Microsoft Corp. v. Baker
Microsoft Corp. v. Baker
Opinion
This case concerns options open to plaintiffs, when denied class-action certification by a district court, to gain appellate review of the district court's order. Orders granting or denying class certification, this Court has held, are "inherently interlocutory,"
Coopers & Lybrand v. Livesay,
The plaintiffs in the instant case, respondents here, were denied Rule 23(f) permission to appeal the District Court's refusal to grant class certification. Instead of pursuing their individual claims to final judgment on the merits, respondents stipulated *1707 to a voluntary dismissal of their claims "with prejudice," but reserved the right to revive their claims should the Court of Appeals reverse the District Court's certification denial.
We hold that the voluntary dismissal essayed by respondents does not qualify as a "final decision" within the compass of § 1291. The tactic would undermine § 1291's firm finality principle, designed to guard against piecemeal appeals, and subvert the balanced solution Rule 23(f) put in place for immediate review of class-action orders.
I
A
Under § 1291 of the Judicial Code, federal courts of appeals are empowered to review only "final decisions of the district courts."
1
In
Coopers & Lybrand,
this Court considered whether a plaintiff in a putative class action may, under certain circumstances, appeal as of right a district court order striking class allegations or denying a motion for class certification. We held unanimously that the so-called "death-knell" doctrine did not warrant mandatory appellate jurisdiction of such "inherently interlocutory" orders.
The death-knell theory likely "enhance[d] the quality of justice afforded a few litigants," we recognized.
*1708
Second, the doctrine forced appellate courts indiscriminately into the trial process, thereby defeating a "vital purpose of the final-judgment rule-that of maintaining the appropriate relationship between the respective courts."
Finally, we observed, the doctrine was one sided: It "operate[d] only in favor of plaintiffs," even though the class-certification question is often "of critical importance to defendants as well."
In view of these concerns, the Court reached this conclusion in
Coopers & Lybrand
: "The fact that an interlocutory order may induce a party to abandon his claim before final judgment is not a sufficient reason for considering [the order] a 'final decision' within the meaning of § 1291."
2
After
Coopers & Lybrand,
a party seeking immediate review of an adverse class-certification order had no easy recourse. The Federal Rules of Civil Procedure did not then "contain any unique provisions governing appeals" in class actions,
*1709
Another avenue opened in 1998 when this Court approved Federal Rule of Civil Procedure 23(f). Seen as a response to
Coopers & Lybrand,
see,
e.g.,
Blair v. Equifax Check Services, Inc.,
"A court of appeals 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. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders." 5
Courts of appeals wield "unfettered discretion" under Rule 23(f), akin to the discretion afforded circuit courts under § 1292(b). Committee Note on Rule 23(f). But Rule 23(f) otherwise "departs from the § 1292(b) model," for it requires neither district court certification nor adherence to § 1292(b)'s other "limiting requirements." Committee Note on Rule 23(f) ; see supra, at 1707 - 1708.
This resolution was the product of careful calibration. By "[r]emoving the power of the district court to defeat any opportunity to appeal," the drafters of Rule 23(f) sought to provide "significantly greater protection against improvident certification decisions than § 1292(b)" alone offered. Judicial Conference of the United States, Advisory Committee on Civil Rules, Minutes of November 9-10, 1995. But the drafters declined to go further and provide for appeal as a matter of right. "[A] right to appeal would lead to abuse" on the part of plaintiffs and defendants alike, the drafters apprehended, "increas[ing] delay and expense" over "routine class certification decisions" unworthy of immediate appeal. Ibid. (internal quotation marks omitted). See also Brief for Civil Procedure Scholars as Amici Curiae 6-7, 11-14 (" Rule 23(f) was crafted to balance the benefits of immediate review against the costs of interlocutory appeals." (capitalization omitted)). Rule 23(f) therefore commits the decision whether to permit interlocutory appeal from an adverse certification decision to "the sole discretion of the court of appeals." Committee Note *1710 on Rule 23(f) ; see Federal Judicial Center, T. Willging, L. Hooper, & R. Niemic, Empirical Study of Class Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules 86 (1996) (hereinafter Federal Judicial Center Study) ("The discretionary nature of the proposed rule ... is designed to be a guard against abuse of the appellate process."). 6
The Rules Committee offered some guidance to courts of appeals considering whether to authorize appeal under Rule 23(f). "Permission is most likely to be granted," the Committee Note states, "when the certification decision turns on a novel or unsettled question of law," or when "the decision on certification is likely dispositive of the litigation," as in a death-knell or reverse death-knell situation. Committee Note on Rule 23(f) ; see supra, at 1708, and n. 2. Even so, the Rule allows courts of appeals to grant or deny review "on the basis of any consideration." Committee Note on Rule 23(f) (emphasis added).
B
With this background in mind, we turn to the putative class action underlying our jurisdictional inquiry. The lawsuit is not the first of its kind. A few years after petitioner Microsoft Corporation released its popular videogame console, the Xbox 360, a group of Xbox owners brought a putative class action against Microsoft based on an alleged design defect in the device. See
In re Microsoft Xbox 360 Scratched Disc Litigation,
Two years later, in 2011, respondents filed this lawsuit in the same Federal District Court. They proposed a nationwide class of Xbox owners based on the same design defect alleged in
Scratched Disc Litigation
. See
Invoking Rule 23(f), respondents petitioned the Ninth Circuit for permission to appeal that ruling. 7 Interlocutory review was appropriate in this case, they argued, because the District Court's order striking the class allegations created a "death-knell situation": The "small size of [their] claims ma[de] it economically irrational to bear the cost of litigating th[e] case to final judgment," they asserted, so the order would "effectively kil[l] the case." Pet. for Permission To Appeal Under Rule 23(f) in No. 12-80085(CA9), App. 118. The Ninth Circuit denied the petition. Order in No. 12-80085 (CA9, June 12, 2012), App. 121.
Respondents then had several options. They could have settled their individual claims like their
Scratched Disc
predecessors or petitioned the District Court, pursuant to § 1292(b), to certify the interlocutory order for appeal, see
supra,
at 1707 - 1708. They could also have proceeded to litigate their case, mindful that the District Court could later reverse course and certify the proposed class. See Fed. Rule Civ. Proc. 23(c)(1)(C) ("An order that grants or denies class certification may be altered or amended before final judgment.");
Coopers & Lybrand,
Instead of taking one of those routes, respondents moved to dismiss their case with prejudice. "After the [c]ourt has entered a final order and judgment," respondents explained, they would "appeal the ... order striking [their] class allegations." Motion To Dismiss in No. 11-cv-00722 (WD Wash., Sept. 25, 2012), App. 122-123. In respondents' view, the voluntary dismissal enabled them "to pursue their individual claims or to pursue relief solely on behalf of the class, should the certification decision be reversed." Brief for Respondents 15. Microsoft stipulated to the dismissal, but maintained that respondents would have "no right to appeal" the order striking the class allegations after thus dismissing their claims. App. to Pet. for Cert. 35a-36a. The District Court granted the stipulated motion to dismiss,
The Ninth Circuit held it had jurisdiction to entertain the appeal under § 1291.
*1712
Satisfied of its jurisdiction, the Ninth Circuit held that the District Court had abused its discretion in striking respondents' class allegations.
We granted certiorari to resolve a Circuit conflict over this question: 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?
8
577 U.S. ----,
II
"From the very foundation of our judicial system," the general rule has been that "the whole case and every matter in controversy in it [must be] decided in a single appeal."
McLish v. Roff,
Construing § 1291 in line with these reasons for the rule, we have recognized that "finality is to be given a practical rather than a technical construction."
Eisen,
A
Respondents' voluntary-dismissal tactic, even more than the death-knell theory, invites protracted litigation and piecemeal appeals. Under the death-knell doctrine, a court of appeals could decline to hear an appeal if it determined that the plaintiff "ha[d] adequate incentive to continue" despite the denial of class certification.
Coopers & Lybrand,
Consider this case. The Ninth Circuit reviewed and rejected only the District Court's application of comity as a basis for striking respondents' class allegations.
Respondents nevertheless maintain that their position promotes efficiency, observing that after dismissal with prejudice the case is over if the plaintiff loses on appeal. Brief for Respondents 38-39. Their way, they say, means prompt resolution of many lawsuits and infrequent use of the voluntary-dismissal tactic, for "most appeals lose" and few plaintiffs will "take th[e] risk" of losing their claims for good.
Id.,
at 35-36. Respondents overlook the prospect that plaintiffs with weak merits claims may readily assume that risk, mindful that class certification often leads to a hefty settlement. See
Coopers & Lybrand,
B
Another vice respondents' theory shares with the death-knell doctrine, both allow indiscriminate appellate review of interlocutory orders.
Ibid
. Beyond disturbing the "appropriate relationship between the respective courts,"
In the Rules Enabling Act, as earlier recounted, Congress authorized this Court to determine when a decision is final for purposes of § 1291, and to provide for appellate review of interlocutory orders not covered by statute. See
supra,
at 1709, and n. 4. These changes are to come from rulemaking, however, not judicial decisions in particular controversies or inventive litigation ploys. See
Swint,
Here, however, the Ninth Circuit, after denying respondents permission to appeal under Rule 23(f), nevertheless assumed jurisdiction of their appeal challenging only the District Court's order striking the class allegations. See supra, at 1710 - 1712. According to respondents, even plaintiffs who altogether bypass Rule 23(f) may force an appeal by dismissing their claims with prejudice. See Tr. of Oral Arg. 34. Rule 23(f), respondents say, is irrelevant, for it "address[es] interlocutory orders," whereas this case involves "an actual final judgment." Brief for Respondents 26, 28.
We are not persuaded. If respondents' voluntary-dismissal tactic could yield an appeal of right, Rule 23(f)'s careful calibration-as well as Congress' designation of rulemaking "as the preferred means for determining whether and when prejudgment orders should be immediately appealable,"
Mohawk Industries,
Plaintiffs in putative class actions cannot transform a tentative interlocutory order, see
supra,
at 1710 - 1711, 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, see Brief for Respondents 45; Tr. of Oral Arg. 31 (assertion by respondents' counsel that, if the appeal succeeds, "everything would spring back to life" on remand). Were respondents' reasoning embraced by this Court, "Congress['] final decision rule would end up a pretty puny one."
Digital Equipment Corp.,
C
The one-sidedness of respondents' voluntary-dismissal device "reinforce[s] our conclusion that [it] does not support appellate jurisdiction of prejudgment orders denying class certification."
Coopers & Lybrand,
* * *
For the reasons stated, the judgment of the Court of Appeals for the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
Justice GORSUCH took no part in the consideration or decision of this case.
Justice THOMAS, with whom THE CHIEF JUSTICE and Justice ALITO join, concurring in the judgment.
I agree with the Court that the Court of Appeals lacked jurisdiction over respondents'
*1716
appeal, but I would ground that conclusion in Article III of the Constitution instead of
The plaintiffs in this case, respondents here, sued Microsoft, petitioner here, to recover damages after they purchased allegedly faulty video game consoles that Microsoft manufactured. The plaintiffs brought claims for themselves (individual claims) and on behalf of a putative class of similarly situated consumers (class allegations). Early in the litigation, the District Court granted Microsoft's motion to strike the class allegations, effectively declining to certify the class. The Court of Appeals denied permission to appeal that decision under Federal Rule of Civil Procedure 23(f), which requires a party to obtain permission from the court of appeals before appealing a decision regarding class certification.
The plaintiffs decided not to pursue their individual claims, instead stipulating to a voluntary dismissal of those claims with prejudice. They then filed a notice of appeal from the voluntary dismissal order. On appeal, they did not ask the Court of Appeals to reverse the District Court's dismissal of their individual claims. They instead asked the Court of Appeals to reverse the order striking their class allegations. The question presented in this case is whether the Court of Appeals had jurisdiction to hear the appeal under both § 1291, which grants appellate jurisdiction to the courts of appeals over "final decisions" by district courts, and under Article III of the Constitution, which limits the jurisdiction of federal courts to "cases" and "controversies."
The Court today holds that the Court of Appeals lacked jurisdiction under § 1291 because the voluntary dismissal with prejudice did not result in a "final decision." I disagree with that holding. A decision is "final" for purposes of § 1291 if it "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment."
Catlin v. United States,
The Court reaches the opposite conclusion, relying not on the text of § 1291 or this Court's precedents about finality, but on Rule 23(f). Rule 23(f) makes interlocutory orders regarding class certification appealable only with the permission of the court of appeals. The Court concludes that the plaintiffs' "voluntary dismissal" "does not qualify as a 'final decision' " because allowing the plaintiffs' appeal would "subvert the balanced solution Rule 23(f) put in place for immediate review of class-action orders." Ante, at 1707.
The Court's conclusion does not follow from its reasoning. Whether a dismissal with prejudice is "final" depends on the meaning of § 1291, not Rule 23(f). Rule 23(f) says nothing about finality, much less about the finality of an order dismissing individual claims with prejudice. I agree with the Court that the plaintiffs are trying to avoid the requirements for interlocutory appeals under Rule 23(f), but our view of the balance struck in that rule should not warp our understanding of finality under § 1291.
Although I disagree with the Court's reading of § 1291, I agree that the plaintiffs could not appeal in these circumstances. In my view, they could not appeal because the Court of Appeals lacked jurisdiction under Article III of the Constitution. The "judicial Power" of the United States extends only to "Cases" and "Controversies." Art. III, § 2. This requirement
*1717
limits the jurisdiction of the federal courts to issues presented "in an adversary context,"
Flast v. Cohen,
The plaintiffs' appeal from their voluntary dismissal did not satisfy this jurisdictional requirement. When the plaintiffs asked the District Court to dismiss their claims, they consented to the judgment against them and disavowed any right to relief from Microsoft. The parties thus were no longer adverse to each other on any claims, and the Court of Appeals could not "affect the[ir] rights" in any legally cognizable manner.
Ibid
. Indeed, it has long been the rule that a party may not appeal from the voluntary dismissal of a claim, since the party consented to the judgment against it. See,
e.g.,
Evans v. Phillips,
The plaintiffs contend that their interest in reversing the order striking their class allegations is sufficient to satisfy Article III's case-or-controversy requirement, but they misunderstand the status of putative class actions. Class allegations, without an underlying individual claim, do not give rise to a "case" or "controversy." Those allegations are simply the means of invoking a procedural mechanism that enables a plaintiff to litigate his individual claims on behalf of a class. See
Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co.,
Plaintiffs' representation that they hope to "revive their [individual] claims should they prevail" on the appeal of the order striking their class allegations does not undermine this conclusion. Brief for Respondents 45. This Court has interpreted Article III "to demand that an actual controversy be extant at all stages of review, not merely at the time the complaint is filed."
Campbell-Ewald Co., supra,
at ----, 136 S.Ct., at 669 (internal quotation marks and alterations omitted). And in any event, a favorable ruling on class certification would not "revive" their individual claims: A court's decision about class allegations "in no way touch[es] the merits" of those claims.
Gardner v. Westinghouse Broadcasting Co
.,
* * *
Because I would hold that the Court of Appeals lacked jurisdiction under Article III to consider respondents' appeal, I concur in the judgment.
Section 1292, which authorizes review of certain interlocutory decisions, does not include among those decisions class-action certifications. See
This scenario has been called a "reverse death knell," Sullivan & Trueblood, Rule 23(f) : A Note on Law and Discretion in the Courts of Appeals,
Coopers & Lybrand
also rejected the collateral-order doctrine as a basis for invoking § 1291 to appeal an order denying class certification. The collateral-order doctrine applies only to a "small class" of decisions that are conclusive, that resolve important issues "completely separate from the merits," and that are "effectively unreviewable on appeal from a final judgment." 437 U.S., at 468,
Congress amended the Rules Enabling Act,
Rule 23(f) has changed little since its adoption in 1998. See Advisory Committee's 2007 and 2009 Notes on subd. (f) of Fed. Rule Civ. Proc. 23, 28 U.S.C.App., p. 820 (deleting a redundancy and increasing the time to petition for permission to appeal from ten to 14 days, respectively).
Legislation striking this balance was also introduced in Congress. See H.R. 660, 105th Cong., 1st Sess. (1997). The bill, which would have amended § 1292(b) to provide for interlocutory appeal of adverse class determinations, likewise committed the decision whether an immediate appeal would lie exclusively to the courts of appeals: "The court of appeals may, in its discretion, permit the appeal to be taken from such determination."
An order striking class allegations is "functional[ly] equivalent" to an order denying class certification and therefore appealable under Rule 23(f).
Scott v. Family Dollar Stores, Inc.,
Compare
Berger v. Home Depot USA, Inc.,
Rule 23(f) avoids delay not only by limiting class-certification appeals to those permitted by the federal courts of appeals, but also by specifying that "[a]n appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders." See
Blair v. Equifax Check Services, Inc.,
The very premise of the death-knell doctrine was that plaintiffs "would not pursue their claims individually."
Coopers & Lybrand,
Respondents also invoke our decision in
United States v. Procter & Gamble Co.,
Reference
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