Supreme Court Says No to Appellate Gamesmanship

Washington, DC-based litigator James Freije brings us an analysis of the Supreme Court’s latest class certification decision.

Resolving a current split amongst multiple federal circuits, the United States Supreme Court recently ruled in Microsoft Corp. v. Baker that federal courts of appeals lack jurisdiction to review orders denying class certification after plaintiffs voluntarily dismiss their claims with prejudice. Justice Ginsburg wrote the majority opinion, joined by Justices Kennedy, Breyer, Sotomayor, and Kagan, overturning the United States Court of Appeals for the Ninth Circuit, citing a lack of jurisdiction under 28 U.S.C. § 1291 (“§ 1291”). In a separate opinion concurring in the judgment, Justice Thomas, joined by Chief Justice Roberts and Justice Alito, agreed that the Ninth Circuit lacked jurisdiction, but cited incongruity with the standing requirements of Article III of the U.S. Constitution (“Article III”) rather than § 1291. Justice Gorsuch did not participate.

Respondents, owners of Microsoft’s Xbox 360 (“Xbox”) game console, sued Microsoft in 2011, alleging that a design defect in the console scratched various game discs. Microsoft moved to strike the class allegations, arguing that only 0.4% of Xbox owners reported disc scratching, mostly resulting from consumer misuse rather than product defect. The district court, ruling in Microsoft’s favor, concluded that comity required it to defer to an earlier class certification denial from another district court decision involving a similar putative class. There, because not all Xbox owners had sustained damages due to the alleged defect, the court ruled that the need to consider individualized damage questions precluded certifying a class of Xbox owners. The Respondents unsuccessfully petitioned for an interlocutory appeal of the denial under Federal Rule of Civil Procedure 23(f). Once the Rule 23(f) petition was denied, both Respondents and Microsoft stipulated to dismiss the case with prejudice, and the district court entered a final order dismissing the case. Respondents then immediately appealed that order to the Ninth Circuit.

The Ninth Circuit concluded that it had jurisdiction over this appeal under § 1291. Relying on its 2014 decision in Berger v. Home Depot USA, Inc., the court claimed jurisdiction under § 1291 “because a dismissal of an action with prejudice, even when such dismissal is the product of a stipulation, is a sufficiently adverse – and thus appealable – final decision.” The Ninth Circuit reversed the district court’s denial of certification and remanded for further proceedings. It also...