Microsoft Corp. v. Baker
Annotate this Case
582 US ___ (2017)
The owners of Microsoft’s videogame console, Xbox 360, filed a putative class action alleging a design defect. The district court struck class allegations from the complaint. The Ninth Circuit denied permission to appeal that order under FRCP 23(f), which authorizes permissive interlocutory appeal of class certification orders. Instead of pursuing their individual claims, plaintiffs stipulated to a voluntary dismissal, then appealed, challenging only the interlocutory order striking their class allegations. The Ninth Circuit held it had jurisdiction to entertain the appeal under 28 U.S.C. 1291, applicable to “final decisions of the district courts,” and that the rationale for striking the class allegations was impermissible. The Supreme Court reversed. Federal courts of appeals lack jurisdiction under section 1291 to review an order denying class certification (or an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice. Section 1291’s final-judgment rule preserves the proper balance between trial and appellate courts, minimizes the harassment and delay that would result from repeated interlocutory appeals, and promotes the efficient administration of justice. Under plaintiffs’ theory, plaintiffs alone could determine whether and when to appeal an adverse certification ruling, allowing indiscriminate appellate review of interlocutory orders. Plaintiffs in putative class actions cannot transform interlocutory orders into section 1291 final judgments simply by dismissing their claims with prejudice. Finality “is not a technical concept of temporal or physical termination.”
- Baker v. Microsoft Corp., No. 12-35946 (9th Cir. Jul. 20, 2015)
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .
SUPREME COURT OF THE UNITED STATES
MICROSOFT CORP. v. BAKER et al.
certiorari to the united states court of appeals for the ninth circuit
No. 15–457. Argued March 21, 2017—Decided June 12, 2017
Orders granting or denying class certification are inherently interlocutory, hence not immediately reviewable under 28 U. S. C. §1291, which empowers federal courts of appeals to review only “final decisions of the district courts.” In Coopers & Lybrand v. Livesay, 437 U. S. 463 , a 1978 decision, this Court held that the death-knell doctrine—which rested on courts’ recognition that a denial of class certification would sometimes end a lawsuit for all practical purposes—did not warrant mandatory appellate jurisdiction of certification orders. Id., at 470, 477. Although the death-knell theory likely “enhanced the quality of justice afforded a few litigants,” it did so at a heavy cost to §1291’s finality requirement. Id., at 473. First, the potential for multiple interlocutory appeals inhered in the doctrine. See id., at 474. Second, the death-knell theory forced appellate courts indiscriminately into the trial process, circumventing the two-tiered “screening procedure” Congress established for interlocutory appeals in 28 U. S. C. §1292(b). Id., at 474, 476. Finally, the doctrine “operat[ed] only in favor of plaintiffs,” even though the class-certification question may be critically important to defendants as well. Id., at 476.
Two decades later, in 1998, after Congress amended the Rules Enabling Act, 28 U. S. C. §2071 et seq., to empower this Court to promulgate rules providing for interlocutory appeal of orders “not otherwise provided for [in §1292],” §1292(e), this Court approved Federal Rule of Civil Procedure 23(f). Rule 23(f) authorizes “permissive interlocutory appeal” from adverse class-certification orders in “the sole discretion of the court of appeals.” 28 U. S. C. App., p. 815. This discretionary arrangement was the product of careful calibration on the part of the rulemakers.
Respondents, owners of Microsoft’s videogame console, the Xbox 360, filed this putative class action alleging a design defect in the device. The District Court struck respondents’ class allegations from the complaint, and the Court of Appeals denied respondents permission to appeal that order under Rule 23(f). Instead of pursuing their individual claims to final judgment on the merits, respondents stipulated 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. Respondents then appealed, challenging only the interlocutory order striking their class allegations. The Ninth Circuit held it had jurisdiction to entertain the appeal under §1291. It then held that the District Court’s rationale for striking respondents’ class allegations was an impermissible one, but refused to opine on whether class certification was inappropriate for a different reason, leaving that question for the District Court on remand.
Held: Federal courts of appeals lack jurisdiction under §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. Pp. 11–17.
(a) Section 1291’s final-judgment rule preserves the proper balance between trial and appellate courts, minimizes the harassment and delay that would result from repeated interlocutory appeals, and promotes the efficient administration of justice. This Court has resisted efforts to stretch §1291 to permit appeals of right that would erode the finality principle and disserve its objectives. See, e.g., Mohawk Industries, Inc. v. Carpenter, 558 U. S. 100 . Attempts to secure appeal as of right from adverse class certification orders fit that bill. Pp. 11–12.
(b) 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, 437 U. S., at 471. Under respondents’ theory, however, the decision whether an immediate appeal will lie resides exclusively with the plaintiff, who need only dismiss her claims with prejudice in order to appeal the district court’s order denying class certification. And she may exercise that option more than once, interrupting district court proceedings with an interlocutory appeal again, should the court deny class certification on a different ground.
Respondents contend that their position promotes efficiency, observing that after dismissal with prejudice the case is over if the plaintiff loses on appeal. But plaintiffs with weak merits claims may readily assume that risk, mindful that class certification often leads to a hefty settlement. And the same argument was evident in the death-knell context, yet this Court determined that the potential for piecemeal litigation was “apparent and serious.” Id., at 474. That potential is greater still under respondents’ theory, where plaintiffs alone determine whether and when to appeal an adverse certification ruling. Pp. 12–14.
(c) Also like the death-knell doctrine, respondents’ theory allows indiscriminate appellate review of interlocutory orders. Beyond disturbing the “ ‘appropriate relationship between the respective courts,’ ” Coopers & Lybrand, 437 U. S., at 476, respondents’ dismissal tactic undercuts Rule 23(f)’s discretionary regime. This consideration is “[o]f prime significance to the jurisdictional issue” in this case, Swint v. Chambers County Comm’n, 514 U. S. 35 , because Congress has established rulemaking as the means for determining when a decision is final for purposes of §1291 and for providing for appellate review of interlocutory orders not covered by statute, see §§2072(c) and 1292(e).
Respondents maintain that Rule 23(f) is irrelevant, for it concerns interlocutory orders, whereas this case involves an actual final judgment. Yet permitting respondents’ voluntary-dismissal tactic to yield an appeal of right would seriously undermine 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, 558 U. S., at 113. 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. Finality “is not a technical concept of temporal or physical termination.” Cobbledick v. United States, 309 U. S. 323 . It is one “means [geared to] achieving a healthy legal system,” ibid., and its contours are determined accordingly. Pp. 14–16.
(d) The one-sidedness of respondents’ voluntary-dismissal device reinforces the conclusion that it does not support mandatory appellate jurisdiction of refusals to grant class certification. The tactic permits only plaintiffs, never defendants, to force an immediate appeal of an adverse certification ruling. Yet the “class issue” may be just as important to defendants, Coopers & Lybrand, 437 U. S., at 476, for class certification may force a defendant to settle rather than run the risk of ruinous liability. P. 17.
797 F. 3d 607, reversed and remanded.
Ginsburg, J., delivered the opinion of the Court, in which Kennedy, Breyer, Sotomayor, and Kagan, JJ., joined. Thomas, J., filed an opinion concurring in the judgment, in which Roberts, C. J., and Alito, J., joined. Gorsuch, J., took no part in the consideration or decision of the case.