The Ninth Circuit held that Rule 60(b)(6) could undo voluntary dismissals that were sought to obtain review of class-certification denials.
November 18, 2019
In last week’s Henson v. Fidelity National Financial, Inc., the Ninth Circuit held that plaintiffs could use Rule 60(b)(6) to undo voluntary dismissals they had entered to facilitate appellate review. Before the Supreme Court’s decision in Microsoft Corp. v. Baker, the Ninth Circuit allowed plaintiffs had to use these dismissals to secure review of orders denying class certification. Baker closed that door to appeal. But Henson—which was pending on appeal when Baker was decided—held that plaintiffs who had relied on pre-Baker caselaw in voluntarily dismissing their claims could obtain relief from the judgment via Rule 60(b).
Baker and the voluntary-dismissal tactic
Class-certification decisions are interlocutory and—absent an exception to the final-judgment rule—cannot be immediately appealed. Nowadays appeals of these decisions normally come via Rule 23(f), which gives the courts of appeals discretion to hear interlocutory class-certification appeals. If the court of appeals declines to hear a case under Rule 23(f), that usually means that the parties will have to litigate the case to a final judgment to secure any appellate review. And conventional wisdom states that parties will rarely do so—the class-certification decision has such consequences for the litigation that cases are normally abandoned or settled once class certification is decided.
Before 2017, a few circuits had condoned another avenue for appealing class-certification decisions without litigating to a final judgment. These circuits allowed plaintiffs who had lost at class certification to stipulate to a conditional and voluntary dismissal of their claims. The plaintiffs could then appeal that dismissal and, in that appeal, obtain review of the class-certification decision. If the court of appeals reversed, the plaintiffs could then revive their individual claims. The plaintiffs were essentially gambling their individual claims on the possibility of reversal on class certification. If the plaintiffs prevailed on appeal, their individual claims were safe and the case would proceed as a class action; if they lost on appeal, their individual claims were gone and the case was over.
Baker rejected this avenue for appeals. This voluntary-dismissal tactic increased the risk of multiple, piecemeal appeals; undercut Rule 23(f)’s grant of discretionary appellate jurisdiction in favor of an absolute right to appeal; and benefited only plaintiffs, not defendants. The Court technically held that the voluntary dismissal was not “final”under 28 U.S.C. § 1291 and thus not appealable. As I’ve explained before, that was a bit odd; district court proceedings were over, so the case was as “final” as it ever was going to be. Despite this questionable reasoning, Baker was undoubtedly correct in its outcome—the plaintiffs were trying to circumvent Rule 23(f) and manufacture the appeal of an order that they should not have been able to appeal.
The Supreme Court remanded Baker to the Ninth Circuit for further proceedings consistent with the Court’s decision. The Ninth Circuit, in turn, remanded the case to the district court with the same instruction.
What happens to the pre-Baker voluntary dismissals?
One thing not addressed in either of those remands was what those further proceedings were supposed to look like. Given the voluntary dismissal with prejudice, the district court proceedings seemed to be over (despite the plaintiffs’ being unable to appeal). And Baker was not the only case for which this mattered; other plaintiffs had voluntarily dismissed their claims to secure appellate review even before Baker, and some of those cases were pending when Baker was decided.
In Henson, the Ninth Circuit held that the change in law that Baker had wrought warranted undoing these voluntary dismissals via a Rule 60(b)(6) motion.
The district court in Henson had denied the plaintiffs’ motion for class certification. Rather than continue litigating, the plaintiffs and defendant Fidelity National Financial entered into a stipulated dismissal with prejudice. In doing so, the plaintiffs relied on Ninth Circuit precedent that condoned the voluntary-dismissal tactic. After the appeals were fully briefed, the Ninth Circuit stayed the appeal pending the Supreme Court’s decision in Baker. After the Supreme Court rejected the voluntary-dismissal tactic, the Ninth Circuit remanded Henson for “the parties to seek appropriate relief in the district court.”
Back in the district court, the Henson plaintiffs moved under Rule 60(b)(6) to vacate their voluntary dismissal. They argued that Baker’s intervening change in law (among other things) warranted Rule 60(b) relief. But the district court denied the motion. The plaintiffs then appealed.
The Ninth Circuit reversed, holding that the district court had abused its discretion in denying Rule 60(b) relief. The court largely focused on the change in law. The plaintiffs had relied on Ninth Circuit caselaw to secure appellate review. Granted, a circuit split existed on the validity of the voluntary-dismissal tactic, so the plaintiffs took some risk of an unfavorable change in law. But there was no indication at the time of the Henson plaintiffs’ appeal that any change was forthcoming; the petition in Baker had not even been filed. As the court saw it, “denying Rule 60(b) relief would treat the voluntary dismissal, which was intended to facilitate appellate review, as a final adjudication of the entire case, even though there had been and was to be no appellate review of the issues the district court had decided, then or later.”
The Ninth Circuit noted that several other considerations weighed in favor of Rule 60(b) relief, including the plaintiffs’ diligence in seeking Rule 60(b) relief after the appeal was remanded and the absence of any reasonable reliance interests in the finality of the judgment. Weighing all of these considerations, the Ninth Circuit concluded that they “heavily tip[ped] the scale in favor of granting Rule 60(b)(6) relief.”
Other pending pre-Baker dismissals
Henson suggests that those who relied on pre-Baker caselaw and whose appeals were still pending when Baker was decided will find some relief back before the district court. And rightfully so. Baker was correct in rejecting the voluntary-dismissal tactic. But that doesn’t mean everyone who relied on pre-Baker caselaw should lose any opportunity for an appeal. Henson thus appears to have steered the best course: although the plaintiffs cannot immediately appeal the class-certification decision via a voluntary dismissal, they don’t have to be stuck with their voluntary dismissals in the district court.
Henson v. Fidelity National Financial, Inc., 2019 WL 6042821 (Nov. 15, 2019), available at the Ninth Circuit and Westlaw.