Mehedi v. View, Inc. f/k/a CF Finance Acquisition Corp. II

Background

The defendants moved under 28 U.S.C. § 1292(b) to certify an interlocutory appeal, meaning an appeal before the district court case is finished. They sought review of the court’s earlier order granting the plaintiffs’ motion to alter or amend the judgment and for relief from a final judgment. The defendants also asked the court to stay, or pause, the case during the appeal.

The proposed controlling question was whether a lead plaintiff who lacks a viable loss-causation theory can nevertheless have Article III standing to bring securities-fraud claims. Article III standing is the constitutional requirement that a plaintiff have a sufficient connection to the dispute to invoke federal-court jurisdiction.

Analysis

The court found all three requirements for certification under § 1292(b). First, it held that the standing question was a pure question of law that did not depend on a material factual dispute. It also found the issue controlling because a reversal could mean that Stadium Capital lacked standing to pursue any claims, which the court said would require dismissal of the entire action.

Second, the court found substantial grounds for disagreement because the Ninth Circuit had not addressed whether failure to plead loss causation defeats Article III standing, other courts had reached different conclusions, and this court had issued two orders reaching opposite conclusions on the issue. Third, the court found that an interlocutory appeal could materially advance the end of the litigation because a successful appeal on the standing issue could require dismissal of the entire case.

The court also considered the parties’ competing arguments about a stay. Although the court recognized that a stay would briefly delay the case, it concluded that continuing litigation during the appeal would reduce the efficiency and benefit of interlocutory review.

Disposition

Judge Beth Labson Freeman granted the defendants’ motion for certification of an interlocutory appeal, certified the stated standing question for review by the Ninth Circuit, and amended the earlier order to include the certification order. The defendants were ordered to petition the Ninth Circuit for permission to proceed with the interlocutory appeal. The court also granted the defendants’ request for a stay and stayed the case pending a Ninth Circuit decision. The parties must file a joint status report within 14 days after the earlier of the Ninth Circuit’s denial of permission to proceed or its decision on the certified question.