The United States Supreme Court’s recent ruling in Microsoft Corp. v. Baker not only ended the plaintiffs’ effort to obtain immediate appellate review of an order denying class certification, it importantly levels the playing field for plaintiffs and defendants. This decision means plaintiffs or defendants may seek permissive review of a class certification order under Fed.R.Civ.P. 23(f) or either party can await appellate review upon a final judgment. But plaintiffs cannot take advantage of a procedural vehicle available only to them – a voluntary dismissal of their lawsuit – to seek an immediate appeal. The Baker case, thus, restores the balance that the drafters of Rule 23(f) envisioned and also ensures that only final judgments are subject to appellate review consistent with federal appellate statutes.

Case Background

In the Baker case, plaintiffs had filed a class action contending that Microsoft’s X-Box 360 scratched game discs during normal game playing conditions. The lawsuit followed a similar case filed several years before in which the plaintiffs sought the same relief and where class certification had been denied. After failing to obtain appellate review under Rule 23(f), the individual plaintiffs in the earlier case settled their claims. In Baker, the District Court denied certification relying upon the prior decision.

After their Rule 23(f) appeal was denied, the Baker plaintiffs voluntarily dismissed their claims with prejudice but on the condition that the claims could be pursued individually or as a class should the certification order be reversed. The plaintiffs then filed an appeal after a “final judgment” had been entered. The Ninth Circuit Court of Appeals first concluded it had jurisdiction to hear the case and then reversed the District Court’s class certification decision. Microsoft thereafter filed a writ of certiorari with the Supreme Court.

The Decision

All of the Justices (except Justice Gorsuch, who did not participate) rejected the plaintiffs’ argument that the dismissal permitted immediate review of the interlocutory certification order. Justice Ginsburg, writing for the majority, traced the history of 28 U.S.C. § 1291, Rule 23(f), the “death-knell” doctrine, and interlocutory review. Finding that the tactic plaintiffs’ counsel attempted in Baker contradicted Court precedent (holding that the “death-knell” doctrine did not permit immediate appeal of a decision denying class certification even though such a ruling effectively ended the litigation) the Court concluded that the “death-knell” doctrine was an improper end-run around 28 U.S.C. §§ 1291 and 1292.

The Court also concluded that allowing this type of appeal is contrary to the purpose and intent of Rule 23(f), under which appeals from class certification orders may be heard only in the discretion of the court of appeals. If permitted, the voluntary dismissal tactic would allow a plaintiff to force a court of appeals to hear an appeal where it had not been permitted under Rule 23(f).

The majority ultimately found there is no appellate jurisdiction under § 1291 when a plaintiff dismisses his or her own case to obtain appellate review of a denial of class certification. Justice Ginsberg specifically noted that the tactic would undermine the need for a final appealable order and would also be one-sided in that plaintiffs could use it to obtain review of certification decisions they did not like, while defendants could not.

Justice Thomas (joined by Chief Justice Roberts and Justice Alito) concurred in the result but reached the conclusion differently. The concurring Justices would find that the appeals court lacked jurisdiction because there was no longer a “case or controversy” under Article III of the Constitution. Justice Thomas explained that, after the individual claim was resolved by the voluntary dismissal with prejudice, “[c]lass allegations, without an underlying individual claim, do not give rise to a ‘case’ or ‘controversy’” because a class action is simply a procedural mechanism.

The Court identified three viable options to obtain relief if a plaintiff wants appellate review of a denial of class certification and the court of appeals denies a Rule 23(f) petition:

1. A plaintiff could ask the district court to certify its order for interlocutory review under § 1292(b). However, if the court of appeals permitted no Rule 23(f) petition, it would be unlikely to reach a different result under 1292(b). 

2. A plaintiff could simply proceed with the case in the hopes of perhaps changing the district court’s mind on class certification later. But the chances of doing so generally are not great. 

3. The Court suggested that the plaintiff litigate the individual case to a final judgment and then seek review of the denial of class certification. The costs of pursuing the individual cases may, however, make that alternative unattractive to many plaintiffs and their lawyers.

What’s Next?

Senate is considering the proposed Fairness in Class Action Litigation Act of 2017, H.R. 985, already passed by the House, that would allow appeals as of right under 23(f) (either granting or denying certification). If the bill is signed into law, it would largely moot the Baker case because a party may automatically file an interlocutory appeal.