A Circuit by Circuit Analysis of Federal Rule of Civil Procedure 23(f) 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...

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