UPDATES & ANALYSIS

Two appellate-jurisdiction issues; two circuit splits. Next year’s moot-court competition?

by Ryan Koopmans | February 14, 2013

By Ryan Koopmans

Yesterday, the Eighth Circuit decided Ruppert v. Principal Life Insurance Company and deepened circuit splits on two separate issues. First, the panel held that if a plaintiff voluntarily dismisses his remaining claim after receiving an unfavorable interlocutory ruling, there is no final appealable order unless the dismissal is with prejudice.  That ruling reinforces Eighth Circuit precedent and strengthens a long-lasting circuit split that most, if not all, federal courts of appeals have addressed.

Second, the court ruled that if a district court denies class certification and the putative class plaintiff voluntarily settles his underlying claim, then the plaintiff does not have standing to appeal the class-certification order.  In so ruling, the Eighth Circuit sided with the Fourth Circuit and split with the D.C. Circuit.  Moot-court boards take note: two issues; two circuit splits.  Sounds like the Eighth Circuit has written next year’s competition.

The case arises out of a  putative class action against Iowa-based Principal Life Insurance Company.  The plaintiff, Joseph Ruppert, alleged that Principal violated ERISA by receiving revenue-sharing payments from mutual funds and failing to disclose those payments to its customers.  A federal district court in Iowa denied class certification, and the Eighth Circuit rejected Ruppert’s request for interlocutory appeal.

Hoping to create a final, appealable order, Ruppert settled and dismissed his underlying claims against Principal, but with two caveats: Ruppert reserved the right to appeal the denial of class certification, and if the Eighth Circuit reversed, then Ruppert reserved the right to refile his claims on remand.  Likely realizing the jurisdictional hurdles that agreement would create, Ruppert and Principal agreed that Principal would not challenge the Eighth Circuit’s jurisdiction to hear Ruppert’s class-certification appeal.

Of course, that could not and did not stop the Eighth Circuit from deciding the jurisdictional issues itself.  And a three-judge panel, Judge Colloton writing, decided them both against Ruppert.

To begin, there was no final judgment because Ruppert dismissed his claims without prejudice.  Under the settlement agreement, the claims would, in Judge Colloton’s words, “spring back to life” if the Eighth Circuit reversed the denial of class certification.  The panel acknowledged the circuit split on the issue, citing several cases that cite several more.  But the panel reinforced the Eighth Circuit rule: “[U]nless the appellant’s claims are unequivocally dismissed with prejudice, there is no final appealable decision.”

But the Eighth Circuit went on, noting that even if it were “wrong about finality,” Ruppert settled his claims against Principal, so he doesn’t have Article III standing to appeal the class-certification ruling.  Under U.S. Supreme Court precedent, a class plaintiff may appeal the denial of class certification even if his individual claims are involuntarily dismissed because the plaintiff maintains an interest in collecting attorney fees and spreading the cost of the litigation throughout the class.  But the Supreme Court has left open the question whether a class-certification appeal becomes moot if the plaintiff settles his underlying claims.

The answer, according to the Eighth Circuit, is yes.  Splitting with the D.C. Circuit, but joining the Fourth Circuit, the court ruled that when a putative class plaintiff settles his claims, he lacks standing  to appeal an adverse class-certification order even if he retained the right to seek attorney fees. Under that scenario, the plaintiff does not maintain “a sufficient personal stake to maintain a case or controversy.”

Expect a cert. petition on both issues–though the presence of both issues might make this case a poor vehicle to address either one.

Tags: Eighth Circuit