United States District Court, S.D. New York
November 3, 2004.
GRAND RIVER ENTERPRISES SIX NATIONS, LTD., et al., Plaintiffs,
PRYOR, et al., Defendants.
The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
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
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
The federal courts have long viewed piecemeal appeals with an
austere eye. Rule 54(b), however, provides the courts some
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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