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November 10, 2017
  Lambert v. Nutraceutical Corp.
Headline: The Ninth Circuit panel held that Federal Rule 23(f)'s fourteen-day deadline for filing a petition for interlocutory appeal of an order decertifying a class is procedural and, therefore, subject to equitable exceptions such as tolling. Parting ways with other circuits, the panel also held that, because plaintiff informed the court orally of his intention to seek reconsideration of the decertification order within fourteen days of the decertification order, and because the district court set the deadline for filing a motion for reconsideration after the expiration of the deadline, with which Lambert complied, the Rule 23(f) deadline was tolled. .
Areas of Law: Civil Procedure

Issues Presented: Whether the fourteen-day time limit, provided in Federal Rule of Civil Procedure 23(f) for appealing an order decertifying a class action was tolled at the time plaintiff informed the court, within the fourteen-day period, of his intention to file a motion for reconsideration of the order, even though the motion was filed, at the court's instruction, after the expiration of the deadline.

Brief Summary: Plaintiff brought a consumer class action against defendant, alleging that defendant's product made egregious false representations causing injury. After the district court granted defendant's motion to decertify the class, plaintiff, within the fourteen days of the decertification order, informed the court of his intention to file a motion to reconsider the order. As directed by the court, ten days later, and twenty days after the expiration of the fourteen-day deadline, plaintiff moved for reconsideration which the court denied three months later. Fourteen days later, plaintiff filed a petition for permission to appeal the district court's order.

Rule 23(f) provides that a petition for permission to appeal an order granting or decertifying a class must be filed within fourteen days of said order. The panel held this Rule 23(f) is a procedural and thus may be subject to equitable exceptions, like tolling, under certain circumstances. Although circuits that have considered this issue agree that this deadline may be tolled when the plaintiff files the motion for reconsideration within the fourteen-day period, the Ninth Circuit panel parted ways with other circuits in holding that the deadline is also tolled when the plaintiff orally informs the court, within the fourteen-day deadline, of his intention to move for reconsideration and, at the court's instruction, then files the motion after the expiration of the deadline. Addressing the meirts of the appeal, the panel also held that district court abused its discretion in decertifying the class.

Significance: Disagreeintg with the position of other circuits that limit the availability of equitable exceptions to the Rule 23(f) deadline by allowing tolling only when the motion for reconsideration is filed, the Ninth Circuit panel allowed tolling when the plaintiff, within the fourteen-day deadline, orally informed the court of his intention to move for reconsideration.

Extended Summary: Plaintiff, Troy Lambert, brought a consumer class action against defendant, Nutraceutical Corporation, for violations of California's Unfair Competition Law ("UCL"), False Advertising Law ("FAL"), and Consumer Legal Remedies Act ("CLR").

Nutraceutical manufactured and marketed "Cobra Sexual Energy," an alleged aphrodisiac supplement not approved by the Food and Drug Administration ("FDA"). Despite "Cobra Sexual Energy's" lack of FDA approval, defendant claimed its product contained performance-enhancing herbs that would provide users with "animal magnetism" and "potency wood." Based on these assertions plaintiff purchased the product. Had Lambert known the product lacked FDA approval, plaintiff contends he would not have purchased the product.

The district court granted class certification because Lambert's full refund damages model provided a reasonable theory that monetary relief could be ascertained on a classwide basis. Once discovery concluded, defendant moved to decertify the class which the district court granted explaining that, although Lambert's full refund damages model was consistent with the theories of liability alleged, his failure to provide "the key evidence necessary to apply his class wide model for damages" was fatal.

Ten days after the order decertifying the class, Lambert informed the district court of his intention to file a motion for reconsideration. The district court instructed Lambert to file the motion within ten days. As instructed by the court, Lambert moved for reconsideration ten days later. Three months later, the court the court denied Lambert's motion for reconsideration. Fourteen days after his motion for reconsideration was denied, Lambert filed a Rule 23(f) petition to appeal the court's decertification orders granting the motion for decertification and denying the motion for reconsideration.

Rule 23(f) requires that a petition for permission to appeal an order granting or denying class certification be filed within fourteen days after the order is entered. However, the rule is silent as to the effect a motion for reconsideration has on the fourteen-day deadline. Lambert's petition for permission to appeal the denial of his motion for reconsideration was filed approximately three months after the order for decertification was granted.

In order to determine whether Rule 23(f) deadline bars Lambert's petition for permission to appeal, the panel first had to determine whether Rule 23(f) is jurisdictional. To decide this issue, the panel was guided by two Supreme Court decisions: Eberhart v. United States, 546 U.S. 12 (2205) and Bowles v. Russell, 551 U.S. 205 (2007). In Eberhart, the Supreme Court held that a deadline in the Federal Rules of Criminal Procedure was not jurisdictional, because it was a procedural "claims-processing" rule. In Bowles, the Court held that deadlines in statutes are jurisdictional but non-statutory deadlines may instead be "claims-processing" rules. Applying Bowles and Eberhart the panel held that Rule 23(f) is not jurisdictional "because it is procedural, does not remove a court's authority over subject matters or persons, and is in the Federal Rules of Civil Procedure, rather than in a statute."

After determining that Rule 23(f) is not jurisdictional that panel had to decide what if any equitable considerations could be applied and whether plaintiff was entitled to any. The panel agreed with those circuits that have held that the deadline may be tolled when the plaintiff filed his motion for reconsideration within the fourteen-day deadline. However, the panel noted that these circuits would not toll the deadline in circumstances like Lambert's where the motion was filed twenty days after the running of the fourteen-day deadline.

To determine when equitable circumstances beyond a motion for reconsideration filed within the fourteen-day Rule 23(f) deadline can toll the deadline, the panel applied the following equitable factors: (1) whether the litigant pursued his rights diligently; (2) whether external circumstances affected the litigant's ability to comply with the fourteen-day deadline; and (3) other legal actions taken by litigant. Here, Lambert conveyed his intention to file a motion for reconsideration to the district court, complied with the imposed deadline set by the court, and thereafter was diligent in submitting his petitioning to the appellate court. The panel found no evidence of bad faith. Furthermore, there was justifiable reliance on the district court's instructions (ten days after the order for decertification was granted petitioner was told that he had ten more days to file his motion).

Turning to the merits of the appeal, the panel concluded that the district court had abused its discretion in decertifying the class on the basis of Lambert's inability to prove restitution damages through the proposed full refund model, citing Yokoyama v Midland Nat'l Life Ins. Co, 594 F.3d 1087, 1094 (9th Cir. 2010): "damage calculations alone cannot defeat certification.". The panel reconciled this holding in Yokoyama with the Supreme Court's holding in Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1433 (2013), that a Rule 23(b)(3) plaintiff must show that "damages are capable of measurement on a class wide basis," by noting that "Comcast stood only for the proposition that 'plaintiffs must be able to show that their damages stemmed from the defendant's actions that created the legal liability.'"

To read the full opinion, please visit: http://cdn.ca9.uscourts.gov/datastore/opinions/2017/09/15/15-56423.pdf

Panel: Richard A. Pae, Marsha S. Berzon, and Morgan Christen, Circuit Judges

Argument Date: March 9, 2017

Date of Issued Opinion: September 15, 2017

Docket Number: D.C. No. 2:13-cv-05942-AB-E

Decided: Reversed and remanded for further proceedings. The court found that plaintiff's petition for class certification, pursuant to Fed. R. Civ. P. 23(f), was timely made.

Case Alert Author: Luis F. Bustamante

Counsel
Gregory Weston (argued) and David Elliott, The Weston Firm, San Diego, California; Ronald A. Marron, The Law Offices of Ronald A. Marron APLC, San Diego, California; for Plaintiff-Appellant.

Steven N. Feldman (argued) and John C. Hueston, Hueston Hennigan LLP, Los Angeles, California; Jon F. Monroy, Monroy Averbuck & Gysler, West Lake Village, California; for Defendant-Appellee.
Author of Opinion: Richard A. Paez

Circuit: Ninth

Case Alert Supervisor: Professor Glenn Koppel

    Posted By: Glenn Koppel @ 11/10/2017 05:11 PM     9th Circuit  

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