In Microsoft v. Baker, 137 S. Ct. 1702 (June 12, 2017), the U.S. Supreme Court resolved an important jurisdictional issue concerning class action procedure, holding that a federal court of appeals does not have jurisdiction under 28 U.S.C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.

The plaintiffs in Baker brought a putative class action against the manufacturer of a popular video game console, the Xbox 360, alleging that the console was inherently defective. The district court entered an order striking the plaintiffs' class allegations, see 851 F. Supp. 2d 1274 (W.D. Wash. 2012), which is the functional equivalent of class certification denial. The plaintiffs filed a petition in the U.S. Court of Appeals for the Ninth Circuit under Rule 23(f) of the Federal Rules of Civil Procedure seeking permission to appeal from the district court's order denying class certification. In support of their petition, the plaintiffs argued that the class certification denial would sound the death knell for the underlying litigation in light of the small economic value of their individual claims. The Ninth Circuit denied the Rule 23(f) petition for interlocutory review.

Instead of pursuing their individual claims to a final judgment on the merits, the plaintiffs filed a motion in the district court to dismiss voluntarily their claims with prejudice under Fed. R. Civ. P. 41(a), but reserving the plaintiffs' right to revive their claims in the event of a reversal of the district court's certification denial and reinstatement of the class allegations. The reason for their motion to dismiss, the plaintiffs explained, was to secure a final judgment and then appeal from it, which would bring up for review the prior interlocutory order denying class certification. (Under the “merger rule,” prior interlocutory orders merge with the final judgment in a case, and such orders are reviewable on appeal from the final judgment to the extent that they affect it.) Microsoft stipulated to the voluntary dismissal without conceding the plaintiffs' right to appeal. After the district court's entry of an order granting the dismissal with prejudice, the plaintiffs appealed to the Ninth Circuit, which held that it had jurisdiction to entertain the appeal under 28 U.S.C. §1291. The court reversed on the ground that the district court had abused its discretion in denying class certification. The court expressed no opinion on whether the class should be certified, holding only that the district court had applied an incorrect standard of review and remanding to that court for further consideration of the certification issue under a different standard. See 797 F.3d 607 (9th Cir. 2015).