Effect of a Stipulated Dismissal “Without Prejudice” on Appellate Jurisdiction

On occasion, a plaintiff faced with the dismissal of one or more, but not all, of its claims may wish to pursue an immediate appeal without losing the ability to pursue its remaining claims later on.  A similar situation arises when a court dismisses a plaintiffs’ claims in their entirety, but the defendant has counterclaims that remain pending.  Since an order dismissing less than all of the claims of all of the parties is not “final” for the purpose of bringing an appeal as of right in either the Michigan Court of Appeals or the Sixth Circuit,[1] it is tempting to consider stipulating to the dismissal of the remaining claims or counterclaims “without prejudice” or with some other language preserving the ability to reinstate those claims in the event of an appellate reversal.  It would be wise to resist that temptation.

State Court

The Michigan Court of Appeals has repeatedly cautioned against dismissing claims “without prejudice” in order to try and achieve finality.  As the court explained in City of Detroit v Michigan, 262 Mich App 542, 545; 686 NW2d 514 (2004), voluntarily dismissing claims without prejudice creates the possibility of “piecemeal” appeals, which the court rules are designed to prevent:

The parties’ stipulation to dismiss the remaining claims without prejudice is not a final order that may be appealed as of right; it does not resolve the merits of the remaining claims and, as such, those claims are “not barred from being resurrected on that docket at some future date.” Wickings v Arctic Enterprises, Inc, 244 Mich App 125, 136; 624 NW2d 197 (2000). The parties’ stipulation to dismiss the remaining claims was clearly designed to circumvent trial procedures and court rules and obtain appellate review of one of the trial court’s initial determinations without precluding further substantive proceedings on the remaining claims. This method of appealing trial court decisions piecemeal is exactly what our Supreme Court attempted to eliminate through the “final judgment” rule.

In MLive Media Group v City of Grand Rapids, 321 Mich App 263; 909 NW2d 282 (2017), the Court of Appeals found City of Detroit to be distinguishable because the dismissal without prejudice at issue in MLive was involuntary. Id. at 268. But the court reiterated Michigan’s firmly established rule that “[p]arties cannot create a final order by stipulating the dismissal of remaining claims without prejudice after a trial court enters an order denying a motion for summary disposition addressing only some of the parties’ claims.”  Id.

Federal Court

The Sixth Circuit likewise views attempts to manufacture finality with disfavor.  In fact, the court just recently addressed the issue in Rowland v Southern Health Partners, Inc, 4 F4th 422 (CA 6, 2021).  After the district court granted partial summary judgment to the defendants on the plaintiff’s federal claims, leaving her state-law claims remaining, the parties told the district court that their “preferred method of moving forward” was dismissal of the plaintiff’s remaining state-law claims “without prejudice” so that the plaintiff could pursue an appeal on her federal claims and have her dismissed state-law claims reinstated if she prevailed on appeal.  Id. at 424.  The Sixth Circuit held that the maneuver deprived it of jurisdiction over the plaintiff’s appeal. 

The court explained that, with limited exceptions, “the finality requirement establishes a one-case, one-appeal rule.” Id. at 425.  Because the plaintiff’s state-law claims could “spring back to life” if summary judgment were reversed on any of her federal claims, this “contravene[d] purpose of the finality requirement, which is intended to prevent parties from pausing the litigation, appealing, then resuming the litigation on a ‘half-abandoned claim if the case returns.’”  Id. at 426 (citation omitted).  See also Page Plus of Atlanta, Inc v Owl Wireless, LLC, 733 F3d 658, 659-660 (CA 6, 2013) (dismissing an appeal for lack of jurisdiction where the parties—after the district court granted summary judgment to the defendant on the plaintiff’s claims as well as on the defendant’s counterclaim (except as to damages)—stipulated to an order dismissing the entire case on condition that the defendant could re-raise its counterclaim if the order granting summary judgment on the plaintiff’s claims was reversed).

One noteworthy aspect of the Sixth Circuit’s approach to finality is that the court does appear to recognize two potential rationales that might establish finality notwithstanding a stipulated dismissal being “without prejudice.”  One is that “the voluntary dismissal comes at a cost,” with the party “assum[ing] the risk that the statute of limitations, any applicable preclusion rules or any other defenses might bar recovery on the claim.” Id. at 427 (citation and internal quotations omitted).  The other is if the “claim voluntarily dismissed without prejudice must be re-filed in a separate action,” in which case there would be “no risk that the same case will produce multiple appeals raising different issues.”  Id. at 427-428 (citation and internal quotations omitted).

Conclusion

Although it appears theoretically possible to construct a voluntary dismissal without prejudice that meets the Sixth Circuit’s view of finality, it should be approached with extreme caution.  As far as Michigan goes, the practice should be avoided completely, or else face the very real—if not likely—prospect of the appeal being dismissed.