Tenth Circuit: Withdrawal of Settlement Approval in 15-Year-Old Case Is Not “Final Decision”

The Tenth Circuit recently held that an order withdrawing approval of a four-year-old class action settlement agreement did not qualify as a “final decision” subject to appeal under 28 U.S.C. § 1291. While a final judgment is the quintessential “final decision” appealable under § 1291, the court held in McClendon v. City of Albuquerque that not every ruling that follows a final judgment in it is necessarily appealable. Rather, “every post-judgment decision must be assessed on its own terms to determine whether it is a final decision ready for or subject to an appeal.” (Emphasis in original.) In McClendon, that assessment resulted in the continuance of litigation that began more than 15 years ago.

The underlying lawsuit is a class action by prisoners challenging the conditions of Bernalillo County Detention Center. After the class and subclass were certified, the parties negotiated settlement agreements, which were approved by the U.S. District Court for the District of New Mexico in 1997.

When Bernalillo County transferred all of its prisoners to a new jail in 2003, a dispute arose as to whether the terms of the settlement agreements should carry over to the new facility.  The parties renegotiated another set of settlement agreements that superseded the original agreements and applied only to the new prison. This second set of settlement agreements was approved by the district court in 2005.

In 2009, however, the district court withdrew its approval of the 2005 settlement agreements and permitted the plaintiffs to rescind the agreements. The court found that Bernalillo County had made misrepresentations to the plaintiffs about its continuing obligations to federal detainees that were now housed at the original prison pursuant to an agreement between the county and the federal government, and that those misrepresentations had induced the plaintiffs to agree to exclude the old facility from the new settlement agreements. The defendants appealed the withdrawal.

The Tenth Circuit dismissed the appeal, holding that it did not have jurisdictional authority over the appeal because no final decision had been made by the district court. Specifically, the court reasoned that “a final decision does not normally occur until there has been 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.”

The defendants argued that their appeal satisfied the final decision rule because the 1997 order approving the settlement was a final judgment, and thus the 2005 settlement agreements also must be considered final judgments. In essence, the court said, the defendants were arguing that “any post-judgment order is automatically subject to appellate review.” The court rejected this position.

The court held that under these circumstances, the district court’s order did not disassociate the court from the case and it did not “end the litigation on the merits.” To the contrary, “the order ensures litigation on the merits will continue in the district court.” Orders such as these are not appealable, the court said, because “they set aside or undo a judgment and so settle nothing with finality except the fact that more litigation is on the way.”

One might assume that an order reinstating a lawsuit that had been settled for more than a decade would be immediately appealable. As the court acknowledged, “even the most hard-boiled litigator may raise an eyebrow at a case lasting as long as this one.” In the end, however, the court’s concern about the duration of the lawsuit was outweighed by its unwillingness to stretch the bounds of its jurisdictional authority. McClendon shows that the length of a settlement is immaterial to its finality.

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