Shearman & Sterling LLP | Securities Litigation Blog | United States Supreme Court Allows For Appeals From Final Decisions Regarding Individual Actions In Ongoing Consolidated Proceedings<br >  
Securities Litigation
This links to the home page
  • United States Supreme Court Allows For Appeals From Final Decisions Regarding Individual Actions In Ongoing Consolidated Proceedings

    On Tuesday, March 27, 2018, Chief Justice John Roberts announced a unanimous decision of the United States Supreme Court that allows immediate appeals from final decisions issued in any action that has been consolidated with other actions for proceedings under Rule 42(a) of the Federal Rules of Civil Procedure.  Hall v. Hall, --U.S.—, 2018 WL 1472897 (2018).  This decision provides important optionality for parties, including in securities actions (which are often consolidated under Rule 42(a)), to be able to appeal an adverse final decision while continuing to address pending cases within the consolidated proceeding.

    Hall came before the Court in the context of a complex family dispute involving two different actions:  A “trust case” originally brought by a mother as trustee, relating to her son’s alleged mismanagement of various real estate holdings in a trust; and an “individual case” which featured separate claims by the son against his sister, who had joined the trust case as trustee after the mother’s death.  The cases were consolidated for trial, during which the son prevailed both in his counterclaims in the trust case and in his affirmative claims in the individual case.  The district court, however, granted the daughter a new trial in the individual case, while a final judgment was entered in the trust case.  The daughter sought to appeal the final judgment in the trust case even while the individual case progressed. 

    The United States Court of Appeals for the Third Circuit held that the judgment issued in the trust case was not a final judgment, because the claims in the individual case were still pending before the district court.  The Supreme Court disagreed.  The Court first noted that if the proceedings had not been consolidated, there would not have been any dispute that the appeal could have proceeded.  In then tracing the history of consolidation, the Court explained that the first federal courts had the authority to consolidate cases for purposes of judicial efficiency, but that these cases still comprised individual proceedings in which a final decision was immediately appealable by the losing party.  The concept that consolidated cases reflect a combination of distinct actions that retain their distinct character even after consolidation is also rooted in Supreme Court precedent from the nineteenth century and had been commonly adhered to before the advent of Rule 42(a).

    In discussing how Rule 42(a) was drafted in the late 1930s against this historical backdrop, the Court further noted that the word “consolidate” was undefined in Rule 42(a), but “presumably carried forward the same meaning we had ascribed to it under the consolidation statute for 125 years.”  Id. at *9.  Rejecting the son’s argument that the rule left open the door to multiple forms of consolidation, including a wholesale merger of proceedings which would render “partial” judgments unappealable, the Court held that this strained the plain language of the rule, especially in light of historical practice, noting that “if Rule 42(a) were meant to transform consolidation into something sharply contrary to what it had been, we would have heard about it [from Congress or the Rule Advisory Committee].”  Id. at *10.

    Under the Supreme Court’s decision, it is now clear that, when faced with an adverse final decision in one case within a consolidated action, a party can appeal that decision while the remaining consolidated proceeding goes forward.
    CATEGORY: Jurisdiction