Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-03239/USCOURTS-cand-3_09-cv-03239-8/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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United States District Court

For the Northern District of California

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 The case number for the related Briggs action is CV 07-5760 WHA.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

TAYLOR RUSSELL, on behalf of himself

and all others similarly situated,

Plaintiff,

 v.

UNITED STATES OF AMERICA,

Defendant. /

No. C 09-03239 WHA

ORDER ON MOTION TO

INTERVENE AND 

RELATED MOTIONS

INTRODUCTION

After a successful class action against the United States involving military credit cards,

the same counsel commenced a second proposed class action against the United States also

involving military credit cards but concerning a different practice. This order addresses counsel’s

search for a suitable plaintiff in the second action.

The second proposed class action is the instant action, Russell v. United States of America. 

The instant action, like counsel’s first class action, Briggs v. United States of America (also

pending before the undersigned judge), involves credit cards issued by the Army and Air Force

Exchange Service (“AAFES”) to military personnel.1 The details of the two claims asserted in

the instant action were set forth in a previous order filed on March 30, 2010 (Dkt. No. 61). In

brief, the AAFES credit cards targeted in both actions offered two types of repayment plans for

credit card purchases: (1) the Uniform Clothing Deferred Payment Plan (“UCDPP”), which

applied to purchases of military uniforms, and (2) the Deferred Payment Plan (“DPP”), which

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applied to purchases of other goods. Both claims asserted in the instant action involved allegedly

excessive interest charges imposed by the AAFES on debt incurred under these two payment

plans. By contrast, the claims in the related Briggs action involved tax refunds and other

government benefits illegally withheld by the government to satisfy AAFES credit card debt.

This omnibus order resolves four separate motions filed by counsel in these two related

actions: (1) a motion to enlarge time, filed in Briggs (the first lawsuit); (2) a motion to intervene,

filed in the instant lawsuit; (3) a motion for a preliminary injunction, filed in the instant lawsuit;

and (4) a motion for class certification, filed in the instant lawsuit. As stated, these motions all

relate to counsel’s search for a suitable plaintiff in the instant action.

For the reasons explained below, all four motions are DENIED.

STATEMENT

The procedural history behind both this action and the Briggs action provides instructive

context to the instant motions. Of particular interest is the fact that the two interest-overcharge

claims asserted in the instant action were originally asserted in the related Briggs action. In

Briggs, however, the credit-card interest claims were dismissed as moot approximately four

months into the litigation, after the AAFES voluntarily “removed the disputed interest charges”

prior to class certification (Dkt. No. 34 at 12–13 in CV 07-5760 WHA). Over a year later, class

counsel in Briggs filed a motion to intervene in an attempt to revive the mooted interest-related

claims (Dkt. No. 92 in CV 07-5760 WHA). Since the Briggs action had already been litigated to

an advanced stage, the motion to intervene was denied (Dkt. No. 104 in CV 07-5760 WHA). 

Final approval of a class action settlement in Briggs is imminent.

The instant case was borne from the failed motion to intervene in Briggs. Indeed, the

proposed intervenor in Briggs — Taylor Russell — was the named plaintiff and proposed class

representative in the instant action. In November 2009, however, approximately four months

after the instant action was filed, plaintiff Russell’s claim pertaining to interest charged on his

UCDPP credit-card debt was dismissed as moot (Dkt. No. 29). The remaining claim pertaining to

DPP interest charges was also dismissed as moot in an order filed on March 30, 2010 (Dkt. No.

61). For both of these claims, the government had simply (and voluntarily) adjusted the credit

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 Since claims for attorney’s fees ancillary to a case “may be heard even though the

underlying case has become moot,” this issue survived the government’s motion to dismiss. 

Williams v. Alioto, 625 F.2d 845, 848 (9th Cir. 1980). 

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card accounts of plaintiff Russell and over 30,000 other putative class members prior to class

certification and had issued full refunds based upon the adjustments.

The March 30 order also denied, without prejudice, plaintiff’s motion for class

certification (filed after the government had moved to dismiss the case as moot) and left the

question of plaintiff’s entitlement to attorney’s fees for another day.2

 Importantly, the March 30

order left open “the possibility that another plaintiff, whose account has not been adjusted, to

come forward, to intervene, and assume the role of lead plaintiff so long as this is done before the

resolution of the lingering attorney’s fees issue” (id. at 7) (emphasis added). This window of

opportunity was provided due to counsel’s view that the government’s voluntary refunds had not

been given to the entire putative class. 

Two days after the March 30 order issued, counsel filed a motion to intervene, a motion

for a preliminary injunction, and a motion for class certification in the instant case (Dkt. Nos.

62–65). On April 8, counsel then filed — in the related Briggs action — an administrative

motion to enlarge time, which (as will be explained shortly) is directly related to the three

motions filed in the instant case. A hearing on these motions was held on April 14, 2010.

ANALYSIS

Both of plaintiff Russell’s claims have been dismissed as moot. As such, this action

currently lacks a named plaintiff with a justiciable case or controversy. Given this backdrop, all

of the pending motions hinge upon the success of counsel’s motion to intervene. In other words,

if counsel’s motion to intervene fails, so too will the motions for a preliminary injunction and

class certification — without a plaintiff with “live” claims, these motions automatically fail.

The proposed intervenor is veteran Charles Davidson. While the March 30 order clearly

stated that any proposed intervenor must be an individual “whose account has not been adjusted”

by the AAFES, Mr. Davidson’s account was adjusted by the AAFES in September 2009 to the

minimum 12% interest rate specified by his credit agreement (Bedison Decl. ¶¶ 5–9). This

adjustment was made in 2009 because Mr. Davidson was (and still remains) a member of the

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certified class in the earlier and almost completed Briggs class action (id. at ¶¶ 6, 9). According

to the United States, all members of the Briggs certified class, including Mr. Davidson, had their

interest rates voluntarily and retroactively adjusted to the minimum rate of 12%. This occurred

months before similar adjustments were made for plaintiff Russell and other putative class

members in the instant litigation (id. at ¶¶ 5, 6, 8). 

After making this voluntary adjustment, the AAFES then planned to issue refund checks

to Briggs class members in for interest overcharges, including Mr. Davidson (id. at ¶ 8; Quinn

Decl. ¶ 3). At the request of class counsel in Briggs, however, these refund checks were

not issued to Briggs class members (Quinn Decl. ¶¶ 3–5). The reason for this request, as stated

by Attorney S. Chandler Visher (who represents plaintiffs in both actions), was that the voluntary

interest refund might “interfere with the Court’s intended distribution of [the class] fund” (id. at

Exh. 3).

The Briggs case is now on the verge of final approval of a class-wide settlement, where

the government has offered to refund 100% of everything improperly collected by the AAFES. 

As a Briggs class member, Mr. Davidson will be receiving a settlement payment (minus

reasonable attorney’s fees) of close to $400, “which includes a full refund of money collected [by

the AAFES] on his debts since 2001 relating to principal, interest charges (including any alleged

overcharges), and penalties” (Opp. 7; Bedison Decl. ¶ 9) (emphasis added). In other words, the

approximately $45 of overcharged interest payments sought by Mr. Davidson in the instant

litigation (if he were allowed to intervene) are already bundled into his pending Briggs settlement

payment.

This is exactly why counsel filed, on April 8, an administrative motion in Briggs to

enlarge the opt-out period to allow Mr. Davidson to belatedly opt out of the Briggs settlement. 

The merits of the opt-out motion, filed in the Briggs action, is addressed below.

* * *

To opt out of the pending Briggs settlement, a class member had to have sent a letter to

class counsel requesting exclusion from the settlement, (2) the letter had to have been signed by

the class member, and (3) the letter had to have been postmarked no later than March 31, 2010

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 In addition to objecting to the opt-out motion on the merits, the government objects

to the use by counsel of an administrative motion under Civil Local Rule 7-11 rather than a

properly noticed motion under Civil Local Rule 7-2. While this order agrees with the United

States that an opt-out motion is not a “miscellaneous administrative matter” and a properly

noticed motion should have been filed by counsel, this is a moot point. As explained herein,

counsel’s motion fails on the merits. 

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(Dkt. No. 149 in CV 07-5760 WHA). Despite failing to follow any of these procedures, Briggs

class member Davidson now seeks to enlarge the opt-out period to permit his exclusion from the

Briggs settlement so that he can intervene and become the named plaintiff in the instant action.3

The test for determining whether a class member should be allowed to opt out of the class

after the applicable deadline has passed is whether his failure to comply with the deadline is the

result of “excusable neglect.” See Silber v. Mabon, 18 F.3d 1449, 1454-55 (9th Cir.1994). This

standard allows courts, “where appropriate, to accept late filings caused by inadvertence, mistake,

or carelessness, as well as by intervening circumstances beyond the party’s control.” Pioneer Inv.

Serv. Co. v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 380, 388 (1993). When evaluating whether

“excusable neglect” applies, a court should consider the “degree of compliance with the best

practicable notice procedures; when notice was actually received and if not timely received, why

not; what caused the delay, and whose responsibility was it; how quickly the belated opt out

request was made once notice was received; how many class members want to opt out; and

whether allowing a belated opt out would affect either the settlement or finality of the judgment.” 

Silber, 18 F.3d at 1455 (internal footnote omitted). Additionally, the court should consider the

danger of prejudice to the opposing party, and whether the movant acted in good faith. Pioneer,

507 U.S. at 395.

Having considered the full scope of equitable factors under Pioneer, this order finds that

“excusable neglect” has not been shown by Mr. Davidson. While it is true that Mr. Davidson’s

opt-out request — made directly by Attorney Visher to the United States on April 1, 2010 — was

only one day late, it was nevertheless late. Additionally, the following factors also support a

rejection of the opt-out request: First, it is undisputed that the individual, mailed notice provided

in Briggs easily met the due process requirements required for class actions. See Eisen v. Carlisle

& Jacqueline, 417 U.S. 156, 173-77 (1974); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812

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(1985). Indeed, it would be a strange twist of events if counsel for Mr. Davidson, who is also

class counsel in Briggs, were to argue that notice in Briggs wasn’t the “best notice practicable.” 

Second, while it is unquestioned that Mr. Davidson did not receive actual notice of the

class action or the proposed settlement in Briggs, and was not “at fault” for failing to receive such

notice (the details of why he didn’t receive actual notice are explained below), this does not —

without more — warrant a finding of “excusable neglect.” Indeed, the circumstances underlying

Mr. Davidson’s opt-out exercise bespeaks manipulation. Here’s what happened: 

Approximately six months prior to when the first notice of the Briggs class action was

mailed (announcing the pendency of the class action), Mr. Davidson temporarily relocated from

San Francisco to Hawaii for the period of one year (Davidson Decl. ¶ 2). He then moved back to

California, except not to the same residence where the Briggs class notices — including the

second notice pertaining to the pending settlement — had been mailed (ibid.; Visher Decl. ¶ 4). 

The only reason Mr. Davidson was alerted to the Briggs class action and the pending settlement

was because Attorney Visher took the affirmative step of contacting him by phone on March 31,

2010, and on April 1, 2010 (Davidson Decl. ¶ 2).

During the April 1 phone conversation, Attorney Visher informed Mr. Davidson of his

right to opt-out of the Briggs settlement (even though the settlement will provide a 100%

recovery for Mr. Davidson) (Visher Decl. ¶¶ 5–6). Apparently, Attorney Visher did not inform

Mr. Davidson in the March 31 phone conversation that the deadline for exclusion from the Briggs

settlement was set to expire that very day. In the April 1 phone conversation, Mr. Davidson told

Attorney Visher that he wanted to be excluded from the Briggs class settlement (Davidson Decl. ¶

6). The reasons behind Mr. Davidson’s untimely request were the following (id. at ¶¶ 8–10):

8. I chose to opt out of the Briggs class and corresponding

settlement so I could be a class representative in the Russell

lawsuit. Mr. Visher has advised me that the government claims

that if I receive a refund as a class member in Briggs I will not

have a claim in Russell. Although my understanding is that the

Briggs settlement does not affect my claims in Russell, I would

rather opt out of the Briggs class than have this issue possibly

affect my suitability as a class representative.

9. I would like to be a class representative in the Russell

lawsuit. I understand that, with no representative, the case cannot

go forward, which would mean that thousands of veterans

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 Of course, as emphasized in the conclusion of this order, this is not true. Any

veteran who believes he or she has not received full relief on the merits is free to assert his or

her rights in court, by either intervening in the instant case or by filing a new lawsuit, with or

without Attorney Visher. 

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overcharged by AAFES would have no remedy. I am more

interested in helping these veterans than receiving an

approximately $350 refund.

10. As a class representative in the Russell case, I have no

expectation of receiving compensation beyond my refund as a

member of the class. I understand and expect that my recovery, if

the case is successful, will be the same as every other class

member[.] . . . I know that sometimes class representatives receive

some compensation for the time and trouble of being a class

representative, but I am motivated by a desire to ensure veterans

are treated fairly rather than a desire for personal gain.

Given Mr. Davidson’s declaration, a few obvious points must be made: Prior to this

phone call, Mr. Davidson had no idea whatsoever that the Briggs class action even existed, or that

he was about to receive a 100% refund (well over $350) under the Briggs settlement agreement

(id. at ¶ 3). As such, he would not have brought the administrative motion, and would never have

requested exclusion from the pending Briggs class settlement had Attorney Visher not taken the

affirmative steps to solicit him to intervene and be the class representative in the instant action. 

Moreover, based upon the above declaration, Attorney Visher apparently told Mr. Davidson that

in order to be a more “suitable” class representative for this instant action (where his individual

claim would be worth approximately $45), he must forego his pending settlement payment in

Briggs, which amounted to a full refund of everything improperly charged or offset by the

government. Finally, Attorney Visher apparently told Mr. Davidson that “thousands of veterans

overcharged by AAFES would have no remedy” if the instant case remained without a class

representative.4

 This manipulation is troubling.

On April 1 (the same day Mr. Davidson informed counsel that he wanted to opt out of the

Briggs settlement), Attorney Visher moved to intervene with Mr. Davidson in the instant case. 

Six days later, on April 7, the government filed its opposition to the motion. In its opposition, the

government noted that Mr. Davidson’s account had already been adjusted and that he would be

receiving a 100% refund of everything — including interest overcharges — as part of his

settlement payment as a Briggs class member. Attorney Visher was therefore presented with a

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choice. He could (1) advise Mr. Davidson to remain in the Briggs settlement and keep his $350,

but risk losing the motion to intervene, (2) advise Mr. Davidson to opt out of the Briggs

settlement and forego his 100% refund to improve his chances of successfully intervening in the

instant case, or (3) find a more suitable individual (perhaps someone who is not a Briggs class

member and did not have his account adjusted) to intervene. While the last option would have

been the best choice to avoid any manipulation, counsel selected the second option.

This weighs very strongly against a finding of “excusable neglect.” Indeed, the facts

discussed above illustrate that it was not Mr. Davidson’s “inadvertence, mistake, or carelessness”

that caused him to file an untimely request to opt out. See Pioneer, 507 U.S. at 388. Rather, Mr.

Davidson’s declaration makes clear that it was counsel’s affirmative acts of manipulation that

caused the administrative motion to be filed. For these reasons, the motion to enlarge time to

allow Mr. Davidson to opt out of the Briggs settlement must be DENIED.

* * *

Since Mr. Davidson’s AAFES account has already been adjusted, and he is in line to

receive a generous settlement check in Briggs representing “a full refund of money collected on

his debts since 2001 relating to principal, interest charges (including any alleged overcharges),

and penalties,” he is not an appropriate intervenor to serve as a class representative in the instant

action. Moreover, whether the settlement in Briggs is given final approval or not, Mr. Davidson’s

AAFES account has already been retroactively adjusted, and he stands to receive a refund for

these alleged interest overcharges. For these reasons, counsel’s motion to intervene is DENIED. 

Because there is still no plaintiff in this action with justiciable claims, counsel’s motions for a

preliminary injunction and for class certification must also be DENIED. 

Counsel will please understand that any new proposed intervenor in the instant action

must be someone whose AAFES account has not been adjusted in preparation for a voluntary

refund of alleged interest overcharges. Additionally, any proposed intervenor must be free from

the manipulation of the type evident in Mr. Davidson’s opt-out motion in Briggs. Finally, as

stated in the March 30 order, a motion to intervene must be brought, if ever, before the resolution

of the lingering attorney’s fees issue.

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With respect to the attorney’s fees issue, if counsel wishes to pursue this issue, a motion

— noticed on the normal 35-day track — must be filed no later than MAY 6, 2010. If no motion

is filed by this deadline, judgment will be entered accordingly, and no further motions to

intervene will be entertained.

CONCLUSION

A few closing points must be made. First, this order emphasizes the benefits of patience

with respect to the pending settlement in Briggs. Waiting until the Briggs settlement runs its

course will provide greater clarity as to whether any Briggs class members still have viable claims

against the AAFES for interest overcharges. If it is true, as counsel insists, that some Briggs class

members have not received full relief on the merits, they are free to bring a new lawsuit against

the government, with or without Attorney Visher, or they may move to intervene in the instant

lawsuit, so long as the motion precedes the resolution of the attorney’s fees issue.

Second, any veteran who is not in the Briggs certified class that has a valid claim against

the government pertaining to AAFES interest overcharges is, of course, free to bring his or her

own lawsuit, with or without Attorney Visher. Or, alternatively, that veteran may come forward

to timely intervene in the instant lawsuit. In sum, nothing in this order should be construed as

barring any veteran who believes he or she has not received full relief — whether a member of

the Briggs class or not — from asserting his or her rights in court.

Third, if such a motion to intervene in the instant action is timely made, the United States

is barred from further adjusting the account of that specific intervenor and sending an interest

refund check to that intervenor until the Court can sort out the issue of mootness. This bar,

however, would not apply to anyone else. The United States would be free, and is encouraged, to

issue and mail refund checks to all veterans entitled to them.

IT IS SO ORDERED.

Dated: April 23, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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