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Sandwiches Inc. v. Wendy's International Inc.

UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT


decided: June 17, 1987.

SANDWICHES, INC., D/B/A SUBURPIA SUBMARINE SANDWICH SHOPPES, PLAINTIFF-APPELLANT, CROSS-APPELLEE,
v.
WENDY'S INTERNATIONAL, INC., DEFENDANT-APPELLEE, CROSS-APPELLANT

Appeals from the United States District Court for the Eastern District of Wisconsin, No. 85-C-1488 -- Thomas J. Curran, Judge.

Author: Easterbrook

Before COFFEY, EASTERBROOK, and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit ;Judge. There are two cases on the district court's docket. In one Wendy's International, Inc., is the plaintiff and Suburpia Submarine Sandwich Shoppes of Milwaukee, Inc., and William Drilias are the defendants. Wendy's charges Suburpia and Drilias with slander; Wendy's believes they falsely accused it of stealing a commercial belonging to Suburpia. Suburpia calls this the "Cheeseburga" commercial; Wendy's made and used two derivative commercials. In the second case Sandwiches, Inc., is the plaintiff and Wendy's the defendant. Sandwiches, as assignee of Suburpia's interest in the commercial, accused Wendy's of infringing its copyright. Wendy's concedes that if Suburpia or Sandwiches possesses a copyright, then Wendy's commercial infringes; but Wendy's maintains that Suburpia did not have a copyright in the Cheeseburga commercial.

This district court consolidated the cases at Sandwiches' request and decided, on motion for summary judgment, that neither Sandwiches nor Suburpia has a copyright in the Cheeseburga commercial. 654 F. Supp. 1066 (E.D. Wis. 1987). The court concluded that the creator of the commercial, rather than the advertiser, owned the rights. It dismissed Sandwiches' suit with prejudice; Wendy's suit lives on, however, and the district court will hold a trial on its claims of slander.

Sandwiches, contending that this order is the "final decision" in the only case in which it is a party, has filed two appeals -- one from the order, and the other from the denial of motions to modify the order. Wendy's has filed a cross appeal. Yet the order does not wind up all litigation about the Cheeseburga commercial and its fallout; it dealt with two, consolidated cases. The district court did not say to what extent the cases are consolidated; it simply referred to a local rule that governs consolidations of every kind. If the cases have been consolidate for all purposes, then the judgment does not cover all claims and parties, and no one may appeal unless the district court makes the findings required by Fed. R. Civ. P. 54(b). See Ivanov-McPhee v. Washington National Insurance Co., 719 F.2d 927 (7th Cir. 1983).

If the cases have not been fully consolidated, however, Sandwiches presumptively may appeal on the ground that all claims in a stand-alone suit have been disposed of. Things are not that simply, though. Suburpia is in bankruptcy; the trustee sold Suburpia's assets and business to Sandwiches. Suburpia maintains an independent existence, however; it and not Sandwiches will be called on to compensate Wendy's for any torts. The district court's order on the motion for summary judgment declares that Suburpia had no copyright to transfer. This is why the court declared that Sandwiches has no copyright. The disposition of Sandwiches' copyright claim derives from Suburpia's. The only declaration unique to Sandwiches' suit is that Sandwiches got no more than Suburpia had. If Sandwiches appealed now, the decision in Wendy's suit that Suburpia had no copyright to transfer would remain in force; Suburpia cannot appeal without a Rule 54(b) judgment; only when the litigation between Suburpia and Wendy's ends may the case be resolved fully on appeal.

The link between the legal positions of Suburpia and Sandwiches suggests that the cases are sufficiently closely related that they should be treated as consolidated for all purposes, even if that was imperfectly accomplished. This is the course this court followed in Ivanov-McPhee. Sandwiches says that this will force it to wait another year to have its claims resolved on appeal, which is inefficient and unjust. Yet delay is inevitable, given the inability of either Suburpia or Drilias to appeal now, and the link between the claims. Moreover, Sandwiches is free to seek to shorten the delay by convincing the district judge to enter a Rule 54(b) judgment. Even this would not necessarily supply appellate jurisdiction if the cases in the district court are sufficiently related to those covered by Rule 54(b) judgment. See United States General, Inc. v. Albert, 792 F.2d 678 (7th Cir. 1986). The district court would have to analyze this case closely to see whether the standard of Albert is met. Our court has insisted that only parties (and claims) whose legal and factual positions are distinct may appeal on a partial final judgment under Rule 54(b). E.g., F.I.C.A. v. Elefant, 790 F.2d 661 (7th Cir. 1986); Jack Walters & Sons corp. v. Morton Building, Inc., 737 F.2d 698, 701-02 (7th Cir. 1984); A/S Apothekernes Laboratorium for Specialpraeparater v. I.M.C. Chemical Group, Inc., 725 F.2d 1140 (7th Cir. 1984) (collecting cases). The issues must be sufficiently separate that the court may deal with one appeal confident that the same problem will not recur on a later appeal in the same case. The principles restricting the number of interlocutory appeals apply as well to determining whether cases have been so consolidated that an appeal is interlocutory.

We do not think this approach collides with the statement in Johnson v. Manhattan Ry., 289 U.S. 479, 496-97, 77 L. Ed. 1331, 53 S. Ct. 721 (1933), that consolidated cases remain separate for purposes of identifying who is a party -- and therefore who may appeal. Ivanov-McPhee shows that there are several kinds of consolidations. See also 9 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §§ 2382 and 2386 (1971). Generalizations that assume all consolidations are of one flavor do not always carry the day. We doubt, moreover, that the Supreme Court adheres to all of the language in Johnson. In Synar v. United States, 626 F. Supp. 1374 (D. D.C.) (three-judge court), affirmed, 478 U.S. 714, 106 S. Ct. 3181, 92 L. Ed. 2d 583 (1986), two suits were filed challenging the constitutionality of a statute. The district court, citing Johnson, see 626 F. Supp. at 1379, concluded that it had to decide whether each was an Article III case or controversy, which entailed a look at the standing of each set plaintiffs. Yet the Supreme Court, without mentioning Johnson, stated that the consolidation of the cases in the district court made it unnecessary to decide whether the plaintiffs in one of the cases had standing, 106 S. Ct. at 3186; it then resolved both cases on the merits. See also Secretary of the Interior v. California, 464 U.S. 312, 319 n.3, 78 L. Ed. 2d 496, 104 S. Ct. 656 (1984), which like Synar treated consolidation as eliminating the need for an independent Article III case or controversy in each suit. We need not say that these cases have overruled Johnson in silence to conclude that "consolidations" in a district court merge the case for at least some jurisdictional matters. Here the subjects of the two cases are intertwined, and there is no point in resolving the copyright issues with respect to Sandwiches when the same issues with respect to Sandwiches when the same issues with respect to Suburpia remain in the district court.

The final judgment rule, and the limits on the propriety of entering Rule 54(b) judgments, are designed in part to ensure that a single set of factual and legal questions comes before the court of appeals but once -- and then only after all closely related issues have been resolved in the district court. See Glidden v. Chromalloy American Corp., 808 F.2d 621, 624 (7th Cir. 1986); Elefant; Albert; and I.M.C. Chemical. An appeal by Sandwiches now would create a substantial risk that the issues would return on a later appeal by Suburpia or Drilias; deferring the appeal will allow the copyright issues to be resolved on appeal with knowledge of the consequences of their resolution. The principles behind the final decision rule call for treating this appeal as premature.

This is no an ideal solution. If Sandwiches had not moved to consolidate the case, it could appeal notwithstanding the link between them. The result would be the same if the cases clearly had been consolidated only for discovery. So our conclusion appears to make jurisdiction turn on an irrelevancy. But some effects of this sort are inevitable: had Wendy's named Sandwiches as well as Suburpia as a defendant in the initial suit, Sandwiches unquestionably could not appeal. Ivanov-McPhee commits this court to a ground between that of the First Circuit, which for purposes of appellate jurisdiction treats all consolidated cases as separate, see In re Massachusetts Helicopter Airlines, Inc., 469 F.2d 439 (1st Cir. 1972), and that of the Ninth Circuit, when treats cases consolidated for any purpose as a single case, see Huene v. United States, 743 F.2d 703 (9th Cir. 1984). Each bright-line rule has its attractions and its difficulties. Our approach looks to the purposes of the final decision rule and allows an appeal without a Rule 54(b) judgment only when the parties and questions readily are distinct. None of the three rules will work best all the time, so we shall stick with the one we have. Perhaps an amendment to Rule 54 (or the rules dealing with consolidations) would make cases of this character easier; until then we hope district judges will heed the request of Ivanov-McPhee to specify clearly the extent to which the cases have been consolidated.

Wendy's cross appeal challenges the district court's decision not to award it attorneys' fees as a "prevailing party" under the copyright laws. Although the merits and awards of fees are separate decision, separately appealable, see Exchange National Bank v. Daniels, 763 F.2d 286 (7th Cir. 1985); Budinich v. Becton Dickinson & Co., 807 F.2d 155 (10th Cir. 1986), so that a party may appeal the judgment even though a request for fees is pending (and must do so if it wants review of the merits), it does not follow that a party may appeal an adverse decision about fees even though the merits are pending. See Mulay Plastics, Inc. v. Grand trunk Western R.R., 742 F.2d 369 (7th Cir. 1984) (no separate appeal on fees awarded against a party as a sanction); Palmer v. City of Chicago, 806 F.2d 1316 (7th Cir. 1986) (interlocutory appeal possible on award of "interim" fees only if there is a substantial chance that a party prevailing on appeal would be unable to retrieve the award). The denial of a request for fees as a "prevailing party" is not appealable when the merits are not appealable, for questions about who has prevailed cannot intelligently be resolved in advance of the merits. Decisions about fees are separate "final decision" under § 1291 only after there is a judgment on the merits that would be "final" but for the matter of fees. That may produce two final order, independently appealable. Here there is none.

All three appeals are dismissed for want of jurisdiction.

19870617

© 1998 VersusLaw Inc.



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