Jocelyn D. Larkin - Executive Director, The Impact Fund

Jocelyn D. Larkin - Executive Director, The Impact Fund

For those of us grown weary of daily CNN news alerts, it is something of a relief that the U.S. Supreme Court gave its obsession with class action procedure a bit of a rest this year. While there were no cases this term that presented the stomach-turning existential threats of the past six years, there are two new SCOTUS decisions affecting impact litigation of which you should be aware. 

In a not-at-all surprising decision, the high court ruled unanimously that a class action plaintiff -- who has lost class certification and had a petition for Rule 23(f) interlocutory appeal denied -- cannot ask the district court to dismiss his or her individual claims and enter judgment, and then appeal the denial of class certification under 28 U.S.C. § 1291.  Microsoft Corp. v. Baker, No. 15-457, 582 U.S. ___ (June 12, 2017).

Section 1291 limits appellate review to “final judgments” in order to avoid the distinct problems associated with piecemeal appellate review. Fed. R. Civ. P. 23(f), adopted in 1998, did authorize interlocutory review of class certification orders, but only at the discretion of the Courts of Appeal. Justice Ginsburg reasoned that a plaintiff could not manufacture an appealable final judgment by requesting voluntary dismissal of the individual claims since the claims would need to be “revived” for the action to go forward (i.e. if the appeal were successful). Put differently, if the individual claims are gone, there is nothing upon which Rule 23 certification can be based. The Court also held that this tactic would undermine the “discretionary regime” carefully crafted by Rule 23(f).  The concurring opinion, by Justice Thomas, would have grounded the analysis in Article III, rather than the statute. 

While the Microsoft case is a clear victory for corporate defendants, there is some language in the opinion that may be useful in another important fight in a different venue. H.R. 985, the anti-class action bill passed earlier this year by the House, would permit an interlocutory appeal from every class certification order. The high court’s opinion strongly endorsed a contrary perspective – it highlighted the wisdom of Rule 23(f)’s “careful calibration” of the question as well as the preference for determining such issues through rulemaking rather than legislation. Senate Judiciary Committee, are you listening? 

One additional point in Microsoft: the Court confirmed that an order striking class allegations is “functional[ly] equivalent” to an order denying class certification and thus may be appealed under Rule 23(f). Slip Opinion at 9, n.7.

The second SCOTUS decision, Bristol-Myers Squibb Co. v. Superior Court, No. 16-466, 582 U.S. __ (June 19, 2017), concerns the question of when a state court may, consistent with the Due Process Clause, assume personal jurisdiction over the claims of non-residents. The focus, though, is not on the plaintiffs, but on the non-resident defendant’s contacts with the forum state. The Court has identified two jurisdictional buckets: general jurisdiction (invoked when the defendant has “continuous and systematic” contacts with the forum) or specific jurisdiction (tied to the conduct underlying the specific case). Got those first year Civ Pro flashbacks yet? Think International Shoe and Pennoyer v. Neff.

The case was a mass action – not a class action --- filed in California state court on behalf of California residents as well as non-residents alleging injuries associated with the drug, Plavix. The California Supreme Court had ruled in a split decision that the California courts had specific jurisdiction to hear the non-residents’ claims. The U.S. Supreme Court disagreed, ruling 8 – 1 that the non-residents did not buy the drug or sustain injuries from it in California, nor was the drug designed or developed in California. Justice Sotomayor, the lone dissenter, highlighted that there was no unfairness in holding a large corporate defendant, engaged in nationwide conduct, accountable in a state where it does extensive business, and bemoaned the practical problems of bringing a mass action in light of the majority’s holding.