FIRESTONE TIRE & RUBBER CO. V. RISJORD

• Decision Date: 13 January 1981
• Citation: 449 U. S. 368
• Court: U.S. Supreme Court

Firestone Tire & Rubber Co. v. Risjord

No. 79-1420

Argued November 12, 1980

Decided January 13, 1981

449 U.S. 368

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

Respondent is lead counsel for the plaintiffs in four consolidated product liability suits in Federal District Court against petitioner and other manufacturers. Petitioner moved to disqualify respondent from further representation of the plaintiffs because of an alleged conflict of interest arising from the fact that petitioner's liability insurer was also an occasional client of respondent's law firm. Petitioner argued that respondent's representation of the insurer would give him an incentive to structure the plaintiffs' claims for relief so as to enable the insurer to avoid any liability, thus increasing petitioner's own potential liability. In accordance with the District Court's order, respondent obtained the consent of both the plaintiffs and the insurer to his continuing representation, and the court then allowed him to continue his representation of the plaintiffs. Petitioner filed a notice of appeal pursuant to 28 U.S.C. § 1291, which vests the courts of appeals with "jurisdiction of appeals from all final decisions of the district courts . . . except where a direct review may be had in the Supreme Court." The Court of Appeals held that district court orders denying disqualification motions were not immediately appealable under § 1291, but, because it was overruling prior cases, the court made its decision prospective only and, on the merits, affirmed the District Court's order permitting respondent to continue representing the plaintiffs.

Held:

1. Orders denying motions to disqualify the opposing party's counsel in a civil case are not appealable final decisions under § 1291. Such an order does not fall within the "collateral order" exception of Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541, to the requirement that all appeals under § 1291 must await final judgment on the merits in the underlying litigation. Petitioner has made no showing, as required under the Cohen doctrine of immediately appealable "collateral orders," that an order denying disqualification is effectively unreviewable on appeal from a final judgment on the merits. The propriety of a district court's denial of a disqualification motion will often be difficult to assess until its impact on the underlying litigation may be evaluated, which is normally after final judgment, and should the court of appeals conclude

Page 449 U. S. 369

after the trial has ended that permitting continuing representation was prejudicial error, it would retain its usual authority to vacate the judgment appealed from and order a new trial. P P. 373-378.

2. The Court of Appeals, after properly concluding that the District Court's order was not immediately appealable under § 1291, erred in reaching the merits of the District Court's order. The finality requirement of § 1291 is jurisdictional in nature. If an appellate court finds that the order from which a party seeks to appeal does not fall within the statute, its inquiry is over. A court lacks discretion to consider the merits of a case over which it is without jurisdiction, and thus a jurisdictional ruling may never be made prospective only. P P. 379-380.

612 F.2d 377, vacated and remanded.

MARSHALL, J., delivered the opinion of the Court, in which BRENNAN, STEWART, WHITE, BLACKMUN, POWELL, and STEVENS, JJ., joined. REHNQUIST, J., filed an opinion concurring in the result, in which BURGER, C.J., joined, post, P. 380.

JUSTICE MARSHALL delivered the opinion of the Court.

This case presents the question whether a party may take an appeal, pursuant to 28 U.S.C. § 1201, [^{Footnote 1}] from a district court order denying a motion to disqualify counsel for the opposing party in a civil case. The United States Court of Appeals for the Eighth Circuit held that such orders are not appealable, but made its decision prospective only, and therefore

Page 449 U. S. 370

reached the merits of the challenged order. We hold that orders denying motions to disqualify counsel are not appealable final decisions under § 1291, and we therefore vacate the judgment of the Court of Appeal and remand with instructions that the appeal be dismissed for lack of jurisdiction.

I

Respondent is lead counsel for the plaintiffs in four product liability suits seeking damages from petitioner and other manufacturers of multi-piece truck tire rims for injuries caused by alleged defects in their products. [^{Footnote 2}] The complaints charge petitioner and the other defendants with various negligent, willful, or intentional failures to correct or to warn of the supposed defects in the rims. Plaintiffs seek both compensatory and exemplary damages. App. 6-72.

Petitioner was at all relevant times insured by Home Insurance Co. (Home) under a contract providing that Home would be responsible only for some types of liability beyond a minimum "deductible" amount. Home was also an occasional client of respondent's law firm. [^{Footnote 3}] Based on these facts, petitioner, in May, 1979, filed a motion to disqualify respondent from further representation of the plaintiffs. Petitioner argued that respondent had a clear conflict of interest because his representation of Home would give him an incentive to structure plaintiffs' claims for relief in such a way as to enable the insurer to avoid any liability. This, in turn, petitioner

Page 449 U. S. 371

argued, could increase its own potential liability. Home had, in fact, advised petitioner in the course of the litigation that its policy would cover neither an award of compensatory damages for willful or intentional acts nor any award of exemplary or punitive damages. [^{Footnote 4}] The District Court entered a pretrial order requiring that respondent terminate his representation of the plaintiffs [^{Footnote 5}] unless both the plaintiffs and Home consented to his continuing representation. [^{Footnote 6}] Id. at 157, 160.

In accordance with the District Court's order, respondent filed an affidavit in which he stated that he had informed both the plaintiffs and Home of the potential conflict, and that neither had any objection to his continuing representation of them both. He filed supporting affidavits executed by the plaintiffs and by a representative of Home. Because he had satisfied the requirements of the pretrial order, respondent was able to continue his representation of the plaintiffs. Petitioner objected to the District Court's decision to permit respondent to continue his representation if he met the stated

Page 449 U. S. 372

conditions, and therefore filed a notice of appeal pursuant to 28 U.S.C. § 1291. [^{Footnote 7}]

Although it did not hear oral argument on the appeal, the Eighth Circuit decided the case en banc, and affirmed the trial court's order permitting petitioner to continue representing the plaintiffs. [^{Footnote 8}] In re Multi-Piece Rim Products Liability, 612 F.2d 377 (1980). Before considering the merits of the appeal, the court reconsidered and overruled its prior decisions holding that orders denying disqualification motions were immediately appealable under § 1291. The Court of Appeals reasoned that such orders did not fall within the collateral order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 (1949), which allows some appeals prior to final judgment. Because it was overruling prior cases, the court stated that it would reach the merits of the challenged order "[i]n fairness to the appellant in the instant case," but

Page 449 U. S. 373

held that, in the future, appellate review of such orders would have to await final judgment on the merits of the main proceeding. [^{Footnote 9}] 612 F.2d at 378-379. We granted certiorari, 446 U.S. 934 (1980), to resolve a conflict among he Circuits on the appealability question. [^{Footnote 10}]

II

Under § 1291, the courts of appeals are vested with "jurisdiction of appeals from all final decisions of the district courts . . . except where a direct review may be had in the Supreme Court." We have consistently interpreted this language as indicating that a party may not take an appeal under this section until there has been "a decision by the District Court that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.'" Coopers

Page 449 U. S. 374

& Lybrand v. Livesay, 437 U. S. 463, 467 (1978), quoting Catlin v. United States, 324 U. S. 229, 233 (1945). This rule, that a party must ordinarily raise all claims of error in a single appeal following final judgment on the merits, serves a number of important purposes. It emphasizes the deference that appellate courts owe to the trial judge as the individual initially called upon to decide the many questions of law and fact that occur in the course of a trial. Permitting piecemeal appeals would undermine the independence of the district judge, as well as the special role that individual plays in our judicial system. In addition, the rule is in accordance with the sensible policy of

"avoid[ing] the obstruction to just claims that would come from permitting the harassment and cost of a succession of separate appeals from the various rulings to which a litigation may give rise, from its initiation to entry of judgment."

Cobbledick v. United States, 309 U. S. 323, 325 (1940). See DiBella v. United States, 369 U. S. 121, 124 (1962). The rule also serves the important purpose of promoting efficient judicial administration. Eisen v. Carlisle & Jacquelin, 417 U. S. 156, 170 (1974)

Our decisions have recognized, however, a narrow exception to the requirement that all appeals under § 1291 await final judgment on the merits. In Cohen v. Beneficial Industrial loan Corp., supra, we held that a "small class" of orders that did not end the main litigation were nevertheless final and appealable pursuant to § 1291. Cohen was a shareholder's derivative action in which...