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Parties Involved:
3CI Incorporated
Appellee
Alvarado Partners, L.P.
Appellant
James E. Brownhill
Appellee
Deloitte, Haskins & Sells
Appellee
Hanifen, Imhoff Inc.
Appellee
John Hoxmeier
Appellee
Rajiv P. Mehta
Appellee
Robert A. Rademacher
Appellee
Charles F. Smith
Appellee

Document Text:

FILED 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

United States Court of Appeals 

'f'r,,.,tJ,, ~; .. r-,,,t 

JUN 1 7 1991 

ALVARADO PARTNERS, L.P., 

Plaintiff-Appellant, 

v. 

RAJIV P. MEHTA; JOHN HOXMEIER; 

JAMES E. BROWNHILL; ROBERT A. 

RADEMACHER; CHARLES F. SMITH; 

3CI INCORPORATED; HANIFEN, 

IMHOFF INC.; 

Defendants-Appellees, 

v. 

HANIFEN, IMHOFF INC., 

Third-party-plaintiffAppellee, 

v. 

DELOITTE, HASKINS & SELLS, 

Third-party-defendantAppellee, 

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TIOBE~T L. HOECKER 

C~erk 

No. 89-1321 

(D. Colorado) 

(D.C. No. 88-B-781) 

ORDER AND JUDGMENT* 

Before SEYMOUR, BARRETT, and ANDERSON, Circuit Judges. 

Alvarado Partners, L.P. ("Alvarado"), appeals a district 

court order denying approval of a partial settlement. We dismiss 

the appeal. 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-1321 Document: 010110120903 Date Filed: 06/17/1991 Page: 1 
' 

BACKGROUND 

Alvarado brought this class action to recover damages for 

alleged violation of the federal securities laws. Alvarado 

represents a class which purchased stock in 3CI Inc. ("3CI") during the period February 24, 1987 to July 30, 1987. The defendants 

are: 3CI and its directors; Hanifen, Imhoff Inc. ( "Hanifen"), the 

managing underwriter of a March 18, 1987 public offering of 3CI 

common stock; and Deloitte, Haskins & Sells ("OHS"), 3CI's 

accountants. Alvarado alleges1 that defendants made or participated in the making of materially misleading statements about 3CI 

which artificially increased the price of 3CI common stock and 

thereby injured the class. 

A year after bringing suit, Alvarado reached a partial 

settlement with 3CI and its directors (the "settling defendants"). 

The proposed settlement was conditioned on the district court 

entering an order cutting off any cross-claims against the settling defendants, including claims for contribution and indemnity. 

In addition, Alvarado conditioned its acceptance of the settlement 

upon the requirement that the settlement proceeds would be 

credited dollar-for-dollar (pro tanto) against any subsequent 

judgment for damages obtained against the non-settling defendants. 

On August 15, 1989, the district court held a hearing on 

Alvarado's motion for approval of the proposed partial settlement 

and plan of distribution. On September 15, 1989, the district 

1 It was actually Hanifen, acting as a third-party plaintiff, 

that filed against OHS as a third-party defendant. 

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Appellate Case: 89-1321 Document: 010110120903 Date Filed: 06/17/1991 Page: 2 
court denied Alvarado's motion on three grounds, stating it could 

not 

approve the proffered partial settlement because: (1) 

it requires application of the ill-conceived pro tanto 

rule; (2) certain pleaded and potential state claims 

cannot be "extinguished"; and (3) I cannot bar potential 

claims of non-parties to this action. 

R. Vol. I, Tab 20 at 33. 

Alvarado filed this interlocutory appeal seeking review of 

the portion of the district court order that rejected application 

of the pro tanto offset rule in favor of an offset calculation on 

the basis of proportional fault, i.e., the pro rata offset rule. 

DISCUSSION 

Alvarado's appeal is moot. The district court's disapproval 

of the pro tanto offset rule constituted only one of its three 

rationales for rejecting the proposed partial settlement, and 

Alvarado does not here appeal the other grounds for rejection. In 

fact, Alvarado admits that settlement negotiations have been 

terminated and that it will proceed against all of the defendants 

at trial. Appellant's Brief at 16 ("there is no settlement which 

can 'proceed,' and trial will go forward with all defendants as 

parties"). As a result, Alvarado's appeal presents us with no 

justiciable case or controversy. Any decision on our part would 

be purely advisory, and thus contrary to Article III, Section 2 of 

the United States Constitution. Thournir v. Buchanan, 710 F.2d 

1461, 1462-63 (10th Cir. 1983). 

Even if there were a scenario under which this case presented 

a justiciable controversy, we would still lack jurisdiction to 

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Appellate Case: 89-1321 Document: 010110120903 Date Filed: 06/17/1991 Page: 3 
consider this appeal. As a general rule, "to be final and appealable, the district court's judgment must end the litigation and 

leave nothing to be done except execute the judgment." Bender v. 

Clark, 744 F.2d 1424, 1427 (10th Cir. 1984) (quoting Matter of 

Glover, Inc., 697 F.2d 907, 909 (10th Cir. 1983)). See 28 u.s.c. 

§ 1291. While it is true, as Alvarado urges, that the "collateral 

order doctrine" established in Cohen v. Beneficial Industrial Loan 

Corp., 337 U.S. 541 (1949), provides an exception to this general 

rule, Alvarado's appeal does not fit within the Cohen exception. 

We have held that for a collateral order to be appealable 

under the Cohen exception, it must satisfy three independent 

requirements: "[T]he order must conclusively determine the 

disputed question, resolve an important issue completely separate 

from the merits of the action, and be effectively unreviewable on 

appeal from a final judgment." D&H Marketers, Inc. v. Freedom Oil 

and Gas Inc., 744 F.2d 1443, 1445 (10th Cir. 1984) (quoting 

Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978)). Without 

considering or deciding whether the district court order satisfies 

the first two requirements, we hold that it clearly fails to 

satisfy the third one: it is not "effectively unreviewable on 

appeal from a final judgment." 

Alvarado insists that the district court's decision with 

regard to the appropriate offset rule is effectively unreviewable. 

Alvarado argues that if it negotiates a new partial settlement 

based upon the pro rata offset rule, it will have agreed to the 

rule and will be barred from appealing its propriety. And, if it 

proceeds to trial against all of the defendants, the rejected 

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Appellate Case: 89-1321 Document: 010110120903 Date Filed: 06/17/1991 Page: 4 
partial settlement, and thus the question of which offset rule 

should apply to such a settlement, will be moot. 

We reject this reasoning. The question is not whether there 

are scenarios under which a district court's non-final order will 

not be reviewed. There always are. As noted above, Alvarado is 

quite right in asserting that its choice to proceed to trial 

against all of the defendants renders the partial settlement 

offset issue unreviewable. Note, however, that Alvarado's 

decision to proceed is effectively a decision not to preserve its 

appeal of that issue. Alvarado is not correct in asserting that 

the negotiation of a partial settlement based upon the pro rata 

rule required by the district court would be unreviewable. If 

Alvarado negotiated such a settlement and then prevailed on the 

merits at trial, it could freely appeal the offset rule imposed by 

the district court. In short, Alvarado complains of risk, not 

unreviewability. We therefore hold that the district court's 

refusal to apply the pro tanto offset rule to a partial settlement 

in this case is not effectively unreviewable on appeal from a 

final judgment. As a result, the district court's order does not 

fall within the Cohen exception and Alvarado's appeal is not 

within our appellate jurisdiction. 

Accordingly, we DISMISS the appeal. 

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ENTERED FOR THE COURT 

Stephen H. Anderson 

Circuit Judge 

Appellate Case: 89-1321 Document: 010110120903 Date Filed: 06/17/1991 Page: 5