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Supreme Court Holds Voluntary Dismissal With Prejudice Does Not Constitute An Appealable “Final Decision” That Would Allow The Appeal Of A Class Certification Decision
06/20/2017On June 12, 2017, the United States Supreme Court, in an opinion authored by Justice Ginsburg, held that “[f]ederal courts of appeals lack jurisdiction under [28 U.S.C.] § 1291 to review an order denying class certification (or, as here, an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice.” Microsoft Corp. v. Baker, 582 U.S. ___ (2017). The Court reversed and remanded the Ninth Circuit Court of Appeals’ decision and held that a voluntary dismissal with prejudice does not constitute a “final decision,” as required to bring an appeal under § 1291. Therefore, the Court found that the plaintiffs, after voluntarily dismissing their claims with prejudice, did not have a right to appeal the district court’s order striking their class action allegations.
The case arose after plaintiffs brought a class action against Microsoft alleging that the Xbox 360 damages disks when played. After a D.C. district court struck the class allegations, plaintiffs petitioned the Ninth Circuit for permission to appeal, which the Ninth Circuit denied. The parties subsequently stipulated to a dismissal with prejudice, subject to plaintiffs’ right to revive their claims if the Ninth Circuit reversed the district court’s denial. Plaintiffs then appealed the district court’s decision to strike the class allegations. The Ninth Circuit held it had jurisdiction, after concluding that the dismissal was “‘a sufficiently adverse—and thus appealable—final decision under § 1291,’” and reversed the lower court’s decision.
The Court granted certiorari to resolve a circuit split over whether “federal courts of appeals have jurisdiction under § 1291 and Article III of the Constitution to review an order denying class certification (or, as here, an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice.” The Court, having found that § 1291 does not allow for jurisdiction, did not reach the constitutional issue.
The Court held that the plaintiffs’ tactic of voluntarily dismissing the action and then seeking an appeal of an adverse class ruling “invites protracted litigation and piecemeal appeals.” This concern had also been raised by the Court in Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), in which the Court rejected the “death-knell doctrine,” pursuant to which appellate courts would find an order to be an appealable final decision if the denial of class certification would lead to the termination of the case for all practical purposes. The Court noted that the concerns raised here were even greater than those raised in Coopers & Lybrand because, here, by dismissing a case then seeking appeal, plaintiffs alone would determine whether and when to appeal an adverse ruling on class certification and could potentially use such a tactic multiple times in the same case—for example, appealing an order from the district court, and then, if that was reversed on appeal, and the district court again denied class certification on a different basis after reconsideration, seeking to appeal that as well.
The Court further found that plaintiffs’ tactic would undermine Federal Rule of Civil Procedure 23(f), which allows immediate appeal of orders denying or granting class certification if the court of appeals permits it. Rule 23(f) was enacted after Coopers & Lybrand and was, according to the Court, the “product of careful calibration”—providing a possible avenue to appeal class certification decisions, but not as a matter of right. The Court noted that allowing plaintiffs to appeal the district court’s order here via a voluntary dismissal would allow “indiscriminate appellate review of interlocutory orders,” undercutting the discretion allowed for in Rule 23(f). The Court also noted that the Ninth Circuit’s approach would give an entirely one-sided right to plaintiffs to force an immediate appeal of a class certification order, an outcome again inconsistent with Rule 23(f), which gives appeals rights to both plaintiffs and defendants. As the Court noted, “[i]t is not the prerogative of litigants or federal courts to disturb that settlement” set forth in Rule 23(f).
