Whether Federal Rule of Civil Procedure 23(f)’s 14-day deadline to petition for permission to appeal is subject to equitable exceptions.
This case asks the Supreme Court to consider whether courts may apply equitable exceptions to Federal Rule of Civil Procedure 23(f)’s 14-day deadline to petition for permission to appeal. After the district court decertified the consumer class suing Nutraceutical and denied Lambert’s motion for reconsideration, Lambert filed a petition for permission to appeal under Rule 23(f) in June 2015. The Ninth Circuit held that the petition was proper because equitable exceptions applied. Nutraceutical now argues that the petition was not timely because it was filed well beyond the 14-day deadline and that equitable exceptions do not apply to Rule 23(f). Lambert contends that the petition was filed in a timely manner and that equitable exceptions make the petition proper even if the filing was not timely. This case will have implications for protecting unsophisticated litigants in class action suits as well as for judicial economy and resources.
Questions as Framed for the Court by the Parties
Whether the U.S. Court of Appeals for the 9th Circuit erred when it held that equitable exceptions apply to mandatory claim-processing rules—such as Federal Rule of Civil Procedure 23(f), which establishes a 14-day deadline to file a petition for permission to appeal an order granting or denying class-action certification—and can excuse a party’s failure to file timely within the deadline specified by Federal Rule of Civil Procedure 23(f), in conflict with the decisions of the U.S. Courts of Appeals for the 2nd, 3rd, 4th, 5th, 7th, 10th and 11th Circuits.
Respondent Troy Lambert (“Lambert”) brought a consumer class action in federal district court against Petitioner Nutraceutical Corporation (“Nutraceutical”), alleging that their dietary supplement product was illegally misbranded and violated numerous provisions of Title 21 of the Code of Federal Regulations, which governs food and drugs. An individual bringing a consumer class action must have their class certified under Federal Rule of Civil Procedure 23 ("FRCP 23" or "Rule 23").
Lambert relied on FRCP 23(b)(3), which extends certification in cases where “questions of law or fact common to class members predominate over any question affecting only individual members.” The class shared the common issue of seeking damages, which Lambert asserted the court could address using a damages model that would multiply the average retail price of the supplement by the number of units sold. The district court originally granted certification based on this damages model. The case was then reassigned to a different district judge.
In February 2015, the district court—on a motion from Nutraceutical—decertified the class in Lambert’s case. The district court found that Lambert had not provided the actual average retail price of the supplement, which was necessary for the court to apply the damages model. allows litigants to appeal an order denying class-action certification if the petition requesting permission to appeal is filed 14 days after the court enters the decertification order.
Ten days after the court’s decertification order, Lambert orally informed the court in a meeting that he intended to file a motion for reconsideration that included evidentiary support for his damages model. The district court ordered Lambert to file his motion within 10 days of their meeting—that is, within 20 days from the decertification order. Accordingly, Lambert moved for reconsideration 10 days later. In June 2015—3 months after the initial decertification order—the district court denied Lambert’s motion.
Within 14 days of the court’s denial, Lambert filed a Rule 23(f) petition for permission to appeal (“petition”). The U.S. Court of Appeals for the Ninth Circuit conditionally granted Lambert’s Rule 23(f) petition and instructed both parties to address whether Lambert’s Rule 23(f) petition was made in a timely fashion.
At the outset, the Ninth Circuit concluded that Rule 23(f) was a procedural rule, and was therefore eligible for equitable exceptions—specifically, equitable tolling. Equitable tolling allows courts to pause a statutory time limit when extraordinary circumstances prevent a litigant from acting in a timely fashion.
The Ninth Circuit then established that a motion for reconsideration filed within 14 days of a decertification order could toll the Rule 23(f) deadline. They reasoned that, although Lambert filed his motion for reconsideration within 20 days of the court’s decertification order, several factors suggested that equitable tolling apply to his case nonetheless. In particular, the Ninth Circuit pointed to how Lambert informed the district court of his intentions to seek reconsideration and how Lambert complied with the district court’s order to file for recertification within 10 days of their meeting. −
Thus, the Ninth Circuit concluded that the Rule 23(f) 14-day deadline was tolled and that Lambert’s 23(f) petition was filed in a timely fashion. The Ninth Circuit acknowledged that their interpretation of Rule 23(f) directly conflicted with other circuit courts of appeals, which typically limit Rule 23(f) tolling solely to cases where a motion to reconsider was filed within 14 days. However, the Ninth Circuit asserted that such rulings were unpersuasive.
On February 1, 2018, Nutraceutical filed a petition for a writ of certiorari to address whether the Ninth Circuit erred in applying equitable exceptions to Rule 23(f) in conflict with its sister circuits. The Supreme Court granted certiorari on June 25, 2018.
THE TIMELINESS OF LAMBERT’S PETITION
Nutraceutical argues that Rule 23(f) is a mandatory claim-processing rule and that, under Supreme Court precedent, the proscribed time limit must be strictly enforced. Nutraceutical contends that the purpose of claim-processing rules—to facilitate litigation progress—is best served when courts precisely apply these rules. Nutraceutical asserts that although a motion for reconsideration can extend the deadline to file a petition for permission to appeal, the party must file the motion before Rule 23(f)’s 14-day deadline. Nutraceutical claims that Lambert filed the motion 6 days after the Rule 23(f) deadline expired. Even the Ninth Circuit, Nutraceutical points out, found that Lambert’s petition was “untimely” “under the plain text of Rule 23(f).” Nutraceutical maintains that Lambert’s argument that Federal Rule of Civil Procedure 59(e) (“Rule 59(e)”) and the motion to reconsider extended the Rule 23(f) deadline fails because Rule 59(e) applies only to motions to “alter or amend” a final judgment. The district court’s certification order, according to Nutraceutical, did not constitute a “judgment” under Rule 59(e) because it was not a final judgment. Even if Rule 59(e) did apply, Nutraceutical insists, the deadline to file the motion to reconsider would be governed by Rule 23(f)’s 14-day deadline rather than Rule 59(e)’s 28-day deadline.
Respondent Lambert argues that he filed his petition for permission to appeal in a timely manner under Rule 23(f). Lambert contends that Rule 59(e) permitted him to “move to alter or amend” the district court’s February 20 decertification order so long as he did so within 28 days. Lambert claims that he satisfied this deadline because he filed his motion for reconsideration of the order 20 days after the district court’s decertification order. Lambert asserts that his motion for reconsideration was timely independent of the Rule 59(e) deadline because he satisfied the district court’s orally-stated deadline from the March 2 status conference. This, according to Lambert, extended the Rule 23(f) deadline to file his petition until 14 days after the district court denied his motion for reconsideration. Lambert suggests that the decertification order did not become a “final” decision subject to an interlocutory appeal until the district court denied his motion. Thus, Lambert maintains that because he filed his petition before the post-motion-denial Rule 23(f) deadline, his petition filing was timely. (“Rule 4(a)(4)”), Lambert reasons, further expressly confirms that a Rule 59(e) motion will postpone the deadline to file a petition for permission to appeal.
SUBJECTING CLAIM-PROCESSING RULES AND RULE 23(F) TO EQUITABLE EXCEPTIONS
Nutraceutical argues that Rule 23(f) is not subject to equitable exceptions. Nutraceutical notes that although the Supreme Court has not yet decided whether claim-processing rules are generally subject to equitable exceptions, Supreme Court precedent suggests that the language of some claim-processing rules precludes equitable exceptions. According to Nutraceutical, these precedents show that courts cannot ignore when the “emphatic” language of federal rules establishes a clear mandate. In this vein, Nutraceutical asserts Rule 23(f)’s language stating that courts may only permit a class-action certification appeal “if a petition is filed . . . within 14 days after the [class-action certification] order is entered” clearly demonstrates that the 14-day time limit is a mandatory prerequisite to filing an interlocutory appeal related to the class-action certification order.
Nutraceutical further contends that Federal Rule of Appellate Procedure 5(a)(2) (“Rule 5(a)(2)”), which states that petitions for appeal must be filed within the time proscribed by the rule authorizing the appeal, supports its argument. Moreover, even if Rule 23(f) and Rule 5(a)(2) do not preclude extending the 14-day time limit, Nutraceutical asserts, Federal Rule of Appellate Procedure 26(b) (“Rule 26(b)”) does. According to Nutraceutical, Rule 26(b) mandates that courts may not extend the time to file a notice of appeal or a petition for permission to appeal. Nutraceutical claims that because Rule 26(b) is nearly identical to Federal Rule of Criminal Procedure 45(b), which the Supreme Court has determined to be immune to equitable exceptions, the same must be true of Rule 26(b) and its application to Rule 23(f). Additionally, Nutraceutical argues that Federal Rule of Appellate Procedure 2 (“Rule 2”) further establishes that Rule 23(f)’s deadline cannot be extended beyond 14 days. Rule 2, Nutraceutical notes, provides for equitable exceptions where “manifest justice would otherwise result,” except for Rule 26(b). This, according to Nutraceutical, demonstrates that Rule 26(b) precludes courts from subjecting Rule 23(f) to equitable exceptions, even if manifest justice would otherwise ensue.
Nutraceutical contends that subjecting Rule 23(f)’s time limit to equitable exceptions would contravene Rule 23(f)’s purpose by enabling interlocutory appeals to disrupt and delay litigation. Although it acknowledges that all appeal deadlines should be consistently and strictly enforced, Nutraceutical asserts that courts should be especially strict and inflexible with deadlines for interlocutory appeals such as those provided for by Rule 23(f). Furthermore, according to Nutraceutical, Rule 23(f)’s deadline to file an interlocutory appeal is “deliberately small,” which minimizes the disruption to the continuing litigation. Nutraceutical notes that every circuit court of appeals other than the Ninth Circuit has strictly enforced Rule 23(f)’s time limit for these reasons.
Lambert argues that although his appeal complied with the Federal Rules and their deadlines, equitable exceptions apply to claim-processing rules. Lambert first points to the history and drafting of the Federal Rules, noting that they were “almost universally drawn from [principles of] equity.” Thus, according to Lambert, the Federal Rules are permissive and grant broad discretion to individual judges rather than proscribing rigid rules. Therefore, Lambert claims, equitable exceptions and consideration should be presumptively applicable to the Federal Rules.
Lambert asserts that Supreme Court precedent also shows that equitable exceptions apply to claim-processing rules. For example, Lambert notes that the Supreme Court has long recognized that timely motions for reconsideration extend the deadline to file an appeal, even if no statute or rule authorizes such an extension. Lambert also contends that the Supreme Court has applied the unique circumstances doctrine and equitable tolling to extend the time prescriptions of claim-processing rules. Lambert claims that the precedent cited by Nutraceutical for the proposition that Rule 23(f) and claim-processing rules are not susceptible to equitable exceptions either did not preclude the possibility of applying equitable exceptions to claim-processing rules or did not even address the issue. Moreover, Lambert argues that precedent from the circuit courts of appeals also demonstrates that courts may apply equitable exceptions to claim-processing rules.
Lambert maintains that the Federal Rules suggest that Rule 23(f) is subject to equitable exceptions. Lambert points to a recent Supreme Court case where the Court acknowledged that courts may apply Rule 23(f) flexibly and that Rule 23(f) provides courts of appeals with “unfettered discretion” to grant or deny interlocutory appeals from certification decisions. Thus, Lambert claims, courts of appeals may consider equitable exceptions when deciding on petitions for permission to appeal. Lambert also contends that Federal Rule of Appellate Procedure 3(a) (“Rule 3(a)”) suggests that equitable exceptions apply to Rule 23(f). Lambert asserts that while Rule 3(a) provides that the untimely filing of notices to appeal—which are mandatory for appeals as of right, but not in appeals by permission—can invalidate an appeal, Rule 3(a) does not provide that the untimely filing of a petition for permission to appeal can render an appeal invalid. Lambert therefore notes that although the courts of appeals may deny an untimely petition, Rule 3(a) does not require that they do so. Finally, Lambert argues that Rule 23(f) is consistent with Rule 26(b) and Rule 2. Lambert suggests that Nutraceutical reads Rule 26(b) selectively, and that the Rule prohibits extending the time to file a petition only in cases where the petitioner shows good cause. The Rule, according to Lambert, is completely silent about equitable tolling. And because Rule 26(b) is consistent with equitable exceptions, Lambert maintains, so too is Rule 2 in that it merely provides that courts may not suspend Rule 26(b).
APPLYING EQUITABLE EXCEPTIONS TO LAMBERT’S PETITION
Nutraceutical argues that even if Rule 23(f) is subject to equitable exceptions, the Ninth Circuit applied exceptions that were inconsistent with Supreme Court precedent and used a standard that will provide relief to any party—such as Lambert—who simply failed to follow the rules. Nutraceutical emphasizes that equitable exceptions are only proper when an external obstacle—and not the litigant themselves—is responsible for the late filing. Nutraceutical notes that one type of equitable exception that the Supreme Court has applied to excuse late filings is equitable tolling. However, according to Nutraceutical, equitable tolling cannot apply because it requires a showing of extraordinary circumstances. Nutraceutical contends that because no extraordinary circumstances prevented Lambert’s timely filing of the petition, equitable tolling is not applicable. A second type of equitable exception recognized by the Supreme Court, Nutraceutical maintains, is the doctrine of unique circumstances. The doctrine of unique circumstances, according to Nutraceutical, requires an even higher burden than equitable tolling and applies only when a party has relied on a court’s “specific assurance” extending the appeal deadline. But, Nutraceutical asserts, the district court did not provide Lambert with any specific assurance extending the appeal deadline.
Lambert argues that Nutraceutical’s fact-based challenge to the Ninth Circuit’s application of equitable exceptions is inappropriate because it is outside the scope of the question presented by the Court. Therefore, Lambert contends, the Court should decline to reexamine the Ninth Circuit’s balancing of the equities in this case. But should the Court do so, Lambert asserts, the equitable considerations warrant affirming the Ninth Circuit’s decision. Both equitable tolling and the unique circumstances doctrine, according to Lambert, apply in this case because he orally informed the district court of his intention to seek reconsideration and he acted in accordance with the court’s instructions.
SHOULD EQUITABLE EXCEPTIONS BE APPLIED TO PROTECT UNSOPHISTICATED LITIGANTS?
Nutraceutical Corp. argues that equitable exceptions are unnecessary to protect unsophisticated litigants filing for appeal under Rule 23(f). Firstly, Nutraceutical asserts, class actions are generally filed by lawyers who should be aware of Rule 23’s statutory deadlines. Furthermore, Nutraceutical contends, Rule 23(f)’s deadline is not a difficult one to meet for unsophisticated parties. By the time Rule 23(f) is even relevant, the company maintains, parties should be well aware of the litigation’s status, including when the district court filed its decision on class certification. Alternatively, Nutraceutical claims, equitable exceptions are not necessary to protect defendants, because parties that miss the Rule 23(f) deadline can appeal certification decisions following final judgment. Finally, Nutraceutical insists that the Ninth Circuit’s application of equitable exceptions will unduly extend relief to parties who were not subject to extraordinary circumstances, but who simply failed to follow Rule 23(f)’s requirements.
Lambert, on the other hand, asserts that there is no reason for courts to assume litigants know that Rule 23(f)’s deadline is 14 days from a court’s order determining class certification, rather than whatever deadline their specific district judge has ordered. Moreover, Lambert contends that class certification decisions have high stakes for litigants, and so should warrant interlocutory—or pre-final judgment—appeal. In support of this argument, Lambert points out that certification orders are often dispositive for class actions. Furthermore, Lambert insists that the Ninth Circuit’s application of equitable exceptions in his case will not incentivize future appellants to miss Rule 23(f) deadlines. He argues that the circuit court has no obligation to accept any appeal under Rule 23(f) and can exercise similar discretion whether to apply equitable tolling to appellants. Therefore, Lambert reasons, appellants will have no incentive to miss Rule 23(f) deadlines, as the court is unlikely to grant their late petitions.
WILL APPLYING EQUITABLE EXCEPTIONS TO RULE 23(F) WASTE JUDICIAL RESOURCES?
Nutraceutical insists that the application of equitable exceptions to Rule 23(f) situations will waste judicial resources by expanding litigant opportunities for interlocutory appeals. Nutraceutical contends that Rule 23(f)’s 14-day deadline was intended to minimize litigants’ abilities to appeal class certification determinations prior to final judgement. The Ninth Circuit’s use of equitable tolling to extend Lambert’s and other litigants’ abilities to file for appeal, Nutraceutical insists, cuts against this purpose and will extend the time and expense of class actions. Moreover, Nutraceutical asserts, the stay of proceeding that often occurs during an interlocutory appeal will affect the economic incentives of class action parties.. When a court decertifies a class, Nutraceutical observes, class members have to proceed on an individual basis, which will likely lead to motion for a stay of proceedings. Nutraceutical states that the same is true for defendants. Requiring class members to proceed individually will lengthen litigation and create uncertainty around the future of a case; further wasting judicial resources.
In opposition, Lambert contends that exempting Rule 23(f) from equitable exceptions will waste party and judicial resources. Relying on the case at hand as an example, Lambert hypothesizes that Nutraceutical would have preferred Lambert file both a motion for reconsideration and a Rule 23(f) petition. If, in this hypothetical, Lambert had succeeded in his motion for reconsideration, he would have then had to dismiss his own Rule 23(f) petition. Lambert asserts that this would have wasted the time and effort that the court and the parties would have spent on its consideration. Alternatively, if the district court had denied Lambert’s hypothetical motion for reconsideration, Lambert would have had to make a wasteful third filing on top of his initial motion and his Rule 23(f) petition, explaining why the district court’s denial was in error. Lambert suggests that this type of situation would ultimately flood circuit courts with redundant Rule 23(f) petitions involving unnecessary certification determinations that would already be subject to alteration by separate motions for reconsideration.
- Boris Bershteyn et al., The Supreme Court’s Business Docket for the October 2018 Term, JD Supra (Oct. 23, 2018).
- Lawrence Weinstein & Jennifer Yang, Supreme Court Briefing Begins Over Equitable Tolling of Rule 23(f) Deadline, National Law Review (Sept. 5, 2018).