DAMIAN LANGERE, on behalf of himself and others similarly situated, Plaintiff-Appellant, v. VERIZON WIRELESS SERVICES, LLC, Defendant-Appellee.
No. 19-55747
United States Court of Appeals, Ninth Circuit
Filed December 29, 2020
Opinion by Judge Bumatay
D.C. No. 2:15-cv-00191-DDP-AJW; Appeal from the United States District Court for the Central District of California, Dean D. Pregerson, District Judge, Presiding; Argued and Submitted November 9, 2020, Pasadena, California.
FOR PUBLICATION
OPINION
Before: Barrington D. Parker, Jr.,* Paul J. Watford, and Patrick J.
Opinion by Judge Bumatay
SUMMARY**
Arbitration / Appellate Jurisdiction
The panel dismissed for lack of jurisdiction a Verizon Wireless customer‘s appeal from the district court‘s orders denying his motions to compel arbitration and reconsideration, and from his own voluntary dismissal, in a case in which the plaintiff brought a putative class action against Verizon for violation of federal and state consumer-protection laws.
In Omstead v. Dell, Inc., 594 F.3d 1081 (9th Cir. 2010), this court held that a plaintiff can avoid arbitration and manufacture appellate jurisdiction simply by voluntarily dismissing his claims with prejudice. The panel concluded that Omstead has been effectively overruled by Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017). The panel therefore held that a plaintiff does not create appellate jurisdiction by voluntarily dismissing his claims with prejudice after being forced to arbitrate them.
COUNSEL
Jordan S. Esensten (argued) and Robert L. Esensten, Esensten Law, Los Angeles, California, for Plaintiff-Appellant.
Julia B. Strickland (argued) and David W. Moon, Stroock Stroock & Lavan LLP, Los Angeles, California, for Defendant-Appellee.
OPINION
BUMATAY, Circuit Judge:
After being compelled to arbitrate by court order, can a plaintiff avoid arbitration and manufacture appellate jurisdiction simply by voluntarily dismissing his claims with prejudice? We‘ve previously answered that question in the affirmative. See Omstead v. Dell, Inc., 594 F.3d 1081 (9th Cir. 2010). But a later decision of the Supreme Court has forced us to reconsider. See Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017). After finding that our previous approach is clearly irreconcilable with that outlined by the Court, we change our answer.
We conclude that our decision in Omstead has been effectively overruled by the Court‘s decision in Microsoft. And so we hold that a plaintiff does not create appellate jurisdiction by voluntarily dismissing his claims with prejudice after being forced to arbitrate them.
I.
Damian Langere is a Verizon Wireless customer who purchased the company‘s extended warranty program for his cellphone. He was unhappy to find out that the Verizon warranty offers similar protections to those already provided by his cellphone‘s manufacturer for the first year. He therefore brought this putative class action against Verizon for the violation of federal and state consumer-protection statutes. Verizon moved to compel arbitration and stay judicial proceedings under
Ordinarily, a plaintiff in this position has two choices to appeal: arbitrate the claims to completion and then appeal as of right, see
Langere then appealed his own voluntary dismissal, and the district court‘s orders, to this court. Verizon moved to dismiss for lack of appellate jurisdiction. A motions panel of this court denied that motion without prejudice to renew during the merits consideration of the case. Verizon so renewed its concern about appellate jurisdiction before this panel. We now grant that motion.
II.
A.
Generally speaking, we may only review decisions from district courts that are “final.” See
On top of the general final-judgment rule, Congress has carefully designed a framework for appeals in the arbitration context. In the
Accordingly, it is “well established that
B.
For every rule, there‘s an exception. In Omstead, we created one such exception to the rules for appealing arbitration orders. In that case, like here, a district court ordered arbitration of plaintiffs’ claims and stayed judicial proceedings. 594 F.3d at 1083. In response, the plaintiffs told the district court that they would not arbitrate their claims, citing economic infeasibility and arbitration bias. Id. They also requested that the court enter a final order allowing them to appeal. Id. The district court refused, and instead dismissed the plaintiffs’ claims for failure to prosecute under
On appeal, we held that the district court abused its discretion in dismissing the action for want of prosecution because the
as a
C.
1.
Seven years after Omstead, the Court decided Microsoft. 137 S. Ct. at 1702. That case had a procedural history like this one. The plaintiffs filed a putative class action against Microsoft for defects in its gaming console. Id. at 1710. Based on a prior class certification denial in a related case, the district court denied class certification and struck the class allegations. Id. at 1710–11. In one twist from the instant case, the plaintiffs came to us first and petitioned for an interlocutory appeal under
The plaintiffs then returned to the district court and moved to dismiss their case with prejudice; Microsoft stipulated to the dismissal but maintained that such a dismissal would not be appealable. Id.. The district court granted the stipulated dismissal motion, and the plaintiffs appealed. Id. We granted jurisdiction over the stipulated dismissal, holding it was a sufficiently adverse, final decision under
The Supreme Court granted certiorari to resolve the question: “Do federal courts of appeals have jurisdiction under
In Microsoft, the Court held that “[p]laintiffs in putative class actions cannot transform a tentative interlocutory order into a final judgment within the meaning of
First, the Court considered it of “prime significance” that the plaintiffs’ dismissal tactic would “undercut[]
The Court also was concerned that the voluntary-dismissal tactic “invites protracted litigation and piecemeal appeals.” Id. at 1713. It explained that the voluntary dismissal deprives appellate courts of the ability to decline an appeal and, therefore, allows the plaintiff to exclusively determine whether an immediate appeal will lie. Id. Furthermore, a plaintiff may deploy this method more than once, “stopping and starting the district court proceedings with repeated interlocutory appeals.” Id.
The Court finally explained that the “one-sidedness” of plaintiffs’ voluntary-dismissal device demonstrated that treating the dismissal as a final judgment was inappropriate. Id. at 1715. Recognizing a final judgment in that case would permit “plaintiffs only,” and “never defendants,” to force an immediate appeal. Id. Again, such a tactic, the Court observed, would allow litigants to disturb the rulemaking process that Congress chose to settle appellate procedures. Id.
In addition, three Justices would have ruled that the plaintiffs’ voluntary dismissal tactic deprived the court of jurisdiction because there was no longer a case or controversy. Id. at 1717 (Thomas, J., concurring). Justice Thomas, along with Chief Justice Roberts and Justice Alito, concluded that when plaintiffs voluntarily dismiss their claims, “they consent[] to the judgment against them and disavow[] any right to relief [from the defendant].” Id. In such a case, the parties were no longer “adverse to each other on any claims,” and the court of appeals could not “affect their rights” in any legally cognizable manner. Id. (simplified). This view was supported by the long-established rule that “a party may not appeal from the voluntary dismissal of a claim, since the party consented to the judgment against it.” Id.; see, e.g., Evans v. Phillips, 17 U.S. 73 (1819) (dismissing writ of error on ground that plaintiff had “submitted to a nonsuit in the circuit court“); United States v. Babbitt, 104 U.S. 767, 768 (1881) (explaining that “consent to the judgment below” waived right to appeal); see also Keena v. Groupon, Inc., 886 F.3d 360, 365 (4th Cir. 2018) (recognizing, in this exact procedural context, “the longstanding principle that a party is not entitled to appeal from a consensual dismissal of her claims“).
As a result, a unanimous Court ruled that plaintiffs can‘t evade the discretionary framework for appealing class-certification denials by simply voluntarily dismissing their claims with prejudice and manufacturing appellate jurisdiction.
Before considering Microsoft‘s impact on Omstead, we pause to explain our framework for examining the interplay between circuit and Supreme Court precedent. Our circuit‘s published opinions on the law are authoritative once issued and remain binding on subsequent panels of this court. See Hart v. Massanari, 266 F.3d 1155, 1171 (9th Cir. 2001). Generally speaking, the law announced in such cases can be changed only by Congress, our court itself sitting en banc, or the Supreme Court. Id.
Sometimes, though, our precedent becomes effectively overruled by a Supreme Court decision that is closely on point, even if the decision does not do so expressly. Miller v. Gammie, 335 F.3d 889, 899 (9th Cir. 2003) (en banc). While following our past decisions is important to preserve the stability of circuit law, that is secondary to following the Supreme Court. Id. After all, “unless we wish anarchy to prevail within the federal judicial system,” we are always required to follow the controlling opinions of the Court. Hutto v. Davis, 454 U.S. 370, 375 (1982). Importantly, this deference extends to the reasoning of Court decisions, too—not just their holdings. See Thompson v. Hebdon, 909 F.3d 1027, 1043 (9th Cir. 2018); see also United States v. Slade, 873 F.3d 712, 715 (9th Cir. 2017) (finding a prior decision effectively overruled because its reasoning skipped an “analytical step” that the Supreme Court later required).
So when the reasoning of a prior case of ours is “clearly irreconcilable” with the reasoning of a subsequent Supreme Court case, a three-judge panel is not bound by the former and is free to reject it as “effectively overruled.” Miller, 335 F.3d at 893. This happens when the Supreme Court has “undercut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.” Id. at 900. Thus, even when the issue in the Supreme Court case is not “identical” to the one decided by our court, the Supreme Court‘s reasoning may be controlling nonetheless. Id. This burden is high, but not insurmountable. See Aleman Gonzalez v. Barr, 955 F.3d 762, 765 (9th Cir. 2020).
In employing this principle, we‘ve said it is enough that the issues, while not carbon copies, “ultimately derive[d] from the same inquiry.” SEIU Local 121RN v. Los Robles Reg‘l Med. Ctr., 976 F.3d 849, 855 (9th Cir. 2020). In SEIU Local 121RN, our prior precedent held that courts may construe a broad arbitration clause in a labor agreement as conferring authority on the arbitrator to decide arbitrability. Id. at 853 (discussing United Bhd. of Carpenters & Joiners of Am., Local No. 1780 v. Desert Palace, Inc., 94 F.3d 1308 (9th Cir. 1996)). But the Supreme Court had since held that in both the commercial and labor contexts, whether parties have agreed to submit their dispute to arbitration is presumptively a matter for the court to decide. Id. at 854 (discussing Granite Rock Co. v. Int‘l Bhd. of Teamsters, 561 U.S. 287 (2010)). While the Supreme Court case dealt with formation of an arbitration agreement generally and ours dealt with delegation to the arbitrator, more fundamentally, both cases dealt with what the parties agreed to have the arbitrator decide. Id. at 855. The “incompatibility of the rationale[s]” of the two cases was enough to render them “clearly irreconcilable.” Id. at 860. The Supreme Court‘s decision therefore trumped our own. Id. at 861.
And in Dorman v. Charles Schwab Corp., we viewed the Supreme Court‘s holding that arbitrators can competently interpret and apply federal statutes as a general matter as effectively overruling
At the end, our cases distill to a simple principle: when a rule announced by this court and a rule later announced by the Supreme Court cannot both be true at the same time, they are clearly irreconcilable. In such a case, the former must give way to the latter. On the other hand, where two rules can coexist, we leave them both undisturbed.5 At bottom, this just reflects the definition of “irreconcilable.”6
IV.
Applying these principles to this case, we hold that Omstead has been effectively overruled by the Supreme Court‘s decision in Microsoft. Class certification and compelling arbitration are not the same. But the ultimate, fundamental question is whether a plaintiff may bypass a regime for discretionary appellate review through a voluntary dismissal. Because the Supreme Court has clearly rejected that tactic, we must do so as well. At its core, the Supreme Court‘s reasoning in Microsoft is clearly irreconcilable with our approach in Omstead.
A.
First and foremost, Langere‘s voluntary-dismissal tactic undermines the discretionary appellate-review scheme designed by Congress in the FAA. See
The dismissal tactic here is antagonistic to Congress‘s plan because it transforms discretionary, interlocutory appeals of orders compelling arbitration into appeals as of right. As a result, Congress‘s final decision rule is rendered into “a pretty puny one,” Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 872 (1994), and its scheme for discretionary appellate review of arbitration orders is nullified.
This concern applies with even more force here, since Langere has unilaterally removed the district court from any role in the appellate process. Under the FAA, to appeal an interlocutory arbitration order, the plaintiff must first seek the concurrence of the district court.
Second, Langere‘s voluntary-dismissal tactic “invites protracted litigation and piecemeal appeals.” Microsoft, 137 S. Ct. at 1713. Since the strategy removes the courts’ discretion in policing appeals and places appellate rights exclusively in the hands of plaintiffs, nothing prevents them from exercising this option more than once, “stopping and starting the district court proceedings with repeated interlocutory appeals.” Id. at 1713. This directly undermines Congress‘s effort in the FAA “to prevent parties from frustrating arbitration through lengthy preliminary appeals.” Stedor Enterprises, Ltd., 947 F.2d at 730. Indeed, a case might ping pong back and forth between the district and circuit courts with every new ground for compelling arbitration, if this voluntary-dismissal tactic were allowed to proceed.
Third, like in Microsoft, the dismissal tactic here is one-sided: only plaintiffs, never defendants, may force the immediate appeal of an order compelling arbitration. It is true that
Were we to replace three words in Microsoft, “denying class certification,” with “compelling arbitration,” and substitute “Rule 23(f)” with “§ 16(b),” that decision would be indistinguishable from our own. One case is about class certification and one is about arbitration. But we cannot cover our eyes to binding Court decisions on that basis alone. The reasoning of Microsoft was that the voluntary-dismissal device cannot be permitted to subvert the final judgment rule or a finely wrought, discretionary-appellate regime. And that is precisely what the gambit before us now purports to do. Simply, the rationales of Omstead and Microsoft are incompatible and irreconcilable. For that reason, we conclude that Omstead‘s jurisdictional holding is overruled.
B.
Our decision today hardly breaks new ground. Rather, we just solemnize what seems obvious. Our court has previously acknowledged—on two separate occasions—that Microsoft effectuated a change in law in our circuit for the purposes of
Applying Microsoft‘s rationale to the appeal of orders to compel arbitration puts us in line with at least one other circuit. In Keena, the Fourth Circuit likewise applied the Microsoft factors to determine that plaintiffs cannot create appellate jurisdiction by voluntarily dismissing their claims after an arbitration order. 886 F.3d at 363-65 (explaining that, instead, “a party seeking to appeal an order staying the action and compelling arbitration must first secure permission from both the district court and the court of appeals under
Two other out-of-circuit cases do not counsel in favor of the Omstead rule either. First, the Fifth Circuit has concluded that Microsoft does not preclude the immediate appeal of an involuntary dismissal for want of prosecution, before affirming the district court‘s dismissal because the litigant refused to arbitrate. See Griggs v. S.G.E. Mgmt., L.L.C., 905 F.3d 835 (5th Cir. 2018). That case obviously offers no support to Langere, who has voluntarily dismissed his claims. Second, Langere points to the Tenth Circuit, which concluded that a voluntary dismissal with prejudice was appealable as a final order. See Spring Creek Expl. & Prod. Co., LLC v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1016 (10th Cir. 2018). But that conclusion depended on the fact that dismissal was stipulated to by the parties, and that the case fully resolved in arbitration before the appeal. Id. With a procedural posture unlike Microsoft and the case before us now, Spring Creek does not help Langere, either.
V.
After careful consideration of our own precedent, and that of the Supreme Court, we conclude that the voluntary dismissal of claims following an order compelling arbitration does not create appellate jurisdiction. We therefore DISMISS this appeal for lack of jurisdiction.