Procedure

How (or how not) to fix an erroneous damages award in federal court

Last week, the U.S. Fifth Circuit issued a valuable opinion on how to fix erroneous awards of damages in the federal system. As explained by the court, “the Federal Rules of Civil Procedure provide several ways for a federal litigant to seek a different damages figure than that which the jury awards. And [plaintiff] chose exactly none of them.” Acadian Diagnostic Labs., LLC v. Quality Toxicology, LLC, No. 19-30320, slip op. at 10 (5th Cir. July 13, 2020). The court’s opinion is a handy summary of the motions available in federal court to address errors in the district court, before the cement dries on the final judgment.

The case was a suit for breach of two contracts involving payment for testing lab specimens. Before trial, Judge Brade (M.D. La.) rendered partial summary judgment in the plaintiff’s favor on one of the contracts, finding that the defendant owed damages for 2,027 of the 2,679 contested specimens. As to the 2,027 undisputed samples, Judge Brady concluded that the defendant owed the plaintiff $1,017,528.20, less $73,134.34 already paid (the difference is $944,393.86). The judge apparently left for the jury the question of damages for the remaining 652 specimens.

The jury returned a verdict in plaintiff’s favor on both contracts. For the contract on which Judge Brady had granted partial summary judgment, the jury awarded damages of $269,706.50. The verdict form did not specify whether this figure was for all 2,679 specimens or just the 652 specimens on which Judge Brady had denied summary judgment.

Shortly after the verdict, Judge Brady died. Fifteen months later, another judge entered final judgment for plaintiff on the jury verdict. The final judgment didn’t mention Judge Brady’s prior summary judgment or his damages calculation for the 2,027 undisputed specimens.

Both sides appealed. In its cross-appeal, the plaintiff argued that the $269,706.50 award was too low and should be amended to reflect total damages of over $1.3 million or, alternatively, at least the $1,017,528.20 found to be owed by Judge Brady’s partial summary judgment.

The Fifth Circuit rejected the plaintiff’s argument and affirmed the final judgment. The court began by citing the Seventh Amendment, which prevents an appellate court from simply increasing the damages awarded in a verdict. The court then went on to list the motions available in the trial court to head off or correct an erroneous verdict:

  • A pre-verdict motion for judgment as a matter of law under Fed. R. Civ. P. 50(a)
  • If a pre-verdict motion for JMOL has been filed, a renewed post-verdict motion for judgment as a matter of law under Fed. R. Civ. P. 50(b)
  • A motion for new trial (in this instance, a new trial on damages) under Fed. R. Civ. P. 59(a)

Because the plaintiff failed to file any of these motions in the district court, it forfeited its ability to seek appellate review of the jury verdict.

The Fifth Circuit went on to describe motions that were available to address the inconsistency between Judge Brady’s partial summary judgment for $1,017,528.20 and the final judgment awarding only $269,706.50:

  • A request that the judgment be set out in a separate document under Fed. R. Civ. P. 58(d). The plaintiff could have used this rule to request entry of a final judgment reflecting both the jury verdict and the partial summary-judgment opinion, but failed to do so.
  • Within 28 days after entry of the final judgment, a motion to alter or amend under Fed. R. Civ. P. 59(e). This rule, the Fifth Circuit pointed out, is designed to enable the district court to fix its own errors and, if successful, can make an appeal unnecessary.
  • Even after the time for a Rule 59(e) motion, a motion for relief from the judgment under Fed. R. Civ. P. 60(b). Among the grounds for this motion is “mistake,” including a judicial mistake.

But because the plaintiff failed to use any of these procedures to address the inconsistency in the district court, the plaintiff forfeited its right to raise the inconsistency on appeal.


Not too late for a 1915(B) certification

Let’s say that a trial court renders a judgment dismissing only some of a party’s claims, without designating the judgment as final under La. Code Civ P. art. 1915(B). The aggrieved party appeals anyway, and the court of appeal renders a judgment dismissing the appeal for lack of jurisdiction because the judgment needs but lacks an art. 1915(B) designation of finality. Can the appeal be salvaged?

Yes, it can, if the appellant acts promptly. That’s according to the Louisiana Supreme Court’s decision today in Interdiction of Gambino, 2020-312 (La. 6/3/20). In that case, the court of appeal rendered judgment dismissing the appeal on December 11, 2019. Eight days later, the district court signed an order designating the judgment appealed from as final under art. 1915(B). The Louisiana Supreme Court found that the district court’s order was “issued prior to finality of the dismissal of the appeal,” presumably because the order was issued within the 14-day time to apply for rehearing. The Court therefore held that the district court’s order “cured any jurisdictional defect in the appeal.” The Court reversed dismissal of the appeal, directed the court of appeal to supplement the record with the district court’s 1915(B) order, and consider the merits of the appeal.

My original title for this post was “Never too late for a 1915(B) certification,” but that would have been overstating Gambino. Had the time expired to apply for rehearing in the court of appeal before the district court’s 1915(B) order, the result might have been different. Arguably “prior to finality” could include not only the 14-day time to apply for rehearing, but also the 30-day time to apply to the Louisiana Supreme Court for a writ. See La. Code Civ. P. art. 2166. But once the 14-day time expires, the court of appeal cannot change its judgment. So if you ever find yourself in a similar spot, better to act while the court of appeal still has the power to act. (Of course, the best course is to nail down appellate jurisdiction before taking the appeal.)

Hat tips to Thomas Flanagan and Jeff Richardson for spotting this one.


Of costs and precedent in the U.S. 5th Circuit

Last week, the U.S. Fifth Circuit issued an interesting decision: City of San Antonio v. Hotels.com, L.P., No. 19-50701 (5th Cir. May 11, 2020). Two takeaways from this decision:

First, the decision reminds us that the Fifth Circuit’s unpublished decisions are binding precedents if rendered before January 1, 1996. This rule is established by Weaver v. Ingalls Shipbuilding, Inc., 282 F.3d 357, 359 (5th Cir. 2002), interpreting 5th Cir. R. 47.5.3

Second, when a defendant has prevailed in a Fifth Circuit appeal, the defendant is entitled to an award of costs in the district court under Fed. R. App. P. 39(e), including the premium for the supersedeas bond, if the judgment is silent on costs. In this case, where the underlying judgment in the prior appeal was worth over $84 million, the bond premium was over $2 million. Under Rule 39(e)(3), the bond cost is taxable in the district court. In awarding the $2 million bond cost, the district court felt itself bound by an unreported Fifth Circuit decision, In re Sioux Ltd. Securities Litigation, No. 87-6167, 1991 WL 182578 (5th Cir. Mar. 4, 1991). The Fifth Circuit affirmed, holding that the district court applied the correct standard—meaning the district court has no discretion to deny awarding the cost of the appeal bond. The Fifth Circuit held that, in the prior appeal, the defendants were the prevailing party for purposes of Fed. R. App. P. 39(a)(3) because the Fifth Circuit’s prior order “vacat[ing]” the district court’s judgment was tantamount to a reversal. And because the Fifth Circuit did not “order otherwise” in the prior appeal, the default in Fed. R. App. P. 39(a)(3) applied, requiring taxation of costs against the appellee. And under the Fifth Circuit’s unreported precedent in Sioux Ltd., the appellants were entitled in the district court to an award of appeal costs under Rule 39(e)(3), including the appeal-bond premium.


U.S. 5th Circuit unlocks the “finality trap”

In a recent en banc decision, the U.S. Fifth Circuit addressed the “finality trap,” with the majority holding that a designation of finality under Fed. R. Civ. P. 54(b) is a way (not the only way) out of the trap. Williams v. Taylor Seidenbach, Inc., No. 18-31159, 202o WL 2111307 (5th Cir. May 4, 2020) (en banc).

What is this “finality trap”? As describes in Williams, this is what happens when a plaintiff sues two defendants, dismisses one without prejudice, and litigates against the other to a judgment on the merits. The thought is that a dismissal without prejudice is not really a dismissal because it doesn’t foreclose further litigation against the dismissed defendant. Therefore, the judgment on the merits isn’t “final” and appealable under the federal rules because it doesn’t dispose of all claims.

This is what happened to the Williams plaintiffs. The original plaintiff sued several defendants, alleging that he contracted mesothelioma through asbestos exposure. The defendants removed the case to the federal court, Eastern District of Louisiana, where it was subsumed into multi-district litigation in Pennsylvania. While the case was in the MDL, the original plaintiff died, and his children were substituted as plaintiffs. The court granted summary judgments dismissing the plaintiffs' claims against some (not all) defendants, and later remanded the case to the E.D. La. After remand, the plaintiffs moved to voluntarily dismiss the four remaining plaintiffs. Their motion sought dismissal of one defendant with prejudice but didn’t specify whether the other three dismissals were with or without prejudice. The judgment granting their motion accordingly dismissed one defendant with prejudice and dismissed the other three without specifying whether the dismissal was with or without prejudice. The plaintiffs then appealed from the summary judgments. While their appeals were pending, they filed a motion in the district court for final judgment under Rule 54(b). The defendant appellees moved the Fifth Circuit to dismiss the appeal for lack of a final judgment. The Fifth Circuit granted their motion and dismissed the appeal. Williams v. Taylor-Seidenbach, Inc., 748 Fed. App’x 584 (5th Cir. 2018).

Back in the E.D. La., the plaintiffs got their Rule 54(b) judgment, and took another appeal. A three-judge panel again dismissed the appeal for lack of jurisdiction. Williams v. Taylor Seidenbach, Inc., 935 F.3d 358 (5th Cir. 2019). The panel reasoned that, because the other defendants had been voluntarily dismissed, the district court lacked authority to render a Rule 54(b) judgment. In a concurring opinion, Judge Haynes suggested that “[w]e should take this case en banc to correct this egregious mess and make it clear that when we have deemed a case ‘not final’ for purposes of appeal because of a dismissal without prejudice, then the district court regains jurisdiction to ‘fix’ the lack of finality either by granting a Rule 54(b) motion or revising the dismissal ‘without prejudice’ to render it ‘with prejudice.’” 935 F.3d at 361–62 (Haynes, J., concurring). The plaintiffs petitioned for en banc rehearing, which the Fifth Circuit granted. Williams v. Taylor Seidenbach, Inc., 941 F.3d 1183 (5th Cir. 2019).

On rehearing, a majority of the en banc court held that entry of partial final judgment under Rule 54(b) was one way out of the finality trap. The majority held that the court had appellate jurisdiction and returned the case to the panel for a decision on the merits. The majority suggested other “tools to avoid that alleged ‘trap,’” including amendment of the complaint to remove claims or parties under Fed. R. Civ. P. 15(a) and severance of parties under Fed. R. Civ. P. 21.


La. 1st Cir: Judgment must be signed by the presiding judge

Today, the Louisiana First Circuit held that a judgment is null when signed by a judge other than the judge who presided over the hearing or trial. In re M.L.M., 2019-1030 (La. App. 1 Cir. 4/23/20). Although the case was allotted to Judge A, a minute entry showed that Judge B was “standing in” for Judge A at the hearing and rendered the ruling under appeal. The judgment submitted by counsel had Judge B’s name typed under the signature line, but it was signed by Judge A. The First Circuit vacated the judgment. The First Circuit relied on La. Code Civ. P. art. 1911, which requires every final judgment to be signed, and interpreted article 1911 to mean that the judge before whom the matter was tried must sign the judgment. And absent the signature of the judge who actually presided, “there is no final judgment.”

If this post gives you a sense of deja vu, that may be because the Louisiana Fourth Circuit recently decided the same issue in the same way. For a discussion of the Fourth Circuit case on this issue, see this April 10 blog post.

Hat tip to my colleague Jeff Richardson.


Judgment must be signed by the presiding judge

A recent decision by the Louisiana Fourth Circuit reminds us that, to be valid, a judgment must be signed by the judge who presided over the trial or hearing. Reaney-Gates v. Mendoza, 2019-0912 (La. App. 4 Cir. 2/19/20), — So. 3d —, 2020 WL 830823.

Here’s what happened: Following an automobile accident, the plaintiffs sued the other driver, the other driver’s insurer, and their own UM insurers. The case was assigned to Judge A. The UM insurers filed cross-motions for summary judgment, and Judge A set signed the order setting the motion for hearing. But when the hearing date arrived, the motion was argued before and decided by Judge B, who granted one motion and denied the other. Counsel then prepared a form of judgment and submitted it to Judge A. The judgment itself recited that Judge B had presided in place of Judge A. Judge A signed the judgment, and the losing UM insurer appealed.

The Fourth Circuit dismissed the appeal without prejudice because of the lack of an appealable judgment. The court cited La. Code Civ. P. art. 1911, which requires a judgment to be signed by the judge, and cited caselaw interpreting “the judge” in article 1911 to mean the judge who actually presided over the the hearing. The Fourth Circuit remanded the case to the trial court to enable Judge B, who actually presided at the summary-judgment hearing, to render and sign the written judgment.


Time to appeal a preliminary injunction

Under La. Code Civ. P. art.3612, an order “relating to” a preliminary injunction can be appealed within 15 days “from the date of the order or judgment.” Yesterday, the en banc First Circuit held that the 15 days starts running when the judgment is signed, not when the clerk mails notice of judgment. Stevens Constr. Co. v. St. Tammany Fire Protection Dist. No. 1, 2019-CA-0431 (La. App. 1 Cir. 1/16/20), — So. 3d —. The court reasoned that under art. 3612, the 15-day delay starts with “the date of the order or judgment,” not the date of notice of judgment. The court further held that, under art. 3612, a motion for new trial does not interrupt the 15-day delay to appeal a preliminary injunction.

Note that these rules, drawn from art. 3612(C), apply only to an appeal from a preliminary injunction. An appeal from a final injunction is subject to the same rules that govern an appeal from any other final judgment. See La. Code Civ. P. art. 3612(D).

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p.s. Hat tip to my colleague Sara Valentine for spotting this case.


When to appeal denial of a motion to lift an automatic bankruptcy stay

Let’s say you represent a creditor suiting a debtor in state court, and the debtor files for bankruptcy, triggering an automatic stay of your state-court suit. You file a motion in bankruptcy court to lift the stay, but the bankruptcy court denies your motion. Is the denial of your motion appealable, or must appeal await a final adjudication of your client’s claim in bankruptcy court. Today, the U.S. Supreme Court answered that question, holding that the order denying a motion to lift an automatic --bankruptcy stay is immediately appealable. Ritzen Group, Inc. v. Jackson Masonry, LLC, No. 18-938 (Jan. 14, 2020).

In Ritzen, the creditor failed to immediately appeal denial of its motion to lift the stay, instead attempting to appeal that order after the bankruptcy court ruled on the merits of the creditor’s claim against the bankrupt debtor. The district court and Sixth Circuit held that the appeal was untimely as to the order denying the motion to lift the stay, concluding that the appeal should have been taken within 14 days after entry of that order. See 28 U.S.C. § 158(c)(2) and Fed. R. Bankr. P. 8002(a). The Supreme Court agreed, holding that a “stay-relief adjudication” is a “proceeding ... apart from proceedings on the merits of creditors’s claims.”


What happens when a partially incomplete judgment is appealed?

Let’s say a party appeals a trial-court judgment that is partially incomplete. For example:

  • The judgment awards plaintiffs “$4,733, along with any penalties and interest, for the amount of income tax liability Plaintiffs incurred,” but fails to specify the amounts of penalties and interest.
  • The judgment awards a worker’s compensation claimant “[a]ll medical bills and expenses not paid by his general health insurer” and “[a]ll out of pocket medical expenses incurred for the lumbar spine which are part of the evidence admitted at trial,¨ but fails to specify the amounts of these awards.
  • The judgment awards “$16,420.00 ... together with reasonable attorney’s fees,” but fails to specify the amount of attorney’s fees.

Each of these judgments is technically unappealable because part of the relief awarded is indefinite. But if the judgment comes up on appeal anyway, what’s an appellate court to do with it? As shown in some recent decisions, this question has bedeviled the First Circuit. Last month, the issue came up in two cases that went en banc, with no majority agreement on what to do.

First, some history. About two years ago, the issue came up in Duet v. Landry, 2016-0575 (La. App. 1 Cir. 3/6/17), 2017 WL 900066, 2017 La. App. Unpub. LEXIS 77. The Duet judgment awarded “4,733, along with any penalties and interest, for the amount of income tax liability Plaintiffs incurred.” Because the judgment failed to specify the amount of penalties and interest awarded, the court found the judgment indefinite and therefore not final. So the court dismissed the appeal without prejudice and remanded the case to the district court for further proceedings, including entry of a final judgment setting forth the amounts of penalties and interest. The panel consisted of judges Welch, Crain, and Holdridge.

About three months later, a five-judge panel of the First Circuit faced the same issue in Crockerham vl Weyerhaeuser Holden Wood Products, 2016-0331 (La. App. 1 Cir. 6/2/17), 223 So. 3d 533, a worker’s compensation case. The judgment in the claimant’s favor included awards for “[a]ll medical bills and expenses not paid by his general health insurer” and “[a]ll out of pocket medical expenses for the lumbar spine which are part of the evidence admitted at trial ....” The panel agreed that the failure to specify the amounts of these awards made the judgment indefinite and therefore not final, but the panel split on what to do about that. A two-judge plurality (Whipple and Guidry) vacated the parts of the judgment that were indefinite and not final, and decided the merits of the rest of the judgment. Remarkably, in reaching this decision, the plurality noted but declined to follow Duet v. Landry. See Crockerham, 2016-0331, pp. 16–17 n. 6. Judge Pettigrew concurred without giving reasons. Judge Holdridge—who was on the Duet panel—dissented, citing Duet. Judge McClendon also dissented, though on the merits and not on appealability. 

Fast-forward to December 2018, when the First Circuit rendered a pair of en banc decisions involving the same procedural issue. The first (and shorter) of the pair is Advanced Leveling & Concrete Solutions v. Lathan Co., 2017-1250 (La. App. 1 Cir. 12/20/18), 2018 WL 6716997, 2018 La. App. LEXIS 2564 (en banc). The judgment in Advanced Leveling awarded $16,420.00 ... together with reasonable attorney’s fees,” without specifying the amount of attorney’s fees. It appears that the court went en banc in Advanced Leveling to resolve the conflict between Duet and Crockerham. But the conflict may have remained unresolved because of no majority decision. A five-judge plurality (Guidry, McClendon, Welch, Crain, and Penzato) subscribed to an opinion overruling Crockerham and dismissing the appeal. Judge Holdridge concurred in the result, noting that the judgment had not been designated as final under La. Code Civ. P. art. 1915(B). Chief Judge Whipple (joined by Judge Higganbotham) dissented for reasons stated in Crockerham. Judges Pettigrew, Theriot, and Chutz dissented without giving reasons.

The next day, an en banc First Circuit rendered a judgment in ABS Services, Inc. v. James Construction Group, LLC, 2016-0705 (La. App. 1 Cir. 12/21/18), 2018 WL 6718889, 2018 La. App. LEXIS 2578. ABS was set for oral argument before the en banc court specifically to resolve the conflict between Duet and Crockerham: i.e., “whether or not the award of ‘reasonable attorney’s fees’ in an otherwise final judgment renders the judgment, in whole or in part, nonappealable as uncertain or indefinite in nature.” But the appellee found a procedural way around this issue, filing  motion for limited remand for the sole purpose of allowing the trial court to designate the judgment as final under La. Code Civ. P. art. 1915(B). The First Circuit granted the order, the trial court signed the 1915(B) order, and the case returned to the First Circuit to be decided on the merits. (Unfortunately, a majority of the court could not agree on the resolution of all issues in this complex case—that is a topic for another post.) Judge Crain dissented “because this court does not have appellate jurisdiction to consider the merits of this appeal,” citing the previous day’s decision in Advanced Leveling. He further opined that the art. 1915(B) certification did not cure the defect in the judgment.

What will happen in the next First Circuit case with this issue? I don’t know. The lesson to be learned here is to avoid the issue. Try to avoid having a judgment signed that leaves the amount of any relief to be determined later. Otherwise, try to include in the judgment a designation of finality under La. Code Civ. P. art. 1915(B). If you go the latter route, ask the judge to state for the record the reasons why the judgment should be immediately appealable.