On February 26, the Supreme Court unanimously held in Nutraceutical Corporation v. Lambert that the text of Rule 23(f)—which sets a 14-day deadline for a party to petition a circuit court for permission to appeal a district court’s class certification order—must be strictly applied.

• This appeal arose from a class action lawsuit alleging that Nutraceutical Corporation’s marketing of its dietary supplement ran afoul of California consumer-protection law.
• After initially certifying the class, the district court entered an order decertifying the class.  Ten days after the decertification order, the plaintiff indicated his intention to file a motion for reconsideration and later moved for reconsideration in compliance with the district court’s schedule (20 days after the decertification order).  The district court ultimately denied the motion for reconsideration roughly four months after the decertification order.  It was only then that the plaintiff petitioned the Ninth Circuit for permission to appeal the decertification order. 
• The Ninth Circuit held that the 14-day deadline should be tolled under the circumstances.  But the Supreme Court reversed, explaining that the text of Rule 23(f) “make[s] clear that its deadline is not subject to equitable tolling” and that “[w]here the pertinent rule or rules invoked show a clear intent to preclude tolling, courts are without authority to make exceptions merely because a litigant appears to have been diligent, reasonably mistaken, or otherwise deserving.”
• Although the Supreme Court left open the question of how a motion for reconsideration filed within the 14-day window would affect Rule 23(f)’s deadline, it did note that “[a] timely motion for reconsideration filed within a window to appeal … ‘renders an otherwise final decision of a district court not final’ for purposes of appeal.”  This suggests that the Court’s decision might have been different had the plaintiff actually moved for reconsideration within the 14-day window.    
• Following the decision, parties moving for district court reconsideration of a class certification order must take steps to preserve their ability to file a Rule 23(f) petition:
  • • First, it is now clear that a litigant should file a motion for reconsideration within 14 days to preserve Rule 23(f) petition rights, regardless of whether the district court’s schedule permits motions for reconsideration on a later timetable. 
    • Second, as a prophylactic measure to avoid potential waiver, parties should go ahead and file a Rule 23(f) petition within 14 days—even while a motion for reconsideration remains pending—unless and until the Supreme Court conclusively determines that the Rule 23(f) clock does not begin ticking until the district court has ruled on the motion for reconsideration.  Although the appellate court may refuse to consider the petition if it determines that the pending motion for reconsideration divests it of jurisdiction, the petitioning party will have avoided the potential waiver problem and can renew its Rule 23(f) petition (if necessary) after the district court declines to reconsider its class certification order. 
    • Third, the party should apprise both the district court and the appellate court that, due to the uncertainty engendered by Lambert, it believes the prudent course is to file a motion for reconsideration and a Rule 23(f) petition concurrently in order to preserve its appellate rights.            
• The Lambert decision should also counsel class action defendants to think strategically before filing a motion for reconsideration of a class certification order.  Except for the rare situation in which the motion identifies an obvious and material error committed by the district court, motions for reconsideration have low success rates and create unnecessary confusion about the appellate deadline.  Instead, it may be advisable to concentrate your efforts on the Rule 23(f) petition, in which the odds are low but probably higher than a reconsideration motion. 

Read More »