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United States District Court, S.D. New York

November 3, 2004.

PRYOR, et al., Defendants.

The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge


Plaintiffs, a collection of cigarette manufacturers, importers and wholesalers, have commenced this action against 31 state attorneys-general whose states have enacted Escrow Statutes and Certification Statutes as part of a Master Settlement Agreement between their states and certain other cigarette companies. Plaintiffs intend to enjoin enforcement of the statutes on constitutional, antitrust, preemption and Civil Rights Act grounds.

On September 29, 2003, the Court issued an opinion and order (the "Original Order") granting the motions of the 30 non-New York defendants to dismiss for lack of personal jurisdiction, and granting the motions of all 31 defendants to dismiss for failure to state a claim upon which relief can be granted.

  Soon thereafter, the Court of Appeals decided Freedom Holdings, Inc. v. Spitzer, 357 F.3d 205 (2d Cir. 2004), which rejected the basis of the Court's dismissal of the antitrust claims. In response to a motion for reconsideration, the Court issued an opinion and order dated July 15, 2004 (the "Reconsideration Decision"), reinstating only the antitrust claim as to Eliot Spitzer ("Spitzer"), the New York defendant. The Court denied plaintiffs' motion for reconsideration of the Original Order in all other respects.

  Plaintiffs now move by order to show cause, dated October 1, 2004, for an amended or further judgment, directing the entry of final judgment as to the dismissed defendants pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. Plaintiffs also seek a stay of pretrial proceedings pending the appeal of the dismissal as to the 30 non-New York defendants and the non-antitrust claims. Lastly, plaintiffs ask the Court to vacate the dismissal of the claims against the non-New York defendants to the extent that the dismissal was based on lack of personal jurisdiction. Defendant Spitzer opposes the motion in all respects.

  The federal courts have long viewed piecemeal appeals with an austere eye. Rule 54(b), however, provides the courts some leeway:

  When more than one claim for relief is presented in an action . . . or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. Three factors govern the applicability of Rule 54(b): (i) whether multiple, separate claims exist, (ii) whether one of them has been finally determined, and (iii) whether there is no just reason for delay of an appeal. Even if these conditions are met, discretion to order Rule 54(b) certification remains with the district court. Shrader v. Granninger, 870 F.2d 874, 877 (2d Cir. 1989). The first two factors are easily resolved. First, plaintiffs make multiple claims, and the dismissed non-antitrust claims may be resolved independently of the antitrust claim. Second, the Court has dismissed all of the claims, with the exception of the antitrust claim against Spitzer.

  The third factor presents the rub. The Court is mindful that Rule 54(b) certification is appropriate "only in the infrequent harsh case, where there exists some danger of hardship or injustice through delay which would be alleviated by immediate appeal." Citizens Accord, Inc. v. Rochester, 235 F.3d 126, 129 (2d Cir. 2000) (internal quotes and citations omitted). An instructive example is "where an expensive and duplicative trial could be avoided if, without delaying prosecution of the surviving claims, a dismissed claim were reversed in time to be tried with the other claims." Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 16 (2d Cir. 1997).

  This potential scenario inclines the Court toward granting of the Rule 54(b) certification in this case. If, at the end of the trial on the merits against Spitzer, the Court of Appeals reverses the personal jurisdiction dismissals and/or the dismissals of the non-antitrust claims, another trial of the non-New York defendants, Spitzer, or both would be necessary. On the other hand, Rule 54(b) certification and immediate appeal of the dismissed claims would avoid the need for separate trial in the event of a reversal. See Michelson v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 709 F. Supp. 1279, 1290 (S.D.N.Y. 1989). While the Court in no way hesitates as to the propriety of its previous orders, the latter path is the more efficient one and better serves judicial economy in the event of a reversal.

  In his letter dated October 19, 2004, defendant Spitzer relies on Shrader v. Granninger, 870 F.2d 874 (2d Cir. 1989), for the proposition that Rule 54(b) certification is unnecessary because plaintiffs may obtain the relief they seek by asserting their claims as defenses to enforcement actions brought by the non-New York defendants in their state courts. Shrader is distinguishable. In that case, no party was completely dismissed from the action, which was cause for "hesitation." Id. at 878. Here, 30 of 31 defendants have been dismissed.

  More importantly, Shrader was an action by individuals committed to the Albany Veterans Administration Medical Center (AVAMC) seeking, in part, declaratory judgment that the AVAMC must abide by Article 9 of the New York Mental Hygiene Law. Id. at 876. The district court determined that the Supremacy Clause prevented state law from regulating procedures at veterans' hospitals. Id. at 876-77. In rejecting Rule 54(b) certification of this ruling, the Court of Appeals noted plaintiffs' argument that delay was harmful because the AVAMC would not apply Article 9 to patients during the trial. The Court determined, however, that state habeas corpus proceedings would have resulted in the application of Article 9 to the plaintiffs, giving them some of the relief they sought. This belied plaintiffs' argument that delay of the appeal would be "harmful." Id. at 879.

  Application of Shader to this case results in the proverbial mixing of apples and oranges. Certainly, the pursuit of the remedy in other actions would have alleviated the harm to plaintiffs in Shader, but the harm in Shader (failure to apply Article 9) was not the same kind of harm that preoccupies the Court in this case (multiple, duplicative trials). Plaintiffs' conduct, whatever it may be, in the non-New York cases does not assuage the Court's concern. Furthermore, the Shrader Court rejected the Rule 54(b) appeal largely because of an insufficient record that resulted in a "factual void," and the lack of a determination in the court below as to which provisions of Article 9 should apply to the AVAMC. Id. at 879. These concerns are not present here. For the foregoing reasons, the motion for Rule 54(b) certification of the dismissed claims is granted. As for plaintiffs' request for a stay of the Spitzer proceedings pending appeal, the Court looks to five factors: "(1) the private interests of the plaintiffs in proceeding expeditiously with the civil litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private interests of and burden on the defendants; (3) the interests of the courts; (4) the interests of persons not parties to the civil litigation; and (5) the public interest." Volmar Distributors, Inc. v. N.Y. Post, Co., 152 F.R.D. 36, 39 (S.D.N.Y. 1993).

  The first factor is not at issue because plaintiffs request the stay. The fourth factor also is of no concern. The remaining factors tip the balance to the defendant. In his October 19 letter, defendant Spitzer contends that the pending antitrust claim clouds the validity of New York public health legislation. The Court agrees. A stay would only exacerbate this problem, which jointly affects the defendant and the public interest. As for the interest of the courts, Rule 54(b) certification was granted to allow for a dismissed claim to be reversed in time for trial with the pending claim, without delay to the pending claim. A stay impedes this goal. While the Court is not deaf to plaintiffs' assertions of financial hardship (See Declarations of Steve Williams, Randy Bishop and Najib Boulos in Support of Stay and Related Relief), the other considerations are weightier, and a stay of a civil case is "an extraordinary remedy." Jackson v. Johnson, 985 F. Supp. 422, 424 (S.D.N.Y. 1997). The motion for a stay is denied.

  Next, the Court takes up plaintiffs' motion for vacatur of the dismissal of the non-New York defendants for lack of personal jurisdiction. Plaintiffs contend that a motion for leave to file an amicus brief in Freedom Holdings, Inc. v. Spitzer, 02 Civ. 2939 (S.D.N.Y.) (Hellerstein, J.), by 28 of the 30 non-New York defendants was sufficient for personal jurisdiction to attach in this matter as to those defendants.

  The Court is not convinced. The amicus motion was filed on October 6, 2004, over two years after plaintiffs filed their complaint in this case. Only pre-litigation contacts are relevant to general personal jurisdiction analysis. Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 569 (2d Cir. 1996). With respect to specific jurisdiction, the cases on point are sparse, though some cases have permitted consideration of events after the event that gave rise to the cause of action. See McMullen v. European Adoption Consultants, Inc., 109 F. Supp. 2d 417, 420 (W.D. Pa. 2000). Nevertheless, the filing of a motion to submit amicus briefs in the Freedom Holdings case is hardly a continuation of the conduct that gave rise to the complaint in this case. See Educational Testing Service v. Katzman, 631 F. Supp. 550, 556 (D.N.J. 1986). Motion denied. CONCLUSION

  There being no just reason for delay, the Court grants Rule 54(b) certification with respect to the Rule 12(b)(2) dismissals of the claims against the 30 non-New York defendants, as well as the Rule 12(b)(6) dismissals of plaintiffs' claims against all defendants, with the sole exception of the antitrust claim against defendant Spitzer. Pursuant to Rule 54(b), the clerk is directed to enter final judgment with respect to the dismissed claims. Plaintiffs' other motions are denied.



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