Wagner v. Daewoo Heavy Industries America Corp.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

________________________ December 10, 2002

THOMAS K. KAHN

No. 01-11998 CLERK

________________________

D. C. Docket No. 00-00797-CV-ODE-1

ANDREW J. WAGNER,

Plaintiff-Appellant,

versus

DAEWOO HEAVY INDUSTRIES AMERICA CORPORATION,

JACK MOSLER, et al.,

Defendants-Appellees.

________________________

Appeal from the United States District Court

for the Northern District of Georgia

_________________________

(December 10, 2002)

Before EDMONDSON, Chief Judge, TJOFLAT, ANDERSON, BIRCH,

DUBINA, BLACK, CARNES, BARKETT, HULL, MARCUS and WILSON,

Circuit Judges.

WILSON, Circuit Judge:

Andrew J. Wagner appealed the district court’s dismissal of his case

pursuant to Federal Rule of Civil Procedure 12(b)(6). He asserted that the district

court erred in finding that he failed to state a claim upon which relief could be

granted. After hearing oral argument, a panel of this Court vacated the district

court’s dismissal of Wagner’s case. Wagner v. Daewoo Heavy Indus. Am. Corp.,

289 F.3d 1268, 1275 (11th Cir.) (per curiam), vacated, 298 F.3d 1228 (11th Cir.

2002) (per curiam). Relying upon Bank v. Pitt, 928 F.2d 1108 (11th Cir. 1991)

(per curiam), the panel held that the district court should not have dismissed

Wagner’s case without providing him an opportunity to amend his complaint.

Wagner, 289 F.3d at 1273. We subsequently vacated the panel’s opinion and

ordered that the case be reheard en banc. Wagner, 298 F.3d at 1228. We thus

address en banc whether a district court is required to grant a plaintiff leave to

amend his complaint sua sponte when the plaintiff, who is represented by counsel,

never filed a motion to amend nor requested leave to amend before the district

court. In so doing, we overrule Bank and substitute the following rule: A district

court is not required to grant a plaintiff leave to amend his complaint sua sponte

when the plaintiff, who is represented by counsel, never filed a motion to amend

nor requested leave to amend before the district court.1 We, however, conclude

that this rule will be applied prospectively.

1

In this opinion, we decide and intimate nothing about a party proceeding

pro se.

2

I.

The allegations in the complaint are discussed in, and a copy of the

complaint is set forth in, the panel’s opinion. See Wagner, 289 F.3d at 1270–73,

1277–83. After hearing oral argument, the panel concluded that the complaint

failed to state a claim upon which relief could be granted and that it was not

obvious that a more carefully drafted complaint would fail to state a claim. Id. at

1271, 1274. We agree.

II.

In this en banc opinion, we address whether this case should be remanded to

the district court with instructions to permit the plaintiff to amend his complaint.

Under Bank, we would answer that question in the affirmative. 928 F.2d at 1112

(“Where a more carefully drafted complaint might state a claim, a plaintiff must be

given at least one chance to amend the complaint before the district court dismisses

the action with prejudice.”). We, however, have determined that the Bank rule

should no longer be followed. As a result, we overrule Bank and substitute the

following rule: A district court is not required to grant a plaintiff leave to amend

his complaint sua sponte when the plaintiff, who is represented by counsel, never

filed a motion to amend nor requested leave to amend before the district court.

3

This new rule is more efficient and in line with the critically important

concept of finality in our judicial system. Powers v. Boston Cooper Corp., 926

F.2d 109, 112 (1st Cir. 1991) (“Finality is a critically important concept in our

system of jurisprudence. At some point, battles must end” (internal quotation

marks omitted).); see Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1276

(11th Cir. 2000) (noting that interlocutory appeals “are generally disfavored”

because “[p]iecemeal appellate review has a deleterious effect on judicial

administration”). It also is in line with the general rule of this Circuit that issues

not raised before the district court will not be considered on appeal. See Wright v.

Hanna Steel Corp., 270 F.3d 1336, 1342 (11th Cir. 2001). In addition, it satisfies

the apparent purpose of the Federal Rules of Civil Procedure, which is “to secure

the just, speedy, and inexpensive determination of every action.” Fed. R. Civ. P. 1.

Under the Bank rule, a plaintiff could sit idly by as he awaited the district

court’s determination with respect to a Rule 12(b)(6) motion to dismiss; he need

not seek leave to amend his complaint nor amend it as of right,2 because he would

2

Federal Rule of Civil Procedure 15 sets forth the standards for amendments.

It provides,

A party may amend the party’s pleading once as a matter of course at

any time before a responsive pleading is served or, if the pleading is

one to which no responsive pleading is permitted and the action has

not been placed upon the trial calendar, the party may so amend it at

4

have “two bites at the apple” on appeal. See, e.g., Bank, 928 F.2d at 1113. As in

this case, the plaintiff could appeal the adverse ruling of the district court as long as

it was a final judgment. Briehler v. City of Miami, 926 F.2d 1001, 1002 (11th Cir.

1991) (per curiam) (discussing when an order dismissing a complaint is final and

appealable). If we reversed the district court, the plaintiff’s appeal was successful.

His appeal, however, also was successful if we affirmed the district court, because

we would then remand the case to the district court and instruct the court to permit

the plaintiff to amend his complaint.3 See, e.g., Bank, 928 F.2d at 1113.

Consequently, the plaintiff reaped several benefits without taking any risks by

appealing the dismissal without seeking leave to amend before the district court.

any time within 20 days after it is served. Otherwise a party may

amend the party’s pleading only by leave of court or by written

consent of the adverse party; and leave shall be freely given when

justice so requires.

Fed. R. Civ. P. 15(a) (emphasis added).

3

Our remand of these cases was based upon the possibility that the plaintiff

could allege a set of facts to support his claim. In fact, it did not matter whether

the plaintiff provided the district court or this Court with the additional facts that

would make the complaint sufficient. See, e.g., Bank, 928 F.2d at 1113 n.8 (noting

that we would not consider the proposed amendments submitted by the plaintiffs

because we were not granting leave to amend). The mere chance that a plaintiff

could assert a set of facts to support a cause of action does not outweigh the

burdens that these appeals have placed upon defendants and the courts.

5

Our system thus turned these appeals into interlocutory appeals, because no

matter what our ruling was, the district court would have to entertain further

proceedings.4 This added great trouble, time, and expense for defendants and the

courts. Bush, 221 F.3d at 1276 (noting that such appeals “are inherently disruptive,

time-consuming, and expensive” and are therefore disfavored (internal quotation

marks omitted)). As we have noted,

[p]iecemeal appellate review has a deleterious effect on judicial

administration. It increases the workload of the appellate courts, to

the detriment of litigants and judges. . . . [I]t creates opportunities for

abuse by litigants seeking to delay resolution of a case by raising with

the appellate court objections to the scope of an order that should have

been raised first with the district court itself.

Id.

We avoid this costly, additional litigation by following the rule we announce

today. In adopting this rule, we bring our Circuit in line with the majority of our

sister circuits. See Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 76 (2d Cir.

1998); Gov’t of Guam v. Am. President Lines, 28 F.3d 142, 144 (D.C. Cir. 1994);

Cinel v. Connick, 15 F.3d 1338, 1346 (5th Cir. 1994); Domino Sugar Corp. v.

4

Not only would there be further litigation before the district court, there

would be further litigation before this Court. After a case was remanded and the

complaint was amended, the district court likely would consider the sufficiency of

the complaint again. Should the district court decide that the complaint still failed

to state a claim upon which relief could be granted, the plaintiff likely would

appeal that determination to this Court.

6

Sugar Workers Local Union 392 of the United Food & Commercial Workers Int’l

Union, 10 F.3d 1064, 1068 n.1 (4th Cir. 1993); Sinay v. Lamson & Sessions Co.,

948 F.2d 1037, 1041–42 (6th Cir. 1991); Royal Bus. Group, Inc. v. Realist, Inc.,

933 F.2d 1056, 1066 (1st Cir. 1991); Glenn v. First Nat’l Bank in Grand Junction,

868 F.2d 368, 371 (10th Cir. 1989); Cohen v. Ill. Inst. of Tech., 581 F.2d 658, 662

(7th Cir. 1978). But see Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)

(“In dismissing for failure to state a claim, a district court should grant leave to

amend even if no request to amend the pleading was made, unless it determines

that the pleading could not possibly be cured by the allegation of other facts”

(internal quotation marks omitted).); Dist. Council 47, Am. Fed’n of State, County,

& Mun. Employees v. Bradley, 795 F.2d 310, 316 (3d Cir. 1986) (noting that “this

court has consistently held that when an individual has filed a complaint under §

1983 which is dismissable for lack of factual specificity, he should be given a

reasonable opportunity to cure the defect, if he can, by amendment of the

complaint” (internal quotation marks omitted)).

III.

As we have established a new rule, we now must address the application of

that rule. We can apply our new rule retroactively or prospectively. See James B.

7

Beam Distilling Co. v. Georgia, 501 U.S. 529, 535–37 (1991); see also McKinney

v. Pate, 20 F.3d 1550, 1565 (11th Cir. 1994) (en banc).

Generally, new rules of law are applied retroactively as well as

prospectively. Int’l Ass’n of Machinists & Aerospace Workers, Local Lodge No.

1688 v. Allied Prods. Corp., 786 F.2d 1561, 1564 (11th Cir. 1986). The general

rule, however, “is just that: a general presumption that is subject to rebuttal.”

McKinney, 20 F.3d at 1566. Thus, we have noted that a new rule of law may be

applied prospectively if the following conditions are met:

1) the decision adopting the rule does so either by overruling

clear past precedent or by deciding an issue of first impression

the resolution of which was not clearly foreshadowed; and

2) the application of the old rule in the instant case [does] not

contravene the purpose and operation of the provision being

interpreted; and

3) application of the new rule in the instant case [would] be

inequitable.

Kirkland v. Midland Mortgage Co., 243 F.3d 1277, 1282 (11th Cir. 2001)

(alterations in original) (internal quotation marks omitted); see also McKinney, 20

F.3d at 1565.

The first and third conditions are satisfied easily in this case. The first

condition is satisfied, because this case clearly is one in which we are “overruling

clear past precedent.” The rule set forth in Bank provided the plaintiff with “two

bites at the apple.” The plaintiff could appeal a Rule 12(b)(6) dismissal, hoping

8

that the complaint would be deemed sufficient on appeal; if it was not deemed

sufficient, the plaintiff’s case likely would be remanded to the district court with

instructions to permit the plaintiff to amend. See Bank, 928 F.2d at 1113. The rule

of law we set forth today clearly contravenes the old rule. We now have decided

that a district court is not required to grant a plaintiff who is represented by counsel

leave to amend his complaint sua sponte. Thus, we are no longer required to

remand to the district court with instructions to permit the plaintiff to amend when

he never filed a motion to amend nor requested leave to amend before the district

court.

In addition, the third condition is satisfied, because it would be inequitable

to apply the new rule to this case and to other cases now on appeal. See McKinney,

20 F.3d at 1566 & n.23 (noting that retroactive application would be inequitable to

the plaintiff and “would also produce inequities – for defendants in other pending

cases”). Wagner and other plaintiffs likely relied upon Bank in determining

whether to seek leave to amend before the district court or to appeal the dismissal.5

5

At oral argument, Wagner’s attorney stated that he relied upon the rule set

forth in Bank when he brought this appeal. In addition, Wagner requested leave to

amend his complaint pursuant to Bank in his initial brief before the panel. Br. of

Appellant at 24–25. Were we to apply our new rule retroactively, we would strip

Wagner of the opportunity to have his case heard on the merits. Prospective

application avoids any inequity to him.

9

It would be inequitable to punish those parties for following the clearly established

precedent of this Circuit.

It is the second condition that gives us some pause. The apparent purpose of

the Federal Rules of Civil Procedure is “to secure the just, speedy, and inexpensive

determination of every action.” Fed. R. Civ. P. 1. As we noted above, our new

rule follows that purpose, for it is designed to secure efficiency and to reduce

costly, additional litigation. We, however, also note that the purpose of allowing

amendments is to resolve litigation on the merits, and decisions based upon the

merits generally are favored under the Rules. See Foman v. Davis, 371 U.S. 178,

181–82 (1962). As Wagner followed our precedent in appealing his case rather

than seeking to amend before the district court, the retroactive application of this

rule would strip him of the opportunity to have his case heard on the merits. As a

result, it seems consistent with the purpose of the Federal Rules of Civil Procedure

to decline to apply our new rule in this case.

Thus, as the conditions of Kirkland are satisfied, this rule will be applied

prospectively; it applies only to cases in which the notice of appeal was filed after

the date of this decision.

CONCLUSION

10

Thus, we VACATE the district court’s dismissal of Wagner’s complaint and

REMAND this case to the district court with instructions to grant Wagner leave to

amend his complaint.

11