Rule 54(b) Finality: Fraud and Warranty as a Single Claim for Appeal

Introduction

In Gustavo Diaz et al. v. FCA US LLC, the Third Circuit addressed the boundaries of final-order jurisdiction under 28 U.S.C. § 1291 and the mechanics of Federal Rule of Civil Procedure 54(b). Plaintiffs—originally six individual owners of Dodge “Hellcat” and “Charger” vehicles—alleged that FCA designed and sold cars with defective rear differentials, asserting both fraud and breach-of-warranty claims. After the District Court dismissed all fraud‐based counts and some warranty counts, it entered a partial final judgment under Rule 54(b) as to those fraud counts. Six of the eight named plaintiffs appealed. The central question became whether that Rule 54(b) partial judgment was “final” so as to trigger immediate appellate jurisdiction.

Summary of the Judgment

The District Court granted FCA’s motion to dismiss the plaintiffs’ fraud counts for failure to plead pre-sale knowledge of the defect.
All warranty counts of five original plaintiffs were dismissed; two new plaintiffs retained some warranty counts.
Plaintiffs moved for certification of an appeal under § 1292(b) or final judgment under Rule 54(b). The District Court denied certification but expressly entered a Rule 54(b) partial final judgment on the fraud counts for six of the eight plaintiffs.
The Third Circuit held there was no § 1291 jurisdiction because:
1. The Rule 54(b) order did not encompass all of those plaintiffs’ remaining counts (their warranty counts remained undisturbed but were not included in the judgment).
2. Even if the order had been all-encompassing, fraud counts and warranty counts based on the same underlying defect constitute one “claim” under Rule 54(b). The partial judgment thus did not dispose of a separate claim.
The appeal was dismissed for lack of jurisdiction, and the case was remanded to vacate the Rule 54(b) order.

Analysis

Precedents Cited

28 U.S.C. § 1291 – “final decisions” of district courts
Fed. R. Civ. P. 54(b) – procedure for partial final judgments
Sears, Roebuck & Co. v. Mackey, 351 U.S. 427 (1956) – Rule 54(b) cannot override § 1291 finality requirement
Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1 (1980) – two-step Rule 54(b) analysis: finality then “no just reason for delay”
Sussex Drug Prods. v. Kanasco, Ltd., 920 F.2d 1150 (3d Cir. 1990) – alternative theories on the same facts constitute one claim
Gerardi v. Pelullo, 16 F.3d 1363 (3d Cir. 1994) – alternative recovery theories on a single loss are a single claim
Allis-Chalmers Corp. v. Phila. Elec. Co., 521 F.2d 360 (3d Cir. 1975) – factors for “no just reason for delay”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) & Ashcroft v. Iqbal, 556 U.S. 662 (2009) – plausibility pleading and elements-based approach
Connelly v. Lane Constr. Corp., 809 F.3d 780 (3d Cir. 2016) & Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) – post-Twombly/Iqbal three-step pleading test
Gelboim v. Bank of Am. Corp., 574 U.S. 405 (2015) – Rule 54(b) augments, not diminishes, appeal opportunities

Legal Reasoning

The Court’s reasoning involved three focal points:

Finality under § 1291: A Rule 54(b) judgment must be “final” in the § 1291 sense. It must “dispose of all of the rights or liabilities of one or more of the parties” or be an “ultimate disposition” of an individual claim in a multi-claim action.
Definition of “claim”: The Court emphasized Third Circuit precedents (Sussex, Gerardi) holding that alternative theories of recovery—fraud and warranty here—arising from the same factual nexus are a single claim for Rule 54(b) purposes. Plaintiffs could recover the same loss on different legal theories; disposing of one theory leaves the claim open under another.
District Court’s Rule 54(b) order:
- The order did not cover certain plaintiffs’ counts (e.g., the sixth plaintiff, who never amended his complaint).
- The Court’s brief “no just reason for delay” analysis—citing “judicial administrative interests,” “equities” and “miscellaneous factors”—was inadequate to permit review.

Impact

This decision clarifies and tightens Rule 54(b) practice in multi-claim, multi-party cases:

“Claim” is interpreted under Third Circuit precedent to encompass all alternative theories based on the same core facts—even if they require different elements of proof (fraud vs. warranty).
A district court cannot bypass § 1291 by designating an order as final when it leaves core liability questions open under alternative theories.
District courts must explicitly address why there is “no just reason for delay” and explain their balancing of judicial efficiency, potential duplication of appeals, and other factors identified in Allis-Chalmers.
Future litigants should request a single Rule 54(b) judgment that resolves every theory they pursue if they wish to appeal immediately.

Complex Concepts Simplified

Final Order (§ 1291): An order is “final” when it ends the litigation on the merits as to one or more parties or claims—nothing remains but execution of that judgment.
Partial Final Judgment (Rule 54(b)): In a case with multiple claims or parties, the court may certify that some claims or parties are finished—if it determines there is no just reason to keep them tied to the remaining proceedings.
Claim vs. Cause of Action: A “claim” for Rule 54(b) purposes is the set of facts giving rise to relief, regardless of how many legal theories (causes of action) a plaintiff invokes to remedy that harm.
No Just Reason for Delay: The district court must weigh factors such as overlap between adjudicated and pending claims, risk of duplicative litigation, administrative efficiency, and any prejudice from waiting.

Conclusion

Diaz v. FCA US LLC reinforces that Rule 54(b) cannot be used to dispatch piecemeal appeals of alternative legal theories grounded in the same facts. Fraud and warranty counts based on an alleged vehicle defect here were inseparable “claims” under binding Third Circuit precedent. Because the District Court’s partial final judgment omitted some related counts and provided only boilerplate reasons for “no just reason for delay,” the Third Circuit dismissed the appeal for lack of § 1291 jurisdiction. Going forward, litigants and district courts must treat alternative theories arising from a single factual scenario as one claim unless each theory is fully resolved, and must articulate clear, specific findings before certifying a Rule 54(b) appeal.