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March 14, 2013 Articles

Appeals in Intra-Circuit Ancillary Proceedings

The circuits are clearly divided on whether such suits are appealable.

By Josh Jacobson

An “ancillary proceeding” (or “ancillary suit”) is one that “grows out of and is auxiliary to another suit and is filed to aid the principle suit, to enforce a prior judgment, or to impeach a prior decree.” Black’s Law Dictionary 1475 (8th Ed. 2004). In federal civil litigation, ancillary proceedings most often arise out of disputes relating to subpoenas served on third parties located outside the district where the underlying action is pending.

Under Fed. R. Civ. P. 45(a)(2), any subpoena served on a non-party must be issued from the federal district court where the non-party is located, and that same federal district court will hear any disputes relating to the subpoena. For example, if a party to an action pending in federal district A issues and serves a subpoena on a non-party located in federal district B, Fed. R. Civ. P. 45(c)(3)(A) requires that any dispute relating to the enforcement of that subpoena must be resolved by the federal court in district B.

While some federal appellate courts have struggled with the jurisdictional issues arising from appeals in ancillary proceedings, every federal circuit court ultimately has held that, under most circumstances, orders denying discovery in ancillary proceedings are appealable as of right. See Cusumano v. Microsoft Corp., 162 F.3d 708, 712 (1st Cir. 1998); Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567, 574 n.5 (2d Cir. 2005); Nat’l Life Ins. Co. v. Hartford Acc. and Indem. Co., 615 F.2d 595, 597 (3d Cir. 1980); Nicholas v. Wyndham Int’l, Inc., 373 F.3d 537, 541 (4th Cir. 2004); Wiwa v. Royal Dutch Petrol. Co., 392 F.3d 812, 816 (5th Cir. 2004); Ochsner v. Millis, 382 F.2d 618, 623 (6th Cir. 1967); Carter Prods., Inc. v. Eversharp, Inc., 360 F.2d 868, 870 (7th Cir. 1966); Misc. Docket Matter #1 v. Misc. Docket Matter #2, 197 F.3d 922, 925 (8th Cir. 1999); CF & I Steel Corp. v. Mitsui & Co., 713 F.2d 494, 496 (9th Cir. 1983); In Re Westinghouse Elec. Corp. Uranium Contract Litig., 570 F.2d 899, 901 (10th Cir. 1978); Ariel v. Jones, 693 F.2d 1058, 1059 (11th Cir. 1982); Northrop Corp. v. McDonnell Douglas Corp., 751 F.2d 395, 399 n.5 (D.C. Cir. 1984); Micro Motion, Inc. v. Kane Steel Co., 894 F.2d 1318, 1320 (Fed. Cir. 1990).

Where a third party becomes engaged in an ancillary proceeding in a judicial circuit different from the principal suit, the rationale for allowing immediate appeal of the ancillary suit, in the judicial circuit where the ancillary suit was brought, is straightforward: “Because the ancillary proceeding involves a nonparty and the main action is pending in a district court outside this Circuit, appellants would have no means, other than an immediate appeal, to obtain appellate review.” Misc. Docket Matter #1, 197 F.3d at 925.

While the circuit courts are unanimous in recognizing the appealability of orders in most ancillary proceedings, the circuits are badly divided on the appealability of orders issued in ancillary proceedings when the ancillary proceeding and the underlying action are pending in the same circuit.

Some circuits have stated (though arguably in dicta) that ancillary discovery orders are appealable anytime the underlying action is pending in a different district. E.g., Titan Sports, Inc. v. Turner Broad. Sys., Inc., 151 F.3d 125, 127 (3d Cir. 1998) (ancillary discovery order is appealable “where a district court, other than the district court before which the main action is pending, issues an order denying discovery against a non-party”); Northrop Corp., 751 F.2d at 399 n.5 (“An order denying discovery in one district court’s jurisdiction arising from litigation in another jurisdiction may be appealed.”). But despite the broad language of those decisions, neither of those cases involved an appeal from a district court located in the same circuit as the underlying action.

Six courts of appeal have directly addressed the jurisdictional issue arising out of appeals from orders in intra-circuit ancillary proceedings in published opinions, with only two of those circuits finding those orders to be appealable. In Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017 (Fed. Cir. 1986), the underlying patent-infringement action was pending in the Northern District of California, while the ancillary discovery dispute arose in the Northern District of West Virginia. The Federal Circuit concluded that because ancillary discovery orders are “appealable as a final disposition . . . it does not matter that the Federal Circuit is the same appellate court that would possess jurisdiction over an appeal” from a judgment in the underlying action because the plaintiff “ha[d] no other means of effectively obtaining review” of the ancillary discovery order. Id. at 1021.

The Eleventh Circuit reached the same conclusion in Ariel v. Jones, 693 F.2d 1058 (11th Cir. 1982), where the underlying action was pending in the Middle District of Florida, and the ancillary discovery dispute arose in the Southern District of Florida. The Eleventh Circuit concluded that the ancillary discovery order “was a final disposition of all issues pending [in the Southern District of Florida]” and that the defendant “ha[d] no other means of effectively obtaining review.” Id. at 1059.

The Eighth Circuit also denied a motion to dismiss an intra-circuit appeal in an ancillary proceeding, albeit in a single-sentence unpublished order. Cycle Source Group, LLC v. Perinchief (In Re Subpoena to Am. Recreation Prods., Inc.), No. 07-1614, slip. op. (8th Cir. May 7, 2007) (available in PACER).

However, in the years since Heat & Control, Inc. and Ariel were decided, the Second, Fifth, Ninth, and Tenth Circuits all have held that orders denying discovery in intra-circuit ancillary proceedings are not appealable. See Periodical Publishers Serv. Bureau, Inc. v. Keys, 981 F.2d 215, 217–18 (5th Cir. 1993); Hooker v. Cont’l Life Ins. Co., 965 F.2d 903, 905 (10th Cir. 1992); Barrick Group, Inc. v. Mosse, 849 F.2d 70, 73 (2d Cir. 1988); In Re Subpoena Served on the California Pub. Utils. Comm’n, 813 F.2d 1473, 1478 (9th Cir. 1987). Each of these decisions rests on the theoretical possibility of review of the ancillary discovery order on appeal from a judgment in the underlying action. For example, the Tenth Circuit in Hooker found that “an appeal of the order denying discovery will be reviewable at the same time as an appeal from a final judgment entered in the underlying action.” Hooker, 965 F.2d at 905. However, none of these decisions address whether post-judgment review of an ancillary discovery order is either practical or effective.

A leading treatise also endorses the majority view that prohibits intra-circuit appeals in ancillary proceedings. 15B Wright, et al., Federal Practice & Procedure, § 3914.24 (2012) (noting that the majority rule “deserves general adoption”).

The Fourth Circuit ducked this question entirely in Nicholas, acknowledging the circuit split but finding it unnecessary to decide the question. Nicholas, 373 F.3d at 542 n.1 (“We need not decide whether we would have jurisdiction to entertain an appeal from an order denying discovery in an ancillary proceeding conducted by another district court within this circuit”) (emphasis in original).

To summarize, orders denying discovery in intra-circuit ancillary proceedings are definitely appealable in the Eleventh and Federal Circuits, probably appealable in the Eighth Circuit, and not appealable in the Second, Fifth, Ninth, and Tenth circuits. In the remaining six circuits, litigants will have little choice other than to file a notice of appeal, fully aware of the jurisdictional questions that will inevitably follow.

So the next time a client calls and asks you whether an order denying discovery in an intra-circuit ancillary proceeding is appealable, your answer may well begin, “It depends . . .”

Keywords: litigation, appellate practice, ancillary proceeding, FRCP 45, subpoena, discovery

Josh Jacobson, a member of the Appellate Practice Committee’s Appellate Rules and Statutes Subcommittee, is a commercial litigator with The Law Office of Josh Jacobson, P.A. in Minneapolis, Minnesota, and an adjunct professor teaching appellate advocacy at the William Mitchell College of Law.

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