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For Whom Rule 23(f) Tolls

NewupdateBy Kate T. Spelman

In a matter of first impression for the court, a three-judge panel of the Ninth Circuit recently held in Lambert v. Nutraceutical Corp. that the fourteen-day deadline to file a petition for interlocutory review of an order granting or denying class certification under Federal Rule of Civil Procedure 23(f) is not jurisdictional, and thus equitable exceptions apply to toll the deadline.  While other circuits have come to this same conclusion, the Ninth Circuit went one step further in holding that Rule 23(f)’s fourteen-day deadline was tolled in this case by the plaintiff’s filing of a motion for reconsideration, even though the motion itself was filed more than fourteen days after the court’s decertification order.  In so holding, the Ninth Circuit has created a circuit split that may require resolution by the U.S. Supreme Court.        

In Lambert, the plaintiff challenged the efficacy of Cobra Sexual Energy, an alleged aphrodisiac dietary supplement, under California’s consumer protection laws.  The district court initially certified a damages class under Rule 23(b)(3) based on the plaintiff’s full refund damages model, which was properly tied to the plaintiff’s theory that the product was entirely worthless.  However, the district court later decertified the class because the plaintiff had provided only the suggested retail price of the product, and not the actual average retail price necessary to calculate the full refund amount.  The plaintiff filed a motion for reconsideration twenty days after the court’s decertification order, which the court denied.  The plaintiff filed a Rule 23(f) petition less than fourteen days after that. 

In assessing the timeliness of the plaintiff’s appeal, the Ninth Circuit held in accordance with other circuit courts that the fourteen-day deadline in 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.”  However, going one step further, the court found that equitable tolling was warranted in this particular case because the plaintiff clearly conveyed his intention to seek reconsideration of the district court’s decertification decision ten days after entry of the order, and filed his Rule 23(f) petition less than fourteen days after the district court denied the reconsideration motion, despite the fact that the plaintiff failed to file the reconsideration motion itself within fourteen days of the court’s decertification order.  In so holding, the Ninth Circuit expressly “recognize[d] that other circuits would likely not toll the Rule 23(f) deadline in Lambert’s case.”  In fact, the Third Circuit has already rejected the argument that Rule 23(f) can be tolled by a motion for reconsideration when that motion is filed outside of the Rule 23(f) deadline, and other circuits have rejected comparable equitable tolling arguments.  See, e.g., Gutierrez v. Johnson & Johnson, 523 F.3d 187, 193 n.5 (3d Cir. 2008); Delta Airlines v. Butler, 383 F.3d 1143, 1145 (10th Cir. 2004).

Going on to address the merits of the plaintiff’s Rule 23(f) petition, the Ninth Circuit held that “the district court abused its discretion in decertifying the class on the basis of Lambert’s inability to prove restitution damages through the full refund model.”  The court emphasized that “uncertain damages calculations should not defeat certification . . . as long as a valid method has been proposed for calculating those damages.”  According to the Ninth Circuit, the plaintiff was only required to show that the full amount of retail sales of the product could be “approximated” over the class period, even if the underlying data was “uncertain.”  The court held that the question of whether the plaintiff could prove damages with reasonable certain was a question of fact that should be decided at trial.    

With this decision, the Ninth Circuit has expanded the scope of litigants for whom Rule 23(f) may be tolled.  Unless the Ninth Circuit reverses itself en banc, it is likely only a matter of time before the Supreme Court either affirms or rejects this expansion.