An Early Roll of the Dice: Appeal Under Conditional Finality in Federal Court

Abstract

Imagine that a plaintiff files a complex civil lawsuit in federal court with several distinct claims for relief involving closely related facts and legal issues. One of the claims is worth significantly more than the peripheral claims, so much so that trying the peripheral claims without the primary claim would not be worth it to the plaintiff. Early in the litigation process, the district court judge in a narrow decision issues an order adversely terminating the plaintiff’s primary claim. At this point, the plaintiff faces a stark choice. The plaintiff may proceed to trial on its peripheral claims and hope to overturn the judge’s order after trial on appeal or the plaintiff may dismiss its peripheral claims and immediately appeal the judge’s order.

Under the traditional analysis, if a plaintiff chooses to dismiss its peripheral claims and immediately appeal, the dismissal of the peripheral claims must be with prejudice to produce a final judgment for appeal. If the plaintiff dismisses the peripheral claims with prejudice, even if the plaintiff wins its appeal on the adversely terminated primary claim, the peripheral claims are lost forever.

Fortunately, the doctrine of conditional finality, or as it is sometimes referred to conditional manufactured finality or conditional prejudice dismissal, represents a novel solution to this problem. Under conditional finality, after the adverse termination of its primary claim, a plaintiff has the option to conditionally dismiss its peripheral claims and immediately appeal. A plaintiff is able to recapture the peripheral claims it conditionally dismissed, if and only if, the plaintiff wins a reversal on appeal of the order that terminated its primary claim. Because, under conditional finality, the consequence of losing on appeal is the termination of the case, a plaintiff is forced to weigh the risks versus the potential benefits of an expedited appeal.

This Comment argues that conditional finality produces cost savings for parties, improves judicial efficiency, and provides more accurate legal outcomes, and that a nationally uniform rule change should be adopted allowing for appeal under conditional finality. Part II of this Comment examines the functions and the limitations of the final judgment rule, Rule 54(b), and interlocutory appeals——the traditional methods of obtaining appellate review. Part III explains how a party may employ the rules of procedure to manufacture a final judgment to obtain early appellate review. Part IV explores the various approaches that courts of appeals take to the issue of manufactured finality. Part V analyzes the costs and benefits of allowing appeal under the doctrine of conditional finality by utilizing a basic economic model. Finally, Part VI examines proposals for change to the rules governing appellate jurisdiction, including the recent consideration of conditional finality by the federal rules advisory committees. This Comment then concludes by suggesting a proposed amendment to the rules of procedure to allow for appeal under conditional finality.