Today’s decision by the Supreme Court in Microsoft Corp. v. Baker puts an end to a tactic used by plaintiffs in the Ninth Circuit to manufacture an immediate appeal of an order denying class certification. When a federal district court grants or denies class certification, Federal Rule of Civil Procedure 23(f) allows the losing party to ask the court of appeals for permission to appeal immediately. Otherwise, the parties must litigate the case to a final judgment—the named plaintiffs’ individual claims if certification has been denied, or the class claims if certification has been granted—to obtain appellate review of the district court’s class certification determination. But the Ninth Circuit created an exception to this rule by authorizing a plaintiff who has had class certification denied to dismiss his or her individual claims with prejudice and then file an appeal from that self-generated judgment.
After the oral arguments in Baker, it seemed likely that the Supreme Court would reject that exception. And that is exactly what the Court decided today. Much more interesting is how they got there: Although all eight participating Justices agreed on the outcome, they took different approaches to the question presented.
The majority, in an opinion by Justice Ginsburg, held that the “voluntary dismissal” tactic cannot create appellate jurisdiction because such dismissals do not result in a final judgment—which is what 28 U.S.C. § 1291 requires for an appeal as of right. The Court held:
“Plaintiffs in putative class actions cannot transform a tentative interlocutory order … into a final judgment within the meaning of § 1291 simply by dismissing their claims with prejudice—subject, no less, to the right to ‘revive’ those claims if the denial of class certification is reversed on appeal.”
The Court explained that the “tactic would undermine § 1291’s firm finality principle, designed to guard against piecemeal appeals, and subvert the balanced solution Rule 23(f) put in place for immediate review of class-action orders.”
Indeed, Justice Ginsburg’s majority opinion focused heavily on the “careful calibration” by the Rules Committee in crafting Rule 23(f). The Court found the circumvention of Rule 23(f) troubling for many reasons. The majority explained that, under the Ninth Circuit’s approach, “the decision whether an immediate appeal will lie resides exclusively with the plaintiff.” In answer to the respondents’ argument that plaintiffs might be loath to invoke the tactic because a “dismissal with prejudice” would kill the case on the merits (if the appeal of the denial of class certification loses), the Court explained the reality “that plaintiffs with weak merits claims may readily assume that risk, mindful that class certification often leads to a hefty settlement.” Moreover, the “one-sidedness of [the] voluntary-dismissal device”—which would “permit plaintiffs only, never defendants, to force an immediate appeal of an adverse certification ruling”—supported the Court’s view that Congress’s adoption of the “rulemaking process” was the right mechanism to “settle the matter” of when immediate appeals of such orders should be available.
The majority did not reach the question whether plaintiffs’ voluntary-dismissal tactic deprived the court of appeals of jurisdiction under Article III’s cases-and-controversies requirement.
But in an opinion concurring in the judgment, Justice Thomas (joined by Chief Justice Roberts and Justice Alito) concluded that, although the plaintiffs’ voluntary dismissal was technically a “final decision” within the meaning of Section 1291, there was no appellate jurisdiction because the Ninth Circuit lacked Article III jurisdiction over plaintiffs’ individual claims. The plaintiffs’ decision to “consent to the judgment against them” eliminated any adversity between the parties—both sides had agreed that the claims should be dismissed with prejudice. The fact that plaintiffs asserted an “interest in reversing the order striking their class allegations” was not enough, in the concurring Justices’ view, because “[c]lass allegations, without an underlying individual claim, do not give rise to a ‘case’ or controversy’” within the meaning of Article III. “Those allegations are simply the means of invoking a procedural mechanism that enables a plaintiff to litigate his individual claims on behalf of a class.” (emphasis added).
That conclusion speaks to a broader debate over whether a class action is more than the sum of its parts. The answer is “no”—as we have argued in prior blog posts and a number of briefs over the years. Justice Thomas’s concurrence in Baker shows that at least three Justices agree. In other words, a procedural right such as the ability to pursue class treatment of claims cannot—standing alone—amount to a concrete interest sufficient to create the standing needed to satisfy Article III’s case-or-controversy requirement.
That standing analysis also dovetails with a significant comment made by Chief Justice Roberts in his concurring opinion last year in Tyson Foods, Inc. v. Bouaphakeo. In Part II of that opinion (joined by Justice Alito), the Chief Justice explained;
“Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not. The Judiciary’s role is limited ‘to provid[ing] relief to claimants, in individual or class actions, who have suffered, or will imminently suffer, actual harm.’ … Therefore, if there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”
In other words, absent class members who are not injured lack standing and therefore cannot recover from a litigated class action judgment in federal court. Or, as Justice Thomas puts it in Baker, “without an underlying individual claim,” there is no case or controversy.
Of course, a concurrence by three Justices is not binding authority. Yet the seeds are there. In Tyson Foods, Justice Kennedy’s majority opinion recognized that “the question whether uninjured class members may recover is one of great importance.” And it is also telling that the Baker majority (which included Justice Kennedy) declined to reach—or even address—the Article III issue addressed by Justice Thomas’s concurrence. The important question of whether Article III requires absent class members to have standing is one that the Supreme Court can and should address eventually, and there is strong reason to believe that the Court—now at full strength with nine Justices—will recognize that the same Article III standing rules apply to all plaintiffs, “class action or not.”