Antitrust Law Daily Wrap Up, ADVERTISING—10th Cir.: Settlement agreement was not a final decision for purposes of appellate jurisdiction, (May 7, 2014)

By Jody Coultas, J.D.

The U.S. Court of Appeals in Denver did not have jurisdiction to review a district court’s decision that parties in a false advertising case had entered into a binding settlement agreement (Miller v. Basic Research, LLC, May 6, 2014, Tymkovich, T.).

Basic Research, LLC, manufacturer of weight-loss dietary supplement Akävar 20/50, advertised that purchasers could “Eat all you want and still lose weight.” After purchasers filed a class action against Basic Research, the parties entered into mediation and signed a document outlining the terms of a settlement. The parties encountered problems while drafting the settlement, and Basic Research informed the district court that it no longer intended to settle. The class filed a motion to enforce the settlement, which was granted. Basic Research challenged the district court’s finding that the parties entered into a binding, enforceable agreement.

Courts of appeal have jurisdiction to review only final decisions. Final decisions end the litigation on the merits and leave nothing for the court to do but execute the judgment. Appellate courts may review the issuance or denial of injunctive relief and resolve certain collateral orders when their effect on the litigation is significant.

Because the district court had not yet reached its final decision—since it had not approved the proposed settlement—the court lacked appellate jurisdiction. Basic Research argued that the district court’s order granting enforcement of the settlement was equivalent to an injunction because it controlled the rights and liabilities of the parties to a large extent, and that the district court order was an appealable collateral order because their rights will be effectively unreviewable at a later time in the litigation.

Appellate jurisdiction can be based on the collateral order doctrine, where the district court’s order conclusively determined the disputed question, resolved an important issue completely separate from the merits of the action, and was effectively unreviewable on appeal from a final judgment. Even if the order had the practical effect of an injunction, delaying appellate jurisdiction did not impose serious consequences or preclude appellate review. The court noted that the fairness of the settlement to the class would be addressed at a Rule 23 hearing.

Basic Research did not quantify the cost of notice or even the size of the class to demonstrate the financial burden they face. Sending out notice would not diminish the likelihood of a future settlement or prejudice the ongoing litigation, and the proposed settlement was not an admission of liability. Therefore, the district court’s order did not qualify for interlocutory review or review under the collateral order doctrine.

The case is No. 13-4048.

Attorneys: Scott R. Shepherd (Shepherd, Finkelman, Miller & Shah, LLP) for Pamela Miller. Christopher B. Sullivan (Snell & Wilmer, L.L.P.) for Basic Research, LLC.

Companies: Basic Research, LLC

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