July 21, 2015 Update: On July 20, 2015, the Ninth Circuit Court of Appeals denied Microsoft’s petition for rehearing en banc and amended its March 18, 2015, opinion to add a footnote supporting the conclusion that it had jurisdiction because a stipulated dismissal is an appealable judgment.  The amended opinion can be accessed here.

We recently reported on a Ninth Circuit Court of Appeals opinion reversing a district court’s decision to strike class action allegations in a putative class action against Microsoft.  Baker v. Microsoft Corp., No. 12-35946, 2015 U.S. App. LEXIS 4317 (9th Cir. Mar. 18, 2015).  In Baker v. Microsoft Corporation, the Ninth Circuit panel of judges held that proof that individual class members were damaged by an alleged defect (here, a defect in Xbox 360 video game consoles resulting in scratched game discs) was not necessary for a class action to be certified.  Id. at *20.  You can read the full article here.

Microsoft has now petitioned the Ninth Circuit for a rehearing en banc, putting a spotlight on a strategy class action plaintiffs have employed to “end-run” the appeals process once they have been denied class certification.  Namely, instead of pursuing individual claims to final judgment and then filing an appeal on the denial of class certification, plaintiffs voluntarily dismiss the action so that they can immediately appeal the order denying class certification.

This strategy short cuts the appeals process because class certification orders (granting or denying class certification) are not immediately appealable as a matter of right; the Court of Appeals only has appellate jurisdiction over final judgments.  28 U.S.C. § 1291.  Ordinarily, a party can either (1) seek an interlocutory appeal under the discretionary Federal Rule of Civil Procedure 23(f) and/or (2) litigate the claims until a final judgment is entered, and then appeal the class certification order.  However, at least some class action plaintiffs are skipping this process by filing dismissals either before or after seeking a Rule 23(f) appeal.

In Baker, the plaintiffs voluntarily dismissed the lawsuit after the district court ordered the class action allegations stricken and the plaintiffs unsuccessfully moved for a Rule 23(f) interlocutory appeal of that order.  2015 U.S. App. LEXIS 4317 at *11-12.  The Ninth Circuit held there was appellate jurisdiction following a voluntary dismissal, citing Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1065 (9th Cir. 2014).  Id.  (We previously reported on other aspects of the Berger opinion here.)

In its petition, Microsoft argues that the Ninth Circuit should rehear the issue of appellate jurisdiction because the panel decision conflicts with (1) Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), in which the U.S. Supreme Court held that, in line with the congressional policy against piecemeal appeals, the fact an interlocutory order may induce a party to abandon its claim before final judgment is not sufficient to consider the order a “final decision” under 28 U.S.C. § 1291; (2) Huey v. Teledyne, Inc., 608 F.2d 1234 (9th Cir. 1979), a Ninth Circuit opinion finding appellate jurisdiction lacking under similar procedural facts as Baker; and (3) decisions rejecting appellate jurisdiction over class certification denials in the Third, Fourth, Eighth, and Tenth Circuits.  See Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d 239, 245-46 (3d Cir. 2013); Rhodes v. E.I. du Pont de Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011); Telco Grp., Inc. v. AmeriTrade, Inc., 552 F.3d 893, 893-94 (8th Cir. 2009) (per curiam); Bowe v. First of Denver Mortg. Investors, 613 F.2d 798, 800-02 (10th Cir. 1980).

Whether the Ninth Circuit grants Microsoft’s petition for rehearing en banc, and how it handles the shortcut strategy to appellate jurisdiction, could significantly affect how class actions are litigated in the Ninth Circuit because a class certification order often decides whether the case is settled or dismissed.  Stay tuned along with us to see how it all pans out.

A copy of Microsoft’s petition can be accessed here.