Microsoft Wins SCOTUS Review of Class Appeal Issue

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By Perry Cooper

Jan. 15 — The U.S. Supreme Court agreed Jan. 15 to consider whether plaintiffs may voluntarily dismiss their suit as a procedural tactic to guarantee appellate review of an unfavorable class certification decision.

The strategy has been blessed by the Second and Ninth circuits. But defendants argue that it gives plaintiffs too many chances to challenge the certification order, and could be used by plaintiffs as another way to force defendants to settle.

Robert G. Bone, civil procedure professor at the University of Texas Law School in Austin, told Bloomberg BNA Jan. 15 that the strategy is most effective for small claims class actions, where the individual plaintiffs' claims aren't that financially significant.

“The price you pay for using the strategy is that the named plaintiffs lose their claims,” he said. “But if those claims are small, they don't really matter.”

He's concerned that the strategy threatens the integrity of Fed. R. Civ. P. 23(f), which provides for interlocutory appeal to give appeals courts discretionary review of certification decisions.

If plaintiffs don't like the Rule 23(f) decision, they could use this tactic as an “end-run” around the rule, Bone said. “But with this route available, plaintiffs may not bother with Rule 23(f) at all.”

Voluntary Dismissal

Consumers alleged that a design defect caused Microsoft's Xbox 360 video game console to destroy game discs.

The district court struck their class allegations based on a denial of certification in a similar case in the same district (11 CLASS 747, 8/27/10).

The plaintiffs sought interlocutory appeal of the certification decision under Rule 23(f), which the U.S. Court of Appeals for the Ninth Circuit denied.

The plaintiffs then voluntarily dismissed the individual claims with prejudice and appealed. The Ninth Circuit revived the class claims (16 CLASS 308, 3/27/15).

Grant Adds Language

The Supreme Court granted Microsoft's petition for certiorari challenging the use of the plaintiffs' tactic for getting review of a decision denying class certification.

But it expanded the question presented to ask whether federal appeals courts have jurisdiction “under both Article III and 28 U.S.C. § 1291” to review an order denying certification in this situation.

Article III of the U.S. Constitution limits federal courts' jurisdiction to “cases and controversies.” Section 1291 gives federal appeals courts jurisdiction over all final decisions of the district courts.

Darren T. Kaplan of Stueve Siegel Hanson LLP in New York; Mark A. Griffin, Amy Williams-Derry and Benjamin Gould of Keller Rohrback LLP in Seattle; and others represent the plaintiffs.

Bradford L. Smith, David M. Howard and Timothy G. Fielden of Microsoft Corp. in Redmond, Wash.; Charles B. Casper of Montgomery, McCracken, Walker & Rhoads LLP in Philadelphia; Stephen M. Rummage and Fred B. Burnside of Davis Wright Tremaine LLP in Seattle; and Jeffrey L. Fisher in Stanford, Calif., represent Microsoft.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Peter Hayes at phayes@bna.com