By Lionel Schooler
The United States Court of Appeals for the Fifth Circuit has issued an en banc decision in Williams v. Taylor Seidenbach Incorporated that is designed to re-connect the law of federal appellate jurisdiction with common sense. In so doing, the Court unsealed what it labeled as a “finality trap,” thus liberating the appellants from a procedural purgatory which had ensnared them for many years.
Federal Rules in Conflict
Introduction. The Court achieved this re-connection by providing much-needed clarification about the interplay between Fed.R.Civ.P. 41 and 54(b). In the process, the Court identified the circumstances under which a plaintiff can voluntarily cease pursuing claims against certain parties without forfeiting the right to obtain appellate review of merits rulings as to other parties.
Rule 41(a). Federal Rule 41(a) permits a plaintiff to dismiss voluntarily “an action.” There has been concern over where this phrase covers an entire case, or only individual defendants. However, in Williams, the Fifth Circuit stated definitively that Rule 41(a) applies to permit individualized dismissals.
Rule 54(b). Federal Rule 54(b) affords a district court the authority to direct entry of a final judgment “as to one or more, but fewer than all, claims or parties,” if the district court expressly determines that there is no just reason to delay such an action. If the district court in such a situation does not make this express determination, then the judgment is not final or appealable, because it has not otherwise disposed of all claims against all parties.
Section 1291. The companion provision governing appellate jurisdiction, 28 U.S.C. §1291, requires a “final decision” by a district court before appellate jurisdiction can attach.
The Williams case started as a lawsuit by a man who suffered severe medical problems after being exposed to mesothelioma. He filed his case in a Louisiana state court against 24 defendants. The case then traveled from state court to the Eastern District of Louisiana, and then to the Asbestos Multi-District Litigation panel in the Eastern District of Pennsylvania.
Mr. Williams died while the case was pending there, and his two children were substituted as Plaintiffs. Six years after the case was initially filed, the Multi-District Litigation Panel granted summary judgment to several of the defendants, including Taylor-Seidenbach Inc. and McCarty Corporation, based on insufficient evidence of causation. The case was eventually remanded to the Eastern District of Louisiana.
Unsuccessful Efforts to Appeal
Appeal No. 1
Back in New Orleans federal court, the plaintiffs in 2016 decided to lay the groundwork for an appeal of the substantive rulings granting summary judgment to Taylor-Seidenbach Inc. and McCarty Corporation. They attempted to do this by voluntarily moving to dismiss the claims against the other four remaining defendants pursuant to Fed.R.Civ.P. 41(a). The district court ordered dismissal of these parties without specifying whether the dismissals were with or without prejudice.
Following this action, the plaintiffs lodged an appeal of the summary judgment granted to Taylor-Seidenbach Inc. and McCarty Corporation. However, in this first appeal, the Fifth Circuit declared that appellate jurisdiction lacking, because of what it considered to be a non-final order. It applied precedent to hold that appellate jurisdiction could not be created by dismissing remaining claims without prejudice, given the possibility that the plaintiffs could merely attempt to reinstate the claims at a later date. In its view, the Court stated that since the Rule 41(a) dismissal order as to at least three of the four dismissed defendants had been without prejudice, there was not a final decision as required by 28 U.S.C. §1291.
Appeal No. 2
In their return to the district court, the plaintiffs again tried to establish an appealable final decision for purposes of Section 1291 by requesting and obtaining from the district court a partial final judgment of dismissal with prejudice, pursuant to Fed.R.Civ.P. 54(b).
After the district court acquiesced in this request, plaintiffs lodged their second appeal. In the second appellate journey to New Orleans, a different Fifth Circuit panel again dismissed the appeal for lack of jurisdiction because of the absence of a final decision. This time, the Court specifically stated that the district court did not have the power to enter a partial final judgment under Rule 54(b) because it had already dismissed claims “without prejudice” against the three defendants as to whom claims were now purportedly being dismissed “with prejudice.”
In this second dismissal, a concurring judge lamented the existence of a procedural “finality trap,” and the “wrong and illogical” application of this trap. He therefore urged that the Fifth Circuit review the case en banc.
Review by the En Banc Court
The second appellate dismissal did attract the attention of the entire Fifth Circuit, which granted rehearing en banc. In its latest opinion, recently released, the Court held that the Panel did indeed have appellate jurisdiction to consider the merits of the appeal, and therefore returned the case to the Panel for such a review.
The En Banc majority held that the plaintiffs had followed the guidance of the applicable rules, specifically Rule 54(b), which allowed them to secure judgment as to some “but not all of the claims or parties.” The Court therefore held that Rule 54(b) governed the result in this case, irrespective of the fact that there had previously been a voluntary dismissal under Rule 41(a), and also irrespective of the fact that in other circumstances, a district court might permissibly grant a partial final judgment under Rule 54(b) first, followed by a Rule 41(a) voluntary dismissal of remaining parties or claims.
The Court emphasized that the plaintiffs had appropriately followed the framework prescribed by Rule 54(b), and therefore had preserved their right to appeal the summary judgment ruling in favor of the two remaining defendants.
The Fifth Circuit’s en banc decision in Williams v. Taylor Seidenbach Incorporated marks a welcome re-connection of common sense and logic, interjecting simplicity into an appellate process that can often appear overwhelmingly labyrinthine. Thus, federal court litigants confronted with adverse substantive rulings that do not comprehensively resolve all issues as to all parties now have a basis upon which to seek prompt, straightforward appellate resolution of such legal issues.
Lionel M. Schooler is a management-side employment lawyer and recognized authority on employment law, federal appellate practice, and arbitration. Lonnie’s employment practice focuses on counseling clients and litigating, on a nationwide basis, claims under all employment laws, wage and hour claims, and investigations by the Equal Employment Opportunity Commission, the U.S. Department of Labor, and the Texas Workforce Commission. Lonnie is also experienced as an arbitrator on the Commercial and Employment Panels of the American Arbitration Association and as an advocate. He was selected for inclusion by the National Association of Distinguished Neutrals and is certified as a Fellow of the Chartered Institute of Arbitrators for international arbitration matters. Since 2017, Lonnie has served on the Board of Directors of the Houston Bar Association. His previous editorial experience includes serving as editor-in-chief of The Houston Lawyer, a bimonthly publication of the Houston Bar Association.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.