In the Ninth Circuit, Not All Litigants Are Created Equal

9thCirThe U.S. Court of Appeals for the Ninth Circuit this week denied Uber Technologies’s petition for Rule 23(f) interlocutory review of an order granting class certification in a major challenge to the manner in which Uber operates its ride-sharing business. The four named plaintiffs assert that every Uber driver should be classified as an employee, not (as is currently the case) an independent contractor. The denial of review is not unusual when viewed in isolation. Although Rule 23(f) grants federal appeals courts discretionary authority to hear interlocutory appeals from class-certification orders, appeals courts permit such appeals in only a fraction of all cases, and the default rule continues to be that litigants must await issuance of a final judgment before appealing from pre-judgment rulings to which they object.

Nonetheless, the denial of Uber’s petition highlights a major anomaly in Ninth Circuit case law. When a district court grants a motion to certify a plaintiff class, the defendants are permitted to appeal only at the discretion of the appeals court. But in cases in which a district court denies a motion to certify the class, the Ninth Circuit has created a pathway for plaintiffs that gives them a right to immediate appellate review. That unequal treatment of plaintiffs and defendants directly conflicts with Supreme Court precedent governing class-certification appeals.

To obtain immediate review of a denial of certification, all that Ninth Circuit plaintiffs must do is stipulate to dismissal of their claims with prejudice. According to the Ninth Circuit in two recent decisions, Berger v. Home Depot USA, Inc. and Baker v. Microsoft Corp., the stipulated dismissal is an appealable final judgment, and the class-certification denial can be appealed as part of the appeal from that final judgment. Then, if the Ninth Circuit determines that the district judge erred in denying class certification (as it did in Baker), the lawsuit magically springs back to life as a certified class action; the plaintiffs’ earlier stipulation that their case should be dismissed with prejudice is overlooked.

The Ninth Circuit’s recognition of a right to immediate appeal from class-certification denials directly conflicts with the Supreme Court’s decision in Coopers & Lybrand v. Livesay. The Court held in Livesay that immediate review of such denials is inconsistent with 28 U.S.C. § 1291 (Congress’s “final decision” rule), which was adopted to ensure that controversies are not reviewed by appellate courts in a piecemeal fashion as issues arise. One of Livesay’s rationales for barring immediate review is particularly pertinent to the Ninth Circuit’s rulings: the theory espoused by the Livesay plaintiffs was unfair to defendants, the Court concluded, because it created a pathway by which plaintiffs could obtain pre-trial appellate review of class-certification orders while not creating a similar pathway for defendants.

The Supreme Court will soon have an opportunity to determine whether the Ninth Circuit’s double standard for class-certification appeals is consistent with federal law. The defendant in Baker recently filed a petition seeking review in the case, noting that the Ninth Circuit’s decision conflicts with decisions from at least five other circuits. WLF filed an amicus brief in support of Microsoft’s petition on November 11.

Indeed, the grant of an appeal-as-of-right to the Baker plaintiffs is particularly anomalous, because a previous Ninth Circuit panel had denied those same plaintiffs’ petition for a discretionary interlocutory appeal under Rule 23(f). The Supreme Court will likely decide in January whether to hear the case. In order to maintain parity between the rights of class-action plaintiffs and defendants, the Court should take the case and reverse the Ninth Circuit. If Uber cannot immediately appeal a class-certification order that threatens its very business model, then the Baker plaintiffs shouldn’t be able to either.

Also published by Forbes.com on WLF’s contributor page.

One thought on “In the Ninth Circuit, Not All Litigants Are Created Equal

  1. Pingback: Supreme Court’s First 2016 Conference Yields Positive Results for Free-Enterprise Advocates—and Reason to Hope for More |

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