Digital Equipment Corp. v. Desktop Direct, Inc.

• Decision Date: 06 June 1994
• Docket Number: No. 93-405.,93-405.
• Citation: 511 U.S. 863
• Parties: DIGITAL EQUIPMENT CORP. v. DESKTOP DIRECT, INC.
• Court: U.S. Supreme Court

511 U.S. 863

DIGITAL EQUIPMENT CORP. v. DESKTOP DIRECT, INC.

No. 93-405.

United States Supreme Court.

Argued February 22, 1994.

Decided June 6, 1994.

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CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

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Souter, J., delivered the opinion for a unanimous Court.

John G. Roberts, Jr., argued the cause for petitioner. With him on the briefs were David G. Leitch, Laurence R. Hefter, David M. Kelly, and Thomas C. Siekman.

Rex E. Lee argued the cause for respondent. With him on the brief were Carter G. Phillips, Gene C. Schaerr, Janet M. Letson, John Paul Kennedy, and H. Ross Workman.^*

Justice Souter, delivered the opinion of the Court.

Section 1291 of the Judicial Code confines appeals as of right to those from "final decisions of the district courts." 28 U. S. C. § 1291. This case raises the question whether an order vacating a dismissal predicated on the parties' settlement agreement is final as a collateral order even without a district court's resolution of the underlying cause of action. See Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541, 546 (1949). We hold that an order denying effect to a settlement agreement does not come within the narrow ambit of collateral orders.

I

Respondent, Desktop Direct, Inc. (Desktop), sells computers and like equipment under the trade name "Desktop Direct." Petitioner, Digital Equipment Corporation, is engaged in a similar business and in late 1991 began using that trade name to market a new service it called "Desktop Direct from Digital." In response, Desktop filed this action in the United States District Court for the District of Utah, charging Digital with unlawful use of the Desktop Direct name. Desktop sent Digital a copy of the complaint, and negotiations between officers of the two corporations ensued. Under a confidential settlement reached on March 25, 1992, Digital agreed to pay Desktop a sum of money for the right to use the "Desktop Direct" trade name and corresponding trademark, and for waiver of all damages and dismissal of the suit. That same day, Desktop filed a notice of dismissal in the District Court.

Several months later, Desktop moved to vacate the dismissal and rescind the settlement agreement, alleging misrepresentation of material facts during settlement negotiations. The District Court granted the motion, concluding "that a fact finder could determine that Digital failed to disclose material facts to Desktop during settlement negotiations which would have resulted in rejection of the settlement offer." App. to Pet. for Cert. 13a. After the District Court declined to reconsider that ruling or stay its order vacating dismissal, Digital appealed.

The Court of Appeals for the Tenth Circuit dismissed the appeal for lack of jurisdiction, holding that the District Court order was not appealable under § 1291, because it neither "ended the litigation on the merits" nor "fell within the long-recognized `collateral order' exception to the final judgment requirement." 993 F. 2d 755, 757 (1993). Applying the three-pronged test for determining when "collateral order" appeal is allowed, see Cohen, supra; Coopers & Lybrand v. Livesay, 437 U. S. 463 (1978), the Court of Appeals concluded that any benefits claimed under the settlement agreement were insufficiently "important" to warrant the immediate appeal as of right. Although Digital claimed what it styled a "right not to go to trial," the court reasoned that any such privately negotiated right as Digital sought to vindicate was different in kind from an immunity rooted in an explicit constitutional or statutory provision or "compelling public policy rationale," the denial of which has been held to be immediately appealable. 993 F. 2d, at 758-760.¹

The Tenth Circuit recognized that it was thus deviating from the rule followed in some other Courts of Appeals, see Forbus v. Sears, Roebuck & Co., 958 F. 2d 1036 (CA11 1992); Grillet v. Sears, Roebuck & Co., 927 F. 2d 217 (CA5 1991); Janneh v. GAF Corp., 887 F. 2d 432 (CA2 1989); but see Transtech Industries, Inc. v. A & Z Septic Clean, 5 F. 3d 51 (CA3 1993), cert. pending, No. 93-960. We granted certiorari, 510 U. S. 942 (1993), to resolve this conflict and now affirm.

II

A

The collateral order doctrine is best understood not as an exception to the "final decision" rule laid down by Congress in § 1291, but as a "practical construction" of it, Cohen, supra, at 546; see, e. g., Coopers & Lybrand, supra, at 468. We have repeatedly held that the statute entitles a party to appeal not only from a district court decision that "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment," Catlin v. United States, 324 U. S. 229, 233 (1945), but also from a narrow class of decisions that do not terminate the litigation, but must, in the interest of "achieving a healthy legal system," cf. Cobbledick v. United States, 309 U. S. 323, 326 (1940), nonetheless be treated as "final." The latter category comprises only those district court decisions that are conclusive, that resolve important questions completely separate from the merits, and that would render such important questions effectively unreviewable on appeal from final judgment in the underlying action. See generally Coopers & Lybrand, supra. Immediate appeals from such orders, we have explained, do not go against the grain of § 1291, with its object of efficient administration of justice in the federal courts, see generally Richardson-Merrell Inc. v. Koller, 472 U. S. 424 (1985).

But we have also repeatedly stressed that the "narrow" exception should stay that way and never be allowed to swallow the general rule, id., at 436, that a party is entitled to a single appeal, to be deferred until final judgment has been entered, in which claims of district court error at any stage of the litigation may be ventilated, see United States v. Hollywood Motor Car Co., 458 U. S. 263, 270 (1982). We have accordingly described the conditions for collateral order appeal as stringent, see, e. g., Midland Asphalt Corp. v. United States, 489 U. S. 794, 799 (1989), and have warned that the issue of appealability under § 1291 is to be determined for the entire category to which a claim belongs, without regard to the chance that the litigation at hand might be speeded, or a "particular injustice" averted, Van Cauwenberghe v. Biard, 486 U. S. 517, 529 (1988), by a prompt appellate court decision. See also Richardson-Merrell, supra, at 439 (this Court "has expressly rejected efforts to reduce the finality requirement of § 1291 to a case-by-case appealability determination"); Carroll v. United States, 354 U. S. 394, 405 (1957).

B

Here, the Court of Appeals accepted Digital's claim that the order vacating dismissal (and so rescinding the settlement agreement) was the "final word on the subject addressed," 993 F. 2d, at 757 (citation omitted), and held the second Cohen condition, separability, to be satisfied, as well. Neither conclusion is beyond question,² but each is best left untouched here, both because Desktop has made no serious effort to defend the Court of Appeals' judgment on those points and because the failure to meet the third condition of the Cohen test, that the decision on an "important" question be "effectively unreviewable" upon final judgment, would in itself suffice to foreclose immediate appeal under § 1291.³ Turning to these dispositive factors, we conclude, despite Digital's position that it holds a "right not to stand trial" requiring protection by way of immediate appeal, that rights under private settlement agreements can be adequately vindicated on appeal from final judgment.

C

The roots of Digital's argument that the settlement with Desktop gave it a "right not to stand trial altogether" (and that such a right per se satisfies the third Cohen requirement) are readily traced to Abney v. United States, 431 U. S. 651 (1977), where we held that § 1291 entitles a criminal defendant to appeal an adverse ruling on a double jeopardy claim, without waiting for the conclusion of his trial. After holding the second Cohen requirement satisfied by the distinction between the former jeopardy claim and the question of guilt to be resolved at trial, we emphasized that the Fifth Amendment not only secures the right to be free from multiple punishments, but by its very terms embodies the broader principle, "`deeply ingrained in . . . the Anglo-American system of jurisprudence,' " that it is intolerable for "`the State, with all its resources . . . to make repeated attempts to convict an individual defendant, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity.' " 431 U. S., at 661-662 (quoting Green v. United States, 355 U. S. 184, 187-188 (1957)). We found that immediate appeal was the only way to give "full protection" to this constitutional right "not to face trial at all." 431 U. S., at 662, and n. 7; see also Helstoski v. Meanor, 442 U. S. 500 (1979) (decision denying immunity under the Speech and Debate Clause would be appealable under § 1291).

Abney `s rationale was applied in Nixon v. Fitzgerald, 457 U. S. 731, 742 (1982), where we held to be similarly appealable an order denying the petitioner absolute immunity from suit for civil damages arising from actions taken while petitioner was President of the United States. Seeing this immunity as a "functionally mandated incident of the President's unique office, rooted in the . . . separation of powers and supported by our history," id., at 749, we stressed that it served "compelling public ends," id., at 758, and would be irretrievably lost if the former President were not allowed an immediate appeal to vindicate this right to be free from the rigors of trial, see id., at 752, n. 32.

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