Microsoft Corp. v. Baker

• Court: U.S. Supreme Court
• Writing for the Court: Justice GINSBURG delivered the opinion of the Court.
• Citation: Microsoft Corp. v. Baker, 137 S. Ct. 1702, 198 L.Ed.2d 132 (2017)
• Decision Date: 12 June 2017
• Docket Number: No. 15–457.,15–457.
• Parties: MICROSOFT CORPORATION, Petitioner v. Seth BAKER, et al.

137 S.Ct. 1702

198 L.Ed.2d 132

MICROSOFT CORPORATION, Petitioner

v.Seth BAKER, et al.

No. 15–457.

Supreme Court of the United States

Argued March 21, 2017.

Decided June 12, 2017.

Jeffrey L. Fisher, Stanford, CA, for Petitioner.

Peter K. Stris, Los Angeles, CA, for Respondents.

Bradford L. Smith, David M. Howard, Timothy G. Fielden, Microsoft Corporation, Redmond, WA, Charles B. Casper, Montgomery, McCracken, Walker & Rhoads, LLP, Philadelphia, PA, Jeffrey L. Fisher, Stanford, CA, Stephen M. Rummage, Fred B. Burnside, Davis Wright Tremaine LLP, Seattle, WA, for Petitioner.

Brendan S. Maher, Daniel L. Geyser, Douglas D. Geyser, Stris & Maher LLP, Dallas, TX, Darren T. Kaplan, Stueve Siegel Hanson LLP, New York, NY, Peter K. Stris, Radha A. Pathak, Dana Berkowitz, Victor O'Connell, Thomas E. Logan, Stris & Maher LLP, Los Angeles, CA, Mark A. Griffin, Amy Williams–Derry, Benjamin Gould, Keller Rohrback LLP, Seattle, WA, Shaun P. Martin, University of San Diego, School of Law, San Diego, CA, Robert L. Esensten, Esensten Law, Los Angeles, CA, Jeffrey M. Ostrow, Jonathan M. Streisfeld, Kopelowitz Ostrow Ferguson, Weiselberg Gilbert P.A., Fort Lauderdale, FL, Paul L. Stritmatter, Bradley J. Moore, Stritmatter Kessler Whellan, Koehler Moore Kahler, Seattle, WA, for Respondents.

Justice GINSBURG delivered the opinion of the Court.

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, 437 U.S. 463, 470, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978), hence not immediately reviewable under 28 U.S.C. § 1291, which provides for appeals from "final decisions." Pursuant to Federal Rule of Civil Procedure 23(f), promulgated in 1998, however, orders denying or granting class certification may be appealed immediately if the court of appeals so permits. Absent such permission, plaintiffs may pursue their individual claims on the merits to final judgment, at which point the denial of class-action certification becomes ripe for review.

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 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." 28 U.S.C. § 1291.¹ Two guides, our decision in Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978), and Federal Rule of Civil Procedure 23(f), control our application of that finality rule here.

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. 437 U.S., at 470, 477, 98 S.Ct. 2454. Courts of Appeals employing the doctrine "regarded [their] jurisdiction as depending on whether [rejection of class-action status] had sounded the ‘death knell’ of the action." Id., at 466, 98 S.Ct. 2454. These courts asked whether the refusal to certify a class would end a lawsuit for all practical purposes because the value of the named plaintiff's individual claims made it "economically imprudent to pursue his lawsuit to a final judgment and [only] then seek appellate review of [the] adverse class determination." Id., at 469–470, 98 S.Ct. 2454. If, in the court of appeals' view, the order would terminate the litigation, the court deemed the order an appealable final decision under § 1291. Id., at 471, 98 S.Ct. 2454. If, instead, the court determined that the plaintiff had "adequate incentive to continue [litigating], the order [was] considered interlocutory." Ibid. Consequently, immediate appeal would be denied.

The death-knell theory likely "enhance[d] the quality of justice afforded a few litigants," we recognized. Id., at 473, 98 S.Ct. 2454. But the theory did so, we observed, at a heavy cost to § 1291's finality requirement, and therefore to "the judicial system's overall capacity to administer justice." Id., at 473, 98 S.Ct. 2454 ; see id., at 471, 98 S.Ct. 2454 ( Section 1291"evinces a legislative judgment that ‘restricting appellate review to final decisions prevents the debilitating effect on judicial administration caused by piecemeal appeal disposition.’ " (quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 170, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974) (alterations and internal quotation marks omitted))). First, the potential for multiple interlocutory appeals inhered in the doctrine: When a ruling denying class certification on one ground was reversed on appeal, a death-knell plaintiff might again claim "entitle[ment] to an appeal as a matter of right" if, on remand, the district court denied class certification on a different ground. Coopers & Lybrand, 437 U.S., at 474, 98 S.Ct. 2454.

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." Id., at 476, 98 S.Ct. 2454 (internal quotation marks omitted); see id., at 474, 98 S.Ct. 2454. The Interlocutory Appeals Act of 1958, 28 U.S.C. § 1292(b), we explained, had created a two-tiered "screening procedure" to preserve this relationship and to restrict the availability of interlocutory review to "appropriate cases." 437 U.S., at 474, 98 S.Ct. 2454. For a party to obtain review under § 1292(b), the district court must certify that the interlocutory order "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." The court of appeals may then, "in its discretion, permit an appeal to be taken from such order." The death-knell doctrine, we stressed, "circumvent[ed] [ § 1292(b)'s] restrictions." Id., at 475, 98 S.Ct. 2454.

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." Id., at 476, 98 S.Ct. 2454. Just as a denial of class certification may sound the death knell for plaintiffs, "[c]ertification of a large class may so increase the defendant's potential damages liability and litigation costs that he may find it economically prudent to settle and to abandon a meritorious defense." Ibid.²

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." Id., at 477, 98 S.Ct. 2454.³

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, id., at 470, 98 S.Ct. 2454 so parties had to survive § 1292(b)'s two-level inspection, see id., at 474–475, and n. 27, 98 S.Ct. 2454 ;supra, at 1707 – 1708, or satisfy the extraordinary-circumstances test applicable to writs of mandamus, see Will v. United States, 389 U.S. 90, 108, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967) (Black, J., concurring) ("[In] extraordinary circumstances, mandamus may be used to review an interlocutory order which is by no means ‘final’ and thus appealable under federal statutes."); cf. Coopers & Lybrand, 437 U.S., at 466, n. 6, 98 S.Ct. 2454.

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., 181 F.3d 832, 834 (C.A.7 1999) ; Solimine & Hines, Deciding To Decide: Class Action Certification and Interlocutory Review by the United States Courts of Appeals Under Rule 23(f), 41 Wm. & Mary L. Rev. 1531, 1568 (2000), Rule 23(f) authorizes "permissive interlocutory appeal" from adverse class-certification orders in the discretion of the court of appeals, Advisory Committee's 1998 Note on subd. (f) of Fed. Rule Civ. Proc. 23, 28 U.S.C.App., p. 815 (hereinafter Committee Note on Rule 23(f) ). The Rule was adopted pursuant to § 1292(e), see Committee Note on Rule 23(f), which empowers this Court, in accordance with the Rules Enabling Act, 28 U.S.C. § 2072, to promulgate rules "to provide for an appeal of an interlocutory decision to the courts of appeals that is not otherwise provided for [in § 1292 ]." § 1292(e).⁴ Rule 23(f) reads:

"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...