Notice: Fourth Circuit I.o.p. 36.6 States That Citation of Unpublished Dispositions is Disfavored Except for Establishing Res Judicata, Estoppel, or the Law of the Case and Requires Service of Copies of Cited Unpublished Dispositions of the Fourth Circuit, 993 F.2d 1537 (4th Cir. 1983)

George Himler and other individual named appellants (Himler) appeal the district court's denial of class certification. We conclude that this court lacks subject matter jurisdiction and, therefore, dismiss Himler's appeal.

* This case arises out of the decision by Comprehensive Care Corporation (CompCare) to terminate its agreement to merge with First Hospital Corporation (FHC). Thereafter, on November 7, 1989, George Himler, a shareholder of CompCare, filed this action, individually and on behalf of all others similarly situated, in the United States District Court for the Eastern District of Virginia against FHC, Dr. Ronald I. Dozoretz (the owner of FHC), and CompCare.

Himler's action was then consolidated with two related cases in the Eastern District of Virginia, thereby adding several other named plaintiffs and individual defendants.¹  Thereafter, Himler filed a consolidated class action complaint on March 23, 1990. In the consolidated complaint, Himler alleged: two violations of the Securities Exchange Act (the Act)-one for purported misrepresentations and omissions in CompCare's public filings and the other for an allegedly misleading Proxy Statement issued by CompCare to its shareholders; common law fraud; breach of fiduciary duty; intentional interference with business relations; and breach of contract.

On April 26, 1990, Himler filed a motion requesting class certification on all claims. However, on July 20, 1990, the district court granted summary judgment in favor of CompCare, dismissing all claims except the two alleged violations of the Act and the common law fraud claim. Then, on August 3, 1990, the district court denied Himler's motion for class certification on the remaining claims.

Because Himler believed the individual claims were too small to justify continued litigation, Himler sought to appeal the denial of class certification. However, rather than applying for interlocutory review pursuant to 28 U.S.C. § 1292(b), on April 23, 1991, Himler instead filed a motion pursuant to Fed. R. Civ. Proc. 42(a) (2), requesting a voluntary dismissal of the case with prejudice. Although the district court warned of the prohibition against appealing voluntary dismissals, Himler nonetheless insisted on dismissal. Consequently, on May 6, 1991, the district court granted Himler's motion and entered an order dismissing the action with prejudice.

Himler now appeals the denial of the motion for class certification.

II

In the appeal, CompCare argues that this court lacks subject matter jurisdiction. In response, Himler raises two arguments suggesting why we have subject matter jurisdiction. We reject both of Himler's arguments and discuss our reasons with respect to each argument separately.² 

* Himler first argues that the general rule, which allows a party to appeal a voluntary dismissal with prejudice if an underlying order "effectively" dismissed the action, should apply to the present case. Himler reasons that the underlying order in the present case, i.e. the denial of class certification, "effectively" dismissed the action because the individual claims of the named plaintiffs could not justify continued litigation. Although we do not dispute the general rule of law cited by Himler, we disagree with the proposition that the denial of class certification "effectively" dismissed the action.

"Normally, a plaintiff may not appeal the dismissal of his suit with prejudice, which is granted on his own motion." Distaff, Inc. v. Springfield Contractors Corp., 984 F.2d 108, 110 (4th Cir. 1993) (citation omitted). However, an exception to this general rule exists "when the dismissal is with prejudice and 'designed only to expedite review' of a prior order having the effect of a dismissal." Laczay v. Ross Adhesives, 855 F.2d 351, 354 (6th Cir. 1988) (citation omitted, emphasis added), cert. denied, 489 U.S. 1014 (1989); Empire Volkswagon, Inc. v. World Wide Volkswagon Corp., 814 F.2d 90, 94 (2nd Cir. 1987); Studstill v. Borg Warner Leasing, 806 F.2d 1005, 1008 (11th Cir. 1986). In such circumstances, the plaintiff may appeal the underlying order. Thus, to determine whether this exception applies to the present case, we must determine whether the order denying class certification "effectively" dismissed Himler's case. We conclude that it did not.

The cases employing the exception to the general rule suggest that an order "effectively" dismisses a case when it affects the merits of the case or imposes a significant legal burden on the plaintiff's ability to proceed with the litigation. See, e.g., Laczay, 855 F.2d at 354 (order refused to remand case to state court for trial of state law issues; under federal law, case would have to be dismissed for failure to exhaust administrative remedies); Empire Volkswagon, 814 F.2d at 94 (partial summary judgment dismissing most of plaintiff's claims); Atlanta Shipping Corp., Inc. v. Chemical Bank, 818 F.2d 240, 245 (2nd Cir. 1987) (same); Studstill, 806 F.2d at 1008 (same); Raceway Properties, Inc. v. Emprise Corp., 613 F.2d 656, 657 (6th Cir. 1980) (district court's determination of relevant market for antitrust claim effectively disposed of case because plaintiffs were not prepared and could not proceed with evidence regarding the relevant market outlined by the district court).

Thus, it is unquestionably clear that the denial of class certification in the present case did not "hav [e] the effect of a dismissal." Laczay, 855 F.2d at 354. The order had no effect on the merits of, nor imposed any legal impediment on, the underlying individual claims. Rather, the denial of class certification only affected the economic feasibility of the litigation. Consequently, the exception to the general prohibition against appealing voluntary dismissals with prejudice does not apply to the present case.

B

Himler next argues that a plaintiff may appeal the denial of class certification if there is a final order, dismissing the case with prejudice. In support, Himler relies on Gary Plastic Packaging v. Merrill Lynch, et al., 903 F.2d 176 (2nd Cir. 1990), cert. denied, 111 S. Ct 675 (1991) and Nichols v. Mobile Board of Realtors, Inc., 675 F.2d 671 (5th Cir. 1982). Because the district court in the present case dismissed Himler's action with prejudice, Himler concludes that an appeal of the denial of class certification is permissible. We disagree.

In Nichols, after the district court denied class certification, the original named plaintiffs accepted the defendants' settlement offer. Consequently, the district court entered final judgment, dismissing the action with prejudice. Then, other members of the putative class intervened and filed an appeal of the class certification decision. On appeal, the defendants argued that, according to Bowe v. First of Den- ver Mortgage Investors, 613 F.2d 798 (10th Cir.), cert. denied, 447 U.S. 906 (1980), and Huey v. Teledyne, Inc., 608 F.2d 1234 (9th Cir. 1979), the intervenors had to first pursue a trial on the merits before appealing the class certification decision.³ 

The Fifth Circuit rejected the defendants' argument, reasoning that " [a] dismissal with prejudice clearly is a decision that 'ends the litigation on the merits and leaves nothing for the court to do but execute a judgment.' " Nichols, 675 F.2d at 673, quoting Livesay, 437 U.S. at 467. The court also rejected the notion that Livesay required at least one class member to try his individual claims on the merits before an appellate court could review the denial of class certification. The Nichols court opined that Livesay only required a decision which "ends the litigation on the merits" and that a dismissal with prejudice satisfied this requirement. Nichols, 675 F.2d at 674. Accordingly, the Nichols court rejected the holdings in Bowe and Huey, thereby creating a split among the circuits as to the proper interpretation of Livesay.

Following Nichols, the Second Circuit addressed a similar issue in Gary Plastic. In that case, after the district court denied the plaintiff's motion for class certification, the plaintiff missed the scheduled pretrial conference and filed a motion out of time to reargue the class certification issue. In response, the district court denied the motion and dismissed the action for want of prosecution pursuant to Fed. R. Civ. P. 41(b). The plaintiff then appealed the class certification issue.

On appeal, the defendants argued that the plaintiff should not be able to obtain appellate review by refusing to prosecute its individual claims. The Second Circuit rejected this argument, reasoning that the concerns against piecemeal review espoused in Livesay would not arise when "immediate appellate review [is] only ... available to disappointed class representatives who risk forfeiting their potentially meritorious individual claims." Gary Plastic, 903 F.2d at 179. Consequently, the Second Circuit also rejected the holdings of Bowe and Huey.

However, because both Gary Plastic and Nichols involved involuntary dismissals of the plaintiffs' lawsuits, we conclude that those cases do not apply to the instant matter. In the present case, Himler affirmatively requested the district court to enter a voluntary dismissal of the action with prejudice. Because Himler requested a voluntary dismissal with prejudice, we feel compelled to follow the general rule, recently expressed by this court, that " [n]ormally, a plaintiff may not appeal the dismissal of his suit with prejudice, which is granted on his own motion." Distaff, 984 F.2d at 110.⁴  Consequently, we conclude that Himler cannot appeal the denial of the motion for class certification.

III

For the reasons stated herein, we conclude that this court lacks subject matter jurisdiction over this appeal and, therefore, dismiss the appeal.

DISMISSED