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Is Rule 23(f) Appellate Review of Class Certification Rulings Becoming at Long Last a Reality for Plaintiffs?

July 29th, 2009

In 1998, the Supreme Court adopted subdivision (f) to Rule 23 of the Federal Rules of Civil Procedure, permitting interlocutory review by a court of appeals of a district court’s decision granting or denying a motion for class certification under Rule 23.  The adoption of the rule came after years of agitation, primarily from the defense bar and business interests, which had complained that class certification rulings often had a coercive effect  on class action defendants by placing “insurmountable pressure” on them to settle, even where a plaintiff’s case was weak on the merits, and that it was therefore necessary to provide immediate appellate review so that defendants aren’t coerced by faulty class certification rulings into settling meritless claims. 

Previously, the courts of appeals lacked jurisdiction to review class certification rulings until the conclusion of a case, and immediate review of such rulings was available only in extraordinary cases.  E.g., In re Master Key Antitrust Litigation, 528 F.2d 5, 10 (2d Cir. 1975) (interlocutory review of class certification orders available only in “exceptional circumstances,” requiring 3 factors to be satisfied:  (1) class action designation was “fundamental to the further conduct of the case,” (2) review of order was “separable from the merits” of the action, and (3) “the order was likely to cause irreparable harm to a defendant in terms of time and money spent in defending a huge class action”) (internal quotation marks omitted).

In the decade since its adoption, Rule 23(f) became a vehicle for defendants to often obtain review of class certification rulings, notwithstanding the purportedly high standard for the grant of immediate review.  E.g., Vallario v. Vandehey, 554 F.3d 1259, 1263 (10th Cir. 2009) (interlocutory review under Rule 23(f) appropriate (1) in “death knell” situations (i.e., where “a questionable class certification order is likely to force either a plaintiff or a defendant to resolve the case based on considerations independent of the merits”); (2) where there is “an interest in facilitating the development of the law”; and (3) where district court’s decision is “manifestly erroneous”).  In those instances where a circuit court granted a plaintiff’s petition for review of a class certification denial, it was almost invariably to affirm the denial.

Well, along now comes the Eleventh Circuit in Williams v. Mohawk Industries, Inc., 568 F.3d 1350 (11th Cir. 2009), in a May 28th opinion that reversed – that’s right, reversed – a denial of class certification.

In Mohawk Industries, the plaintiffs, current and former employees of the defendant, the second largest carpet manufacturer in the U.S., filed a proposed class action suit under both the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) and Georgia’s state RICO (“Little RICO”) statute, alleging that Mohawk conspired with various temporary employment agencies to knowingly hire illegal aliens so as to lower its labor costs, thereby driving down the plaintiffs’ wages.  Mohawk moved to dismiss the plaintiffs’ complaint for failure to state a claim, which the district court denied as to the RICO claims but granted its motion as to certain of Plaintiffs’ common law unjust enrichment claims.  On appeal, the Eleventh Circuit agreed that the district court had properly sustained the federal and state RICO claims but held that it should have dismissed all of the unjust enrichment claims.  Williams v. Mohawk Industries, Inc., 411 F.3d 1252 (11th Cir. 2005).

On remand, the plaintiffs moved for class certification.   In an unpublished decision, the district court denied their motion.  The plaintiffs then sought review of that denial by Rule 23(f) petition and, on May 28th, the Eleventh Circuit issued a published opinion holding that the district court had abused its discretion in refusing to certify the class.

The Eleventh Circuit took the district court to task for conducting an improper class certification analysis.  It noted that the plaintiffs had presented “two overarching questions” common to all members of the class:  (1) whether Mohawk conducted or participated in the conduct of an enterprise’s affairs under the federal RICO statute; and (2) whether Mohawk engaged in a pattern of racketeering activity or a conspiracy to violate the Georgia RICO statute.  The court of appeals also noted that the district court had wrongly likened the case to a Title VII discrimination suit, noting that, in contrast, RICO claims “are often susceptible to common proof.”   In this respect, the Eleventh Circuit held that the district court had wrongly relied on  decentralized decision-making at Mohawk about hiring and wages to conclude that the plaintiffs’ claims aren’t amenable to common proof, noting that the plaintiffs’ claims aren’t dependent on “proof of individual acts of disparate treatment as often is the case under Title VII.”

Based on its conclusion that common questions predominate in the plaintiffs’ suit, the Eleventh Circuit rejected the district court’s finding that a class action trial would not be manageable (and hence class action treatment not a superior means of adjudicating the case – the so-called “superiority” factor that must be considered for classes being certified under Rule 23(b)(3)), noting that “the factor of manageability is ordinarily satisfied so long as common issues predominate over individual issues.”

One can’t get overly enthusiastic and interpret Mohawk Industries as heralding the leveling of the Rule 23(f) playing field overnight.  Among other things, one has to keep in mind that federal courts have generally been giving a relatively favorable reception to motions to certify classes in so-called Civil RICO “wage depression” suits filed by American workers being cheated by greedy employers who’ve knowingly violated the immigration laws by hiring illegal aliens, see Brewer v. Salyer, No. CV F 06-1324-AWI-DLB, 2009 WL 1396148 (E.D. Cal. May 18, 2009) (certifying class of seasonal hourly wage earners suing food processor); Marin v. Evans, No. CV-06-3090-RHW, 2008 WL 2937424 (E.D. Wash. July 23, 2008) (certifying class of legally-authorized employees of Washington State fruit farming company), than to certain other kinds of cases.

Still, the Eleventh Circuit’s decision in Mohawk Industries, and some other circuit court reversals of class certification denials – the Ninth Circuit’s reversal last summer of a denial in an employment discrimination case alleging pay disparity, Parra v. Bashas’, Inc., 536 F.3d 975 (9th Cir. 2008), and the Third Circuit’s reversal of the denial in Hagan v. Rogers, No. 07-1412, 2009 WL 1708084 (3d Cir. June 19, 2009), a civil rights action filed by state prisoners, which was issued a month after Mohawk Industries – seem to be tentative signs of a fairer shake for class action plaintiffs from the appellate courts.

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