Supreme Court Rules on Plaintiffs’ Ability to Appeal Class Certification Denial

The Supreme Court has issued its opinion in Microsoft v. Baker, ruling class action plaintiffs cannot circumvent the Rule 23(f) procedure governing the appeal of class certification denials by voluntarily dismissing their claims with prejudice.

Following oral argument several months back, the consensus had been that the ruling in Baker would be in Microsoft’s favor.  In fact, even the Ninth Circuit appeared to back away from its holding in Baker, issuing a contrary ruling while Baker remained pending before the Supreme Court.

The predictions proved right, with the Supreme Court issuing a ruling that reached a unanimous result: plaintiffs cannot appeal a denial of class certification unless they either successfully petition for permission to appeal under Rule 23(f) or continue to litigate after the denial of certification until judgment.

Perhaps most interesting about the ruling was the 5-4 split on the underlying reasoning. Justice Kennedy and the liberal wing of the Court premised the majority ruling on the basis that federal courts of appeals lack jurisdiction under the “final judgment rule” of §1291 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.

The concurrence by Justice Thomas and joined by the remaining conservatives, on the other hand, grounded its conclusion in Article III.  They reasoned that when plaintiffs stipulated to dismiss their claims, “they consented to the judgment against them and disavowed any right to relief from Microsoft,” which meant there was no further case or controversy for the federal courts to resolve.

The split in reasoning should not alter the clear mandate from the Supreme Court. Plaintiffs who lose class certification and who want to appeal have only two options: they can seek permission to appeal under Rule 23(f) or else litigate the case to final judgment and then appeal.