Seventh Circuit Clarifies Jurisdiction over Appeals from Orders in Ancillary Actions

March 23, 2017 12:36 PM | Anonymous member (Administrator)

By Katherine A. Grosh
Partner, Beermann Pritikin Mirabelli Swerdlove LLP

In P.H. Glatfelter Co. v. Windward Prospects Ltd., 847 F.3d 452 (7th Cir. 2017), the Seventh Circuit addressed three total appeals—two taken by P.H. Glatfelter Co. (Glatfelter) arising out of discovery-related orders and one cross-appeal taken by non-party subpoena respondent Windward Prospects, Ltd. (Windward), who sought costs and fees from Glatfelter under Federal Rule of Civil Procedure 37—all three of which the Seventh Circuit dismissed for lack of jurisdiction.

The underlying case involved an ongoing multi-party environmental cleanup being performed on the Lower Fox River in Wisconsin pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Under CERCLA, the parties responsible for creating the hazard and potentially responsible parties (PRPs) may be liable for the full costs of remediation. Glatfelter, 847 F.3d at 453-54.

Paper manufacturer Appvion, Inc. (Appvion), a PRP, sued other PRPs, including Glatfelter, in the Eastern District of Wisconsin, to recover the cleanup costs it incurred and to require other PRPs to pay for future remedial work. Id. at 454. Glatfelter sought discovery from Windward, an English entity conducting Appvion’s defense of the CERCLA claims and managing its cleanup operations, relating to Appvion's costs and possible offsets from insurance, settlements or indemnification payments in connection with the underlying cost recovery action. Id.

When Glatfelter could not obtain compliance with the subpoena it attempted to issue to Windward, it instituted an ancillary proceeding in the District of Massachusetts. Id. at 455. In addition to seeking an order compelling Windward to respond to the subpoena, Glatfelter sought to transfer the case to the Eastern District of Wisconsin, where the main cost recovery action was pending. Id. 

The district court transferred the case, and the same judge presiding over the recovery action in the Eastern District of Wisconsin denied the motion to compel, concluding that the court lacked personal jurisdiction over Windward and that Glatfelter had not established that the documents it sought were not already subject to production by Appvion. Id. Glatfelter filed a motion to reconsider, which the court also denied. Glatfelter appealed. Id.

The Seventh Circuit’s analysis began by reciting the general rule that pretrial discovery orders are not final in terms of winding up the underlying lawsuit, as well as the exception to that rule under the collateral order doctrine, where an order “conclusively determine[s] the disputed question, resolve[s] an important issue completely separate from the merits of the action, and [is] effectively unreviewable on appeal from a final judgment.” Id. at 455 (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978).

Examining opinions from other circuits that had directly considered the issue, the Seventh Circuit held that where a district court enters an order in an ancillary action, and that district court is located in the same circuit as the district court handling the main action, the order in the ancillary action is interlocutory and not immediately appealable. Id. at 456-57.

According to the Seventh Circuit, the problem for Glatfelter was that the ancillary action was transferred from the District of Massachusetts to the Eastern District of Wisconsin prior to the appeal. In the Seventh Circuit, pretrial discovery orders are appealable “only where they were issued by a district court in an ancillary proceeding and said district court was not within the jurisdiction of the circuit court having appellate jurisdiction to review the final adjudication of the main action.” Id. at 456 (emphasis original). 

Thus, the three appeals were dismissed for lack of jurisdiction because the ancillary action was in the same district court presiding over the main action (the cost recovery action), and the denial of Glatfelter’s motions would be reviewable on appeal from the final judgment in the main action. Id. at 459.

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