United States: Supreme Court Decision Alert - June 12, 2017

Today, the Supreme Court issued three decisions, described below, of interest to the business community.


Class Actions—Appellate Jurisdiction
Microsoft Corp. v. Baker, No. 15-457

When a federal district court grants or denies class certification, Federal Rule of Civil Procedure 23(f) allows the losing party to ask the court of appeals for permission to appeal immediately.  Otherwise, the parties must litigate the case to a final judgment—the named plaintiffs' individual claims if certification has been denied, or the class claims if certification has been granted—in order to obtain appellate review of the district court's class certification determination.   But the Ninth Circuit created an exception to this rule by authorizing a plaintiff who has had class certification denied to dismiss his or her individual claims with prejudice and then to file an appeal from that self-generated judgment.

Today, the Supreme Court held that this "voluntary dismissal" tactic cannot create appellate jurisdiction because such dismissals do not result in a final judgment—which is what 28 U.S.C. § 1291 requires for an appeal as of right.  Although all eight participating Justices agreed on the outcome, they took different approaches to get there.

In an opinion for five Justices authored by Justice Ginsburg, the Court held that "[p]laintiffs in putative class actions cannot transform a tentative interlocutory order ... into a final judgment within the meaning of § 1291 simply by dismissing their claims with prejudice—subject, no less, to the right to 'revive' those claims if the denial of class certification is reversed on appeal."   The Court explained that the "tactic would undermine § 1291's firm finality principle, designed to guard against piecemeal appeals, and subvert the balanced solution Rule 23(f) put in  place for immediate review of class-action orders."

The majority did not reach the question whether plaintiffs' voluntary-dismissal tactic deprived the court of appeals of jurisdiction under Article III's cases-and-controversies requirement.   But in an opinion concurring in the judgment, Justice Thomas (joined by Chief Justice Roberts and Justice Alito) concluded that, although the plaintiffs' voluntary dismissal was technically a "final decision" within the meaning of Section 1291, there was no appellate jurisdiction because the Ninth Circuit lacked Article III jurisdiction over plaintiffs' individual claims.   The plaintiffs' decision to "consent[] to the judgment against them" eliminated any adversity between the parties—both sides had agreed that the claims should be dismissed with prejudice.  The fact that plaintiffs asserted an "interest in reversing the order striking their class allegations" was not enough, in the concurring Justices' view, because "[c]lass allegations, without an underlying individual claim, do not give rise to a 'case or controversy'" within the meaning of Article III.

Justice Gorsuch did not participate in the case.


Biologics Price Competition and Innovation Act—Notice Requirement
Sandoz Inc. v. Amgen Inc., No. 15-1039

The 2009 Biologics Price Competition and Innovation Act, a component of the Affordable Care Act, created an abbreviated regulatory pathway for the FDA to license "biosimilar" products—i.e., products that are "highly similar" to approved biological products. The statute's "Notice of commercial marketing" provision requires a biosimilar applicant to provide 180 days notice to the existing seller of the biological product before it can engage in commercial marketing for the newly-approved product. Reversing the Federal Circuit, the Supreme Court held today that a biosimilar applicant can provide notice to the existing seller before the applicant has received FDA approval to manufacture the biosimilar.  This decision has the effect of speeding the time to market for new biosimilars, which is likely to have meaningful financial implications for the biologics industry.

The Court also held that federal law does not permit injunctions to compel biosimilar manufacturers to disclose their applications to rivals.  The Court left open the question of whether state-law claims for injunctions would be available.

The opinion, by Justice Thomas, was unanimous.


Fair Debt Collection Practices Act—Debt Collectors
Henson v. Santander Consumer USA, Inc., No. 16-349

The Fair Debt Collections Practices Act governs the conduct of "debt collectors," a term that includes any person who "regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." Resolving a division among the lower courts, the Supreme Court ruled today that the Act covers only those persons who collect debts owed to third parties; individuals or entities who purchase another's debt and then try to collect are not subject to the Act.

The decision, which was unanimous, was written by Justice Gorusch, his first for the Court.


Mayer Brown's Supreme Court & Appellate practice ordinarily distributes a Docket Report when the Supreme Court grants certiorari in a case of interest to the business community and a Docket Report-Decision Alert when the Court decides such a case. We hope that you find the Docket Reports and Decision Alerts useful. We welcome feedback on them, which should be addressed to the general editor, Brian D. Netter (at bnetter@mayerbrown.com or +1 202 263 3339).

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