15‐626 NYSA Series Trust, et al. v. Dessein, et al.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 25th day of November, two thousand fifteen.

PRESENT: AMALYA L. KEARSE, CHESTER J. STRAUB, RICHARD C. WESLEY, Circuit Judges. ______________________

NYSA SERIES TRUST, LEW RUMSMOKE, LEAH GABELMAN, TRUSTEE, GABELMAN TRUST, GERALD E. FUESS, RICHARD MARTIN, RICHARD B. ABBOTT, TERI MARTIN, CHRISTOPHER MORRIS, JACOB HULLER, SUSAN SCHWEITZER, TRUSTEE, SCHWEITZER LIVING TRUST, EDWIN L. OLMSTEAD, ALTON PROSSER, MICHAEL CUDDY, MICHAEL & ELIZABETH PFOHL, ANDREW MERRITT, BRIAN LETCHER, WILLIAM PATTERSON, TRUSTEE, PATTERSON WAREHOUSE EMPLOYEE AND PROFIT SHARING PLAN,

Plaintiffs‐Appellants,

‐v.‐ No. 15‐626

PATRICK DESSEIN, BRETT GREENKY, M.D., SETH GREENKY, M.D., GLENN AXELROD, M.D., RICHARD ESPOSITO, JOHN SACCO, M.D.,

Defendants‐Appellees,

ESPSCO SYRACUSE, LLC,

Defendant.1 ______________________

FOR PLAINTIFFS‐APPELLANTS: JAY SHAPIRO (Patricia C. Foster, Patricia C. Foster, Esq. PLLC, Pittsford, NY, on the brief), White and Williams LLP, New York, NY.

FOR DEFENDANTS‐APPELLEES PATRICK DESSEIN, BRETT GREENKY M.D., SETH GREENKY, M.D., GLENN AXELROD, M.D., RICHARD ESPOSITO: DANIEL B. BERMAN (Janet D. Callahan, on the brief), Hancock Estabrook, LLP, Syracuse, NY.

1 The Clerk of Court is respectfully directed to amend the official caption to conform to the above.

2 FOR DEFENDANT‐APPELLEE JOHN SACCO, M.D.: MATTHEW VAN RYN, Melvin & Melvin, PLLC, Syracuse, NY.

Appeal from the United States District Court for the Northern District of New York (David N. Hurd, Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED AND DECREED that the case is REMANDED for further

proceedings pursuant to procedures set forth in United States v. Jacobson,

, 21–22 (2d Cir. 1994).

Plaintiffs‐Appellants appeal from the dismissal of their claims against

Defendants‐Appellees under Section 10(b) of the Securities Exchange Act of 1934

(“Exchange Act”), 15 U.S.C. § 78j(b); Rule 10b‐5,

.10b‐5; and state

law. The action arises out of Plaintiffs‐Appellants’ purchase of debt securities in

a private placement offering (the “Offering”) made by Defendant ESPSCO

Syracuse, LLC (“ESPSCO”) to “accredited investors,” as that term is defined in

Rule 501(a) of Regulation D under the Securities Act,

(a).

Plaintiffs‐Appellants allege that the informational materials included with the

Offering (the “Offering Materials”) contained material misrepresentations that

fraudulently induced them into making this investment. For the reasons that

3 follow, we lack jurisdiction to entertain the appeal in the present circumstances,

and we remand for further proceedings.

With exceptions not pertinent here, see

(a) and (b), this

Court has jurisdiction over appeals only from decisions of the United States

district courts that are “final.”

. A decision is “final” if it

“conclusively determines the pending claims of all the parties to the litigation,

leaving nothing for the court to do but execute its decision.” Citizens Accord, Inc.

v. Town of Rochester, N.Y.,

(2d Cir. 2000). “An order that . . .

adjudicates the rights and liabilities of fewer than all of the remaining parties[] is

not a final order unless the court directs the entry of a final judgment as to the

dismissed claims or parties ‘upon an express determination that there is no just

reason for delay.’”

(quoting Fed. R. Civ. P. 54(b)).

In the present case, Plaintiffs‐Appellants’ complaint (“Complaint”) asserts

claims not only against the individual defendants but also against defendant

ESPSCO. The individual defendants moved to dismiss the claims against them,

and the District Court granted their motions. There is no indication in the

record, however, that such a motion was made by ESPSCO, and although the

order of the District Court from which Plaintiffs‐Appellants appeal instructed the

4 clerk of court to “close” the case, none of the rulings of the District Court

addressed ESPSCO. At oral argument, Plaintiffs‐Appellants informed us that

ESPSCO has not responded to the Complaint, but that no default has been

entered; no further proceedings have been held on their claims against ESPSCO,

and the claims against ESPSCO remain pending. We note that the District Court

has not entered an order pursuant to Rule 54(b) certifying its dismissal of the

complaint against the individual defendants for entry of a partial final judgment

so as to permit an immediate appeal of that decision; nor do we mean to suggest

that the District Court should do so.

In general, with respect to civil cases there is a “‘historic federal policy

against piecemeal appeals.’” Curtiss‐Wright Corp. v. General Electric Co.,

(1980) (“Curtiss‐Wright”) (quoting Sears, Roebuck & Co. v. Mackey,

(1956) (“Sears Roebuck”)). The exception provided by Rule 54(b) gives

the district court authority to enter a final judgment as to fewer than all of the

claims by or against a given party, or as to fewer than all of the parties in a multi‐

party litigation “only if the court expressly determines that there is no just reason

for delay.” Fed. R. Civ. P. 54(b). This authority should “be exercised sparingly,”

Harriscom Svenska AB v. Harris Corp.,

(2d Cir. 1991)

5 (“Harriscom”), for the “district court must take into account” not only the equities

involved but also “judicial administrative interests,” Curtiss‐Wright,

.

“[T]he standard against which a district court’s exercise of [its] discretion” in this

regard “is to be judged is the ‘interest of sound judicial administration.’”

at 10

(quoting Sears Roebuck,

).

In the present case, all of the defendants are alleged to have engaged in the

challenged conduct, see, e.g., Complaint ¶¶ 83, 93–96, and the Complaint asserts

all six of Plaintiffs‐Appellantsʹ causes of action against all of the defendants, see

at pages 23–35. If the District Court were to certify the dismissals of the

claims against the individual defendants for immediate appeal and were

thereafter to proceed to dismiss the Complaint against ESPSCO on the same

grounds as it dismissed the claims against the individual defendants, the appeals

with regard to this case would require the attention of two panels of this Court.

Ultimately, the decision whether or not to enter a Rule 54(b) certification is

“left to the sound judicial discretion of the district court. At the same time, . . .

‘any abuse of that discretion remains reviewable by the Court of Appeals.’”

Curtiss‐Wright,

(quoting Sears Roebuck,

(emphasis in

Curtiss‐Wright)). Thus, in order to facilitate meaningful appellate review, a

6 district court’s order for entry of a partial final judgment “must be accompanied

by a reasoned, even if brief, explanation of its conclusion.” O’Bert ex rel. Estate of

O’Bert v. Vargo,

, 41 (2d Cir. 2003). A statement by a district court only

of its conclusion, in the language of the Rule, that “there is no just reason for

delay,” unaccompanied by any explanation of the assessments that led to that

conclusion, would be insufficiently explained. See, e.g., Harriscom,

(“Absent an explanation by the district court, we have no basis for conducting a

meaningful review of the district courtʹs exercise of its discretion.”); National Bank

of Washington v. Dolgov,

, 58–59 (2d Cir. 1988) (given a certification that

only tracked the language of Rule 54(b), without an explanation, dismissing the

appeal for lack of appellate jurisdiction); Arlinghaus v. Ritenour,

, 463–

64 (2d Cir. 1976) (same); Cullen v. Margiotta,

(2d Cir. 1980)

(same); see also

(a “unified” appeal “is particularly desirable where . . . the

adjudicated and pending claims are closely related and stem from essentially the

same factual allegations”).

In the present case, rather than immediately dismissing the appeal for lack

of a final judgment, as was done in some of the cases discussed above, we

remand pursuant to the procedure set out in United States v. Jacobson,

,

7 21–22 (2d Cir. 1994), for the District Court either to complete the proceedings

against ESPSCO before entry of a final judgment, or to enter an order certifying

the dismissals of the claims against the individual defendants for immediate

entry of a partial final judgment pursuant to Rule 54(b), supplementing the

record with a reasoned, even if brief, explanation of its view as to why an

immediate appeal of the dismissals of the claims against those defendants is

appropriate.

The mandate shall issue forthwith. On remand, if the District Court enters

an order supplementing the record with a Rule 54(b) certification for the entry of

a partial final judgment, any party may have the appeal reinstated by filing with

the Clerk of this Court, within 30 days, a letter (attaching a copy of the relevant

supplemental order) advising the Clerk that the appeal should be reinstated. In

that event, no new notice of appeal or additional filing fee will be required. If on

remand the District Court instead delays entry of final judgment until Plaintiffs‐

Appellants’ claims against ESPSCO have been adjudicated, any party to the

present appeal may have the appeal reinstated either (a) by filing such a letter

and attachment with the Clerk of this Court if no rulings other than those

specified in the original notice of appeal are to be challenged, or (b) by filing a

8 notice of cross‐appeal or an amended notice of appeal if the aggrieved party

seeks to challenge a ruling not listed in the original notice of appeal. A filing fee

will be required for any cross‐appeal. In the interest of judicial economy, any

reinstated appeal will be assigned to this panel.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk

9