Peter Stris, Stris & Maher (LA) for plaintiffs, Jeffrey L. Fisher, co-director of the Stanford Law School Supreme Court Litigation Clinic.
The U.S. Supreme Court on Tuesday grilled lawyers in a high-profile class action about a controversial procedural tool that allows plaintiffs to appeal a class certification order by dismissing their own case.
The case, Microsoft v. Baker, is one in which the Supreme Court delayed oral arguments after Justice Antonin Scalia died last year. The issue is a critical one in class actions, where certification rulings can make or break the case. In many cases, plaintiffs attorneys have little desire to continue pursuing individual claims once they lose class certification.
The 2011 case involved alleged defects in Xbox 360. A federal judge in Washington had granted Microsoft’s motion to strike the class claims, and the U.S. Court of Appeals for the Ninth Circuit denied the plaintiffs’ petition for interlocutory review of that order. The plaintiffs, rather than press their individual claims, voluntarily dismissed the case, which allowed them to appeal the order. In 2015, the Ninth Circuit ruled that the district judge had abused his discretion, remanding the case, but made no finding as to whether class certification was appropriate.
On Tuesday, plaintiffs attorney Peter Stris fielded numerous questions about the procedural move his clients used, including how many circuits permitted such a tactic and whether it ran afoul of a federal rule granting appellate courts discretionary review over interlocutory appeals of class certification orders.
“The rule makers went through a lot of work to figure out what to do with an interlocutory ruling on class action status. And it came up with 23(f),” said Justice Ruth Bader Ginsburg, referring to the provision in the Federal Rule of Civil Procedure 23. “And this device seems to be just a way to get around 23(f).”
Stris, founding partner of Stris & Maher in Los Angeles, denied that the move was “an end run around Rule 23.” Without it, he said, class actions involving small amounts of monetary damages due each class member would be impossible to pursue.
“You’re going to have small dollar value individual claims that are abandoned without regard to merit,” he told the justices.
But Microsoft counsel Jeffrey Fisher, co-director of the Supreme Court Litigation Clinic at Stanford Law School, cautioned that the tactic, if approved, could be applied not just in class actions but “to any pretrial order on which the plaintiff would be willing to bet their case.”
More to the point, Microsoft argued in its briefs that the tactic gives plaintiffs an unfair advantage since defendants don’t have the option to dismiss the case if it goes the other way. The defense bar has long sought unsuccessfully to push for automatic, rather than discretionary, appeals of class certification rulings. Automatic appeals of class certification rulings made its way into a class action reform bill that the U.S. House of Representatives passed this month. And in public comments to a civil rules committee that is weighing the first proposed amendments since 2003 to Rule 23, many in the defense bar noted that most appeals courts, while they have discretion to do so, don’t take up class certification decisions.
That’s exactly what happened to the plaintiffs in the Microsoft case, leaving them with the unenviable options of pursuing their individual claims to a final judgment or dismissing their case.
Although class certification could effectively wipe out the plaintiffs’ case, Fisher argued that the Supreme Court has rejected that argument as a means to appeal. In a 1978 decision called Coopers & Lybrand v. Livesay, the Supreme Court rejected the so-called death knell doctrine in finding that an appeals court should not have reviewed a decertification order.
Stris countered that Livesay focused on interlocutory appeals, not final judgments. “That’s the whole enchilada in my view,” he told the justices. He also said the plaintiffs voluntarily dismissed the Microsoft case only on the condition that they would appeal the class claims order.
But the justices questioned whether the plaintiffs had standing to do that.
After all, in regular appeals, parties argue why judgment should not have been entered against them, Chief Justice John Roberts noted. “But you told the district court to enter a judgment against you, so you can’t argue that it shouldn’t have done that,” he said.
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Contact Amanda Bronstad at [email protected].
