rule 23(f) class certification appeals: pursuing or...

Rule 23(f) Class Certification Appeals:

Pursuing or Challenging Interlocutory Review Complying With Strict Procedural Requirements and Navigating Differing Circuit Court Standards

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THURSDAY, FEBRUARY 6, 2014

Presenting a live 90-minute webinar with interactive Q&A

David J. Bird, Partner, Reed Smith, Pittsburgh

Paul G. Karlsgodt, Partner, Baker Hostetler, Denver

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Appealing A Class-Certification Decision Under

Rule 23(f)

David Bird 412.288.3542

[email protected]

February 6, 2014

Fed. R. Civ. P. 23(f)

• “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.”

6

History of Rule 23(f)

• In Coopers & Lybrand v. Livesay, 437 U.S. 463, 477 (1978), the

U.S. Supreme Court held that an order denying class

certification is not a “final decision” within the meaning of 28

U.S.C. § 1291, and therefore is not appealable as a matter of

right.

• In 1992, Congress amended 28 U.S.C. § 1292, explaining that

the state of the law re appealable interlocutory orders was

unsatisfactory.

• Rule 23(f) was enacted six years later.

7

History of Rule 23(f)

• The Advisory Committee Notes state that both plaintiffs and

defendants benefit from the opportunity to petition for the

interlocutory appeal of a class-certification order.

• An interlocutory appeal under rule 23(f) is permissible, not

mandatory.

• The Notes provide that courts of appeals have “unfettered

discretion” in deciding whether to permit an appeal under Rule

23(f).

8

What Types of Orders are Appealable Under Rule 23(f)?

• Orders granting or denying class certification are appealable

under 23(f).

• Several circuit courts have held that other types of orders are

appealable under 23(f), too.

9


• (1) An order granting or denying an amended motion for

class certification: In McReynolds v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 672 F.3d 483, 486 (7th Cir. 2012), Judge

Posner stated that “[a] rule limiting parties to one interlocutory

appeal from a grant or denial of class certification would

disserve Rule 23(f).”

10


• (2) An order granting or denying a timely motion for

reconsideration of the original order on class certification:

The Tenth, Third, Eleventh, and Seventh Circuits have held that

such an order restarts the 14-day clock. Gelder v. Coxcom, 696

F.3d 966, 968–69 (10th Cir. 2012); McNair v. Synapse Group

Inc., 672 F.3d 213, 222 n.8 (3d Cir. 2012); Shin v. Cobb Cnty.

Bd. of Educ., 248 F.3d 1061, 1064–65 (11th Cir. 2001); Blair v.

Equifax Check Servs., Inc., 181 F.3d 832, 837 (7th Cir. 1999).

11


• (3) An order granting or denying a motion to amend the

order on class certification: In Fleischman v. Albany Med.

Ctr., 639 F.3d 23, 31 (2d Cir. 2011), the Second Circuit held that

a party can appeal an order granting or denying a motion to

amend the class-certification order—filed pursuant to Rule

23(c)(1)(c)—under Rule 23(f) so long as the motion was filed

within fourteen days after the class-certification order.

12


• (4) An order that “materially alters” a class certification

order: The Seventh Circuit has held that a party may seek the

appeal of an order that “materially alters” a class certification

order under Rule 23(f). Matz v. Household Int’l Tax Reduction

Inv. Plan, 687 F.3d 824 (7th Cir. 2012) (a party had the right to

seek the appeal of an order decertifying a class and reducing

the class by 57-71%).

13


• Note: The Seventh Circuit has also held that an order denying

a motion to decertify is not an appealable order. Driver v.

AppleIllinois, LLC, No. 13-8029, 2014 WL 130481, at *4 (7th

Cir. Jan. 15, 2014).

14


• (5) An order dismissing or striking class claims: In Scott v.

Family Dollar Stores, Inc., 733 F.3d 105, 111 n.2 (4th Cir.

2013), the Fourth Circuit held that it had jurisdiction over the

appeal under Rule 23(f) because “the district court's ruling is

the functional equivalent of denying a motion to certify the case

as a class action.”

15

Following Proper Procedure When Filing Your

Rule 23(f) Petition

• Follow the procedures set forth in Federal Rule of Appellate

Procedure 5.

• File the petition with the clerk of court with proof of service.

• File the petition within the time frame specified by Rule 23(f).

16


Rule 23(f) Petition

• The petition must include: (1) the question presented; (2) the

relevant facts; (3) the relief sought; (4) the rule that authorizes

the appeal and the reasons the Court should allow the appeal;

and (5) a copy of the order.

• A party may file an answer or a cross-petition.

• No reply is allowed.

• Always be sure to check local rules!

17


Rule 23(f) Petition

• The form of the petition must conform to the rules regarding

“other papers” found in Appellate Rule 32.

• The petition must not exceed twenty (20) pages.

• A 23(f) petitioner must file 3 copies.

18

Will the Courts of Appeals Decide the Merits Based on the

Rule 23(f) Petition?

• Rule 23(f) petitioners are not required to make a merits

argument.

• A majority of the time, the court of appeals issues two separate

rulings: (1) an order granting or denying the Rule 23(f) petition;

and (2) and opinion on the merits of the appeal based on

further briefing.

19

Will the Courts of Appeals Decide the Merits Based on the

Rule 23(f) Petition?

• It is possible for a court to make a merits decision based on the

Rule 23(f) petition and answer, and to issue an opinion granting

the appeal and addressing the merits. See CE Design Ltd. v.

King Architectural Metals, Inc., 637 F.3d 721 (7th Cir. 2011).

20

How do the Courts of Appeals Decide Whether to Grant or

Deny a Rule 23(f) Petition?

• The Advisory Committee Notes provide examples of

circumstances under which a court might grant a Rule 23(f)

petition: (1) when a certification decision turns on a novel or

unsettled question of law; and (2) when a certification decision

is likely dispositive of the litigation. Fed. R. Civ. P. 23 advisory

committee’s note (1998).

• Every court with a standard considers, among other things, the

circumstances discussed in the Notes.

21

How do the Courts of Appeals Decide Whether to Grant or

Deny a Rule 23(f) Petition?

• Most courts take into consideration strength of the district court

opinion. See, e.g., Rodriguez v. Nat’l City Bank, 726 F.3d 372,

376–77 (3d Cir. 2013); Lienhart v. Dryvit Sys., Inc., 255 F.3d

138, 144 (4th Cir. 2001); Prado-Steiman ex rel. Prado v. Bush,

221 F.3d 1266, 1275–76 (11th Cir. 2000).

• The Eighth Circuit has declined to adopt a standard or test.

See Liles v. Del Campo, 350 F.3d 742, 746 n.5 (8th Cir. 2003).

22

Don’t Forget Appellate Rule 5 If Your Petition Is Granted

• You must, within fourteen (14) days of the order granting the

appeal, pay the district clerk all required fees and file a cost

bond if Appellate Rule 7 requires.

23

What is the Standard of Review?

• A Court of Appeals will reverse a district court’s decision upon a

showing of abuse of discretion. See Shahriar v. Smith &

Wollensky Rest. Group, Inc., 659 F.3d 234, 250–51 (2d Cir.

2011).

• Questions of law will be reviewed de novo. See McNair v.

Synapse Group Inc., 672 F.3d 213, 222 n.9 (3d Cir. 2013).

24

What is the Standard of Review?

• In Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551

(2011), the Supreme Court made clear that a party seeking

class certification must “affirmatively demonstrate his

compliance” Rule 23(a).

• Courts won’t always presume that the plaintiffs’ allegations in

the complaint are true. Gooch v. Life Investors Ins. Co. of Am.,

672 F.3d 402, 417 (6th Cir. 2012) (providing a list of cases).

25

Has Rule 23(f) clarified the state of the law?

• The courts of appeals are supposed to “develop standards for

granting review . . . .”

• A disproportionate number of the 23(f) opinions fail to discuss

the reasons why the courts decided to grant or deny a 23(f)

petition.

26


• “[O]nly 10% of the ‘decisions’ accepting or rejecting a Rule

23(f) petition are available by searching published or

electronically available opinions,” with the remaining 90%

reflected only in docket entries. Barry Sullivan and Amy

Kobelski Trueblood, Rule 23(f): A Note on Law and Discretion

in the Courts of Appeals, 246 F.R.D. 277, 284 (2008).

27


• There are 68 23(f) opinions from the last 3 years.

• 44 of the 68 decisions (65%) are reported.

• Breakdown by Circuit:

1st Cir. – 0 opinions

2d Cir. – 5 opinions, 40% (2) reported

3d Cir. – 10 opinions, 100% reported

4th Cir. – 3 opinions, 33% (1) reported







11th Cir. – 1 opinion, 0% reported

D.C. Cir. – 1 opinion, 100% reported

28


• Only 17 of the 68 opinions (25%) are reported opinions that discuss why the court grants or denies 23(f) petitions.

• Breakdown by Circuit of reported decisions discussing the reasoning behind the court’s decisions to grant or deny the 23(f) petition:

1st Cir. – 0 opinions

2d Cir. – 1 opinion

3d Cir. – 3 opinions

4th Cir. – 1 opinion

5th Cir. – 0 opinions





10th Cir. – 1 opinion


D.C. Cir. – 1 opinion

29

Conclusion

• With the exception of the Seventh Circuit, and arguably the

Third Circuit, courts have not taken seriously the charge to

clarify the standards by which they would decide to grant a

23(f) petition.

30

Practical Strategies

for Pursuing Appellate

Review Under FRCP

26(f)…

…Or Not

Paul G. Karlsgodt, Esq.

Baker & Hostetler LLP

303.764.4013

[email protected]

The #1 Strategy for a Successful Class

Certification Appeal

Win in the Trial Court

33

Strategy #2: Take Your Medicine and

Move On

• Factors to consider in deciding whether to appeal – Defendant’s tolerance for a bad trial verdict

– Cost of appeal in relation to the amount at stake

– Potential for preclusive effect on a dispositive motion

– Settlement leverage – Will unsuccessful appeal embolden the plaintiff?

– State of development of the factual record

– Potential for reconsideration and potential decertification (but probably no appeal)

– Law of the jurisdiction on accepting interlocutory appeals

34

Strategy #3: File a Rule 23(f) Petition

• Don’t trust anyone trying to sell you a Rule 23(f) form.

• Know the jurisdiction: What is the state of the law on Rule 23(f)? – Early cases looked at whether class certification was a

“death knell” for the defendant, or whether the error was manifestly unjust.

– Recent cases tend to say that the court can accept the appeal if it feels like it.

• What is the state of the law on class certification issues more generally, i.e., what issues have already been addressed?

35

What Makes the Case Worthy of

Appellate Review?

• Injustice

• Interesting issues

• Potential broader impact

36

What Makes Appellate Review

Necessary Now?

• Because it’s an interesting case

• Because the order essentially ends the case

• Because the defendant could go under

• Because you’ll never resolve this issue if you don’t take it now

• Because the record is fully developed. West v. Prudential Securities, Inc., 282 F.3d 935 (7th Cir. 2002)

• Because the trial courts need correction. E.g., Szabo v. Bridgeport Machines, Inc., 249 F.3d 672 (7th Cir. 2001) (only trial court authority on an important issue is a justification for granting interlocutory appeal)

• Because the other Circuit Courts have addressed the issue the other way

• Because there are threshold issues to be addressed, Burtulli v. Independent Assoc. of Continental Pilots, 242 F.3d 290, 294 (5th Cir. 2001) (standing); Samuel-Bassett v. Kia Motors America Inc., 357 F.3d 392 (3d Cir. 2004) (subject matter jurisdiction), In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006) (standard of review)

37

Briefing Strategy

• Two goals in discretionary appeals: – Why the appellate court should take the case

– Why the trial court was wrong

• Catch-22 – If you only say why the court should take the case,

you lose the possibility of sympathy due to the strength of your argument on the merits.

– If you argue both, it may be your only chance to argue the merits of the issue. E.g., Parko v. Shell Oil Co., Nos. 13-8023 & 13-8024, 2014 WL 187184 (7th Cir. Jan. 17, 2014) (“Because the petitions and response address the certification issue comprehensively, we proceed to resolve the issue without requiring further briefing.”)

38

Other Factors

• Amicus support

– Defendants in similar cases

– Governmental entities

– Trade associations

– Public interest organizations

• Statements from the trial court about why

the issue is a good one for appeal

39

Class Certification Appeals in the

State Courts

• Is there an avenue for interlocutory appeal? Millett v. Atlantic Richfield Co., 760 A.2d 250 (Me. 2000) (surveying various states’ approaches to interlocutory appeal of class cert decisions); Gordon v. Microsoft Corp., 645 N.W.2d 393 (Minn. 2002) (adopting an amalgam of federal court factors as standard for permissive appeal).

• Is it mandatory or discretionary?

• If not, consider extraordinary writs.

40

You’ve Got 14 Days To Dazzle

the Court of Appeals

• And that really means 14 days.

• You can’t get an extension. Delta Airlines v. Butler, 383 F.3d 1143 (10th Cir. 2004).

• You might move for reconsideration in the district court, but you’d better do it within 14 days. Carpenter v. Boeing Co., 456 F.3d 1183, 1191 (10th Cir. 2006)

• You get three days for mailing, right? Nope. See FRAP 5 and FRCP 6(d).

• Are you being defeatist if you start drafting the appeal before the trial court’s order? Maybe not, consider that: – You get more time to prepare a Petition worth granting

– Trial court guidance might be relevant to the decision. See Adv. Comm. notes to 1998 Amendments adding Rule 23(f).

41

Details, Details, Details

• If there is any question, seek review under BOTH Rule 23(f) AND 28 U.S.C. § 1292(b). Richardson Electronics, Ltd. v. Panache, 202 F.3d 957 (7th Cir. 2000).

• Make sure that you include appropriate substance as required by FRAP 5.

• Don’t forget what you’re trying to appeal - Attach a copy of the class certification order and memorandum or opinion.

• Filing a Petition for Review does not stay trial court proceedings. FRCP 23, 1998 Adv. Comm. Notes.

• Don’t wait for the Reply or oral argument – you’ll probably never get a chance. FRAP 5.

42

Strategy #4: You Haven’t Lost Yet

• If the Petition is denied, you’ll get another

chance. United Airlines, Inc. v. McDonalds, 432

U.S. 385, 393 (1977)…

• … but probably not until after trial. Driver v.

AppleIllinois, LLC, No. 13-8029, 2014 WL

130481 (7th Cir. Jan. 15, 2014) (denial of

decertification motion is not appealable, but

material change to class definition would be)…

• …if you can resist the “intense pressure to

settle.” Matter of Rhone-Poulenc Rorer, Inc., 51

F.3d 1293, 1298 (7th Cir. 1995).

43

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These materials have been prepared by Baker & Hostetler LLP for informational purposes only and are not legal advice. The information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

Readers should not act upon this information without seeking professional counsel. You should consult a lawyer for individual advice regarding your own situation. ©2014 Baker & Hostetler LLP. All Rights Reserved.

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