Langere v. Verizon Wireless Servs., LLC

• Decision Date: 29 December 2020
• Docket Number: No. 19-55747,19-55747
• Citation: 983 F.3d 1115
• Parties: Damian LANGERE, on behalf of himself and others similarly situated, Plaintiff-Appellant, v. VERIZON WIRELESS SERVICES, LLC, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

983 F.3d 1115

Damian LANGERE, on behalf of himself and others similarly situated, Plaintiff-Appellant,

v.VERIZON WIRELESS SERVICES, LLC, Defendant-Appellee.

No. 19-55747

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 9, 2020 Pasadena, California

Filed December 29, 2020

Jordan S. Esensten (argued) and Robert L. Esensten, Esensten Law, Los Angeles, California, for Plaintiff-Appellant.

Julia B. Strickland (argued) and David W. Moon, Stroock Stroock & Lavan LLP, Los Angeles, California, for Defendant-Appellee.

Before: Barrington D. Parker, Jr.,^* Paul J. Watford, and Patrick J. Bumatay, Circuit Judges.

BUMATAY, Circuit Judge:

After being compelled to arbitrate by court order, can a plaintiff avoid arbitration and manufacture appellate jurisdiction simply by voluntarily dismissing his claims with prejudice? We've previously answered that question in the affirmative. See Omstead v. Dell, Inc. , 594 F.3d 1081 (9th Cir. 2010). But a later decision of the Supreme Court has forced us to reconsider. See Microsoft Corp. v. Baker , ––– U.S. ––––, 137 S. Ct. 1702, 198 L.Ed.2d 132 (2017). After finding that our previous approach is clearly irreconcilable with that outlined by the Court, we change our answer.

We conclude that our decision in Omstead has been effectively overruled by the Court's decision in Microsoft. And so we hold that a plaintiff does not create appellate jurisdiction by voluntarily dismissing his claims with prejudice after being forced to arbitrate them.

I.

Damian Langere is a Verizon Wireless customer who purchased the company's extended warranty program for his cellphone. He was unhappy to find out that the Verizon warranty offers similar protections to those already provided by his cellphone's manufacturer for the first year. He therefore brought this putative class action against Verizon for the violation of federal and state consumer-protection statutes. Verizon moved to compel arbitration and stay judicial proceedings under 9 U.S.C. § 4.¹ The district court obliged and granted the motion to compel arbitration. It also denied Langere's later motion for reconsideration.

Ordinarily, a plaintiff in this position has two choices to appeal: arbitrate the claims to completion and then appeal as of right, see 9 U.S.C. § 16(a)(1)(3), (b)(1)–(3), or hope that the courts approve an interlocutory appeal, id. § 16(b) ; 28 U.S.C. § 1292(b). But Langere tried something different. Finding himself in a "procedural bind," Langere voluntarily dismissed his claims with prejudice, as he was entitled to under Federal Rule of Civil Procedure 41(a)(1), without leave from the district court.² He did so because arbitration was not "economically feasible," and he felt that appealing the arbitration order was his only viable option. He assured the district court that he was "not refusing to prosecute his claims," but only refusing to do so in a way that he thought "would be futile and uneconomical."

Langere then appealed his own voluntary dismissal, and the district court's orders, to this court. Verizon moved to dismiss for lack of appellate jurisdiction. A motions panel of this court denied that motion without prejudice to renew during the merits consideration of the case. Verizon so renewed its concern about appellate jurisdiction before this panel. We now grant that motion.

II.

A.

Generally speaking, we may only review decisions from district courts that are "final." See 28 U.S.C. § 1291. That means that a party normally must raise all their claims of error in a single appeal following a final judgment. Flanagan v. United States , 465 U.S. 259, 263, 104 S.Ct. 1051, 79 L.Ed.2d 288 (1984). This principle, called the final-judgment rule, is fundamental to our legal system. See McLish v. Roff , 141 U.S. 661, 665–66, 12 S.Ct. 118, 35 L.Ed. 893 (1891). Few have said it better than Justice Frankfurter: "Since the right to a judgment from more than one court is a matter of grace and not a necessary ingredient of justice, Congress from the very beginning has, by forbidding piecemeal disposition on appeal of what for practical purposes is a single controversy, set itself against enfeebling judicial administration." Cobbledick v. United States , 309 U.S. 323, 325, 60 S.Ct. 540, 84 L.Ed. 783 (1940). The Supreme Court, therefore, has "resisted efforts to stretch § 1291 to permit appeals of right that would erode the finality principle and disserve its objectives." Microsoft , 137 S. Ct. at 1712.

On top of the general final-judgment rule, Congress has carefully designed a framework for appeals in the arbitration context. In the Federal Arbitration Act ("FAA"), Congress has expressed "a national policy favoring arbitration." Southland Corp. v. Keating , 465 U.S. 1, 10, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). For that reason, the FAA "endeavors to promote appeals from orders barring arbitration and limit appeals from orders directing arbitration." Bushley v. Credit Suisse First Bos. , 360 F.3d 1149, 1153 (9th Cir. 2004) (simplified). It does so by explicitly prohibiting the appeal of orders compelling arbitration. See 9 U.S.C. § 16(b)(3). The sole exception is a limited one: immediate appeal of an order compelling arbitration may only be taken under 28 U.S.C. § 1292(b). 9 U.S.C. § 16(b). That section allows interlocutory appeals when the district judge certifies that an appeal involves 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." 28 U.S.C. § 1292(b). Afterwards, the court of appeals may permit the appeal within its discretion. Id .

Accordingly, it is "well established that § 16(b) bars appeals of interlocutory orders compelling arbitration and staying judicial proceedings," and that § 1292(b) is the "sole avenue" to immediate appeal of such orders. Johnson v. Consumerinfo.com, Inc. , 745 F.3d 1019, 1021–23 (9th Cir. 2014) ; see also MediVas, LLC v. Marubeni Corp. , 741 F.3d 4, 7 (9th Cir. 2014) (holding that "an order compelling arbitration ... may not be appealed if the court stays the action pending arbitration"). This approach honors Congress's efforts to funnel parties into arbitration "as quickly and easily as possible." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 22, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). At bottom, our job is to enforce the clear commands of Congress. In the FAA, Congress has commanded the "rapid and unobstructed enforcement of arbitration agreements." Id. at 23, 103 S.Ct. 927.

B.

For every rule, there's an exception. In Omstead , we created one such exception to the rules for appealing arbitration orders. In that case, like here, a district court ordered arbitration of plaintiffs' claims and stayed judicial proceedings. 594 F.3d at 1083. In response, the plaintiffs told the district court that they would not arbitrate their claims, citing economic infeasibility and arbitration bias. Id . They also requested that the court enter a final order allowing them to appeal. Id. The district court refused, and instead dismissed the plaintiffs' claims for failure to prosecute under Federal Rule of Civil Procedure 41(b). Id. at 1084.

On appeal, we held that the district court abused its discretion in dismissing the action for want of prosecution because the Rule 41(b) dismissal factors favored the plaintiffs. Id. But we then explained what the plaintiffs should have done instead of refusing to arbitrate its claims: we advised that plaintiffs could have obtained immediate review of the arbitration order if they voluntarily dismissed their claims with prejudice under Rule 41(a)(2). Id. at 1085.³ We indicated that "a plaintiff that deems an interlocutory ruling to be so prejudicial as to deserve immediate review ... has the alternative of dismissing the complaint voluntarily [with prejudice]." Id. (quoting John's Insulation, Inc. v. L. Addison and Associates, Inc ., 156 F.3d 101, 107 (1st Cir. 1998) ). To avoid a "useless remand," we sua sponte construed the district court's Rule 41(b) dismissal as a Rule 41(a)(2) voluntary dismissal with prejudice and proceeded to decide the merits of the case. Id .⁴

C.

1.

Seven years after Omstead , the Court decided Microsoft . 137 S. Ct. at 1702. That case had a procedural history like this one. The plaintiffs filed a putative class action against Microsoft for defects in its gaming console. Id. at 1710. Based on a prior class certification denial in a related case, the district court denied class certification and struck the class allegations. Id. at 1710–11. In one twist from the instant case, the plaintiffs came to us first and petitioned for an interlocutory appeal under Federal Rule of Civil Procedure 23(f). Id. at 1711. We declined. Id.

The plaintiffs then returned to the district court and moved to dismiss their case with prejudice; Microsoft stipulated to the dismissal but maintained that such a dismissal would not be appealable. Id. The district court granted the stipulated dismissal motion, and the plaintiffs appealed. Id. We granted jurisdiction over the stipulated dismissal, holding it was a sufficiently adverse, final decision under § 1291. Id .

The Supreme Court granted certiorari to resolve the question: "Do federal courts of appeals have jurisdiction under § 1291 and Article III of the Constitution to review an order denying class certification ... after the named plaintiffs have voluntarily dismissed their claims with prejudice?" Id. at 1712. For the reasons explained below, the Court said "no" and reversed our decision. Id .

2.

In Microsoft , the Court held that "[p]laintiffs 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—subject, no less, to the right to ‘revive’ those claims if the denial of class certification is reversed on appeal." Id . at 1715 (sim...