“This case began in 1924” is not something you expect to see in an opinion published anytime recently. But the Ninth Circuit just issued an opinion with precisely that phrase, illustrating one instance where preclusion doesn’t apply to bar new claims.

In 1924 the United States filed suit in Nevada federal court to establish the water rights of the Walker River Paiute Tribe. In 1940 the district court finalized a decree governing the water rights and retaining jurisdiction. Fifty-two years later, the Tribe filed counterclaims asserting new rights and spawning a round of litigation that lasted until 2015.

After briefing on Rule 12(b) jurisdiction issues—but without any briefing on preclusion—the district court sua sponte dismissed the Tribe’s claims on claim preclusion grounds. The Tribe and the United States appealed, and the Ninth Circuit reversed.

The Ninth Circuit first held that the claims asserted in the 1990s were not “a new action.” The District Court reasoned that because the claims were assigned to a “subfile” they were distinct from the original case. The Ninth Circuit rejected this logic, noting that “designating a subfile . . . logically means that the contents are part of the larger case and not an entirely new action.” And none of the parties had argued that slotting the new claims into a subfile meant they were “a new action.”

The Ninth Circuit proceeded to make short work of the preclusion question: “This circuit has never ‘upheld a dismissal for claim or issue preclusion where the parties were not given any opportunity to be heard on the issue,’ and we decline to do so here.” What’s more, during the round of Rule 12(b) briefing “the district court explicitly told the parties not to brief [claim preclusion] issues, before dismissing on that ground.” The Ninth Circuit remanded with instructions that the district court must put any claim preclusion analysis through “the rigors of the adversarial process.”

Here is the Ninth Circuit’s opinion.

Federal Rule of Civil Procedure 59 allows a district court to “grant a new trial on all or some of the issues . . . .” Because an order for a new trial is not a final decision, it cannot typically be appealed until after the new trial. There are exceptions—but only when there are no questions of fact, only questions of law. And that includes questions of fact already resolved by the jury but reopened by the trial court using Rule 59.

The Second Circuit recently faced just this situation. Derrick Bryant sued the Meriden, Connecticut, Police Department and several police officers, alleging they used excessive force when they arrested and interrogated Bryant. The police officers conceded that disputed facts prevented summary judgment. A jury found the police department and officers not liable, but the district court ordered a new trial on Bryant’s claims against two of the officers. The officers filed an interlocutory appeal, arguing they were protected by qualified immunity.

The Second Circuit dismissed the appeal for lack of jurisdiction, holding that disputed facts barred the interlocutory appeal. Although the jury’s verdict had resolved any factual disputes, “given the district court’s conclusion that the jury’s verdict . . . was against the weight of the evidence, that verdict no longer resolves those factual disputes.” The district court’s order for a new trial essentially reset the case to where it stood before the trial: “Fundamentally, then, this case is not in a meaningfully different posture than it was prior to trial, where the officers acknowledge that a finding of qualified immunity would have been premature. It remains premature now.”

Read the Second Circuit’s opinion here.

The Sixth Circuit recently remarked that a federal court of appeals has jurisdiction over “a final order in a severed action, even if there is no final order in the action from which it was severed.” But when you have a single legal dispute that’s moving along under two case dockets, when does an order in one of those count as “a final order in a severed action”?

In 2003, U.S. Filter, a manufacturer of wastewater-treatment equipment, sued competitor M.W. Watermark for intellectual property violations. The lawsuit ended with a consent decree that enjoined Watermark and its successors from any further wrongdoing.

But by 2016, U.S. Filter’s intellectual property was owned by a different company, Evoqua, and Evoqua sued Watermark for violating the consent decree. The Western District of Michigan held Watermark in contempt of the consent decree but the judge assigned to the case retired before issuing a damages award. The case was reassigned. Watermark moved for an order dissolving the injunction, arguing that Evoqua was not the successor-in-interest to the consent decree. The new judge ordered the parties to file their briefs in both the 2016 case and the long-closed 2003 case, explaining that filing in the 2003 case would give notice to any other interested party.

Ultimately the district court vacated the contempt order and dismissed Evoqua’s contempt claim in the 2003 case. Evoqua appealed while the 2016 case was still with the district court.

The Sixth Circuit dismissed for lack of jurisdiction. Evoqua argued that the district court’s decision vacating the contempt finding “was a final decision in the 2003 Litigation because the district court ‘effectively’ severed the contempt claim from the 2016 Litigation.” The Sixth Circuit rejected this argument, noting that Evoqua “does not cite any law explaining when we should recognize an ‘effective’ severance if the district court did not state that it was severing a claim . . . .”

What’s more, the district court judge “explained that he only caused the contempt issue to appear in the 2003 Litigation because he wanted all interested parties to receive notice. . . . Causing the contempt issue to appear in the 2003 Litigation accomplishes the goal of providing notice; taking the extra step of severing the contempt issue does not advance that goal any further.” Because the order that Evoqua was trying to appeal was not a final order severing the two cases, the court of appeals did not have jurisdiction.

Read the Sixth Circuit’s decision here.

Last week we read about one of the basic requirements of federal diversity jurisdiction: all the plaintiffs have to be citizens of different states than all the defendants. But as you know, there’s a second requirement, the minimum amount in controversy. And you won’t be surprised to learn there’s a timing argument: Over what time period is the amount in controversy measured? The Ninth Circuit recently rejected an argument that the amount in controversy only counts what damages have already happened by the day the case arrives in federal court.

Elsa Chavez sued her former employer, JPMorgan Chase, in California state court, alleging that JPMorgan unlawfully fired her. JPMorgan removed the case to federal district court, and Chavez did not object. But after JPMorgan won on summary judgment Chavez appealed, arguing that the federal court never had jurisdiction because the amount-in-controversy requirement was not met. Chavez argued that the amount-in-controversy is determined at “the time of removal,” meaning the amount wages she had lost up until when JPMorgan removed the case to federal court. The Ninth Circuit disagreed, holding that the amount-in-controversy included Chavez’s claims for lost wages through her planned retirement in 2023.

The Ninth Circuit sketched out Chavez’s argument as based on “our oft-repeated statement that the amount in controversy is assessed as of ‘the time of removal.’ . . . She contends that this means the amount in controversy does not include any damages incurred after the time [of] removal . . . .”

But the amount-in-controversy is simply the “amount at stake in the . . . litigation. . . . When we say that the amount in controversy is assessed at the time of removal, we mean that we consider damages that are claimed at the time the case is removed by the defendant.” Because Chavez claimed that JPMorgan owed her future wages through her planned retirement, those future wages were at stake in the litigation regardless of when Chavez would have earned them. And because those future wages were greater than the amount-in-controversy requirement, the district court had jurisdiction to enter summary judgment against Chavez.

Read the Ninth Circuit’s opinion here.

There are two basic ways to get federal jurisdiction under Article III: there must be a federal question or diversity of citizenship.* And most of the time, diversity jurisdiction requires all the plaintiffs to be citizens of different states than all the defendants. But you might not know the rules about “sham defendants.” A single non-diverse defendant stops a federal court from having jurisdiction—and so that defendant stops the other defendants from removing the case to federal court. But how do you spot a sham defendant? The Ninth Circuit recently addressed the until-now-unanswered question of how much you have to plead to keep your defendants real.

Ruth Thrower’s estate and successors filed a wrongful-death lawsuit in state court against the nursing home where Ruth had been staying when she died. They also sued the nursing home’s administrator. The nursing home’s owner removed to federal court, arguing federal courts had diversity jurisdiction because the single non-diverse defendant—the administrator—was a sham defendant. The district court wasn’t convinced and remanded the case to state court.

Because the district court also awarded attorneys’ fees, the nursing home was able to appeal the entire order to the Ninth Circuit. (Remand orders, by themselves, cannot be appealed.) The Ninth Circuit held that there was no federal diversity jurisdiction because the administrator was a proper defendant.

The nursing home’s owner argued that the Ninth Circuit should apply Rule 12(b)(6)’s well-pleaded-complaint standard to test whether the administrator was a sham defendant. Because the complaint didn’t allege any particular act or omission by the administrator, their argument went, the complaint did not state any cause of action against the administrator. And if the complaint didn’t state a cause of action against the administrator then he was a sham defendant and there was complete diversity—the nursing home could remove the case to federal court.

The Ninth Circuit held that “the test for fraudulent joinder and for failure to state a claim under Rule 12(b)(6) are not equivalent.” Although there are some similarities, “[a] claim against a defendant may fail under Rule 12(b)(6), but that defendant has not necessarily been fraudulently joined. . . . A standard that equates fraudulent joinder with Rule 12(b)(6) conflates a jurisdictional inquiry with an adjudication on the merits.” The remand bar seems to be set a notch lower: “[I]f there is a possibility that a state court would find that the complaint states a cause of action against any of the [non-diverse] defendants,” then there’s no federal jurisdiction. (Italics in the opinion.)

And in Thrower’s case, it was fairly possible that the claims against the non-diverse defendant would stand. The administrator was, after all, in charge of the nursing home where Thrower died. Whether or not the claims against the administrator were detailed enough was an argument over the wording in the complaint, not the “viability” of the claim against him.

Read the Ninth Circuit’s opinion here.

* We shall sail right by “all Cases of admiralty and maritime Jurisdiction . . . .”