Consolidated Cases: Establishing Commonality for Finality

By Brad McCullough

“There’s many a slip ‘twixt’ the cup and the lip” because “the opera ain’t over ‘til the fat lady sings.”  Or, a case can quickly go in an unanticipated direction because there is no final appealable judgment until all claims are adjudicated – and knowing when that happens in consolidated actions can be tricky. 

Judge Glenn T. Harrell begins his opinion in Waterkeeper Alliance, Inc. v. Dep’t of Agric., Md. Court of Appeals, September Term 2013, No. 87 (July 18, 2014), by quoting an old English proverb, “there’s many a slip ‘twixt’ the cup and the lip.” Use of that proverb was apt, because the case clearly went in a direction that was not anticipated by any of the litigants. But when I finished reading Judge Harrell’s opinion, two other quotes popped in my head. There was the battle cry adopted by Coach Dick Motta during the 1978 NBA Championship run of the then-Washington Bullets (now Wizards): “the opera ain’t over ‘til the fat lady sings!” And there was the simple genius of baseball philosopher Yogi Berra: “it ain’t over ‘till it’s over.”

Yet sometimes it’s hard to know exactly when the fat lady starts her song and when indeed “it’s over,” particularly when two or more cases are consolidated. When is the litigation “over?” When may a litigant appeal from an adverse decision? May the litigant note its appeal when all the claims in its action have been decided? Or must the appeal wait until all the claims in all actions have been decided? In Waterkeeper Alliance, the Court of Appeals explained how that question is answered under Maryland law, and during its next term, the Supreme Court, in Gelboim v. Credit Suisse Group AG, will resolve a conflict between the circuits and provide an answer to that question under federal law.

First, we will look at Maryland. In Waterkeeper Alliance, a group of environmental advocacy groups, led by Waterkeeper Alliance, Inc., sued the Maryland Department of Agriculture, seeking to force disclosure of various farmers’ nutrient management plans. The plaintiffs also asked that a statute governing disclosure of that information be declared unconstitutional. Shortly after that action was filed, farming interests filed suit seeking to prevent disclosure of that very same information. After the lawsuits were consolidated, the circuit court denied the farmers’ motion for summary judgment, granted the Department’s cross-motion, and declared the rights of the parties – but did not address the constitutionality of the statute. Two years later, after additional information was sought from the Department, the circuit court issued a revised Order explaining how that revised public-information request was controlled by the court’s earlier Order.

Waterkeeper Alliance noted an appeal from that revised Order, the Court of Special Appeals affirmed the trial court, Waterkeeper Alliance, Inc. v. Dep’t of Agric., 211 Md. App. 417, 65 A.3d 708 (2013), and the Court of Appeals granted Waterkeeper Alliance’s petition for a writ of certiorari. Things then got interesting, because after the case had been briefed – and as it was being argued – it undertook an abrupt change of direction. Suddenly, the case was no longer about the parties’ conflicting positions on the merits; instead, it was focused on pivotal procedural issues and ultimately on whether appellate jurisdiction even existed.

The crucial issue became: Did either of the circuit court’s Orders constitute a final judgment? As the Court of Appeals explained, a court’s order “must adjudicate each and every claim” before it can be considered a final judgment. Waterkeeper Alliance, Inc., Slip Op. p. 14 (citations omitted). That inquiry can be tricky when two or more cases have been consolidated. For while “[a]ssessing whether all claims have been adjudicated fully may be accomplished generally by comparing all of the claims raised in the complaint with all of the claims resolved in the court’s order,” where actions are consolidated, “this assessment may not be so straightforward or the result apparent.” Id. at 15 (citation omitted).

The difficulty arises from the flexibility given to Maryland trial courts. When actions are consolidated into a single case, the trial court has discretion in deciding whether to enter joint or separate judgments. Id. (citing Md. Rule 2-503 (a)).[1] But what happens when the trial court does not explicitly state whether the consolidated action should be treated as one or separate cases? In those cases, it is left to an appellate court to decipher the trial court’s intent. Where a trial court “does not make explicit whether it intended to resolve the consolidated case in joint or separate judgments,” an appellate court “must determine from the record and the applicable law whether the consolidated action should be treated as one case or multiple cases.” Id. at 16.

Quoting from its earlier decision in Yarema v. Exxon Corp., 305 Md. 219, 236, 503 A.2d 239, 248 (1986), the Court of Appeals instructed: “‘[U]nless the trial court clearly intends that a joint judgment be entered disposing of all claims simultaneously, consolidated cases are not to be treated as a single action for purposes of Rule 2-602; instead, each one of the cases is to be treated as a separate action.’” Id. (emphasis added in Waterkeeper Alliance opinion) (footnote omitted) (citation omitted). So, if the trial court’s intent is not clear, each consolidated case is treated as its own independent case and a separate judgment will be entered in each case. In that instance, when all claims in an action are final, an appeal can be taken from that final judgment. But if the trial court clearly demonstrates its intent that a joint judgment will be entered disposing of all claims in all actions at one time – even if that intent is not explicit and can be ascertained only from a careful review of the record – there is no final appealable judgment until all claims in all actions are adjudicated.

In Waterkeeper Alliance, the Court concluded “not only that the trial judge intended to resolve both actions in a joint disposition,” but “that he was compelled to do so, given the interconnectedness of the actions, the nature of the claims, and Maryland’s policy disfavoring piecemeal appeals.” Waterkeeper Alliance, Inc., Slip Op. p. 17 (emphasis added) (footnote omitted). In reaching that conclusion, the Court relied upon the following factors:

• “[T]he trial judge recognized that the outcomes of the two actions were meaningfully interdependent.” Id. at 18. If the Waterkeeper Alliance won its claim that the disclosure statute was unconstitutional, the farmers’ claim seeking a declaration interpreting that statute would be moot.

• “[T]he respective plaintiffs in the two actions presented countervailing requests with interdependent claims that were part of the same action from the start.” Id. at 19. The consolidated cases were “what the [Department] describe[d] aptly as ‘flip-sides of the same coin’ – the outcome of one of the cases could affect directly the outcome of the other.” Id.

• Finally, the circuit court maintained the two actions on the same docket. “Although this is only a formal distinction, the amalgamation of the two actions into one docket,” viewed in conjunction with the other factors identified by the Court, gave “further weight” to its “conclusion that the trial court intended clearly to treat the actions as a singular case requiring a single disposition.”  Id. at 20.

Thus, although the trial court had not clearly expressed its intent that the consolidated cases should be treated as one case, the Court of Appeals reviewed the record and determined that the trial court intended to do so – and that the trial court would have erred had it not done so.

As “the two actions required a joint disposition, the finality of that disposition would be conditioned upon a complete adjudication of all of the claims presented by both actions.” Id.  Although the circuit court’s initial Order resolved the claim presented by the farmers’ complaint, it did not address the constitutional claim raised by the environmental groups. As a result, it was not a final judgment.[2] Similarly, the second Order did not address the constitutional claim and it too was not a final judgment. As the second Order was also not appealable pursuant to any of the exceptions to the final judgment rule,[3] the appeal was dismissed and the case remanded to the Court of Special Appeals with instructions to remand to the circuit court. Or, in Judge Harrell’s words – “we must dismiss this appeal and allow the judicial carousel ride to resume in the Anne Arundel Circuit Court.” Id. at 27.

In short, Maryland has adopted a flexible approach that gives discretion to the individual trial judge, but can also require an appellate court to review the record to determine exactly what the trial court intended.[4]

At the federal level, on the other hand, there is currently no universal approach, with different circuits following different approaches. But that should change during the next term of the Supreme Court. On June 30, 2014, the Supreme Court granted a petition for writ of certiorari that presented the following question: “Whether and in what circumstances is the dismissal of an action that has been consolidated with other suits immediately appealable?” Gelboim v. Credit Suisse Grp. AG, U.S. Supreme Court, October Term 2014, No. 13-1174, Petition for a Writ of Certiorari, p. i.

That petition arose “from litigation alleging that respondents manipulated the London Interbank Offered Rate (‘LIBOR’), which is the most important benchmark for short-term interest rates in the United States and around the world.” Id. at 2. Multiple lawsuits by parties claiming to have been injured by the suppression of the U.S. dollar LIBOR were transferred for pretrial proceedings to the United States District Court for the Southern District of New York.   Three class-action complaints, including one “filed by petitioners Ellen Gelboim and Linda Zacher on behalf of purchasers of bonds with LIBOR-linked interest rates,” were consolidated “‘for pretrial purposes only.’” Id. at 3. A group of non-class-action claims were filed by entities related to Charles Schwab & Co.[5]

The district court dismissed all the claims contained in the Schwab complaint and the petitioners’ class-action complaint, but some claims in the other two class actions remained alive. The district court then entered judgment under Fed. R. Civ. P. 54(b) to permit the plaintiffs in those latter two class actions “to appeal with respect to their antitrust claims, which paralleled those of the petitioners and Schwab.” Id. at 5.[6] According to the district court, the petitioners and Schwab were entitled to appeal, and did not need a Rule 54(b) certification. “The court explained that petitioners and Schwab were ‘in a position to appeal as of right because their complaints were dismissed in their entirety.’” Id. (quoting the record). The Second Circuit, however, saw things differently and dismissed the appeal sua sponte:

This Court has determined sua sponte that it lacks jurisdiction over these appeals because a final order has not been issued by the district court as contemplated by 28 U.S.C. § 1291, and the orders appealed from did not dispose of all claims in the consolidated action. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 467 (1978); Houbigant, Inc. v. IMG Fragrance Brands, LLC, 627 F.3d 497, 498 (2d Cir. 2010) (per curiam). Upon due consideration, it is hereby ORDERED that the appeals are DISMISSED.

Id. at 6.

Resolving the finality of the petitioners’ claims now rests with the Supreme Court, which must also resolve a conflict between the circuits. There are essentially three approaches that have been adopted by the various circuits: (a) a categorical rule allowing an appeal only where all claims in all actions are final (with one circuit applying a slight variation); (b) a categorical rule allowing an appeal where all claims in one action are final; and (c) a rule where appealability depends on the nature of the consolidation (this approach appears to be the closest to the one followed in Maryland).

In the first category are the Ninth, Tenth, Second, and Federal Circuits. The Ninth, Tenth, and Federal Circuits have adopted a strict “categorical rule that the dismissal of one of several consolidated cases is not immediately appealable.” Id. at 8 (citing Spraytex, Inc. v. DJS&T & Homax Corp., 96 F.3d 1377, 1380-81 (Fed. Cir. 1996); Trinity Broad. Corp. v. Eller, 827 F.2d 673, 675 (10^th Cir. 1987); Huene v. United States, 743 F.2d 703, 705 (9^th Cir. 1984)). The Second Circuit follows a similar approach, having adopted “a near-per se bar to appeal.” Id. at 9. In Hageman v. City Investing Co., 851 F.2d 69, 71 (2d Cir. 1988), the Second Circuit recognized the benefits of the Ninth and Tenth Circuits’ uniform rule, but nonetheless chose a slightly more flexible path, holding “that when there is a judgment in a consolidated case that does not dispose of all claims which have been consolidated, there is a strong presumption that the judgment is not appealable absent Rule 54(b) certification,” and allowing a litigant to overcome this presumption only “[i]n highly unusual circumstances.”    

In the second category are “the First and Sixth Circuits, which apply the opposite categorical rule that the dismissal of one of several consolidated cases is immediately appealable.”  Gelboim, Petition for Writ of Certiorari, p. 9 (citing In re Refrigerant Compressors Antitrust Litig., 731 F.3d 586, 589 (6^th Cir. 2013); Beil v. Lakewood Eng’g & Mfg. Co., 15 F.3d 546, 551 (6^th Cir. 1994); Albert v. Maine Cent. R.R. Co., 898 F.2d 5, 7 (1^st Cir. 1990)).

Finally, the D.C., Third, Fifth, Seventh, Eighth, and Eleventh Circuits occupy the third category. “Those courts nominally apply a case-by-case approach. But that approach dictates that an immediate appeal is permitted whenever the underlying complaint was not consolidated with still-pending suits for all purposes.”  Id. at 10 (emphasis in original) (citing Schippers v. United States, 715 F.3d 879, 884 (11^th Cir. 2013); United States ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214, 216 (D.C. Cir. 2003); Tri-State Hotels, Inc. v. FDIC, 79 F.3d 707, 711-12 (8^th Cir. 1999); Brown v. United States, 976 F.2d 1104, 1107 (7^th Cir. 1992); Hall v. Wilkerson, 926 F.2d 311, 314 (3d Cir. 1991); Road Sprinkler Fitters Local Union v. Cont’l Sprinkler Co., 967 F.2d 145, 148, 149 (5^th Cir. 1992)). While the Fourth Circuit has not expressly decided the issue, “it has strongly signaled its agreement with a case-by-case approach.” Id. at 11 (citing Eggers v. Clinchfield Coal Co., 11 F.3d 35, 38-39 (4^th Cir. 1993)).

It will be interesting to see how the Supreme Court ultimately resolves this issue. Will the Court adopt one of the two conflicting per-se rules? Will it rule that a litigant may note an appeal when all claims in its action have been decided? Conversely, will it rule that a litigant may note an appeal only when all claims in all consolidated actions have been decided? Or will it choose a more flexible case-by-case approach, where the answer depends on the scope of the trial court’s consolidation Order – an approach that is more like that followed by Maryland? Stay tuned.

[1] Md. Rule 2-503 (a)(2) provides that “[i]n the trial of a consolidated action, the court may direct that joint or separate verdicts or judgments be entered.”  Fed. R. Civ. P. 42 (a), which governs consolidation of civil actions in federal courts, does not have a similar provision.

[2] If the two actions had not been viewed as one action, “the finality of” the initial Order “would not be affected by the pending constitutional claim” in the environmental groups’ action. Thus, the Order “would have constituted a final judgment resolving” the farming interests’ claims, and its later revision “would have been subject to the restrictions of Rule 2-535.” Waterkeeper Alliance, Inc., Slip Op. p. 17 n. 18. As roughly two years had passed between the entry of the initial Order and the entry of the Order that revised it, and as there was no evidence of fraud, mistake, or irregularity, the initial Order would have been “an enrolled judgment, which could not be revised. See Md. Rule 2-535.” Id. at 18 n. 18. In that instance, the Court of Appeals would have been forced “to dismiss the appeal, vacate the intermediate appellate court’s opinion, and remand the case back to the Court of Special Appeals with directions to vacate the 2011 Order.” Id.

[3] Those exceptions are: “(1) interlocutory orders that are appealable by statute; (2) orders that are appealable by the common-law collateral order doctrine; and (3) orders that adjudicate completely one of multiple claims in an action and are certified (and certifiable) under Rule 2-602(b), or alternatively, Rule 8-602 (e)(1)(C).” Waterkeeper Alliance, Inc., Slip Op. p. 22-23. Md. Rule 2-602(b) is derived from Fed. R. Civ. P. 54(b) and permits a circuit court, where it has determined “that there is no just reason for delay,” to enter final judgment “as to one or more but fewer than all of the claims or parties.” Md. Rule 8-602 (e)(1)(C) allows an appellate court to take the same action if the circuit court had the discretion to enter judgment in accordance with Rule 2-602(b), but failed to act.

[4] Trial courts should be encouraged to state their intent clearly and trial counsel should be encouraged to remind trial courts to do so.

[5] After those suits were filed, “roughly thirty more LIBOR-related complaints were filed and transferred to the Southern District of New York. Those complaints largely raised the same allegations as the previously filed complaints. The court stayed all proceedings on those follow-on complaints.” Gelboim, Petition for Writ of Certiorari, p. 4 (citing the record).

[6] Fed. R. Civ. P. 54(b) is titled “Judgment on Multiple Claims or Involving Multiple Parties” and allows the “entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.”