SCOTUS Reversing 9th Circuit, Says There's No Leeway in Deadline for Class Action Appeals

U.S. Supreme Court building in Washington, D.C. Photo: Diego M. Radzinschi/ALM

The U.S. Supreme Court unanimously sided with the maker of dietary supplements that promised greater "sexual energy" and against a lawsuit on behalf of customers in a ruling over the timeliness of petitions to appeal of class certification orders.

Nutraceutical Corp. had asked the Supreme Court to reverse the U.S. Court of Appeals for the Ninth Circuit’s 2017 decision allowing the plaintiff in a consumer class action to file an interlocutory appeal of a decertification order in a case over “Cobra Sexual Energy” pills. The Supreme Court on Tuesday found that the plaintiff had missed the 14-day deadline to petition for appeal under Rule 23(f) of the Federal Rule of Civil Procedure, which, despite the Ninth Circuit’s contrary view, was not subject to equitable tolling.

“Here, the governing rules speak directly to the issue of Rule 23(f)’s flexibility and make clear that its deadline is not subject to equitable tolling,” wrote Justice Sonia Sotomayor. “The rules thus express a clear intent to compel rigorous enforcement of Rule 23(f)’s deadline, even where good cause for equitable tolling might otherwise exist.”

Nutraceutical attorney John Hueston, of Hueston Hennigan in Los Angeles, said the ruling's impact extended beyond that of his client.

“In a unanimous decision, the Supreme Court adopted our argument that all mandatory claim-processing rules are unalterable if properly raised,” he wrote in an emailed statement. “The Court’s decision has significant implications for civil and administrative procedure and will provide clarity to the lower courts and litigants on this important issue.”

Plaintiff’s attorney Jonathan Herstoff, of Haug Partners in New York, did not respond to a request for comment.

The ruling is the latest Supreme Court decision to challenge procedural rules used in class actions. On Jan. 15, the Supreme Court heard oral arguments in Home Depot v. Jackson, which addressed whether a third-party counterclaim defendant could remove a case to federal court under the U.S. Class Action Fairness Act. And, in 2016, in Campbell-Ewald v. Gomez, the Supreme Court struck down a defense tactic used to wipe out a class action by offering to pay the named plaintiffs in full.

Although interlocutory appeals of class certification orders aren’t mandatory, lawyers on both sides of class actions have fought for appeals courts to take up more petitions for them. The Supreme Court has addressed class certification appeals before, ruling in 2017 in Microsoft Corp. v. Baker that a plaintiff couldn’t petition to appeal such an order after voluntarily dismissing his claims.

The practical impact of Tuesday’s ruling, however, could be less on Rule 23(f) appeals and more on an issue that the Supreme Court “leaves dangling,” said Evan Tager of Mayer Brown in Washington, D.C. That is, when should a lawyer file a motion to reconsider a class certification order without losing his right to appeal? Parties on both sides of a class action could end up delaying or eliminating such motions in light of the Supreme Court’s holding, Tager said.

“As a practical matter, what I foresee happening is nobody is going to fail to file a 23(f) petition within 14 days. Period. End of story,” he said. “And if they want to do a reconsideration, they will probably wait and see what happens with the 23(f).”

In the Nutraceutical case, the plaintiff, Troy Lambert, alleged that the labels on “Cobra Sexual Energy” pills falsely promised “animal magnetism” and “potency wood.” In 2015, U.S. District Judge André Birotte in the Central District of California decertified the class.

Lambert filed a reconsideration motion 20 days later and, when Birotte rejected that, petitioned to appeal that decision 14 days after the filing of his reconsideration motion. Under Rule 23, parties must file petitions for interlocutory appeals of class certification orders 14 days after a ruling, but the Ninth Circuit tolled the deadline for Lambert, concluding that he had “otherwise acted diligently.”

The Supreme Court noted that the Ninth Circuit had acknowledged its holding split with nearly half the country’s federal appellate courts on a matter of first impression.

“Whether the pertinent rule or rules invoked show a clear intent to preclude tolling, courts are without authority to make exceptions merely because a litigant appears to have been diligent, reasonably mistaken, or otherwise deserving,” Sotomayor wrote.