Rule 54(b) – A Primer

Adam Ellis–Las Vegas, Nevada appellate and business litigation attorney

Many civil cases involve multiple parties and multiple causes of action.  Frequently, however, just one or few causes of action are central to the dispute.  Others are either plead in the alternative or out of an abundance of caution.  How can a party appeal a decision as to just one cause of action, when others remain?  Shouldn’t an appeal only lie after the entire case proceeds through judgment? NRCP 54(b) provides the answers:

When an action presents more than one claim for relief — whether as a claim, counterclaim, crossclaim, or third-party claim — or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.

Though the text may appear a bit confusing at first glance, the Rule’s purpose informs us.  Rule 54(b) was designed to promote judicial economy by limiting piecemeal appellate review of issues within a case, while simultaneously imposing a standard to determine when appellate review is appropriate though the case has not proceeded to judgment.

Generally, appellate courts disfavor piecemeal review of issues within a case.  And for good reason; it takes time, effort, and resources to hear an appeal, and appellate courts do not wish to hear individual appeals related to each decision by the district court in a matter.  More importantly, the appellate court lacks jurisdiction to hear an appeal where there is no final judgment in the underlying litigation.

Rule 54(b) certification is a determination from the district court that although the order or judgment under appeal disposes of fewer than all claims in the case, it is otherwise final, and that no just reason for delay exists for the appellate court to review the order.  Absent 54(b) certification, the appellate court lacks jurisdiction to hear the appeal, and the appeal will be dismissed.  See First Western Sav. & Loan Ass’n v. Steinberg, 89 Nev. 582 (1973).

But how does one obtain 54(b) certification?  Like most things, a party must move in the district court for Rule 54(b) certification.  The district court cannot grant certification unless it is  warranted and meets the necessary requirements discussed below. See Taylor Const. Co. v. Hilton Hotels Corp., 100 Nev. 207 (1984).  “The district court does not have the power, even when a motion for certification is unopposed, to transform” an inappropriate interlocutory order “into a final judgment.” Id.

To obtain Rule 54(b) certification, the order or judgment must dispose of either an entire claim or all claims against one party.  For example, the denial of a motion for summary judgment is not capable of 54(b) certification because the denial neither disposes of an entire claim nor all claims against a single party.  See id.  An order granting a motion to dismiss is certifiable under NRCP 54(b), as it operates to dismiss an entire claim, but fewer than all claims in the action.  See State v. AAA Auto Leasing & Rental, Inc., 93 Nev. 483 (1977).

Next, the district court must “expressly determine[] that there is no just reason for delay.”  NRCP 54(b).  The court need not provide any findings of fact or reasoning to support its determination that there is no reason for delay. See Mallin v. Farmers Ins. Exchange, 106 Nev. 606 (1990).  Though this sentence seems rather conclusory, that is all that is required.

NRCP 54(b) serves as a buffer against appeals being taken from interlocutory orders, and imposes a requirement on the district court to certify that its order is final and reviewable.  Failure to seek 54(b) certification when claims or parties remain in the district court proceeding will certainly be fatal to your appeal.  Save yourself time, and your client’s money.  Apply NRCP 54(b) the next time you wish to appeal a district court’s order.


Mediation and Overconfidence Bias

According to Russell Korobkin, “Psychological Impediments to Mediation Success,” 21 Ohio St. J. on Disp. Resolution 281, 287 (2006), 80% of professional truckers believe they are safer than average and 94% of college professors think they are above average.
Lawyers and litigants tend to suffer from the same fate–having overconfidence in their likelihood of success.  In fact, 44% of attorneys who were asked in one study to predict outcomes at trial were overconfident in their prediction of their success.  Goodman-Delahunty, “Insightful or Wishful: Lawyers’ Ability to Predict Case Outcomes,” 16 Psych., Pub. Policy & Law 133 (2010).  Most of my attorney friends who just read that statistic are thinking, “I would be one of the 79% who predicted my success correctly.”[1]

The Randall Kiser Study, released in the Journal of Empirical Legal Studies, found that parties who reject the last and best offer at mediation overwhelmingly regret the decision.  The study surveyed thousands of cases in California and New York over a five-year period.  It found that plaintiffs who rejected the last settlement offer and proceeded to trial do worse a whopping 61% of the time, while defendants did worse than their last offer 24% of the time.  In only 15% of the cases did both sides obtain a better result at trial.

All is not good news for defendants, however.  Although they seem to do better at predicting outcomes, the 24% of the time they are wrong ends up being much more costly to them.  Defendants who fail to do better than the Plaintiff’s last demand, ended up with a verdict that was on average $1.1 Million more than the Plaintiff’s last demand.  On the other hand, plaintiffs received on average $43,000 less than the last offer given before trial.

Mediators assist often entrenched parties who each have a greater belief in the value of their position than they ought to have, to reach a middle position. The uncertainty of a litigated outcome alone justifies considering alternatives to a litigated result.  Every experienced and honest litigator can point to cases they won when they didn’t think they had a chance winning.  They can also point to times when if there was any justice, they would have won, but lost.  There simply is no way to accurately predict with certainty the outcome of a litigated case whether decided by a judge, a jury, or an arbitrator.

Some studies suggest that 95% or more of lawsuits settle rather than go to trial.  Assuming that is true, your case seems destined to settle; therefore, why not resolve it now rather than later?  Doing so may save time, aggravation, stress, and money.  That said, mediation will not be an easy process.  At times, you may feel uncomfortable, pressured, and perhaps even emotional.  If the process were easy, the parties wouldn’t need a mediator’s assistance to settle the matter.  A mediated result gives you certainty without the risk of litigation.

[1] Attorneys are also not known to be terribly good at math.

Obtaining an Injunction Against Non-Signatories to Non-Compete Agreements

nevada law blogIn many states, courts will enforce a written promise that one will not compete with another party to the agreement, such as a key executive promising not to compete with her employer if she leaves the company.   What would happen if the executive left the company, then helped someone else to compete with the executive’s former company?  Courts can keep the executive from continuing to compete by enjoining the activity, but what can be done about the party who has no agreement (“the non-signatory”) with the company?  Can a court enjoin the non-signatory from competing with the company?  The answer is yes.

A court may enjoin someone one who does not sign a non-compete covenant when the non-signatory “breaches the covenant in active concert with the principal party enjoined and with knowledge of the covenant.” Las Vegas Novelty, Inc. v. Fernandez, 106 Nev. 113, 116-117 (1990) (citing McCart v. H & R Block, Inc., 470 N.E.2d 756 (Ind.Ct.App. 1984)).   The plain language of NRCP 65(d) further supports the notion, as it requires an injunction to bind the parties, as well as their agents and any other persons participating or acting in concert with the parties. See NRCP 65(d).

Enjoining a non-signatory preserves the purposes of the covenant; otherwise, permitting someone to intentionally end-run around a non-competition provision essentially renders that provision useless. See Day Cos. V. Patat, 440 F.2d 1343 (5th Cir. 1971), cert. denied, 404 U.S. 830, 92 S.Ct. 71, 30 L.Ed.2d 59 (reasoning a non-signatory to a covenant will be bound because a covenantor will not be allowed to do through others what he or she could not do directly); H&R Block Tax Servs., LLC v. Strauss, 2015 WL 470644, at *6 (N.D.N.Y. Feb. 4, 2015) (enjoining non-signatories where evidence showed the non-signatories were acting in active concert with the covenantor); Dad’s Properties, Inc. v. Lucas, 545 So.2d 926 (Fla. Dist. Ct. App. 1989) (even though wife was the sole owner of competing business, she was properly enjoined from competing because she was aiding and abetting her husband to violate his covenant).

Accordingly, those “who benefit[] from the covenantor’s relationship with a competing business must abide by the same restrictive covenant agreed to by the covenantor.” Tantopia Franchising Co., LLC v. W. Coast Tans of PA, LLC, 918 F.Supp.2d 407, 416–17 (E.D.Pa.2013) (citing Total Car Franchising Corp. v. L & S Paint Works, Inc., 981 F.Supp. 1079, 1082 (N.D.Tenn.1997) (not only covenantor and new company bound but also his “servants or agents and those acting in collusion or combination with him”).  The lesson here is that people who have a covenant not to compete should not try to nevertheless compete through a straw person.  Both could end up as defendants in a very expensive lawsuit.