One of the difficulties of class action litigation that continues to vex employers is the frequent inability to obtain meaningful review of certification decisions. Because, the reasoning goes, certification orders are interlocutory in nature, there is no right of immediate review. While since 1998 there has been the potential for review of orders granting or denying certification of Rule 23 class actions under Rule 23(f), the decision whether to review is purely discretionary, akin to a petition for writ of certiorari. That discretion has been exercised in such a way that review of even highly questionable decisions is frequently unavailable and cases can continue to proceed and to increase cost and risk even while a petition for review is pending. These problems are even worse in so-called "conditional certification" decisions under the Fair Labor Standards Act (FLSA), where no review is available at all.
Ironically, while this problem is one primarily facing employers, attempts to find new ways to obtain interlocutory appellate review have come mainly from the plaintiffs' bar. One method, when faced with the decision not to certify a case (or a decertification order) is for the plaintiffs to dismiss their own claims without prejudice to create a "final appealable order" and then to seek review at that time. We blogged about one such effort, which ultimately proved unsuccessful, in the case of Camesi v. University of Pittsburgh Medical Center, 729 F.3d 239 (3d Cir. 2013), and FLSA case. The Fourth Circuit reached a similar decision in Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88 (4th Cir. 2011), while the Ninth and Second Circuits had allowed such tactics.
On June 12, 2017, the Supreme Court resolved this split in the circuits in the case of Microsoft Corp. v. Baker, Case No. 15-457 (June 12, 2017). It held 8:0 (although on different grounds) that in cases where plaintiffs dismissed their own claims to obtain a final appealable order to review a prior unfavorable certification order, the court of appeal had no jurisdiction to review the decision at all. While a purely procedural case, this decision highlights the difficulties of all parties seeking appellate review of certification decisions they disagree with and may add support for current legislative proposals to make Rule 23(f) review more widely available.
While not an employment case, the facts of Baker, and the Court's approach, are both interesting. The Baker case was a consumer action involving a popular gaming console. The plaintiffs first brought suit in the Western District of Washington, but the district court refused to certify the class and the Ninth Circuit denied their request for Rule 23(f) appeal. The plaintiffs then settled their cases on an individual basis. Two years later, however, they filed essentially the same action again, contending that intervening Ninth Circuit authority made certification viable. The district court in this second case disagreed and struck the class action allegations from their complaint. The plaintiffs again sought Rule 23(f) review. Their argument was that the certification decision was the "death knell" of the class and that because the individual cases were too small to maintain on their own, it "effectively kill[ed] the case." The Ninth Circuit, however, again denied Rule 23(f) review.
As the Supreme Court noted, the plaintiffs at this point could have asked the lower court to certify the case for interlocutory appeal under 29 U.S.C. § 1292(b). They could have continued to litigate before the district court and either ask the court to reconsider certification at some point or await a final decision and appeal then. Or they could have settled again. Instead, they took the route, arguably permitted by the Ninth Circuit in the past, to exercise the tactic of dismissing their own cases and appealing them. This time, at least at first, this tactic worked, as the Ninth Circuit found that it had jurisdiction, reversed the district court, and remanded for further consideration of the certification issue. The Supreme Court accepted review of that decision.
None of the Justices accepted the argument that dismissal under these circumstances would permit review of the underlying certification order. The five-Justice majority opinion, written by Justice Ginsberg, carefully traced the history of 29 U.S.C. § 1291, Rule 23(f), the death-knell theory, and interlocutory review generally. The majority ultimately found on statutory construction grounds that it had no jurisdiction under section 1291 when a plaintiff dismissed his or her own case to obtain appellate review. Justice Ginsberg specifically noted that the tactic would seriously 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. The three-Justice concurrence, authored by Justice Thomas, would have reached the same conclusion, but on Article III grounds, essentially concluding that with the dismissal of the underlying claim there was no longer a valid case or controversy. Justice Gorsuch did not take part in the decision.
The proposed Fairness in Class Action Litigation Act of 2017, H.R. 985, passed by the House, would make appeals under 23(f) (either granting or denying certification) non-discretionary, but is drawing opposition from the plaintiffs' bar in the Senate. If granted, however, it would largely moot the Baker case because a right of interlocutory appeal would automatically exist.
The bottom line: Plaintiffs unsuccessfully seeking class certification cannot force immediate appellate review by dismissing their own cases voluntarily, but pending legislation may broaden the rights of both plaintiffs and defendants to seek immediate appellate review of certification orders.
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