The pattern is familiar. After an adverse federal-court ruling on a claim the plaintiff deems important – on a key cause of action, or against a key defendant – the plaintiff voluntarily dismisses its remaining claims without prejudice and appeals the adverse ruling. Perhaps the dismissal is backed up by a tolling agreement between the parties, or perhaps limitations has not yet run, or perhaps the plan is to add back the dismissed claim in the event of appellate reversal. In any event, the case is over in the trial court and ready for appeal. Except that the Fifth Circuit says it's not.
In Luvata Grenada, LLC v. Danfoss Industries S.A. de C.V., decided last month, the plaintiff initially sued Danfoss US and Danfoss Mexico on a variety of claims. Danfoss Mexico successfully pursued a motion to dismiss for want of personal jurisdiction. The plaintiff and Danfoss US thereafter stipulated to a voluntary dismissal without prejudice, and the plaintiff appealed the dismissal of Danfoss Mexico.
The Fifth Circuit dismissed the appeal for want of jurisdiction, applying a line of Fifth Circuit cases holding "that parties cannot manufacture appellate jurisdiction by agreeing to dismiss remaining claims without prejudice." These cases owe their origin to a 1978 case (Ryan v. Occidental Petroleum Corp.) where the plaintiff, after an involuntary dismissal of the bulk of his complaint, voluntarily dismissed the remaining substantive allegation of the complaint but left it pending as a jurisdictional skeleton. Holding that there was no final judgment, the Ryan court dismissed the appeal.
Ryan was correct: there was still a live case pending in the district court, albeit one without any substantive allegations. But, with all respect to the Fifth Circuit, Ryan's children are misbegotten. When claims are dismissed without prejudice, they do not necessarily vanish from the future jurisprudential world, but they vanish from the pending case, every bit as much as if they had been dismissed with prejudice. This is confirmed by cases describing voluntarily-dismissed claims as the equivalent of claims that were never brought.
The Fifth Circuit rule creates a Bermuda Triangle in which voluntarily-dismissed claims simply disappear without a trace. Are the claims still pending? Luvata Grenada says that "the district court retained jurisdiction" over them. If that is right, how can the claims be revivified? And when? Years later? In what sense, exactly, have they been "dismissed?" Is the outcome different if, in lieu of a Rule 41(a) voluntary dismissal, the claims are simply omitted from an amended complaint? Is this a glass-half-full situation, where appellate jurisdiction is absent if only specific claims are voluntarily dismissed but present if the entire complaint is voluntarily dismissed save and except those portions that were already substantively resolved?
The Triangle swallows up the substantively-resolved claims as well. When, under the Fifth Circuit rule, may they be appealed? Never? How can that be, given that the plaintiff's only sin was to appeal prematurely? After the dismissed claims are added back into the case and substantively resolved? What if that never happens? What if it happens in a separate suit? Does it matter if limitations runs on the dismissed claims? If they are settled? Can the district court go back and issue a Rule 54(b) certification of finality?
The rules about appellate finality are rigorously enforced, and so they should be. But when every claim in a case has been disposed of, a judgment ought not be held to lack finality merely because some of the claims can be reasserted another day in another case.
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