A recent decision by the D.C. Circuit has a thorough and interesting discussion of the criteria that the court applies in deciding whether or not to grant interlocutory review of a decision granting or denying class certification, under Fed. R. Civ. P. 23(f). The rule itself does not contain any such criteria, but some circuits have developed such criteria. The D.C. Circuit’s recent decision, which cites to decisions of several other circuits on this issue, will be of particular interest to class action practitioners, particularly those who handle Rule 23(f) appeals.
In re Rail Freight Fuel Surcharge Antitrust Litigation, No. 12-7085, 2013 U.S. App. LEXIS 16500 (D.C. Cir. Aug. 9, 2013) is a putative antitrust class action, alleging that the four major freight railroads engaged in a price-fixing conspiracy with respect to fuel surcharges. A central issue on the motion for class certification involved the damages model of the plaintiff’s expert, presenting issues quite similar to Comcast v. Behrend. Unsurprisingly, the D.C. Circuit vacated the order granting class certification and remanded for reconsideration in light of Comcast. What I found most interesting, however, was the extended discussion of the court’s criteria for deciding whether to grant interlocutory review. Here are some key points the court made:
- The first scenario in which the court will grant review is “when the decision to certify is ‘questionable’ and is accompanied by a ‘death-knell’ – i.e., it places ‘substantial pressure on the defendant to settle independent of the merits of the plaintiffs’ claims.’” Id. at *11. The court explained that this does not mean that the case has to be a “bet the company” one, or even close. Rather, “[t]he death knell marks not the defendant’s demise, but the litigation’s. . . . A party need not risk destitution to qualify for immediate review; it is enough that certification ‘generate[s] unwarranted pressure to settle nonmeritorious or marginal claims.” Id. at *16. I wonder, however, how a court of appeals, in deciding whether to grant review (typically a decision made based on a short petition and response), can really have enough information evaluate whether the claims on their merits are meritorious or not. In some cases it’s easy to recognize that the claims are relatively meritless, but others are not so easy. In addition to the “death-knell” scenario, the D.C. Circuit requires that the district court decision be “questionable,” which it found was the case here in light of Comcast. The court found this case to be close to satisfying the “death-knell” criterion but not completely.
- The second circumstance in which the court will grant review is “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-case review.” Id. at *11. The court did not specifically discuss this criterion, however, in the context of the Rail Freight here.
- The third circumstance in which the court will grant review is where the district court’s decision is “manifestly erroneous.” There was no suggestion that the district court’s decision here met that criterion.
- Finally, the D.C. Circuit will also grant review where there are “special circumstances” warranting review, a catch-all discretionary category. This case had such a “special circumstance” in light of the intervening Supreme Court decision in Comcast. This circumstance, along with the fact that the death-knell category was close to being satisfied, persuaded the court to grant review. Id. at *22.