The Supreme Court has granted cert in an important case raising the issue whether a federal court of appeals has jurisdiction under both Article III and 28 U. S. C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice. See MICROSOFT CORPORATION, Petitioner, v. SETH BAKER, ET AL., No. 15-457 (U.S., petition granted 1/15/16).
A first group of plaintiffs appealed a denial of class certification, seeking interlocutory review under Fed. R. Civ. P. 23(f). Rule 23(f) gives federal courts of appeals “unfettered discretion” to “permit an appeal from an order granting or denying class-action certification.” Fed. R. Civ. P. 23(f); Fed. R. Civ. P. 23(f) advisory committee’s note to 1998 amendment. They argued the class-certification denial “constitute[d] the ‘death knell’ for this litigation” because the individual claims about their game consoles were too small to justify litigating on their own to final judgment. The Ninth Circuit denied the petition, and the plaintiffs eventually resolved their individual claims by an agreement with Microsoft.
A few years later, the same lawyers as in the original consolidated litigation filed a new lawsuit—again in the U.S. District Court for the Western District of Washington—on behalf of respondents, a handful of Xbox 360 owners who allegedly did not sue in the prior case. Respondents pressed the same claims as their predecessors and they likewise requested certification of a nationwide console class. They argued the Ninth Circuit’s intervening decision in Wolin v. Jaguar Land Rover North America, LLC, 617 F.3d 1168 (9th Cir. 2010) now allowed certification of their proposed classes. (A careful reading shows that case did not did not change the law relevant to this case.) As a result, the district court struck respondents’ class allegations. It found the reasoning in the first denial of class certification (by a different judge) persuasive and that nothing in Wolin undermined the previous analysis. Baker v. Microsoft Corp., 851 F. Supp. 2d 1274, 1280 (W.D. Wash. 2012). Invoking Fed. R. Civ. P. 23(f), respondents sought immediately to appeal the district court’s order striking their class allegations. As in the previous case, respondents’ counsel asserted that “the district court’s order effectively kills this case.” The Ninth Circuit denied the petition, and remanded the case back to the district court.
Instead of pressing their individual claims, respondents tried an end run, as they moved on remand to dismiss their claims with prejudice. Respondents explained that they wanted such an order so as to appeal the class decision, despite defendant's observation that plaintiffs would have no right to appeal the order striking class allegations after entry of their requested dismissal. The district court granted the dismissal with prejudice.
The Ninth Circuit assumed jurisdiction over respondents’ appeal, holding that in the absence of a
settlement, a stipulation that leads to a dismissal with prejudice does not destroy the adversity in that judgment necessary to support an appeal of a class certification denial. That ruling seemed to conflict with Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), and the rule plaintiffs may not manufacture an immediate appeal by dismissing and thereby showing that a class certification denial has in fact sounded the “death knell” of their claims.
On the merits, the Ninth Circuit thought the district court had misread Wolin, and remanded for further proceedings.
As our readers may know, courts disagree on whether plaintiffs seeking to represent a class “may appeal from a judgment entered after a voluntary dismissal with prejudice.” TASHIMA & WAGSTAFFE, FEDERAL CIVIL PROCEDURE BEFORE TRIAL § 16:396 (2015); see also 6 CYCLOPEDIA OF FEDERAL PROCEDURE §23.46 (3d ed. 2015) (explaining that while some courts allow such appeals of de-certification orders, “other courts consider this result untenable, because it allows the putative class representative to evade the policy against piecemeal review by waiving his or her individual claims”). Five circuits have held that a court of appeals lacks jurisdiction to review a denial of class certification where the plaintiffs have voluntarily dismissed their claims with prejudice. E.g., Bowe v. First of Denver Mortg. Investors, 613 F.2d 798, 801 (10th Cir. 1980). The Third, Fourth, and Seventh Circuits have since adopted the same view. Reviewing a case in which the plaintiffs voluntarily dismissed all of their claims to manufacture finality, the Third Circuit held that such a “procedural sleight-of-hand” does not create appellate jurisdiction. Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d 239, 245-47 (3d Cir. 2013). The Fourth Circuit likewise has held that when a putative class plaintiff voluntarily dismisses the individual claims underlying a request for class certification, a court of appeals lacks jurisdiction to decide the issue whether the district court abused its discretion in denying the plaintiff's request for class certification. Rhodes v. E.I. DuPont de Nemours & Co., 636 F.3d 88, 100 (4th Cir.), cert. denied, 132 S. Ct. 499 (2011); see also Himler v. Comprehensive Care Corp., 993 F.2d 1537 (4th Cir. 1993) (unpublished opinion) (same). And the Seventh Circuit has held that it will not review the district court’s refusal to certify a class when the plaintiffs requested and were granted a voluntary dismissal of their claims. Chavez v. Illinois State Police, 251 F.3d 612, 629 (7th Cir. 2001).
The Eleventh Circuit has gone even further, holding that it has no jurisdiction whenever a plaintiff appeals from a final judgment that resulted from a voluntary dismissal with prejudice. See Druhan v. Am. Mut. Life, 166 F.3d 1324, 1325-26 (11th Cir. 1999). It does not matter whether the dismissal with prejudice was requested only as a means of establishing finality in the case such that the plaintiff could appeal an interlocutory order—an order that the plaintiff believes effectively disposed of her case. Id. at 1326. Nor does it matter whether the interlocutory order did, in fact, eliminate the plaintiff’s claim. Id. at 1327 n.7. In either case, neither 28 U.S.C. § 1291 nor Article III permits the
appeal. Id. at 1326-27. Druhan was not a class action, but courts have since confirmed that its
categorical holding applies equally to class actions. See Woodard v. STP Corp., 170 F.3d 1043, 1044 (11th Cir. 1999); Kay v. Online Vacation Ctr. Holdings Corp., 539 F. Supp. 2d 1372, 1373-75 (S.D. Fla. 2008).
Only two circuits now hold that a named plaintiff’s voluntary dismissal with prejudice creates a sufficiently adverse—and thus appealable—final decision for the plaintiff to obtain review of a class-certification denial. Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1065 (9th Cir. 2014); Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 178-79 (2d Cir. 1990), cert. denied, 498 U.S. 1025 (1991).
The Supreme Court now looks poised to resolve this split.