Groupon Wins Appeal Over Reimbursement Policy
The Fourth Circuit cited a 2017 U.S. Supreme Court decision from last year that struck down a procedural tactic used by plaintiffs to get their appeals heard.
March 28, 2018 at 03:04 PM
4 minute read
A federal appeals court has tossed a consumer class action against Groupon Inc. citing a U.S. Supreme Court decision from last year that struck down a procedural tactic used by plaintiffs.
The U.S. Court of Appeals for the Fourth Circuit found on Tuesday that it lacked jurisdiction to hear the appeal of Erin Keena, who sued over Groupon's reimbursement policy. The unanimous panel found that Keena, who had asked the judge below to dismiss the case so he could appeal his arbitration order, had tried the same procedural tactic that Justice Ruth Bader Ginsburg rejected in Microsoft v. Baker.
“Justice Ginsburg's opinion in Microsoft rejected the nearly identical effort made in that case, characterizing Baker's appeal to the court of appeals as arising from a 'voluntary-dismissal tactic' that contravenes the final-judgment rule,” wrote Judge Robert King. “Justice Ginsburg's rationale is instructive here, and provides an apt description of what occurred in Keena's effort to secure an immediate appeal.”
Scott Schutte, a partner at Morgan, Lewis & Bockius in Chicago, who represented Groupon, declined to comment. Keena's lawyer, Daniel Flint of the Law Offices of Daniel C. Flint in Southfield, Michigan, did not respond to a request for comment.
Keena sued after Groupon provided her with a credit toward a future purchase, rather than cash, as a refund for a $29 massage she purchased in 2015. On appeal, Keena challenged the arbitration clause, while Groupon said she lacked standing under Article III of the Constitution since she had no “personal stake” in the litigation anymore. The Fourth Circuit asked for supplemental briefs following the Microsoft decision.
In that June 12 decision, the Supreme Court blocked a controversial procedural tool used by plaintiffs to appeal class certification orders by voluntarily dismissing their own case. Plaintiffs had brought a class action over Microsoft's Xbox 360 video-game consoles.
The Supreme Court found the move violated Federal Rule of Civil Procedure 23(f), which permits interlocutory appeals of class certification, and it wasn't a “final decision” under Judiciary and Judicial Procedure Code 1291. The ruling has prompted other courts to toss class actions over similar tactics. On Oct. 12, the Ninth Circuit granted dismissal of an appeal in a consumer class action over Cymbalta, an antidepressant prescription drug, citing Microsoft. Then, on Feb. 1, the Ninth Circuit dismissed a malpractice class action against the law firm Milberg.
The Second Circuit also cited Microsoft in an Oct. 5 summary order dismissing an appeal of an arbitration ruling—a decision that both sides in the Groupon case addressed in supplemental notices.
The Fourth Circuit found Microsoft's holding analogous, even though it dealt with a ruling over arbitration rather than class certification. In particular, Keena asked U.S. District Judge Graham Mullen of the Western District of North Carolina to amend his arbitration order to include dismissal of her case, insisting “she would not pursue arbitration because the cost of that process outweighed the potential recovery,” the ruling says. In the alternative, she asked that he certify his order for appeal. Mullen granted her request as to dismissal, allowing Keena to appeal.
The court concluded that Keena was required to participate in arbitration proceedings in order to reach a “final decision.”
“Put succinctly, in seeking to create final order 1291 jurisdiction, Keena has, like the plaintiff in Microsoft, pursued her own version of the voluntary-dismissal tactic that the Supreme Court soundly repudiated,” King wrote.
In a footnote, the Fourth Circuit acknowledged Keena's argument that she didn't actually voluntarily dismiss her case, concluding: “This is a distinction without a difference.”
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