Concept
Final Disposition of a Claim
Rule 54(b) judgment on fewer than all claims or parties
Final Disposition of a Claim
Rule 54(b) lets a district court direct entry of a final judgment on fewer than all claims or parties, so the ruling it certifies must already be final.1 In Sears, Roebuck & Co. v. Mackey, the Supreme Court said the amended rule “does not relax the finality required of each decision, as an individual claim, to render it appealable.” The rule only supplies a practical means of appealing one or more final decisions on individual claims without waiting for the rest.2 The rule therefore changes when a finished ruling may be appealed and leaves untouched what makes a ruling finished. The Court cast the district judge as a “dispatcher” who chooses the time when each final decision is ready for appeal, and a dispatcher can send out only what is ready to go.3 A judge who certified a ruling that left part of a claim open would give the court of appeals something the trial court could still revise, and the same claim would probably return on a second appeal, the duplication the final-judgment rule exists to prevent.
Three situations test the requirement. A ruling may resolve only part of a claim; it may arrive while a counterclaim remains undecided; or a party may try to create finality by dismissing whatever else is left.
Complete Resolution Required
The finality that Rule 54(b) borrows is the finality of 28 U.S.C. § 1291, which is in most relevant respects the same, with one change in the unit of measurement. The court asks whether this claim, or this party’s whole stake in the case, is over, instead of asking whether the whole action is over.4 The threshold question is whether the order is “an ultimate disposition of an individual claim entered in the course of a multiple claims action.”5 The rule does not apply to an action with a single claim or to one in which every claim has been finally decided; it works only when some claims, but not all, are finished.6
Measuring finality claim by claim protects the interest that § 1291 protects for a whole action. A ruling that leaves liability, damages, or relief for later can still be reshaped by what remains, so an appellate court that reviewed it would decide something that might move underneath it. A fully resolved claim holds still: the court of appeals can decide it once, and the trial court has nothing left to do on it but enforce the judgment.
Two kinds of completeness satisfy the requirement. One is a claim decided in every respect, liability and remedy alike, so that nothing remains but execution. The other is a party whose rights and liabilities have been fully adjudicated, so that no claim remains pending against it.7 Rulings that fall short fail in two ways. An order that decides particular legal issues without disposing of a whole claim is not an ultimate disposition of that claim. An order that leaves a portion of a single claim open against all defendants does not qualify either: in Alonzi v. Budget Construction Co., the order left punitive damages unresolved against every defendant.8
A ruling that closes out a claim completely looks different. In Continental Airlines v. Goodyear Tire & Rubber Co., partial summary judgments completely extinguished the tire companies’ liability on the airplane-damage claim, and the matters decided were sufficiently severable, factually and legally, from those that remained. The court held Rule 54(b) certification proper.9 Whether certification was also wise is a separate question about delay, taken up later in this chapter.
The party branch works the same way. RFC was one of almost two hundred defendants in the hotel-fire litigation of In re Recticel Foam Corp. Suppose RFC wins summary judgment because the plaintiffs have no evidence that it produced the foam insulation implicated in the fire. That judgment decides everything against RFC, so it completely resolves RFC’s part of the case. The action nonetheless continues against the other defendants, so the judgment does not end it, and the plaintiffs may appeal at once only if the district court certifies the judgment under Rule 54(b).10
A ruling that fixes liability but not the amount of damages is not final either. A judgment holding a defendant liable without ascertaining damages is not sufficiently final to be appealable, as SEC v. Carrillo held.11 A Rule 54(b) recital does not change that, as Liberty Mutual Insurance Co. v. Wetzel shows. The district court there declared two employment policies unlawful under Title VII and directed judgment with a recital of no just reason for delay, but it granted the employees no injunction, no damages, and no attorney’s fees. Read as a declaratory judgment on liability, the order still left those requests unresolved and finally disposed of none of the employees’ prayers for relief, and a ruling limited to liability stays interlocutory while damages or other relief remain open.12
Congress has made one narrow exception to the rule that liability without ascertained damages is not final: a judgment in a patent infringement action that is final except for an accounting may be appealed immediately under 28 U.S.C. § 1292(c)(2).13 The exception comes from that statute, not from Rule 54(b), and it reaches patent infringement actions only. Every other liability-only ruling stays interlocutory, and the common exam error is to treat a recital of no just reason for delay as if it could cure a ruling that has not finished the claim.
Pending Counterclaims
Rule 54(b) names the counterclaim among the claims for relief that can make an action a multiple-claim action, and that listing produces two results that look opposed at first.15 A counterclaim is a claim for relief, so an action with an undecided counterclaim has not ended; without the express determination, the rule’s second sentence leaves any ruling on the plaintiff’s claim interlocutory and open to revision.16 A counterclaim is also only one claim among several, so the first sentence still lets the court direct entry of final judgment on the plaintiff’s claim once that claim has been finally decided. A pending counterclaim thus blocks the appeal that no one has certified, and it leaves the court free to certify.
Miller v. Special Weapons, L.L.C. illustrates the first result. The Eighth Circuit treated a case in which summary judgment had been granted on the plaintiff’s claims, but not on one of the defendant’s counterclaims, as not appealable.17 The trial court still had a claim for relief to decide, so the ruling on the plaintiff’s claim did not end the action and stayed open to revision.18 The judge’s wording does not alter that. In the Mafridge dispute from earlier in this chapter, the judge granted summary judgment to American Butane and wrote that Mafridge “shall take nothing against Defendant.” The order sounds grimly final, but it resolves only the claim that was before the judge on the motion, Mafridge’s primary claim, and whatever else is pending in the case stays open.19 Mafridge could not appeal until the district court certified the ruling or resolved everything else.
Certification stays available while the counterclaim remains pending, and Curtiss-Wright Corp. v. General Electric Co. shows how. Among other things, Curtiss-Wright sought $19 million from General Electric as the outstanding balance due on contracts already performed. General Electric counterclaimed for $1.9 million in costs allegedly incurred through “extraordinary efforts” during performance, and for $52 million by which it said Curtiss-Wright was unjustly enriched by those efforts.20 The district court directed entry of final judgment for Curtiss-Wright and expressly determined that there was “no just reason for delay.”21 The counterclaims stayed in the district court, and the Supreme Court held that the presence of nonfrivolous counterclaims does not prevent a district court from certifying the principal claim as a final judgment subject to immediate appeal.22
The rule measures finality claim by claim, so the question is whether the principal claim has been finally decided, and another pending claim does not change the answer for it. A contrary reading would also drain the rule of use. A counterclaim is one of the ordinary ways a lawsuit comes to hold more than one claim, and treating it as a bar would remove Rule 54(b) from many of the cases it was written for.
The pending counterclaim still matters once certification is on the table. The district court may certify only after expressly determining that there is no just reason for delay, and it reaches that determination by weighing the needs of the parties against the efficiency of a single appeal at the end of the case, spelling out its reasons.23 A counterclaim that seeks money from the party who has just won can bear on that balance, because a later recovery on it might offset some or all of the certified judgment. The counterclaims in Curtiss-Wright, which sought $1.9 million and $52 million against a $19 million balance, are the kind of fact a district court wants in view before it decides that waiting serves no purpose.24
An exam stem that pairs a ruling on the plaintiff’s claim with a pending counterclaim therefore asks for two answers, and each turns on what the district court did after it ruled. With no direction and no determination, the order is interlocutory and an appeal from it fails for want of a final decision. With both, the counterclaim does not stop certification, and the live issue becomes whether the finding of no just reason for delay was sound.
Manufactured Finality
Rule 54(b) offers one route to an immediate appeal from a ruling on part of a case, and the route runs through the district judge, who may direct entry of final judgment on fewer than all claims or parties only by expressly determining that there is no just reason for delay.26 Any other partial ruling stays open to revision until the whole case is decided. A party that has lost one claim and cannot persuade the judge to certify faces a wait, and some respond by creating the finality the judge withheld. They abandon whatever is still pending, so that the action seems over and the earlier ruling seems to have become final under the ordinary final-decision requirement. Because the party, not the judge, performs the act, the finality is manufactured.
The usual device is voluntary dismissal of the remaining claim under Rule 41(a), often “without prejudice” to reinstating it later. The Fifth Circuit in Oswalt v. Scripto, Inc. has read “action” in Rule 41(a) not to mean the entire controversy of a lawsuit, so a party can dismiss a single claim while the rest of the case goes on.27 Whether a judgment produced this way is a final decision is the question the maneuver raises, and the courts of appeals answer it differently.
Some courts are skeptical. Where one claim has been dismissed but another remains pending, they have frowned on dismissing the pending claim without prejudice to reinstating it later, and Union Oil Co. of California v. John Brown E & C is an example.28 In their view the judgment does not “end the litigation on the merits” but resolves the case only on a contingent basis.29 The objection has a mechanism behind it. A claim dismissed without prejudice can be revived, so the party keeps an option to bring it back after the appeal, and the case could return to the trial court and produce a second appeal in the same action, the piecemeal review the final-judgment rule exists to prevent. The device also takes a decision away from the district judge. Rule 54(b) leaves to the trial court the question whether an early appeal is worth the delay, and a party who could turn any interlocutory ruling into a final judgment by abandoning its remaining claims would answer that question for itself.30
Other courts accept the device. In Nystrom v. TREX Co., the Federal Circuit observed that the district court could have dismissed the counterclaim without prejudice and so created an “avenu[e] of appeal as a matter of right.”31 The logic on this side is that the party really does give up the claims it drops. With the remaining claims out of the case, nothing is left for the trial court to decide, and a party who chooses an immediate appeal has paid for it with the claims it abandoned. Both camps start from the same definition of a final decision; they disagree about whether a claim dismissed without prejudice has truly left the case.
The instinctive answer to a fact pattern like this one is that the dismissal makes the case final because nothing remains pending. The better answer starts from the second sentence of Rule 54(b), under which the warranty ruling stays interlocutory unless the district court certifies it.32 It then names the disagreement among the courts of appeals and notes that the skeptical courts’ objection has the most force when the dismissal leaves the claim revivable, which is why the words “without prejudice” matter in the facts.
The class-action setting has a firm answer. In Microsoft Corp. v. Baker, the Supreme Court rejected an attempt to gain an appeal by voluntarily stipulating to dismissal as a way of challenging an adverse class-certification decision.33 The Court reasoned that the dismissal device “subverts the final-judgment rule and the process Congress has established for refining that rule and for determining when nonfinal orders may be immediately appealed,” so the tactic does not give rise to a final decision under § 1291.34 That process includes Rule 23(f), which lets a court of appeals in its discretion permit an appeal from an order granting or denying class certification if application is made within 14 days.35 A dismissal device would turn that discretionary, time-limited permission into an appeal as of right for any plaintiff willing to abandon the claims. The worry is the one the skeptical courts voice: a party’s own maneuver replaces the controlled path to review. Baker speaks to class-certification orders, so the disagreement over dismissing remaining claims in an ordinary multiple-claim case remains as described above.
A separate state-court opinion in Driggers v. Locke states the skeptical position in terms of that state’s Rule 54(b), and it does not control federal practice. The writing justice concluded that a litigant’s attempt to nonsuit parties and claims to obtain a final order “circumvents the intent and dictates of Rule 54(b) and should not be condoned.” The justice added that the court had erred in an earlier case, Bryant, by accepting jurisdiction and ruling on the merits when the Rule 54(b) and jurisdiction issue was not joined.36
A stem in which a party dismisses its remaining claims to appeal a partial ruling therefore calls for an answer that names the split and the contingent-judgment objection. A stem that sets the same dismissal in a class action calls for the separate answer that the Supreme Court has rejected the device.