Opinion ID: 3031341
Heading Depth: 3
Heading Rank: 1

Heading: Waiver of Claims for Failure to Reassert in

Text: Subsequent Pleading Before turning to the District Court’s jurisdictional rulings, we must address Sun Ship’s contention that Atkinson waived his right to appeal the District Court’s dismissal of Sun Ship from the Second Amended Complaint by failing to replead claims against Sun Ship in his Third Amended Complaint. We agree with Sun Ship and hold that Atkinson has waived his right to assert error in connection with the dismissal of his claims of the FCA affect the “substantive rights of the parties . . ..” This, apparently, is designed to encourage us to hold that jurisdictional and substantive facts are always intertwined under the FCA. Hughes Aircraft Co. requires no such result. In Hughes Aircraft Co., the Court was faced with whether the FCA’s jurisdictional restrictions applied retroactively. Id. Hughes Aircraft Co. had nothing to do with how a plaintiff must go about establishing jurisdiction under the FCA. The Court’s holding in that case in no way impacts the requirement that the facts necessary to establish both jurisdiction and a right to substantive relief must be intertwined before any relaxed burden of proof applies to plaintiffs dealing with factual challenges to jurisdiction under Rule 12(b)(1). 19 against Sun Ship. In addition to naming Fidelity and Penn Ship, the Second Amended Complaint also included claims against Sun Ship. As discussed above, the District Court dismissed, without prejudice, all of the claims pertaining to Sun Ship under Rules 9 and 12(b)(6). The District Court specifically granted Atkinson leave to amend his complaint but warned him that further amendments would probably not be permitted. When Atkinson filed his Third Amended Complaint, he once again named Penn Ship and Fidelity, but Sun Ship was no longer included as a party. Indeed, when the District Court disposed of the remaining defendants’ motions to dismiss the Third Amended Complaint, it remarked that “Sun Ship has been dropped as a defendant.”14 Atkinson, 255 F. Supp. 3d at 361. On appeal, Atkinson now challenges the District Court’s decision to grant Sun Ship’s motion to dismiss even though the dismissal was without prejudice, Atkinson did not include Sun Ship in the Third Amended Complaint, and Atkinson did not otherwise indicate 14 It appears that the decision to omit Sun Ship from the Third Amended Complaint was a strategic choice by Atkinson’s then counsel Storch, Amini & Munves, P.C (“Storch”). At the hearing before the District Court over Storch’s motion to withdraw as counsel, Atkinson said that he “strongly protested the refusal of the Storch firm to rename Sun Ship as a [defendant] in the [Third Amended Complaint], . . . but . . . reluctantly agreed to allow [it]” believing that Storch would rename Sun Ship after discovery produced more evidence implicating it in the alleged FCA violations. Letter to Judge Yohn (Sept. 8, 2004). 20 an intention to stand on his dismissed pleading as to Sun Ship. We conclude that where, as here, it would not have been futile to replead dismissed claims but those claims are nevertheless omitted from an amended pleading, the right to challenge the basis for dismissal on appeal is waived.15 This Court has yet to articulate a rule concerning whether the failure to include a dismissed claim in an amended pleading constitutes a waiver of the right to challenge on appeal the basis for the dismissal. We believe the proper rule allows plaintiffs to appeal dismissals despite amended pleadings that omit the dismissed claim provided repleading the particular cause of action would have been futile.16 As far as our research suggests, 15 Requiring a plaintiff to replead where repleading would be futile “merely sets a trap for unsuspecting plaintiffs with no concomitant benefit to the opposing party.” Davis v. TXO Prod. Corp., 929 F.2d 1515, 1518 (10th Cir. 1991) (citation omitted). 16 The Ninth Circuit, which we decline to follow, has articulated the most formalistic approach in these circumstances. E.g., Marx v. Loral Corp., 87 F.3d 1049, 1055-56 (9th Cir. 1996). Holding fast to the general rule that “an amended complaint ordinarily supersedes the original and renders it of no legal effect,” International Controls Corp. v. Vesco, 556 F.2d 665, 668 (2d Cir. 1977), the Ninth Circuit has held that “all causes of action alleged in an original complaint which are not alleged in an amended complaint are waived.” King v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987). The Tenth and Fifth Circuits take a more flexible 21 no appellate court has yet faced the amended complaint waiver rule where, as here, the amended complaint leaves out a defendant rather than merely a cause of action. When a plaintiff’s amended complaint leaves out a party previously named in the preceding complaint, the equitable principles we enunciate here apply even more strongly because parties that do not appear in amended complaints have a legitimate expectation that they are no longer involved in the litigation. Repleading is futile when the dismissal was “on the merits.” A dismissal is on the merits when it is with prejudice or based on some legal barrier other than want of specificity or particularity. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1435 (3d Cir. 1997) (finding futility, in the context of discussing leave to amend, where claims would not survive a Rule 12(b)(6) motion “even if pled with more particularity.”). For example, dismissals based on subject matter jurisdiction or preemption should be understood as being on the merits. See Joyce v. RJR Nabisco Holdings Corp., 126 F.3d 166, 173-74 (3d Cir. 1997) (declining to find waiver where plaintiff did not file an amended complaint following a district court’s preemption based rejection). Repleading is futile in such cases because the approach. “[W]hile the pleader who amends or pleads over, waives his objections to the ruling of the court on indefiniteness, incompleteness or insufficiency, . . . he does not waive his exception to the ruling which strikes ‘a vital blow to a substantial part’ of his cause of action.” Davis, 929 F.2d at 1517 (quoting Blazer v. Black, 196 F.2d 139, 143–44 (10th Cir. 1952) (citation omitted); Wilson v. First Houston Inv. Corp., 566 F.2d 1235, 1237-38 (5th Cir. 1978)). 22 legal inadequacy cannot be solved by providing a better factual account of the alleged claim.17 To the extent that there is uncertainty as to whether a dismissal is on the merits, doubts should be resolved against the party asserting waiver. If a party omits a claim from an amended complaint that it would not have been futile to replead, that party can still preserve the claim for appellate review by standing on the dismissed claim despite leaving it out of the amended complaint.18 We do not adopt a rigid requirement as to what a 17 Sometimes deciding whether dismissal is on the merits will require reading the district court’s dismissal order in light of the plaintiff’s alleged litigating position. For example, in Bastian v. Petren Resources Corp., 892 F.2d 680, 682-83 (7th Cir. 1990), the plaintiff’s original complaint charged violations of Rule 10b- 5 and 18 U.S.C. §§ 1961 et. seq. (the RICO statute). The RICO claim was dismissed with leave to amend because of a technical pleading deficiency. The 10b-5 claim, however, had what the district court believed to be a more serious problem: failure to allege loss-causation. Plaintiff, however, contended that an allegation of loss-causation was not necessary. Id. at 683. Although the district court dismissed that claim with leave to amend (that is, to include facts supporting loss-causation), we considered the dismissal to have been on the merits for waiver purposes because the pleading “error” went to the legal requirements of a 10b-5 action. 18 The practice of standing on a dismissed complaint for purposes of invoking appellate review is by no means foreign to this Court. “[A] dismissal without prejudice is not a final 23 plaintiff must do to stand on a dismissed complaint. Adding a section to an amended pleading specifically preserving the claim certainly suffices. Smith v. Nat’l Health Care Serv. of Peoria, 934 F.2d 95, 98 (7th Cir. 1991) (involving case where plaintiff added a “Preserved Claims” section to his amended pleading). It would also be acceptable for a plaintiff to file a notice with the district court stipulating that he has decided to stand on his previous pleading with respect to a claim or party now dropped from the otherwise operative pleading. In this case, it is clear from the District Court’s opinion that it would not have been futile to replead the claims against Sun Ship because the dismissals were based on pleading deficiencies rather than substantive disagreements regarding the legal requirements of the causes of action. The District Court specifically invited Atkinson to file an amended complaint. The District Court dismissed count one of Atkinson’s Second Amended Complaint because Atkinson failed to plead facts necessary to sustain relief: “[B]ecause the complaint lacks any allegations supporting an agreement to commit a fraudulent act entered into by Sun Ship and any other defendant, . . . the court will dismiss the claim for conspiracy against Sun Ship under the FCA without prejudice.” United States ex rel. Atkinson v. Pa. Shipbuilding Co., No. CIV.A.94-7316, 2000 WL 1207162, at  (E.D. Pa. Aug. 24, 2000). Likewise, the District Court appealable order under § 1291, unless the plaintiff can no longer amend the complaint or unless the plaintiff declares an intention to stand on the complaint as dismissed.” Semerenko v. Cendant Corp., 223 F.3d 165, 172 (3d Cir. 2000) (citations omitted); Borelli v. City of Reading, 532 F.2d 950 (3d Cir. 1976). 24 dismissed counts two through four based on similar pleading deficiencies. See, e.g., Atkinson, 2000 WL 1207162, at -16 (“Nowhere in the complaint is it alleged, much less with the particularity required by Rule 9(b), how the actions of Sun Ship caused Penn Ship to make misrepresentations to the Navy.”). Atkinson’s Third Amended Complaint did not name Sun Ship as a defendant. Moreover, Atkinson never informed the District Court or Sun Ship that he was standing on his allegations in the Second Amended Complaint vis-à-vis Sun Ship rather than simply dropping Sun Ship from the suit. Atkinson filed his notice of appeal from the District Court’s final order granting Fidelity and Penn Ship summary judgment on August 17, 2004 – almost four years after Atkinson had filed his Third Amended Complaint that failed to include Sun Ship as a defendant. It would be unjust under these circumstances to enable Atkinson to drag Sun Ship back into this case after Sun Ship, by Atkinson’s own decision, was dropped as a defendant. Accordingly, we hold that Atkinson has waived his right to challenge the District Court’s grant of Sun Ship’s motion to dismiss.