On June 12. 2017, the United States Supreme Court decided Microsoft Corp. v. Baker, 582 U.S. ___. The Court phrased the question before it as follows:
Do federal courts of appeals have jurisdiction under §1291 and Article III of the Constitution to review an order denying class certification (or, as here, an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice?
Spoiler alert: the Court (8-0) answered “No.”
The Court viewed the Respondents’ arguments as an attempt to revivify the “death knell” doctrine, which the Court rejected decades ago in Coopers & Lybrand v. Livesay, 437 U. S. 463 (1978). Justice Ginsburg, writing for the five-justice majority in Microsoft, briefly summarized that judicially-created doctrine as follows: Courts of Appeals reviewed a refusal to certify a class when the refusal effectively terminated the litigation because the named plaintiff would not pursue his low-value individual claim – hence the term “death knell.” In such circumstances, an appeals court deemed the order denying class certification an appealable final decision under § 1291. Id. at 471.
Coopers & Lybrand killed the “death knell” doctrine, citing its “heavy cost to [28 U.S.C.] § 1291’s finality requirement,” the doctrine tendency to force appellate courts “indiscriminately into the trial process” upsetting the balance between the trial and appellate courts, and the fact that the doctrine “operate[d] only in favor of plaintiffs,” even though class-certification is often “of critical importance to defendants.” Id. at 476.
In 1998, Congress amended the Rules Enabling Act to allow for promulgation of rules providing an interlocutory appeal of orders previously not appealable under existing rules. As a result, Federal Rule of Civil Procedure 23(f) arrived, authorizing “permissive interlocutory appeal” from class-certification orders in “the sole discretion of the court of appeals.”
In 2011, Seth Baker and others sued Microsoft over an alleged design defect in its Xbox game system, seeking to represent a nationwide class of Xbox owners. A prior putative class action alleging the same design defect had ended in a denial of class certification, but Baker argued that the earlier case did not control his case. The district court held that it did control and therefore struck the class allegations. The Ninth Circuit denied Baker’s petition under Rule 23(f).
The putative class representatives then dismissed their case with prejudice, planning to appeal the order striking the class allegations and, if victorious, return to the district court as class representatives. The Ninth Circuit Court of Appeals took the appeal as one from a final order, rejecting Microsoft’s argument that the voluntary dismissal and appeal ploy impermissibly circumvented Rule 23(f ).
The Microsoft majority called the Respondents’ “voluntary-dismissal tactic, even more than the death-knell theory,” an invitation to “protracted litigation and piecemeal appeals,” saying it was infected with all the other, often one-sided, problems identified with the “death knell” doctrine and, moreover, was an affront to the Rules Enabling Act and Rule 23(f )’s permissive appeal regime.
In concurring in the judgment, Justice Thomas took a simpler approach, albeit one that required confronting the constitutional question that the majority avoided. Joined by the Chief Justice and Justice Alito, Justice Thomas concluded that the district court’s dismissal order was final for purposes of § 1291. Therefore, the constitutional question was unavoidable in his view. Having decided the Court must face the Article III question, Justice Thomas concluded that the plaintiffs’ voluntary dismissal of their claims rendered the case non-justiciable under Article III because there was no longer the necessary adversity as to the merits.