On June 12, 2017, the Supreme Court answered “no” to the question whether federal courts of appeals have jurisdiction under 35 U.S.C. section 1291 to review adverse class orders after the named plaintiffs have voluntarily dismissed their claims with prejudice. Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017), Slip Op. at 11.
In 2007, Microsoft Corporation was sued for an alleged product defect of its Xbox 360 video-game console. Slip Op. at 8. The Xbox-owner plaintiffs sought class certification in May 2009. In re Microsoft Xbox 360 Scratched Disc Litig., No. C07-1121-JCC, 2009 WL 10219350, at *2 (W.D. Wash. Oct. 5, 2009). The district court denied class certification, holding that individual issues of damages and causation predominated over common issues. Id. at *6–*7. The plaintiffs petitioned the Ninth Circuit under Rule 23(f) for leave to appeal the class-certification denial, but the Ninth Circuit denied the request. Baker v. Microsoft Corp., 851 F. Supp. 2d 1274, 1276 (W.D. Wash. 2012). Thereafter, the plaintiffs settled their claims individually.
In 2011, a new lawsuit alleging the same Xbox design defect was filed in the same court. Id. at 1275-76. The new plaintiffs argued the class-certification analysis in the earlier case did not control because an intervening change in law overcame the previous certification denial. Id. at 1277-78. The district court disagreed and struck the class allegations. Id. at 1280-81. The plaintiffs petitioned the Ninth Circuit under Rule 23(f) for leave to appeal, arguing interlocutory review was appropriate because the order would “effectively kil[l] the case” as the claims made it “economically irrational to bear the cost of litigating th[e] case to final judgment.” Slip Op. at 9. The Ninth Circuit denied the petition.
The plaintiffs then stipulated to a voluntary dismissal of their claims “with prejudice,” but reserved the right to revive their claims should the district court’s certification denial be reversed. Maintaining that the defendants would have “no right to appeal,” Microsoft stipulated to the dismissal. Id. at 10. The district court granted the stipulated dismissal. The plaintiffs thereafter appealed the district court’s interlocutory order striking their class allegations – not the dismissal order – to the Ninth Circuit under section 1291. Id.
On appeal, the Ninth Circuit rejected Microsoft’s argument that the plaintiffs’ dismissal impermissibly circumvented Rule 23(f). Id. The Ninth Circuit ultimately held the district court had misapplied the comity doctrine and remanded on the question whether a class should be certified. Baker v. Microsoft Corp., 797 F.3d 607, 610 (9th Cir. 2015). Thereafter the Supreme Court granted Microsoft’s petition for a writ of certiorari.
Because the plaintiffs’ voluntary dismissal “subverts the final-judgment rule and the process Congress has established for refining that rule and for determining when non-final orders may be immediately appealed,” the Supreme Court held the tactic “does not give rise to a ‘final decisio[n]’ under §1291.” Slip Op. at 12. The Supreme Court highlighted its recognition that “finality is to be given a practical rather than a technical construction.” Id. (quoting Eisen v. Carlisle & Jacquelin, 417 U. S. 156, 170, 171 (1974). “Repeatedly we have resisted efforts to stretch §1291 to permit appeals of right that would erode the finality principle and disserve its objectives.” Id.
Rule 23(f) was crafted carefully by rule makers, the Supreme Court said, leaving the sole discretion to the courts of appeals. Slip Op. at 15. That careful crafting “warrants the Judiciary’s full respect.” Id. (quoting Swint v. Chambers County Comm’n, 514 U. S. 35, 48 (1995)). [E]ven plaintiffs who altogether bypass Rule 23(f) may force an appeal by dismissing their claims with prejudice,” under the plaintiffs’ logic. Id. If such logic were embraced, the Supreme Court said, “Congress[‘] final decision rule would end up a pretty puny one.” Slip Op. at 16 (quoting Digital Equipment Corp. v. Desktop Direct, Inc., 511 U. S. 863, 872 (1994)).