The U.S. Court of Appeals for the Ninth Circuit recently dismissed an appeal of a putative class action as moot, holding that when a putative class representative voluntarily settles his individual claims, any continuing “private attorney general” interest that the putative class representative may have retained does suffice to meet Article III standing requirements.
A copy of the ruling is available at: http://cdn.ca9.uscourts.gov/datastore/opinions/2014/12/31/12-56784.pdf
A consumer (“Consumer”) brought a class action against a vendor (“Vendor”) alleging several causes of action, including breach of contract, breach of the implied covenant of good faith and fair dealing, violations of the California Consumers Legal Remedies Act (“CLRA”) and violations of the California Unfair Competition Law (“UCL”).
Generally, Consumer alleged that Vendor arbitrarily denied claims made by him and a putative class of similarly situated policy holders of Vendor warranty plans, or otherwise cheated him and the putative class out of benefits owed under their policies with Vendor.
Following several years of motion practice, the district court denied Consumer’s motion for class certification and later granted Vendor’s motion for partial summary judgment on Consumer’s claims under the CLRA and UCL.
After the district court granted partial summary judgment in Vendor’s favor, the parties reached a settlement agreement and filed a joint motion and stipulation for dismissal with the district court. In that motion and stipulation for dismissal, the parties agreed to dismiss with prejudice Consumer’s individual claims in exchange for the full amount of those claims. The parties also agreed to dismiss without prejudice “any class action claims and representative claims” under the UCL, one of several sets of claims alleged in Consumer’s complaint.
However, the joint motion and stipulation for dismissal expressly reserved Consumer’s right to appeal the Court’s order denying class certification, the order precluding the Plaintiff from pursuing injunctive relief under the UCL, and any other order in the case.
The Ninth Circuit noted that after the rulings in Vendor’s favor and before Consumer’s appeal, the parties settled all of Consumer’s individual claims. As such, the Court noted, Consumer expressly released all of his claims against Vendor, and even though Consumer expressly retained his right to appeal the putative class claims, that fact made no difference.
The Ninth Circuit held that the test for whether an appeal is moot after the putative class representative voluntarily settles his individual claims is whether the class representative retains a personal stake in the case. See Narouz v. Charter Commc’ns, LLC, 591 F.3d 1261, 1264 (9th Cir. 2010).
Consumer argued that he had a personal stake in getting the class certified because he maintained an interest in the matter as a private attorney general. However, the Ninth Circuit noted that its case law required the putative class representative to maintain a financial interest in class certification. See, e.g., Narouz (holding that a financial interest existed where putative class representative could receive a $20,000 enhancement fee if the court were the court to approve the settlement); Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015 (9th Cir. 2012) (holding that financial interest remained where putative class representative could recover attorney’s fees).
The Ninth Circuit held that, under the terms of his settlement agreement, Consumer settled attorney’s fees and costs as well as his damages, and Consumer could not get a penny more. Thus, the Court held, Consumer had no financial interest in the class action.
Next, the Ninth Circuit rejected Consumer’s arguments relying on Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011) and U.S. Parole Comm’n v. Geraghty, 445 U.S. 388 (1980). The Court concluded that both cases were inconsistent with its analysis because the putative class representative’s claims expired involuntarily. The Court noted that, when the putative class representative’s claims expired involuntarily, the theoretical interest akin to a private attorney general could potentially suffice to meet Article III requirements.
However, when a putative class representative voluntarily settled his individual claims, the Ninth Circuit held that the “private attorney general” interest does not suffice.
Accordingly, the Ninth Circuit dismissed Consumer’s appeal as moot.
Ralph T. Wutscher
McGinnis Wutscher LLP
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