31 F.4th 1124
9th Cir.2022Background
- Trendsettah sued Swisher for attempted monopolization and breach of an exclusive-manufacturing contract for Splitarillo cigarillos; a jury awarded Trendsettah $14,815,494 (antitrust) and $9,062,679 (contract), and the district court trebled antitrust damages and entered judgment for Trendsettah on contract claims.
- The district court later granted summary judgment for Swisher on the antitrust claims; the Ninth Circuit reversed and directed the court to reinstate the jury verdict.
- After remand, Swisher uncovered evidence (from a grand jury/indictment and related materials) that Trendsettah CEO Akrum Alrahib ran a scheme to evade federal excise taxes, which allegedly inflated Trendsettah’s profit data and allowed artificially low pricing.
- Swisher moved under Federal Rule of Civil Procedure 60: (1) arguing fraud on the court under Rule 60(d); and (2) seeking relief under Rules 60(b)(2) and (b)(3) as newly discovered evidence and fraud that would have impacted liability/damages. The district court granted relief under both theories.
- The Ninth Circuit held the district court abused its discretion to the extent it found fraud on the court under Rule 60(d), but affirmed relief under Rules 60(b)(2) and (b)(3) as to the antitrust claims, and reversed the dismissal of the contract claims—directing reinstatement of the jury verdict on contract claims.
Issues
| Issue | Trendsettah's Argument | Swisher's Argument | Held |
|---|---|---|---|
| Appellate jurisdiction after voluntary dismissal with prejudice | Voluntary dismissal should not create final-judgment jurisdiction | Dismissal does not bar appeal of Rule 60 rulings | Court has jurisdiction; voluntary dismissal with prejudice here was a valid final judgment for appeal |
| Fraud on the court (Rule 60(d)) | Tax-evasion nondisclosure and misleading financials amounted to fraud on the court | Alrahib’s scheme and nondisclosure tainted the trial and judicial process | District court abused discretion: clear-and-convincing standard for fraud on the court not met; vacatur under Rule 60(d) improper |
| Timeliness of Rule 60(b)(2)/(b)(3) | Swisher’s Rule 60(b) motion was untimely under one-year limit | Appellate reversal substantially altered judgment and restarted the one-year clock | Motion timely: remand substantially altered the judgment, triggering a new Rule 60(b) period |
| Sufficiency / diligence for Rule 60(b) relief (newly discovered evidence and fraud) | Excise-tax issues were irrelevant or discoverable earlier; Swisher lacked diligence | Tax-evasion admissions and documents were newly available and undermined Trendsettah’s damages; Swisher acted diligently | Court affirmed Rule 60(b)(2) and (b)(3) relief for antitrust claims: Swisher exercised reasonable diligence and the evidence likely would have changed the verdict |
Key Cases Cited
- Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097 (9th Cir. 2006) (fraud-on-the-court vacatur requires clear and convincing proof)
- United States v. Estate of Stonehill, 660 F.3d 415 (9th Cir. 2011) (distinguishing fraud on the court from ordinary litigation fraud)
- Sierra Pacific Indus., Inc. v. United States, 862 F.3d 1157 (9th Cir. 2017) (mere nondisclosure or perjury usually not fraud on the court)
- In re Levander, 180 F.3d 1114 (9th Cir. 1999) (fraud on the court where false deposition concealed key facts)
- Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128 (9th Cir. 1995) (affirmative concealment of exculpatory test evidence constituted fraud on the court)
- In re Napster, Inc. Copyright Litig., 479 F.3d 1078 (9th Cir. 2007) (fraud-on-the-court requires intentional, material misrepresentations aimed at the court)
- Microsoft Corp. v. Baker, 137 S. Ct. 1702 (Sup. Ct. 2017) (limits on converting interlocutory rulings into final-judgment appeals)
- Concha v. London, 62 F.3d 1493 (9th Cir. 1995) (voluntary dismissal with prejudice may render an interlocutory order appealable in non-class actions)
- Rodriguez v. Taco Bell Corp., 896 F.3d 952 (9th Cir. 2018) (post-Microsoft clarification on voluntary dismissal and appellate jurisdiction)
- Brown v. Cinemark USA, Inc., 876 F.3d 1199 (9th Cir. 2017) (distinguishing Microsoft where Rule 23(f) regime not implicated)
- Jones v. Swanson, 512 F.3d 1045 (8th Cir. 2008) (appellate rulings that substantially alter a district court judgment can restart Rule 60(b)’s one-year period)
- Feature Realty, Inc. v. City of Spokane, 331 F.3d 1082 (9th Cir. 2003) (standards for newly discovered evidence under Rule 60(b)(2))
- De Saracho v. Custom Food Mach., Inc., 206 F.3d 874 (9th Cir. 2000) (standard for fraud under Rule 60(b)(3))
- Wharf v. Burlington N. R.R. Co., 60 F.3d 631 (9th Cir. 1995) (fraud that prevents the opposing party from fully and fairly presenting a defense supports Rule 60(b)(3) relief)