A SCOTUS Case Effectively Overruled An Earlier Ninth Circuit Opinion.
In Damian Langere v. Verizon Wireless Services, No. 19-55747 (9th Cir. 12/29/20) (Bumatay, Parker, Watford), the court holds, "the voluntary dismissal of claims following an order compelling arbitration does not create appellate jurisdiction."
The rule had been otherwise in the Ninth Circuit in Omstead v. Dell, Inc., 594 F.3d 1081 (9th Cir. 2010). However, now the Ninth Circuit finds that its earlier opinion in Omstead, allowing a plaintiff compelled to arbitrate to create appellate jurisdiction by voluntarily dismissing its claims, is incompatible with Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017).
Microsoft involved a situation where there was a voluntary dismissal of claims after plaintiff had been denied class certification, and the Supreme Court held that did not create appellate jurisdiction. While Olmstead involved a dismissal following an order compelling arbitration, and Microsoft involved a dismissal following an order denying class certification, the court in Langere finds that the ultimate question in both cases is the same: "whether a plaintiff may bypass a regime for discretionary appellate review through a voluntary dismissal." And the answer in both cases is the same: no. A plaintiff cannot create appellate jurisdiction by voluntarily dismissing claims after a denial of class certification, and a plaintiff cannot create appellate jurisdiction by voluntarily dismissing claims after being ordered to arbitrate.
COMMENT: If a plaintiff files in federal court, hoping to obtain class certification, and the defendant successfully moves to compel arbitration, what are the plaintiff's alternatives? The plaintiff can arbitrate and challenge the decision to compel arbitration by appeal after the merits of the case are decided by the arbitrator and confirmed as a judgment. Alternatively, the plaintiff can seek an interlocutory appeal if the district judge certifies that an appeal involves 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.” 28 U.S.C. § 1292(b).
Neither alternative is likely to be very tempting. The interlocutory appeal requiring district court certification is usually a longshot. As to arbitration, arbitrating for the class will be impossible unless the arbitration agreement allows class arbitration, or the rules of the arbitral forum permit the consolidation of claims by the claimants. Arbitrating one small claim is likely to be very uneconomical, and appealing the district court's decision to compel arbitration at the end would be very expensive and perhaps ultimately pointless, as a judge or jury might reach the same result as an arbitrator is the dispute were to be litigated instead of arbitrated. Another possibility, filing serial small claim arbitrations, only makes sense if there are fee and cost shifting provisions in the agreement between plaintiff and defendant and the plaintiff has a strong case.
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