United States Court of Appeals
For the First Circuit
No. 24-1863
AIR-CON, INC.,
Plaintiff-Appellant,
v.
DAIKIN APPLIED LATIN AMERICA, LLC,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Raúl M. Arias-Marxuach, U.S. District Judge]
Before
Aframe, Hamilton,* and Thompson,
Circuit Judges.
Rafael M. Santiago-Rosa, with whom José R. Negrón-Fernández,
Miguel A. Rangel-Rosas, and Marichal Hernández LLC were on brief,
for appellant.
Mauricio O. Muñiz-Luciano, with whom Claudia S. Delbrey-Ortiz
and Marini Pietrantoni Muñiz LLC were on brief, for appellee.
August 21, 2026
* Of the United States Court of Appeals for the Seventh
Circuit, sitting by designation.
HAMILTON, Circuit Judge. We dismiss this appeal for
lack of appellate jurisdiction. The defendant's counterclaim for
damages was dismissed voluntarily and without prejudice, which
means the counterclaim could be revived in the district court after
this appeal. Accordingly, there is no genuinely final judgment
from which to appeal, nor is any other route for interlocutory
appeal available here.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises from a commercial relationship between
defendant Daikin Applied Latin America, LLC, a Miami-based
subsidiary of Daikin Industries, and plaintiff Air-Con, Inc., a
Puerto Rican company that distributed Daikin products in Puerto
Rico and across the Caribbean. See Air-Con, Inc. v. Daikin Applied
Latin America, LLC, 21 F.4th 168, 171–72 (1st Cir. 2021).
The relationship soured. Air-Con then sued Daikin and
others in Commonwealth court under the Puerto Rico Dealer's Act,
commonly known as Law 75. P.R. Laws Ann. tit. 10, §§ 278–278e.
Air-Con alleged that Daikin had taken various steps to impair
Air-Con's distribution rights. After Air-Con voluntarily
dismissed its claims against non-diverse defendants, Daikin
removed the case to the federal district court in Puerto Rico.
Daikin then answered and alleged a counterclaim for more than
$235,000 that Air-Con allegedly owed on transactions during the
breakdown of their commercial relationship. Daikin also sought a
- 2 -declaratory judgment to the effect that it had just cause under
Law 75 to terminate its commercial relationship with Air-Con.
The district court granted Daikin's motion for summary
judgment on Air-Con's Law 75 claim and dismissed the declaratory
judgment counterclaim without prejudice as not yet ripe. Setting
the stage for the issue of appellate jurisdiction in this appeal,
the district court denied summary judgment on Daikin's
counterclaim for damages. The court found genuine issues of
material fact as to whether Air-Con was past due on payments and
if so in what amount. The court set the case for trial on that
counterclaim.
Air-Con then sought entry of final judgment on its Law
75 claim under Federal Rule of Civil Procedure 58. Air-Con seems
to have feared, quite incorrectly, that it would be precluded from
ever appealing the summary judgment order if it did not act
promptly to seek an interlocutory appeal. (It is well established
under the "merger doctrine" that an appeal of a final judgment
brings before the court of appeals all interlocutory decisions
that preceded it. See, e.g., Commonwealth School, Inc. v.
Commonwealth Academy Holdings LLC, 994 F.3d 77, 82—83 (1st Cir.
2021).) The district court correctly analyzed this request as a
motion for partial final judgment under Rule 54(b) and rejected
it, noting the "significant factual and legal overlap" between
- 3 -Air-Con's Law 75 claim and Daikin's counterclaim, which remained
set for trial.
Air-Con then tried to invoke Federal Rule of Appellate
Procedure 5 and filed a petition for leave to appeal the denial of
entry of partial final judgment and the underlying summary judgment
order. This court denied that petition, noting that the "summary
judgment ruling was not a final, immediately appealable order
because a counterclaim remained pending" and that denial of a Rule
54(b) motion for entry of a separate final judgment is not subject
to immediate interlocutory review. Air-Con, Inc. v. Daikin Applied
Latin America, LLC, No. 24-8013 (1st Cir. July 8, 2024)
(non-precedential). Air-Con's invocation of Rule 5 was unusual.
Rule 5 is not an independent source of appellate jurisdiction. It
provides only the mechanism by which a court of appeals may grant
discretionary appellate review authorized by some other rule or
law. Id.; see Fed. R. App. P. 5(a)(1)–(2).
One month later, and just before the deadline for
submitting proposed pretrial orders for trial on the counterclaim,
defendant Daikin moved under Federal Rule of Civil Procedure 41(a)
and (c) to dismiss its remaining counterclaim voluntarily, but to
do so without prejudice. "That way," it wrote, "the Court can
enter judgment and this case can conclude." The district court
directed the parties to report whether Air-Con stipulated to the
dismissal. Air-Con opposed dismissal on the terms proposed by
- 4 -Daikin. It asked the court either to make the dismissal with
prejudice or to award attorney fees and costs Air-Con had incurred
on the counterclaim.
The district court granted voluntary dismissal on
Daikin's terms, that is, without prejudice and without attorney
fees or costs. The court wrote that the pending counterclaim was
"the only bar to entry of final judgment and appellate review of"
the summary judgment order and that "[t]his assessment is confirmed
by the Court of Appeal's July 8, 2024, Judgment dismissing
Air-Con's improper attempt at an interlocutory appeal." The
district court entered what it called a final judgment dismissing
with prejudice Air-Con's Law 75 claim and dismissing without
prejudice Daikin's counterclaims. Air-Con has appealed.
Given the district court's assertion that its judgment
was final, it is easy to understand why Air-Con appealed.
Unfortunately, however, the district court was not correct about
the judgment being final. We invited the parties to address
appellate jurisdiction at oral argument. We conclude that
appellate jurisdiction is lacking because the judgment appealed
from is not final within the meaning of 28 U.S.C. § 1291.
II. APPELLATE JURISDICTION
This case presents a recurring problem of appellate
jurisdiction. See 15A Wright & Miller, Federal Practice &
Procedure § 3914.8.1 (3d ed. Apr. 2026 update). When the district
- 5 -court decides some but not all claims before trial, one or both
sides may not wish to proceed with the remaining claims,
particularly if they appear expensive to try and/or less important
than the issues already decided. The temptation to appeal
immediately on the most valuable claims or most important issues
can be strong.
One path to such an immediate appeal is to dismiss the
remaining claims voluntarily, seemingly leaving nothing more
pending in the district court. If the remaining claims are
dismissed with prejudice so that they will not resurface after the
immediate appeal, that path can work. It does not work, however,
if parties try to hedge their bets by dismissing without prejudice
in an effort to preserve an ability to revive the dismissed claims
after an appeal.
That tactic was tried here, but it did not produce a
genuinely final appealable judgment. In dismissing this appeal,
we follow the principles the Supreme Court uses in deciding
finality, as well as the decisive weight of authority among the
circuits. The general rule we apply is that a claim voluntarily
dismissed without prejudice precludes finality under § 1291 if it
could be revived in the same district court, and that rule applies
regardless of whether the claim belongs to an appellant or an
appellee.
- 6 -To explain our reasoning, we first sketch voluntary
dismissals under Rule 41. We then turn to general principles of
finality and the guidance of the Supreme Court in Microsoft Corp.
v. Baker, 582 U.S. 23 (2017), and explain why they point toward
dismissal here. We then review relevant First Circuit precedents
and principles, which leave open the question in this appeal. We
then review the cases from other circuits, most of which would
also point toward dismissal. We then explain why finality should
not depend on which side's claim has been voluntarily dismissed
without prejudice. Finally, we address some nuances and objections
to this rule.
A. Voluntary Dismissals Under Rule 41
We understand why Air-Con has sought immediate appellate
review of an interlocutory decision resolving a particularly
important claim or issue. Such a party may ask the district court
to enter a separate final judgment under Federal Rule of Civil
Procedure 54(b) or seek leave to appeal from the district court
and a circuit court under 28 U.S.C. § 1292(b). Those routes have
stringent requirements, however, and both require approval by the
district court and court of appeals. Those routes have not been
available to Air-Con on its Law 75 claim here.
Daikin seems to have offered Air-Con another path to
appeal the Law 75 issues without trying its counterclaim by using
another tactic: voluntary dismissal. Federal Rule of Civil
- 7 -Procedure 41(a) provides that a plaintiff may "dismiss an action
without a court order" as of right if the defendant has not served
a responsive pleading or motion for summary judgment, or else by
stipulation of all parties who have appeared. To dismiss
unilaterally as of right a counterclaim, crossclaim, or
third-party claim, the claimant must do so before service of a
responsive pleading or, "if there is no responsive pleading, before
evidence is introduced at a hearing or trial." Fed. R. Civ. P.
41(c). Except in those circumstances, "an action may be dismissed
at the plaintiff's request only by court order, on terms that the
court considers proper." Fed. R. Civ. P. 41(a)(2).
Whether by right, stipulation, or leave of the court, a
voluntary dismissal under Rule 41(a) is "without prejudice" unless
otherwise indicated, although a second voluntary dismissal as of
right or by stipulation "operates as an adjudication on the
merits." Fed. R. Civ. P. 41(a)(1)(B) & (2). "The primary meaning
of 'dismissal without prejudice,'" in the Supreme Court's view,
"is dismissal without barring the plaintiff from returning later,
to the same court, with the same underlying claim." Semtek
International Inc. v. Lockheed Martin Corp., 531 U.S. 497, 505
(2001). In this case, there is no doubt that the dismissal of
- 8 -Daikin's counterclaim was without prejudice, both legally and
practically.1
B. Finality for Appeal
1. General Principles
With this understanding of voluntary dismissals under
Rule 41, we turn to general principles of finality and consider
how a voluntary dismissal without prejudice fits with them, or
not. Federal courts of appeals have appellate jurisdiction over
"final decisions" of federal district courts. 28 U.S.C. § 1291.
The canonical definition of the term "final decision" in § 1291
comes from Catlin v. United States: "A 'final decision' generally
is one which ends the litigation on the merits and leaves nothing
for the court to do but execute the judgment." 324 U.S. 229, 233
Several circuits have read the text of Rule 41(a) to
1
contemplate dismissal of "'an action' –– which is to say, the whole case," and not "a particular claim." Perry v. Schumacher Group of
Louisiana, 891 F.3d 954, 958 (11th Cir. 2018), quoting Berthold
Types Ltd. v. Adobe Systems Inc., 242 F.3d 772, 777 (7th Cir.
2001); see also 9 Wright & Miller, Federal Practice & Procedure
§ 2362, n.15 (4th ed. Apr. 2026 update) (collecting cases).
District courts in this circuit have concluded likewise, noting
the appropriate path is amendment under Rule 15(a) instead of
dismissal under Rule 41(a). E.g., Shwachman v. Town of Hopedale,
540 F. Supp. 3d 134, 139–40 (D. Mass. 2021). Courts sometimes
allow a plaintiff to dismiss all claims against a particular
defendant while leaving other defendants in the case. Williams v.
Taylor Seidenbach, Inc., 958 F.3d 341, 344–45 (5th Cir. 2020) (en
banc); accord, Donahue v. Federal National Mortgage Ass'n, 971
F.3d 1, 3 (1st Cir. 2020), superseded on reh'g, 980 F.3d 204. We
need not and do not address such situations here. While the effect
of a voluntary dismissal without prejudice goes to jurisdiction,
its propriety does not, and the parties have not raised an issue
about its propriety here.
- 9 -(1945); see 15A Wright & Miller, supra, § 3909 (identifying Catlin
as leading case).
"'Finality as a condition of review is an historic
characteristic of federal appellate procedure.' . . . [The]
final-judgment rule, by preventing piecemeal appeals, 'promotes
the efficient administration of justice' and 'preserves the proper
balance between trial and appellate courts.'" GEO Group, Inc. v.
Menocal, 607 U.S. 438, 443–44 (2026), quoting first Cobbledick v.
United States, 309 U.S. 323, 324 (1940), and then Microsoft Corp.
v. Baker, 582 U.S. 23, 36–37 (2017). The Supreme Court has
"recognized that 'finality is to be given a practical rather than
a technical construction.'" Baker, 582 U.S. at 37, quoting Eisen
v. Carlisle & Jacquelin, 417 U.S. 156, 171 (1974), quoting in turn
Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546
(1949). The Baker Court continued: "Finality, we have long
cautioned, 'is not a technical concept of temporal or physical
termination.' It is one 'means [geared to] achieving a healthy
legal system,' and its contours are determined accordingly." Id.
at 41 (citations omitted and alteration in original), quoting
Cobbledick, 309 U.S. at 326.
The final-judgment rule promotes a "healthy legal
system" by advancing several important purposes. The Supreme Court
has explained that these include: (1) "emphasiz[ing] the deference
that appellate courts owe to the trial judge as the individual
- 10 -initially called upon to decide the many questions of law and fact
that occur in the course of a trial"; (2) preventing "piecemeal
appeals [that] would undermine the independence of the district
judge, as well as the special role that individual plays in our
judicial system"; and (3) "the sensible policy of 'avoid[ing] the
obstruction to just claims that would come from permitting the
harassment and cost of a succession of separate appeals from the
various rulings to which a litigation may give rise, from its
initiation to entry of judgment.'" Firestone Tire & Rubber Co. v.
Risjord, 449 U.S. 368, 374 (1981) (third alteration in original),
quoting Cobbledick, 309 U.S. at 325.
Efforts by parties to skirt the final-judgment rule to
rush appellate review often prove counterproductive, as here. They
waste judicial resources and the parties' time and expense. They
can even lead to the irrecoverable loss of a valuable claim or
defense. Those prospects do not let this court disregard its
obligations both to assure itself of appellate jurisdiction and to
guard the health of the legal system. See Commonwealth School,
994 F.3d at 82 (courts of appeals must confirm existence of
appellate jurisdiction in every case).
2. Guidance from Microsoft Corp. v. Baker
The Supreme Court has rejected the use of "inventive
litigation ploys," including voluntary dismissal under Rule 41(a),
to get around the rules limiting interlocutory appeals. Microsoft
- 11 -Corp. v. Baker, 582 U.S. 23, 39 (2017). In Baker, the Supreme
Court held that a voluntary dismissal with prejudice of named
plaintiffs' individual claims could not be used to produce a final
judgment allowing immediate appeal of the denial of class
certification. In Baker, a putative class of disgruntled gamers
alleged their game discs were destroyed by a design defect in the
Xbox device. The district court denied class certification because
individual causation and damages issues predominated.
The Ninth Circuit denied permission for a discretionary
interlocutory appeal of the denial of class certification under
Federal Rule of Civil Procedure 23(f), which allows the court of
appeals to "permit an appeal from an order granting or denying
class-action certification." Id. at 31, 34, 40. The plaintiffs
presumably decided that the value of their own game discs was not
worth litigating to final judgment. They stipulated with Microsoft
to dismiss voluntarily their individual claims, hoping to secure
immediate appellate review of the denial of class certification.
Id. at 35. According to the plaintiffs, the dismissal was "with
prejudice" but was also conditional, meaning the individual claims
could be revived, but only if the court of appeals reversed the
denial of class certification. Id. at 41. In other words, the
conditional dismissal amounted to a version of dismissal without
prejudice.
- 12 -The case reached the Supreme Court to decide finality
under § 1291. In the first section of its discussion, the Court
noted, in line with its reasoning in past finality cases like
Firestone, that allowing the appeal would "invite[] protracted
litigation and piecemeal appeals" and would thereby undermine the
judicial efficiency that the final-judgment rule promotes. 582
U.S. at 37–38. The Court added to that familiar analysis its
concern that voluntary dismissal would allow the parties to get
around Rule 23(f): "Because respondents' dismissal device
subverts the final-judgment rule and the process Congress has
established for refining that rule and for determining when
nonfinal orders may be immediately appealed, see [28 U.S.C.]
§§ 2072(c) and 1292(e), the tactic does not give rise to a 'final
decisio[n]' under § 1291." Id. at 37 (second alteration in
original).
A bit of the backstory helps clarify the weight Baker
deserves here. The Judicial Conference proposed Rule 23(f) two
decades after the Supreme Court decided Coopers & Lybrand v.
Livesay, which rejected the so-called "death knell" theory of
interlocutory appeals from class certification decisions. 437
U.S. 463 (1978). Under that rejected theory, a class certification
denial could be a final decision immediately appealable as of
right. The theory was that "the individual plaintiff may find it
economically imprudent to pursue his lawsuit to a final judgment
- 13 -and then seek appellate review of an adverse class determination."
Id. at 469–70. The "principal vice" of the death-knell theory was
that it made the interlocutory appeal a matter of right rather
than the appellate court's discretion. Id. at 474–75.
Rule 23(f) instead "commits the decision whether to
permit interlocutory appeal from an adverse certification decision
to 'the sole discretion of the court of appeals.'" Baker, 582
U.S. at 32, quoting Committee Note on Fed. R. Civ. P. 23(f) (1998).
Rule 23(f)'s drafters wanted to "provide 'significantly greater
protection against improvident certification decisions than
§ 1292(b)' alone offered," including a path to review for denials
that economically doomed a case. Id. at 31–32, quoting Judicial
Conference of the United States, Advisory Committee on Civil Rules,
Minutes of November 9–10, 1995. Accepting the Baker plaintiffs'
voluntary dismissal strategy would have disrupted that "careful
calibration" of authority by instead putting the parties in the
driver's seat. See id. at 40–41. Similarly here, allowing evasion
of finality requirements by voluntary dismissals without prejudice
would disrupt the balance struck by statutes and rules in allowing
only narrow categories of interlocutory appeals. See Mohawk
Industries, Inc. v. Carpenter, 558 U.S. 100, 113–14 (2009)
(foreclosing judicial expansion of collateral order doctrine).
- 14 -3. Case Law on Finality and Voluntary Dismissals
Without Prejudice
First Circuit case law provides no clear guidance on the
specific question we face here, the effect on finality of a
voluntary dismissal without prejudice. In two recent cases, we
recognized the issue but did not need to or declined to decide it.
In Donahue v. Federal National Mortgage Ass'n, we did not need to
decide whether a voluntary dismissal without prejudice under Rule
41(a)(1) of a plaintiff's remaining claims could ripen a premature
appeal. 980 F.3d 204, 206–07 (1st Cir. 2020). The dismissed
claims had already been dismissed voluntarily once before, so the
plaintiff contended that the new dismissal operated "as an
adjudication on the merits" that barred any later revival of the
claims. Id. at 207 & n.3, quoting Fed. R. Civ. P. 41(a)(1)(B).
This court chose to "assume appellate jurisdiction and proceed to
the merits, given how clear they are." Id. at 207.
A similar question of finality arose again in Shea v.
Millett, where the defendants voluntarily dismissed their
counterclaims without prejudice, just as in this case. 36 F.4th
1, 5 & n.5 (1st Cir. 2022). Notwithstanding the entry of partial
final judgment by the district court, in Shea the appellate motions
judge ordered the parties to show cause why appellate jurisdiction
existed, citing Donahue as well as cases clearly showing that the
judge questioned the propriety of the partial final judgment. But
- 15 -the motions judge deferred the issue to the merits panel, which
chose to assume it had jurisdiction and to decide the merits, just
as in Donahue. Id. at 5 n.5.2
We decline to follow that path here. We need to confront
the problem for our appellate jurisdiction, and there is no
suggestion here that Daikin's dismissal of its counterclaim
without prejudice would somehow have the same effect as a dismissal
with prejudice. Also, apart from the Supreme Court's rejection of
hypothetical jurisdiction in Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83, 101–02 (1998), and unlike Donahue and
Shea, the merits here are not necessarily obvious. This case
presents substantial questions of Puerto Rico law, including
whether Law 75 requires advance notice before a distributor
terminates only a product line rather than the entire relationship.
That issue may be important for the attractiveness of the Puerto
Rico market and the rights of local dealers for mainland and
foreign manufacturers and distributors. See V. Suarez & Co. v.
Dow Brands, Inc., 337 F.3d 1, 4, 7–9 (1st Cir. 2003); Borg Warner
International Corp. v. Quasar Co., 138 D.P.R. 60, 38 P.R. Offic.
2 This court has also recently decided at least one case with
the same scenario we face here –– a defendant voluntarily
dismissing counterclaims without prejudice after winning summary
judgment on the plaintiff's claims –– without noting any finality
problem. Dusel v. Factory Mutual Insurance Co., 52 F.4th 495, 502
(1st Cir. 2022). Cf. Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83, 91 (1998) (such "drive-by"
jurisdictional rulings have no precedential effect).
- 16 -Trans. 10 (P.R. 1995); Medina & Medina v. Country Pride Foods,
Ltd., 122 D.P.R. 172, 22 P.R. Offic. Trans. 163 (P.R. 1988)
(answering certified question). Further, just as district courts
must police their subject-matter jurisdiction, this court has a
duty to police our appellate jurisdiction. Commonwealth School,
994 F.3d at 82.
On finality generally, this court has said repeatedly
that "[f]inal decisions -- which we also often refer to as final
judgments –- are those that 'dispose[] of all claims against all
parties.'" Triangle Cayman Asset Co. v. LG & AC, Corp., 52 F.4th
24, 30 (1st Cir. 2022) (second alteration in original), quoting
Galvin v. U.S. Bank, N.A., 852 F.3d 146, 154 (1st Cir. 2017),
quoting in turn Maine Medical Center v. Burwell, 841 F.3d 10, 15
(1st Cir. 2016), quoting in turn Boston Property Exchange Transfer
Co. v. Iantosca, 720 F.3d 1, 6 (1st Cir. 2013) (Souter, J.). That
definition does not answer the question what it means to "dispose"
of a claim, which is the problem we face here.
One general standard we have applied, though it is
subject to exceptions, is that finality depends on whether any
proceedings remain pending before the district court. See North
Carolina National Bank v. Montilla, 600 F.2d 333, 334 (1st Cir.
1979) (Rule 12(b)(6) dismissal without prejudice of defendant's
counterclaim not appealable notwithstanding entry of partial final
judgment under Rule 54(b); order explicitly allowed defendant to
- 17 -raise counterclaim again "during the course of the pending
proceedings" on plaintiff's claims depending on what evidence
might later be introduced); Pratt v. United States, 129 F.3d 54,
57 (1st Cir. 1997) (dismissal without prejudice of habeas petition
lacking clearance required by AEDPA was "final in the relevant
sense" because the prisoner could "regain access to the district
court . . . only by an appeal and a subsequent holding" in his
favor); Mirpuri v. ACT Manufacturing, Inc., 212 F.3d 624, 629 (1st
Cir. 2000) (Rule 12(b)(6) dismissal without prejudice was final
for purpose of starting clock on deadline to appeal because, unlike
in Montilla, dismissal "left no aspect of the litigation pending
and was therefore immediately appealable"); United States ex rel.
Willette v. Univ. of Massachusetts, Worcester, 812 F.3d 35, 44–45
(1st Cir. 2016) (reading partial final judgment certification
strictly and noting that, as to other issues, "the case was still
pending in the district court" and "the litigation still continues"
in that court); see also AVX Corp. v. Cabot Corp., 424 F.3d 28, 32
(1st Cir. 2005) (no final judgment for claim-preclusion purposes,
which court equated with finality under § 1291, where parties
stipulated to voluntary dismissal without prejudice of entire
case).
Tying finality to whether any claims are still pending
before the district court will usually produce the correct result,
but that standard and the cases applying it do not engage with the
- 18 -problem here and parties' ability to manufacture the appearance of
finality. If a claim that had been pending in the district court
was voluntarily dismissed without prejudice, so that it could be
revived in the same district court after what looks like an appeal
from a "final" judgment, then that judgment was not actually final.
Finality was instead an illusion created by the artifice of
dismissal without prejudice.
Basing our jurisdiction on such an illusion, without
paying attention to whether dismissal was with or without
prejudice, is not consistent with Baker. After all, in Baker
itself, nothing remained before the district court after the
plaintiffs stipulated to "conditional" dismissal with prejudice of
their individual claims. That's why the concurring opinion
concluded that the order was in fact a final decision. See 582
U.S. at 43 (Thomas, J., concurring in the judgment) (noting that
order "left nothing for the District Court to do but execute the
judgment," which is exactly what it did).
The majority in Baker took a different approach,
characterizing the final-judgment rule as "not a technical concept
of temporal or physical termination" but a "means [geared to]
achieving a healthy legal system." Id. at 41 (alteration in
original), quoting Cobbledick, 309 U.S. at 326. Baker also
explained that Rule 23(f) restored the economic and efficiency
benefits of some immediate appeals of class certification
- 19 -decisions while avoiding what Coopers & Lybrand had called the
"principal vice" of the death-knell theory, 437 U.S. at 474, namely
that it put the parties and not the appellate court in control.
See 582 U.S. at 30–33 (noting Rules Committee's guidance that
certification may be proper "in a death-knell or reverse
death-knell situation").
Similarly, as the Supreme Court explained in Sears,
Roebuck & Co. v. Mackey, Rule 54(b) was a response to the
prevailing judicial unit theory under which the court had to decide
all claims asserted in the action before any party could appeal.
351 U.S. 427, 431–32 (1956). Like Rule 23(f), Rule 54(b) balances
the benefits of relief from the "injustice" of unduly delaying
appeal in certain circumstances, 10 Wright & Miller, Federal
Practice & Procedure, § 2653 (4th ed. Apr. 2026 update), while
empowering the courts, not the parties, to act as the "dispatcher,"
Mackey, 351 U.S. at 435.
Enforcement of the final-judgment rule and the judicial
unit theory protects the domain of federal rules authorizing
interlocutory appeals in particular circumstances, such as Rules
23(f) and 54(b), where the Supreme Court and Congress have decided
those principles ought to give way. Applying these rules does not
require parsing different formulations of finality in Supreme
Court or circuit case law as if they were statutory texts,
including questions about what it means to "end[] the litigation
- 20 -on the merits and leave[] nothing for the court to do but execute
the judgment," Catlin, 324 U.S. at 233, what it means to "resolve[]
the entire case," GEO Group, 607 U.S. at 443–44, quoting Ritzen
Group, Inc. v. Jackson Masonry, LLC, 589 U.S. 35, 38 (2020), or
what it means to "dispose[] of all claims against all parties,"
Triangle Cayman, 52 F.4th at 30 (alteration in original). Such an
effort would be in vain. "No verbal formula yet devised can
explain prior finality decisions with unerring accuracy or provide
an utterly reliable guide for the future." Eisen, 417 U.S. at
170.
We can say, however, that voluntary dismissal without
prejudice is not a route to finality when the dismissed claims may
be revived in the same district court. That criterion best guards
against piecemeal appeals and preserves the balance of authority
struck by Rule 54(b).3
Finding finality where a party could return to the same
court with the same claim would mean "litigants, not district
judges, would control the timing of appeal" by dismissing and
reinstating claims at their pleasure. Blue v. District of Columbia
3We do not address here the finality rules governing
involuntary dismissals, see Acevedo-Villalobos v. Hernandez, 22
F.3d 384, 386–89 (1st Cir. 1994), nor dismissals for reasons such
as improper venue, lack of personal jurisdiction, or failure to
exhaust administrative remedies that leave open the possibility of
refiling in another district or refiling a newly ripened claim in
the same district.
- 21 -Public Schools, 764 F.3d 11, 18 (D.C. Cir. 2014); accord, e.g.,
Marshall v. Kansas City Southern Railway Co., 378 F.3d 495, 500
(5th Cir. 2004) (noting circuit precedent "disallows the
manipulative plaintiff from having his cake (the ability to refile
the claims voluntarily dismissed) and eating it too (getting an
early appellate bite at reversing the claims dismissed
involuntarily)"); Union Oil Co. of California v. John Brown E & C,
121 F.3d 305, 310 (7th Cir. 1997) ("In short, litigants and courts
cannot avoid the finality requirement of § 1291 by agreement. To
hold otherwise would allow litigants to circumvent the rules that
Congress has instructed as to the timing of appellate
proceedings.") (citations omitted). "The resulting fragmentary
appeals would burden courts and litigants, foster uncertainty, and
undermine the salutary aims that Rule 54(b) and the final judgment
rule promote." Blue, 764 F.3d at 18.
Our dismissal in this case is thus consistent with
general principles of finality and guidance from the Supreme Court.
It is also in accord with the substantial weight of authority in
other circuits. The clear majority rule is that, in general, a
claim voluntarily dismissed without prejudice defeats finality.
See Scottsdale Insurance Co. v. McGrath, 88 F.4th 369, 379 (2d
Cir. 2023); S.B. v. KinderCare Learning Centers, LLC, 815 F.3d
150, 152 (3d Cir. 2016); Metz v. McCarthy, 167 F.4th 722, 725–26
(4th Cir. 2026); Williams v. Taylor Seidenbach, Inc., 958 F.3d
- 22 -341, 343 (5th Cir. 2020) (en banc); Rowland v. Southern Health
Partners, Inc., 4 F.4th 422, 425 (6th Cir. 2021); West v.
Louisville Gas & Electric Co., 920 F.3d 499, 503–05 (7th Cir.
2019); In re Municipal Stormwater Pond Coordinated Litig., 73 F.4th
975, 979–80 (8th Cir. 2023); Eastom v. City of Tulsa, 783 F.3d
1181, 1183–84 (10th Cir. 2015); Blue, 764 F.3d at 16–17 (D.C.
Cir.). In the Ninth Circuit, however, the picture is not as clear.
Some panels have looked for evidence of intentional jurisdictional
manipulation by the parties rather than focused on the nature of
the dismissal. See Galaza v. Wolf, 954 F.3d 1267, 1270–72 (9th
Cir. 2020). In the Eleventh Circuit, a voluntary dismissal creates
finality regardless of prejudice. Corley v. Long-Lewis, Inc., 965
F.3d 1222, 1231 (11th Cir. 2020).4
Some courts recognize an exception to this general rule
and treat a voluntary-dismissal-without-prejudice judgment as
final when some other bar, such as a statute of limitations, an
4This area of civil procedure can be so frustrating and
complicated that it has been compared to a Jackson Pollock
painting. Corley, 965 F.3d at 1228. Inter- and intra-circuit
splits are common, and these issues sometimes go unremarked upon.
See, e.g., Williams v. Taylor Seidenbach, Inc., 935 F.3d 358, 361
(5th Cir. 2019) (Haynes, J., concurring) ("[O]ur precedent at best
is muddled, and at worst is simply wrong and illogical."), rev'd
en banc, 958 F.3d 341 (5th Cir. 2020); Rowland, 4 F.4th at 435
(Moore, J., dissenting) (noting "disagreement and confusion sown
by the circuits"). The Federal Circuit allows a voluntary
dismissal without prejudice to create a "final decision" under its
distinct jurisdictional statute, 28 U.S.C. § 1295(a). Atlas IP,
LLC v. Medtronic, Inc., 809 F.3d 599, 604–05 (Fed. Cir. 2015).
- 23 -immunity doctrine, or a jurisdictional defect, precludes reviving
the same claim in the same court. The scope of this practical
exception is not entirely clear, but if the bar is truly
definitive, that exception seems consistent with the Supreme
Court's pragmatic approach to finality. Its most straightforward
application occurs when the claimant consents to converting the
voluntary dismissal without prejudice to a voluntary dismissal
with prejudice, which precludes the claim from being raised at any
future point in the same court. E.g., Alix v. McKinsey & Co., 23
F.4th 196, 202–03 (2d Cir. 2022); Chessie Logistics Co. v. Krinos
Holdings, Inc., 867 F.3d 852, 856 (7th Cir. 2017); Rossley v. Drake
Univ., 979 F.3d 1184, 1186 (8th Cir. 2020).
Conversion to dismissal with prejudice responds to the
concerns about piecemeal appeals because a claim that a party
cannot reassert in the future cannot become the basis for a
successive appeal. The party is in effectively the same position
as if it had settled the claim before litigating the others,
circumstances that ordinarily would not present a finality problem
and would not implicate the judicial unit theory.5 Here, however,
5 This observation justifies continuing to treat dismissal
with prejudice of a party's remaining claims as sufficient to
produce finality outside the class-action context. The Supreme
Court in Baker acknowledged the conditional nature of the dismissal with prejudice, meaning the individual claims were lost if the
Ninth Circuit affirmed denial of certification, but they would
somehow spring back to life if it reversed. Yet, the Supreme Court
- 24 -Daikin declined at oral argument to consent to dismissal with
prejudice.
Aside from conversion to dismissal with prejudice,
courts have discussed a variety of other reasons that may prevent
a party from pursuing the same claim in the same court so that the
judgment can be deemed final. See, e.g., Morton International,
Inc. v. A.E. Staley Manufacturing Co., 460 F.3d 470, 477 (3d Cir.
2006) (expiration of fixed deadline to reinstate claim); Affinity
Living Group, LLC v. StarStone Specialty Insurance Co., 959 F.3d
634, 638–39 (4th Cir. 2020) (claim inherently doomed as a matter
of law by failure of other claim on the merits); Abdullah v.
Paxton, 65 F.4th 204, 208 n.3 (5th Cir. 2023) (plaintiff's
concession of sovereign immunity created jurisdictional defect);
Wesco Insurance Co. v. Roderick Linton Belfance, LLP, 39 F.4th
did not seem to hinge its analysis on that feature of the
dismissal, which suggests the case would have come out the same
way even if the claims had been dismissed with prejudice, full
stop. See 582 U.S. at 41. Perhaps that's because, in the
class-action context, giving up a few individuals' claims does not
prevent future litigation and future appeals. When a district
court denies certification, counsel for the putative class often
can find a new plaintiff not bound by a dismissal (or settlement)
as to the first plaintiff. In fact, in Baker itself, the attorneys
had previously brought an essentially identical design defect
claim against Microsoft, failed at the class-certification stage,
and settled the individual claims before trying again with new
plaintiffs in the same district court two years later. Id. at 33.
Multiple bites at the apple, even within the applicable statute of
limitations, are not available in the ordinary civil case. Cf.
China Agritech, Inc. v. Resh, 584 U.S. 732, 735–36 (2018) (limiting tolling of statutes of limitations in repetitive attempts to
certify class).
- 25 -326, 335 (6th Cir. 2022) (non-diversity of parties to cross-claim).
We express no view on these decisions. Neither party to this case
has identified any legal grounds that would prevent Daikin from
reviving its counterclaims in the District of Puerto Rico.
4. Dismissal Without Prejudice by Appellee
This case presents one other wrinkle addressed by some
other circuits. The counterclaim that was voluntarily dismissed
without prejudice belongs to the would-be appellee, Daikin, not
the would-be appellant, Air-Con. When the claim voluntarily
dismissed without prejudice belongs to the appellee, some courts
have expressed concern that rejecting finality might mean that
"parties could deliberately manipulate the proceedings . . . to
cut off their adversary's right to appeal." CSX Transportation,
Inc. v. City of Garden City, 235 F.3d 1325, 1329 (11th Cir. 2000).
For example, a defendant confident of winning summary judgment on
a plaintiff's claims could serve and dismiss unilaterally a
counterclaim before the plaintiff responds, or a plaintiff
confident of winning summary judgment on some claims could
similarly raise and dismiss a meritless claim. See id. at 1329 &
n.4, citing State Treasurer v. Barry, 168 F.3d 8, 21 (11th Cir.
1999) (Cox, J., specially concurring). By rule, those tactics
would produce a dismissal without prejudice, Fed. R. Civ. P. 41(a),
(c), seemingly foreclosing an appeal without further action on the
dismissed claims. Until recently there existed no obvious path to
- 26 -requiring the would-be appellee either to dismiss the claim with
prejudice or to reinstate it and litigate to final judgment. See
Barry, 168 F.3d at 19 & n.9 (Cox, J., specially concurring).
Some courts have therefore allowed appeals as if from
final judgments where the claims voluntarily dismissed without
prejudice belonged to the appellee. See We CBD, LLC v. Planet
Nine Private Air, LLC, 109 F.4th 295, 301 (4th Cir. 2024); DeCastro
v. Hot Springs Neurology Clinic, P.A., 107 F.4th 813, 815 n.3 (8th
Cir. 2024); Local Motion, Inc. v. Niescher, 105 F.3d 1278, 1279
(9th Cir. 1997) (per curiam). Other courts have taken the path we
follow here, rejecting any distinction between appellants and
appellees. Heimann v. Snead, 133 F.3d 767, 769 (10th Cir. 1998)
(per curiam) (nature of claimant "makes little difference when one
considers the very purpose of [Rule 54(b)]"); see also Chessie
Logistics, 867 F.3d at 856 (implicit holding).
We think the better path is to preserve the general rule
that voluntary dismissals without prejudice do not establish
finality, regardless of whether the claims dismissed without
prejudice belong to the would-be appellant or appellee. After
all, Rule 54(b) "treats counterclaims, whether compulsory or
permissive, like other multiple claims." Cold Metal Process Co.
v. United Engineering & Foundry Co., 351 U.S. 445, 452 (1956).
The two scenarios pose the same risk of piecemeal appeals. They
equally undermine the gatekeeping roles of the district court and
- 27 -court of appeals. We have located no instance of a party
successfully deploying a dismissal tactic to frustrate appellate
review, behavior that would probably amount to a sanctionable fraud
on the court.
If such a tactic were tried, moreover, the courts have
tools to protect all parties' rights to appeal. The simplest route
forward would be for the district court to require the claimant to
choose between dismissal with prejudice or litigating the claim to
final judgment. A dismissal with prejudice for failure to
prosecute under Rule 41(b) might be available if the party holding
the claim declined to act on it.
For other cases, Rule 60(b) provides the path forward.
That rule provides a mechanism for a "party" to seek "relie[f]"
from a "final judgment, order, or proceeding." Fed. R. Civ. P.
60(b). And last year, the Supreme Court held that a voluntary
dismissal without prejudice under Rule 41(a) is a final
"proceeding" that can be reopened through a party's Rule 60(b)
motion. See Waetzig v. Halliburton Energy Services, Inc., 604
U.S. 305, 313, 319 (2025). The Waetzig Court explained:
After a case is finally terminated, however,
a court no longer presides, and a party can no
longer seek a "rehearing" on an interlocutory
judgment. It is at that point that a court's
power under Rule 60(b) kicks in, permitting
the court to look back at the "final" act in
a case and provide relief from that act when
appropriate. A voluntary dismissal without
prejudice is one such "final" act. It
- 28 -terminates the case and strips a court of its
equitable power to revise its earlier rulings.
At that point, Rule 60(b) is the appropriate
avenue for relief.
Id. at 319 (citation omitted). The Court also specifically
rejected the view that "final" under Rule 60(b) means the same
thing as "final" under § 1291 (i.e., for our appellate jurisdiction
purposes) -- finality under Rule 60(b) is undoubtedly broader.
Id. at 314.
It is true that Waetzig, procedurally, is a bit different
than today's case. Waetzig wanted to reopen his own case, while
Air-Con would be trying to invoke Rule 60(b) to reopen a claim
brought against it. See 604 U.S. at 308-09. But that is no
matter: Rule 60(b) does not limit its availability to a party that
has received an entirely adverse (or even partially adverse)
judgment. Nothing in the rule's text, which references only "a
party," would forbid Air-Con from invoking the rule.
We also see no reason to doubt the applicability of Rule
60(b) to circumstances like these -- where, without judicial
intervention, Daikin could in theory remain indefinitely the
master of Air-Con's appellate rights. The rule is designed to
strike a balance "between the conflicting principles that
litigation must be brought to an end and that justice should be
done." Waetzig, 604 U.S. at 309 (cleaned up). And although
there's sometimes tension between "finality" and "justice," we
- 29 -have no doubt it would be unjust for a party to block its opponent
from appeal by voluntarily dismissing without prejudice a
counterclaim. Further, finality concerns are minimal here, where
a counterclaim dismissed without prejudice may be brought again,
so that the parties' respective rights remain unsettled.
To make the path clearer, we also note that Rule 60(b)(6)
likely offers Air-Con a path toward appeal, though it may require
adjudication to judgment of Daikin's counterclaim. That catchall provision, which allows a case to be reopened for "any other
reason that justifies relief," is a "grand reservoir of equitable
power to do justice in a particular case." Johnson v. Spencer,
950 F.3d 680, 700-01 (10th Cir. 2020) (cleaned up); see also Henson
v. Fidelity National Financial, Inc., 943 F.3d 434, 440-41 (9th
Cir. 2019) (same). In the rare case where one party could hold
another's appellate rights hostage into perpetuity, the latter
would be forced "into a procedural no man's land," a result the
Court in Waetzig specifically sought to avoid. See 604 U.S. at
313. So, in such a case, the "grand reservoir of equitable power"
contained in Rule 60(b)(6) may well need to be opened. Johnson,
950 F.3d at 700.
5. A "Finality Trap"?
The possibility of Rule 60(b) relief from a voluntary
dismissal without prejudice also responds to concerns about the
so-called "finality trap." See Bryan Lammon, Disarming the
- 30 -Finality Trap, 97 N.Y.U. Law Review Online 173, 189 (2022). Judges
and commentators have said that the majority rule that a dismissal
without prejudice defeats finality could mean a party could
permanently lose its right to appeal if the court of appeals
dismissed an appeal as non-final and the district court then
refused to do anything to finish the case. E.g., Williams v.
Taylor Seidenbach, Inc., 935 F.3d 358, 361 (5th Cir. 2019) (Haynes,
J., concurring) (criticizing such "ghostly magic"), rev'd en banc,
958 F.3d 341 (5th Cir. 2020); Waltman v. Georgia-Pacific, LLC, 590
F. App'x 799 (10th Cir. 2014) (non-precedential) (finality trap in
action), cited by Lammon, supra, at 174–75; see generally Terry W.
Schackmann & Barry L. Pickens, The Finality Trap: Accidentally
Losing Your Right to Appeal (Parts I and II), 58 Journal of the
Missouri Bar 78 & 138 (2002).
We expect that such a trap could be neutralized rather
easily. The trap scenario seems to assume a district judge would
not finish the case after a party has identified the odd
circumstances detailed here -- a counterclaimant holding captive
a plaintiff's appellate rights based on a counterclaim voluntarily
dismissed without prejudice. Such judicial inaction would
surprise us, no doubt. But via Rule 60(b) (as well as, possibly,
other mechanisms we have not identified), a party has a way to
prod the district court to finish the case for purposes of § 1291.
- 31 -The appeal is DISMISSED. Each party shall bear its own
costs. See Fed. R. App. P. 39(a).
- 32 -