United States Court of Appeals
For the First Circuit
Nos. 99-1938
99-1939
SHASHI L. MIRPURI, INDIVIDUALLY AND
ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, ET AL.,
Plaintiffs, Appellants,
v.
ACT MANUFACTURING, INC., ET AL.,
Defendants, Appellees.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Selya, Circuit Judge,
Bownes, Senior Circuit Judge,
and Boudin, Circuit Judge.
Brian P. Murray, with whom Stephen Moulton, Nancy Freeman
Gans, Moulton & Gans, LLP, Karl P. Barth, Hagens Berman, P.S.,
Lionel Z. Glancy, Neal A. Dublinsky, David Pastor, Gilman &
Pastor, and Rabin & Peckel, LLP were on brief, for appellants.
Brian E. Pastuszenski, with whom Kevin J. O'Connor, Anthony
J. Canata, Matthew A. Wolfman, and Testa, Hurwitz & Thibeault,
LLP were on brief, for appellees.
May 5, 2000
SELYA, Circuit Judge. This procedural motley requires
us to determine when, and under what circumstances, an order
dismissing an action "without prejudice" is final and, hence,
appealable. Along the way, we also must determine whether the
district court erred either by rejecting the plaintiffs' belated
attempt to amend their complaint or by refusing to extend the
time within which they might file a notice of appeal.
Concluding, as we do, that the lower court handled the matter
appropriately in all respects, we affirm.
I. BACKGROUND
On February 25, 1998, ACT Manufacturing, Inc. (ACT)
announced that it had an unanticipated inventory shortfall and
that it would delay the announcement of its 1997 fourth-quarter
and year-end earnings. 1 In response, the price of its stock
tumbled and a shareholder, Shashi L. Mirpuri, filed this class
action. Mirpuri's complaint alleged, inter alia, that ACT and
two of its senior officers had violated federal securities laws.
At a conference held on August 12, 1998, the district
court indicated its intention to appoint three other individuals
as co-lead plaintiffs. The defendants raised no objection to
the appointment but informed the court that they planned to file
1
On March 31, 1998, ACT estimated the size of the deficiency
at $13,100,000 and concluded that "the ultimate cause of the
shortfall could not be finally determined."
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a motion to dismiss on the ground that the complaint did not
allege facts sufficient to support a strong inference of
scienter. See 15 U.S.C. § 78u-4(b)(2); see also Greebel v. FTP
Software, Inc., 194 F.3d 185, 191-201 (1st Cir. 1999). To
forfend such a motion, the court allowed the plaintiffs sixty
days in which to file an amended complaint. The plaintiffs
availed themselves of this opportunity and the defendants
thereafter moved to dismiss the amended complaint. The
plaintiffs opposed the motion.
The district court held a hearing on April 28, 1999.
Near the end of that session, the defendants offered to amend
the complaint for a second time. The court unequivocally
refused the offer, stating:
No. There's one shot on it, frankly. And I
made it clear, I think, at the first hearing
that we had, that the opportunity to amend
complaints is not a reenactment of
Scheherazade. You tell the story maybe
twice, but not endlessly night after night.
At the close of the hearing, the court reserved decision on the
motion to dismiss.
In due course, Judge Woodlock wrote a memorandum
decision that explained his reasons for granting the motion to
dismiss. The final footnote states in pertinent part:
This dismissal is . . . without prejudice .
. . . To be sure, at the Scheduling
Conference in this matter, I identified
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certain shortcomings in Plaintiffs'
pleadings and afforded them the opportunity
to file an amended complaint. They did so.
But when the course of the discussion at the
hearing on the motion to dismiss appeared to
be proceeding in a direction adverse to
their amended complaint, plaintiffs' counsel
suggested a willingness to file yet another
amended complaint containing additional but
unidentified details to particularize their
pleadings further. The plaintiffs were
given fair warning both of the deficiencies
in their initial complaint and the need to
draft an amended complaint upon which the
court could finally act at the motion to
dismiss stage. They were afforded adequate
time to do so. The evaluation of pleadings
cannot be extended endlessly. These
plaintiffs have failed in their effort to
present a complaint which can withstand
scrutiny and that failure should be
recognized with finality in this case.
Whether they can state a claim in some other
case is not a matter, however, I will
attempt to preclude by a dismissal, as
defendants request, with prejudice.
On June 1, 1999, the clerk entered Judge Woodlock's memorandum
decision on the docket, along with a separate order that
dismissed the action and a notation that read "[c]ase closed."
Twenty-seven days later, the plaintiffs filed a motion
for permission to file a further amended complaint. The
district court denied this motion on July 13, explaining that
"final judgment ha[s] entered in this case." On July 26, the
plaintiffs, apparently aware that the thirty-day appeal period
had expired, requested an extension of time within which to file
a notice of appeal from the June 1 dismissal order. Finding
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neither good cause nor excusable neglect, the district court
rejected this request on August 10. These appeals ensued.
II. ANALYSIS
We begin by noting what is not before us. The
plaintiffs apparently concede that if the June 1 dismissal order
was final and appealable, they allowed the time for filing a
notice of appeal from that order to expire — and concession or
not, it is nose-on-the-face plain that any such appeal would be
time-barred. See Fed. R. App. P. 4(a)(1)(A). Initially, at
least, this narrows the lens of inquiry to the question of
finality and to the propriety of two other orders, namely, the
July 13 order denying leave to amend and the August 10 order
refusing to extend the time for appealing.2 As to the first of
these matters, we afford plenary review to the district court's
legal conclusion that final judgment had entered. See Exxon
Corp. v. Esso Workers' Union, Inc., 118 F.3d 841, 844 (1st Cir.
1997). We review the latter two rulings for abuse of
discretion. See Correa-Martinez v. Arrillaga-Belendez, 903 F.2d
49, 59 (1st Cir. 1990) (stating the standard of review for the
granting or denial of a motion for leave to file an amended
2
We say "initially" because, were we to determine that the
district court erred in refusing to extend the appeal period, we
might then proceed to consider the merits of the district
court's dismissal order.
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complaint); Gochis v. Allstate Ins. Co., 16 F.3d 12, 14 (1st
Cir. 1994) (per curiam) (same, in respect to the granting or
denial of a motion to extend the time for filing a notice of
appeal). We remain mindful, however, that a court invariably
abuses its discretion if it predicates a discretionary decision
on a mistaken view of the law. See Waste Mgmt. Holdings, Inc.
v. Mowbray, ___ F.3d ___, ___ (1st Cir. 2000) [No. 99-8015, slip
op. at 13]; United States v. Synder, 136 F.3d 65, 67 (1st Cir.
1998).
A. Leave to Amend.3
The plaintiffs premise their claim that the district
court erred in failing to grant leave to amend on familiar
axioms. The Civil Rules declare that leave to amend "shall be
freely given when justice so requires." Fed. R. Civ. P. 15(a).
Under this mandate, a denial of leave to amend cannot be founded
on judicial whim. See Foman v. Davis, 371 U.S. 178, 182 (1962).
"Unless there appears to be an adequate reason for the denial of
leave to amend (e.g., undue delay, bad faith, dilatory motive,
futility of amendment, prejudice), we will not affirm it."
Glassman v. Computervision Corp., 90 F.3d 617, 622 (1st Cir.
1996). The plaintiffs proceed to argue that none of these
3 Since the question of finality is bound up with the
district court's treatment of the motion for leave to amend, we
deal with it as part and parcel of this discussion.
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exemplars applies in this instance and, therefore, the district
court's denial of their motion cannot be upheld.
This line of argument suffers from tunnel vision: it
overlooks the district court's determination that, at the time
the plaintiffs filed their motion, a final judgment already had
been entered. If this perception is correct, the district court
had no power to allow an amendment to the complaint because
there was no complaint left to amend. See Maldonado v.
Domínguez, 137 F.3d 1, 11 (1st Cir. 1998) ("[A] district court
cannot allow an amended pleading where a final judgment has been
rendered unless that judgment is first set aside or vacated
pursuant to Fed. R. Civ. P. 59 or 60.").4 The question, then,
is whether a final judgment in fact entered on June 1, 1999.
The plaintiffs suggest, without citation of relevant
authority, that the June 1 dismissal order somehow is deficient
because it fails to use the word "judgment." This suggestion
elevates form over substance, and we reject it out of hand. The
entry of judgment need not employ talismanic language nor use
any specific set of words. See Danzig v. Virgin Isle Hotel,
4 The reference to Rules 59 and 60 does not give succor to
the plaintiffs. They filed no motion at all within the ten-day
period allowed under Fed. R. Civ. P. 59(e), and they never moved
to set the judgment aside under Fed. R. Civ. P. 60(b). Thus,
their current argument can succeed only if no final judgment was
entered on June 1.
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Inc., 278 F.2d 580, 582 (3d Cir. 1960); see also Fed. R. App. P.
4(a) (outlining the process for appealing from a "judgment or
order").
The plaintiffs also contend that the court's dismissal
of their action "without prejudice" stripped the dismissal order
of the requisite finality and necessarily encompassed an
opportunity to amend the complaint. This argument is not
constructed out of whole cloth; one circuit seems to view a
dismissal without prejudice as an implicit invitation to amend.
See Borelli v. City of Reading, 532 F.2d 950, 951 (3d Cir. 1976)
(per curiam). In that circuit, such an order is final and
appealable only if the plaintiff "cannot amend or declares his
intention to stand on his complaint." Id. at 952. This court,
however, has rejected that position.5 See Acevedo-Villalobos v.
Hernandez, 22 F.3d 384, 389 (1st Cir. 1994) (holding squarely
that a final, appealable judgment results whenever a district
court dismisses a complaint "without expressly granting the
plaintiff leave to amend"). In this circuit, the phrase
"without prejudice," when attached to a dismissal order, is not
to be read as an invitation to amend, but rather as a
5
In all events, the instant case does not implicate the
Third Circuit's approach to ambiguous dismissal orders. Here,
unlike in Borelli, the district court order expressly denied
leave to amend. No invitation reasonably could have been
implied in light of this explicit rejection.
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signification that the judgment does not preclude a subsequent
lawsuit on the same cause of action either in the rendering
court or in some other forum. If leave to amend is
contemplated, we require an express judicial statement to that
effect because doing so "avoids confusion over when a
plaintiff's right to amend a dismissed complaint terminates, the
order becomes final, and the time for appeal begins to run."
Id. at 388 (quoting Quartana v. Utterback, 789 F.2d 1297, 1300
(8th Cir. 1986)).
The plaintiffs' attempt to derive support for their
"without prejudice" argument from North Carolina National Bank
v. Montilla, 600 F.2d 333 (1st Cir. 1979) (per curiam), is
unavailing. There, the district court had dismissed a
counterclaim "without prejudice," stating that it could be
raised again during the course of the pending proceedings if new
evidence were adduced. See id. at 334. We held that this order
— like an order dismissing a complaint but expressly reserving
leave to amend — was not final for the purpose of conferring
appellate jurisdiction. See id. at 334-35. The crucial
distinction between the dismissal orders in Montilla and in the
case at bar is that the latter left no aspect of the litigation
pending and was therefore immediately appealable. See id. at
335 n.2 (specifically distinguishing "a dismissal 'without
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prejudice' that is nevertheless a final order because the
litigation is entirely terminated").
The plaintiffs' reliance on Sandul v. Larion, 119 F.3d
1250 (6th Cir. 1997), likewise misses the mark. In Sandul, the
district court entered summary judgment against the plaintiff on
all except one of his claims (which it dismissed without
prejudice). See id. at 1253. The Sixth Circuit ruled that
Sandul could not appeal the dismissal of the last-mentioned
claim "because the dismissal was without prejudice." Id. at
1254. The court then stated that "[s]uch dismissal is not a
final judgment, and thus, no appeal is permitted." Id.
A leading treatise fittingly describes this aspect of
Sandul as "puzzling." 15A Charles Alan Wright et al., Federal
Practice and Procedure § 3914.6, at 145 n.18 (2d ed. Supp.
2000). The quoted language cannot be taken literally, as such
a reading would contradict longstanding Supreme Court precedent.
See United States v. Wallace & Tiernan Co., 336 U.S. 793, 795
n.1 (1949) ("That the dismissal was without prejudice to filing
another suit does not make the cause unappealable, for denial of
relief and dismissal of the case ended this suit so far as the
District Court was concerned."). There is another possible
explanation. In support of its pronouncement, the Sandul court
cited Laczay v. Ross Adhesives, 855 F.2d 351 (6th Cir. 1988) —
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a case holding that no appeal can be taken from a voluntary
dismissal without prejudice. See id. at 354. If Sandul turned
on voluntariness (a fact that is not clear from the opinion), it
is of no help to the plaintiffs in the case at hand. If,
however, Sandul actually stands for the proposition that
dismissals without prejudice are per se unappealable, we are
bound not only by Wallace & Tiernan but also by applicable First
Circuit precedent to reject it. See, e.g., Pratt v. United
States, 129 F.3d 54, 57-58 (1st Cir. 1997) ("Appellate courts
routinely exercise jurisdiction over claims dismissed without
prejudice when the dismissal contains sufficient indicia of
finality.").
To sum up, the district court's memorandum decision,
echoing the judge's earlier comments from the bench, slammed the
door shut on the possibility of future amendments to the
complaint. Given the court's express rejection of the
plaintiffs' offer to assemble a further amended complaint, it is
difficult to imagine how the point could have been put more
clearly. And apart from the flawed arguments discussed above,
the plaintiffs make no other challenge to either the form or the
sufficiency of the judgment. Nor could they: the dismissal
order was set forth on a separate document and duly docketed in
conformity with the applicable provisions of the Civil Rules.
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See Fed. R. Civ. P. 58, 79. In our view, a final judgment
occurs where, as here, an action is dismissed, leave to amend is
explicitly denied, and the order is embodied in a separate
document. See 15A Wright et al., supra, § 3914.1, at 494 (2d
ed. 1992). Because final judgment entered in this case on June
1, 1999, the district court correctly perceived that it lacked
jurisdiction to permit the filing of an amended complaint on
June 28.
B. Extension of Time.
In the federal system, a notice of appeal from the
district court to the court of appeals must be filed "within 30
days after the judgment or order appealed from is entered."
Fed. R. App. P. 4(a)(1)(A); accord 28 U.S.C. § 2107(a). This
temporal stricture is mandatory and jurisdictional. See Scola
v. Beaulieu Wielsbeke, N.V., 131 F.3d 1073, 1073-74 (1st Cir.
1997). There is, however, an escape hatch: on motion filed
within thirty days after the time prescribed by Rule 4(a)
expires, the district court may extend the time for filing a
notice of appeal so long as the movant demonstrates either good
cause or excusable neglect. See Fed. R. App. P. 4(a)(5).
Final judgment entered in this case on June 1, 1999.
The plaintiffs filed their motion to extend the time to appeal
from that judgment fifty-five days thereafter, and thus came
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within the window of opportunity framed by Rule 4(a)(5). But
the district court dashed their hopes, finding that their
tardiness was not a product of either good cause or excusable
neglect.
On appeal, the plaintiffs base their challenge to this
finding principally on two circumstances. First, they maintain
that the lower court's June 1 decision and order, taken
together, were ambiguous as to the possibility of subsequent
amendment. Second, they allege that one of their attorneys
telephoned the district court clerk's office on June 4 to ask
whether judgment had been entered on the docket and that the
(unidentified) person with whom he conversed responded that it
had not.
The plaintiffs' effort to invoke the "good cause"
exception need not detain us. The reference to "good cause" was
added in 1979. See Fed. R. App. P. 4 advisory committee's note.
The drafters augmented the rule to take account of a narrow
class of cases in which a traditional "excusable neglect"
analysis would be inapposite. See Pontarelli v. Stone, 930 F.2d
104, 109-11 (1st Cir. 1991) (discussing purpose of incremental
"good cause" standard). An illustrative case is Scarpa v.
Murphy, 782 F.2d 300 (1st Cir. 1986) — a case in which the
putative appellant's tardiness in filing a notice of appeal
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resulted entirely from external causes. See id. at 301. In
such a situation, there is no neglect (and, thus, nothing to
excuse). In contrast, where there are no forces beyond the
control of the would-be appellant that prevent him from taking
timely steps to preserve his rights, "good cause" has no
applicability and an extension of the time for appealing can be
justified only by a showing of excusable neglect. See Virella-
Nieves v. Briggs & Stratton Corp., 53 F.3d 451, 453-54 (1st Cir.
1995).
The case at hand does not fit within the isthmian
confines of the "good cause" rubric. Even were we to assume
(counterfactually) that the district court's decision was
unclear as to its finality, the clerk also entered an
unambiguous "[c]ase closed" notation on the docket, and the
plaintiffs could have discovered this telltale simply by
checking the docket in person or on-line at any time thereafter.
We previously have held that reliance on telephonic inquiries to
the clerk's office, without more, cannot constitute good cause.
See id.; cf. Kelley v. NLRB, 79 F.3d 1238, 1249 (1st Cir. 1996)
("We think it plain that an attorney's reliance on oral
information, provided over the telephone and by a low-level
employee, is not reasonable."). We unhesitatingly reiterate
that sensible holding today.
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This brings us to the crux of the plaintiffs' argument:
their claim of excusable neglect. In Pioneer Investment
Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S.
380 (1993), the Court explained that such determinations are
equitable in nature. See id. at 395. Accordingly, an inquiring
court must "tak[e] account of all relevant circumstances
surrounding the [movant's] omission," including "the danger of
prejudice to the [non-movant], the length of the delay and its
potential impact on judicial proceedings, the reason for the
delay, including whether it was within the reasonable control of
the movant, and whether the movant acted in good faith." Id.
Mere "inadvertence, ignorance of the rules, or mistakes
construing the rules do not usually constitute 'excusable'
neglect." Id. at 392. Rather, the would-be appellant must
demonstrate unique or extraordinary circumstances. See Gochis,
16 F.3d at 14.
Refined to bare essence, the plaintiffs hinge their
claim of excusable neglect on the notion that they plausibly
misconstrued the June 1 dismissal order. We do not gainsay the
possibility that a plausible misconstruction of a court order
may on rare occasions meet the requirements for excusable
neglect. See Lorenzen v. Employees Retirement Plan of the
Sperry & Hutchinson Co., 896 F.2d 228, 232-34 (7th Cir. 1990)
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(explaining that a plausible misconstruction of the law or rules
can amount to excusable neglect). Here, however, the
plaintiffs' professed reading of the dismissal order was wholly
implausible. The memorandum decision that accompanied the
dismissal order explicitly rejected the plaintiffs' offer to
amend their complaint anew and explained in the most transparent
of terms the court's intention to act with "finality in this
case." A misunderstanding that occurs because a party (or his
counsel) elects to read the clear, unambiguous terms of a
judicial decree through rose-colored glasses cannot constitute
excusable neglect. See Advanced Estimating Sys., Inc. v. Riney,
130 F.3d 996, 998 (11th Cir. 1997) (holding that an attorney's
misreading of the plain language of a rule cannot constitute
excusable neglect).
The other circumstances to which the plaintiffs allude
likewise fail sufficiently to distinguish their case from the
mine-run. Because we already have mentioned most of these
circumstances, we will be brief. The plaintiffs' reliance on a
telephonic inquiry, in lieu of checking the docket, constituted
neglect — but not excusable neglect. Their assertion that the
decision and order were misleading when read together represents
a triumph of hope over reason. The fact that the district
court, by dismissing the action "without prejudice," left open
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the possibility of another suit did not create any legitimate
confusion as to the finality of its judgment in this case. See
Wallace & Tiernan, 336 U.S. at 794 n.1. Against this backdrop,
we cannot fault the district court's discretionary decision to
deny the motion for extended time to appeal. See Norgaard v.
DePuy Orthopaedics, Inc., 121 F.3d 1074, 1075 (7th Cir. 1997)
(holding that "[i]gnorance of the Supreme Court's docket,
although 'neglect,' is not 'excusable'"); Joslin v. Wechsler (In
re Wechsler), 246 B.R. 490, 495 (S.D.N.Y. 2000) (affirming a
bankruptcy court's finding of no excusable neglect where the
party "failed to check the docket for weeks"); E.I. DuPont
DeNemours & Co. v. United States, 15 F. Supp. 2d 859, 861 (Ct.
Int'l Trade 1998) (holding that "reliance on legal advice of the
clerk's office or counsel's misinterpretation of the law" is not
excusable neglect); cf. Mennen Co. v. Gillette Co., 719 F.2d
568, 570 (2d Cir. 1983) (finding excusable neglect where the
clerk violated a direct order of the court, relied upon by the
would-be appellant, to give notice of the entry of judgment).
We need go no further. Because the plaintiffs' failure
to file a timely notice of appeal was not excused by any
extraordinary circumstances, the district court did not abuse
its discretion in denying their motion for an extension of time.
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Affirmed.
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Mirpuri v. Act Manufacturing, Inc.
Court: Court of Appeals for the First Circuit
Date filed: 2000-05-08
Citations: 212 F.3d 624
Copy CitationsCombined Opinion