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The climax in the typical class action case is the decision whether the class will be certified.&nbsp; Frequently, the magnitude of a potential loss, even if the actual risk is small and the case is weak on the merits, may drive a defendant to settle if the case&nbsp;has been certified.&nbsp; For that reason, Rule 23 was amended in 1998&nbsp; to provide for a potential appeal should either side be dissatisfied with the trial court's decision whether to certify the class.&nbsp; The operative language of Rule 23(f) states: "A court of appeals may permit an appeal from an order granting or denying class-action certification under this rule if a petition for permission to appeal is filed with the circuit clerk within 14 days after the order is entered."&nbsp; According to the committee notes, the rule was amended because if certification was denied, the plaintiff may not have an economic incentive to pursue the claims, while a decision certifying the case "may force a defendant to settle rather than incur the costs of defending a class action and run the risk of potentially ruinous liability."&nbsp; In the wake of Rule 23(f)'s amendment, no rigid test has been developed for review, but courts of appeal tend to look at issues such as whether the decision creates a "death-knell" situation independent of the merits, presents novel issues of law, or is manifestly erroneous. A recent case, <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2010/12/Dalton-v-Lee-Publications-Inc.pdf">Dalton v Lee Publications Inc.pdf</a>, Case No. 10-80159 (9th Cir. Nov. 16, 2010), underscores that Rule 23(f) appeals may still be unavailable even in dire cases for one party.&nbsp; In that case, the United States Court for the Southern District of California certified a class of approximately 800 delivery workers who claimed that they had been misclassified by the defendant newspaper as independent contractors.&nbsp; The defendant sought 23(f) review, citing, among others, the fact that it was a "member of the struggling newspaper industry" might&nbsp; be facing a death-knell scenario given the potential of $18 million in liability. In a 2:1 decision, the Ninth Circuit denied review.&nbsp; The majority did not explain its reasoning, other than to cite the per curiam decision in a prior case, Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005), that listed some of the factors that might be considered in deciding whether to grant review.&nbsp; The dissent, however, asserted that the defendant should at least be permitted to appeal.&nbsp; It noted that Rule 23(f) was intended precisely to permit review when a certification decision created undue pressure on one of the parties to settle.&nbsp; Finding that the underlying certification decision was at least debatable given the need for an individual inquiry, and also that the defendant would now face "intense settlement pressure" due to its economic condition, it would have granted review.&nbsp; Importantly, the question being asked technically was not whether the case should have been certified, but whether the court would at least inquire on an interlocutory basis whether certification was warranted.&nbsp; As a result of the decision, the defendant will be presented with the great cost and risk associated with a class and may very well settle rather than risk its existence on appellate review years later.&nbsp; Even then, the defendant may have no meaningful right of review if it suffers an adverse class award and cannot come up with the likely hefty appellate bond needed to stay execution during the appeal's pendency. The Bottom Line:&nbsp; Interlocutory review of decisions whether to certify are far from automatic, and review may not be available even when the case presents the very issues Rule 23(f) was intended to address. &nbsp;

Court Denies Rule 23(f) Appeal Despite Financial Concerns