1.23.2008

Federal Circuit Discusses Split Re Appellate Jurisdiction over Dismissals Without Prejudice

Per Doe v. U.S., --- F.3d ----, 2008 WL 170188 (Fed. Cir. Jan. 22, 2008):

[T]he government contends that the judgment is not final because the claims that were not dismissed for failure to state a claim were dismissed voluntarily and without prejudice. In the government's view, the judgment is not final because the claims that were dismissed voluntarily and without prejudice were not adjudicated. In support of its argument, the government relies on cases from the Second, Fifth, Seventh, and Eleventh Circuits that have found jurisdiction lacking when unresolved claims are voluntarily dismissed without prejudice. See Rabbi Jacob Joseph Sch. v. Province of Mendoza, 425 F.3d 207, 210 (2d Cir.2005) (“immediate appeal is unavailable to a plaintiff who seeks review of an adverse decision on some of its claims by voluntarily dismissing the others without prejudice.” (emphasis in original)); Marshall v. Kansas City S. Ry. Co., 378 F.3d 495, 499-500 (5th Cir.2004) (“a party cannot use voluntary dismissal without prejudice as an end-run around the final judgment rule” (emphasis in original)); West v. Macht, 197 F.3d 1185, 1189 (7th Cir.1999) (“The recent cases disallowing a sort of manufactured finality like that found in the present lawsuit are consistent with the fundamental policy disfavoring piecemeal appeals. Hence, West's voluntary dismissal without prejudice is under current law insufficient to create a final judgment.”); State Treasurer v. Barry, 168 F.3d 8, 11 (11th Cir.1999) ( “appellate jurisdiction over a non-final order cannot be created by dismissing the remaining claims without prejudice”).

Our court has not adopted that position. In Nystrom v. Trex Co ., 339 F.3d 1347 (2003), we addressed a claim of patent infringement that was dismissed on summary judgment of noninfringement. Id. at 1349. The defendant had filed a counterclaim for a declaratory judgment of invalidity and unenforceability, but the district court did not reach those issues. Id. Instead, the court entered judgment for the defendant and stayed the counterclaim pending appeal. Id. Because the counterclaim remained pending, we held that the summary judgment order was not an appealable final judgment. Id. at 1351. We discussed, however, four “avenues of appeal” that the district court could have followed for the parties to have an appeal “as a matter of right.” Id. at 1350-51. One of those avenues was that “the district court could have dismissed the counterclaim without prejudice (either with or without a finding that the counterclaim was moot) following the grant of summary judgment of non-infringement.” Id. at 1351.

In this case, we see no reason to disavow our statement in Nystrom regarding dismissals without prejudice. Several other circuits have also declined to follow a bright line rule that judgments must always be treated as nonfinal whenever unresolved claims are voluntarily dismissed without prejudice. In James v. Price Stern Sloan, 283 F.3d 1064, 1069-70 (9th Cir.2002), the Ninth Circuit reviewed the split among the circuits on this issue, and adopted a rule that “when a party that has suffered an adverse partial judgment subsequently dismisses remaining claims without prejudice with the approval of the district court, and the record reveals no evidence of intent to manipulate our appellate jurisdiction, the judgment entered after the district court grants the motion to dismiss is final and appealable.” In adopting that rule, the James court followed the Sixth Circuit's approach in Hicks v. NLO, Inc., 825 F.2d 118 (6th Cir.1987), and the Eighth Circuit's approach in Chrysler Motors Corp. v. Thomas Auto Co., 939 F.2d 538 (8th Cir.1991). See James, 283 F.3d at 1069-70. In those cases, the courts exercised appellate jurisdiction over cases in which the district court had entered final judgment at the parties' request by dismissing remaining claims without prejudice. Hicks, 825 F.2d at 120 (“we hold that plaintiff's dismissal with the concurrence of the court of the only count of her complaint which remained unadjudicated imparted finality to the District Court's earlier order granting summary judgment.”); Chrysler Motors, 939 F.2d at 540 (same). The James court also noted that, although the Seventh Circuit has declined to exercise jurisdiction in appeals following a dismissal without prejudice, “it has done so only where the record revealed that the district court and the parties have schemed to create jurisdiction over an essentially interlocutory appeal.” 283 F.3d at 1069 (citing United States v. Kaufmann, 985 F.2d 884 (7th Cir.1993), and Horwitz v. Alloy Auto Co., 957 F.2d 1431 (7th Cir.1992)).

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