Earl v. Boeing Company ( 2021 )

Case: 21-40720 Document: 00516141991 Page: 1 Date Filed: 12/22/2021
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
December 22, 2021
No. 21-40720 Lyle W. Cayce
Clerk
Damonie Earl, individually and on behalf of all others
similarly situated; Linda Rugg, individually and on behalf
of all others similarly situated; Alesa Beck,
individually and on behalf of all others similarly
situated; Timothy Blakey, Jr.; Stephanie Blakey;
Marisa Thompson, individually and on behalf of all others
similarly situated; Muhammad Muddasir Khan; John
Rogers, individually and on behalf of all others similarly
situated; Valerie Mortz-Rogers, individually and on
behalf of all others similarly situated; James LaMorte;
Brett Noble, individually and on behalf of all others
similarly situated; Ruben Castro, individually and on
behalf of all others similarly situated; Fritz Ringling,
individually and on behalf of all others similarly
situated; Litaun Lewis, individually and on behalf of all
others similarly situated; Lance Hogue, Jr.,
individually and on behalf of all others similarly situated,
Plaintiffs—Appellees,
versus
The Boeing Company; Southwest Airlines Company,
Defendants—Appellants.
Case: 21-40720 Document: 00516141991 Page: 2 Date Filed: 12/22/2021
No. 21-40720
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 4:19-cv-507
Before Elrod, Oldham, and Wilson, Circuit Judges.
Andrew S. Oldham, Circuit Judge:
The defendants in this class action lawsuit have moved for a stay of
discovery while this court reviews their appeal under Federal Rule of Civil
Procedure 23(f). We grant the defendants’ stay motion.
I.
This is a class action lawsuit against the Boeing Company and
Southwest Airlines for allegedly conspiring to conceal design defects in
Boeing’s 737 MAX 8 aircraft (the “MAX”) and thereby defrauding airline
ticket purchasers. Plaintiffs allege that Boeing and Southwest were able to
inflate the prices of airline tickets by concealing defects in the MAX.
Widespread public knowledge of the MAX’s defects would have lowered the
demand for air travel on airlines flying the MAX, the theory goes, so prices
would have decreased and plaintiffs would have paid less for their tickets.
Plaintiffs seek damages under the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. § 1962.
On September 3, 2021, the district court certified four classes of
plaintiffs. These classes encompassed persons who purchased or otherwise
bore the economic burden for tickets on Southwest or American Airlines
between August 29, 2017, and March 13, 2019, for routes where MAX
aircraft were in use. Boeing and Southwest petitioned for permission to bring
an interlocutory appeal of the class-certification decision. See Fed. R. Civ.
P. 23(f). We granted Boeing and Southwest permission to appeal on
September 30, 2021.
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Boeing and Southwest then moved the district court to stay discovery
pending the Rule 23(f) appeal. On November 19, 2021, the district court
granted the motion in part and denied it in part. The district court stayed
discovery pertaining to class membership during the pendency of the appeal.
But the district court allowed all other discovery to proceed, including
discovery on the merits. Boeing and Southwest then filed this motion in our
court, asking us to stay all discovery until the Rule 23(f) appeal is resolved.
II.
We have authority to stay proceedings in the district court while a
Rule 23(f) appeal is pending. See Fed. R. Civ. P. 23(f). To decide whether
to grant a stay, we consider four factors: (1) whether the movant makes a
strong showing that it is likely to succeed on the merits; (2) whether the
movant will be irreparably injured without a stay; (3) whether other
interested parties will be irreparably injured by a stay; and (4) where the
public interest lies. Nken v. Holder, 556 U.S. 418, 426 (2009).
Our court has not decided what deference is owed to district courts
when considering whether to stay discovery pending a Rule 23(f) appeal. But
we note that several of our sister circuits have concluded that district courts
enjoy significant discretion in choosing whether and to what extent to stay
discovery pending appeal. See, e.g., Blair v. Equifax Check Servs., Inc., 181
F.3d 832, 835 (7th Cir. 1999) (stating that “Rule 23(f) is drafted to avoid
delay” and suggesting that stays of discovery should issue infrequently
during Rule 23(f) appeals). We need not decide the specific level of deference
owed to the district court here, because even under the deferential standard
articulated in cases like Blair, a stay is appropriate by virtue of Boeing and
Southwest’s “demonstration that the probability of error in the class
certification decision is high enough that the costs of pressing ahead in the
district court exceed the costs of waiting.” Ibid. Stated differently, even
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under a deferential standard of review, Boeing and Southwest have shown
that all four Nken factors favor a stay of discovery during the pendency of
their Rule 23(f) appeal.
On the likelihood of success on the merits, Boeing and Southwest have
made a strong showing that our court is likely to reverse the class-certification
decision. Because the district court certified the class action under Rule
23(b)(3), the court was required to find “that the questions of law or fact
common to class members predominate over any questions affecting only
individual members.” Fed. R. Civ. P. 23(b)(3). Here, it is likely that such
predominance is lacking because “[q]uestions of individual damage
calculations will . . . overwhelm questions common to the class.” Comcast
Corp. v. Behrend, 569 U.S. 27, 34 (2013). Under plaintiffs’ theory of injury,
they would be owed damages for the difference between the ticket price they
were charged and the ticket price they would have been charged if the MAX’s
alleged defects had been widely known and deflated ticket prices. In order to
show Rule 23(b)(3) predominance on the question of damages, then,
plaintiffs must show that the price-deflating effect of public knowledge of the
MAX’s defects would have been fairly uniform across all the various routes
and dates (over 18 months) involved in this lawsuit. But both the plaintiffs’
and the defendants’ expert testimony suggest plaintiffs will not be able to
make that showing. The substantial predominance questions raised by
Boeing and Southwest’s Rule 23(f) petitions thus give Boeing and Southwest
a significant likelihood of success on appeal.
On irreparable harm, Boeing and Southwest again have made a strong
showing. The district court recognized that the classes in this case contain
thousands or millions of members, and discovery for a class action suit of this
magnitude will be very costly and time-consuming. Boeing and Southwest
assert that they have already spent millions of dollars in defense costs and
that plaintiffs’ escalating discovery demands will impose millions more in
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unrecoverable costs absent a stay. The district court also recognized that
discovery has become more contentious as this case has proceeded. And it is
undisputed that Boeing and Southwest’s discovery costs will be
unrecoverable even if the class certification is reversed on appeal.
In light of these concerns, the district court’s approach was to enter a
partial stay. It stayed discovery “pertaining to class membership,” but
allowed all other discovery to proceed. The district court’s primary
justification for this approach was its conclusion that the named plaintiffs’
claims would remain even if class certification is reversed on appeal. Thus,
on the district court’s view, discovery on the merits will eventually proceed
anyway, so Boeing and Southwest would not be irreparably harmed by the
denying a full stay.
There are at least three problems with that. First, Boeing and
Southwest also challenge the plaintiffs’ standing. And if Boeing and
Southwest succeed on their standing challenge, even the named plaintiffs will
be unable to proceed with the suit. See Rivera v. Wyeth-Ayerst Lab’ys, 283
F.3d 315, 319 (5th Cir. 2002) (“Standing may—indeed must—be addressed
even under the limits of a rule 23(f) appeal.”). Second, even if only the class
certification is reversed on appeal, the proportionality requirement imposed
by Federal Rule of Civil Procedure 26(b) would impose far different
constraints on discovery by eleven named plaintiffs than it would for classes
of millions of air travelers.* Third and finally, the district court’s order
*
The crux of our disagreement with Judge Elrod appears to be on this point. Judge
Elrod claims that limiting discovery to liability solves this problem because “defendants’
liability does not vary based on class size” and “discovery—at least on liability—is
inevitable.” Post, at 10–11 (Elrod, J., dissenting). We respectfully disagree with both
assertions. Plaintiffs seek to recover for airline ticket premiums they allegedly paid due to
defendants’ fraud. Whether defendants are liable for eleven ticket premiums or millions of
them depends on the class certification question, so defendants’ liability does vary based on
class size. And because of Rule 26(b)’s proportionality requirement, it is not
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threatens to exacerbate rather than alleviate the contentious discovery
disputes in this case because it fails to draw a workable line between
permitted and non-permitted discovery. The parties have already engaged in
voluminous motions practice disputing the propriety of various discovery
requests, and the district court’s approach would likely further litter the
record with disputes over whether a given discovery request falls within the
parameters of the district court’s partial stay. Boeing and Southwest have
thus shown that denying a full stay will subject them to irreparable harm.
We now consider the final two stay factors: whether a stay would
irreparably harm other interested parties, and where the public interest lies.
Plaintiffs have not plausibly alleged that they or any other parties will be
irreparably injured by delaying further discovery until the conclusion of the
Rule 23(f) appeal. The district court cited generalized concerns about
spoliation of evidence and avoiding significant delay in the overall resolution
of the case. And plaintiffs point to alleged past discovery malfeasance by
Southwest, including Southwest’s alleged destruction or non-production of
highly relevant text messages. But neither the district court nor the plaintiffs
have identified any specific prospective threat of spoliation. And because
plaintiffs only seek money damages, it is not apparent why plaintiffs would be
prejudiced by waiting on merits discovery until the end of the Rule 23(f)—
especially since discovery related to class membership is already stayed until
the conclusion of that appeal. The upshot of a full stay here is that there will
be one exhaustive round of discovery post-appeal, rather than two distinct
rounds of discovery pending- and post-appeal. Finally, the public interest
“speculation,” id. at 10 n.3, to note that plaintiffs will not be able to proceed with
multimillion-dollar merits discovery if the value of their suit is reduced to hundreds or a
few thousand dollars. Merits discovery—at least on the scale plaintiffs currently propose—
is thus hardly “inevitable.”
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supports staying district court proceedings to avoid potentially wasteful and
unnecessary litigation costs where, as here, the appellant has shown a
substantial likelihood of success on appeal. See Weingarten Realty Invs. v.
Miller, 661 F.3d 904, 913 (5th Cir. 2011).
* * *
IT IS THEREFORE ORDERED that appellants’ motion to stay
trial court proceedings pending disposition of this Rule 23(f) appeal is
GRANTED.
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Jennifer Walker Elrod, Circuit Judge, concurring in part and
dissenting in part:
I respectfully dissent from the panel majority’s complete stay of all
discovery in this case pending appeal. In staying all discovery, the panel flips
Rule 23(f) on its head and places its burden on the wrong shoulders. I would
instead allow discovery to proceed on the issue of defendants’ liability.
The district court has carefully shepherded this case through two
years of litigation. It did the same in its order granting limited discovery. The
district court acknowledged that the defendants raise a substantial case on
the merits about the propriety of class certification and carefully balanced the
equities based on the purpose of the discovery at issue. The district court
disallowed class discovery and allowed merits discovery while the class
certification appeal is pending. It also took into account the potential loss of
relevant evidence if discovery were not allowed to proceed.1 In reaching its
careful balance, the district court has heeded our guidance and can be trusted
to do so again.
Rule 23(f) contemplates infrequent stays and deference to the district
court’s stay decision. Rule 23(f) was “drafted to avoid delay.” Blair v.
Equifax Check Servs., Inc., 181 F.3d 832, 835 (7th Cir. 1999); Microsoft Corp.
v. Baker, 137 S. Ct. 1702, 1709 (2017) (“Rule 23(f) was crafted to balance the
benefits of immediate review against the costs of interlocutory appeals.”
(quoting Brief for Civil Procedure Scholars as Amici Curiae at 6–7, 11–14)).
To offset our broad discretion to grant class-certification appeals, Rule
23(f)—together with the standard for stays pending appeal—provides that
district court proceedings presumptively proceed. E.g., Prado-Steiman ex rel.
1
In the district court and before us now the plaintiffs raise serious concerns about
the preservation of relevant text messages, privilege logs, and third-party documents.
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Prado v. Bush, 221 F.3d 1266, 1273 n.8 (11th Cir. 2000) (“Rule 23(f)
contemplates that in most cases discovery (at the very least, merits
discovery) will continue [despite] an appeal of the class certification order.”).
Accordingly, “[s]tays are not favored and should be issued only when the
party seeking the stay demonstrates that the probability of error in the class
certification decision is high enough that the costs of pressing ahead . . .
exceed the costs of waiting.” 5 James W. Moore et al., Moore’s Federal
Practice § 23.88[2][d] (3d ed. 2021). As Judge Easterbrook, writing for the
Seventh Circuit, has explained: Stays should be infrequent and Rule 23(f)
“should not unduly retard the pace of litigation.” Blair, 181 F.3d at 835; see
also A.A. ex rel. P.A. v. Phillips, No. 19-00770-BAJ-SDJ, 2021 WL 2589180, at
*1 (M.D. La. June 24, 2021) (Jackson, J.).
Rule 23(f) also contemplates deference to the district court’s stay
decision. The district court’s “action and any explanation of its views should
weigh heavily with the court of appeals.” Fed. R. Civ. P. 23(f) committee’s
note to 1998 amendment;2 see also 6A Federal Procedure, Lawyer’s Edition
§ 12:478 (2012); 32B Am. Jur. 2d Federal Courts § 1823 (2021). Deference in
this context makes sense of the text and history of Rule 23(f), the district
court’s knowledge of the record, parties, and course of litigation, and the
inherently limited nature of appellate review.
Accordingly, Rule 23(f) requires defendants to carry a dual burden.
First, defendants must meet the traditional Nken factors for a stay. Nken v.
Holder, 556 U.S. 418, 426 (2009). Second, defendants must carry this burden
2
Committee Notes are “of weight” when interpreting the Federal Rules of Civil
Procedure. Schiavone v. Fortune, 477 U.S. 21, 31 (1986) (quoting Miss. Pub. Corp. v.
Murphree, 326 U.S. 438, 444 (1946)); Torres v. Oakland Scavenger Co., 487 U.S. 312, 316
(1988).
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so convincingly that we are justified not only in granting the full stay, but in
disregarding the district court’s decision to the contrary.
Defendants have not carried this dual burden. Even assuming that
class certification was improper, the named plaintiffs will be able to pursue
their claims on remand. Because discovery—at least on liability—is
inevitable, defendants cannot show that they would be irreparably injured in
the absence of a total stay. Discovery will occur either way; the only
questions are when and how much. Defendants have not shown that having
to conduct inevitable discovery now, rather than later, will cause irreparable
harm. See In re Cobalt Int’l Energy, Inc. Secs. Litig., No. H-14-3428, 2017 WL
3620590, at *4 (S.D. Tex. Aug. 23, 2017) (Atlas, J.) (denying a stay pending
a Rule 23(f) appeal because “the discovery will be necessary whether or not
the appeal is successful”); see also Sampson v. Murray, 415 U.S. 61, 90 (1974)
(“Mere injuries, however substantial, in terms of money, time and energy
necessarily expended in the absence of a stay, are not enough [for an
irreparable injury.]” (quoting Va. Petroleum Jobbers Ass’n v. Fed. Power
Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958))); M.D. v. Perry, No. C-11-84,
2011 WL 7047039, at *2 (S.D. Tex. July 21, 2011) (Jack, J.) (“The prospect
of burdensome or expensive discovery alone is not sufficient to demonstrate
‘irreparable injury’ . . . .”). 3
The panel majority identifies three problems with the district court’s
partial stay, none of which are convincing. First, it notes that defendants
“challenge the plaintiffs’ standing.” Ante at 5. But merely challenging
plaintiffs’ standing is not enough; defendants must make a strong showing that
3
Indeed, defendants appear to assume that plaintiffs will drop their suits if class-
certification is reversed. But there is no basis for that in the record, and speculation about
irreparable harm is not irreparable harm.
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plaintiffs lack standing. Because defendants have not made this showing,
they cannot show a strong likelihood of success against the named plaintiffs.
The panel majority’s second and third problems are solved by limiting
discovery to liability. The panel majority observes that the district court’s
stay would impose proportionality problems if class certification is reversed
on appeal. Ante at 5. It further contends that the district court’s stay order is
unworkable and will exacerbate the already-contentious discovery. Ante at 5–
6.
Limiting discovery to liability solves both issues. First, defendants’
liability does not vary based on class size. And, as discussed above, discovery
on liability will occur anyway because defendants have not shown a strong
likelihood of success against the named plaintiffs. Because defendants’
liability will be determined in any event, they have not justified postponing it.
Second, liability is a clear and enforceable line. There is hardly a brighter line
than that between damages and liability. We trust district courts to enforce,
and parties to respect, lines much duller than this.4
As to the final two Nken factors, the panel majority continues to fault
plaintiffs for failing to carry a burden that is defendants’ to bear. Whether
plaintiffs have plausibly alleged irreparable injury, spoliation of evidence,
significant delay, or discovery malfeasance is beside the point. The defendants
must prove these factors and they fail to do so. Tex. League of United Latin
Am. Citizens v. Hughs, 978 F.3d 136, 143 (5th Cir. 2020); Nken, 556 U.S. at
4
To the extent that discovery on liability would vary based on class size under Rule
26(b), the district court is well aware of Rule 26(b)’s proportionality requirement and can
enforce it ably on remand. The crux of the panel’s disagreement is the relevant baseline
for defendants’ motion to stay all discovery. We must measure defendants’ motion against
the baseline of allowing district court proceedings to continue. Measured accordingly,
defendants have not carried their burden to postpone inevitable discovery.
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433–34. Where discovery on liability is inevitable, its unjustified delay
irreparably harms the plaintiffs and upends the public interest.
Simply put, the panel majority gets it exactly backwards. Because
some discovery will proceed regardless of class certification, defendants have
not shown—as they must—an entitlement to staying all discovery. Nor have
they lifted—again, as they must—the “heavy weight” we accord to the
district court’s discovery rulings. I would instead limit discovery to liability
and rely upon the very capable district court to manage it while the appeal
proceeds.
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