In April, we reported on the oral argument in Microsoft Corp. v. Baker, a Supreme Court case addressing whether putative class members may obtain appellate review of orders denying class certification by voluntarily dismissing their individual claims with prejudice. Recently, the Supreme Court gave its unanimous answer: no. See Microsoft Corp. v. Baker, 137 S. Ct. 1702, 1707 (2017). The Court’s ruling ends a long-standing practice that class plaintiffs used as an end run around procedural restraints to create appellate review, and affirms the use of a Federal Rule of Civil Procedure 23 (Rule 23) petition as the sole vehicle to obtain interlocutory review of an order denying (or granting) class certification.
Under a 1978 Supreme Court decision, orders denying class certification are interlocutory and not appealable as of right. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 477 (1978). Twenty years later, Rule 23 was amended with paragraph (f), which gives appellate courts discretion to review, upon petition, orders granting or denying class certification. But if their Rule 23(f) petition is denied, putative class members would sometimes voluntarily dismiss their claims with prejudice to artificially create a final order from which to appeal. This is what happened in Baker.
In 2011, Seth Baker and others brought a class action against Microsoft (the creator and owner of Xbox). The district court later struck the class allegations (the functional equivalent of denying class certification). After the Ninth Circuit denied the plaintiffs’ Rule 23(f) petition, the plaintiffs moved to dismiss their individual claims with prejudice. Microsoft stipulated to the dismissal, but objected to the plaintiffs’ ability to appeal the certification denial. The plaintiffs, nevertheless, appealed the denial of class certification. The Ninth Circuit held the dismissal order was “final,” exercised jurisdiction and reversed the district court’s order. Baker v. Microsoft Corp., 797 F.3d 607, 612–16 (9th Cir. 2015). Microsoft appealed, and the Court granted certiorari.
The Court held that the class plaintiffs’ voluntary dismissal did not create a final order from which an appeal could be taken. The Court held that the class plaintiffs’ “voluntary-dismissal tactic . . . invites protracted litigation and piecemeal appeals” because “the decision whether an immediate appeal will lie resides exclusively with the plaintiff,” who “need only dismiss her claims with prejudice, whereupon she may appeal the district court’s order denying class certification.” The Court noted that the class plaintiffs’ tactic “undercuts Rule 23(f)’s discretionary regime” that “was the product of careful calibration.” In sum, the Court held that class plaintiffs “cannot transform a tentative interlocutory order . . . into a final judgment . . . simply by dismissing their claims with prejudice . . . .”
Citing Baker, one circuit court has already denied putative class members the right to artificially create appellate review. In Connelly v. Hilton Grand Vacations Co., LLC, No. 14-55431, 2017 WL 3016736 (9th Cir. July 17, 2017), the Ninth Circuit dismissed a procedurally identical appeal for lack of jurisdiction. Other circuit courts will likely follow in similar cases.