NC Supreme Court Takes Jurisdiction over Order Granting Certification (Fisher Part 1)

In its last batch of opinions for 2016, the North Carolina Supreme Court affirmed the certification of a class of more than 800,000 tobacco farmers in Fisher v. Flue-Cured Tobacco Cooperative Stabilization Corporation. Because Fisher raises a number of interesting class certification issues, and because the North Carolina Supreme Court rarely issues opinions addressing North Carolina Rule 23, we are covering the decision in two parts. In this installment, we provide the background of the case and address the Court’s decision to accept jurisdiction over this interlocutory appeal. In the second installment, we’ll address the Court’s approach to commonality and manageability.

The Supreme Court’s decision in Fisher is the latest chapter in litigation that began more than 11 years ago, when a group of tobacco farmers filed suit against the Flue-Cured Tobacco Cooperative, an agricultural cooperative formed in 1946 to help tobacco farmers market their crop. The plaintiffs alleged that when federal tobacco price support ended in 2004, the Cooperative improperly removed hundreds of thousands of members from its membership rolls. The Cooperative contended that many of these members had not grown tobacco for decades, and that it was simply updating its membership to accurately reflect the much smaller number of active tobacco farmers. Although the plaintiffs asserted a number of different claims, the primary dispute was over the Cooperative’s reserves, which totaled several hundred million dollars.

Fisher is an unusual case in many respects. The litigation itself is quite old—we are not aware of any other active cases with an ’05 case number—and the underlying facts are far older. The Cooperative was founded in 1946, meaning that the certified class would include farmers (or their heirs) who grew tobacco just after the end of the Second World War. The dispute also involved certificates issued for crop years from 1967 to 1973 and federal changes to tobacco price regulation from 1982. The class was also enormous, encompassing over 800,000 members.

The procedure has also been unusual, both at the trial and appellate level. Judge Jolly, formerly the Chief Judge of the North Carolina Business Court, certified the class in 2014, as we reported at the time. The case was not a Business Court case—it was handled by Judge Jolly under Rule 2.1—and the appeal predates direct appeals from the Business Court to the Supreme Court. But in October 2014, the Supreme Court took the unusual step of removing the case from the Court of Appeals on its own motion under Appellate Rule 15(e)(2).

The first question presented involved appellate jurisdiction over the order granting class certification. In federal court, either party can ask the appellate court to appeal a class certification order under Federal Rule of Civil Procedure 23(f)—regardless of whether the order granted or denied class certification. Most other states also permit some interlocutory review of class certification orders. But North Carolina appears to be unique in holding that orders denying class certification are automatically subject to interlocutory appeal, while orders granting class certification generally are not. See, e.g., Frost v. Mazda Motor of America, Inc., 353 N.C. 188, 193 (2000).

John Wester of our firm, representing the NC Chamber as amicus curiae, advocated for a ruling that an order granting class certification could affect a substantial right, permitting interlocutory review. The Chamber’s brief noted that an order granting class certification often put such pressure on a defendant to settle that it effectively determines the outcome of the case. In fact, the Chamber stated that it appeared that the North Carolina Supreme Court had never decided a post-judgment appeal of an order certifying a class action against a private party. The Chamber also argued that permitting interlocutory review of orders granting class certification promoted the development of the law and was a more efficient use of judicial resources than requiring a defendant to proceed to trial before obtaining review.

The Court did not expressly hold that an order granting class certification affects a substantial right, nor did it hold that an order granting class certification could not be the subject of interlocutory review. Rather, it stated that, given the size of the class, the “subject matter of this case implicates the public interest to such a degree that invocation of our supervisory authority is appropriate” and proceeded to review the certification order “notwithstanding that the appeal is interlocutory and ordinarily would not be immediately appealable.” It remains to be seen how this exception to the prohibition against interlocutory appeals will apply in future cases. It is also unclear whether this exception will apply in the North Carolina Court of Appeals, which lacks the Supreme Court’s “supervisory authority” but has previously accepted interlocutory review of an order granting class certification on substantial rights grounds.

For the time being, counsel seeking to appeal from an order granting certification would be advised to petition for certiorari in addition to seeking interlocutory review on substantial rights grounds, as the Cooperative did in this case.

(John Wester of our firm served as amicus counsel to the NC Chamber in Fisher.)