United States: A Circuit by Circuit Analysis of Federal Rule of Civil Procedure 23(f) Appeals

CLASS CERTIFICATION APPEALS

The 1998 amendment of Federal Rule of Civil Procedure 23 adding interlocutory appeals of class certification under new subsection (f) gave the federal courts of appeal a great deal of discretion in determining when review is appropriate. Most of the circuit courts have developed standards for review under Rule 23(f), or at least issued substantive opinions that give practitioners guidance on when they will accept such cases, according to attorney Paul C. Ziebert. In this article, Ziebert looks at the rulings in each circuit, starting with the initial interpretation of the rule in 1999 by the U.S. Court of Appeals for the Seventh Circuit. He concludes that most of the circuits will grant review if they see a significant error in the certification decision coupled with a threat that the certification ruling will essentially end the litigation. Likewise, they will review if the case involves a fundamental legal question.

And--at least so far--the appeals courts have tended to reverse class certification and to affirm certification denials in Rule 23(f) reviews, Ziebert says, noting that such decisions occurred in 25 out of 32 published rulings.

Paul C. Ziebert is a partner at Ross & Hardies in Chicago. He can be reached at paul.ziebert@rosshardies.com.

Federal Rule of Civil Procedure 23 was amended in 1998, adding subsection (f), which permits interlocutory appeals following an order either granting or denying class certification. An immediate appeal of a class certification ruling provides a useful tool for practitioners to challenge a district court decision in the class action context.

Prior to the enactment of Rule 23(f), parties were forced to ask the district court to certify the ruling granting or denying the class certification order as an interlocutory appeal pursuant to 28 U.S.C. §1292(b). Interlocutory appeals under 28 U.S.C. §1292(b) require that the certified question raise "a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation."¹

The "controlling question" requirement is not found in Rule 23(f). Instead, the appellate courts are vested with the right to develop standards by which they will accept or reject petitions for appeal pursuant to the new provision. Furthermore, Rule 23(f) permits litigants to file motions for a stay before the district court of the court of appeals. Given the growth of class action litigation, Rule 23(f) provides an opportunity for litigants to challenge such rulings at the earliest stages of litigation without the constraints found in 28 U.S.C. §1292(b).

Rule 23(f) provides:

A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders. Subsection (f) became effective December 1, 1998. According to the Advisory Committee Notes, the courts of appeals are given "unfettered discretion whether to permit the appeal, akin to the discretion exercised by the Supreme Court in acting on a petition for certiorari."² Since the enactment of Rule 23(f), many of the circuit courts of appeals have addressed the standards by which they will entertain interlocutory appeals involving the grant or denial of class certification orders. This article will address, on a circuit-by-circuit basis, those standards. We begin with the first case to address the Rule 23(f) appeals, for that case provides the essential framework which other circuits have used as a template and further embellished.

First 23(f) Case The first case to reach an appellate court involving a Rule 23(f) appeal was Blair v. Equifax Check Services Inc., 181 F.3d 832 (7th Cir. 1999). Blair involved a rather remarkable factual scenario. Two class actions were pending against Equifax Check Services Inc. (Equifax) in the Northern District of Illinois.³ Both class actions arose out of form collection letters the defendant sent to consumers in the State of Illinois.⁴ The first class action, styled Crawford v. Equifax Check Services Inc. was filed in 1997.⁵ Blair was filed more than one year later. On February 25, 1999, the parties to the Crawford class action settled on a classwide basis.⁶ Because the Crawford class action was larger than the Blair class action, the parties in Crawford sought to subsume the Blair class action within the settlement.⁷ Remarkably, on the same day the parties reached the settlement in Crawford, Judge Plunkett issued an order certifying a class in the Blair action.⁸ Thus, as of February 25, 1999, two competing class actions were pending against Equifax for substantially the same conduct.

As a result, on March 8, 1999, Equifax filed a motion to reconsider Judge Plunkett's ruling.⁹ Judge Plunkett denied the defendant's motion.¹⁰ Thereafter, on March 22, 2002, Equifax filed a petition for permission to appeal the district court's class certification order in Blair to the Seventh Circuit Court of Appeals.¹¹

The Seventh Circuit first addressed whether Equifax's petition was timely. It found that it was. The court found that Equifax's motion for reconsideration, which was filed within 10 days of the court's certification order, extended the time for a Rule 23(f) appeal until the district court disposed of the reconsideration motion.¹² Because Equifax filed its petition for permission to appeal within 10 days of the denial of its motion for reconsideration, the Seventh Circuit found that the petition was timely.¹³

Three Factors

Once the court determined that the appeal was timely, it then considered the circumstances under which it should accept appeals pursuant to Rule 23(f). The court looked to the Advisory Committee Notes and articulated three instances in which an appellate court may entertain an appeal brought pursuant to Rule 23(f).¹⁴ First, the court recognized instances when the denial of class certification "sounds the death knell of the litigation, because the representative plaintiff's claim is too small to justify the expense of litigation."¹⁵ In other words, the court reasoned that when the denial of class certification seems likely to be fatal, and when a plaintiff has a solid argument in opposition to the district court's decision denying class certification, the appellate court should exercise its discretion to entertain an appeal pursuant to Rule 23(f).¹⁶

The second instance the Seventh Circuit recognized as a viable avenue of Rule 23(f) appeals is the flip-side of the first instance. When a court certifies a class action, such a ruling may place considerable pressure on a defendant to settle, even though the plaintiffs' probability of success is slight.¹⁷ In such cases, the simple fact that the court certified a class may increase the stakes of the litigation astronomically.¹⁸ Even if the plaintiffs have a weak case, the risk of a catastrophic judgment may induce a defendant to settle.¹⁹ Rule 23(f) offers defendants an opportunity to appeal immediately the class certification ruling to avoid this result, assuming of course that the defendant has a solid argument to oppose class certification.²⁰

The third instance the Seventh Circuit identified as viable under Rule 23(f) is when an interlocutory appeal may facilitate the development of the law.²¹ The court adopted a sliding scale argument in that if development of the law is the gravamen of the Rule 23(f) appeal, then infirmities in the district court's opinion become less important.²² Furthermore, the more fundamental the issue relating to class action litigation, the less important it is to point out the shaky basis for the district court's opinion.²³

In Blair, the appellate court found that the Rule 23(f) appeal presented a case in which the development of the law would be facilitated by engaging in appellate review.24 Specifically, Equifax argued that by allowing both actions to proceed for largely the same conduct, Equifax faced the prospect of inconsistent judgments in parallel class action proceedings.²⁵ Based on this "fundamental" issue, the Seventh Circuit entertained the appeal.

Thus, the first appellate court to address the standards under which permission to appeal would be granted found three such instances: 1) when a class certification denial rings the death knell for the litigation; 2) when granting class certification status pressures a defendant into settlement; and 3) when an immediate appeal facilitates the development of the law. Blair served as the template for subsequent appellate courts to address the instances in which they would accept appeals pursuant to Rule 23(f). While, as will be described below, many of the circuits embraced the three-factor analysis contained in Blair, they have also begun to employ additional factors in order to fine-tune the Blair analysis.

First Circuit

The First Circuit addressed the standards applicable in Rule 23(f) cases in Waste Management Holdings Inc. v. Mowbray, 208 F.3d 288 (1st Cir. 2000). At the time, Blair was the only reported decision relating to Rule 23(f), and the First Circuit cited from it extensively and embraced all three types of appeals identified in Blair.²⁶ The First Circuit, however, expressed concern over the third category of appeals, relating to those appeals that present fundamental issues of law.²⁷ A creative lawyer, the court wrote, "almost always will be able to argue that deciding her case would clarify some 'fundamental' issue."²⁸ As a result, the court stressed that Rule 23(f) appeals should be the exception, rather than the rule.²⁹

Accordingly, when petitions for appeal are presented based on a fundamental issue of law, such appeals should be restricted to instances when "an appeal will permit the resolution of an unsettled legal issue that is important to the particular litigation as well as important in itself and likely to escape effective review if left hanging until the end of the case."³⁰

The court cautioned that when faced with Rule 23(f) appeals, it should err on the side of allowing a district court to fine-tune its class certification orders pursuant to Rule 23(c)(1), rather than accepting Rule 23(f) appeals.³¹

The First Circuit specifically reserved the right to grant permission to appeal in cases that did not fall within any of its three categories and to reject appeals that superficially appear to fall within one of the three categories of cases described in Waste Management.³²

Second Circuit

The Second Circuit embraced the reasoning in Blair and Waste Management in In re Sumitomo Copper Litigation, 262 F.3d 134 (2nd Cir. 2001), 2 CLASS 618, 9/14/01. It found that for cases in which the class certification issue is likely to be dispositive of the litigation, the moving party should make a substantial showing that the district court's decision is questionable.³³ In addition, the court found that if a petition for appeal raises a legal question involving class actions about which there is a compelling need for immediate resolution, and it is likely to escape effective review after entry of a final judgment, then a Rule 23(f) appeal may be granted.³⁴ The court cautioned, however, that it has long held the view that the district court is in the best position to assess the propriety of class certification, and pursuant to Rule 23(c)(4)(B), the district court has the authority to alter, modify or decertify the class or to create sub-classes.³⁵ Thus, from its perspective, the Second Circuit predicted that it would rarely grant Rule 23(f) appeals.³⁶

Like the appellate courts before it, the Second Circuit left open the possibility that petitions for appeal may be granted even if they do not fall within any of the categories of cases discussed above as long as such cases present "special circumstances that militate in favor of an immediate appeal."³⁷

Finally, the court recognized that a litigant may move either (or both) the district court and the court of appeals to stay the action, pending review under Rule 23(f).³⁸ The Advisory Committee Notes to Rule 23(f) specifically provide that any motion for a stay should first be brought before the district court. The court instructed parties that stays should not be issued, however, "unless the likelihood of error on the part of the district court tips the balance of hardships in favor of the party seeking the stay."³⁹ In so holding, the Second Circuit specifically noted that Rule 23(f) is not a mechanism to delay proceedings.⁴⁰

Since enunciating the Rule 23(f) standards, the Second Circuit has permitted an appeal in one reported case.⁴¹ The Second Circuit permitted the appeal before issuing its decision in In re Sumitomo Copper Litigation. Thus, the Second Circuit's acceptance of the appeal in In re Visa Check/Mastermoney Antitrust Litigation does not fit squarely within either of the two types of cases enumerated in In re Sumitomo Copper Litigation; however, the Second Circuit suggested that it accepted the appeal in that case because it raised an unresolved issue relating to the proper standard for evaluating expert opinions at the class certification stage.⁴²

Third Circuit

The Third Circuit followed the path of its sister courts in formulating the bases for Rule 23(f) appeals in Newton v. Merrill, Lynch, Pierce, Fenner & Smith, 259 F.3d 154 (3rd Cir. 2001), 2 CLASS 583, 8/24/01. Specifically, the court first found that if a decision granting or denying class certification tends to be dispositive of the litigation, then a successful Rule 23(f) appeal may ensue.⁴³ Second, when the moving party makes a showing that the district court's class certification was erroneous, the appellate will accept the Rule 23(f) appeal.⁴⁴ Finally, the Third Circuit will accept a Rule 23(f) appeal when it facilitates development of the law on class certification.⁴⁵ The court refused to limit its Rule 23(f) appeals to these three instances, citing the rule's grant of broad discretionary authority with which to entertain such appeals.⁴⁶

In two reported decisions, the Third Circuit allowed Rule 23(f) appeals.⁴⁷ While neither decision explained why the appeals were accepted, both presented legal issues that facilitated the development of class action law. Johnston v. HBO Film Management Inc. raised the issue of whether in securities law claims, plaintiffs must establish their reliance on the alleged misrepresentations.⁴⁸ Because both the trial court and appellate court agreed that such proof was required, individual questions predominated over common questions, necessitating a denial of class certification.⁴⁹

In McKowan Lowe & Co. v. Jasmine Ltd., the Third Circuit accepted the appeal to decide whether class claims of intervening class members were tolled when the district court declined to certify an underlying class for non-substantive reasons.⁵⁰ Both Johnston and McKowan Lowe & Co. also potentially impacted the "death knell" factor, as the district court in both actions declined to certify a class, thereby perhaps making the stakes too small for a single plaintiff to pursue.

Fourth Circuit

The Fourth Circuit had occasion to address Rule 23(f) appeals in Lienhart v. Dryvit Systems Inc., 255 F.3d 138 (4th Cir. 2001), 2 CLASS 475, 7/13/01. The Fourth Circuit adopted five factors to analyze when petitions for appeal are presented.⁵¹ First, will an appeal likely be dispositive of the litigation?⁵² Second, does the district court's decision resolving the motion for class certification contain a substantial weakness?⁵³

The court added that the stronger the case regarding the weakness of the district court's opinion, the less important the other factors are in the analysis.⁵⁴ In fact, the court posited that if the appellate court is likely to reverse the district court's decision, that fact may be sufficient to allow the court to entertain the appeal.⁵⁵ Conversely, if the alleged infirmity in the district court's opinion is far from clear, then analysis of the other factors will have to tip the scales in favor of review in order for the appellate court to grant the petition.⁵⁶

Third, will an appeal permit the resolution of an unsettled legal question?⁵⁷ Fourth, what is the nature and status of the litigation at the district court level?⁵⁸ This factor takes into account the pendency of any outstanding dispositive motions and the status of discovery.⁵⁹ Finally, what is the likelihood that future events will make review more or less appropriate?⁶⁰

In applying these factors in Lienhart, the Fourth Circuit found that the district court's order certifying a class on behalf of homeowners who purchased stucco siding products was "manifestly erroneous" under the third factor, permitting the court to accept the appeal without regard to any of the other four factors.⁶¹

Further, the court conceded that in reaching its decision to permit the appeal, it was delving deeply into an analysis of the merits of the class certification ruling.⁶² Whether in subsequent opinions, the appellate court would do likewise is an issue the court left to the discretion of future panels.⁶³ Although the Fourth Circuit's decision appears to present a five-factor analysis in assessing Rule 23(f) appeals, it remains to be seen whether each of the factors will be analyzed in subsequent petitions for appeal.

Fifth Circuit

The Fifth Circuit has not articulated any standards by which it will assess Rule 23(f) appeals. Instead, it has simply granted certain petitions for appeal. As a result, an analysis of those decisions, in light of the framework set forth by the other courts of appeals, may serve to aid practitioners in the Fifth Circuit regarding cases which will be accepted for appeal. Bolin v. Sears, Roebuck & Co., 231 F.3d 970 (5th Cir. 2000), 1 CLASS 480, 11/10/00, is the first reported Rule 23(f) decision out of the Fifth Circuit. The district court certified a Rule 23(b)(2) class involving the post-bankruptcy collection practices of Sears.⁶⁴ Because the Fifth Circuit noted that Rule 23(b)(2) classes are inappropriate when the relief relates exclusively or predominantly to money damages, and the relief sought, was, in large part, money damages, the court vacated the district court's class certification order.⁶⁵

In four subsequent Rule 23(f) appeals, the Fifth Circuit vacated or reversed a trial court's order certifying a class.⁶⁶ Thus, in five of the six Rule 23(f) appeals, the Fifth Circuit looked to whether there was a substantial weakness in the district court's opinion. Finding that there was, the appellate court vacated or reversed the district court's class certification order.

The sixth case out of the Fifth Circuit is Bertulli v. Independent Association of Continental Pilots, 242 F.3d 290 (5th Cir. 2001), 2 CLASS 105, 2/23/01. The first issue addressed in Bertulli was whether standing could be raised in the context of a Rule 23(f) appeal.⁶⁷ Even though Rule 23(f) is specifically limited to appeals involving the class certification order, the court allowed the defendants to challenge the plaintiffs' standing on appeal, as standing is an "inherent prerequisite to the class certification inquiry."⁶⁸ The court then rejected defendants' standing argument and affirmed the trial court's class certification decision.⁶⁹ This case does not fit squarely within any of the standards for Rule 23(f) appeals; however, the court may have granted the petition in order to address the unsettled question of whether standing may be raised in the context of a Rule 23(f) appeal.

Sixth Circuit

The Sixth Circuit has not adopted any standards by which it will accept or reject Rule 23(f) appeals. Research discloses a single case in which the court accepted a Rule 23(f) appeal.⁷⁰ Coleman v. General Motors Acceptance Corp. involved a class action brought under the Equal Credit Opportunity Act (ECOA).⁷¹ The trial court certified a class action under Rule 23(b)(2).⁷²

The Sixth Circuit accepted a petition to appeal the decision pursuant to Rule 23(f) and vacated the trial court's decision.⁷³ Specifically, the court found that compensatory damages are not recoverable in a Rule 23(b)(2) class under the ECOA.⁷⁴ Accordingly, the Sixth Circuit ruled that the trial court erred in granting plaintiffs' motion for class certification.⁷⁵

While not enunciating any standards under Rule 23(f), Coleman fits squarely within those cases allowing appeals when the district court's opinion presents a substantial ground for weakness. Moreover, the case also allowed the Sixth Circuit the opportunity to clarify an area of class action law, holding that the ECOA does not permit the recovery of compensatory damages in a Rule 23(b)(2) class.

Seventh Circuit

Not surprisingly, given the fact that the Seventh Circuit was the first appellate court to enunciate standards for Rule 23(f) appeals, it has been one of the most active circuits in accepting appeals. The Seventh Circuit has granted permission to appeal in at least five cases. Several presented instances when the legal question involved in the class action context was unresolved and had escaped resolution.⁷⁶

In addition, several of these Rule 23(f) appeals also presented instances when the district court's orders certifying a class placed undue pressure on the defendant to settle a suit, regardless of the actual merits of the suits.⁷⁷

Eighth Circuit

The Eighth Circuit has permitted a Rule 23(f) appeal in a single, reported decision.⁷⁸ Glover v. Standard Federal Bank, however, does not enunciate any standards for Rule 23(f) appeals. Instead, the court simply accepted the appeal and then reversed the decision of the trial court.⁷⁹ In Glover, the trial court certified a class defined as all individuals who obtained a mortgage brokered by Heartland Mortgage and financed by Standard Federal Bank (Standard Federal).⁸⁰ Several months later, after plaintiffs filed a motion for clarification, the court modified its original order to define a nationwide class of all individuals who obtained a mortgage financed by Standard Federal and brokered by any mortgage broker.⁸¹ Standard Federal appealed pursuant to Rule 23(f).⁸²

The Eighth Circuit first rejected plaintiffs' challenge to the court's jurisdiction, finding that the court's modification of its original order properly vested the appellate court with jurisdiction to hear the Rule 23(f) appeal.⁸³ As for the merits, the court determined that the issue was whether a fee paid by the lender to the mortgage broker was permissible under the Real Estate Settlement Procedures Act.⁸⁴

Because the permissibility of such a fee had to be determined on a case-by-case basis, the Eighth Circuit ruled that class certification was improper, given that individual questions of fact would predominate.⁸⁵ Plainly, although the court did not address why it accepted the appeal, this case fits neatly within the framework of those cases where the trial court's class certification order exhibited a substantial weakness.

Ninth Circuit

The Ninth Circuit has not articulated any standards by which it will accept Rule 23(f) appeals. Instead, it has accepted appeals in a few instances without stating why it has done so. First, in Smith v. University of Washington Law School, 233 F.3d 1188 (9th Cir. 2000), cert. denied, 532 U.S. 1051 (2001), the court accepted a Rule 23(f) appeal in a case involving a challenge to a law school's admission practices.⁸⁶ Specifically, the plaintiff moved to certify a class of all Caucasians who were denied admission due to racially discriminatory policies.⁸⁷

After initially certifying a class, the trial court decertified that class when the state passed a measure which precluded using race as a factor in admissions decisions.⁸⁸ Following decertification, the plaintiff appealed.⁸⁹ The Ninth Circuit agreed that the passage of the state initiative mooted plaintiff's claim and as a result, affirmed decertification of the class.⁹⁰

The Ninth Circuit's second Rule 23(f) appeal was in Hawkins v. Comparet-Cassani, 251 F.3d 1230 (9th Cir. 2001), 2 CLASS 443, 6/22/01. Hawkins involved a class action brought by a prisoner who was required to wear a stun belt when appearing in state courts.⁹¹ The trial court granted class certification to all persons in custody of the Los Angeles County Sheriff who appear in court and may be subjected to the use of the stun belt.⁹² The appellate court reversed the class certification order, finding that the representative plaintiff, who was a convicted prisoner, could not serve as a class representative for non-convicted prisoners.⁹³ As a result, plaintiff was clearly not an adequate representative of the defined class and class certification was improper.⁹⁴

The Ninth Circuit also accepted a Rule 23(f) appeal in Zinser v. Accufix Research Institute Inc., 253 F.3d 1180 (9th Cir. 2001), 2 CLASS 437, 6/22/01. The trial court denied class certification in a products liability action involving an allegedly defective pacemaker lead.⁹⁵ In affirming the trial court's decision, the appellate court cited a host of problems with plaintiff's motion for class certification, including the fact that in a national class action, many state laws would apply; common questions of fact and law did not predominate; and a class action was not a superior method of adjudication.⁹⁶

As a result, the Ninth Circuit affirmed the denial of class certification. This case does not fit neatly within the confines of the prototypical Rule 23(f) appeal, especially since the trial court declined to certify a class. The best reason for permitting the appeal appears to be the development of class action law, especially in the context of a national class action involving a product liability claim.

Tenth Circuit

The Tenth Circuit has not addressed the standards for accepting Rule 23(f) appeals. Further, there are no reported decisions in which the court accepted an appeal pursuant to Rule 23(f).

Eleventh Circuit

By far, the most active jurisdiction in entertaining Rule 23(f) appeals has been the Eleventh Circuit. On at least nine occasions, the Eleventh Circuit has entertained Rule 23(f) appeals. Before formally establishing standards for accepting Rule 23(f) appeals, the Eleventh Circuit granted permission to appeal in two cases. First in Pickett v. Iowa Beef Processors, 209 F.3d 1276 (11th Cir. 2000), 1 CLASS 88, 5/26/00, the trial court certified a class involving all cattle producers who sold fed cattle directly to the defendant.⁹⁷ The defendant appealed the ruling pursuant to Rule 23(f), which the Eleventh Circuit accepted.⁹⁸

On appeal, the court found that the class certification order was improper because plaintiffs failed to demonstrate that they would fairly and adequately protect the interests of the class.⁹⁹ The court based its reversal on the fact that the class included those who claimed harm from the very same acts from which other class members benefited.¹⁰⁰ As a result, the class representatives could not possibly provide adequate representation for all class members.¹⁰¹

Second, the Eleventh Circuit accepted a Rule 23(f) appeal in Rutstein v. Avis Rent-a-Car Systems Inc., 211 F.3d 1228 (11th Cir. 2000), 1 CLASS 86, 5/26/00. The district court certified a class in Rutstein on behalf of all Jewish entities who were refused an Avis corporate account, had their Avis corporate account canceled or were provided rentals at less advantageous terms due to their Jewish ethnicity.¹⁰² After accepting the Rule 23(f) petition, the appellate court reversed, finding that the plaintiffs failed to demonstrate that common questions would predominate.¹⁰³ Specifically, the court found that each plaintiff would have to introduce evidence demonstrating that Avis intended to treat her less favorably because she was Jewish.¹⁰⁴ Such an inquiry was, by definition, an individualized one, requiring a reversal of the class certification order.¹⁰⁵

Both Pickett and Rutstein present prototypical examples of Rule 23(f) appeals where the trial court's class certification order contained a substantial weakness. Because the trial court's orders in both cases failed to demonstrate that the Rule 23(a) requirements were met, the appellate court accepted the appeals and reversed the trial court's decisions.

In Prado Steiman v. Bush, 221 F.3d 1266 (11th Cir. 2000), 1 CLASS 312, 8/25/00, the court enunciated the "guideposts" which the Eleventh Circuit would use in the future to determine whether to accept a Rule 23(f) appeal.¹⁰⁶ First, the Eleventh Circuit stated that if the trial court's decision on class certification effectively rings the death knell of the litigation, an immediate appeal may be necessary.¹⁰⁷ Specifically, if the denial of class certification makes the case too cost-prohibitive for plaintiffs to proceed because the stakes are too small, the Eleventh Circuit may entertain a Rule 23(f) appeal. Conversely, if granting class certification raises the stakes in the litigation so substantially that settlement by the defendant becomes "irresistible," the Eleventh Circuit may entertain a Rule 23(f) appeal.¹⁰⁸ The court predicted that appeals falling in this category will be infrequent.¹⁰⁹

Second, when petitions for appeal present a substantial weakness in the class certification decision, the court will entertain a Rule 23(f) appeal.¹¹⁰ The court expressed its view that judicial resources would be saved if an immediate appeal is allowed in instances when allowing the litigation to proceed to final judgment leads to an inevitable appeal and reversal.¹¹¹ The more the substantial weakness is directed to an error of law, as opposed to an error in the application of the law to the facts, the more likely the court will entertain the appeal.¹¹² In describing this type of appeal, the court recognized that Rutstein and Pickett presented perfect examples of such an appeal.¹¹³

Third, the court will review a class certification decision when an appeal will permit the resolution of an unsettled legal issue that is important to the particular litigation as well as important itself.¹¹⁴ The court identified instances when such appeals might arise, including when an appellate ruling will substantially assist the bench and bar; when the issue is arising simultaneously in related actions; or when it involves a strong public interest component.¹¹⁵

Fourth, the court should look to the status of the litigation before the trial court in weighing whether to accept or deny a petition to appeal.¹¹⁶ For instance, a limited or insufficient record militates against a Rule 23(f) appeal.¹¹⁷ The pendency of motions before the trial court may affect an appellate court's decision whether to accept an appeal.¹¹⁸

Fifth, the court should also consider the effect future events may have on an immediate appeal.¹¹⁹ For example, if a party may file for bankruptcy or if settlement negotiations involve some or all of the parties, the appellate court may be disinclined to accept a petition for appeal.¹²⁰ On the other hand, if the issue will arise in related actions, then the appellate court may be swayed to accept the appeal and resolve the issue as early as possible.¹²¹

Generally, the court indicated that interlocutory appeals are disfavored and should be accepted only in limited instances.¹²² Moreover, the court concluded that its list of "guideposts" is not intended to be exhaustive.¹²³ It is simply a roadmap for litigants to present petitions for Rule 23(f) appeals.¹²⁴

Interestingly, after noting the infrequency with which the appellate court expects to entertain Rule 23(f) appeals, the Eleventh Circuit has proceeded to accept appeals in seven cases. On three occasions, the Eleventh Circuit accepted appeals that presented a substantial weakness in the district court's opinion.¹²⁵ In two cases, although the court failed to address specifically why it accepted the appeal, the inference was that the actions implicated the public interest due to the involvement of Medicaid participants.¹²⁶ Finally, on two occasions, the Eleventh Circuit heard appeals in order to resolve unsettled legal issues.¹²⁷

Twelfth Circuit

The Twelfth Circuit has not addressed the standards for accepting Rule 23(f) appeals. Further, there are no reported decisions in which the court accepted an appeal pursuant to Rule 23(f).

District of Columbia Circuit The District of Columbia Circuit was the most recent circuit court to enunciate its standards in permitting Rule 23(f) appeals.¹²⁸ After discussing the nuances between the circuits, it identified three characteristics to govern Rule 23(f) appeals. First, the court will accept appeals when there is a "death knell situation" for either party that is independent of the merits of the underlying claim or claims.¹²⁹ In addition, a party must also demonstrate that the district court's certification order is questionable.¹³⁰

Second, Rule 23(f) appeals will follow when the certification decision presents an "unsettled and fundamental issue of law relating to class actions, important both to the specific litigation and generally, that is likely to evade end-of-the-case review."¹³¹ In this category of appeals, it does not matter whether the trial court's decision is questionable.¹³² The court specifically noted that this category presents issues of law, which can be resolved through reversals as well as affirmances.¹³³

Third, Rule 23(f) appeals may arise simply because the district court's class certification decision is manifestly erroneous.¹³⁴ Obviously, the District of Columbia Circuit reasoned that a district court opinion presenting a substantial weakness, in and of itself, is sufficient to warrant an appeal.¹³⁵

Echoing the views of every circuit to enunciate standards before it, the D.C. Circuit indicated that the explications are intended to be a guide, not a rigid and formulaic process.¹³⁶

Federal Circuit

The Federal Circuit has not addressed the standards for accepting Rule 23(f) appeals. The court has noted, however, that at least in appeals coming from the Court of Federal Claims, Rule 23(f) does not apply, because the Court of Federal Claims has its own rules.¹³⁷

Conclusion

Rule 23(f) affords litigants an opportunity to appeal class certification decisions within 10 days after they are issued. If a litigant can establish that there is a substantial basis for error in the district court's decision and the class certification decision rings the death knell for the litigation--either by denying class certification, causing a plaintiff to drop her case or by granting class certification, causing a defendant to settle--then a litigant should pursue a Rule 23(f) petition and will likely succeed in having a court of appeals hear the appeal. Likewise, if the litigant can establish that the class certification decision involves a fundamental question of law, then an appellate court will likely entertain a Rule 23(f) appeal. What is clear from a review of all of the cases appealed pursuant to Rule 23(f) and accepted by the respective courts of appeal is that if an appellate court accepts such an appeal, the most likely result is either to reverse or vacate the trial court's class certification decision. Indeed, of the 32 cases cited in this article which were accepted as Rule 23(f) appeals, 22 reversed or vacated a trial court's order granting class certification. Furthermore, five of the remaining 10 decisions affirmed the trial court's denial of class certification.

Based on this admittedly unscientific survey, once an appellate court accepts a Rule 23(f) appeal, the likelihood is high that if the trial court certified a class, the ruling will be reversed on appeal. Conversely, if the trial court denied a motion for class certification, the appellate court will affirm that decision. Indeed, 27 of the 32 decisions cited in this article fall into either of these two categories.

ENDNOTES:

1 28 U.S.C. §1292(b).
2 Advisory Committee Notes to the 1998 Amendments to Rule 23(f).
3 Blair, 181 F.3d at 836.
4 Id.
5 Id.
6 Id.
7 Id.
8 Id.
9 Id. at 837.
10 Id.
11 Id.
12 Id.
13 Id.
14 Id. at 834-35; accord, Shin v. Cobb County Board of Education, 248 F.3d 1061, 1065 (11th Cir. 2001).
15 Blair, 181 F.3d at 834.
16 Id.
17 Id.
18 Id.
19 Id.
20 Id. at 835.
21 Id.
22 Id.
23 Id.
24 Id. at 837-38.
25 Id.
26 Waste Management, 208 F.3d at 293-94.
27 Id. at 294.
28 Id.
29 Id.
30 Id.
31 Id.
32 Id.
33 In re Sumitomo Copper Litigation, 262, F.3d at 139.
34 Id. at 139-40.
35 Id. at 139.
36 Id. at 140.
37 Id.
38 Id. at 139.
39 Id.
40 Id.
41 In re Visa Check/Mastermoney Antitrust Litigation, 280 F.3d 124 (2nd Cir. 2001).
42 Id. at 132 fn 3.
43 Newton, 259 F.3d at 165.
44 Id.
45 Id.
46 Id.
47 Johnston v. HBO Film Management Inc., 265 F.3d 178 (3rd Cir. 2001), 2 CLASS 695, 10/12/01, and McKowan Lowe & Co. v. Jasmine Ltd., 295 F.3d 380 (3rd Cir. 2002), 3 CLASS 465, 7/26/02.
48 Johnston, 265 F.3d at 189.
49 Id.
50 McKowan Lowe & Co., 295 F.3d at 389.
51 Lienhart v. Dryvit Systems Inc., 255 F.3d 138, 145-46 (4th Cir. 2001).
52 Id. at 144.
53 Id.
54 Id. at 145.
55 Id.
56 Id.
57 Id. at 144.
58 Id.
59 Id.
60 Id.
61 Id. at 146.
62 Id. at 146 n. 3.
63 Id.
64 Bolin, 231 F.3d at 972.
65 Id. at 978-79.
66 Patterson v. Mobil Oil Corp., 241 F.3d 417 (5th Cir. 2001) (individual reliance is an element in order to prove a RICO violation, making case poor candidate for class certification); Berger v. Compaq Computer Corp., 257 F.3d 475 (5th Cir. 2001), 2 CLASS 547, 8/10/01 (class certification order vacated because court improperly shifted burden of showing class representatives' inadequacy to defendant); Smith v. Texaco Inc., 263 F.3d 394 (5th Cir. 2001), 2 CLASS 617, 9/14/01 (individual questions relating to damages predominated and class action was not superior to individual actions in race discrimination action, necessitating reversal of trial court's order); Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315 (5th Cir. 2002), 3 CLASS 138, 3/8/02 (class certification order without any basis in record reversed and case dismissed due to lack of justiciable case or controversy).
67 Bertulli, 242 F.3d at 294.
68 Id.
69 Id.
70 Coleman v. General Motors Acceptance Corp., 296 F.3d 443 (6th Cir. 2002), 3 CLASS 455, 7/26/02.
71 Id. at 444.
72 Id.
73 Id.
74 Id.
75 Id.
76 Jefferson v. Ingersoll International Inc., 195 F.3d 894 (7th Cir. 1999) (Rule 23(b)(2) class certification order in Title VII case vacated to determine whether damages sought were incidental to equitable relief); Szabo v. Bridgeport Machines Inc., 249 F.3d 672 (7th Cir. 2001), 2 CLASS 335, 5/25/01 (class certification order in breach of warranty case vacated because district court applied improper standard in accepting as true all of plaintiffs' factual allegations); West v. Prudential Securities Inc., 282 F.3d 935 (7th Cir. 2002) (class certification order reversed when trial court improperly expanded fraud-on-the-market doctrine to non-public information); In the Matter of Bridgestone/Firestone Inc., 288 F.3d 1012 (7th Cir. 2002), 3 CLASS 280, 5/10/02 (class certification order applying one state's law to national class action reversed).
77 Szabo v. Bridgeport Machines Inc., 249 F.3d 672 (7th Cir. 2001) (national class action in breach of warranty action turned $200,000 case into $200 million dispute); Isaacs v. Sprint Corp., 261 F.3d 679 (7th Cir. 2001), 2 CLASS 583, 8/24/01 (class certification order reversed because trial court violated one-way intervention rule of Rule 23(c)(2) and because it failed to determine whether the Rule 23(b) requirements were satisfied); West v. Prudential Securities Inc., 282 F.3d 935 (7th Cir. 2002) (class certification orders in securities cases present prototypical instances of potentially catastrophic losses even in face of weak positions by plaintiffs); In the Matter of Bridgestone/Firestone Inc., 288 F.3d 1012 (7th Cir. 2002) (class certification order reversed because national class action involving millions of products manufactured for more than 10 years creates risk of catastrophic judgment exceeding the merit of plaintiffs' claims).
78 Glover v. Standard Federal Bank, 283 F.3d 953 (8th Cir. 2002), 3 CLASS 213, 4/12/02.
79 Glover, 283 F.3d at 966.
80 Glover, 283 F.3d at 956.
81 Id.
82 Id.
83 Id. at 959.
84 Id. at 957.
85 Id. at 966.
86 Smith, 233 F.3d at 1191.
87 Id.
88 Id. at 1192.
89 Id.
90 Id. at 1195.
91 Hawkins, 251 F.3d at 1235.
92 Id.
93 Id. at 1238.
94 Id.
95 Zinser, 253 F.3d at 1184.
96 Zinser, 253 F.3d at 1188-90.
97 Pickett, 209 F.3d at 1277.
98 Id. at 1279.
99 Id. at 1280-81.
100 Id.
101 Id.
102 Rutstein, 211 F.3d at 1233.
103 Id. at 1234-35.
104 Id. at 1235.
105 Id.
106 Prado Steiman v. Bush, 221 F.3d at 1274-77.
107 Id. at 1274.
108 Id.
109 Id.
110 Id.
111 Id. at 1274-75.
112 Id. at 1275 n. 9.
113 Id.
114 Id. at 1275.
115 Id.
116 Id. at 1276.
117 Id.
118 Id.
119 Id.
120 Id.
121 Id.
122 Id.
123 Id.
124 Id.
125 Carter v. West Publishing Co., 225 F.3d 1258 (11th Cir. 2000), 1 CLASS 376, 9/22/00 (plaintiffs lacked standing to bring class action, necessitating reversal of class certification order); Piazza v. Ebsco Industries, 273 F.3d 1341 (11th Cir. 2001), 2 CLASS 833, 12/14/01 (same); Franze v. Equitable Assurance, 2002 WL 1482778 (11th Cir. 2002), 3 CLASS 461, 7/24/02 (same).
126 Prado-Steiman, 221 F.3d at 1276; Murray v. Auslander, 244 F.3d 807 (11th Cir. 2001).
127 Turner v. Beneficial Corp., 242 F.3d 1023 (11th Cir. 2001), 2 CLASS 11, 1/12/01 (denial of class certification affirmed because detrimental reliance, which raises individual questions of fact, must be established in order to recover actual damages under Truth in Lending Act); Culpepper v. Irwin Mortgage Corp., 253 F.3d 1324 (11th Cir. 2001), 2 CLASS 481, 7/13/01 (class certification affirmed to resolve interpretation of federal regulation governing yield spread premium in Real Estate Settlement Procedures Act cases).
128 In re Lorazepam & Clorazepate Antitrust Litigation, 289 F.3d 98 (D.C. Cir. 2002), 3 CLASS 315, 5/24/02.
129 Id. at 105.
130 Id.
131 Id.
132 Id.
133 Id.
134 Id.
135 Id.
136 Id.
137 Christopher Village LP v. United States, 2001 WL 1646762 (Fed. Cir. 2001).