Fifth Circuit Holds That It Has No Appellate Jurisdiction Over Post-Judgment Order to Return Interpleaded Funds to the Court’s Registry

In Reed Migraine Centers of TX v. Ticer, No. 20-10156 (5th Cir. Feb. 2, 2021), the panel holds that a Fed. R. Civ. P. 60(b)(5) order reopening an interpleader action and directing return of the funds was not a final appealable order.

“Dr. Kenneth Reed, a member of both Reed Migraine Centers of Texas, LLC and Neuro Stim Technologies, LLC, (collectively ‘Reed’), developed a neurostimulation implant procedure for migraine headaches. Dr. Jack Chapman was a former partner physician with Reed Migraine. Chapman formed a competing company with others, including another former employee of Reed Migraine and Neuro Stim (Collectively ‘Chapman’). Chapman then began marketing a surgical migraine procedure allegedly identical to the Reed procedure. Thereafter, Reed filed suit [in federal court] against Chapman for false advertising, unfair competition, tortious interference with reasonable expectancy, and civil conspiracy.”

When the case settled, Dr. Reed’s attorney Mark Ticer claimed part of the settlement funds. “Chapman successfully sought to interplead the disputed funds to be paid in settlement under Rule 22 of the Federal Rules of Civil Procedure.” Although the federal action wound down and final judgment was entered, a state lawsuit commenced to determine the owner of the funds deposited in court.

“After the state court granted summary judgment to Reed and dismissed Ticer’s claims, the district court … ordered the clerk to disburse the funds to Reed.” But then the state court was reversed on appeal, and “Ticer then filed a Rule 60(b)(5) motion asking the district court for relief from its prior order to disburse the funds. On January 7, 2020, the district court granted the Rule 60(b)(5) motion and ordered the Reed parties to return the interpleaded funds to the court’s registry within 30 days.” Reed appealed the order.

The Fifth Circuit dismisses the appeal. “This case does not yet involve a final determination of the status of the interpleaded funds. Instead, it involves Rule 60(b)(5) relief from a prior order to disburse funds. The district court was not disbursing funds to the other party, but merely ordering that they be returned to the court’s registry pending the outcome of the state court action on remand. As the district court said, there has been no decision on who is entitled to the money. The final judgment has been set aside. Thus, this court lacks jurisdiction to hear this appeal [under 28 U.S.C. § 1291].”

The panel also rejects an analogy to the interlocutory appeal of an injunction under 28 U.S.C. § 1292. “Here, the order does not have the practical effect of granting or denying an injunction, nor does it have irreparable consequence. Again, there has been no decision as to disbursement of the money and there has been no final judgment. The previous final judgment on which Reed repeatedly attempts to rely no longer exists.”

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