Ninth Circuit Vacates Certification of Nationwide Classes, Holding that Defendant Did Not Waive Personal Jurisdiction Challenge by Not Raising It Precertification

On August 10, 2021, a divided Ninth Circuit panel vacated a trial court’s certification of two nationwide classes, finding that the defendant had not waived its personal jurisdiction objection to class certification by not raising the issue at the pleading stage. See Moser v. Benefytt, Inc., No. 19-56224, 2021 WL 3504041 (9th Cir. Aug. 10, 2021).

This case arose as a putative nationwide class action filed by Kenneth Moser in federal court in California against Benefytt Technologies, Inc., formerly known as Health Insurance Innovations, Inc. (HII), alleging that HII was responsible for unwanted sales calls that violated the TCPA. Moser was a resident of California, whereas HII was incorporated in Delaware and had a principal place of business in Florida.

Although HII did not dispute that the California district court had specific personal jurisdiction over Moser’s claims, it objected to his motion to certify two nationwide classes on the basis that the court lacked personal jurisdiction over the claims on non-California plaintiffs. HII’s argument invoked the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California, __ U.S. __, 137 S. Ct. 1773 (2017), which held that the 14th Amendment’s due process clause prohibited a state court from exercising specific personal jurisdiction over nonresident plaintiffs’ claims in a mass action against a nonresident company.

The district court did not address HII’s Bristol-Myers argument on the merits. Instead, it concluded that under Federal Rule of Civil Procedure 12(h)(1), HII had waived the argument by not raising it at the motion-to-dismiss stage. Finding that all other requirements for certification were satisfied, it certified both nationwide classes. HII appealed.

On appeal, the Ninth Circuit held “that the district court erred in concluding that HII waived its personal jurisdiction objection to class certification by failing to assert the defense at the [Federal] Rule [of Civil Procedure] 12 stage.” Id. at *5. It explained that while Rule 12(h)(1)(A) provides that a party waives any defense under Rule 12(b)(2) (such as lack of personal jurisdiction) by omitting it from a pleading stage motion (as described in Rule 12(g)(2)), such waiver only applies to a defense or objection that was available to a party at the time. Accordingly, “[t]he question here is whether, at the motion to dismiss stage, it was an ‘available’ Rule 12(b) defense that the district court lacked personal jurisdiction over unnamed, non-resident putative class members. The answer is no.” Id. at *4.

The Ninth Circuit explained that, at the pleading stage, HII did not have “‘available’ a Rule 12(b)(2) personal jurisdiction defense to the claims of unnamed putative class members who were not yet parties to the case[,]” noting that “[t]o conclude otherwise would be to endorse ‘the novel and surely erroneous argument that a nonnamed class member is a party to the class-action litigation before the class is certified.’” Id. at *5 (quoting Smith v. Bayer Corp., 564 U.S. 299, 313 (2011)). “HII could not have moved to dismiss on personal jurisdiction grounds the claims of putative class members who were not then before the court, nor was HII required to seek dismissal of hypothetical future plaintiffs.” Id. On that basis, the Ninth Circuit vacated the certification of the nationwide classes, and—without reaching the merits of the Bristol-Myers argument—remanded the case to the district court.

Additionally, the Ninth Circuit considered its jurisdiction over the appeal. Over a one-judge dissent, a two-judge majority concluded that it had jurisdiction under Rule 23(f), which permits an appeal from an order granting or denying class-action certification. The majority reasoned that the personal jurisdiction and waiver questions were “not ancillary to class certification, but central to the nationwide classes that the district court certified and, again, part of the very class certification decision we permitted HII to appeal.” Id. at *3. Therefore, it had jurisdiction under Rule 23(f) to hear HII’s appeal. The dissent took the view that the exercise of personal jurisdiction over class members is not ordinarily reviewable on appeal and therefore concluded that there was no appellate jurisdiction. The majority countered that “[t]he problem with the dissent’s analysis is that there was no Rule 12 motion to dismiss non-resident class members for lack of personal jurisdiction, nor did the district court resolve such a motion.” Id. at *3; see also id. (“HII’s argument is that under Bristol-Myers, the district court could not certify nationwide classes consistent with Rule 23. The dissent says Rule 23(f) ‘appeals are limited to those issues that bear on the soundness of the class certification decision.’ [ ] That test is clearly met here.”) (internal parenthetical omitted).

Although the Ninth Circuit did not reach the merits of HII’s Bristol-Myers argument, the Moser opinion makes clear that a nonresident defendant in the Ninth Circuit retains the ability to raise personal jurisdiction challenges to the claims of nonresident putative class members at the certification stage.