Amicus Curiae Brief — Microsoft Corp. v. Baker, 136 S. Ct. 890 (2016) (No. 15-457)

ARAI UASL, LO

AND

REFS MAR 17 206

No. 15-457 |__OFRICE OF THE CLERK

In the

Supreme Court of the Anited States

> ae

MICROSOFT

CORPORATION,

Petitioner,

Vv

SETH BAKER, et al.,

Respondents.

—~—

On Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

+

BRIEF AMICUS CURIAE OF

PACIFIC LEGAL FOUNDATION

IN SUPPORT OF PETITIONER

> 2

DEBORAH J. LA FETRA

Counsel of Record

Pacific Legal Foundation

930 G Street

Sacramento, California 95814

Telephone: (916) 419-7111

Facsimile: (916) 419-7747

E-mail: DLaFetra@pacificlegal org

Counsel for Amicus Curiae Pacific Legal Foundation

i

QUESTION PRESENTED

Whether a federal court of appeals has jurisdiction

under both Article III and 28 U.S.C. § 1291 to review

an order denying class certification after the named

plaintiffs voluntarily dismiss their individual claims

with prejudice.

Hy

TABLE OF CONTENTS

QUESTION PRESENTED ........ ee

TABLE OF AUTHORITIES ..........

IDENTITY AND

INTEREST OF AMICUS CURIAE

INTRODUCTION AND

SUMMARY OF ARGUMENT ....

I. A PLAINTIFF WHO DISMISSES

WITH PREJUDICE LACKS

ARTICLE II STANDING TO APPEAL

A CLASS CERTIFICATION DENIAL ...... 3

A. Denial of Class Certification

Has No Bearing on the Merits or

Plaintiffs Legal Ability to Proceed ...... 4

B. A Purported Class

Representative’s Claims Rise and

Fall with His Individual Claims

Il. POLICY CONSIDERATIONS FAVOR

EXTENSION OF LIVESAY TO

DISMISSALS WITH PREJUDICE

A. Procedural Rules

Should Not Encourage

Litigation Gamesmanship ....

B. The Interests of Plaintiffs’

Counsel Cannot Be Imputed

to the Plaintiffs Themselves ..

RE ae nme

TABLE OF AUTHORITIES

Page

Cases

Airframe Systems, Inc. v. Raytheon Co.,

ee I, ME gv onc cc cvcwecsives 13

Allen v. Bedolla,

787 F.3a 1218 (Oth Cir. 3015) ............2.. 16

Amchem Prods. v. Windsor,

rn st aidie ee ee 6 eeine's 17

American Express Co. v. Italian Colors

Restaurant, 133 S. Ct. 2304 (2013) ........... 6

Anderson v. CNH U.S. Pension Plan,

515 F.3d 823 (8th Cir. 2008)................ 11

Ariz. Christian Sch. Tuition Org. v. Winn,

ec Se eee beewes es 19

Arizonans for Official English v. Arizona,

ee ee ae oe iad oee'es ee Obs 3

AT&T Mobility LLC v. Concepcion,

ee 17

Bailey v. Patterson, 369 U.S. 31 (1962) .......... 9

Baker v. Microsoft Corp.,

797 F.3d GO7 (Oth Cir. 2015) ..............2... 2

Bennett v. Spear, 520 U.S. 154 (1997) ........... 1

Bode & Grenier, LLP v. Knight,

808 F.3d 852 (D.C. Cir. 2015) ............... 14

Bowles v. Russell, 551 U.S. 205 (2007) ......-.... 10

Budinich v. Becton Dickinson & Co.,

cia ve eceneennees 12

lV

TABLE OF AUTHORITIES—Continued

Page

Camesi v. Univ. of Pittsburgh Med. Ctr.,

729 F.3d 239 (@d Cir. 2013) .............. 9,13

Campbell-Ewald Co. v. Gomez,

oss kav ncmeseccees 3.7

Camreta v. Greene, 131 S. Ct. 2020 (2011)........ 3

Chapman v. Procter & Gamble Distributing, LLC,

766 F.3d 1296 (11th Cir. 2014).............. 13

Collins v. Miller,

Tee ae 10

Contractors Edge, Inc. v. City of Mankato,

863 N.W.2d 765 (Minn. 2015)............... 14

Coopers & Lybrand v. Livesay,

437 U.S. 463 (1978) ........... 2-3, 6, 10-11, 17

Dannenberg v. Software Toolworks,

16 P.3a 1073 (th Cir. 1904)................. S)

Daubert v. Merrell Dow Pharmaceuticals, Inc.,

EE ME, occ cc ccceseccccsccee 12-13

Deposit Guaranty Nat'l Bank v. Roper,

en wie wee ees 5, 7, 11

Dickinson v. Petroleum Conversion Corp.,

er 14

Empire Volkswagon, Inc. v.

World Wide Volkswagon Corp.,

SD oc cccccceccescs 4-5

Espenscheid v. DirectSat USA, LLC,

688 F.3d 872 (7th Cir. 2012)................ 16

Vv

TABLE OF AUTHORITIES—Continued

Page

Fairley v. Andrews,

S76 F.34a GIS (7th Cir. 2008)... we ccc ccc 9

First American Financial Corp. v. Edwards,

ee On acids bee ee. 1

FTC v. Garvey, 383 F.3d 891 (9th Cir. 2004) ..... 13

Genesis Healthcare Corp. v. Symczyk,

eee ee soe whee 4,7

Gerstein v. Pugh, 420 U.S. 103 (1975) ........... 8

Grupo Dataflux v. Atlas Global Grp., L.P.,

ee ec cows scenes seven 12

Hackett v. General Host Corp.,

455 F.2d 618 (3d Cir.),

cert. denied, 407 U.S. 925 (1972) ............ 15

Hall v. State Farm Mut. Auto. Ins. Co.,

215 Fed. Appx. 423 (6th Cir. 2007) .......... 15

Himler v. Comprehensive Care Corp.,

790 F. Supp. 114 (E.D. Va. 1992),

appeal dismissed,

993 F.2d 1537 (4th Cir. 1993).............. 7-8

Hollingsworth v. Perry,

Is ok dccscsescoveses 3-4

In re Community Bank of Northern Virginia,

418 F.3d 377 (6d Cir. 3006) ................ 15

Laczay v. Ross Adhesives,

855 F.2d 351 (6th Cir. 1988),

cert. denied, 489 U.S. 1014 (1989) ............ 4

Laird v. Tatum, 408 U.S. 1 (1972) .............. 4

v1

TABLE OF AUTHORITIES—Continued

Page

Lewis v. Casey, 518 U.S. 343 (1996) ............. 5

Lewis v. Contl Bank Corp.,

ia aes 17

Local No. 438 Constr. and General

Laborers’ Union, AFL-CIO v. Curry,

RE 4

Lujan v. Defenders of Wildlife,

ean wba nn es sk eee eenaee 1

Maguire v. Sandy Mac, Inc.,

GE, ED onc cc owe ccccccce 7

Massachusetis v. E.P.A., 549 U.S. 497 (2007) ..... 1

Mohawk Indus., Inc. v. Carpenter,

ogc ecccveveccees 10

Muro v. Target Corp.,

580 F.3d 485 (7th Cir. 2009)................ 11

Newton v. Merrill Lynch,

259 F.3d 154 (8d Cir. 2001) ................ 17

Pastor v. State Farm Mut. Auto. Ins. Co.,

487 F.8d 1042 (7th Cir. 2007) ................ 7

Phillips v. Asset Acceptance, LLC,

736 F.3d 1076 (7th Cir. 2013) ............... 16

Potter v. Norwest Mortgage, Inc.,

329 F.3d 608 (8th Cir. 2003)................. 8

Raceway Properties, Inc. v. Emprise Corp.,

613 F.3a G56 (th Cir. 1960)... .. 2... ecw a es 5

Raines v. Byrd, 521 U.S. 811 (1997) ........-..... 2

vii

TABLE OF AUTHORITIES—Continued

Page

Rhodes v. E.I. du Pont de Nemours & Co.,

636 F.3d 66 (4th Cir. O11) ...........2.2200. 8

Ruppert v. Principal Life Ins. Co.,

706 P34 GSO Gtk Cir. BOIS)... ee eee 7

Schlesinger v. Reservists Comm. to Stop the War,

ne eee eeeneeveecee Gg

Sears, Roebuck & Co. v. Butler,

ec ccucces 1

Sosna v. Iowa, 419 U.S. 393 (1975) ............ 10

Spokeo v. Robins,

No. 13-3339 (U.S. filed May 1, 2014) .......... 1

State Treasurer of State of Michigan v. Barry,

168 F.3d 8 (11th Cir. 19908) .............. 11-12

Summers v. Earth Island Institute,

nar ae 1

Toms v. Allied Bond & Collection Agency, Inc.,

179 F.3d 108 (4th Cir. 1999)................. 4

Tyrues v. Shinsecki,

783 F.3d 1861 (Ped. Cir. 3013) .............. 14

U.S. Parole Comm'n v. Geraghty,

ck s ees ee se 7-9, 15

United States v. Procter & Gamble Co..,

eS ey sw a &¥ wee wi 8

Van Cauwenberghe v. Biard,

EOC TET TTT eee 11

TABLE OF AUTHORITIES—Continued

Page

Wal-Mart Stores, Inc. v. Dukes,

ee ge aaa er 1, 5-6

White v. Baptist Mem Health Care Corp.,

699 F.3d 869 (6th Cir. 2012)................. 7

United States Constitution

8 ES rat en 3, 8-9, 17, 19

ee ee WN, Be EE boo onc vaskccivk eee 3

Rules of Court

8 8 rrr eer 5-6

PL COE os vc pn wtoves saves baw ee en 9

EE DEE aay +04 sone dy ah ee eek ebee eee 1

ee EE «cc esctevevesieeaek eeeenaee 1

DED . sc cutibneeesckeeeeenblenseaneaae 1

Miscellaneous

Barnette, William P.,

The Limits of Consent: Voluntary

Dismissals, Appeals of Class Certification

Denials, and Some Article IT Problems,

56 S. Tex. L. Rev. 451 (2015) ...... 5-6, 9-10, 17

Comment, Continuation and

Representation of Class Actions

Following Dismissal of the Class

Representative, 1974 Duke L.J. 573 .......... 15

ix

TABLE OF AUTHORITIES—Continued

Page

Dixon, Lloyd & Gill, Brian, RAND Inst.

for Civil Justice, Changes in the

Federal Standards for Admitting

Expert Evidence in Federal Civil Cases

Since the Daubert Decision (2001) ........ 12-13

Donaldson, Jr., David H., Comment,

A Search for Principles of Mootness in the

Federal Courts: Part Two—Class Actions,

Ee 15

Fisher, Daniel, $7.8 Million Fee for Lawyers,

7-Cent Check for One Lucky Class Member,

FORBES, Jan. 8, 2016, http://www.forbes.com/

sites/danielfisher/2016/01/08/7-8-million-

fee-for-lawvers-7-cent-check-for-one-

lucky-class-member/#246210ee6c61 ......... 16

Frank, Theodore D., Requiem for

the Final Judgment Rule,

re 14

Hines, Laura J., Mirroring or

Muscling: An Examination of State

Class Action Appellate Rulemaking,

58 U. Kan. L. Rev. 1027 (2010) .............. 6

Nagareda, Richard A., The Preexistence

Principle and the Structure of the Class

Action, 103 Colum. L. Rev. 149 (2003) ........ 18

Redish, Martin H. & Kiernan, Megan B.,

Avoiding Death by a Thousand Cuts:

The Relitigation of Class Certification

and the Realities of the Modern Class Action,

99 Iowa L. Rev. 1659 (2014) ............. 16-17

x

TABLE OF AUTHORITIES—Continued

Page

Redish, Martin H., Class Actions and the

Democratic Difficulty: Rethinking the

Intersection of Private Litigation and Public

Goals, 2003 U. Chi. Legal F.71 ............. 18

Schwartz, Joanna C.,

Gateways and Pathways in Civil Procedure,

60 UCLA L. Rev. 1662 (2013) ............... 12

Skitol, Robert A., The Shifting Sands of Antitrust

Policy: Where It Has Been, Where It Is Now,

Where It Will Be in Its Third Century,

9 Cornell J.L. & Pub. Pol’y 239 (1999) ........ 18

Trask, Andrew J., The Roberts Court

and the End of the Entity Theory,

48 Akron L. Rev. 831 (2015) ................. 7

1

IDENTITY AND

INTEREST OF AMICUS CURIAE

Pursuant to Supreme Court Rule 37, Pacific Legal

Foundation (PLF) respectfully submits this brief

amicus curiae in support of Petitioner, Microsoft Corp.’

PLF was founded in 1973 and is widely recognized as

the most experienced nonprofit legal foundation of its

kind. PLF litigates matters affecting the public

interest at all levels of state and federal courts and

represents the views of thousands of supporters

nationwide. PLF advocates for limited government,

individual rights, and free enterprise. PLF has

litigated numerous cases involving Article III standing,

see, e.g., Spokeo v. Robins, No. 13-3339 (U.S. filed

May 1, 2014); First American Financial Corp. v.

Edwards, 132 S. Ct. 2536 (2012); Summers v. Earth

Island Institute, 555 U.S. 488 (2009); Massachusetts v.

E.P_A., 549 U.S. 497 (2007); Bennett v. Spear, 520 U.S.

154 (1997); Lujan v. Defenders of Wildlife, 504 U.S. 555

(1992), as well as cases involving class actions in

federal court. See, e.g., Sears, Roebuck & Co. v. Butler,

134 S. Ct. 1277 (2014); Wal-Mart Stores, Inc. v. Dukes,

131 S. Ct. 2541 (2011).

* Pursuant to this Court’s Rule 37.3(a), all parties have consented

to the filing of this brief. Letters evidencing such consent have

been filed with the Clerk of the Court.

Pursuant to Rule 37.6, Amicus Curiae affirms that no counsel

for any party authored this brief in whole or in part, and no

counsel or party made a monetary contribution intended to fund

the preparation or submission of this brief. No person other than

Amicus Curiae, its members, or its counsel made a monetary

contribution to its preparation or submission.

2

INTRODUCTION AND

SUMMARY OF ARGUMENT

Washington-based plaintiffs sued in a purported

class action alleging a design defect in Microsoft’s

manufacture of Xbox game consoles. The district court

denied class certification and the plaintiffs filed an

interlocutory appeal which, in its discretion, the Ninth

Circuit denied. Rather than pursuing their individual

claims, the plaintiffs voluntarily dismissed their claims

with prejudice for the purpose of appealing the

certification denial. Baker v. Microsoft Corp., 797 F.3d

607, 609-11 (9th Cir. 2015).

In Coopers & Lybrand v. Livesay, 437 U.S. 463,

466 (1978), this Court held that plaintiffs seeking

review of interlocutory orders denying class

certification typically must wait until after final

judgment, even if the order sounds the “death knell”

for the plaintiffs’ claims. Since Livesay, five circuit

courts of appeals have held that plaintiffs cannot evade

Livesay by voluntarily dismissing their lawsuits with

prejudice to force a final judgment that then becomes

immediately appealable. In this case, the Ninth

Circuit held to the contrary: that the plaintiffs’ tactic

of voluntary dismissal sufficed to create a final

judgment such that the appellate court had jurisdiction

to decide whether certification was properly denied or

should have been granted. Baker, 797 F.3d at 615.

“No principle is more fundamental to the

judiciary’s proper role in our system of government

than the constitutional limitation of federal-court

jurisdiction to actual cases or controversies.” Raines v.

Byrd, 521 U.S. 811, 818 (1997) (citation omitted). The

plaintiffs’ voluntary dismissal resulted in no remaining

“case or controversy” necessary for jurisdiction under

3

Article II of the U.S. Constitution. This Court should

not countenance the tactical end-run around Livesay.

The decision below should be reversed.

ARGUMENT

I

A PLAINTIFF WHO DISMISSES

WITH PREJUDICE LACKS ARTICLE III

STANDING TO APPEAL A CLASS

CERTIFICATION DENIAL

Article LI of the Constitution limits federal-court

jurisdiction to “cases” and “controversies.” U.S. Const.

art. [I], § 2. This constitutional boundary functions as

an “essential limit on [judicial] power: It ensures that

[courts] act as judges, and do not engage in

policymaking properly left to elected representatives.”

Hollingsworth v. Perry, 133 S. Ct. 2652, 2659 (2013).

In so doing, the standing doctrine furthers the

separation of powers defined by the Constitution. Jd.

at 2661.

A case or controversy exists when both the

plaintiff and the defendant have a “personal stake” in

the lawsuit. Camreta v. Greene, 131 S. Ct. 2020, 2028

(2011) (citation omitted). This requirement extends

through the course of the entire litigation; it is not a

snapshot in time, relevant only when the complaint is

filed. Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663,

669 (2016); Arizonans for Official English v. Arizona,

520 U.S. 43, 67 (1997). When “an intervening

circumstance deprives the plaintiff of a ‘personal stake

in the outcome of the lawsuit,’ at any point during

litigation, the action can no longer proceed and must be

4

dismissed as moot.” Genesis Healthcare Corp. v.

Symczyk, 133 S. Ct. 1523, 1528 (2013).

Whether a plaintiff has standing is a matter that

courts must determine objectively. If a court’s

assessment of constitutional standing defers to the

plaintiffs subjective assessment of the value of his

case, no case would ever be dismissed on such grounds.

See Laird v. Tatum, 408 U.S. 1, 13-14 (1972)

(“Allegations of a subjective ‘chill’ are not an adequate

substitute for a claim of specific present objective harm

or a threat of specific future harm; ‘the federal courts

established pursuant to Article ITI of the Constitution

do not render advisory opinions.”) (citation omitted);

Hollingsworth, 133 S. Ct. at 2661. Cf. Toms v. Allied

Bond & Collection Agency, Inc., 179 F.3d 103, 107 (4th

Cir. 1999) (“No party can create jurisdiction merely by

agreement; the Constitution vests authority in the

courts only where a concrete interest is present.”).

A. Denial of Class Certification

Has No Bearing on the Merits or

Plaintiffs Legal Ability to Proceed

Article III requires that the only type of voluntary

dismissal with prejudice that can be appealed is that

which “effectively” dismisses a case. See Laczay uv.

Ross Adhesives, 855 F.2d 351, 354 (6th Cir. 1988)

(citation omitted), cert. denied, 489 U.S. 1014 (1989);

Empire Volkswagon, Inc. v. World Wide Volkswagon

Corp., 814 F.2d 90, 94 (2nd Cir. 1987). An order

“effectively” dismisses a case when it affects the merits

of the case or imposes a significant legal burden on the

plaintiffs ability to proceed with the litigation. See

Local No. 438 Const. and General Laborers’ Union,

AFL-CIO v. Curry, 371 U.S. 542, 548-49 (1963) (courts

may consider jurisdictional determination whether

5

state courts may review a controversy within the

allegedly exclusive domain of the National Labor

Relations Board, a matter wholly independent of the

merits that is subject to no further review in the state

courts); Empire Volkswagon, 814 F.2d at 94 (partial

summary judgment dismissing most of plaintiffs

claims); Raceway Properties, lic. v. Emprise Corp., 613

F.2d 656, 657 (6th Cir. 1980) (district court’s

determination of relevant market for antitrust claim

effectively disposed of the case because the plaintiffs

could not proceed with evidence regarding the relevant

market outlined by the district court).

By definition, a ruling denying class certification

is procedural in nature and does not resolve the merits

of the named plaintiffs individual claim. See generally

Fed. R. Civ. P. 23 (discussing the procedural

requirements for class certification); Lewis v. Casey,

518 U.S. 343, 357 (1996) (“That a suit may be a

class action . . . adds nothing to the question of

standing... .”) (citation and internal quotation marks

omitted); Deposit Guaranty Natl Bank v. Roper, 445

U.S. 326, 336 (1980) (“We view the denial of class

certification as an example of a procedural ruling,

collateral to the merits of a litigation, that is

appealable after the entry of final judgment.”);

William P. Barnette, The Limits of Consent: Voluntary

Dismissals, Appeals of Class Certification Denials, and

Some Article III Problems, 56 S. Tex. L. Rev. 451, 477

(2015). Class certification decisions remain procedural

in nature even though the analysis of whether a class

should be certified will frequently “entail some overlap

with the merits of the plaintiffs underlying claim.”

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

(2011). The “necessity of touching aspects of the merits

in order to resolve preliminary matters,” such as

6

certification, does not mean that the merits are

conclusively determined one way or the other by the

resolution of the preliminary matters. Jd. at 2552.

A court order denying class certification,

therefore, has no effect on the merits of the plaintiffs

claim, nor does it impose any constitutionally relevant

legal impediment. See Livesay, 437 U.S. at 464-66 (A

district court’s order denying class certification is not

“appealable as a matter of right,” even if denial of class

status sounds the “death knell” of the litigation

because the named plaintiffs find it uneconomical to

proceed on their individual claims.); American Express

Co. v. Italian Colors Restaurant, 133 S. Ct. 2304,

2309-10 (2013) (Federal Rule of Civil Procedure 23

does not establish any entitlement to class proceedings

for vindication of statutory rights, ever when the costs

of proceeding individually are “prohibitively high.”)

(citation omitted). The plaintiffs individual claims

remain just as they were prior to filing a motion for

certification.

Moreover, denial of class certification does not

necessarily render it “economically imprudent” for

individual plaintiffs to pursue their case further.

Barnette, supra, at 478 (citing Laura J. Hines,

Mirroring or Muscling: An Examination of State Class

Action Appellate Rulemaking, 58 U. Kan. L. Rev. 1027,

1032 (2010)). The cost of litigation will not always

lead an unsuccessful class representative to stop

litigating. See Livesay, 437 U.S. at 470, 471 & n.15

(“the litigation will often survive an adverse class

determination .. . [given the plaintiffs] prospect of

prevailing on the merits and reversing an order

denying class certification.”). Im cases where a

successful plaintiff is entitled to recover fees, the

7

individual litigation may well be worth pursuing. And,

for those truly small dollar cases, small claims court

efficiently and inexpensively fits the bill. See Pastor v.

State Farm Mut. Auto. Ins. Co., 487 F.3d 1042, 1047

(7th Cir. 2007); Maguire v. Sandy Mac, Inc., 145 F.R.D.

50, 54 (D.N.J. 1992) (denying class certification while

cautioning against “the transformation of the federal

court system into a veritable small claims court”).

B. A Purported Class

Representative’s Claims Rise

and Fall with His Individual Claims

Prior to class certification, a purported class

representative presents only his individual substantive

claims. Campbell-Ewald, 136 S. Ct. at 667; Andrew J.

Trask, The Roberts Court and the End of the Entity

Theory, 48 Akron L. Rev. 831, 860 (2015) (“[A] class

action is nothing more than an individual lawsuit until

the time that a court certifies it as a class

action.”). Courts have found a secondary interest in

the existence of the purported class itself, but only

when the named plaintiffs substantive claims are

mooted involuntarily. See Genesis Healthcare, 153 S.

Ct. at 1530; U.S. Parole Comm'n v. Geraghty, 445 U.S.

388, 403 (1980); Roper, 445 U.S. at 330; Ruppert v.

Principal Life Ins. Co., 705 F.3d 839, 843 (8th Cir.

2013) (Ruppert’s voluntary dismissal (relinquishment)

of his individual claims renders the case moot,

eliminating any party before the court with a sufficient

personal stake in challenging the district court’s denial

of class certification.); White v. Baptist Mem’ Health

Care Corp., 699 F.3d 869, 878 (6th Cir. 2012) (“[A] lead

plaintiff cannot be similarly situated and represent

opt-in plaintiffs without a viable claim.”); Himler v.

Comprehensive Care Corp., 790 F. Supp. 114, 116 (E.D.

8

Va. 1992), appeal dismissed, 993 F.2d 1537 (4th Cir.

1993) (“By employing this procedure to appeal the

denial of their motion for class certification, plaintiffs

are in effect attempting to sidestep the rule that

interlocutory orders are not appealable as well as the

rule that voluntary dismissals with prejudice by

plaintiffs are not appealable.”).

These holdings are consistent with the general

rule that a party who voluntarily dismisses a claim

with prejudice lacks both an injury and adversity

within the meaning of Article III. United States v.

Procter & Gamble Co., 356 U.S. 677, 680 (1958). There

is nothing unique about the role of an unsuccessful

class representative that should change the application

of the general rule. See, e.g., Rhodes v. EI. du Pont de

Nemours & Co., 636 F.3d 88, 100 (4th Cir. 2011)

(‘[W]hen a putative class plaintiff voluntarily

dismisses the individual claims underlying a request

for class certification, as happened in this case, there

is no longer a ‘self-interested party advocating’ for class

treatment in the manner necessary to satisfy

Article II standing requirements.”); Potter v. Norwest

Mortgage, Inc., 329 F.3d 608, 611-13 (8th Cir. 2003)

(courts should normally dismiss an action as moot

when the named plaintiff settles its individual claim

and the class has not been certified).’

* The normal rules regarding mootness also continue to apply.

Geraghty, 445 U.S. at 399 (“inherently transitory” claims may

continue beyond the mootness of the individually named plaintiffs

claim); Gerstein v. Pugh, 420 U.S. 103, 110-11 n.11 (1975) (holding

that the claims of the unnamed members of the class are not

mooted by the termination of the class representative’s claims

when the case addressed inherently transitory challenges to

probable cause procedures).

9

Within the meaning of Article III there is only the

class representative’s individual claim that she is

seeking to prove on behalf of the class. See Fed. R. Civ.

P. 23(a) (“One or more members of a class may sue...

as representative parties on behalf of all

members... .”); Schlesinger v. Reservists Comm. to

Stop the War, 418 U.S. 208, 216 (1974) (“To have

standing to sue as a class representative it is essential

that a plaintiff must be part of that class, that is, he

must possess the same interest and suffer the same

injury shared by all members of the class he

represents.”); Bailey v. Patterson, 369 U.S. 31, 32-33

(1962) (per curiam) (“[Plaintiffs] cannot represent a

class of whom they are not a part.”). When a plaintiff

dismisses claims with prejudice, they “are gone

forever—they are not reviewable by [an appellate

cjourt and may not be recaptured at the district court

level.” Camesi v. Univ. of Pittsburgh Med. Ctr., 729

F.3d 239, 247 (3d Cir. 2013) (citing Fairley v. Andrews,

578 F.3d 518, 522 (7th Cir. 2009)) (a litigant’s

voluntary dismissal of a portion of their claims in order

to secure an appeal, extinguishes those dismissed

claims forever); Dannenberg v. Software Toolworks, 16

F.3d 1073, 1077 (9th Cir. 1994) (a party may not revive

claims dismissed for the purposes of establishing a

final appealable order). That is, there is no amorphous

“class” claim floating free of the named plaintiffs

individual claim. Barnette, supra, at 480.° As such,

* Only once certified does a class acquire a limited legal status

that may be separated from the interests of the named plaintiff,

that allows the class to continue with a new representative should

the original named plaintiffs claim be rendered moot. See

Geraghty, 445 U.S. at 405, 407 (the question of who would

represent the class on remand is different from whether the class

claim was moot). However, “that separate legal status does not

(continued...)

10

the plaintiff has no standing remaining to appeal the

results of interlocutory motions such as a denial of

class certification.

i

POLICY CONSIDERATIONS FAVOR

EXTENSION OF LIVESAY TO

DISMISSALS WITH PREJUDICE

A. Procedural Rules Should Not

Encourage Litigation Gamesmanship

The general rule is that “a party is entitled to a

single appeal, to be deferred until final judgment has

been entered,” and exceptions must “never be allowed

to swallow” it. Mohawk Indus., Inc. v. Carpenter, 558

U.S. 100, 106 (2009) (citation omitted). An appeal may

not proceed “in fragments.” Collins v. Miller, 252 U.S.

364, 370 (1920). In the appellate-jurisdiction context,

the Court “has no authority to create equitable

exceptions to jurisdictional requirements.” Bowles v.

Russell, 551 U.S. 205, 214 (2007). The final judgment

rule

emphasizes the deference that appellate

courts owe to the trial judge as the individual

initially called upon to decide the many

questions of law and fact that occur in the

course of trial .... In addition, the rule is in

accordance with the sensible policy of

avoid[ing] the obstruction to just claims that

would come from permitting the harassment

and cost of a succession of separate appeals

* (...continued)

somehow untether the substantive rights of the class members

from the claim of the class representative.” Barnette, supra,

at 480 n.226 (citing Sosna v. Iowa, 419 U.S. 393, 399 (1975)).

11

from the various rulings to which a litigation

may give rise, from its initiation to entry of

judgment.

Van Cauwenberghe v. Biard, 486 U.S. 517, 521 n.3

(1988) (citations and internal quotation marks

omitted).

A plaintiff has no right to an interlocutory appeal

of a denial of class certification even when the plaintiff

perceives that denial to be the “death knell” of his

lawsuit. Livesay, 437 U.S. 463. The policy reasons

underlying that decision justify its broad application.

Courts have refused to permit various attempts to

avoid the final judgment rule with regard to class

certification denials. For example, a plaintiff cannot

use a settlement agreement as a springboard to appeal

a class certification denial. See Anderson v. CNH U.S.

Pension Plan, 515 F.3d 823, 827 (8th Cir. 2008)

(recitation in settlement agreement that plaintiff

reserves right to appeal denial of class certification not

sufficient to create concrete interest in class

certification issue required by Roper, 445 U.S. 326);

Muro v. Target Corp., 580 F.3d 485, 491 (7th Cir. 2009)

(“A voluntary settlement by the prospective class

representative often means that, as a practical] matter,

the settling individual has elected to divorce himself

from the litigation and no longer retains a community

of interests with the prospective class.”). In these

cases, the plaintiff must proceed with his claims and

appeal the denial of class certification once the court

has entered final judgment on the merits.

“Policy matters, too, in sculpting the final

judgment rule.” State Treasurer of State of Michigan

v. Barry, 168 F.3d 8, 19 (11th Cir. 1999) (Cox, J.,

concurring). For “operational consistency and

12

predictability in the overall application of § 1291,” this

Court should adopt a bright-line rule to determine

whether jurisdiction exists or not when a purported

class action representative dismisses his lawsuit with

prejudice for the sole purpose of creating a “final

judgment.” Jd. at 21 (quoting Budinich v. Becton

Dickinson & Co., 486 U.S. 196, 202 (1988)); Grupo

Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 582

(2004) (“Uncertainty regarding the question of

jurisdiction,” is “particularly undesirable.”).

The plaintiffs proposed exception to the final

judgment rule in this case violates all established

policies favoring the final judgment and avoiding

piecemeal litigation. He argues that the exception is

necessary to prevent his abdication of the lawsuit as

uneconomical to pursue. But the potential effects of a

denial of class certification are not unique to that

procedural aspect of a case. An analogous situation

arises when a trial court refuses to allow a party’s

expert witness to testify, pursuant to its gatekeeping

function under Daubert v. Merrell Dow

Pharmaceuticals, Inc., 509 U.S. 579, 597 (1993) (A

court must ensure that the expert testimony at issue

“both rests on a reliable foundation and is relevant to

the task at hand.”). Like class certification denials, the

exclusion of a plaintiff's expert may cause the plaintiff

to “narrow the case, drop the case altogether, or accept

a reduced settlement” and may cause the defendant to

move for summary judgment; while exclusion of a

defendant’s expert may cause the defendant to “accept

certain allegations by plaintiffs” or settle. Joanna C.

Schwartz, Gateways and Pathways in Civil Procedure,

60 UCLA L. Rev. 1652, 1664 n.40 (2013) (citing Lloyd

Dixon & Brian Gill, RAND Inst. for Civil Justice,

Changes in the Federal Standards for Admitting Expert

13

Evidence in Federal Civil Cases Since the Daubert

Decision 55 (2001)). And yet plaintiffs may not

circumvent the need for a final judgment to appeal.

See Chapman v. Procter & Gamble Distributing, LLC,

766 F.3d 1296, 1302 (11th Cir. 2014) (dismissing

appeal of Daubert order for lack of standing, after

parties agreed to a joint dismissal with prejudice,

including a provision purportedly reserving the right to

appeal the Daubert ruling).

Courts routinely halt attempts to circumvent

fundamental procedural rules. In Camesi v. Univ. of

Pittsburgh Med. Ctr., 729 F.3d at 245, the Third

Circuit held that voluntary dismissal of individual

claims constituted an impermissible attempt to

manufacture finality for purposes of appeal. The court

spoke of the “procedural sleight-of-hand” in harsh

terms: “Appellants have attempted to short-circuit the

procedure for appealing an interlocutory district court

order that is separate from, and unrelated to, the

merits of their case.” Allowing such a maneuver, the

court continued, would leave no obstacle to “prevent

litigants from employing such a tactic to obtain review

of discovery orders, evidentiary rulings, or any of the

myriad decisions a district court makes before it

reaches the merits of an action. This would greatly

undermine the policy against piecemeal litigation.” Jd.

at 245-46. See also Airframe Systems, Inc. v. Raytheon

Co., 601 F.3d 9, 14 (1st Cir. 2010) (doctrine of claim

preclusion “protect|s] litigants against gamesmanship

and the added litigation costs of claim-splitting, and

preventing scarce judicial resources from being

squandered in unnecessary litigation”); FTC v. Garvey,

383 F.3d 891, 900 (9th Cir. 2004) (courts discourage

strategic gamesmanship in litigation that hinders case

development and imposes unnecessary costs).

14

“Strategic or merely lazy circumventions of a legal

process grounded in a sound policy have the effect of

eroding the regularized, rational character of litigation

to the detriment of practitioners and clients alike.”

Bode & Grenier, LLP v. Knight, 808 F.3d 852, 861

(D.C. Cir. 2015) (citation omitted).

One ironic but inevitable by-product of the

plaintiffs’ proposed flexible approach to finality is that

litigants face the undesirable risk that failure to

appeal from a particular ruling at the time of its entry

could constitute a waiver of the right to appeal at the

conclusion of the case. See Dickinson v. Petroleum

Conversion Corp., 338 U.S. 507, 516 (1950) (proposed

intervenor “could have appealed” and the “failure to [do

so] forfeits its right of review”). Lawyers unsure of the

finality of the decision would appeal as a precautionary

measure, even though the result is added costs and

unwanted delay, disrupting the judicial process and

undermining confidence in the trial court. Theodore D.

Frank, Requiem for the Final Judgment Rule, 45 Tex.

L. Rev. 292, 317 (1966). Cf. Tyrues v. Shinsecki, 732

F.3d 1351, 1358 (Fed. Cir. 2013) (a veteran must

appeal decision of Board of Veterans’ Appeals on a

partial claim to avoid being barred by a rule requiring

an appeal within 120 days of decision); Contractors

Edge, Inc. v. City of Mankato, 863 N.W.2d 765, 775,

781 (Minn. 2015) (Lillehaug, J., dissenting) (a holding

ostensibly to “discourage piecemeal appeals” by

creating a “new, murky category of ‘mostly final’

judgments” will “encourage litigation over late

appeals”).

Moreover, if an individual plaintiff voluntarily

dismisses his case with prejudice, for the purpose of

appealing denial of class certification, is that plaintiffs

15

individual claim revived if the appellate court holds

that the class should have been certified? See, e.g.,

Hall v. State Farm Mut. Auto. Ins. Co., 215 Fed. Appx.

423, 427 (6th Cir. 2007) (“[U]nnamed putative class

members are not technically parties to an action prior

to class certification and . . . as a consequence, [the

substituted named plaintiff] was not a true party at

the time that [the originally named plaintiff] filed

suit.”). If not, does class counsel have a right to

substitute another named plaintiff of his or her

choosing? See In re Community Bank of Northern

Virginia, 418 F.3d 277, 313 (3d Cir. 2005) (“[Clourts

have recognized that class counsel do not possess 4

traditional attorney-client relationship with absent

class members.”). Geraghty, 445 U.S. at 407 (Even if a

case or controversy continues to exist after denial of

class certification, the “question of who is to represent

the class is a separate issue.”) (citing David H.

Donaldson, Jr., Comment, A Search for Principles of

Mootness in the Federal Courts: Part Two—Class

Actions, 54 Tex. L. Rev. 1289, 1331-32 (1976));

Comment, Continuation and Representation of Class

Actions Following Dismissal of the Class

Representative, 1974 Duke L.J. 573, 602-08).

B. The Interests of Plaintiffs’

Counsel Cannot Be Imputed

to the Plaintiffs Themselves

The Third Circuit held in Hackett v. General Host

Corp., 455 F.2d 618, 625 (3d Cir.), cert. denied, 407

U.S. £25 (1972):

Realistically, when we are asked to grant

interlocutory appellate review of an adverse

class action deterniination we are asked to

recognize a separate interest of the attorney

16

sufficient to bring the class action

determination within the “collateral order”

doctrine, or to recognize the standing of the

attorney’s client to assert such an interest on

his behalf. We decline to do either.

The lawyerly howls that greet the suggestion of a

separate interest reveal one of the not-so-hidden truths

about many class action cases: the instigators and

most interested parties are not the consumers or

employees or other individuals who suffered some

small-dollar loss; the instigators and interested parties

are the attorneys who seek to represent them for a

significant cut of the settlement or eventual judgment.‘

See Allen v. Bedolla, 787 F.3d 1218, 1223-24 (9th Cir.

2015) (vacating settlement of uncertified class action

and cautioning district court on remand to be wary of

class counsels’ self-interest and possible collusion);

Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1080

(7th Cir. 2013) (“[C}lass action attorneys are the real

principals and the class representative/clients their

agents ... .”) (internal q «tation marks omitted);

Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 876

(7th Cir. 2012) (“It is true that class actions are almost

always the brainchild of lawyers who specialize in

bringing such actions.”); Martin H. Redish & Megan B.

Kiernan, Avoiding Death by a Thousand Cuts: The

* See Daniel Fisher, $7.8 Million Fee for Lawyers, 7-Cent Check

for One Lucky Class Member, FORBES, Jan. 8, 2016,

http://www.forbes.com/sites/danielfisher/2016/01/08/7-8-million-f

ee-for-lawyers-7-cent-check-for-one-lucky-class-member/#24621

Oee6c61 (multiple law firms representing class action against

Bank of America settled for fees equal to a quarter of the

$31 million the bank agreed to pay for improper flood insurance

solicitations and shared commissions; class members received only

2.28% of the improperly paid insurance premiums).

17

Relitigation of Class Certification and the Realities of

the Modern Class Action, 99 Iowa L. Rev. 1659, 1662

(2014) (“For all practical purposes, class attorneys

function as far more than class members’ legal

representative: [Instead,] they act as quasi-guardians

or trustees on behalf of the absent class members.”).

The fact that plaintiffs frequently abandon cases

following the denial of certification likely says more

about the putative class lawyer’s fee,” rather than the

individual plaintiffs potential recovery. Barnette,

supra, at 478 n.216 (citing Amchem Prods. v. Windsor,

521 U.S. 591, 617 (1997) (“A class action ...

aggregate[es] the relatively paltry potential recoveries

into something worth someone's (usually an attorney’s)

labor.”)).

Few class actions actually proceed _ to

judgment—the vast majority settle. “[W]hen damages

allegedly owed to tens of thousands of potential

claimants are aggregated and decided at once, the risk

of an error will often become unacceptable. Faced with

even a small chance of a devastating loss, defendants

will be pressured into settling questionable claims.”

AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 350

(2011). This Court and others acknowledge “the risk of

‘in terrorem’ settlements that class actions entail.” Jd.

(citations omitted). For this reason, counsel on both

sides of class action litigation recognize the decision to

certify as the most defining moment in the litigation.

See Livesay, 437 U.S. at 476; Newton v. Merrill Lynch,

259 F.3d 154, 164 (8d Cir. 2001) (Once the class is

certified, defendant companies are under “hydraulic

° A mere interest in obtaining attorneys’ fees without an

underlying claim does not satisfy Article III. Lewis v. Contl Bank

Corp., 494 U.S. 472, 480 (1990).

18

pressure’ to settle.). “In short, class actions today

serve as the procedural vehicle not ultimately for

adversarial litigation but for dealmaking on a mass

basis.” Richard A. Nagareda, The Preexistence

Principle and the Structure of the Class Action, 103

Colum. L. Rev. 149, 151 (2003).

Such litigation is thus used not primarily to

redress injury but as a mechanism to “line lawyers’

pockets despite the absence of any substance to the

underlying allegations.” Robert A. Skitol, The Shifting

Sands of Antitrust Policy: Where It Has Been, Where It

Is Now, Where It Will Be in Its Third Century, 9

Cornell J.L. & Pub. Pol’y 239, 266 (1999). These “suits

are not, in any realistic sense, brought either by or on

behalf of the class members,” but by “private attorneys

who initiate suit and who are the only ones rewarded

for exposing the defendants’ law violations.” Martin H.

Redish, Class Actions and the Democratic Difficulty:

Rethinking the Intersection of Private Litigation and

Public Goals, 2003 U. Chi. Legal F. 71, 77. Class

members “neither make the decision to sue. . . nor

receive meaningful compensation.” Jd. Rather, the

prospect of significant attorneys’ fees “provide[ | the

class lawyers with a private economic incentive to

discover violations of existing legal restrictions on

corporate behavior.” Id.

The plaintiffs’ attorneys’ interest in recovering

fees cannot therefore be sufficient reason for creating

a broad exception to the general rule that class

certification denials may be appealed only when the

courts exercise their discretion to permit it.

19

+

CONCLUSION

“In an era of frequent litigation [and] class

actions, .. . courts must be more careful to insist on the

formal rules of standing, not less so.” Ariz. Christian

Sch. Tuition Org. v. Winn, 563 U.S. 125, 146 (2011). In

this case, Article III’s demands and _ policy

considerations both lead to the same result.

The decision below should be reversed.

DATED: March, 2016.

Respectfully submitted,

DEBORAH J. LA FETRA

Counsel of Record

Pacific Legal Foundation

930 G Street

Sacramento, California 95814

Telephone: (916) 419-7111

Facsimile: (916) 419-7747

E-mail: DLaFetra@pacificlegal.org

Counsel for Amicus Curiae Pacific Legal Foundation