The U.S. Supreme Court has closed a loophole that class action plaintiffs in the Ninth Circuit had been exploiting to obtain immediate appellate review of a district court’s denial of class certification. The decision – Microsoft Corp. v. Baker, 582 U.S. __ (2017) – will end a practice in the Ninth Circuit that was seen as unfair to defendants, who could not exploit the same loophole to obtain immediate review of a district court’s grant of class certification.

A district court’s class certification decision is inherently interlocutory and therefore not immediately appealable. But a party aggrieved by an adverse class certification decision also need not satisfy the strict standards for taking an interlocutory appeal; instead, under Rule 23(f), a “court of appeal[] may permit an appeal from an order granting or denying class-action certification . . . if a petition for permission to appeal is filed with the circuit clerk within 14 days after the order is entered.” Under this rule, either side can ask the court of appeal to exercise its discretion to review a class certification decision. Rule 23(f) strikes a balance that provides both sides an equal opportunity to obtain appellate review and the court of appeal the right to control which interlocutory class certification decisions it will review.

The Ninth Circuit, however, had upset Rule 23(f)’s balance. In its case law, the Ninth Circuit permitted a class action plaintiff, who suffered an adverse class certification decision, to immediately appeal the decision if the plaintiff dismissed his or her claims with prejudice, thereby creating an appealable final judgment. If the Ninth Circuit then reversed the denial of certification, the plaintiff’s claims would be revived and the dismissal with prejudice ignored. This procedure was not available to a class action defendant, who could not similarly force a final judgment, and also usurped the Ninth Circuit’s ability to deny appellate review.

In Microsoft, the U.S. Supreme Court rejected the Ninth Circuit’s plaintiff-friendly end run around Rule 23(f), finding that a plaintiff’s dismissal with prejudice so that it could appeal a class certification decision was not a final judgment within the meaning of the final judgment rule (28 U.S.C. § 1291). “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. . . . Were [that] reasoning embraced by this Court, ‘Congress’ final decision rule would end up a pretty puny one.’”

Going forward, if either side wishes for appellate review of a class certification decision, it will have to seek permission from the court of appeal under Rule 23(f).