Last month, the Sixth Circuit subtly deepened a circuit split over a significant question of appellate jurisdiction within the federal courts: When a lawsuit begins in one U.S. district court but is transferred to a second district court within another federal circuit before reaching a final judgment, which court of appeals has jurisdiction to review the first district court’s interlocutory decisions?
In Kalama v. Matson Navigation Co., Inc., a panel of the Sixth Circuit answered: Appellate jurisdiction exists in the court of appeals encompassing the transferee district court, where the case reaches a final judgment. The Kalama appeal arose out of convoluted multidistrict litigation. The plaintiffs initially brought the underlying lawsuit in the Northern District of Ohio. The action was eventually transferred to the Eastern District of Pennsylvania, which dismissed some, but not all, defendants from the lawsuit. The Eastern District of Pennsylvania then re-transferred the case back to the Northern District of Ohio. The case reached a final judgment when the Northern District of Ohio dismissed the remaining defendants. Several plaintiffs then appealed only the Eastern District of Pennsylvania’s dismissal to the Sixth Circuit, which encompasses Ohio, but not Pennsylvania.
The Kalama appeal put the Sixth Circuit in the strange position of reviewing an order that arose in a district court outside of its territorial jurisdiction. Such a situation arises infrequently for good reason. Federal courts may only exercise jurisdiction to the extent authorized by Congress. One such jurisdictional authorization, codified at 28 U.S.C. § 1294, provides that “appeals from reviewable decisions of the district . . . courts shall be taken . . . to the court of appeals for the circuit embracing the district.” Under a straightforward reading of § 1294, the Eastern District of Pennsylvania’s decision should have been appealed to the Third Circuit, not the Sixth.
Yet the Sixth Circuit did not take that position in Kalama. Instead, it held that it may review a non-final order issued by a district court outside of the Sixth Circuit if the case eventually reaches a final judgment within the Sixth Circuit. Under the court’s reasoning, all previous non-final orders “merge” with the final judgment and become appealable in the court of appeals embracing the district court that issues the final judgment. The Seventh, D.C., Fourth, and Second Circuits also follow this theory.
While this “merger” theory appears to contradict § 1294, in the Sixth Circuit’s opinion that is not so. In Kalama, the court followed the D.C. Circuit by expressly adopting an interpretation of § 1294 that comports with the merger theory. According to the Sixth Circuit, a “reviewable” decision is synonymous with an “appealable” decision. A non-final order, such as the partial dismissal in Kalama, is not “reviewable”—that is, appealable—until the case reaches a final judgment. Thus, under the Sixth Circuit’s interpretation, § 1294 authorizes appeal of a non-final order to the court of appeals embracing the district court that ends up reaching a final judgment. In Kalama, that court was the Sixth Circuit.
The Tenth and Eleventh Circuits disagree. Both have rejected the merger theory, and both hold that, under the plain language of § 1294, any decision arising in a district court within a sister court of appeals must be appealed to that court of appeals. According to the Tenth and Eleventh Circuits, “reviewable” is not synonymous with “immediately appealable.”
Furthermore, neither court minds that this interpretation can practically leave a party without the opportunity to appeal a decision. For example, imagine that you are representing a defendant in an action initially filed in Colorado (a Tenth Circuit state), but recently consolidated into multidistrict litigation in Alabama (an Eleventh Circuit state). The Alabama district court denies your motion for summary judgment and refuses your request for the court to certify its decision for immediate review under 28 U.S.C. § 1292(b). You have no right to appeal the district court’s interlocutory decision at this stage. Next, the district court in Alabama re-transfers your case to the district court in Colorado for trial, where you lose. Now, you would want to appeal the Alabama court’s initial denial of your motion for summary judgment, but the Tenth Circuit’s interpretation of § 1294 prevents it. You are left without an avenue to appeal the decision.
Luckily for practitioners within the Sixth Circuit, including Tennessee, this conundrum should not arise under the rule announced in Kalama. As long as a case reaches final judgment within the Sixth Circuit, any interlocutory decisions may safely be appealed to the Sixth Circuit. However, practitioners should keep their guard up when a case is transferred out of the Sixth Circuit to the Tenth or Eleventh. In that circumstance, it is prudent to make every effort available to get an unfavorable, interlocutory decision reviewed before transfer—through either Rule 54(b) or § 1292(b), or by seeking an extraordinary writ—because the opportunity may be lost post-transfer.
