Commercial Litigation and Arbitration

Standards for Severing Claims into Separate Trials under Federal Rule of Civil Procedure 21

From Securities and Exchange Commission v. Leslie, 2010 U.S. Dist. LEXIS 76826 (N.D. Cal. July 29, 2010):

The "determination of a Rule 21(b) motion involves the sound discretion of the trial court . . . ." United States v. Testa, 548 F.2d 847, 856 (9th Cir. 1977). See also Rice v. Sunrise Express, Inc., 209 F.3d 1008, 1016 (7th Cir. 2000) (citing Hebel v. Ebersole, 543 F.2d 14, 17 (7th Cir. 1976); United States v. O'Neil, 709 F.2d 361, 367 (5th Cir. 1983)) ("It is within the district court's broad discretion whether to sever a claim under Rule 21."). "As long as there is a discrete and separate claim, the district court may exercise its discretion and sever it." Rice, 209 F.3d at 1016. However, "an attempt to separate an essentially unitary problem" is an "abuse of discretion." Spencer, White & Prentis, Inc. v. Pfizer, Inc., 498 F.2d 358, 362 (2d Cir. 1974).

The application of Rule 21 involves considerations of convenience and fairness. It also "presupposes basic conditions of separability in law and logic." Id. "[T]he Court will consider the following factors in making such a decision: (1) whether the claims arise out of the same transaction or occurrence; (2) whether the claims present some common questions of law or fact; (3) whether settlement of the claims or judicial economy would be facilitated; (4) whether prejudice would be avoided if severance were granted; and (5) whether different witnesses and documentary proof are required for the separate claims." Morris v. Northrop Grumman Corp., 37 F. Supp. 2d 556, 580 (E.D.N.Y. 1999). In addition, "the court typically will deny a request that comes so late in the litigation that it will delay the case or prejudice any of the parties to the action." City of Syracuse v. Onondaga County, 464 F.3d 297, 308 (2d Cir. 2006) (citing to 7 Wright, Miller & Kane, Federal Practice And Procedure § 1688.1 at 510 (West 2001)).

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