Source: https://caselaw.findlaw.com/us-9th-circuit/1708243.html
Timestamp: 2019-04-19 09:41:56+00:00

Document:
Our decision in Huey v. Teledyne, Inc., 608 F.2d 1234 (9th Cir.1979), is not to the contrary. There, putative class plaintiff Huey's motion for class certification was denied in the district court. Id. at 1236. Subsequently, Huey's individual action was called for trial, but Huey made no appearance; accordingly, the district court dismissed Huey's action for want of prosecution. Id. Huey attempted to appeal the denial of class certification, but this court explained that it lacked jurisdiction over the appeal. We explained that the strong policy of giving trial judges the ability “to achieve the orderly and expeditious disposition of cases” meant that plaintiffs who had failed to prosecute their claims lost the ability to appeal the denial of class certification. Id. at 1239 (quoting Sullivan v. Pacific Indem. Co., 566 F.2d 444, 445–46 (3rd Cir.1977)).
However, Huey does not control here. Unlike that proceeding, Baker did not fail to appear before the district court after the class action allegations were struck. In fact, Baker stipulated to dismiss his individual claim, giving up a valuable right in the process. Our cases recognize that a stipulated dismissal of an individual claim is an adverse and appealable final judgment, Berger, 741 F.3d at 1065, as does a leading treatise. See 7B Charles Allan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice & Procedure § 1802 (3d ed.2005).
With this amendment, Judges Rawlinson and Bea voted, and Judge Hawkins recommended, to deny the Petition for En Banc Rehearing.
The full court has been advised of the Petition for En Banc Rehearing, and no judge of the court has requested a vote.
Microsoft Corporation's Petition for En Banc Rehearing, filed on April 1, 2015, is DENIED. No further petitions for rehearing or rehearing en banc will be accepted.
Plaintiffs, a putative class of owners of Microsoft Corporation's (Microsoft) Xbox 360® video game console (Xbox), appeal from the stipulated dismissal with prejudice of their lawsuit and from the order striking their class allegations. In striking the class allegations, the district court deferred to an earlier class certification denial order involving a similar putative class. See Baker v. Microsoft Corp., 851 F.Supp.2d 1274, 1276 (W.D.Wash.2012) (citing In re Microsoft Xbox 360 Scratched Disc Litig., No. C07–1121, 2009 WL 10219350 (W.D.Wash. Oct. 5, 2009) (Scratched Disc Litigation )). We have jurisdiction pursuant to 28 U.S.C. § 1291 and reverse the order striking the class action allegations because the district court misapplied the law as established in Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1173 (9th Cir.2010), constituting an abuse of discretion.
Ten months after dismissal of Scratched Disc Litigation, we reversed the Gable decision upon which Judge Coughenour had so heavily relied in denying class certification. See Wolin, 617 F .3d at 1170, 1176. We concluded that the district court in Gable “erred when it concluded, without discussion, that certification is inappropriate because [plaintiffs] did not prove that the defect manifested in a majority of the class's vehicles․” Id. at 1173. Indeed, in the past, “we have held that proof of the manifestation of a defect is not a prerequisite to class certification.” Id. (citing Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir.1975)). We observed that rather than challenging the predominance of common legal and factual issues, Land Rover was actually arguing the merits of the case. See id. We concluded that while “individual factors may affect premature tire wear, they do not affect whether the vehicles were sold with an alignment defect.” Id.
Similarly, proof that the allegedly defective disc system caused individual damages is not necessary to determine whether the existence of the alleged design defect breaches Microsoft's express warranty. Rather, plaintiffs' breach of express warranty claim presents a common factual question—is there a defect?—and a common mixed question of law and fact—does that defect breach the express warranty? We conclude, as we did in Wolin, that the district court erred in finding that individual issues of causation predominate over these common questions. See id.
Microsoft next argues that, “unlike the Wolin plaintiffswho alleged the alignment defect made their luxury vehicles ‘worth less,’ ․—Plaintiffs neither claimed the alleged defect made Xbox 360 consoles worth less nor offered common evidence of damage or loss to the proposed class.” This argument misconstrues the allegations of the complaint. Like the plaintiffs in Wolin, plaintiffs in this case alleged that a design defect diminished the value of the Xbox.
This case presents an important question of first impression in the federal courts of appeal: What principles should guide a federal district court's application of comity to a fellow district court's earlier denial of class certification, when addressing a later motion for class certification by a similar class of plaintiffs? The parties asked this question of Judge Martinez in the district court, who answered (“[i]n the absence of any specific guidance” from our court) by adopting the American Legal Institute's (“ALI”) suggestion that the earlier denial of class certification be accorded a rebuttable presumption of correctness. Baker v. Microsoft Corp., 851 F.Supp.2d 1274, 1278 (W.D.Wash.2012). We should be aware that litigants in other cases have added to the chorus of voices requesting guidance, reinforcing just how important this question is to effective adjudication of class action litigation. See, e.g., Ott v. Mortgage Investors Corp. of Ohio, 2014 WL 6851964 at *13 (D.Or. Dec. 3, 2014) (citing Baker, 851 F.Supp.2d at 1278).
I believe our court owes it to district courts to give them the guidance which Judge Martinez found, quite correctly, was absent. Moreover, I respectfully disagree with the majority opinion's assertion that this case can be decided on the “narrower and more well established ground” that Judge Martinez erred in basing his ruling on the tire defect cases. Maj. Op. at 19 n. 5 (citing Gable v. Land Rover North America, Inc., 2008 WL 4441960 (C.D.Cal. Sept. 29, 2008), rev'd sub nom Wolin v. Jaguar Land Rover North Am., LLC, 617 F.3d 1168 (9th Cir.2010)). That simply was not the basis for Judge Martinez's ruling. Rather, Judge Martinez based his ruling on the only ground urged by Microsoft: that he should defer, for reasons of comity, to Judge Coughenour's denial of class certification in an earlier, similar class action.1 For that reason, I do not concur in the majority opinion. Instead, I would hold that a federal district court faced with an earlier denial of class certification in an earlier common dispute heard in a different district court should adopt the rebuttable presumption of correctness suggested by the ALI and adopted by Judge Martinez. But because I conclude that presumption was rebutted in this case, I concur in the result reached by the majority.
First, a brief history of this action may be helpful to bring focus. In Gable,2 the district court denied certification of a class of Land Rover owners who alleged a defect in the wheel alignment of their vehicles that caused uneven, premature tire wear. The district court judge believed that the individual issue whether or not the defect actually had manifested itself by causing damage to the tire predominated over the common issue whether the car had defective wheel alignment. Gable v. Land Rover North America, Inc ., 2008 WL 4441960, *5 (C.D.Cal. Sept. 29, 2008).
A year later, District Judge Coughenour in In re Microsoft Xbox 360 Scratched Disc Litigation, 2009 WL 10219350 (W.D.Wash. Oct. 5, 2009), was presented with a putative class of X–Box owners who, similar to plaintiffs here, alleged their X–Box devices had scratched their video game discs. He relied on the causation analysis of Gable to deny certification of the class. He reasoned that much as each Land Rover owner in Gable had to show that the alignment defect had manifested itself by causing tire damage in his car, so too each video game system owner in Microsoft Xbox 360 Scratched Disc Litigation had to show that the scratching defect of his game console had manifested itself by damaging a disc. The manifested effect of the product defect would tend to be different as to each plaintiff's tire or disc. Notably, Judge Coughenour ruled against the plaintiffs' attempts to distinguish Gable, saying that the two cases presented identical questions of predominance of individual issues over common class issues. Microsoft Scratched Disc Litigation at *7. That scratched disc case was settled later that year.
In 2010, the Ninth Circuit reversed Gable's determination of the predominance question. We held the common question whether a defect existed in the wheel alignment predominated over the individual question of the manifestation of the defective wheel alignment through uneven tire wear.3 Judge Martinez, the district court judge here, heard Microsoft's motion to strike class claims in 2012, and was faced with an unusual conundrum.
Was Judge Martinez's application of comity correct? As I have noted, this is a question of first impression in this circuit, and a difficult one. And it puts the wrong question in this case to assert, as the majority does, that Judge Martinez misconstrued this court's opinion in Wolin.5 After all, in the typical comity case, where a U.S. court is considering whether to give effect to a foreign judgment, “the mere assertion of [a] party that the [earlier] judgment was erroneous in law or in fact” does not suffice to disrupt the presumption that the foreign judgment be given legal effect. Asvesta v. Petroutsas, 580 F.3d 1000, 1011 (9th Cir.(2009)) (quoting Hilton v. Guyot, 159 U.S. 113 (1895)). In those cases, a “special reason why the comity of this nation” should not attach is needed. Id. Perhaps such solicitousness makes less sense in the federal district court context; since federal district court judges are not sovereigns, their decisions might not require a “special reason” to be ignored. But if that is the conclusion we come to, we should say so.
The basic posture of this case is not new: a defendant faces a putative class of plaintiffs, but there is substantial uncertainty as to whether the putative class will be able to satisfy Federal Rule of Procedure 23's requirements for class treatment. As the Supreme Court has recognized, the decision whether or not the class is certified is usually the most important ruling in such a case; once a class is certified, plaintiffs who brought claims of even dubious validity can extract an “in terrorem” settlement from innocent defendants who fear the massive losses they face upon an adverse jury verdict. See, e.g., AT & T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1752 (2011) ( “Faced with even a small chance of a devastating loss, defendants will be pressured into settling questionable claims.”).
However, the Supreme Court abrogated Bridgestone/Firestone in Smith v. Bayer. Bayer, 131 S.Ct. at 2380–81. There, the Court made clear that despite “policy concerns relating to use of the class action device,” individuals not present before the district court could not be bound by its judgment, as the court simply lacked authority to bind them because they were not parties to the litigation, nor did they fit into any of the narrow exceptions to the party preclusion rule announced in Taylor v. Sturgell, 553 U .S. 880 (2008). This was not, the Supreme Court said, to deny the force of defense counsel's policy objection, but to state that “principles of stare decisis and comity among courts” would have to “mitigate the sometimes substantial costs of similar litigation brought by different plaintiffs.” Bayer, 131 S.Ct. at 2380–81.
It is settled law that the decision to apply principles of comity is discretionary, not mandatory. Bird v. Glacier Elec. Coop., Inc ., 255 F.3d 1136, 1140 (9th Cir.2001). Therefore, this court reviews a district court's decision to grant comity deference to a state or tribal court's determination of an issue for abuse of discretion. Stock West Corp. v. Taylor, 964 F.2d 912, 918 (9th Cir.1992). This principle has been extended to comity to federal court decisions; a district court's decision to dismiss an action under the federal comity doctrine's “first to file” rule is reviewed for an abuse of discretion. Barapind v. Reno, 225 F.3d 1100, 1109 (9th Cir.2000).
Judge Martinez concluded that the presumption had not been rebutted because the Gable/Wolin Land Rover litigation was distinguishable from the scratched disc litigation. However, the language he quoted from Judge Coughenour's earlier denial was language justifying Judge Coughenour's conclusion that Gable could not be distinguished from the X–Box scratch case. In re Microsoft Xbox 360 Scratched Disc Litigation, 2009 WL 10219350, at *7 (W.D.Wash. Oct. 5, 2009) (“Plaintiffs attempt to distinguish Gable, but fail ․ The Gable court acknowledged that every Land Rover suffered the same design flaw, but nonetheless refused to certify the class, because the defect had not manifested in every Land Rover. That is exactly the case here.”). Judge Martinez committed two errors of law. First, he read Judge Coughenour's earlier denial of class certification as based on a finding that the Gable/Wolin decision was distinguishable from the scratched disc litigation; to the contrary, Judge Coughenour had stated that the scratched disc and tire wear actions were not distinguishable. Second, it was legal error for him to defer to Judge Coughenour's denial of class certification in light of the change in law wrought by Gable's reversal in Wolin, as discussed fully in the majority opinion. Maj. Op. at 14–15.
1. In particular, the plaintiffs contended that the front of each of the vehicle's rear tires was farther out from the center line than the back of each tire, a condition the district court described as “duck-footed.” Gable, 2008 WL 4441960, at *1.
2. Courts have grappled with the balance between preventing repeated frivolous efforts to certify a class and preserving due process rights. See, e.g., In re Bridgestone/Firestone, Inc., Tires Products Liab. Litig., 333 F.3d 763, 768–69 (7th Cir.2003) (binding putative class members whether or not named). Despite the Supreme Court's recognition of “policy concerns relating to use of the class action device,” the Court rejected the Seventh Circuit's approach and decided that “principles of stare decisis and comity among courts” would have to “mitigate the sometimes substantial costs of similar litigation brought by different plaintiffs.” Smith v. Bayer Corp., 131 S.Ct. 2368, 2381 (2011). The district court's application of the ALI proposal may be viewed as an effort to reconcile these values and follow the Supreme Court's guidance in Smith.
3. Microsoft also contends that because the Plaintiffs unsuccessfully moved for interlocutory appeal under Rule 23(f), they must litigate the merits of their claims to final judgment to obtain appellate review. However, Microsoft has not presented a principled basis for this proposed distinction between the present case and Berger.
4. Our decision in Huey v. Teledyne, Inc., 608 F.2d 1234 (9th Cir.1979), is not to the contrary. There, putative class plaintiff Huey's motion for class certification was denied in the district court. Id. at 1236. Subsequently, Huey's individual action was called for trial, but Huey made no appearance; accordingly, the district court dismissed Huey's action for want of prosecution. Id. Huey attempted to appeal the denial of class certification, but this court explained that it lacked jurisdiction over the appeal. We explained that the strong policy of giving trial judges the ability “to achieve the orderly and expeditious disposition of cases” meant that plaintiffs who had failed to prosecute their claims lost the ability to appeal the denial of class certification. Id. at 1239 (quoting Sullivan v. Pacific Indent. Co., 566 F .2d 444, 445–46 (3rd Cir.1977)).However, Huey does not control here. Unlike that proceeding, Baker did not fail to appear before the district court after the class action allegations were struck. In fact, Baker stipulated to dismiss his individual claim, giving up a valuable right in the process. Our cases recognize that a stipulated dismissal of an individual claim is an adverse and appealable final judgment, Berger, 741 F.3d at 1065, as does a leading treatise. See 7B Charles Allan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice & Procedure § 1802 (3d ed.2005).
5. Although no circuit has adopted the ALI rule since its publication in 2010 (nor did the Supreme Court endorse it in Smith ), the district court misapplied the rule by relying on the wrong legal standard. The district court gave a presumption of correctness to Judge Coughenour's prior ruling, but improperly determined that a change in law (our decision in Wolin ) did not rebut the presumption. In other words, assuming arguendo the validity of the ALI rule, the district court's misreading of the prior ruling rendered application of the presumption of comity an abuse of discretion. See United States v. Hinkson, 585 F.3d 1247, 1251 (9th Cir.2009) (en banc) (abuse of discretion to identify wrong legal standard); see also Barapind v. Reno, 225 F .3d 1100, 1109 (9th Cir.2000) (decision to dismiss under comity doctrine reviewed for abuse of discretion). Given that we can decide this case on a narrower and more well established ground, there is no reason to adopt the ALI rule here.
1. See infra footnote 5 and accompanying text.
2. Gable v. Land Rover North America, Inc., 2008 WL 4441960 (C . D. Cal. Sept. 29, 2008), rev'd sub nom Wolin v. Jaguar Land Rover North Am., LLC, 617 F.3d 1168 (9th Cir.2010).
3. The Ninth Circuit reversed under a different name. Wolin v. Jaguar Land Rover North Am., LLC, 617 F.3d 1168 (9th Cir.2010). Thus, Wolin refers unambiguously to the Ninth Circuit ruling, while Gable refers unambiguously to the district court ruling.
4. See ER 45 (making the comity argument as to the motion to strike, then arguing that “In the Alternative, the Court Should Deny Certification of Plaintiffs' Proposed Classes.”). Certification raises issues and procedures quite different from a motion to strike, and defendants were unambiguous in relying on the comity argument alone for their motion to strike. Plaintiffs replied that “comity does not apply” because Wolin was an intervening change in law; as the ALI explains, the comity presumption of correctness is rebutted “when the basis for an earlier denial ․ is no longer present.” Dkt. 23 at 17 (citing Am. Law. Inst., Principles of the Law of Aggregate Litigation § 2.11 cmt. c. (2010)).
5. I agree that Judge Martinez misunderstood Wolin. See Part III, infra. He did not see Wolin as a change in the law, despite Judge Coughenour's reliance on the decision Wolin overruled. But I do not agree that Judge Martinez relied on Wolin, since nothing in his order suggests such reliance. To the contrary, the order suggests he relied on Judge Coughenour's earlier ruling. Moreover, there is no authority the majority can cite for the proposition that if Judge Martinez had understood Wolin as a change in the law, he was obliged to refuse comity deference to Judge Coughenour's earlier ruling. Indeed, that is the very question the majority should have answered in this case, and with which this concurrence deals.
6. The more common federal comity case occurs when a federal district court declines jurisdiction over a case on the grounds that an action relating to the same subject matter has already been commenced in another district. The first-to-file rule is technically an abdication by the district court; if subject matter jurisdiction exists, the second court is not required by any constitutional principle to desist. It does so for the unremarkable reason that the public interest—conservation of judicial resources and minimization of the risk of inconsistent decisions—is better served by so doing.
7. Thus, I would have the district court presented with a motion to strike class allegations, as in this case, give comity deference to an earlier ruling on class certification as to similar class claims.
8. Different named plaintiffs would be required because the original named plaintiff, as party to the suit, would be precluded from relitigating the matter. See Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (describing basic principles of claim and issue preclusion).
9. An interlocutory appeal of this order is explicitly allowed under Federal Rule of Civil Procedure 23(f), which allows circuit courts to permit an immediate appeal from the denial of class certification “if a petition for permission to appeal is filed with the circuit clerk within 14 days” of the denial.
10. Or, as in this case, plaintiffs could voluntarily dismiss their claims with prejudice and appeal as of right. I concur with the opinion's jurisdictional and standing analysis based on Berger, so it is common ground that plaintiffs have created proper appellate jurisdiction in this manner.
11. My suggestion balances the finality value of a definitive ruling in defendants' favor with the danger of an erroneous first denial of class certification curtailing legitimate claims by allowing the second district court to engage in clear-error review of the first court's ruling.
12. Plaintiffs in this case allege that a rebuttable presumption serves to unduly constrain district court discretion. But discretion does not mean unbounded discretion, and the policy arguments against duplicative class actions recognized by the Supreme Court in Smith v. Bayer require some restrictions on the discretion of district courts to certify a class. 131 S.Ct. at 2381. A rebuttable presumption, coupled with abuse-of-discretion review by this court, thus preserves district court discretion without allowing district courts to stray too far.

References: v. 
 v. 
 § 1802
 v. 
 § 1291
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 1802
 v. 
 v. 
 v. 
 v. 
 v. 
 § 2
 v. 
 v.