trespass or a non-event.” The court also noted the “practical reality” that the clerk kept the cashier’s check. The lenders’ reliance on the local rule, the court explained, “must yield to precedent.” The Supreme Court has held that “imperfections in noticing an appeal should not be fatal where no genuine doubt exists about who is appealing, from what judgment, to which appellate court.” And as the court saw it, a “failure to comply (initially) with local rules” is such an “immaterial imperfection.”

The court cited two rules in support of its conclusion. Civil Rule 5(d)(4) “commands” a clerk not to refuse a filing “solely because it is not in the form prescribed by ... a local rule.” And Civil Rule 83(a)(2) warns that “[a] local rule imposing a requirement of form must not be enforced in a way that causes a party to lose any right because of a nonwillful failure to comply.”

A practice point: In the court’s evaluation of other cases involving questions of appellate timeliness, the decisions often turn on the presence of “evidence”—generally “an affidavit averring a timely filing.” It is no substitute for counsel to make representations about filing problems in briefs. “Unsworn excuses about attempted filings are far afield from sworn excuses about completed filings.”

Personal Jurisdiction: General Appearance Does Not Waive IPJ
Blessing v. Chandrasekhar, 988 F.3d 889 (6th Cir. 2021)

In a case involving Covington Catholic High School students’ claims against self-described celebrity D-lister Kathy Griffin, the Sixth Circuit clarified that there is no bright-line rule that a counsel’s general appearance waives personal jurisdiction objections; waiver remains a fact-specific inquiry.

The plaintiffs in Blessing v. Chandrasekhar were Kentucky high school students involved in a widely publicized event at a January 2019 March for Life rally in Washington D.C. Twitter users, including a New Jersey doctor and Ms. Griffin, a California comedian, posted about the incident. The high schoolers sued the tweeters under a variety of theories, including civil harassment, invasion of privacy, and terroristic threatening, bringing the case in the Eastern District of Kentucky.

One question on appeal was whether Ms. Griffin’s counsel had waived her personal jurisdiction defense by filing a general appearance. The court used this question to address the “confusion in the district courts” from the Sixth Circuit’s decision in Gerber v Riordan, 649 F.3d 514 (6th Cir. 2011). Although Gerber involved “three years of the defendants’ litigation conduct,” the court concluded that personal jurisdiction was waived “by failing to raise the issue when making a responsive pleading or a general appearance.”

After Gerber, the Sixth Circuit explained in one case (King v. Taylor, 2012) that earlier published precedent rejected the Gerber waiver rule, only to “muddle[] the situation further” by applying “Gerber’s rule” in another case (M & C Corp v. Erwin Behr GmbH, unpublished 2012) that treated appearances of counsel as waiver and in a third case (Boulger v. Woods, 2019) that described the waiver inquiry “more an art than a science.” This left district courts without adequate guidance, with some courts finding waiver, others not, and some basing their decisions on the order of the filings or a case-specific inquiry.

Revisiting the Sixth Circuit’s precedent, the court concluded that “Gerber requires a fact-specific analysis of a defendant’s litigation conduct, and a defendant’s mere appearance—without participation—does not waive the defense of personal jurisdiction.” “To the extent that Gerber can be read as creating such a rule,” the court held the rule “inconsistent with earlier circuit precedent and thus not binding.”

The court also held the Gerber bright-line rule would be inconsistent with Rule 12, which requires a defendant to raise personal jurisdiction only in its “first defensive move.” In addition, since personal jurisdiction “flows from the Due Process Clause, . . . [i]t should not be waived unwittingly,” which an appearance-is-waiver rule would do.

Along the way, the court quickly rejected the plaintiffs’ other arguments. Any distinction between special and general appearances “was abolished by [Rule] 12.” And any purported distinction between the court’s personal jurisdiction rulings on forfeiture and waiver grounds “does not exist in our case law.”

The court went on to find that exercising jurisdiction over two out-of-state tweeters did not comport with due process. Neither defendant committed an act in Kentucky, and harmful consequences from social media, even if felt in the forum, aren’t enough.

Stephanie A. Douglas
Grant A. Newman
Bush Seyferth PLLC
Troy, Michigan

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Seventh Circuit

Appellate Jurisdiction – Timeliness of Appeal – Excusable Neglect
Krivak v. Home Depot, U.S.A., Inc., 2021 WL 2460984 (7th Cir. June 17, 2021)

Krivak filed a personal injury action against Home Depot in state court, which Home Depot removed to federal court. On December 20, 2019, the district court dismissed the case for lack of prosecution and entered judgment after Krivak’s attorney failed to appear at several status conferences. Three days after the dismissal, Krivak’s lawyer filed a motion to vacate the judgment, misidentifying it as being filed under “Rule 6(b)” and explaining that a prior non-appearance was due to a calendaring error. On January 6, 2020, the district court denied the motion, in part because it had not shown a basis for relief under Federal Rules of Civil Procedure 59 or 60. The following day, Krivak’s lawyer appeared in court and made an oral motion for post-judgment relief, which the district court denied on January 17. Krivak filed his notice of appeal on February 14.

The Seventh Circuit determined that Krivak had not filed his appeal timely. The panel began its analysis with Federal Rule of Appellate Procedure 4’s thirty-day appeal clock, which began ticking on December 20. But under Rule 4, Krivak’s first post-judgment motion “deferred” the start of the clock until January 6, the day the motion was denied. The panel then turned to Krivak’s second, oral motion, which his lawyer made on January 7. This second motion could not further delay the start of the thirty-day period, however, because Rule 4 permits only one suspension of the period. Thus, Krivak’s appeal clock expired on February 5, 2020.

When the panel flagged this issue, Krivak returned to the district court and sought leave to extend his time to appeal under 21 U.S.C. § 2107(c). That provision permits a district court to extend the time to appeal if a party shows excusable neglect or good cause. The district court granted the motion, reasoning that Krivak had established excusable neglect by showing that he reasonably believed his second motion to be his “first and only” motion under Rule 60(b). The appellate panel disagreed with the district court’s conclusion that this belief constituted “excusable neglect.” Because Rule 4 only allows one post-judgment motion to defer the appeal deadline, Krivak’s beliefs regarding his second motion were irrelevant. As Krivak’s motion under Section 2107(c) provided no additional reasons which showed good cause or excusable neglect, the panel concluded that the district court had abused its discretion in granting it.

Appellate Jurisdiction – Finality and Stays Under Colorado RiverLoughran v. Wells Fargo Bank, N.A., --- F.4th ---- (7th Cir. June 22, 2021) 

In Loughran v. Wells Fargo Bank, N.A., the Seventh Circuit analyzed appellate principles of finality in the context of a stay of federal litigation entered under Colorado River Water Conservation Dist. v. United States.

The Loughrans obtained a home mortgage loan from Wells Fargo, which transferred it to a trust under which U.S. Bank served as trustee and Wells Fargo served as loan servicer. After the Loughrans defaulted on the loan, U.S. Bank filed a foreclosure action in Illinois state court. In response to U.S. Bank’s request for a foreclosure judgment, the Loughrans raised several defenses, including that U.S. Bank lacked standing and that it and Wells Fargo had defrauded the Loughrans and the court by misrepresenting which entity had physical possession of the loan documents.

While U.S. Bank’s motion to strike these defenses was pending, the Loughrans filed a federal lawsuit against Wells Fargo and several law firms that were representing it and U.S. Bank in the foreclosure proceeding. The Loughrans raised claims in the federal lawsuit that mirrored their defenses in the state proceeding. In response, U.S. Bank moved to stay the action pending the outcome of the state proceeding or to dismiss it under Rule 12(b)(6). The district court granted the motion to stay under Colorado River, which permits federal courts to refrain from exercising jurisdiction in light of ongoing parallel proceedings in state court.

The Loughrans appealed the stay decision, which prompted the Seventh Circuit to consider its jurisdiction. A decision to stay litigation is not ordinarily appealable immediately as a “final” decision under 28 U.S.C. § 1291 or as an immediately reviewable interlocutory decision under Section 1292. But as the panel observed, the Supreme Court has recognized that a stay because of parallel state litigation may be treated as final for the purpose of appeal if the federal and state proceedings involve the same or substantially similar issues, such that a judgment in the state proceeding would constitute res judicata in the federal proceeding. Thus, in Moses H. Cone Memorial Hospital v. Mercury Construction Corp., the Court found a stay order final under Section 1291 because the federal and state actions involved the same issue, which was the only substantive issue in the federal suit.

Examining Moses Cone and a case on which it heavily relied, Idlewild Bon Voyage Liquor Corp. v. Epstein, the panel concluded that appellate jurisdiction over stay decisions was not limited to instances in which the stay would necessarily bring the federal action to an end because resolution of the state action would have preclusive effect. Instead, the panel read these decisions as opening appellate jurisdiction under Section 1291 to cases in which resolution of the state proceeding would not completely dispose of all issues in the federal action. Specifically, the court held that the “key question for jurisdictional purposes is whether the object of the stay order is to require all or an essential part of the federal suit to be litigated in a state forum.”

Under this standard, the district court’s order staying the Loughrans’ federal suit was immediately appealable even though the state foreclosure action might not resolve all of the claims in the federal proceeding. It was enough for jurisdictional purposes that the state proceeding would “largely” resolve the issues in the federal case.

Daniel J. Kennedy
Gass Turek LLC
Milwaukee, Wisconsin

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Eighth Circuit

Subject Matter Jurisdiction: Forum-Defendant Rule
Holbein v. TAW Enterprises, Inc., 983 F.3d 1049 (8th Cir. 2020) (en banc)

In Holbein, the Eighth Circuit, sitting en banc, considered the appeal of an action originally brought in Nebraska state court by an individual against his former employer but which had been removed to federal court by the employer and thereafter dismissed with prejudice for failure to state a claim.

On appeal, a panel of the Eighth Circuit vacated the dismissal of the action and ordered it to be remanded to state court, concluding under prior Eighth Circuit precedent that the employer’s citizenship in the state of Nebraska resulted in a jurisdictional removal defect under the so-called “forum-defendant rule.” The employer then successfully petitioned the Eighth Circuit for a rehearing en banc to reconsider the precedents leading to the panel’s disposition.

After vacating the panel’s decision, the full Eighth Circuit reconsidered its prior precedent on the forum-defendant rule under 28 U.S.C. § 1441. Under that statute, a defendant in a civil action brought in state court may remove the action to federal court if the federal court has original jurisdiction. Id. at § 1441(a). But, if a federal court’s original jurisdiction is based upon diversity of citizenship, an action may not be removed to federal court if a defendant is a citizen of the state in which the action is brought. Id. § 1441(b)(2). If a removal to federal court is defective (for reasons other than a lack of subject matter jurisdiction), a motion to remand must be made within thirty days of the filing of the notice of removal. 28 U.S.C. § 1447(c).

When previously interpreting those statutory provisions, the Eighth Circuit had held the requirements of § 1441(b)(2) were jurisdictional in nature and could not be waived. Hurt v. Dow Chemical Co., 963 F.2d 1142, 1145–46 & n.1 (8th Cir. 1992). The Eighth Circuit later reaffirmed the rule from Hurt, despite some other circuits having held in the interim that violation of the forum-defendant rule was a procedural, nonjurisdictional defect. Horton v. Conklin, 431 F.3d 602, 605 (8th Cir. 2005).

In Holbein, the Eighth Circuit unanimously overruled its holdings in Hurt and Horton, concluding that “violation of the forum-defendant rule is a nonjurisdictional defect in removal that is waived if not raised in ‘[a] motion to remand . . . made within 30 days after the filing of the notice of removal.’” 983 F.3d at 1053, 1064 (quoting 28 U.S.C. § 1447(c)). In reaching this conclusion, the court reasoned that §§ 1441(a) and 1441(b)(2) are not “jurisdiction-granting” and “jurisdiction-stripping,” respectively. Id. at 1054. Rather, those sections give “certain state-court defendants access to a federal forum that already possesses subject-matter jurisdiction over the type of action being removed” and then “narrow[] the class of defendants who are entitled to exercise this right.” Id. In other words, the court explained that the forum-defendant rule “strips forum defendants of the statutory right to remove” but “does not strip district courts of jurisdiction they otherwise have to adjudicate the sorts of actions forum defendants might attempt to remove.” Id.

The Eighth Circuit acknowledged that some courts have referred to § 1441(a) as granting “removal jurisdiction” but indicated the phrase was “something of a misnomer” because removal is a “statutory right” or “privilege” and not a kind of jurisdiction. Id. (quotations omitted). Similarly, the forum-defendant rule under § 1441(b)(2) is a “privilege” granted to a plaintiff to preserve the plaintiff’s choice of a state forum in circumstances where access to a federal forum to avoid prejudice is a weaker consideration. Id. at 1055. Thus, the court concluded, the forum-defendant rule functions as a limitation on the right to remove under § 1441(a) and both are nonjurisdictional. Id.

The Eighth Circuit found further support for its interpretation in the location of § 1441 within the Judicial Code (Title 28 of the United States Code) because, when Congress enacted a title defining and regulating the jurisdiction and procedure of federal courts in 1911, it placed the provisions regarding district court jurisdiction and removal of actions in separate chapters, and such separation remained despite later recodification of the Judicial Code. Id. In addition, the Eighth Circuit indicated that the statutory history of § 1447(c) regarding circumstances in which a removed case should be remanded confirmed that the forum-defendant rule should be viewed as nonjurisdictional. Id. at 1056–57. The court explained that, at the time Hurt was decided in 1992, § 1447(c) required a “defect in removal procedure” to be raised within thirty days of the filing of the notice of removal, which led the court in Hurt distinguish between “substantive” removal defects, which it concluded were jurisdictional, and “procedural” removal defects. Id. The court in Holbein recognized that Congress amended § 1447(c) in 1996 to substitute the language “defect other than lack of subject matter jurisdiction” in place of “any defect in removal procedure,” thus eliminating the supposed distinction between “substantive” defects to be considered as jurisdictional and other procedural, nonjurisdictional defects. Id. at 1057. The court in Holbein acknowledged that it had not addressed the significance of this amendment in Horton when it reaffirmed Hurt. Id.

Additionally, the Eighth Circuit in Holbein explained that its conclusion that the forum-defendant rule was nonjurisdictional was supported by “[l]ongstanding judicial understanding of the nature of the forum-defendant rule” because, since 1900, American courts had predominantly taken the nonjurisdictional view of the forum-defendant rule and other similar provisions governing removal. Id. The court further noted that its holding eliminated a “lopsided circuit split,” as the nine other circuits that had addressed the issue of whether the forum-defendant rule was jurisdictional had all held that it was not and was, thus, a “waivable, removal defect.” Id. at 1053, 1059 (collecting cases).

Finally, the Eighth Circuit rejected the plaintiff-appellant’s argument that federal courts should decline to exercise jurisdiction due to the case involving the interpretation of solely state law because “with rare exception, federal courts have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given.” Id. at 1060–61 (quotation omitted). The court further rejected the plaintiff-appellant’s argument that waiver of the forum-defendant rule could only occur after the parties had litigated through trial because § 1447(c) required a motion to remand within thirty days of the filing of the notice of removal, as well as rejected the argument that the court’s decision should only apply prospectively because “the normal rule in civil cases is full retroactivity” and, even if the court had discretion to depart from the normal rule, the court found “no grave inequity” warranted a departure from the rule. Id. at 1061. The court then affirmed the dismissal of the plaintiff-appellant’s complaint on the merits.

Colin S. Seaborg
Maria P. Brekke
Bassford Remele, P.A.
Minneapolis, Minnesota

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D.C. Circuit

Final Judgment Rule
Dist. No. 1, Pac. Coast Dist., Marine Eng’rs Beneficial Assoc. v. Liberty Mar. Corp., 998 F.3d 449 (D.C. Cir. 2021)

The D.C. Circuit held that a district court’s stated dismissal of a “complaint” without prejudice amounted to a final decision as to the action, when (1) the language of the district court’s order otherwise bespoke a final dismissal of the action, (2) the substance of the defendant’s motion to dismiss sought dismissal of the entire action with prejudice, and (3) the course of the litigation indicated that litigation was terminated after the district court granted the defendant’s motion to dismiss including a referral of the parties to arbitration.

A labor union that represented employees who worked as deck and marine engineering officers for a maritime carrier brought a civil action against the carrier employer under the Labor Management Relations Act (“LMRA”). Both the labor union and employer were parties to a collective bargaining agreement (“CBA”). The complaint challenged the employer’s appointment of an arbitrator to resolve outstanding grievances under the CBA. The U.S. District Court for the District of Columbia granted the employer’s motion to dismiss and the labor union appealed.

In deciding its appellate jurisdiction, the D.C. Circuit considered 28 U.S.C. § 1291, where a court of appeals “shall have jurisdiction of appeals from all final decisions of the district courts of the United States,… except where a direct review may be had in the Supreme Court.” The district court dismissed the labor union’s complaint “without prejudice.” This raised the question of whether the district court’s order was final for the purpose of appellate jurisdiction.

The D.C. Circuit first considered its decision in Ciralsky v. CIA, 355 F.3d 661, 666 (D.C. Cir. 2004) which addressed the distinction between dismissal of a complaint without prejudice and dismissal of an action without prejudice. When a district court dismisses a complaint without prejudice, the plaintiff can still continue the litigation by amending the pleading. By contrast, the dismissal of an action ends the case. Even if an action is dismissed without prejudice, it would still (absent another affirmative act such as an intervening order) require the filing of a new lawsuit, and therefore the case is at an end. In further consideration of Ciralsky, the D.C. Circuit explained that in situations where it is unclear whether the district court intended its order to dismiss the action or merely the complaint, it considers: the language used by the district court in effecting its dismissal, the language of the dismissal motion granted by the court, and the course of the litigation.

Applying these considerations to this case, the D.C. Circuit concluded that, while the district court stated that it was dismissing the complaint, the context made it evident that the district court in fact sought to dismiss the action, for the purposes of bringing the case to an end. First, the language used by the district court indicated that that the district court effected a dismissal of the case when it concluded its memorandum by stating that, “because there are no issues left for this court to resolve, I easily conclude that it is appropriate to dismiss this case in its entirety.” Id. at 455. The D.C. Circuit concluded that by stating there were no issues left to resolve and that it would be appropriate to dismiss the case in its entirety, the district court must have intended to terminate the action.

Second, the employer’s motion in substance sought dismissal of the action when it contended that “‘all of the claims are subject to resolution by the arbitrator,’ and the district court should dismiss them.” Id. (citing employer’s motion to dismiss). The D.C. Circuit reasoned that the employer’s submission that the labor union’s claims should be handled in arbitration, necessarily meant that employer sought dismissal of the action.

Third, the D.C. Circuit concluded that the course of the litigation confirmed that, in granting the employer’s motion to dismiss, the district court effected a dismissal of the action, not just the complaint. The district court referred the parties to arbitration, which therefore terminated the litigation.

For these reasons, the D.C. Circuit held that the district court’s dismissal amounted to a final decision as to the action, not just the complaint. The D.C. Circuit thus possessed appellate jurisdiction.

Timeliness of Appeal
Serv. Emp. Int’l Union Local 32BJ v. Preeminent Protective Serv. Inc., 997 F.3d 1217 (D.C. Cir. 2021)

The D.C. Circuit held that a summary judgment order by the district court compelling arbitration was a final, appealable order where the only claim before the district court was one to compel arbitration. The D.C. Circuit also held that a later post-judgment contempt sanction did not lose its status as a final judgment because related fee litigation remained pending.

A labor union filed a petition to compel arbitration of an alleged violation of a collective bargaining agreement. In May 2018, the district court granted summary judgment to the labor union and ordered the employer and labor union to arbitrate. Following delays that the labor union attributed to the employer’s conduct, the labor union moved for contempt. In June 2019, the district court found the employer in civil contempt and imposed a fine if the employer failed to arbitrate within 30 days plus awarded costs and attorneys’ fees. After the contempt order, an arbitrator completed the arbitration. In November 2019, the district court entered an order fixing the total amount of costs and attorneys’ fees. The employer filed an appeal within several days of the November 2019 order challenging the May 2018 order, the June 2019 order, and the November 2019 order.

The D.C. Circuit in considering its jurisdiction held that it only had jurisdiction as to the November 2019 order. As to the May 2018 order, the D.C. Circuit considered that Section 16 of the Federal Arbitration Act “bars appeals from any ‘interlocutory order… directing arbitration to proceed,’” 997 F.3d at 1220 (citing 9 U.S.C. § 16(b)(2)), “but permits any ‘final decision with respect to an arbitration,’” id. at 1220 (citing § 16(a)(3)). The D.C. Circuit reasoned that the May 2018 order was not interlocutory because “it ended the litigation on the merits” given that “[t]he only claim before the district court was one to compel arbitration, and the court conclusively resolved it on summary judgment.” Id. As to the June 2019 order, the D.C. Circuit acknowledged precedent that civil contempt orders are not final, appealable orders if entered against a party in a pending proceeding. However, because the district court entered this contempt order after a final judgment of the district court, it was appealable at the time the district court entered it. The D.C. Circuit also held that the conditional nature of the contempt order did not change its decision as the D.C. Circuit has “previously held that a contempt order imposing conditional sanctions is final.” Id. at 1221 (citation omitted). Further, while previously addressed by the U.S. Supreme Court in the context of an award under a fee-shifting statute, the D.C. Circuit reasoned that the rationale of that decision requires that “[t]he pendency of fee issues did not prevent the contempt order from becoming final and appealable when it was entered.” Id. (citing Bundinich v. Becton Dickinson & Co., 486 U.S. 196, 201 (1988)). Because the employer timely appealed the November 2019 order, the D.C. Circuit proceeded to review that order on the merits.

James M. Sullivan
Hollingsworth LLP
Washington, D.C.

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Federal Circuit

Direct Appeals of Patent Trial and Appeal Board Decisions Security People Inc. v. Iancu, 971 F.3d 1355 (Fed. Cir. 2020)

The Federal Circuit held that even if the Patent Trial and Appeal Board (“PTAB”) lacked authority to resolve the alleged patentee’s constitutional claim in an inter partes review, to seek further relief, the alleged patentee was required to pursue a direct appeal of the PTAB’s inter partes review decision to the Federal Circuit rather than file an action in federal district court.

Following a decision by the PTAB that an alleged patentee’s claim was unpatentable, the alleged patentee filed an action against the U.S. Patent and Trademark Office (“PTO”) in a federal district court, challenging the Fifth Amendment constitutionality of the cancellation of its patent in the prior inter partes review proceeding. The PTO moved to dismiss. The district court granted the motion to dismiss based on lack of subject matter jurisdiction, agreeing with the PTO that “Congress established a specific means for judicial review of IPR decisions, rendering collateral Administrative Procedure Act [APA] suits in district court inappropriate.” Id. at 1358. The district court reasoned that the America Invents Act required a direct appeal to the Federal Circuit from the PTAB’s decision. The alleged patentee then appealed the district court’s decision to the Federal Circuit.

The Federal Circuit agreed with the district court that “Congress foreclosed the possibility of collateral APA review of inter partes review decisions by district courts” and “separately establishe[d] an adequate remedy in a court,” the Federal Circuit, for the alleged patentee’s constitutional challenge. Id. at 1357-58. The Federal Circuit rejected the alleged patentee’s argument that because the PTAB arguably lacked the authority to decide its constitutional challenge that supported filing an APA action in district court. The Federal Circuit reasoned that “[i]t is not unusual for an appellate court reviewing the decision of an administrative agency to consider a constitutional challenge to a federal statute that the agency concluded it lacked authority to decide.” Id. at 1359 (citation omitted). Further, even if some factual development would be required to resolve the constitutional challenge, the Federal Circuit reasoned that it has authority to take judicial notice of facts in appeals from the PTAB and if needed the PTAB may participate in fact-finding even if it lacks the authority to resolve the legal issue for which those factual questions must be resolved. The Federal Circuit affirmed the district court’s dismissal of the alleged patentee’s APA action.

Evidence Considered on Appeal Cottingham on Behalf of K.C. v. Sec’y of Health and Human Serv., 971 F.3d 1337, 1340 (Fed. Cir. 2020)

The Federal Circuit declined to consider, for the first time on appeal, medical literature allegedly connecting a child’s symptoms to the HPV vaccine as alleged objective evidence supporting causation for a claim under the National Vaccine Childhood Vaccine Compensation Program. The Federal Circuit reasoned that (1) the parent did not submit the articles with the petition for compensation or at any point prior to appealing to the Federal Circuit, (2) the parent did not argue prior to appeal that the medical literature supported the petition, and (3) the articles were not in the appellate record despite their availability prior to dismissal of the petition. For these reasons, the Federal Circuit concluded that the medical literature did not fit within limited exceptions where the Federal Circuit has considered new arguments on appeal. Id. at 1347 (citing Hylete LLC v. Hybrid Athletics, LLC, 931 F.3d 1170, 1174-75 (Fed. Cir. 2019)).

James M. Sullivan
Hollingsworth LLP
Washington, D.C.

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