James v. Price Stern Sloan, Inc.

• Decision Date: 12 March 2002
• Docket Number: No. 00-35321.,00-35321.
• Citation: 283 F.3d 1064
• Parties: Robin JAMES, a married person in her separate capacity, Plaintiff-Appellant, v. PRICE STERN SLOAN, INC., a Delaware corporation; Penguin Putnam, Inc., a Delaware corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

283 F.3d 1064

Robin JAMES, a married person in her separate capacity, Plaintiff-Appellant, v. PRICE STERN SLOAN, INC., a Delaware corporation; Penguin Putnam, Inc., a Delaware corporation, Defendants-Appellees.

No. 00-35321.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 12, 2001.

Filed March 12, 2002.

John P. Mele, Ryan, Swanson & Cleveland, PLLC, Seattle, WA, argued the cause for the plaintiff-appellant.

David R. Goodnight, Dorsey & Whitney LLP, Seattle, WA, argued the cause for the defendants-appellees; Joseph C. Klein assisted on the brief.

Appeal from the United States District Court for the Western District of Washington; Robert S. Lasnik, District Judge, Presiding. D.C. No. CV-99-00456-RSL.

Before: KOZINSKI and GOULD, Circuit Judges, and SCHWARZER, Senior District Judge.^*

KOZINSKI, Circuit Judge:

Robin James is a successful artist. For five years, from 1977 to 1982, she illustrated a series of children's books published by Price Stern Sloan, Inc.¹ As the books became popular, the originals of James's illustrations rose in value. Years later, James requested that Price Stern return her original artwork. Price Stern complied by returning all the artwork that it could locate. Having eventually returned about half of the illustrations, Price Stern informed James that the remaining artwork had been irretrievably lost.

James sued Price Stern, claiming compensation for the lost artwork. Price Stern countered by arguing that the contracts governing James's work between 1977 and 1982 assigned the ownership of the artwork to Price Stern. The district court granted Price Stern's motion for partial summary judgment with respect to claims related to those contracts. James appeals and we must determine whether we have jurisdiction.²

The partial summary judgment disposed only of the claims brought under the contracts concluded between 1977 and 1982; it did not adjudicate claims related to two post-1982 book series.³ After the district court granted partial summary judgment for Price Stern, James petitioned for dismissal of the remaining claims. The district court granted the motion, dismissed these claims without prejudice and entered what on its face appears to be a final judgment against James. The question we must answer is whether the judgment was, indeed, final.

The judgment summarized the court's two interim dispositions: the partial summary judgment for Price Stern and the dismissal of James's remaining claims. As to form, then, the judgment comports with the requirement of finality by disposing of all pending claims; after entry of this judgment, James had "no claims left for the district court to hear." Horn v. Berdon, Inc. Defined Benefit Pension Plan, 938 F.2d 125, 127 n. 1 (9th Cir.1991).

Price Stern argues, however, that James's appeal lacks finality because dismissal of some of James's claims without prejudice leaves her free to resurrect these claims on remand if her appeal is successful. Relying on Dannenberg v. Software Toolworks, 16 F.3d 1073 (9th Cir.1994), and Cheng v. Commissioner, 878 F.2d 306 (9th Cir.1989), Price Stern argues that a losing party's non-prejudicial dismissal of some claims is invariably "an impermissible attempt to `manufacture finality'" as to the remaining claims.

We start by observing that there is no evidence James attempted to manipulate our appellate jurisdiction by artificially "manufacturing" finality. We have always regarded evidence of such manipulation as the necessary condition for disallowing an appeal where a party dismissed its claims without prejudice. See Dannenberg, 16 F.3d at 1076-77; Cheng, 878 F.2d at 310-11; Fletcher v. Gagosian, 604 F.2d 637, 638-39 (9th Cir.1979). In Dannenberg and Cheng, finality was achieved by a stipulation that if the judgment is reversed on appeal, appellant would be permitted to reinstate the dismissed claims. Dannenberg, 16 F.3d at 1074; Cheng, 878 F.2d at 308-09. The stipulation kept the dismissed claims on ice while appeal was taken from a partial judgment, circumventing the final judgment rule and arrogating to the parties the gatekeeping role of the district court.

Admittedly, a dismissal of some claims without prejudice always presents a possibility that the dismissing party would attempt to resurrect them in the event of reversal. But, absent a stipulation such as that in Dannenberg, plaintiff assumes the risk that, by the time the case returns to district court, the claim will be barred by the statute of limitations or laches. Such a unilateral dismissal is therefore much less likely to reflect manipulation. The court's approval of the motion is usually sufficient to ensure that everything is kosher. Of course, the other party's failure to oppose the dismissal may be collusive (i.e. the result of a side agreement not brought to the court's attention), but Price Stern mentions no such agreement, and it would surely be aware of one if it did exist.

Dannenberg itself emphasized this distinction, drawing a contrast with Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530 (9th Cir.1984). In Robertson, we allowed an appeal where, after the district court partially dismissed his complaint, the plaintiff voluntarily dismissed the remaining counts without prejudice. Id. at 533. As Dannenberg explained, "[i]n Robertson, [unlike] in this case, the claims disappeared from the district court once the plaintiff dismissed them. Here, as in Cheng, the parties stipulated to revive the dismissed claims in the event of a reversal on appeal. In essence, the claims remained in the district court pending a decision by this court. We see this as a clear, and impermissible, attempt to circumvent Rule 54(b)." Dannenberg, 16 F.3d at 1077.⁴ The case for finding jurisdiction here is arguably even stronger than in Robertson. While in Robertson the dismissal was accomplished without the district court's approval, under Rule 41(a)(1), Robertson, 749 F.2d at 533, James's dismissal was pursuant to court order under Rule 41(a)(2). The district court's participation in the process is an additional factor alleviating concerns about a possible manipulation of the appellate process.

Our situation also differs from Fletcher v. Gagosian, 604 F.2d 637 (9th Cir.1979). In Fletcher, after the district court "categorically refused" to grant a Rule 54(b) severance, plaintiffs dismissed the remaining claims without informing the district court, filed a simultaneous appeal and, before the appeal was even considered, "refile[d] the dismissed portion as a separate lawsuit." Id. at 638-39. Not surprisingly, we found manipulation. Finding "nothing in th[e] record purporting to be a judgment and nothing indicating that the district court intended to have a judgment entered," we held that a party may not "convert[] what had been an unappealable order into an appealable order, without the district judge's participation and perhaps without his personal knowledge." Id. at 638. Our case presents none of the concerns identified in Fletcher. James sought the district court's permission to dismiss the remaining claims, accepted the court's condition that the result of discovery be available in any subsequent proceeding between the parties, and did not attempt to press the claims in a different federal lawsuit simultaneously with the appeal.⁵

Our case is even farther removed from two other cases discussed in Dannenberg, Huey v. Teledyne, Inc., 608 F.2d 1234 (9th Cir.1979), and Ash v. Cvetkov, 739 F.2d 493 (9th Cir.1984). These cases involved, not final judgments severable for immediate appeal pursuant to Rule 54(b), but interlocutory orders — a denial of class certification, Huey, 608 F.2d at 1236, and an order quashing writs of execution, Ash, 739 F.2d at 495 — that could be appealed only if certified by the district court under 28 U.S.C. § 1292(b) as raising an important and unsettled question of law whose disposition will advance the ongoing proceedings. The appellant in those cases — the party objecting to the interlocutory order — simply refused to prosecute the case, which eventually resulted in a dismissal. On appeal from that dismissal, appellants sought to have us review the interlocutory orders in the course of the appeal.

This was unquestionably a manipulation of appellate process: "If a litigant could refuse to proceed whenever a trial judge ruled against him, wait for the court to enter a dismissal for failure to prosecute, and then obtain review of the judge's interlocutory decision, the policy against piecemeal litigation and review would be severely weakened." Huey, 608 F.2d at 1239 (quoting Sullivan v. Pac. Indem. Co., 566 F.2d 444, 445 (3d Cir.1977)). We reaffirmed this position in Ash, where we held that "the sufferance of dismissal without prejudice because of failure to prosecute is not to be employed as an avenue for reaching issues which are not subject to interlocutory appeal as of right." Ash, 739 F.2d at 497. Huey and Ash, like Dannenberg and Fletcher, turned on manipulation and are therefore inapposite.

Price Stern argues that James did engage in manipulation because she engineered an end-run around the procedures specified in Rule 54(b). This rule enables the district court to sever a partial final judgment for an immediate appeal.⁶ Price Stern argues that, because James is really appealing the partial summary judgment, she may do so only if this judgment is issued pursuant to Rule 54(b).

There is no evidence, however, that James attempted to circumvent Rule 54(b), or that the final judgment issued by the district court undermines the Rule 54(b) procedures. The record shows that James requested — and the district court intended to grant — a final, appealable judgment. In her motion to dismiss, James stated that "[a] federal court trial on the few remaining pieces of artwork would not be an efficient use of time and resources, given the small amount of artwork actually involved," and that "[o]nce...