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9th Cir. Holds Appeal by Putative Class Representative From Individual Settlement Was Moot

Class ActionThe U.S. Court of Appeals for the Ninth Circuit recently dismissed as moot an employee’s appeal of a trial court’s ruling denying class certification after he reached an individual settlement with his employer as to his claims for workplace meal break violations. 

Because the employee’s individual settlement expressly resolved his claims to attorneys’ fees and did not provide for entitlement to any class representative enhancement award, the Ninth Circuit concluded that he did not retain any financial stake in the outcome of the class, thereby rendering both his class claims and the appeal moot.

A copy of the opinion in Brady v. Autozone Stores, Inc. is available at:  Link to Opinion.

An employee sued his employer individually and on behalf of a putative class for alleged violations of Washington’s meal break laws. After his motion for class certification was denied, the employee settled his individual claims, including “claims to costs or attorneys’ fees” for $5,000. 

The settlement agreement was “not intended to settle or resolve [the employee’s] Class Claims,” but it also did not provide any financial reward due to the employee if the class claims were ultimately successful. 

Upon stipulation of the parties that the employee’s individual claims, including attorneys’ fees were resolved, the trial court entered final judgment. This appeal of the class certification rulings followed.

On appeal, the Ninth Circuit analyzed whether the employee’s settlement of his individual claims rendered the putative class claims as moot. 

As you may recall, “[t]he 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.” Campion v. Old Republic Prot. Co., 775 F.3d 1144, 1146 (9th Cir. 2014). That “personal stake” must be “concrete” and “financial,” id., a question that “turns on the language of [the] settlement agreement,” Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1021 (9th Cir. 2012).

The Ninth Circuit first examined this issue in Narouz v. Charter Communications, LLC, 591 F.3d 1261 (9th Cir. 2010), in which it held that the class representative maintained “a continued financial interest in the advancement of the class claims” where the settlement agreement expressly provided that the class representative would receive an “award enhancement fee” if a class were certified, and did not release claims for attorneys’ fees and costs. Narouz, 591 F.3d at 1264-65. 

The issue was subsequently addressed in Evon where the class representative’s individual claims were resolved upon acceptance of a Rule 68 offer of judgment that was silent as to class claims, and therefore, those claims were not rendered moot by waiver or disclaimer. Evon, 688 F. 3d at 1020-1023. However, the Evon Court did not directly address whether the class representative maintained a “continued financial interest,” Narouz, 591 F.3d at 1265, in the class claims.  Evon, 688 F.3d at 1021. 

This issue was clarified by the Ninth Circuit in Campion, where the settlement agreement at issue resolved the class representative’s individual claims but explicitly did not resolve his class claims. Campion, 775 F.3d at 1145.  The Court explained that “a more concrete interest” — that is, a “financial interest” — was required to avoid mootness, and that the Court did not address that requirement in Evon because that class representative maintained such an interest in the potential to receive a higher attorneys’ fees award. Id. at 1146-47.  However, because the Campion representative’s settlement agreement did not provide additional compensation for resolution of class claims beyond the individual settlement, his class claims were moot. Id.

Here, the employee argued that he could still receive a class representative enhancement award. However, the Ninth Circuit was required to consider the language of the settlement agreement, and the settlement agreement did not indicate that he could or would receive any such enhancement award. Moreover, the possibility of additional compensation for an award of attorneys’ fees did not exist, as those were settled by agreement. Thus, although the employee did not expressly resolve his class claims, those claims were rendered moot because he did not retain a financial stake in them, as in Campion

In sum, the Ninth Circuit held that “when a class representative voluntarily settles his individual claims, he must do more than expressly leave class claims unresolved to avoid mootness. A class representative must also retain — as evidenced by an agreement — a financial stake in the outcome of the class claims. Absent such a stake, a class representative’s voluntary settlement of individual claims renders class claims moot.”

Accordingly, the employee’s appeal of the class certification rulings was dismissed as moot.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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