Game Over: Supreme Court Delivers Win For Class Action Defendants In Microsoft

In Short

The Decision: The United States Supreme Court held that class action plaintiffs cannot obtain an immediate appeal as of right from the denial of class certification by voluntarily dismissing their individual claims.

The Reasoning: The "dismissal device" undermines the final-judgment rule, undermines the discretion given to the courts of appeals by Rule 23(f), and violates principles of fairness because it is available only to class action plaintiffs.

The Implications: Class action plaintiffs cannot use this "dismissal device" to obtain early review "as of right" of the denial of class certification. Given the Court's recognition of the heavy burdens class certification can impose on defendants, the decision may also help class action defendants obtain discretionary appellate review under Rule 23(f). The Court's decision provides courts with a reminder to treat class action defendants evenhandedly.

In a victory for class action defendants, the United States Supreme Court's decision in Microsoft Corp. v. Baker puts an end to plaintiffs' manufactured appeals as of right from denials of class certification. The Court's holding reaffirms that class certification decisions are interlocutory and subject to immediate appeal only within the discretion of the courts of appeals under Rule 23(f). In addition to narrowing when plaintiffs can appeal, the Court emphasized that class action rules must be evenhanded; class certification is "just as important to defendants" as it is to plaintiffs.

The Background

In 2011, a group of console owners sued Microsoft Corporation in a putative nationwide class action, claiming the popular Xbox 360 console was defectively designed because, plaintiffs alleged, it scratched game discs during normal operations. Microsoft Corp. v. Baker, ___ U.S. ___, No. 15-457, slip op. at 8 (June 12, 2017). The District Court struck the class allegations, an act that is "functional[ly] equivalent to an order denying class certification." The court determined that nothing undermined a previous court's denial of class certification in a similar case in 2009. Id. at 8-9 & n.7 (citing In re Microsoft Xbox 360 Scratched Disc Litig., 2009 WL 10219350, at *6-7 (W.D. Wash. Oct. 5, 2009)).

Although the order striking class allegations was not immediately appealable as of right under 28 U.S.C. § 1291 (because it was not a final judgment), Federal Rule of Civil Procedure 23(f) grants an immediate appeal of the grant or denial of class...