Gaining Appellate Review by "manufacturing" a Final Judgment Through Voluntary Dismissal of Peripheral Claims - Rebecca A. Cochran

• Publication year: 1997

Gaining Appellate Review by "Manufacturing" A Final Judgment Through Voluntary Dismissal of Peripheral Claims

Rebecca A. Cochran^*

"7 can never get the Seventh Circuit to take an interlocutory appeal."¹

I. Introduction

In recent decades, the paths from federal district courts to the federal circuit courts of appeals have narrowed considerably. Appeals through rule 54(b),² section 1292(b),³ the collateral order doctrine,⁴ and other avenues have become increasingly limited, compelling district court litigants and judges to test the limits of the most prevalent appellate path—appeal from a final judgment. This Article argues that the purposes of the final judgment rule, including judicial economy, are served, not hindered, by voluntary dismissals with prejudice of peripheral claims to render final an earlier ruling that decided the heart of the litigation.⁵

First, this Article profiles the district court cases in which peripheral claims dismissals typically occur. Then, the Article offers the contradic-tory appellate court responses to this dismissal practice.

The Article next contends that this controversial dismissal practice presents further evidence of ways in which the final judgment rule⁶ has been shaped by a caseload "crisis in volume" at both the trial and appellate levels.⁷ This volume has given rise to trial and appellate court case management techniques, designed to resolve cases before trial and to resolve appeals before briefing or oral argument.⁸ Trial courts have encouraged settlement by giving more autonomy to litigants to resolve their disputes and end the litigation, but some appellate courts find this trend goes too far when it includes concerted, deliberate efforts to create a final judgment. The growing reluctance of appellate courts to exercise their discretion in accepting rule 54(b), section 1292(b) and other discretionary appeals is analyzed as a case management mecha-nism.

The Article next focuses upon appellate courts' current response to the largest volume of appeals—final judgment orders under section 1291. The purposes and goals underlying the final judgment rule, including the goal of appellate case management, are reviewed. The present circuit conflict over the finality of voluntary dismissal of peripheral claims is analyzed within the framework of the crisis of volume and the judicial responses to overcrowded dockets. In particular, the trial and appellate courts' practice of overlooking or discounting language of dismissal with or without prejudice and examining instead the record to search for the litigants' and trial judges' intent is analyzed and found unwise, wasteful, and confusing.⁹ The Article concludes that voluntary dismissal of peripheral claims, with prejudice, is an approach that advances, rather than subverts, the underlying purposes of the final judgment rule and ultimately supports the case management goals of trial and appellate courts. Some recent decisions, in which finality has been achieved through dismissal with prejudice of peripheral claims, wrongly deny appellate jurisdiction. Other decisions too readily accept appeals when peripheral claims are dismissed without prejudice, thereby undermining the final judgment rule by creating opportunities for piecemeal appeals. This approach advances a return to honoring the formalities of language. The dismissal order's language is viewed as a material condition of the relationship between the trial and appellate courts, rather than as a routine or empty formality. Reliance on the formal language, rather than a search of the trial court record for good or bad intent, will create a clear path to an appeal, as well as save time, curb frustration, and conserve judicial resources. Basing appellate jurisdiction on intent, rather than on the designation of dismissal with or without prejudice, weakens the final judgment rule and wastes much-needed judicial resources.

A. District Court Use of Voluntary Dismissal of Peripheral Claims to Achieve Finality

District court litigants and district court judges have manufactured or created appealable final orders by using or recommending voluntary dismissal of peripheral claims in district court litigation after the central or core claim or claims in the case have been dismissed or resolved in a summary judgment order.¹⁰ The voluntary dismissal¹¹ with prejudice of remaining claims and counterclaims, which both parties may deem not worth pursuing, should render the earlier order dispositive, final, and appealable.

Often district court litigants have found significant portions of their cases are resolved by a district court's grant of a motion for summary judgment or dismissal on several counts of a claim.¹² Such decisions resolve the gist of the litigants' action, rendering unnecessary extensive and expensive trials.¹³ Experience may have taught counsel that their court of appeals reluctantly accepts interlocutory appeals under 28 U.S.C. Sec. 1292(b),¹⁴ and rule 54(b) may also be unavailable because the remaining open counts may be tangentially related to claims already resolved.¹⁵ Entering a consent judgment or a stipulated dismissal order on the claim the district court has already determined may also result in loss of that claim's appealability.¹⁶ Suffering an involuntary dismissal on remaining claims could be a valid route to appeal,¹⁷ but some courts have closed that option also.¹⁸

Recognizing and responding to the limited availability of appeals,¹⁹ litigants and trial judges have forged a new avenue for appeal that uses section 1291 and its mandatory right of appeal from a final judgment. Litigants and trial judges are highly motivated to seek a final judgment and appellate review of an earlier dispositive order because all agree the case is essentially concluded, save for the shouting and posturing. They may agree to amend allegations in the complaint or voluntarily dismiss the remaining counts of the complaint or a counterclaim still pending.²⁰ The voluntary dismissal is often without prejudice, sometimes with prejudice. With these peripheral claims resolved, the judges and litigants view the earlier summary judgment or dismissal order as a final judgment and the parties appeal that final decision.²¹

B. Appellate Court Response to Voluntary Dismissals

The district courts' use of voluntary dismissals to tie up the loose ends of litigation and thus appeal an earlier adjudication as a final decision has, however, split the circuit courts²² and divided three circuits within themselves.²³ Splits arise over whether the appealability of the earlier adjudicated claim "turns upon . . . the dismissal of the remaining claims with prejudice."²⁴ Splits and intracircuit inconsistencies leave district court litigants and judges frustrated and uncertain about which procedure will satisfy the appellate courts and permit an appeal to go forward. One court of appeals accepts the appeal, finding a final judgment resulted from a voluntary dismissal without prejudice.²⁵ Or, the court of appeals dismisses the appeal for lack of a final judgment because the voluntary dismissal was without prejudice.²⁶ Or the court of appeals accepts the appeal because it has previously instructed the litigants to return to the district court, voluntarily dismiss the outstand-ing claims, and then return once the judgment is made final.²⁷

Thus, the appellate courts variously characterize the dismissal practice as unacceptable—the parties exhibit a bad intent to manipulate the judicial system to gain appellate review—or as an acceptable alternative that they suggest to trial court litigants seeking a final, appealable judgment. Appellate courts discount the language of the dismissal orders and instead expend scarce judicial resources scrutinizing trial records for evidence of the parties and the district court judges' good or bad intent in creating a final judgment through this voluntary dismissal practice.

II. Finality and Judicial Responses to a Crisis of Volume

Some observers believe that an overload of cases at the trial and appellate level shaped, and continues to shape, nearly every aspect of federal practice in the 1980s and the 1990s.²⁸ Numbers of trial court filings and appeals reveal part of the story.²⁹ The size of the cases entering the system, such as environmental mass torts or civil RICO claims with multiple parties, multiple claims, massive discovery, and expert testimony, also plays a role in this crisis.³⁰ Judges openly express their frustration over a perceived caseload crisis; regardless of the substantive issue before the court, a judge may use the occasion to comment on a crowded docket.³¹ Some judges may publicly urge that new limits be placed on federal jurisdiction at both the trial and appellate levels.³² Others question the perceived crisis of volume, debating its severity and its effects upon judges and the judicial system.³³

Whether the size of the increase in their caseloads may be quantified precisely or not, at least some portion of the trial and appellate judiciary has perceived and responded to a crisis in case volume and individual case size. Judges, legislators, and litigants have developed and proposed a wide range of procedural rules, techniques, and methods to address large caseloads and delays in the judicial process. The responses at both levels have produced a federal court system tending to encourage independence in litigants and judges to resolve disputes either before trial or on appeal, to produce less written work product, and to limit jurisdiction by screening for jurisdiction defects.

These responses have laid the foundation for and contributed to the current controversy over voluntary dismissals of peripheral claims to achieve a final appealable decision. Case volume and judicial responses to volume have engendered a certain mistrust between the courts on issues concerning finality. Appellate courts express concern that trial courts certify appeals perhaps too...