Commercial Litigation and Arbitration

Unquantified Sanctions Award Is Not Appealable Unless It is Inextricably Intertwined with an Appealable Order or Review of It Is Necessary to Review the Appealable Order

Orenshteyn v. Citrix Sys., Inc., 2012 U.S. App. LEXIS 15507 (Fed. Cir. July 26, 2012):

By statute, this court has jurisdiction over an appeal of a decision of a district court if it is "final" under 28 U.S.C. § 1295(a)(1) or if it is an interlocutory order as specified in 28 U.S.C. § 1292. The district court's decision on the merits *** is final and reviewable by this court. Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202-03, 108 S. Ct. 1717, 100 L. Ed. 2d 178 (1988) ("[A] decision on the merits is a 'final decision' . . . whether or not there remains for adjudication a request for attorney's fees attributable to the case."). But the district court's decision granting sanctions is a separate order which is not final and appealable until the district court has decided the amount of sanctions. See White v. N.H. Dep't of Emp't Sec., 455 U.S. 445, 452, 102 S. Ct. 1162, 71 L. Ed. 2d 325 (1982) ("Unlike other judicial relief, the attorney's fees . . . are not compensation for the injury giving rise to an action. Their award is uniquely separable from the cause of action to be proved at trial."); McCarter v. Ret. Plan for the Dist. Managers of the Am. Family Ins. Grp., 540 F.3d 649, 652 (7th Cir. 2008) ("[T]he upshot of White's approach is that decisions on the merits and decisions about attorneys' fees are treated as separate final decisions, which must be covered by separate notices of appeal--each filed after the subject has independently become 'final.'"); see also Falana v. Kent State Univ., 669 F.3d 1349, 1360 (Fed. Cir. 2012); View Eng'g, 115 F.3d at 964.

In rare circumstances, the doctrine of pendent appellate jurisdiction allows federal courts of appeals limited discretion to review a ruling that is not independently appealable if jurisdiction exists over another related ruling. Cf. Swint v. Chambers Cnty. Comm'n, 514 U.S. 35, 50-51, 115 S. Ct. 1203, 131 L. Ed. 2d 60 (1995) ("[W]e have not universally required courts of appeals to confine review to the precise decision independently subject to appeal."). Thus, the only issue here is whether this court should exercise pendent jurisdiction over Orenshteyn's appeal of the sanctions order. We conclude that we should not, following Supreme Court guidance that the exercise of pendent jurisdiction is limited to exceptional circumstances.

The Supreme Court in Swint provided two essential reasons why pendent jurisdiction should be limited. First, Congress specifically provided district courts the authority to certify an interlocutory order as appealable under 28 U.S.C. § 1292(b) (applicable to this court under 28 U.S.C. § 1292(c)(1)), and § 1292(b) is undermined if appellate courts take jurisdiction over appeals from non-final orders in the absence of district court certification. Swint, 514 U.S. at 46-47. Second, the Supreme Court has express rulemaking authority to expand the list of appealable interlocutory orders, implying that this is not a determination to be made by judicial decision of a circuit court. See id. at 48 (citing 28 U.S.C. §§ 1292(e), 2072).

After Swint, it is clear that a court of appeals may have pendent jurisdiction when the appealable and non-appealable decisions are "inextricably intertwined" or when review of the non-appealable decision is necessary to review the appealable one. See id. at 51. While Swint did not "definitively or preemptively settle . . . whether or when it may be proper for a court of appeals, with jurisdiction over one ruling, to review, conjunctively, related rulings that are not themselves independently appealable," the Supreme Court nevertheless found that pendent jurisdiction did not exist when the non-appealable decision was neither "inextricably intertwined with" nor "necessary to ensure meaningful review of" the appealable decision. 514 U.S. at 50-51. Thus, notwithstanding the qualifying language in Swint, this court cannot exercise pendent jurisdiction unless at least one of the Swint tests is met without contradicting the central holding of Swint. ***

Relying on Swint, this court found no pendent jurisdiction in Falana based on similar facts to those present here. 669 F.3d at 1359-62. In Falana, Kent State sought to appeal a final district court decision on inventorship along with a non-final award of unquantified attorney fees based on an exceptional case finding. Id. at 1359-60. This court declined to exercise pendent jurisdiction over the unquantified award of attorney fees, notwithstanding the final judgment on inventorship. Id. at 1359-62. Falana is our closest controlling precedent.

This court's holding in Falana is consistent with the holdings of other circuits declining to exercise pendent jurisdiction over unquantified sanctions or attorney fees. Several circuits declined to exercise jurisdiction over unquantified attorney fees when appealed with final decisions even before Swint. See Cooper v. Salomon Bros., 1 F.3d 82, 85 (2d Cir. 1993); Pennsylvania v. Flaherty, 983 F.2d 1267, 1275-77 (3d Cir. 1993); Becton Dickinson & Co. v. Dist. 65, United Auto., Aerospace & Agric. Implement Workers, 799 F.2d 57, 61-62 (3d Cir. 1986); S. Travel Club, Inc. v. Carnival Air Lines, Inc., 986 F.2d 125, 129-31 (5th Cir. 1993); Pa. Nat'l Mut. Cas. Ins. Co. v. Pittsburg, 987 F.2d 1516, 1520-21 (10th Cir. 1993). In light of Swint, the Seventh Circuit expressly overruled its decisions allowing pendent jurisdiction over unquantified attorney fees. McCarter, 540 F.3d at 653-54. While the Eleventh Circuit continued to assert that it had discretion to exercise pendent jurisdiction over an award of attorney fees after Swint, it declined to do so. Hibiscus Assocs. Ltd. v. Bd. of Trs. of the Policemen & Firemen Ret. Sys., 50 F.3d 908, 921-22 (11th Cir. 1995). Even though the D.C. Circuit has a more permissive interpretation of Swint than most circuits and did not create a "blanket rule" prohibiting pendent jurisdiction over unquantified attorney fees, the D.C. Circuit declined to exercise pendent jurisdiction over unquantified attorney fees and anticipated that review of such orders "will be rare exceptions." Gilda Marx, Inc. v. Wildwood Exercise, Inc., 85 F.3d 675, 676, 678-80, 318 U.S. App. D.C. 109 (D.C. Cir. 1996); see also Kilburn v. Socialist People's Libyan Arab Jamahiriya, 376 F.3d 1123, 1133-34, 363 U.S. App. D.C. 87 (D.C. Cir. 2004).

There have been rare cases in which courts in other circuits have taken jurisdiction over an unquantified award of attorney fees, but these were special cases, such as when the award actually met one of the Swint tests for pendent appellate jurisdiction. See Thornton v. Gen. Motors Corp., 136 F.3d 450, 451, 453-54 (5th Cir. 1998) (exercising pendent appellate jurisdiction when the sanction of unquantified attorney fees was "'inextricably intertwined'" with a final sanctions order suspending the appellant from the practice of law); M & C Corp. v. Erwin Behr GmbH & Co., KG, 289 F. App'x. 927, 932 (6th Cir. 2008) (unpublished) (finding a final award of statutory penalties allowed pendent jurisdiction over an "intertwined" unquantified award of litigation expenses based on the same statute); see also In re Dyer, 322 F.3d 1178, 1186-88 (9th Cir. 2003) (taking jurisdiction over a sanctions award in the context of the "flexible finality standards" of bankruptcy law, but "stop[ping] short of adopting a similar rule in non-bankruptcy cases"). These are the exceptions that prove the general rule that an unquantified award of attorney fees is not inherently or universally appealable under pendent jurisdiction, and instead must meet the same standards as any other decision to qualify for pendent appellate jurisdiction.

Therefore, the circuits, including this one, are in general agreement that an unquantified award of attorney fees does not usually warrant the exercise of pendent jurisdiction. Unlike Thornton and M & C in which the final decision and the non-final award of attorney fees had essentially the same legal basis, the finding of invalidity and the sanctions in the present case have different legal bases requiring different legal analyses. Thus, this court finds no indication in the present case that the unquantified sanction is "inextricably intertwined" with or necessary to review the final decision on the merits. See Swint, 514 U.S. at 51; Clinton, 520 U.S. at 707 n.41. This court does not assert that Swint precludes the exercise of all pendent jurisdiction. See Helifix, 208 F.3d at 1345. This court simply follows Falana in declining to exercise pendent jurisdiction over the unquantified sanction because to do so would be inconsistent with the standards established in Swint.

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