630 F.2d 677 (9th Cir. 1980), 78-2639, Anderson v. Allstate Ins. Co.

Docket Nº:78-2639.
Citation:630 F.2d 677
Party Name:Luverne L. ANDERSON and Josephine Rodriguez, Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, a California Corporation et al., Defendants- Appellees.
Case Date:October 02, 1980
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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630 F.2d 677 (9th Cir. 1980)

Luverne L. ANDERSON and Josephine Rodriguez, Plaintiffs-Appellants,


ALLSTATE INSURANCE COMPANY, a California Corporation et al.,

Defendants- Appellees.

No. 78-2639.

United States Court of Appeals, Ninth Circuit

October 2, 1980

Argued April 10, 1980.

Submitted Aug. 11, 1980.

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[Copyrighted Material Omitted]

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Gregory Bergman, Los Angeles, Cal., argued, Lewis M. Koss, Irmas, Simke & Chodos, Inc., Los Angeles, Cal., on brief, for plaintiffs-appellants.

James Sanborn, Los Angeles, Cal., argued, Irwin Waldman, Los Angeles, Cal., on brief, for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before TUTTLE, [*] WALLACE and ALARCON, Circuit Judges.

WALLACE, Circuit Judge:

Plaintiffs Anderson and Rodriguez appeal from district court orders dismissing their action on statute of limitations grounds as to three defendants, striking their amended complaint and summons, and granting sanctions against plaintiffs' attorney. We find appellate jurisdiction despite the fact that the orders appealed from were not initially final orders. We affirm in part and reverse and remand in part.


Anderson was a chiropractic doctor practicing in California, and Rodriguez was his employee. They brought this action in state court in September 1976, alleging that defendants, mainly insurance companies and their agents and employees, had conspired to suppress their exercise of First Amendment rights in warning various patients to seek the aid of legal counsel before entering into negotiations to settle liability claims. In addition to their federal claim of conspiracy to violate civil rights, they alleged state claims of malicious prosecution, abuse of process, and unlawful interference with business relationships. The named defendants were Allstate Insurance Company, State Farm Insurance Company, the Insurance Crime Prevention Institute, several named individuals, and Does 1 to 50. Section 474 of the California Code of Civil Procedure authorizes plaintiffs to sue fictitiously-named Doe defendants to preserve their cause of action against any defendants not yet known or identified.

In January 1978 plaintiffs filed a first amended complaint, adding Farmers Insurance Group, Farmers Insurance Exchange (Farmers), Joseph A. Bachhuber (Bachhuber), and "John Doe Gomez" (Gomez) to the list of named defendants. 1 The amended complaint also retained the original defendants Does 1 to 50. Having been served process pursuant to the filing of the amended complaint, defendants jointly filed, on April 11, 1979, for removal to federal district court based on the presence of a federal claim.

On May 1 plaintiffs moved the district court to remand to state court, contending,

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among other things, that there was no basis for removal jurisdiction because plaintiffs had voluntarily dismissed the federal claim in state court prior to removal. Defendants responded that plaintiffs filed for voluntary dismissal of the federal claim on April 24, almost two weeks after defendants had removed the action to federal court and at a time when the state court lacked jurisdiction to dismiss the federal claim. As the prerequisites for original and pendent jurisdiction were thus properly found, defendants contended that the case had not been "removed improvidently and without jurisdiction." 28 U.S.C. § 1447(c). 2 The district court denied plaintiffs' motion to remand.

On May 17 defendants Farmers, Bachhuber, and Gomez brought a motion to dismiss the complaint for failure to state a claim upon which relief could be granted. The motion was based on the contention that the statute of limitations had run as to both the federal and state claims. They alleged that because plaintiffs' amended complaint and summons added them as new defendants, rather than as Doe defendants previously named, the claims against these defendants did not relate back to the filing date of the original complaint. At a hearing on June 5, the district judge granted the motion to dismiss and directed defendants' counsel to prepare an appropriate order.

Subsequent to the district judge's ruling, plaintiffs attempted to overcome the failure of the claims to relate back to the original filing as to the moving parties by serving these defendants with the same amended complaint and a federal summons purporting to serve each "As A Doe Defendant." In response, defendants filed a motion to strike or dismiss the amended complaint and for sanctions against plaintiffs' counsel for abuse of federal service of process. On July 17 the district judge granted the motion to strike and imposed a sanction of $750.00 against plaintiffs' counsel.

Plaintiffs appeal from the order dismissing plaintiffs' action with prejudice, and from the order striking the amended complaint and imposing sanctions on plaintiffs' attorney.


A threshold question is whether we have appellate jurisdiction. Because the orders appealed from dismiss the action as to only some of the defendants, it is clear that they were not final orders pursuant to 28 U.S.C. § 1291 at the time they were entered. Moreover, plaintiffs did not obtain the interlocutory certificate required by Fed.R.Civ.P. 54(b). Under these circumstances, we are ordinarily precluded from assuming jurisdiction. See Stevens v. Security Pacific Nat'l Bank, 538 F.2d 1387, 1388 (9th Cir. 1976). This is true even if, as here, the jurisdiction issue is raised by neither of the parties. Burkhart v. United States, 210 F.2d 602, 605 (9th Cir. 1954).

In the case before us, however, that portion of the case remaining in the district court has subsequently been disposed of. In an order filed November 27, 1978, the district court dismissed the federal claim as to the remaining defendants and remanded the state claims to state court. The issue presented is whether, in light of these subsequent developments, we should treat the orders appealed from as final orders. We conclude that we should, and that we therefore have appellate jurisdiction to hear the merits of this case.

Although this is an issue of first impression in this circuit, two other circuits have held that orders adjudicating only some of the claims may be treated as final orders if the remaining claims have subsequently been finalized. Jetco Electronic Indus., Inc. v. Gardiner, 473 F.2d 1228, 1231 (5th Cir. 1973); Frankfort Oil Co. v. Snakard, 279 F.2d 436, 438 (10th Cir.), cert. denied, 364 U.S. 920, 81 S.Ct. 283, 5 L.Ed.2d 259 (1960). In Jetco, the district court dismissed the action as to one of three defendants, and

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several months later entered an agreed judgment as to the other defendants. Although neither was written as a final order, and the appellant had failed to obtain a Rule 54(b) certificate, the court found that:

(T)hese two orders, considered together, terminated this litigation just as effectively as would have been the case had the district judge gone through the motions of entering a single order formally reciting the substance of the earlier two orders. Mindful of the Supreme Court's command that practical, not technical, considerations are to govern the application of principles of finality, Gillespie v. United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), we decline appellee's invitation to exalt form over substance by dismissing this appeal.

Jetco Electronics Indus., Inc. v. Gardiner, supra, 473 F.2d at 1231. We find this analysis persuasive.

Nor do we believe such a result is foreclosed because it is based upon developments occurring subsequent to the appeal. Analogously, subsequent events can validate a prematurely filed appeal. See, e. g., Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); Lemke v. United States, 346 U.S. 325, 74 S.Ct. 1, 98 L.Ed. 3 (1953) (per curiam) (criminal appeal); Ruby v. Secretary of Navy, 365 F.2d 385, 389 (9th Cir. 1966) (en banc), cert. denied, 386 U.S. 1011, 87 S.Ct. 1358, 18 L.Ed.2d 442 (1967); Firchau v. Diamond Nat'l Corp., 345 F.2d 269, 271 (9th Cir. 1965). In both Ruby and Firchau, we entertained appeals from non-final orders granting motions of dismissal. We did so because the district court had subsequently entered judgment based on the order appealed from.

These cases provide clear examples of giving a practical rather than a technical construction to the finality rule, without sacrificing the considerations underlying that rule. There is no danger of piecemeal appeal confronting us if we find jurisdiction here, for nothing else remains in the federal courts. We therefore find that we have jurisdiction.


Plaintiffs first contend that the district court lacked jurisdiction to enter the order dismissing the action. Plaintiffs do not deny that their state court filing for dismissal of the federal claim was ineffectual to prevent removal. They argue, however, that the voluntary dismissal of the federal claim in the district court deprived the court of the jurisdiction it had validly obtained.

Plaintiffs' argument reflects a lack of understanding of basic principles of both removal and pendent jurisdiction. It is the law of this circuit "that a federal court does have the power to hear claims that would not be independently removable even after the basis for removal jurisdiction is dropped from the proceedings." Watkins v. Grover, 508 F.2d 920, 921 (9th Cir. 1974);...

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