When Justice Antonin Scalia died on February 13, 2016, one of the petitions for review awaiting the Supreme Court’s consideration was an appeal by Dow Chemical Co., which had asked the court to review the billion-dollar judgment against the company in a price-fixing case. But less than two weeks later, Dow announced that it was settling the case for $835 million. The company maintained that it “was not part of any conspiracy and the judgment was fundamentally flawed as a matter of class action law.” But, Dow explained, that the settlement was nonetheless “the right decision for the company and its shareholders” in light of uncertainty stemming from “recent events within the Supreme Court and increased likelihood for unfavorable outcomes for business involved in class action suits.”

Dow pointed to two important class-action decisions, both authored by Scalia and decided by a vote of 5-4, on which it had relied. In Wal-Mart v. Dukes, the court struck down a lower-court ruling that approved the certification of a class of roughly 1.5 million Wal-Mart female employees, who had argued that the leeway over pay and promotions that the store gives to its local supervisors discriminates against women. The court ruled that the women lacked the kind of common legal claim that would allow them to bring a lawsuit collectively, because they were suing “about literally millions of employment decisions at once.” And in Comcast v. Behrend, the justices held that the lower courts were wrong to certify a class of cable-television subscribers in an antitrust lawsuit against the cable company because the subscribers could not show that their damages could be measured on a classwide basis. Although Dow emphasized that, in its view, the judgment against it violated both of those decisions, it opted to settle the case rather than take its chances with a Scalia-less court.

Covering the Wal-Mart decision for this blog, Lyle Denniston described Scalia as the court’s “most dedicated skeptic about the class-action approach to litigation.” Whether Gorsuch, if confirmed, would follow in Scalia’s footsteps remains to be seen. During his decade on the bench, Gorsuch has participated in relatively few class action cases. In the cases involving class action issues in which he has participated, he has generally, but not always, ruled for the defense. Notably, both in cases in which he has ruled for the defense and those in which he has ruled for the plaintiffs, Gorsuch has emphasized the need for courts to stay in their lane, so to speak – that is, not to exceed their authority, particularly when it comes to decisions that are in his view best left to Congress.

Gorsuch adhered to this principle just a few months ago in ruling for the defense in Hammond v. Stamps.com, a case in which the on-demand postage company had wanted to remove a proposed class action against it, in which the plaintiffs alleged that the company’s monthly subscription costs were misleading, from a New Mexico state court to federal court. The district court ruled that the company could not remove the case because the Class Action Fairness Act’s “amount in controversy” requirement – more than $5 million – had not been met: The company could not show how many of its customers who cancelled their accounts had actually been misled, rather than cancelling for other reasons.

In an opinion by Gorsuch, the U.S. Court of Appeals for the 10th Circuit reversed, emphasizing that the district court’s conclusion that the “amount in controversy” requirement had not been met “rests on a legal error about the meaning of a key statutory term” – “in controversy.” In other contexts, the court explained, the phrase “has never required a party seeking to invoke federal jurisdiction to show that damages ‘are greater’ or will likely prove greater ‘than the requisite amount’ specified by statute.” Instead, it has “required a party seeking federal jurisdiction to show only and much more modestly that ‘a fact finder might legally conclude’ that the damages exceed the statutory amount.” With no reason to believe that Congress intended the term to have another meaning in the CAFA, Gorsuch concluded, “[o]ur job is to abide Congress’s policy directions, not replace them with others of our own hand.”

Gorsuch thus agreed with the district court “that it is unlikely all 312,000 persons who cancelled service” will actually be entitled to damages, and he acknowledged that the district court had articulated “the correct legal test for jurisdiction (focusing on what’s legally possible, not what’s likely).” But the district court failed to actually apply the correct test to the facts of the case, instead “mistakenly focusing not on the legally possible but the factually probable. And that is an error of law we are not free to disregard.”

In McClendon v. City of Albuquerque, Gorsuch once again relied on the idea of the court’s limited authority, but this time to rule in favor of the plaintiffs in what he described as a “long-running” class action challenging the conditions in city’s jails. The question before the court was whether an order withdrawing approval of a class action settlement was a “final decision” that would allow the defendants – city and prison officials – to appeal.

Gorsuch cautioned that, although final judgments are the “paradigmatic ‘final decision’ appealable under” federal law, that does not mean “that every case with a final judgment in it is appealable.” To illustrate this point, Gorsuch used (as he so often does) a “plain language” example to explain, writing that “[j]ust because all the people you’ve met lately are kind doesn’t mean all people are kind.” Instead, Gorsuch reasoned, the district court’s order withdrawing approval “essentially indicates that any prior decision is defunct, gone, and further litigation on the merits must resume, and the usual rule that we must not interfere with ongoing district court proceedings governs.” “If there is to be any change to the Supreme Court’s bright line rule disallowing immediate appeals based solely on a settlement or plea agreement purporting to grant a right not to stand trial,” Gorsuch emphasized, it should come from Congress, rather the courts. Gorsuch also acknowledged (and was sympathetic to) the defendants’ argument that, if they were not allowed to appeal, the case would continue to drag on. He agreed with them that “the delays and costs associated with civil litigation in modern America are substantial and worrisome.” “But one thing we may never do,” he concluded, “is disregard the bounds of our legal authority” – “no less when it is hard to do so than when it is easy.”

Gorsuch was more sympathetic to a different group of prison officials in Shook v. Board of County Commissioners, in which the court upheld a district court’s order denying class certification in a case filed by inmates who alleged that the lack of access to mental health care in a county jail violated their constitutional rights. Gorsuch explained that the different kinds of mental health issues and treatment required for the different inmates in the proposed class were too dissimilar for the district court to issue a single order addressing their claims. And he used another “explainer” to push back against the inmates’ suggestion that class actions “are generally ‘well suited’ to civil rights cases”: He countered that the fact that “many civil rights actions may properly proceed under Rule 23(b)(2) does not mean that we may assume that all such actions should so proceed.”

It is important to note that here too Gorsuch stressed the relatively limited role of the court of appeals in reviewing the district court’s ruling. He emphasized that “the district court enjoys considerable discretion.” Thus, he explained, although “we very well may have made a different decision had the issue been presented to us as an initial matter, and while other district courts perhaps could have chosen, or could choose, to certify similar classes, we cannot say the district court’s assessment was beyond the pale.”

Gorsuch also ruled in favor of the defense in BP America v. Oklahoma ex rel. Edmondson, a lawsuit brought by the Oklahoma attorney general against BP and others, alleging that the companies had manipulated national gas prices. BP removed the case to federal district court, but the district court remanded it to state court; the question before the 10th Circuit was whether BP could appeal the district court’s remand order.

“As a general rule,” Gorsuch began, “remand orders aren’t appealable. But like so many rules, this one has its exceptions.” The Class Action Fairness Act indicates that the courts of appeals may consider appeals of remand orders, leading to the question of when the courts of appeals should “exercise the discretion afforded to us by Congress to ‘accept’ such an appeal.” Relying on decisions by other courts of appeals, Gorsuch identified factors that courts should consider when deciding whether to use their discretion to allow immediate appeals – for example, whether the question presented by the case is important, unsettled, and likely to recur, whether the potential harm from an immediate appeal is outweighed by the harm if an immediate appeal is denied, and whether the question presented in the case “appears to be either incorrectly decided or at least fairly debatable.” Concluding that all of the factors weighed in favor of reviewing BP’s appeal, the court granted leave to appeal.

Posted in Nomination of Neil Gorsuch to the Supreme Court, A close look at Judge Neil Gorsuch’s jurisprudence, Featured

Recommended Citation: Amy Howe, A closer look at Judge Neil Gorsuch and class actions, SCOTUSblog (Mar. 8, 2017, 2:07 PM), http://www.scotusblog.com/2017/03/closer-look-judge-neil-gorsuch-class-actions/