Richard Adler v. Elk Glenn, LLC , 758 F.3d 737 ( 2014 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0148p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
RICHARD C. ADLER, ┐
Plaintiff, │
│
│ No. 14-5159
v. │
>
│
ELK GLENN, LLC, a Kentucky Limited Liability │
Company, │
Defendant-Appellant, │
│
│
KENTUCKY FARM BUREAU MUTUAL INSURANCE │
COMPANY, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Eastern District of Kentucky at Pikeville
No. 7:12-cv-00085—Amul R. Thapar, District Judge.
Decided and Filed: July 10, 2014
Before: BOGGS, SUTTON, and WHITE, Circuit Judges.
The court delivered a PER CURIAM opinion. SUTTON, J. (pp. 4B10), delivered a
separate concurring opinion.
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OPINION
_________________
PER CURIAM. Elk Glenn, LLC appeals a district court’s order granting summary
judgment on Kentucky Farm Bureau Mutual Insurance Company’s intervening complaint,
relieving it of its duty to defend Elk Glenn against claims brought by the plaintiff in the
underlying diversity suit for breach of contract and related claims arising from the sale of a
1
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residential lot. The clerk directed the parties to show cause why the appeal should not be
dismissed because the district court did not provide sufficient reasoning supporting its
certification for an immediate appeal under Federal Rule of Civil Procedure 54(b). Kentucky
Farm Bureau responds.
Kentucky Farm Bureau asserts that the district court provided sufficient reasoning in
the minute entry order accompanying its order granting certification under Rule 54(b).
A certification to appeal under Rule 54(b) “requires two independent findings.” Gen.
Acquisition, Inc. v. GenCorp., Inc., 23 F.3d 1022, 1026 (6th Cir. 1994). The second finding
requires the district court to determine that there is no just reason for delay. Id. This
determination “requires the district court to balance the needs of the parties against the interests
of efficient case management.” Id. at 1027. To that end, we have articulated a non-exhaustive
list of factors that district courts should consider when making a Rule 54(b) determination. See
id. at 1030 (listing the factors). The district court’s only reason supporting immediate appeal
was the “real prejudice” Kentucky Farm Bureau would suffer. This reference, without further
explication, does not provide reasoning supporting the necessity of immediate review. See
Daleure v. Commonwealth of Ky., 269 F.3d 540, 543 (6th Cir. 2001) (holding that the district
court’s mere declaration that its order was final and appealable lacked the necessary findings
balancing the interests in permitting an interlocutory appeal).
Kentucky Farm Bureau notes that Rule 54(b) certification has been used to permit an
appeal such as its, citing Revco D.S., Inc. v. Gov’t Emps. Ins. Co., 791 F. Supp. 1254, 1278 (N.D.
Ohio 1991). But in that case, the district court discussed in detail the factors supporting an
interlocutory appeal. Id. at 1278−79; see also Morell v. Star Taxi, 343 F. App’x 54, 56 (6th Cir.
2009) (noting that the “district court entered a conforming judgment . . . which included the
required findings for finality under Fed. R. Civ. P. 54(b)” before considering the merits of a
parties’ claim that it had no duty to defend the plaintiff). In the absence of proper certification
for an interlocutory appeal under Rule 54(b), an order disposing of fewer than all claims in a
civil action is not immediately appealable. See Gen. Acquisition, Inc., 23 F.3d at 1026; Lowery
v. Fed. Express Corp., 426 F.3d 817, 821−22 (6th Cir. 2005).
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Should we conclude that the proper findings supporting jurisdiction were not made by the
district court, Kentucky Farm Bureau asks that we order the district court to provide the requisite
findings. But the clerk instructed the parties that good cause for permitting the appeal to proceed
could be shown if a party applied for and received a proper certification from the district court
under Rule 54(b). Kentucky Farm Bureau did not do so, and we will not order the district court
to make the necessary findings supporting jurisdiction in light of the Bureau’s inaction.
The appeal is DISMISSED.
No. 14-5159 Adler v. Elk Glenn, et al. Page 4
_________________
CONCURRENCE
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SUTTON, J., concurring. When a district court enters a final judgment under Civil Rule
54(b), must it explain its reasons for doing so? Our cases suggest that it must, compelling the
dismissal of this appeal. I doubt, however, whether our decisions in this area have got it right.
Under 28 U.S.C. § 1291, the principal federal law governing appellate jurisdiction, a
court of appeals may review only a district court’s “final decisions.” For the most part, a district
court’s decision counts as “final” only if it takes care of all claims and all parties in the case.
This norm saves district courts from the hindrance of appellate interruptions in ongoing
litigation, just as it saves appellate courts from the inefficiency of reviewing cases in
installments. But an exception to this norm, Civil Rule 54(b), allows a district court to “direct
entry of a final judgment as to one or more, but fewer than all, claims or parties.” In this way, a
district court can dispatch part of a multi-claim or multi-party case for immediate appellate
review. This exception pays tribute to the reality that the benefits of immediate appeals on
occasion exceed the costs.
Rule 54(b) provides that a district court may deploy this procedure “only if the court
expressly determines that there is no just reason for delay.” These words have two sides. First
and most obviously, they allow an immediate appeal only if “there is no just reason for delay.”
On this score the district court must consider the needs of “sound judicial administration” and
“the equities involved,” and we must allow the district court’s decision to stand unless it amounts
to an abuse of discretion. Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8–10 (1980).
Second, and no less importantly, the words of Rule 54(b) allow an immediate appeal only if the
district court “expressly determines” that no just reason supports delay. If the court does not
make an express determination, we have no power to hear the case, no matter how obvious we
find the absence of just reasons for delay. EJS Properties LLC v. City of Toledo, 689 F.3d 535
(6th Cir. 2012).
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Does Rule 54(b) require still more? Must a district court not just expressly find that there
are no just reasons for delay, but also expressly explain why it reached this conclusion? The
question has prompted a spectrum of responses from the courts of appeals. According to one
view, a district court must explain why it has invoked Rule 54(b), and its failure to do so
invalidates its certification. See, e.g., Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 630
(2d Cir. 1991). According to another, a district court’s failure to set out its reasoning does not
wipe out the certification, but it does eliminate the deference otherwise owed to the district
court’s conclusion that there is no just reason for delay. See, e.g., Bldg. Indus. Ass’n of Superior
California v. Babbitt, 161 F.3d 740, 745 (D.C. Cir. 1998). A third camp holds that unexplained
Rule 54(b) certifications work just like explained ones; the absence of a statement of reasons
neither invalidates the certification nor changes the standard of review. See, e.g., Ackerman v.
FDIC, 973 F.2d 1221, 1224–25 (5th Cir. 1992). Still other cases refine these schools of thought
further.
Our early cases hesitated between annulling the certification and merely withholding
deference. Some of them indeed endorsed both positions at the same time. See, e.g., COMPACT
v. Metro. Gov. of Nashville, 786 F.2d 227, 231 (6th Cir. 1986). Our more recent holdings,
however, have taken the less forgiving position, quashing unexplained certifications in full. See,
e.g., Daleure v. Kentucky, 269 F.3d 540, 543 (6th Cir. 2001); Justice v. Pendleton Place
Apartments, 40 F.3d 139, 141 (6th Cir. 1994).
I for one doubt that we (or for that matter most of the other circuits) have interpreted Rule
54(b) correctly. 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.
No rule of procedure requires district courts to attach explanations to their Rule 54(b)
certifications. The text of Rule 54(b) says nothing about giving reasons. It requires only an
express “determin[ation] that there is no just reason for delay.” That demands an express
conclusion, not an express explanation. See, e.g., Oxford English Dictionary, “determine, v.”
(“to conclude, settle, decide, fix”).
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Context verifies text. The Civil Rules insist on statements of reasons when district courts
issue certain types of orders. Rule 11(c)(6), for example, requires a sanctions order to “explain
the basis for the sanction.” Rule 50(c)(1) requires a court to “state the grounds for conditionally
granting or denying [a] motion for a new trial.” Rule 56(a) instructs a court “to state on the
record the reasons for granting or denying [a] motion [for summary judgment].” Rule 59(d)
requires a court to “specify [its] reasons” when it orders a new trial on its own initiative or on
grounds not pressed by a party. Rule 65(b)(2) requires any temporary restraining order issued
without notice to state both “why [the injury] is irreparable” and “why the order was issued
without notice.” And Rule 65(d) requires any injunction or restraining order to “state the reasons
why it issued.” The presence of reason-giving requirements in other rules highlights the
conspicuous absence of any comparable requirement in Rule 54(b). See Russello v. United
States, 464 U.S. 16, 23 (1983).
Confirming the impropriety of fiddling with the text of Rule 54(b), the Civil Rules use
precise and calibrated requirements to control the contents of district court orders. Some orders
must state their terms (orders appointing masters, Rule 53(b)(2)(E)), while others must state their
terms with “specific[ity]” (injunctions and restraining orders, Rule 65(d)(1)(B)). Some orders
must specify the “time and place” for carrying out the court’s command (subpoenas, Rule
45(a)(1)(A)(iii)), while others must specify the “time, place, manner, [and] conditions” of doing
so (orders for physical and mental examinations, Rule 35(a)(2)(B)). The rules most often do not
superintend the format of orders, but in some situations require an order to state the “civil-action
number” of the lawsuit (subpoenas, Rule 45(a)(1)(A)(ii)), to state the “date and hour” of issuance
(temporary restraining orders issued without notice, Rule 65(b)(2)), to include a particular
caption (letters of request to foreign countries, Rule 28(b)(3)), or to appear “in a separate
document” (judgments, Rule 58(a)). This finely tuned, indeed fastidious, regulation of the
contents of district court orders counts against the imposition of a new requirement nowhere
mentioned in Rule 54(b). See Law v. Siegel, 134 S. Ct. 1188, 1196 (2014).
Reinforcing these points is the legal backdrop against which the Civil Rules operate. An
appellate court reviews a district court’s judgments, not its opinions. If the district court reaches
the right result, we must in general affirm its decision, whether it gave the right reasons, the
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wrong reasons, or no reasons at all. See McClung v. Silliman, 6 Wheat. 598, 603 (1821).
Invalidating a certification because of the inadequacy of the accompanying opinion, in the
absence of direction from the relevant Civil Rules, means departing from this entrenched
background principle—something we should hesitate to interpret the rules to require.
What explains the contrary cases? Most of them observe that requiring district courts to
explain why they found no just reason for delay eases appellate review of their conclusions. See,
e.g., Stockman’s Water Co. v. LLC, 425 F.3d 1263, 1266 (10th Cir. 2005). Some of them add,
more paternalistically, that forcing district judges to show their work helps them reach the right
result in the first place. See, e.g., Harriscom, 947 F.2d at 630.
I appreciate the advantages of requiring explanations, but they do not stand alone. The
requirement adds a new burden to district judges’ already heavy workload. It also creates new
uncertainties for us to sort through. How extensive an explanation must the district court give?
Does the answer vary with the complexity of the litigation? Does it vary with the obviousness of
the arguments on either side? These questions threaten to divert the litigants’ time and money
from the main event (the merits of the case) to what should be sideshows (the validity of the
certification and the court’s authority to reach the merits of the case). Cf. Hertz Corp. v. Friend,
559 U.S. 77, 94 (2010). The absence of a requirement, moreover, does not prevent district courts
from providing explanations on their own.
I do not know whether the benefits of requiring explanations make up for the costs. I do
know that this is neither the time nor the place to do the balancing. Federal law gives the
rulemakers, not appellate judges, the responsibility to “define when a ruling of a district court is
final for the purposes of appeal.” 28 U.S.C. § 2072(c). That makes rulemaking the preferred
way “to define or refine” the prerequisites for pre-judgment appeals. Swint v. Chambers County
Comm’n, 514 U.S. 35, 48 (1995). Not only that, the rulemaking process invites appellate judges,
district judges, law professors and lawyers all to participate. 28 U.S.C. § 2073(c)(1). The
appellate decisionmaking process does not. That makes rulemaking a more reliable vehicle than
appellate decisionmaking for assessing the pros and cons of a new reason-giving requirement.
Until the rulemakers act, we should demand only what the text of Rule 54(b) demands: a
determination, not an explanation.
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Turning to the intermediate position of some courts of appeals, no principle of law
justifies changing the standard of review when the district court fails to explain why there is no
just reason to delay an appeal. For starters, the Civil Rules as just shown allow district courts to
issue summary Rule 54(b) certifications. It seems strange to penalize the district court (by
ratcheting up the standard of review) for doing what the rules entitle them to do.
On top of that, it is well to remember that Rule 54(b) allows immediate review if the
district court determines that there is no just reason for delay. In contrast with other provisions
that make interlocutory review available at the appellate court’s discretion, the rule does not give
us any say in the matter. Cf., e.g., 28 U.S.C. § 1292(b) (giving appellate courts discretion to hear
interlocutory appeals raising controlling questions of law); Fed. R. Civ. P. 23(f) (giving appellate
courts discretion to hear interlocutory appeals from grants and denials of class certification).
When we stop deciding whether the record supports the district court’s conclusion that there is
no just reason for delay, and start deciding for ourselves whether there is no just reason for delay,
we cast ourselves in a leading role even though the rules assign us a supporting part.
Changing the standard of review also makes appellate review more difficult. Far away
from the facts and the daily goings-on of the case, we cannot tell with ease whether bringing a
pre-judgment order here will interfere with the district court’s management of the litigation or
will do an injustice to one of the parties. Despite the handicap, we can still look at the record to
figure out whether it supports the district court’s unexplained certification, just as we look at the
record in every sufficiency-of-the-evidence challenge to figure out whether it supports the jury’s
unexplained verdict. It is one thing for us to decide without the help of a district court opinion
whether the court reached a reasonable result. It is quite another for us to decide without the
help of a district court opinion whether it reached the right result. Intensifying the standard of
review only makes our jobs harder.
A moveable standard of review also creates the same kinds of uncertainties as an absolute
requirement that district courts explain their certifications. Litigants will litigate and appellate
judges will have to judge whether each explanation includes enough detail to justify abuse-of-
discretion review or enough gaps to justify fresh review. That again means everyone spends
more time on the jurisdiction of the court, less on the merits of the case.
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Appellate practice in analogous contexts reinforces these concerns. In setting after
setting, the Supreme Court has expressly refused to withhold deference from a decision because
of the absence of an accompanying statement of reasons. See, e.g., Harrington v. Richter, 131 S.
Ct. 770, 783–85 (2011) (state court adjudication reviewed on habeas corpus); Wainwright v.
Witt, 469 U.S. 412, 431 (1985) (state court factual finding reviewed on habeas corpus); Arizona
v. Washington, 434 U.S. 497, 516–17 (1978) (declaration of a mistrial). It has indeed instructed
us to defer to all sorts of decisions that usually come without statements of reasons. See, e.g.,
Uttecht v. Brown, 551 U.S. 1, 17 (2007) (dismissals of prospective jurors for cause); Old Chief v.
United States, 519 U.S. 172, 174 n.1 (1997) (evidentiary rulings); United States v. Park,
421 U.S. 658, 675 (1975) (jury instructions); Ungar v. Sarafite, 376 U.S. 575, 590–91 (1964)
(denials of continuances). I see no good reason to treat Rule 54(b) certifications any other way
in the absence of further direction from the relevant Rules Committees.
The argument for denying deference is that the absence of an explanation prevents us
from knowing whether the district court carefully considered the relevant factors before issuing
the Rule 54(b) certification. See, e.g., Solomon v. Aetna Life Ins. Co., 782 F.2d 58, 61 (6th Cir.
1986). Yet district judges take the same oaths to apply the law that we do. 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. See Washington, 434 U.S. at 516–17 & n.39. Judges, appellate as well as trial, have
good reasons for sometimes declining to provide statements of reasons, such as “concentrat[ing]
[their] resources on the cases where opinions are most needed.” Richter, 131 S. Ct. at 784.
I do not deny the obvious. 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. Yet this reality does not change the relevant legal standard. Whether or not the district
court explained its conclusion that the case justifies immediate review, the issue for the appellate
court remains the reasonability of the conclusion, not the adequacy of the reasoning. See
Hennon v. Cooper, 109 F.3d 330, 335 (7th Cir. 1997).
All in all, I do not mean to discourage district courts from explaining their Rule 54(b)
certifications. Far from it. I acknowledge the invaluable help we get from a district court’s
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reasoning. Helpful, however, does not mean required—at least not until the rulemakers say so.
Yielding to our contrary precedents, I concur in the court’s order dismissing this appeal.