August 12, 2020

Volume X, Number 225

August 12, 2020

Subscribe to Latest Legal News and Analysis

August 11, 2020

Subscribe to Latest Legal News and Analysis

August 10, 2020

Subscribe to Latest Legal News and Analysis

Can Voluntary Individual Settlements Moot Class Actions? Yes, Depending on the Facts, According to the Ninth Circuit

The Ninth Circuit Court of Appeals recently clarified that a named plaintiff gives up his or her right to represent a class if, in an individual settlement, he or she does not carve out from the settlement a concrete financial interest in the putative class action.  In so holding, the court explained that it was not enough for a plaintiff to generically carve out “class claims,” without identifying a more specific financial stake that would remain in the outcome of the class claims.

Settlement Agreement

In Brady v. AutozoneInc., plaintiff Michael Brady sued defendant for violations of Washington’s meal break laws, and, after months of litigation, filed a motion for class certification under Federal Rule of Civil Procedure 23.  The court denied the motion and declined to reconsider.  Shortly thereafter, Brady settled his individual claim against the defendant.

The settlement agreement resolved plaintiff’s claims for meal break, wage, and unfair business practice violations, for $5,000.  The agreement also resolved Brady’s “claims to costs or attorneys’ fees.”  Critically, however, the language in the agreement stated that the settlement “was not intended to settle  or  resolve  Brady’s Class Claims.”

Ninth Circuit Decision

Brady appealed the denial of class certification to the Ninth Circuit.  The question before the court was whether Brady’s “class claims,” purportedly carved out from the release, were moot.  Answering the question in the affirmative, the court explained that when a plaintiff releases his or her individual claims, they ordinarily no longer have a “legally cognizable interest in the outcome” of the class claims, rendering the plaintiff’s class claims moot.  To undo this, a plaintiff must maintain a specific financial interest by agreement with the defendant.  Stated differently, because the settlement agreement did not contemplate any additional consideration that the plaintiff may receive as a class representative (e.g., attorneys’ fees, or enhancement awards), his class claims were entirely moot.

Takeaways

While the court’s exposition on the mootness doctrine is not groundbreaking law, the scenario presented and the court’s explanation are useful guides when contemplating an individual settlement in a case styled as a class action.  Generic language that the agreement does not release “class claims” is not necessarily enough to overcome operation of the mootness doctrine.  This knowledge can prove useful to employers involved in “give-and-take” drafting negotiations with plaintiffs’ counsel, particularly when the goal of settlement is to eliminate class claims brought under Rule 23.

Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume X, Number 192

TRENDING LEGAL ANALYSIS


About this Author

Daniel J. Butler Labor & Employment Litigation Hunton Andrews Kurth Miami, FL
Associate

Dan advises and represents businesses facing complex employment law issues.

As part of his litigation practice, Dan represents employers in state and federal courts in discrimination, harassment, and retaliation lawsuits, whistleblower claims, and wage and hour collective actions. He also has experience representing companies before state and federal administrative agencies, including the Florida Commission on Human Relations and the Equal Employment Opportunity Commission.

To help clients avoid litigation, Dan regularly performs internal investigations and...

305-810-2519
Christopher Pardo Employment Lawyer Hunton Andrews Kurth
Partner

Chris focuses his practice on the defense of complex employment cases in federal and state courts, arbitration, and before administrative agencies.

He represents a broad range of clients in employment, contractual, and labor matters, particularly in the defense of class and collective actions; complex wage and hour issues; trade secret litigation and restrictive covenant agreements; matters involving race, sex, age, disability, and pregnancy discrimination; wrongful termination; ERISA; RICO; and various state law claims, including wage and discrimination claims under the Massachusetts General Laws. Chris also assists employers in responding to administrative complaints and investigations before the Equal Employment Opportunity Commission, Massachusetts Commission Against Discrimination, the Massachusetts Attorney General's Office and various other state agencies, and defends employers in such actions.

Chris has successfully represented clients across the country, including in California, Connecticut, Georgia, Florida, Illinois, Maine, Massachusetts, New Hampshire, New York, North Carolina, Rhode Island, Tennessee and Texas.

Prior to joining Hunton Andrews Kurth LLP, Chris worked at other national and international law firms, served in the Massachusetts Commission Against Discrimination’s enforcement/investigations division, and worked as a judicial intern for Judge Angel A. Cortiñas of the Third District Court of Appeal of Florida. He was also a certified legal intern for the Office of the Public Defender for Miami-Dade County, where he defended indigent clients in felony criminal cases.

617 648 2759