The concurrence of Judge Jeffrey Sutton in a recent Sixth Circuit case, Adler v. Elk Glenn, No. 14-5159 (6th Cir. July 10, 2014), suggests that the Sixth Circuit and numerous others are laboring under a misreading of Federal Rule of Civil Procedure 54(b). Rule 54(b) provides that “[w]hen an action presents more than one claim for relief . . . or when multiple parties are involved,” a district court “may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” In Adler, an intervening defendant insurance company moved for summary judgment arguing that it was not required to defend one of the original defendants in the suit. The insurance company’s motion was granted, and the district court later certified the question pursuant to Rule 54(b). The district court stated in a minute entry that the intervening defendant would suffer “real prejudice” if the court did not grant the order. It further stated that its order granting summary judgment was “final and appealable,” that it “certifie[d] that its order fully and completely resolved all issues between” the insured and its insurance carrier, and that there was “no just reason to delay appellate review.”
When the case reached the Sixth Circuit, the clerk’s office directed the parties to explain why the appeal should not be dismissed for failure of the district court to provide sufficient reasoning supporting its certification. The intervening defendant argued that the minute order accompanying the judgment granting certification was sufficient. Relying on Sixth Circuit precedent, the court held to the contrary. The court stated that, pursuant to its binding precedent, a Rule 54(b) certification required the district court expressly to direct entry of a final judgment and to “determine that there is no just reason for delay.” Such a determination requires a district court to apply a balancing test accounting for the “‘the needs of the parties against the interests of efficient case management.’” Adler, slip op. at 2 (quoting Gen. Acquisition, Inc. v. GenCorp., Inc., 23 F.3d 1022, 1026 (6th Cir. 1994)). The appellate court held that the district court’s reference to “real prejudice” without more was insufficient to support immediate review under Rule 54(b). The district court needed to give an explanation. Id. Accordingly, the Sixth Circuit, in a per curiam opinion, dismissed the appeal.
Although Judge Sutton agreed that Sixth Circuit precedent required the appeal’s dismissal, he wrote a concurrence because he doubted “whether our decisions in this area have got it right.” Id. at 4 (Sutton, J., concurring). Examining Rule 54(b), Judge Sutton asked whether, beyond making an express determination that no just reasons for delay exist, a district court must “also expressly explain why it reached” its conclusion. Id. at 5 (emphasis in original). He noted that the “question has prompted a spectrum of responses” in the various circuits. Id. Some have held that a district court’s failure to explain why it invoked Rule 54(b) invalidates certification. Others have held that a district court’s failure to give an explanation eliminates any deference that would otherwise be given to its conclusion that no just reason for delay exists. Still others have held that a lack of explanation changes nothing and that a certification without explanation should be treated the same as a certification with explanation.
Judge Sutton placed himself firmly in this last camp: “As I see it, (1) district courts have no legal obligation to write opinions to accompany their certification orders, and (2) a district court’s failure to write an opinion does not authorize us to change the standard of review.” Id. at 5. Judge Sutton explained that no rule of procedure requires district courts to attach explanations to their Rule 54(b) certifications. Nor, more pointedly, does the language of Rule 54(b) require such explanation. The rule simply “demands an express conclusion, not an express explanation.” Id. (emphasis in original). Furthermore, context confirms such a reading. Judge Sutton looked to other civil rules and noted that they “insist on statements of reasons when district courts issues certain types of orders.” Id. at 6 (citing Rules 11(c)(6), 50(c)(1), 56(a), 59(d), 65(b)(2), 65(d)). These other civil rules also “use precise and calibrated requirements to control the contents of district court orders.” Id.
But this was not all. As Judge Sutton explained, this reading of Rule 54(b) is supported by “the legal background against which the Civil Rules operate. An appellate court reviews a district court’s judgments, not its opinions.” Id. In other words, a court of appeals looks to see if the district court reached the right result not whether its reasoning was sound. Judge Sutton noted that it was odd to “penalize the district court (by ratcheting up the standard of review) for doing what the rules entitle” it to do. Id. at 7. Judge Sutton also noted that changing the standard of review is bad policy. It “makes appellate review more difficult” because the court of appeals is far away from the facts and particulars of the case. Id.
Judge Sutton was also doubtful about the argument for “denying deference.” That argument holds that where a district court gives no explanation, the court of appeals is prevented from “knowing whether the district court carefully considered the relevant factors.” Id. at 9. Judge Sutton found this to be unduly suspicious of district court judges, who, after all, “take the same oaths” as court of appeals judges. “We should not assume they have disregarded their responsibilities merely because they have not written out an explanation, especially when we too often decide motions or even whole cases without written opinions.” Id.
None of this was to say that explanations were unhelpful. “The more a district court explains why there is no just reason for delay, the better its chances of persuading the appellate court that there is no just reason for delay.” Id. But just because something is helpful “does not mean [it is] required—at least until the rulemakers say so.” Id. at 10.
The Adler case (and in particular Judge Sutton’s concurrence) is more than just an intellectually interesting case. On the one hand, Judge Sutton’s compelling concurrence does suggest that many circuits have gotten the question wrong. How this error might be resolved is unclear. It seems extremely unlikely that the question will ever reach the Supreme Court, nor do the courts of appeals seem likely to take this question up en banc to correct their misreadings of Rule 54(b). In those circuits where the question may not have been definitively answered, Judge Sutton’s concurrence gives a ready-made argument to practitioners who face a circumstance where the district court did not explain its reasons for certification.
On the other hand, Adler offers a cautionary tale for appellate practitioners and trial attorneys. If one is able to get a claim or party dismissed (in a case involving multiple claims or multiple parties) and convince a district court to enter final judgment pursuant to Rule 54(b), one should ask the district court to state its reasons for granting certification explicitly and in some detail. Adler and the cases cited by Judge Sutton as holding that the lack of explanation leads to invalidation of certification or results in a higher standard of review should be at practitioners’ fingertips so that they can demonstrate to the district court the import of explaining on the record the court’s reasons for granting final judgment pursuant to Rule 54(b). Courts of appeals may be misreading Rule 54(b), but attorneys need to be aware of this misreading and take steps to protect their clients against it.
Keywords: litigation, appellate practice, Rule 54(b), Adler v. Elk Glenn, certification
Conor Dugan is senior counsel at Warner Norcross & Judd LLP in Grand Rapids, Michigan.
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