Justice Thomas’ Concurring Opinion in Microsoft Corp. v. Baker: A Useful Reminder

On June 12th, the Supreme Court issued its unsurprising decision in Microsoft Corp. v. Baker, addressing a relatively recent twist concerning the appealability of orders denying class certification.  The case resulted in unanimous agreement among the eight Justices who participated in it (Justice Gorsuch did not participate), but a five-three split among them as to whether the case should be decided on statutory grounds (supported by the majority) or constitutional grounds (supported by the minority).  In the course of the debate over the decision’s rationale, Justice Thomas penned a paragraph that serves as a useful reminder concerning the nature of putative class litigation.

Of all the Court’s class certification cases, this must have been one of the easiest to decide.  Put simply, the district court struck plaintiffs’ class allegations from the complaint, based on a class certification denial in an earlier case raising the same claims.  After plaintiffs unsuccessfully petitioned the Ninth Circuit for interlocutory review under Rule 23(f), they were left with the choice of litigating their individual claims to final judgment, which would then have permitted an appeal of right from the class certification ruling, or voluntarily dismissing their claims, which should have had the effect of mooting any appeal.  Because plaintiffs wished to preserve their appellate rights but, presumably, were not interested in incurring the expense of trying their small claims to verdict, they attempted a third option.  They voluntarily dismissed their claims with prejudice while purportedly reserving the right to revive their claims in the event that the Ninth Circuit reversed the order striking the class allegations.  They then filed an appeal, seeking to reverse the district court’s order and proceed with their claims on behalf of a class.  Despite the obvious problems of this approach, the Ninth Circuit held that the appeal of the class certification ruling was proper under 28 U.S.C. § 1291, reversed the district court’s order (without reaching the question of the propriety of class certification), and remanded the case to the district court.

The Supreme Court granted certiorari and readily rejected the plaintiffs’ tactic.  In an opinion authored by Justice Ginsburg, the Court held that, “[i]n the Rules Enabling Act, . . . Congress authorized this Court to determine when a decision is final for purposes of § 1291, and to provide for appellate review of interlocutory orders not covered by statute. . . . These changes are to come from rulemaking, however, not judicial decisions in particular controversies or inventive litigation ploys.”  The Ninth Circuit’s action in taking the appeal, the Court held, bypassed the balanced approach embodied in Rule 23(f), which provides for discretionary interlocutory review of class certification orders, without disrupting the final judgment rule established by § 1291.

In his concurring opinion, joined by Chief Justice Roberts and Justice Alito, Justice Thomas argued that the majority should have premised its decision not on § 1291, but on Article III of the Constitution.  After all, he asserted, a judgment based on a dismissal with prejudice is a “final decision” within the meaning of the statute, but once the plaintiffs dismissed their claims, there no longer was a case or controversy to satisfy Article III.  “Indeed,” Justice Thomas wrote, “it has long been the rule that a party may not appeal from the voluntary dismissal of a claim, since the party consented to the judgment against it.”  (Citations omitted.)

Which brings me to the short paragraph that inspired this post.  Justice Thomas continued:

The plaintiffs contend that their interest in reversing the order striking their class allegations is sufficient to satisfy Article III’s case-or-controversy requirement, but they misunderstand the status of putative class actions.  Class allegations, without an underlying individual claim, do not give rise to a “case” or “controversy.”  Those allegations are simply the means of invoking a procedural mechanism that enables a plaintiff to litigate his individual claims on behalf of a class. . . . Thus, because the Court of Appeals lacked Article III jurisdiction to adjudicate the individual claims, it could not hear the plaintiffs’ appeal of the order striking their class allegations.

In this passage, Justice Thomas reaffirms the principle, which all class action litigators should recognize, that a putative class action cannot stand on its own based on the claims of absent class members, but is bound up with, and limited by, the individual claims of the class representatives.  This is true at all stages of the litigation – before class certification, at the time of the class certification decision, after class certification, and on appeal.  If the representatives’ claims prevail, and the case satisfies all of the Rule 23 requirements (including the plaintiff-focused elements of typicality and adequacy), then the class claims generally will prevail.  Conversely, if the representatives’ claims fail on grounds applicable to the class, so will the claims of the class.  And if the representatives’ claims fail on grounds not applicable to the class, then they are improper class representatives and the class should not be certified.

Justice Thomas’ opinion is only a concurrence, but there is no reason to believe that any of the Justices in the majority would disagree with the views contained in this paragraph.  And the centrality of the “underlying individual claim” to a putative class action has important practical consequences beyond the appealability of class certification orders.  For example, because a putative class action is only an individual lawsuit unless and until a court grants certification, the indispensable role of the individual claim may bear on the scope of precertification discovery, the scope of the claims properly before the court, and other important case management issues.

As we noted in a previous post, there are bills pending in Congress that would make federal court class certification rulings automatically appealable and thereby eliminate the need for clever tactics to overcome the final judgment rule.  Regardless of the outcome of such legislation, however, Justice Thomas’ opinion serves as a useful reminder for those all-too-frequent situations in which plaintiffs’ lawyers proceed as though they are representing a class even before any class has been certified, and who believe incorrectly that they have license to exceed the bounds of the named plaintiffs’ claims.

Written by former litigation partner, Donald R. Frederico.