“So many years we’ve tried
To keep our love alive
But baby it ain’t over ’til it’s over”
-Lenny Kravitz – “It Ain’t Over ’Til It’s Over”
Whenever a court decision on finality begins with a pointed reminder to parties considering an appeal to remember the Chief Justice Roberts/Lenny Kravitz maxim that “it ain’t over till it’s over,” you can predict pretty well from the get-go which way the court is likely to rule. In the Ninth Circuit’s recent decision on In re Landmark Fence Company, the court comes down just as you might expect: appeal dismissed for lack of jurisdiction.
The Landmark Fence appeal arose out of a bankruptcy court’s decision on of a state court class action alleging violations of California wage and hour laws. After the plaintiffs filed a claim against the employer/debtor’s estate, the bankruptcy court held a trial on the merits of the wage claims. The bankruptcy court found that the debtor had violated California law when it failed to pay class members a prevailing wage for the time they spent (i) traveling to and from public worksites; and (ii) fabricating parts for use on public worksites.
The debtor appealed the decision to the district court. The district court affirmed the bankruptcy court’s ruling that the class members were entitled to the prevailing wage for time spent fabricating components for public work contracts, but held that the bankruptcy court applied an incorrect legal standard for assessing whether the debtor was required to pay prevailing wages for the time class members spent traveling to and from public worksites. The district court remanded the second issue to the bankruptcy court for “additional fact finding” to determine what damages might be justified.
The representative plaintiffs appealed, alleging that the district court’s ruling on travel time was erroneous and asking the Ninth Circuit to reinstate the bankruptcy court’s damages award. The debtor cross-appealed the district court’s determination regarding the entitlement to prevailing wages for parts fabrication.
The Ninth Circuit held that because the district court exercised appellate jurisdiction over the bankruptcy court pursuant to 28 U.S.C. § 158(a), it only had jurisdiction over the appeal and cross-appeal if the district court’s remand order was a “final decision, judgment, order [or] decree.” Stating that a district court order is typically considered final when it ends the litigation on the merits and leaves nothing for the court to do but execute judgment, the Ninth Circuit held that the nature of the district court’s decision, which directed the bankruptcy court to reassess the evidence and apply a different legal standard, was obviously not final.
Holding that the fluid and sometimes chaotic nature of bankruptcy proceedings necessitates a degree of jurisdictional flexibility, the court reviewed the Ninth Circuit’s four factor flexible test for finality. The court considered:
- The need to avoid piecemeal litigation
- Judicial efficiency
- The systematic interest in preserving the bankruptcy court’s role as the finder of fact
- Whether delaying review would cause either party irreparable harm.
Analyzing each factor in turn, the panel concluded that the risk of piecemeal litigation was significant; judicial efficiency would not be enhanced by exercising jurisdiction; preserving the bankruptcy court’s role as the finder of fact tipped in favor of declining jurisdiction; and neither party would suffer irreparable harm if the panel declined jurisdiction.
Interestingly, the court admits in a footnote that the Ninth Circuit’s flexible test for finality is arguably in conflict with the Supreme Court’s decision in Connecticut National Bank v. Germain; however, it determined that it need not resolve the apparent inconsistency at this time because the district court’s decision was not final even under the more forgiving flexible finality standard.
Lastly, the panel considered the fact that the underlying bankruptcy petition had been dismissed seven months prior to oral argument on the appeal. While recognizing that developments during the pendency of an appeal may render a case moot at any time, the panel determined that the first and fundamental question before questions of mootness is that of jurisdiction, and thus, the panel could leave questions of mootness to the lower court.
To this blogger, aside from a good excuse to quote Lenny Kravitz, Landmark Fence is a good reminder that the flexible finality standard is still alive and well in the Ninth Circuit.
Ben Farrow is an Associate at Weil, Gotshal & Manges LLP in New York.