Final Judgments; Appealability; Fraudulent Concealment

If an action is dismissed in part with prejudice and in part without prejudice, can it be final for appeal purposes within 28 U.S.C. § 1291? Generally, the answer is “No” because the plaintiff is free to refile by amending (Domino Sugar Corp. v. Sugar Workers Local Union 392, 10 F.3d 1064 (4th Cir. 1993)). But the answer was “Yes” in GO Computer, Inc. v. Microsoft Corp., 2007 U.S. App. LEXIS 26722 (9th Cir. Nov. 19, 2007). The action was time barred and the trial judge initially dismissed the entire action with prejudice, imposing sanctions by striking certain claims as to which the plaintiff lacked standing to sue. After plaintiff’s counsel represented that plaintiff would never again bring those claims, the court approved a voluntary dismissal with prejudice which eradicated the sanctions. But it also eradicated the with-prejudice dismissal of the non-sanctionable claims. The trial court corrected that, dismissing the non-sanctionable claims with prejudice and the sanctionable claims without (on the express representation that they would never be brought again). In finding the order appealable, the Ninth Circuit rejected the argument that the mere fact that certain claims were dismissed without prejudice automatically foreclosed finality and appellate review:

Section 1291's finality rule has never been so rigid. It is a pragmatic rule, and we have interpreted it chiefly to carry out its "twin purposes" of "avoid[ing] the enfeebling of judicial administration that comes with undue delay" of ongoing district court proceedings and "preserv[ing] the primacy of the district court as the arbiter of the proceedings before it." ... Indeed, Domino Sugar's significance has been its insistence that appellate panels "evaluate the particular grounds for dismissal in each case" before either permitting or prohibiting appeals from dismissals without prejudice....

Dismissals without prejudice naturally leave open the possibility of further litigation in some form. What makes them final or nonfinal is not the speculative possibility of a new lawsuit, but that they "end the litigation on the merits and leave nothing for the court to do but execute the judgment."

Because the present order definitively ended the litigation, it was final for § 1291 purposes.

Fraudulent Concealment. A reminder: fraudulent concealment for statute of limitations purposes requires diligence, and no negligence, on the part of the plaintiff: “Fraudulent concealment is an ‘equitable doctrine . . . read into every federal statute of limitation.’ ... The doctrine only applies ‘when there has been no negligence or laches on the part of a plaintiff in coming to knowledge of the fraud.’” ... This circuit has thus formalized the doctrine into a three-part test: ‘[A] claimant must establish that (1) the party pleading the statute [of limitations] fraudulently concealed facts which are the basis of a claim, and that (2) the claimant failed to discover those facts within the statutory period, despite (3) the exercise of due diligence.’”

The GO Court rejected the argument that: “Not only must there be reasonable diligence, but also the potential to reveal the fraud in full, outside of discovery.” It reasoned: . To be sure, a diligent plaintiff need not engage in ceaseless inquiry when reasonable inquiry does not expose grounds for suit. But nothing ... excuses a negligent plaintiff from the diligence requirement -- not even if a fraud is allegedly well-disguised.”

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