Federalism, like love, is a many-splendored thing. And although stark manifestations are easy to see coming, subtle distinctions can rear their heads in surprising places. Such was the case last month in Luvata Grenada, L.L.C. v. Danfoss Industries S.A. DE C.V., when the United States Court of Appeals for the Fifth Circuit summarily dismissed the claims of a company that sought to sidestep finality to secure an appeal.
As every law student learns in her first semester, one facet of federalism separates state and federal courts: State courts have general jurisdiction, while federal jurisdiction is limited. The difference between the two is one of the checks and balances that prevent the federal government from compromising state sovereignty. Consequently, a person can sue for just about anything in state court, but there are only two ways to get into federal court: (1) rely on federal law or (2) sue someone who lives in a different state or country (for more than $75,000). See 28 U.S.C. §§ 1331 (federal-question jurisdiction) and 1332 (diversity jurisdiction). Both limitations persist on appeal, where they are joined by a third: finality.
This third limitation took center stage in Luvata. There, one company sued two others in federal district court for breach of contract. (The companies’ citizenships were diverse.) One defendant successfully moved to dismiss the lawsuit for lack of personal jurisdiction. And the plaintiff then agreed to dismiss its claims against the second defendant so that it could appeal the dismissal of the first.
In its appeal, the plaintiff claimed that the Fifth Circuit could exercise appellate jurisdiction because the stipulated dismissal of the second defendant had fully disposed of “all claims, rights, and liabilities of all the parties.” Thus, according to the plaintiff, the district court’s decision was now “final,” as required by 28 U.S.C. § 1291.
But there was a catch: The dismissal of the second defendant was “without prejudice.” And as a result it did not prevent the plaintiff from later re-filing its claims against the second defendant. Accordingly, the Fifth Circuit concluded, the second dismissal did not confer the jurisdiction necessary to hear the plaintiff’s appeal.
“[I]t is well settled in this circuit that parties cannot manufacture appellate jurisdiction by agreeing to dismiss remaining claims without prejudice,” the court explained. “The district court’s order dismissing [the plaintiff’s] claims against [the second defendant],” the court continued, “was not a final appealable order.” Because the dismissal was without prejudice, the plaintiff might choose to re-file its claims, and “the district court retained jurisdiction over [them].” Thus, the court held, the plaintiff’s attempt to create temporary finality to satisfy § 1291 could not succeed.
The Luvata court’s pronouncement was not new. The Fifth Circuit had held more than a decade before, in an opinion saluted in Luvata, that dismissals without prejudice are not “an end-run around the final judgment rule to convert an otherwise non-final—and thus non-appealable—ruling into a final decision appealable under § 1291.” That opinion, in turn, traced the rule reaffirmed in Luvata all the way back to a decision by the Fifth Circuit in 1978. It also identified an ominous consequence of playing fast and loose with finality: “By attempting to manufacture appellate jurisdiction . . . [parties may] unwittingly step[ ] into the so-called ‘finality trap,’ thereby forfeiting altogether their right to appeal [a] district court’s decision.” See also, e.g., Barry L. Pickens, The Finality Trap Revisited (March 23, 2010).
The research arm of the federal judiciary, the Federal Judicial Center, has advised that finality “is best understood as the deep structure of the relationship between the reviewing court and the court being reviewed.” For that reason, and as the Luvata court noted, a party may obtain appellate review of an otherwise-non-appealable ruling by first securing the district court’s certification under Federal Rule of Civil Procedure 54(b). Rule 54(b) allows a district court to “direct entry of a final judgment as to one or more, but fewer than all, claims or parties . . . if the court . . . determines that there is no just reason for delay.”
Yet the plaintiff in Luvata did not pursue certification under Rule 54(b). And in seeking premature appellate review of its claims, the plaintiff may forever have lost the ability to appeal their dismissal. The lesson of Luvata is thus plain: Temporary finality will not do. Either wait until the district court disposes of all claims on the merits or obtain the district court’s blessing before filing a notice of appeal.
 In certain circumstances absent from Luvata, federal appellate courts may exercise jurisdiction over non-final orders. See 28 U.S.C. § 1292 (appellate review of interlocutory decisions).