Lorraine Bates v. Bankers Life and Casualty Co

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LORRAINE BATES; CHARLES No. 14-35397
EHRMAN BATES; EILEEN
BURKE; JACI EVANS, as D.C. No.
Successor Personal 3:13-cv-00580-PK
Representative for the Estate
of Thomas Marier; and
DALLA FRANCIS, as Personal OPINION
Representative for the Estate
of George Alexander,
Plaintiffs-Appellants,
v.
BANKERS LIFE AND
CASUALTY COMPANY, an
Illinois insurance company;
CNO FINANCIAL GROUP,
INC., a Delaware corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Oregon
Paul J. Papak II, Magistrate Judge, Presiding
Argued and Submitted October 4, 2016
Portland, Oregon
Filed February 24, 2017
2 BATES V. BANKERS LIFE & CAS. CO.
Before: Richard R. Clifton, Mary H. Murguia,
and Jacqueline H. Nguyen, Circuit Judges.
Per Curiam Opinion
SUMMARY *
Jurisdiction / Class Certification
The panel dismissed the appeal, in part, for lack of
jurisdiction to review the order striking class allegations in
an action alleging claims under Oregon’s financial abuse
statute, Oregon Revised Statute § 124.110.
The panel held that a decision to grant a motion to strike
class allegations was not a final judgment. The panel,
therefore, rejected plaintiffs’ asserted appellate jurisdiction
under Federal Rule of Civil Procedure 54(b) and 28 U.S.C.
§ 1291 because they require a final judgment. The panel
held that 28 U.S.C. § 1292(b) and Federal Rule of Civil
Procedure 23(f) were the only proper avenues for appealing
a motion to strike class allegations. Because plaintiffs did
not use either of those procedural avenues, the panel
concluded that it lacked jurisdiction to hear their challenge
to the order striking their class allegations.
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
BATES V. BANKERS LIFE & CAS. CO. 3
COUNSEL
Rachele R. Selvig (argued) and Christopher L. Cauble,
Cauble & Cauble LLP, Grants Pass, Oregon; Michael L.
Williams and Leslie W. O’Leary, Williams O’Leary LLC,
Portland, Oregon; for Plaintiffs-Appellants.
Adam J. Kaiser (argued), Jeffrey J. Amato, and Matthew A.
Stark, Winston & Strawn LLP, New York, New York; Ilan
Wurman, Winston & Strawn LLP, Washington, D.C.; Vicki
L. Smith, Lane Powell PC, Portland, Oregon; for
Defendants-Appellants.
OPINION
PER CURIAM:
Plaintiffs appeal the district court’s orders striking their
class allegations and dismissing their claims under Oregon’s
financial abuse statute, Oregon Revised Statute § 124.110.
We dismiss the appeal in part because we lack jurisdiction
to review the order striking the class allegations. As to the
proper interpretation of Oregon Revised Statute § 124.110,
we certify this question to the Oregon Supreme Court in an
order filed concurrently with this opinion.
I.
Plaintiffs are elderly Oregonians or their successors who
purchased long-term healthcare insurance policies sold by
Bankers Life and Casualty Company and its parent
company, CNO Financial Group, Inc. (“Bankers”). These
policies are designed to provide health services for elderly
people who can no longer care for themselves and are
4 BATES V. BANKERS LIFE & CAS. CO.
intended to cover expenses for in-home care providers,
assisted living facilities, and nursing homes. Plaintiffs allege
that Bankers collected premium payments and, without good
cause, delayed and denied insurance benefits to which
putative class members were entitled under their policies.
In their Second Amended Complaint, Plaintiffs asserted
claims for breach of contract, intentional misconduct, fraud,
and violations of Oregon’s financial abuse statute. They also
sought certification for three separate classes:
(1) Oregonians whose claims have been mishandled through
delay and nonpayment of claims; (2) family members and
representatives who have incurred expenses while
attempting to obtain benefits; and (3) policyholders who
have not yet made claims. Pursuant to Federal Rules of Civil
Procedure 12(b)(2), 12(b)(6), and 23(d), Bankers moved to
dismiss many of Plaintiffs’ claims and to strike Plaintiffs’
class allegations. Plaintiffs’ breach-of-contract claims
against Bankers, which were not the subject of any of the
motions, remain before the district court.
On January 27, 2014, the district court dismissed, inter
alia, Plaintiffs’ financial abuse claims and granted Bankers’
motion to strike the class allegations. The court concluded
that the class allegations of mishandled insurance claims
“require case-by-case analysis of the operative facts.” Bates
v. Bankers Life & Cas. Co., 993 F. Supp. 2d 1318, 1339–43
(D. Or. 2014). The court found that even with class
discovery Plaintiffs would not be able to satisfy either the
typicality requirement under Federal Rule of Civil Procedure
23(a)(3) or any of the subdivisions under Rule 23(b) to
maintain a class action. Id. at 1342–43.
On April 30, 2014, the district court granted Plaintiffs’
unopposed motion for entry of final judgment pursuant to
BATES V. BANKERS LIFE & CAS. CO. 5
Federal Rule of Civil Procedure 54(b) and stayed the
proceedings pending the outcome of this appeal. The court
concluded that the decision to strike Plaintiffs’ class
allegations was “final” as the term is used in Rule 54(b) and
did not raise the risk of piecemeal litigation. Finding no just
reason for delay, the district court entered final judgment so
that Plaintiffs could appeal the decision to strike the class
allegations. On May 7, 2014, Plaintiffs appealed, arguing
that the district court improperly dismissed their class
allegations without permitting class discovery.
II.
Plaintiffs assert appellate jurisdiction under Federal Rule
of Civil Procedure 54(b) and 28 U.S.C. § 1291. 1 Bankers
counters that our court lacks jurisdiction because an order
granting a motion to strike class allegations, like an order
denying class certification, is not a final judgment. Because
28 U.S.C. § 1292(b) and Federal Rule of Civil Procedure
23(f) are the only proper avenues for appealing a motion to
strike class allegations, we lack jurisdiction to hear
Plaintiffs’ challenge to the order striking their class
allegations.
Under 28 U.S.C. § 1291, we have jurisdiction over “final
decisions” of the district courts. A judgment is generally
final and appealable under § 1291 when it “ends the
litigation on the merits and leaves nothing for the court to do
but execute the judgment.” Lovell v. Chandler, 303 F.3d
1
Plaintiffs also argue that Bankers waived this jurisdictional
challenge by failing to raise it before the district court. A lack of subject
matter jurisdiction may be raised at any time, however, even on appeal.
Fed. R. Civ. P. 12(h)(3); Henderson ex rel. Henderson v. Shinseki,
562 U.S. 428, 434–435 (2011).
6 BATES V. BANKERS LIFE & CAS. CO.
1039, 1047 (9th Cir. 2002) (quoting Catlin v. United States,
324 U.S. 229, 233 (1945)). Pursuant to Federal Rule of Civil
Procedure 54(b), a district court “may direct entry of a final
judgment as to one or more, but fewer than all, claims or
parties only if the court expressly determines that there is no
just reason for delay.” District courts, however, do not have
the discretion under Rule 54(b) to convert a non-final
judgment into a final judgment. See Sears, Roebuck & Co.
v. Mackey, 351 U.S. 427, 437 (1956) (“The District Court
cannot, in the exercise of its discretion [under Rule 54(b)],
treat as ‘final’ that which is not ‘final’ within the meaning of
[28 U.S.C.] § 1291.”).
A decision to grant a motion to strike class allegations,
which is the “functional equivalent of denying a motion to
certify a case as a class action,” is not a final judgment. In
re Bemis Co., 279 F.3d 419, 421 (7th Cir. 2002); see also
United Airlines, Inc. v. McDonald, 432 U.S. 385, 388–90
(1977) (using the terms interchangeably). As the Supreme
Court recognized, “[a]n order refusing to certify, or
decertifying, a class does not of its own force terminate the
entire litigation because the plaintiff is free to proceed on his
individual claim.” Coopers & Lybrand v. Livesay, 437 U.S.
463, 467 (1978). Such decisions are thus “inherently
interlocutory” in nature. Id. at 470; see also Chevron USA
Inc. v. Sch. Bd. Vermilion Par., 294 F.3d 716, 720 (5th Cir.
2002) (dismissing for lack of jurisdiction an appeal, under
28 U.S.C. § 1291 and Rule 54(b), from an order refusing to
certify a class action); Minority Police Officers Ass’n of S.
Bend v. City of South Bend, 721 F.2d 197, 201 (7th Cir.
1983) (same).
There are only two procedural avenues for appealing an
order striking class allegations made under Federal Rule of
Civil Procedure 23: (1) asking the district court to certify an
BATES V. BANKERS LIFE & CAS. CO. 7
order for interlocutory review pursuant to 28 U.S.C.
§ 1292(b); or (2) filing a petition for permission to appeal
pursuant to Federal Rule of Civil Procedure 23(f). See Plata
v. Davis, 329 F.3d 1101, 1107–08 (9th Cir. 2003); Kamm v.
Cal. City Dev. Co., 509 F.2d 205, 206 (9th Cir. 1975).
Section 1292(b) allows appeal of an interlocutory decision if
the district court states in writing that “such order involves a
controlling question of law . . . and that an immediate appeal
from the order may materially advance the ultimate
termination of the litigation.” The court of appeals may then,
in its discretion, permit an appeal of the order if the
application is made within ten days. 28 U.S.C. § 1292(b).
Federal Rule of Civil Procedure 23(f) allows appeal from an
order granting or denying class certification “if a petition for
permission to appeal is filed with the circuit clerk within 14
days after the order is entered.” Plaintiffs did not use either
of these procedural avenues, and we therefore lack
jurisdiction to hear their challenge to the order striking their
class allegations.
Appeal DISMISSED in part for lack of jurisdiction.