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Dannenberg v. Software Toolworks

filed: February 18, 1994.


Appeal from the United States District Court for the Northern District of California. D.C. No. CV 90-02906-FMS. Fern M. Smith, District Judge, Presiding.

Before: Donald P. Lay,*fn* Cynthia Holcomb Hall, and David R. Thompson, Circuit Judges. Opinion by Judge Hall.

Author: Hall

HALL, Circuit Judge:

The class-action plaintiffs in the securities litigation involving Software Toolworks, Inc. appeal the district court's partial summary judgment in favor of defendant auditors Deloitte & Touche ("Auditors") and defendant underwriters Montgomery Securities and PaineWebber, Inc. ("Underwriters"). Because the plaintiffs failed to obtain Rule 54(b) certification to appeal the district court's nonfinal order, we dismiss for lack of jurisdiction.


In October 1990, the plaintiffs filed a class action against the Auditors and Underwriters for alleged violations of federal securities laws. In March 1992, the district court granted summary judgment in favor of the Underwriters on all claims and in favor of the Auditors on every claim other than one cause of action under § 11 of the Securities Act of 1933. See In re Software Toolworks, Inc. Sec. Litigation, 789 F. Supp. 1489 (N.D. Cal. 1992). Following this partial summary judgment order, the plaintiffs stipulated with the Auditors to dismiss the remaining § 11 claim on the following terms:

1. Plaintiffs agree to dismiss their remaining claim against Deloitte under Section 11 of the Securities Act of 1933 without prejudice.

2. Upon the dismissal of their Section 11 claim against Deloitte, plaintiffs may appeal the court's [partial summary judgment] Order . . . . In the event that any portion of the Order which grants Deloitte summary judgment on plaintiffs' [other] claims . . . is reversed on appeal, plaintiffs may refile any portion of their Section 11 claim as to which summary adjudication has not been entered in Deloitte's favor, or as to which summary adjudication in Deloitte's favor has been reversed, within 30 days of the date such reversing decision becomes final, without objection from Deloitte. Deloitte waives any statute of limitations or other time-related defense to plaintiffs refiling their Section 11 claim within such 30-day period. In the event that the partial summary judgment on plaintiffs' [other] claims against Deloitte is affirmed in its entirety by the Ninth Circuit or Supreme Court decision, plaintiffs' Section 11 claim against Deloitte shall be deemed dismissed with prejudice as of the date such decision becomes final.

The district court approved the stipulation and the plaintiffs subsequently filed this appeal pursuant to 28 U.S.C. § 1291, which accords appellate jurisdiction over "final decisions." The plaintiffs neither sought nor obtained a judgment under Federal Rule of Civil Procedure 54(b), pursuant to which district courts may issue final judgments as to fewer than all claims or parties "upon an express determination that there is no just reason for delay."

The Underwriters have moved to dismiss the appeal for lack of jurisdiction, arguing that the stipulation could not transform the district court's nonfinal, nonappealable order into a final, appealable order. We agree.*fn1


Under the final judgment rule embodied in 28 U.S.C. § 1291, parties may appeal only the "final decisions of the district courts." A final judgment under § 1291 is "a decision by the District Court that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 57 L. Ed. 2d 351, 98 S. Ct. 2454 (1978) (internal quotation omitted). By requiring parties to "raise all claims of error in a single appeal following final judgment on the merits," Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374, 66 L. Ed. 2d 571, 101 S. Ct. 669 (1981), § 1291 "forbids piecemeal Disposition on appeal of what for practical purposes is a single controversy," Cobbledick v. United States, 309 U.S. 323, 325, 84 L. Ed. 783, 60 S. Ct. 540 (1940).

"It is axiomatic that orders granting partial summary judgment, because they do not dispose of all claims, are not final appealable orders under section 1291." Cheng v. Commissioner, 878 F.2d 306, 309 (9th Cir. 1989). See, e.g., Seattle Audubon Soc'y v. Espy, 998 F.2d 699, 705 (9th Cir. 1993). As a result, parties ordinarily must obtain Rule 54(b) certification in order to appeal partial summary judgments. E.g., Sierra Club v. DOT, 948 F.2d 568, 571-72 (9th Cir. 1991). We do, however, take a pragmatic approach to finality in situations where events subsequent to a nonfinal order fulfill the purposes of the final judgment rule. Specifically, "judgments whose finality would normally depend upon a Rule 54(b) certificate may be treated as final [and appealable under § 1291] if remaining claims subsequently have [ ]been finalized." Baker v. Limber, 647 F.2d 912, 916 (9th Cir. 1981). E.g., Unioil, Inc. v. E.F. Hutton & Co., 809 F.2d 548, 554 (9th Cir. 1986), cert. denied, 484 U.S. 822, 98 L. Ed. 2d 45, 108 S. Ct. 83 (1987); Anderson v. Allstate Ins. Co., 630 F.2d 677, 680-81 (9th Cir. 1980).

Here, the plaintiffs never obtained Rule 54(b) certification. We therefore have jurisdiction over their appeal of the district court's partial summary judgment only if the dismissal stipulation "finalized" ...

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