Here’s a common scenario:  After unsuccessfully moving for class certification and having a petition for review under Federal Rule of Civil Procedure 23(f) rebuffed, the plaintiff wants to take another shot at an appeal.  Can the plaintiff simply settle his individual claims—subject to his right to appeal the denial of class certification—so that he has a dismissal giving him an automatic right to an immediate appeal?

If you’re in the Third, Seventh, Eighth, or Ninth Circuit, the answer is no. Each of these courts have held that they lack jurisdiction over the appeal of a would-be class representative following such a settlement.

The most recent of these decisions is the  Eight Circuit’s opinion in Ruppert v. Principal Life Ins. Co. (pdf), No. 11-2554 (8th Cir. Feb. 13, 2013), which involved an ERISA claim by the plaintiff against his insurer. The district court denied class certification for lack of commonality and typicality. And the Eighth Circuit denied a Rule 23(f) petition for review. So the plaintiff next tried entering into a settlement, accepting $80,000 in exchange for a dismissal of his individual claims. In the agreement, the plaintiff reserved the right to appeal the denial of class certification and, if the Eighth Circuit were to reverse, to seek a share of any recovery to the class. The Eighth Circuit dismissed the appeal for lack of appellate jurisdiction.

The Eighth Circuit held that there was no final judgment because the settlement “allows for [the plaintiff’s] individual claims to spring back to life.” The Third, Seventh, and Ninth Circuits have also dismissed appeals for lack of finality, concluding that such settlements are impermissible attempts to manufacture appellate jurisdiction. See India Breweries, Inc. v. Miller Brewing Co., 612 F.3d 651, 656-57 (7th Cir. 2010); Fed. Home Loan Mortg. Corp. v. Scottsdale Ins. Co., 316 F.3d 431, 440 (3d Cir. 2003); Dannenberg v. Software Toolworks, Inc., 16 F.3d 1073, 1076 (9th Cir. 1994). By contrast, the Second Circuit deems a decision to be final, despite the plaintiff’s ability to reassert a dismissed claim on remand, if the “plaintiff’s ability to reassert a claim is made conditional on obtaining a reversal” on appeal. Purdy v. Zeldes, 337 F.3d 253, 258 (2d Cir. 2003).

The Eight Circuit also held that the settlement of the plaintiff’s individual claims deprived him of standing to appeal the denial of class certification. The Eighth Circuit acknowledged that the Supreme Court has held that a would-be class representative has standing to challenge the denial of class certification even if his individual claims are involuntarily extinguished. See United States Parole Comm’n v. Geraghty, 445 U.S. 388, 404 (1980). But when the claims are voluntarily settled—even under terms that give the plaintiff a stake in the class recovery—the case is moot. In so holding, the Eighth Circuit sided with the Fourth Circuit and rejected the position of the D.C. Circuit. Compare Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011) with Richards v. Delta Air Lines, Inc., 453 F.3d 525, 529 (D.C. Cir. 2006).  (The fact that the D.C. Circuit’s decision rests on an application of Deposit Guaranty National Bank v. Roper, 445 U.S. 326 (1980)—which the Supreme Court recently suggested might no longer be good law—suggests that the Eighth Circuit has the better side of this split.)

Although Ruppert deepens two preexisting circuit splits, the court’s docket suggests that the plaintiff is not seeking further review.  Accordingly, unless and until the Supreme Court decides the issue, if you’re a class-action defendant and the plaintiff comes to you with a proposal for one of these settlements, consult the law of the relevant circuit before deciding whether the offer is too good to pass up.