Interlocutory Appeal of Class Certification Decisions Under Rule 23(f): An Untapped Resource

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Rule 23(f) is an essential, and under-utilized, tool in achieving the consistency that litigants require in resolving class certification, attorneys David L. Balser, Jonathan R. Chally, Lawrence A. Slovensky and Zachary A. McEntyre say in this BNA Insight. The authors explore Rule 23(f), the standards circuit courts use to resolve petitions for appeal under the rule, and recent statistics regarding the rate at which Rule 23(f) petitions are granted, and offer practical advice for practitioners and class litigants.

David L. Balser Jonathan R. Chally Lawrence A. Slovensky Zachary A. McEntyre

By David L. Balser, Jonathan R. Chally, Lawrence A. Slovensky and Zachary A. McEntyre

David L. Balser (, Jonathan R. Chally ( and Lawrence A. Slovensky ( are partners, and Zachary A. McEntyre ( is a senior associate, in the Business Litigation department at King & Spalding. All four are members of the firm's national class action practice group and are resident in the firm's Atlanta office.

The authors wish to thank associate Andrew Mutter and legal assistant Kelly Genne for their assistance.

The Class Action Fairness Act of 2005 (CAFA) and high-profile decisions from the U.S. Supreme Court, such as Wal-Mart v. Dukes and Comcast v. Behrend, were based, in part, on the respective desires of Congress and the Supreme Court to bring consistency to class certification standards.

In passing CAFA, Congress expressly touted the importance of greater uniformity in these standards, easing the way for federal courts to resolve significant class action cases, and thereby reduce the impact that disparate state courts had on the development of class certification law. The fact that the Supreme Court accepted certiorari and issued decisions in cases like Dukes and Comcast similarly conveys the importance of consistent standards for determining when a case may be certified as a class action.

Regardless of whether one agrees with the results that the Supreme Court has reached in these, or other, class certification cases, opinions from the nation's highest court serve the laudable goal of resolving conflicts among circuits (whether actual or perceived) and reducing ambiguity. Of course, looming uncertainty can be crippling to litigants, particularly class action defendants that operate in jurisdictions across the country and depend on consistent standards.

Nevertheless, the federalization of class actions, along with a number of opinions from the nation's highest court, has not brought about the consistency one might expect. Indeed, these recent developments have only highlighted certain critical distinctions among jurisdictions. Partly in recognition of these distinctions, class action plaintiffs have flocked to favored districts, perhaps most notably the Central and Northern districts of California, and all but fled from others.

To be sure, differing standards for class certification do not entirely explain the desire for class action plaintiffs to file cases in certain jurisdictions. But differing standards play a part. To state the obvious, there is no doubt that litigants believe that class certification is more likely in certain jurisdictions than in others.

Procedural vehicles already exist to resolve some of these inconsistencies. Rule 23(f) of the Federal Rules of Civil Procedure, promulgated in 1998, provides a mechanism for parties to seek interlocutory review of class certification decisions.

Interlocutory appellate review would not eliminate inconsistencies—there are still 13 courts of appeal—but appellate judges tend to focus on resolving, or at least minimizing, conflict between circuits more than district judges bound to apply the law in their circuit. Perhaps more significantly, variations in results reached by appellate courts are obviously more prominent and more likely to be resolved by the Supreme Court at the proper opportunity.

A number of studies have explored the rate at which circuit courts grant Rule 23(f) petitions. The conclusions vary, reflecting the imprecise data that exists, but all studies suggest that at least some circuit courts accept Rule 23(f) petitions in relatively rare circumstances. For instance, our study suggests that since 2012, two courts of appeals have each accepted only one Rule 23(f) petition. The Ninth Circuit considers almost three times as many Rule 23(f) petitions as the next highest circuit, but it accepts only 18 percent of those petitions, denying almost 100 during this 2-year span.

There are many reasons why such petitions are denied. The sheer number of class actions in federal court justifies reasonable limits on interlocutory review. Indeed, most circuit courts, when first considering Rule 23(f) after its adoption, expressly held that Rule 23(f) petitions should be granted only sparingly. See, e.g., In re Delta Air Lines, 310 F.3d 953, 959 (6th Cir. 2002) (“[T]he rule 23(f) appeal is never to be routine.”); Sumitomo Copper Litig. v. Credit Lyonnais Rouse, Ltd., 262 F.3d 134, 140 (2d Cir. 2001) (“We anticipate, therefore, that the standards of Rule 23(f) will rarely be met.”).

The over-burdened appellate courts can hardly be criticized for letting stand, at least until a final judgment, class certification orders in all but the most egregious circumstances. But Rule 23(f) is under-utilized at great cost. The desire for consistency that prompted Congress to pass CAFA and led the Supreme Court to accept certiorari and resolve significant class action cases in the last few years is frustrated when circuit courts are unwilling, or unable, to take a more active role in reviewing class certification decisions.

This article explores Rule 23(f), the standards circuit courts have developed to resolve petitions for appeal under the rule, and recent statistics regarding the rate at which Rule 23(f) petitions are granted. This article then summarizes the practical take-aways for practitioners and class litigants, including that Rule 23(f) is an essential, and under-utilized, tool in achieving the consistency that litigants require in resolving class certification.

Overview of Rule 23(f) Standards
Statutory Background

Before the Supreme Court promulgated Rule 23(f) in 1998, a party unsatisfied with a district court's class certification decision generally had three options for seeking appellate review: ask for permission to file an interlocutory appeal from the district court under 28 U.S.C. §1292(b) ; file a mandamus action under 28 U.S.C. §1651 ; or wait to appeal a final judgment.

These options are limited, to say the least. Recognizing the importance of the class certification decision, some courts fashioned a judicial exception to the finality requirement that allowed plaintiffs to seek review of orders denying class certification through the so-called “death knell” doctrine. The Supreme Court addressed this doctrine in 1978:

The ‘death knell’ doctrine assumes that without the incentive of a possible group recovery the individual plaintiff may find it economically imprudent to pursue his lawsuit to a final judgment and then seek appellate review of an adverse class determination. Coopers & Lybrand v. Livesay , 437 U.S. 463, 469-70 (1978).

While the Court recognized the potential impact of class certification decisions, implicitly acknowledging the value of an interlocutory appeal mechanism, the Court held that the death knell doctrine was contrary to the finality requirements of 28 U.S.C. §1291 and, thus, unauthorized by statute.

Almost 20 years later, Congress stepped in to address the hole in parties' ability to seek interlocutory appellate review of class certification decisions. Rule 23(f) became effective December 1, 1998. As amended in 2009, the rule provides:

A court of appeals may permit an appeal from an order granting or denying class-action certification under this rule 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. Fed. R. Civ. P. 23(f).

Under the rule, a court of appeals may permit an appeal from a class certification order so long as the petition for permission to appeal is filed within 14 days after the order is entered. Appellate review is, thus, discretionary and entirely up to the circuit court of appeals.

The plain language of the rule does not limit the discretion that the court of appeals can exercise in deciding whether or not to permit such an appeal, and it does not describe standards for appellate courts to consider in this regard.

The advisory committee notes suggest that the absence of limiting standards was intentional:

The court of appeals is given unfettered discretion whether to permit the appeal, akin to the discretion exercised by the Supreme Court in acting on a petition for certiorari. Fed. R. Civ. P. 23(f) advisory committee's note.

Unlike interlocutory appeals under 28 U.S.C. §1292(b) , Rule 23(f) does not require any certification from the district court, and Rule 23(f)

does not include the potentially limiting requirements of Section 1292(b) that the district court order ‘involve a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.’ Id.

While making clear that the standards applicable to interlocutory appeals under Section 1292(b) would not apply to Rule 23(f) petitions, the Rules Advisory Committee anticipated that “[t]he courts of appeals will develop standards for granting review that reflect the changing areas of uncertainty in class litigation,” and that “[p]ermission to appeal may be granted or denied on the basis of any consideration that the court of appeals finds persuasive.” Id.

Current Articulation of Rule 23(f) Standards

The Seventh Circuit issued the first decision construing Rule 23(f). Notwithstanding the Advisory Committee's invitation to develop standards for resolving Rule 23(f) petitions, in Blair v. Equifax Check Services, Inc., 181 F.3d 832, 833 (7th Cir. 1999), Judge Easterbrook concluded that “it would be a mistake for us to draw up a list that determines how the power under Rule 23(f) will be exercised.” Blair, 181 F.3d at 834. The court did not provide certain parameters on when a Rule 23(f) petition should be granted, but its more general guidance has proven instructive.

The court first rejected the idea that the significance of the class certification decision was, by itself, enough to support accepting a Rule 23(f) petition. While the Court acknowledged that “[m]any corporate executives are unwilling to bet their company that they are in the right in big-stakes litigation, and a grant of class status can propel the stakes of a case in to the stratosphere,” id., the court held that the potential impact of a class certification decision does not in and of itself justify appeal.

The court provided further guidance that has had long-lasting impact. All courts since Blair have followed its lead in holding that the circuit court's discretion to accept a Rule 23(f) petition should be exercised with consideration for (1) whether the class certification order serves as a death knell to the plaintiff, meaning that continued litigation of only the representative plaintiff's claim is cost prohibitive; (2) whether the class certification order serves as a death knell to the defendant, meaning that it so significantly increases the exposure of the case that it would force a defendant to settle a potentially unmeritorious claim; or (3) whether the class certification order presents novel legal issues that an appeal would help resolve. Id. at 834-35.

While the court considered these factors to be most important in determining whether to accept an appeal, the court also cautioned that interlocutory appeals should be reserved for those instances where the circuit court believes the district court may have erred. According to the court, “[h]owever dramatic the effect of the grant or denial of class status in undercutting the plaintiffs' claim or inducing the defendant to capitulate, if the ruling is impervious to revision there's no point to an interlocutory appeal.” Id. at 835.

Other circuits have largely followed Blair’s rough outline of factors, with some modification and elaboration. Descriptions of the categories can vary from circuit to circuit, but courts have generally recognized four categories of cases where Rule 23(f) petitions should be granted: (1) death knell decisions for plaintiffs; (2) death knell decisions for defendants; (3) novel legal issues that would benefit from immediate appellate review; and (4) certification decisions that are manifestly erroneous.

We briefly explore each category below, including the death knell decisions for plaintiffs and defendants collectively.

`Death Knell' Certifications

The standards developed by all circuits authorize accepting Rule 23(f) petitions seeking review of decisions that create a “death knell” situation for either the plaintiff or the defendant. See In re Lorazepam & Clorazepate Antitrust Litig., 289 F.3d 98, 99-100, 105 (D.C. Cir. 2002); Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 293 (1st Cir. 2000); Sumitomo Copper Litig. v. Credit Lyonnais Rouse, Ltd., 262 F.3d 134, 139 (2d Cir. 2001); Newton v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 259 F.3d 154, 165 (3d Cir. 2001); Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 143 (4th Cir. 2001); Regents of Univ. of Cal. v. Credit Suisse First Boston (USA), Inc., 482 F.3d 372, 379 (5th Cir. 2007); In re Delta Air Lines, 310 F.3d 953, 960 (6th Cir. 2002); Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 834 (7th Cir. 1999); Chamberlan v. Ford Motor Co., 402 F.3d 952, 958 (9th Cir. 2005); Vallario v. Vandehey, 554 F.3d 1259, 1263-64 (10th Cir. 2009); Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1274-76 (11th Cir. 2000).

As described by the court in Blair, the hallmark of a death knell situation is when there is a substantial “risk of a settlement or other disposition that does not reflect the merits of the claim.” Blair, 181 F.3d at 835; see also Prado-Steiman, 221 F.3d at 1274. (“[T]he decision to grant interlocutory review based primarily on this factor generally should be limited to those cases where the district court's ruling, as a practical matter, effectively prevents the petitioner from pursuing the litigation.”). Courts have abandoned the artificial distinction between death knell situations for plaintiffs and death knell situations for defendants that the Supreme Court criticized in Livesay.

Merely claiming that the class certification order creates a death knell situation is not enough to justify appellate review. The Sixth Circuit succinctly described the parties' burden:

[T]he discussion of this factor must go beyond a general assertion. A plaintiff should demonstrate to the court of appeals why he or she could not pursue the individual claim; a defendant also should provide the court insight into potential expenses and liabilities. In re Delta Air Lines, 310 F.3d at 960.

Courts also have made clear that a death knell situation will justify appellate review only if the party seeking review can show some likelihood of success in challenging the district court's order. See id., Blair, 181 F.3d at 835 (“[T]he appellant must demonstrate that the district court's ruling on class certification is questionable—and must do this taking into account the discretion the district judge possesses in implementing Rule 23.”).

Novel Legal Issue

Outside of the death knell circumstances, courts authorize Rule 23(f) appeals regarding decisions that involve novel or unsettled legal issues. Following Blair, some courts have held that a Rule 23(f) petition should be granted when “an appeal may facilitate the development of the law.” Blair, 181 F.3d at 835.

Review in these circumstances does not require a showing that the district court's order was incorrect, or even likely incorrect. Rather, the law may be developed even in cases where the district court decision was correctly decided. Under this rationale, an opportunity to review novel legal issues, regardless of whether that review leads to affirmance or reversal of the district court's ruling, is reason to accept an interlocutory appeal. Id.

Other circuits have restricted this category slightly, noting that “a creative lawyer almost always will be able to argue that deciding her case would clarify some `fundamental' issue.” Mowbray, 208 F.3d at 294.

At least four circuits have restricted “ Blair's third category” to “instances in which an appeal will permit the resolution of an unsettled legal issue that is important to the particular litigation as well as important in itself and likely to escape effective review if left hanging until the end of the case.” Id.; In re Lorazepam, 289 F.3d at 105; Sumitomo, 262 F.3d at 140; Chamberlan, 402 F.3d at 959. It is unclear whether this tweak to Blair's third category leads to substantially different results.

`Manifestly Erroneous.'

Finally, in what has been characterized as “the most notable modification of the Blair trilogy,” Chamberlan, 402 F.3d at 958, several circuits authorize review when the district court's decision is manifestly erroneous, regardless of the complexity or novelty of the issue incorrectly decided. Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1275 (11th Cir. 2000) (the first circuit to add this category); In re Lorazepam & Clorazepate Antitrust Litig. , 289 F.3d 98, 105 (D.C. Cir. 2002); Newton v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 259 F.3d 154, 165 (3d Cir. 2001); Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 145-46 (4th Cir. 2001); Chamberlan, 402 F.3d at 959.

In Prado-Steiman, the Eleventh Circuit held that in order to serve judiciary economy and prevent waste of party resources, “interlocutory review may be warranted even if none of the other factors supports granting the Rule 23(f) petition” if the petitioner “has shown a substantial weakness in the class certification decision, such that the decision likely constitutes an abuse of discretion.” Id at 1247-75. (emphasis in original).

Similarly, in the Fourth Circuit, the “weakness of the district court's certification, viewed in terms of the likelihood of reversal under an abuse of discretion standard, operates on a ‘sliding scale’ in conjunction with the other factors … .” Lienhart, 255 F.3d at 145. At least one other circuit has expressly rejected this “sliding scale” characterization. See Chamberlan, 402 F.3d at 960.

Recent Statistics on Rule 23(f) Petitions

The general contours of these differing rationales for accepting Rule 23(f) petitions are reasonably well-settled, but they often escape thorough examination. While the initial adoption of Rule 23(f) resulted in the early court opinions analyzing the applicable standards described above, the appellate decisions that grant or deny Rule 23(f) petitions now routinely fail to provide any discussion of the specific facts or considerations that motivated the courts' decisions on the petitions.

In the absence of more recent statements by the appellate courts about why specific petitions are granted or denied, practitioners instead can attempt to glean at least some insight into the likely fate of a petition by looking at statistical averages from the circuits. We have analyzed the results in the various circuits on Rule 23(f) petitions during 2012, 2013, and the first half of 2014.

The table below describes our findings regarding the number of petitions and the rate at which the various circuits have granted these applications:

Circuit Number of Petitions Granted Denied Ongoing/Stayed Dismissed/Withdrawn Grant Rate
First 17 1 12 3 1 7.69%
Second 69 20 31 12 6 39.22%
Third 27 4 18 4 1 18.18%
Fourth 21 4 13 4 0 23.53%
Fifth 6 4 2 0 0 66.67%
Sixth 20 1 15 2 2 6.25%
Seventh 37 5 24 6 2 17.24%
Eighth 23 2 17 3 1 10.53%
Ninth 159 23 99 19 9 18.85%
Tenth 30 11 18 0 1 37.93%
Eleventh 31 4 20 5 2 16.67%
DC 7 2 2 3 0 50.00%
TOTAL 447 81 271 61 25 23.01%

As this data suggests, some circuits are more hospitable to Rule 23(f) petitions than others. The Second, Fifth, Tenth, and D.C. Circuits grant petitions at an impressive rate. The Second Circuit's commitment to consider Rule 23(f) appeals is particularly noteworthy, considering that it receives the second-highest number of petitions. Litigants in these circuits have a real chance of obtaining interlocutory appellate review.

The statistics from these jurisdictions stand in stark contrast to the rates at which petitions are granted in other circuits. The First and Sixth Circuits have each accepted only one petition since 2012. The Ninth Circuit receives well over two times the number of Rule 23(f) petitions than the next-highest circuit (the Second Circuit), but it accepts interlocutory appellate review in less than 20 percent of those cases.

Practical Considerations

The data supports a number of conclusions relevant to practitioners and class action litigants.

First , Rule 23(f) petitions are accepted at generally low rates. Overall, only 23 percent of the petitions filed since 2012 have been accepted. The rate is disproportionately influenced by the Ninth Circuit, where approximately one-third of all the Rule 23(f) petitions are filed. Accordingly, class action litigants should approach any Rule 23(f) petition effort with the knowledge that on average less than one out of four petitions are granted. While the existence of the Rule 23(f) procedure gives a disappointed litigant the hope that the appellate court can provide relief, this hope should be chastened by the reality that such relief may not be forthcoming.

Second , the Ninth Circuit, often viewed as an outlier on issues related to class certification, accepts Rule 23(f) petitions at a rate significantly lower than other courts issuing notable decisions on class certification in recent years (the Second and Fifth Circuits). The district courts in the Ninth Circuit are among the most popular with the plaintiffs' bar for filing new class action lawsuits. The Ninth Circuit, perhaps because of the larger number of petitions it faces, is less likely than other circuits to grant a Rule 23(f) petition. Accordingly, litigants are more likely to be forced to live with a “bad” result from a district court in the Ninth Circuit than elsewhere in the country.

Third , the circuit courts that have led the way in developing standards for evaluating Rule 23(f) petitions (the Eleventh and First Circuits) accept petitions at unusually low rates, suggesting that the developed standards are used to limit the cases that receive interlocutory appellate review.

Specifically, the Eleventh Circuit issued a nuanced statement of the standard for granting Rule 23(f) petitions in its Prado-Steiman decision in 2000, while the First Circuit issued its Mowbray decision that same year in which it narrowed the scope of cases in which the existence of an unsettled legal issue will justify Rule 23(f) review. In both circuits, the grant rate is lower than the national average, suggesting that litigants in the First and Eleventh Circuits may face a higher burden in obtaining appellate review and should closely tie their arguments to the standards announced in those circuits.

Finally , in light of the relatively low rate at which Rule 23(f) petitions are accepted, particularly in certain jurisdictions, the procedural vehicle remains a largely un-tapped resource of the federal courts to achieve consistency in class certification standards, a chief aim of CAFA. There are practical limits on the number of Rule 23(f) petitions that the circuit courts can grant. Nonetheless, the fact that class litigants face long odds in obtaining review of class certification decisions, particularly in some circuits, means that the goal of insuring more consistent and predictable decision results on class certification is not being fully met.

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