Mildred A. McLearn v. Cowen & Co. And Merrill Lynch Pierce Fenner & Smith, Incorporated

MESKILL, Circuit Judge

(dissenting):

The only issue properly before this Court is whether Judge Metzner erred in denying relief to appellant under Rule 60(a) of the Federal Rules of Civil Procedure, which provides for the correction of clerical errors or errors arising from oversight or omission. Since I agree with Judge Metzner that such relief is not available in this case, I respectfully dissent.

I.

The propriety of relief in this case under Rule 60(a) was the sole issue raised by McLearn before the district court and addressed by the parties on appeal. Nevertheless, Judge Lumbard and Judge Lasker have reversed the judgment of the district court, each resting upon a different reason, neither of which was raised by any party to this action at any level of the proceedings. I believe that my brothers have far exceeded the scope of our appellate review. While it is well settled that a Court of Appeals may affirm a judgment on grounds not urged in the lower court, see Helvering v. Gowran, 302 U.S. 238, 245-16 , 58 S.Ct. 154, 157-158 , 82 L.Ed. 224 (1937), it is equally clear that reversal of a lower court decision on grounds which were never raised during the course of trial should be reserved for rare instances of public interest or gross injustice, see Singleton v. Wulff, 428 U.S. 106, 120-21 , 96 S.Ct. 2868, 2877-2878 , 49 L.Ed.2d 826 (1975). As this Court noted in Green v. Brown, 398 F.2d 1006,1009 (2d Cir. 1968), “we [are] not ordinarily . . . receptive to attempts to litigate issues not raised in the trial court . . .. ”

I recognize that “the rule that an order will not be reversed upon a point first raised upon appeal is not absolute . . . . ” New York, New Haven & Hartford R.R. Co. v. Reconstruction Fin. Corp., 180 F.2d 241, 244 (2d Cir. 1950). However, I do not believe that the present case involves the high level of injustice or public necessity requisite to invoke the rule’s exception, especially where the points on which my brothers individually rely were not even raised on appeal. In Green v. Brown, supra, this Court chose to entertain several issues raised for the first time on appeal since they were “of great significance in construing an act designed to protect thousands of investors.” 398 F.2d at 1009 . McLearn is only a single investor, albeit an allegedly injured one. In Olegario v. United States, 629 F.2d 204 , 216 n.8 (2d Cir. 1980), cert. denied, 450 U.S. 980 , 101 S.Ct. 1513 , 67 *853 L.Ed.2d 814 (1981), this Court again invoked the exception where an “important federal issue” was at stake and the government was not represented by its own counsel before the district court. McLearn, however, raises no allegations of injury to the public, only to herself, and she has had more than ample access to counsel throughout the full range of this ease.

If MeLearn’s counsel failed to move under Federal Rule of Civil Procedure 59(e) to have the district court’s original judgment altered or amended within ten days of judgment, the appropriate remedy under the facts of this case, perhaps her appropriate recourse is in an action for malpractice; the remedy, however, should not be for this Court to set the clocks back five years, which is in effect what it has done. The effect of such a reversal as this Court orders today, although well intended, will be to impair the finality of judgments and to shift the judicial role, traditionally one of impartial arbiter, to one of advocate. I would reserve such drastic intrusion into the domain of counsel for those instances where “injustice might otherwise result,” Hormel v. Helvering, 312 U.S. 552, 557 , 61 S.Ct. 719, 721 , 85 L.Ed. 1037 (1941).

II.

Beyond my opinion that this Court should have limited its review to the single issue raised before the district court and on appeal, I cannot agree with Judge Lumbard’s reasoning that “the district court had no power to make any order about the merits of the state claim.” 660 F.2d at 846. To this limited extent, I concur with Judge Lasker. That a federal court may exercise jurisdiction over pendent state law claims where it has jurisdiction over the related federal claims was made clear in United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 , 86 S.Ct. 1130, 1138 , 16 L.Ed.2d 218 (1966). While McLearn’s complaint was twice dismissed for failure to plead fraud with particularity, I agree with Judge Lasker that her “federal claims were of sufficient substance to confer subject matter jurisdiction on the trial court and therefore to empower it to determine the pendent state claims.” Id. at 849-50 (Lasker, J., concurring). Consequently, there is no legal basis for Judge Lumbard’s conclusion that the district court’s decision, if it did dismiss the state law claims on the merits, must have been void and thus subject to attack under Rule 60(b)(4).

III.

While I agree with Judge Lasker’s rejection of Rule 60(b)(4) as a source of relief to McLearn, I cannot accept his proposal for relief under Rule 60(b)(6) for the reasons stated in the first part of my dissent. Whether dismissal of a complaint containing both federal and state claims should, as Judge Lasker argues, be presumed to address only the federal claims on the merits, “absent clear indications to the contrary,” must remain an open question until a litigant properly raises it in an appropriate proceeding. Since this issue was never raised before the district court or on appeal, I express no opinion on its merits.

IV.

While Judge Lumbard and Judge Lasker have expressed what each believes to be the proper source of relief in this case, neither has addressed at any length the one issue properly before us — the propriety of relief under Rule 60(a). While their failure to address this issue may be due to the obvious inapplicability of Rule 60(a) to this case, I think that the issue deserves greater discussion since it was the basis for the decision of the court below.

I agree with Judge Metzner that Rule 60(a) relief is not appropriate in this case and would therefore affirm his decision. While relief from alleged judicial errors may be available under Rule 59(e) or Rule 60(b)(1), see 7 Moore’s Federal Practice ¶ 60.22[3] (2d ed. 1979); 11 Wright & Miller, Federal Practice and Procedure, § 2854, at 149 (1973), I agree with Professor Moore that “[i]n exercising the power to correct clerical mistakes [under Rule 60(a)], courts should . . . confine the power to correction of mistakes that may legitimately be said to be clerical, and exercise it only on a clear showing of mistake.” 6A Moore’s Federal Practice, supra, ¶ 60.06[3], at 4063 (footnote omitted). The overriding policy of ensuring finality in judgments militates against in *854 terpreting Rule 60(a), which permits a motion to be made thereunder at any time, to embrace applications for the substantial relief sought here. McLearn would have the district court declare over half a decade after the entry of judgment whether the dismissal of her common-law claims was jurisdictional or on the merits. The relief McLearn seeks was available within ten days from the entry of judgment under Rule 59(e), or possibly, at the very latest, within one year under Rule 60(b)(1).

Much of the litigation in this action obviously could have been avoided had the district court made clear at the outset whether it exercised pendent jurisdiction in dismissing the common-law claims. In cases involving pendent claims, district courts should, as a matter of course, expressly state whether a dismissal of a state cause of action is on the merits or for lack of subject matter jurisdiction. Failing that, a plaintiff should seek relief under Rule 59(e) within the. prescribed time to alter or amend the judgment so that it reflects the intended disposition of the state claims.