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Pendent Appellate Jurisdiction Under Swint Does Not Generally Extend to Appeals of Unquantified Sanctions

July 26, 2012

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Last Month at the Federal Circuit - August 2012

Judges: Newman (dissenting), Linn (author), Reyna

[Appealed from: S.D. Fla., Judge Jordan]

In Orenshteyn v. Citrix Systems, Inc., No. 11-1308 (Fed. Cir. July 26, 2012), the Federal Circuit dismissed an appeal from a district court order granting sanctions to Citrix Systems, Inc. (“Citrix”) because an unquantified award of sanctions is not an appealable final decision.

Alexander S. Orenshteyn filed a complaint in 2002 against Citrix alleging patent infringement. In 2003, the district court granted Citrix’s motions for SJ and Fed. R. Civ. P. 11 sanctions against both Orenshteyn and his prior counsel. The Federal Circuit subsequently reversed both decisions and remanded the case in 2009. As of the date of the Federal Circuit’s first order, the district court had yet to determine the amount of sanctions. The district court on remand again granted motions for SJ and sanctions in favor of Citrix, and referred determination of the sanctions amount to a magistrate judge.

Before the sanctions were quantified, Orenshteyn appealed both the final judgment and the grant of sanctions. Citrix moved to dismiss the sanctions portion of the appeal, arguing that the district court’s order of unquantified sanctions was not a final appealable decision and thus outside of the Court’s appellate jurisdiction.

The Federal Circuit agreed. The Court first disposed of the possible statutory bases of its jurisdiction. While the district court’s grant of SJ to Citrix was “final and reviewable,” its sanctions order was neither “final” as required by 28 U.S.C. § 1295(a)(1), nor an appealable interlocutory order as specified in
28 U.S.C. § 1292. Slip op. at 2. Without a statutory basis, the Court turned its focus to considering whether its “pendent appellate jurisdiction” should extend to Orenshteyn’s sanctions appeal.

Here, the Court found its reasoning guided by Swint v. Chambers County Commission, 514 U.S. 35 (1995), in which the Supreme Court held that the courts of appeal may exercise pendent jurisdiction over a nonappealable decision when it is either “inextricably intertwined” with an appealable decision, or “when review of the non-appealable decision is necessary to review the appealable one.” Slip op. at 4 (citing Swint, 514 U.S. at 51). While recognizing that Swint declined to “definitively or preemptively settle” the scope of pendent appellate jurisdiction, the Court observed that subsequent Supreme Court cases and its own precedent had cemented the two tests of Swint as the relevant standard. “[N]otwithstanding the qualifying language in Swint, this [C]ourt cannot exercise pendent jurisdiction unless at least one of the Swint tests is met . . . .” Id.

The Federal Circuit then considered its application of Swint in Falana v. Kent State University, 669 F.3d 1349 (Fed. Cir. 2012). Falana involved an appeal of a final district court decision on inventorship along with a nonfinal award of unquantified attorneys’ fees; the Court had dismissed the appeal of unquantified attorneys’ fees by relying on Swint. Slip op. at 5 (citing Falana, 669 F.3d at 1359-62). The Court considered Falana to be its closest controlling precedent, thus deciding the present matter in favor of Citrix.

The Court emphasized the consistency of its decision in that case with other circuit dispositions and addressed rare cases in which other circuits took jurisdiction over appeals involving an unquantified award of attorneys’ fees. Id. at 6. The Court noted that even those cases permitting jurisdiction satisfied one of the Swint tests—both the appealable and nonappealable district court decisions in these cases shared “essentially the same legal basis” and thus were “inextricably intertwined.” Id. at 6-7 (citing In re Dyer, 322 F.3d 1178 (9th Cir. 2003); Thornton v. Gen. Motors Corp., 136 F.3d 450 (5th Cir. 1998); M & C Corp. v. Erwin Behr GmbH & Co., KG, 289 F. App’x 927 (6th Cir. 2008) (unpublished)). The Court observed that, in contrast to these cases, the orders involved in Orenshteyn’s appeal had “different legal bases requiring different legal analyses.” Id. at 7. Accordingly, the Court saw no reason to deviate from Falana, as doing so “would be inconsistent with the standards established in Swint.” Id.

Finally, the Federal Circuit observed that the exercise of pendent jurisdiction is discretionary. Because affirming the district court’s sanctions order would result in a separate appeal of the sanctions amount, the Court saw “little judicial efficiency in hearing the non-final sanctions issue with the decision on the merits.” Id. at 12-13. Therefore, even if pendent jurisdiction applied to Orenshteyn’s sanctions appeal, the Court indicated that it would decline to hear the appeal in order to avoid piecemeal litigation. Id. at 13. Therefore, consistent with its decision in Falana and in accordance with Swint, the Court dismissed Orenshteyn’s sanctions appeal as neither inextricably intertwined with nor necessary to review the district court’s decision on the merits for SJ.

Judge Newman dissented from the majority’s decision not to include the appeal of the sanctions because attorneys’ fees and costs had not been quantified. In Judge Newman’s view, the decision is inefficient because “the final judgment of invalidity, and the attorney fees and costs awarded as sanctions, arise from the same factual and legal considerations, and will now require further redundancy of effort, by yet a third panel of [the Federal Circuit].” Newman Dissent at 1-2. Judge Newman found Majorette Toys (U.S.), Inc. v. Darda, Inc., 798 F.2d 1390 (Fed. Cir. 1986), controlling, where the Federal Circuit reasoned that the appeal of the final judgment, together with appeal of the accompanying award of sanctions, harmonizes with the objectives of 28 U.S.C. § 1292(c)(2). By contrast, Judge Newman found that, in the cases relied upon by the panel majority, the sanctions were not appealed along with a final judgment on the merits, as they were here.

Judge Newman disagreed with the majority that Majorette Toys was superseded or overturned by Swint. In Judge Newman’s view, Swint held only that efficiency did not justify jurisdiction in that case, not that efficiency was no longer a relevant consideration. Indeed, Judge Newman explained that “[i]n resolving questions of appealability, considerations of judicial efficiency and economy are routinely at the forefront.” Newman Dissent at 7.

Judge Newman distinguished Swint from the present appeal and from Majorette Toys in three ways. First, Judge Newman explained that in Swint, no efficiency would have been gained by consolidated review. Second, there was no final judgment in Swint; the qualified immunity decision was appealable only under the collateral order doctrine. Third, the court in Swint considered “pendent party” appellant jurisdiction. Here, by contrast, Orenshteyn sought merely to appeal the award of attorneys’ fees against himself, along with the judgment against himself on the merits, so there was no pendent party issue. In sum, Judge Newman believed that both precedent and efficiency supported acceptance of the appeal of the merits together with the sanction.

Summary authored by Anthony H. Sheh, student associate at Finnegan.