Court Opinion

ID: 5139946
Source: CourtListenerOpinion
Date Created: 2021-12-23 01:00:23.784633+00
Date Added: 2024-06-11T08:24:20.415050
License: Public Domain

Case: 21-40720   Document: 00516141991      Page: 1    Date Filed: 12/22/2021

          United States Court of Appeals
               for the Fifth Circuit
                                                                   United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                                                                  December 22, 2021
                             No. 21-40720                            Lyle W. Cayce
                                                                          Clerk

   Damonie Earl, individually and on behalf of all others
   similarly situated; Linda Rugg, individually and on behalf
   of all others similarly situated; Alesa Beck,
   individually and on behalf of all others similarly
   situated; Timothy Blakey, Jr.; Stephanie Blakey;
   Marisa Thompson, individually and on behalf of all others
   similarly situated; Muhammad Muddasir Khan; John
   Rogers, individually and on behalf of all others similarly
   situated; Valerie Mortz-Rogers, individually and on
   behalf of all others similarly situated; James LaMorte;
   Brett Noble, individually and on behalf of all others
   similarly situated; Ruben Castro, individually and on
   behalf of all others similarly situated; Fritz Ringling,
   individually and on behalf of all others similarly
   situated; Litaun Lewis, individually and on behalf of all
   others similarly situated; Lance Hogue, Jr.,
   individually and on behalf of all others similarly situated,

                                                      Plaintiffs—Appellees,

                                versus

   The Boeing Company; Southwest Airlines Company,

                                                 Defendants—Appellants.
Case: 21-40720     Document: 00516141991          Page: 2   Date Filed: 12/22/2021

                                   No. 21-40720

                  Appeal from the United States District Court
                       for the Eastern District of Texas
                            USDC No. 4:19-cv-507

   Before Elrod, Oldham, and Wilson, Circuit Judges.
   Andrew S. Oldham, Circuit Judge:
         The defendants in this class action lawsuit have moved for a stay of
   discovery while this court reviews their appeal under Federal Rule of Civil
   Procedure 23(f). We grant the defendants’ stay motion.
                                        I.
         This is a class action lawsuit against the Boeing Company and
   Southwest Airlines for allegedly conspiring to conceal design defects in
   Boeing’s 737 MAX 8 aircraft (the “MAX”) and thereby defrauding airline
   ticket purchasers. Plaintiffs allege that Boeing and Southwest were able to
   inflate the prices of airline tickets by concealing defects in the MAX.
   Widespread public knowledge of the MAX’s defects would have lowered the
   demand for air travel on airlines flying the MAX, the theory goes, so prices
   would have decreased and plaintiffs would have paid less for their tickets.
   Plaintiffs seek damages under the Racketeer Influenced and Corrupt
   Organizations Act (“RICO”), 18 U.S.C. § 1962.
         On September 3, 2021, the district court certified four classes of
   plaintiffs. These classes encompassed persons who purchased or otherwise
   bore the economic burden for tickets on Southwest or American Airlines
   between August 29, 2017, and March 13, 2019, for routes where MAX
   aircraft were in use. Boeing and Southwest petitioned for permission to bring
   an interlocutory appeal of the class-certification decision. See Fed. R. Civ.
   P. 23(f). We granted Boeing and Southwest permission to appeal on
   September 30, 2021.

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          Boeing and Southwest then moved the district court to stay discovery
   pending the Rule 23(f) appeal. On November 19, 2021, the district court
   granted the motion in part and denied it in part. The district court stayed
   discovery pertaining to class membership during the pendency of the appeal.
   But the district court allowed all other discovery to proceed, including
   discovery on the merits. Boeing and Southwest then filed this motion in our
   court, asking us to stay all discovery until the Rule 23(f) appeal is resolved.
                                          II.
          We have authority to stay proceedings in the district court while a
   Rule 23(f) appeal is pending. See Fed. R. Civ. P. 23(f). To decide whether
   to grant a stay, we consider four factors: (1) whether the movant makes a
   strong showing that it is likely to succeed on the merits; (2) whether the
   movant will be irreparably injured without a stay; (3) whether other
   interested parties will be irreparably injured by a stay; and (4) where the
   public interest lies. Nken v. Holder, 556 U.S. 418, 426 (2009).
          Our court has not decided what deference is owed to district courts
   when considering whether to stay discovery pending a Rule 23(f) appeal. But
   we note that several of our sister circuits have concluded that district courts
   enjoy significant discretion in choosing whether and to what extent to stay
   discovery pending appeal. See, e.g., Blair v. Equifax Check Servs., Inc., 181
   F.3d 832, 835 (7th Cir. 1999) (stating that “Rule 23(f) is drafted to avoid
   delay” and suggesting that stays of discovery should issue infrequently
   during Rule 23(f) appeals). We need not decide the specific level of deference
   owed to the district court here, because even under the deferential standard
   articulated in cases like Blair, a stay is appropriate by virtue of Boeing and
   Southwest’s “demonstration that the probability of error in the class
   certification decision is high enough that the costs of pressing ahead in the
   district court exceed the costs of waiting.” Ibid. Stated differently, even

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   under a deferential standard of review, Boeing and Southwest have shown
   that all four Nken factors favor a stay of discovery during the pendency of
   their Rule 23(f) appeal.
          On the likelihood of success on the merits, Boeing and Southwest have
   made a strong showing that our court is likely to reverse the class-certification
   decision. Because the district court certified the class action under Rule
   23(b)(3), the court was required to find “that the questions of law or fact
   common to class members predominate over any questions affecting only
   individual members.” Fed. R. Civ. P. 23(b)(3). Here, it is likely that such
   predominance is lacking because “[q]uestions of individual damage
   calculations will . . . overwhelm questions common to the class.” Comcast
   Corp. v. Behrend, 569 U.S. 27, 34 (2013). Under plaintiffs’ theory of injury,
   they would be owed damages for the difference between the ticket price they
   were charged and the ticket price they would have been charged if the MAX’s
   alleged defects had been widely known and deflated ticket prices. In order to
   show Rule 23(b)(3) predominance on the question of damages, then,
   plaintiffs must show that the price-deflating effect of public knowledge of the
   MAX’s defects would have been fairly uniform across all the various routes
   and dates (over 18 months) involved in this lawsuit. But both the plaintiffs’
   and the defendants’ expert testimony suggest plaintiffs will not be able to
   make that showing. The substantial predominance questions raised by
   Boeing and Southwest’s Rule 23(f) petitions thus give Boeing and Southwest
   a significant likelihood of success on appeal.
          On irreparable harm, Boeing and Southwest again have made a strong
   showing. The district court recognized that the classes in this case contain
   thousands or millions of members, and discovery for a class action suit of this
   magnitude will be very costly and time-consuming. Boeing and Southwest
   assert that they have already spent millions of dollars in defense costs and
   that plaintiffs’ escalating discovery demands will impose millions more in

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                                          No. 21-40720

   unrecoverable costs absent a stay. The district court also recognized that
   discovery has become more contentious as this case has proceeded. And it is
   undisputed that Boeing and Southwest’s discovery costs will be
   unrecoverable even if the class certification is reversed on appeal.
           In light of these concerns, the district court’s approach was to enter a
   partial stay. It stayed discovery “pertaining to class membership,” but
   allowed all other discovery to proceed. The district court’s primary
   justification for this approach was its conclusion that the named plaintiffs’
   claims would remain even if class certification is reversed on appeal. Thus,
   on the district court’s view, discovery on the merits will eventually proceed
   anyway, so Boeing and Southwest would not be irreparably harmed by the
   denying a full stay.
           There are at least three problems with that. First, Boeing and
   Southwest also challenge the plaintiffs’ standing. And if Boeing and
   Southwest succeed on their standing challenge, even the named plaintiffs will
   be unable to proceed with the suit. See Rivera v. Wyeth-Ayerst Lab’ys, 283
   F.3d 315, 319 (5th Cir. 2002) (“Standing may—indeed must—be addressed
   even under the limits of a rule 23(f) appeal.”). Second, even if only the class
   certification is reversed on appeal, the proportionality requirement imposed
   by Federal Rule of Civil Procedure 26(b) would impose far different
   constraints on discovery by eleven named plaintiffs than it would for classes
   of millions of air travelers.* Third and finally, the district court’s order

           *
              The crux of our disagreement with Judge Elrod appears to be on this point. Judge
   Elrod claims that limiting discovery to liability solves this problem because “defendants’
   liability does not vary based on class size” and “discovery—at least on liability—is
   inevitable.” Post, at 10–11 (Elrod, J., dissenting). We respectfully disagree with both
   assertions. Plaintiffs seek to recover for airline ticket premiums they allegedly paid due to
   defendants’ fraud. Whether defendants are liable for eleven ticket premiums or millions of
   them depends on the class certification question, so defendants’ liability does vary based on
   class size. And because of Rule 26(b)’s proportionality requirement, it is not

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   threatens to exacerbate rather than alleviate the contentious discovery
   disputes in this case because it fails to draw a workable line between
   permitted and non-permitted discovery. The parties have already engaged in
   voluminous motions practice disputing the propriety of various discovery
   requests, and the district court’s approach would likely further litter the
   record with disputes over whether a given discovery request falls within the
   parameters of the district court’s partial stay. Boeing and Southwest have
   thus shown that denying a full stay will subject them to irreparable harm.
           We now consider the final two stay factors: whether a stay would
   irreparably harm other interested parties, and where the public interest lies.
   Plaintiffs have not plausibly alleged that they or any other parties will be
   irreparably injured by delaying further discovery until the conclusion of the
   Rule 23(f) appeal. The district court cited generalized concerns about
   spoliation of evidence and avoiding significant delay in the overall resolution
   of the case. And plaintiffs point to alleged past discovery malfeasance by
   Southwest, including Southwest’s alleged destruction or non-production of
   highly relevant text messages. But neither the district court nor the plaintiffs
   have identified any specific prospective threat of spoliation. And because
   plaintiffs only seek money damages, it is not apparent why plaintiffs would be
   prejudiced by waiting on merits discovery until the end of the Rule 23(f)—
   especially since discovery related to class membership is already stayed until
   the conclusion of that appeal. The upshot of a full stay here is that there will
   be one exhaustive round of discovery post-appeal, rather than two distinct
   rounds of discovery pending- and post-appeal. Finally, the public interest

   “speculation,” id. at 10 n.3, to note that plaintiffs will not be able to proceed with
   multimillion-dollar merits discovery if the value of their suit is reduced to hundreds or a
   few thousand dollars. Merits discovery—at least on the scale plaintiffs currently propose—
   is thus hardly “inevitable.”

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                                      No. 21-40720

   supports staying district court proceedings to avoid potentially wasteful and
   unnecessary litigation costs where, as here, the appellant has shown a
   substantial likelihood of success on appeal. See Weingarten Realty Invs. v.
   Miller, 661 F.3d 904, 913 (5th Cir. 2011).
                                  *        *         *
          IT IS THEREFORE ORDERED that appellants’ motion to stay
   trial court proceedings pending disposition of this Rule 23(f) appeal is
   GRANTED.

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                                         No. 21-40720

   Jennifer Walker Elrod, Circuit Judge, concurring in part and
   dissenting in part:
           I respectfully dissent from the panel majority’s complete stay of all
   discovery in this case pending appeal. In staying all discovery, the panel flips
   Rule 23(f) on its head and places its burden on the wrong shoulders. I would
   instead allow discovery to proceed on the issue of defendants’ liability.
           The district court has carefully shepherded this case through two
   years of litigation. It did the same in its order granting limited discovery. The
   district court acknowledged that the defendants raise a substantial case on
   the merits about the propriety of class certification and carefully balanced the
   equities based on the purpose of the discovery at issue. The district court
   disallowed class discovery and allowed merits discovery while the class
   certification appeal is pending. It also took into account the potential loss of
   relevant evidence if discovery were not allowed to proceed.1 In reaching its
   careful balance, the district court has heeded our guidance and can be trusted
   to do so again.
           Rule 23(f) contemplates infrequent stays and deference to the district
   court’s stay decision. Rule 23(f) was “drafted to avoid delay.” Blair v.
   Equifax Check Servs., Inc., 181 F.3d 832, 835 (7th Cir. 1999); Microsoft Corp.
   v. Baker, 137 S. Ct. 1702, 1709 (2017) (“Rule 23(f) was crafted to balance the
   benefits of immediate review against the costs of interlocutory appeals.”
   (quoting Brief for Civil Procedure Scholars as Amici Curiae at 6–7, 11–14)).
   To offset our broad discretion to grant class-certification appeals, Rule
   23(f)—together with the standard for stays pending appeal—provides that
   district court proceedings presumptively proceed. E.g., Prado-Steiman ex rel.

           1
            In the district court and before us now the plaintiffs raise serious concerns about
   the preservation of relevant text messages, privilege logs, and third-party documents.

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   Prado v. Bush, 221 F.3d 1266, 1273 n.8 (11th Cir. 2000) (“Rule 23(f)
   contemplates that in most cases discovery (at the very least, merits
   discovery) will continue [despite] an appeal of the class certification order.”).
   Accordingly, “[s]tays are not favored and should be issued only when the
   party seeking the stay demonstrates that the probability of error in the class
   certification decision is high enough that the costs of pressing ahead . . .
   exceed the costs of waiting.” 5 James W. Moore et al., Moore’s Federal
   Practice § 23.88[2][d] (3d ed. 2021). As Judge Easterbrook, writing for the
   Seventh Circuit, has explained: Stays should be infrequent and Rule 23(f)
   “should not unduly retard the pace of litigation.” Blair, 181 F.3d at 835; see
   also A.A. ex rel. P.A. v. Phillips, No. 19-00770-BAJ-SDJ, 2021 WL 2589180, at
   *1 (M.D. La. June 24, 2021) (Jackson, J.).
           Rule 23(f) also contemplates deference to the district court’s stay
   decision. The district court’s “action and any explanation of its views should
   weigh heavily with the court of appeals.” Fed. R. Civ. P. 23(f) committee’s
   note to 1998 amendment;2 see also 6A Federal Procedure, Lawyer’s Edition
   § 12:478 (2012); 32B Am. Jur. 2d Federal Courts § 1823 (2021). Deference in
   this context makes sense of the text and history of Rule 23(f), the district
   court’s knowledge of the record, parties, and course of litigation, and the
   inherently limited nature of appellate review.
          Accordingly, Rule 23(f) requires defendants to carry a dual burden.
   First, defendants must meet the traditional Nken factors for a stay. Nken v.
   Holder, 556 U.S. 418, 426 (2009). Second, defendants must carry this burden

          2
            Committee Notes are “of weight” when interpreting the Federal Rules of Civil
   Procedure. Schiavone v. Fortune, 477 U.S. 21, 31 (1986) (quoting Miss. Pub. Corp. v.
   Murphree, 326 U.S. 438, 444 (1946)); Torres v. Oakland Scavenger Co., 487 U.S. 312, 316
   (1988).

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   so convincingly that we are justified not only in granting the full stay, but in
   disregarding the district court’s decision to the contrary.
           Defendants have not carried this dual burden. Even assuming that
   class certification was improper, the named plaintiffs will be able to pursue
   their claims on remand.             Because discovery—at least on liability—is
   inevitable, defendants cannot show that they would be irreparably injured in
   the absence of a total stay. Discovery will occur either way; the only
   questions are when and how much. Defendants have not shown that having
   to conduct inevitable discovery now, rather than later, will cause irreparable
   harm. See In re Cobalt Int’l Energy, Inc. Secs. Litig., No. H-14-3428, 2017 WL
   3620590, at *4 (S.D. Tex. Aug. 23, 2017) (Atlas, J.) (denying a stay pending
   a Rule 23(f) appeal because “the discovery will be necessary whether or not
   the appeal is successful”); see also Sampson v. Murray, 415 U.S. 61, 90 (1974)
   (“Mere injuries, however substantial, in terms of money, time and energy
   necessarily expended in the absence of a stay, are not enough [for an
   irreparable injury.]” (quoting Va. Petroleum Jobbers Ass’n v. Fed. Power
   Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958))); M.D. v. Perry, No. C-11-84,
   2011 WL 7047039, at *2 (S.D. Tex. July 21, 2011) (Jack, J.) (“The prospect
   of burdensome or expensive discovery alone is not sufficient to demonstrate
   ‘irreparable injury’ . . . .”). 3
           The panel majority identifies three problems with the district court’s
   partial stay, none of which are convincing. First, it notes that defendants
   “challenge the plaintiffs’ standing.” Ante at 5. But merely challenging
   plaintiffs’ standing is not enough; defendants must make a strong showing that

           3
              Indeed, defendants appear to assume that plaintiffs will drop their suits if class-
   certification is reversed. But there is no basis for that in the record, and speculation about
   irreparable harm is not irreparable harm.

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                                          No. 21-40720

   plaintiffs lack standing. Because defendants have not made this showing,
   they cannot show a strong likelihood of success against the named plaintiffs.
           The panel majority’s second and third problems are solved by limiting
   discovery to liability. The panel majority observes that the district court’s
   stay would impose proportionality problems if class certification is reversed
   on appeal. Ante at 5. It further contends that the district court’s stay order is
   unworkable and will exacerbate the already-contentious discovery. Ante at 5–
   6.
           Limiting discovery to liability solves both issues. First, defendants’
   liability does not vary based on class size. And, as discussed above, discovery
   on liability will occur anyway because defendants have not shown a strong
   likelihood of success against the named plaintiffs. Because defendants’
   liability will be determined in any event, they have not justified postponing it.
   Second, liability is a clear and enforceable line. There is hardly a brighter line
   than that between damages and liability. We trust district courts to enforce,
   and parties to respect, lines much duller than this.4
           As to the final two Nken factors, the panel majority continues to fault
   plaintiffs for failing to carry a burden that is defendants’ to bear. Whether
   plaintiffs have plausibly alleged irreparable injury, spoliation of evidence,
   significant delay, or discovery malfeasance is beside the point. The defendants
   must prove these factors and they fail to do so. Tex. League of United Latin
   Am. Citizens v. Hughs, 978 F.3d 136, 143 (5th Cir. 2020); Nken, 556 U.S. at

           4
             To the extent that discovery on liability would vary based on class size under Rule
   26(b), the district court is well aware of Rule 26(b)’s proportionality requirement and can
   enforce it ably on remand. The crux of the panel’s disagreement is the relevant baseline
   for defendants’ motion to stay all discovery. We must measure defendants’ motion against
   the baseline of allowing district court proceedings to continue. Measured accordingly,
   defendants have not carried their burden to postpone inevitable discovery.

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   433–34. Where discovery on liability is inevitable, its unjustified delay
   irreparably harms the plaintiffs and upends the public interest.
          Simply put, the panel majority gets it exactly backwards. Because
   some discovery will proceed regardless of class certification, defendants have
   not shown—as they must—an entitlement to staying all discovery. Nor have
   they lifted—again, as they must—the “heavy weight” we accord to the
   district court’s discovery rulings. I would instead limit discovery to liability
   and rely upon the very capable district court to manage it while the appeal
   proceeds.

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