Tenth Circuit Holds Withdrawal of Class Settlement Approval Not Appealable

Posted on: February 14th, 2011 by Steve Larson

In McClendon v. City of Albuquerque, 2011 U.S. App. Lexis 597 (10th Cir., Jan. 12, 2011), the plaintiffs in this class action lawsuit attempted to appeal an order withdrawing approval of the class settlement.  The Tenth Circuit Court of Appeals held the order was not an appealable order under  28 U.S.C. § 1291.

Prior to reaching the substance of the appeal, the Tenth Circuit had to determine its authority for hearing the appeal.  The Court analyzed the defendants’ three main arguments in turn.  First, it held that an order withdrawing approval of a class settlement is not a “final decision” of a district court, regardless of the fact that it post-dates a final judgment.  In so holding, the court found that an order withdrawing approval of a class settlement doesn’t disassociate the court from the case, doesn’t end the litigation on the merits, and actually ensures litigation on the merits will continue.

Second, while the Court admitted that the order withdrawing approval of the class settlement deprived defendants of the repose secured by the earlier settlement agreements and essentially “finally decides” the court’s ruling on those settlements, it held that many interlocutory orders can be characterized as final in the sense that they irretrievably decide a question about the scope and duration of the district court proceeding, but few qualify as final appealable decisions for purposes of § 1291.

Last, the defendants argued that the appeal should be allowed as the district court lacked jurisdiction to withdraw its previous orders on the basis that the district judge should have recused herself.  The Court held that whether that order was made without jurisdiction or in error was of no import to the question of whether that order was a final decision for purposes of § 1291.  The Court pointed out that Congress already provided a method for parties to challenge a district court’s erroneous assertion of jurisdiction before the entry of a final judgment – 28 U.S.C. § 1651(a)’s approval of writs of mandamus.