An Exception to the General Rule That Appellate Courts Lack Jurisdiction Over Appeals From Dismissals Without Prejudice

S.B. v. Kindercare Learning Centers, LLC, 815 F.3d 150 (3d Cir. 2016).  S.B., a four-year old girl, was injured at defendant’s day care center.  Her mother sued for negligence, on her own behalf and on behalf of S.B.  After the case was removed to federal court, the mother changed counsel, and the new attorney filed a motion for voluntary dismissal, asserting that S.B. was too young to describe the details of the incident and how it affected her.  The District Court granted the motion in part, dismissing the case without prejudice but imposing two conditions: (1) that plaintiffs pay defendant reasonable attorneys’ fees, as determined after a bill of costs was submitted, and (2) that they refile their case by June 24, 2019, about four years from the date of the dismissal order, subject to an extension of that time for good cause.  Rather than objecting to the bill of costs, and before the District Court entered an order, plaintiffs appealed.

Writing for the Third Circuit, Judge Sloviter ruled that the court lacked jurisdiction over the appeal.  Only final decisions are immediately appealable, and “[t]ypically, a dismissal without prejudice is not a final decision because the plaintiff may refile the complaint, thereby creating the risk of ‘piecemeal’ appellate litigation.”

Some other Circuits had allowed appeals from dismissals without prejudice where a District Court had attached “unreasonably onerous conditions” to the refiling of the complaint.  This is known as the “legal prejudice” exception to the final judgment rule.  The Third Circuit had not previously spoken to this issue, but Judge Sloviter found the legal prejudice exception consistent with prior Third Circuit law and adopted the exception for the Third Circuit.

Despite that, however, Judge Sloviter determined that there was no jurisdiction.  The two conditions here did not “severely circumscribe” or render “uncertain” plaintiffs’ ability to refile their case, as is required for the legal prejudice exception to apply.  It is not uncommon to require a plaintiff who voluntarily dismisses to pay the defendant’s reasonable attorneys’ fees.  And since no order fixing the amount of the fees was entered, the amount could not be said to impede refiling.

The second condition imposed did not qualify for the legal prejudice exception either.  Plaintiffs were allowed to refile their case within four years.  Though the applicable statute of limitations would have allowed refiling until S.B. turned twenty, there was a valid interest in causing refiling to occur sooner, while memories were fresher, and the four-year deadline was not ironclad but was subject to extension for good cause.

This opinion merited publication due to the panel’s adoption of the legal prejudice exception.  Were it not for that, there might not have been much need for any opinion of any real length since, as Judge Sloviter observed in a footnote, the absence of a “final order identifying the amount of costs imposed is an additional reason why” jurisdiction was lacking.  The adoption of the legal prejudice exception, however, advanced the law in the Third Circuit, and that merited precedential treatment of this opinion.