Here’s a common problem that plaintiffs face: they assert multiple claims and the trial court dismisses one, but not all, of them before trial. That can be especially painful when the dismissed claims form the heart of the suit, and it’s not worth the plaintiff’s time to pursue the remaining claims without them.
State and federal rules provide some relief from this problem, as both allow for entry of an appelable partial final judgment. See Fed. R. Civ. P. 54(b); Va. Sup. Ct. R. 5:8A.
But what’s a plaintiff to do when partial final judgment is not available?
Well, some get creative and dismiss the remaining claims with or without prejudice, thereby creating a final, appealable judgment–they hope. We discussed some of the potential problems with this approach a few years back, calling it the “finality trap.”
Bennett Evan Cooper has a short piece on this phenomenon in the Fall 2012 issue of the ABA Appellate Practice Committee Newsletter, called “‘Manufactured Finality’ and the Right to Appeal in Federal Courts.”
Cooper identifes four scenarios where manufactured-finality issues can arise: (1) the plaintiff dismisses the remaining claims with prejudice; (2) the plaintiff conditionally dismisses the remaining claims with prejudice unless the court of appeals reverses the dismissal of the other claims; (3) the plaintiff dismisses the remaining claims without prejudice, but some barrier (e.g., the statute of limitations) would effectively prevent the plaintiff from reasserting them; and (4) the plaintiff dismisses the remaining claims without prejudice.
The first scenario is easy. If the plaintiff dismisses the remaining claims with prejudice, then he has created a final judgment and can appeal. Most circuits have no problem with this.
The second scenario is harder. The conditional dismissal, with the possibility resserting the dimissed claims after a successful appeal, turns off some of the circuits. The Second Circuit has found a final judgment under this scenario, but the Third, Seventh, Eighth, and Ninth Circuits have not.
The third scenario–dismissal nominally without prejudice, but in the face of a practical bar to reasserting the dismissed claims–has proven less divisive, with the Second, Third, Fourth, Seventh, and Tenth Circuits applying a pragmatic approach to find an appealable judgment under these facts. That makes sense. The dismissal is, functionally, a dismissal with prejudice; it’s just that the source of the prejudice happens to be outside the four corners of the court’s order. But for all practical purposes, we’re proceeding under Scenario 1. (Although Cooper does raise a good point: if that’s so, then why not just require dismissal with prejudice?)
The fourth scenario–straightforward dismissal without prejudice–has caused the most trouble in the case law. The Second, Third, Fifth, Seventh, Tenth, and Eleventh Circuits have rejected this strategy, holding that a judgment is not final if it results from a dismissal without prejudice, and the dismissed claims could later be reasserted. The Sixth, Eighth, and Federal Circuits, by contrast, have found appealable orders under these facts, and the First and D.C. Circuits have reached the merits of such appeals without explicity deciding the jurisdictional issue. The Ninth Circuit applies a subjective approach, looking to the record to see if it shows that the plaintiff was trying to manipulate appellate jurisdiction.
Cooper reports that manufactured finality has been on the agenda of the Advisory Committees on the Appellate Rules and Civil Rules for four years. The subcommittee considering the issue has apparently reached consensus on the first and fourth scenarios: dismissal with prejudice creates an appealable final judgment, while dismissal without prejudice does not.