[ PUBLISH] IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

________ ________________ No. 12

- 11887

________________________ D.C. Docket No. 8:10

- cv - 02463

- TGW
MIRANDA L. DAY , Plaintiff

- Appellee, RAYMOND GUNN, Interested Party

- Appellant,

v ersus PERSELS & ASSOCIATES, LLC, a Maryland limited liability company, RUTHER & ASSOCIATES, LLC, JIMMY B. PERSELS, ROBYN R. FREEDMAN , CAREONE SERVICES, INC., a Maryland corporation, f.k.a. Freedom Point, LE GAL ADVICE LINE, LLC, Defendants

- Appellees,
3C INCORP ORATED, etc., et al., Defendants.

Case: 12-11887 Date Filed: 09/10/2013 Page: 1 of 682 ________________________ Appeal from the United States District Court for the Middl e District of Florida

________________________ (September 10, 2013) Before PRYOR and JORDAN, Circuit Judges, and PRO, ∗ District Judge. PRYOR, Circuit Judge : This appea l requires that we resolve two main issues: first , whether a magistrate judge ha d subject

- matter jurisdiction to enter a final judgment in a class action wit hout first obtaining the consent of the absent members of the class ; and

se cond, whether a judge abuse d his discretion when he found that seven defendants would be financially unable to satisfy a judgment even though no evidence about the financial posit ion of six of the defendants had been introduce d. Miranda Day sued several debt management businesses and individual employees of those businesses on behalf of herself and a statewide class of abo ut 10 ,000 consumers. Day and the defendants consented to allow a magistrate judge to enter a final judgmen t in the class action . 28 U.S.C. § 636(c). Day and the defendants then informed the magistrate judge that they had reached a settlement agree ment, which expanded the definition of the class to a nationwide class of 12 5,000 consumers and released most of the claims of that class in ex change for no monetary relief for

∗ Honorable Philip M. Pro , United States District Judge for the District of Nevada , sitting by designation. Case: 12-11887 Date Filed: 09/10/2013 Page: 2 of 683 the absent class members. At a fairness hearing on the settlement agreement, Day and the defendants argued that the defendants would be financially unable to satisfy a judgment, but the evidence in the record supported the conclusion that only one of the defendants, Persels & Associates, LLC, would be financially unable to satisfy a signi ficant judgment. The magistrate judge conclude d that the settlement agreement was fair, adequate, and reasonable even though it did not provide an y monetary relief to the absent class members because the defendants would be unable to satisfy a significant judg ment. We conclude that the magistrate judge had subject

- matter jurisdi ction to enter a final judgment because absent class members are not parties whose consent is required for a magistrate judge to enter a final judgment u nder section 636(c)

. B ut w e vacate that judgment because the magistrate judge abused his discretion when he found, without adequate evidentiary support, that the defendants could not satisfy a significant judgment , and w e remand for further proceedings. I. BACKGROUND
CareOne Servi ces, Inc. , offered credit counseling services that purported to allow debtors to lower their payments and pay off their debts. In November 2007, Miranda Day enrolled in CareO ne’s credit counseling services. As part of that arrangement with CareOne , Day r eceived and entered a retainer a greement with
Rut her & Associates, LLC , a law firm managed by Neil J. Ruther, and with

Case: 12-11887 Date Filed: 09/10/2013 Page: 3 of 684 CareOne for debt resolution services. Under the agreement, Day would make monthly payment s to Ruther & Associates and CareOne instead of paying her creditors . Ruther & Associates and CareOne would accumulate these funds in an escrow account. Ruther & Associates and CareOne would then negotiate on behalf of Day with her creditors to settle her debt with payments from the escrow account. The agreement also provided that Ruther & Associates and CareOne would deduct a legal fee in the amount of 15 percent of Day’s debt before she entered the agreement from her monthly payments. The agreement provided that the fees could be higher based on the complexity of the representation. When Ruther retired in 2008, he transferred the law firm to Jimmy B. Persels, and Persels renamed the law firm Persels & Associates, LLC. Both law firms employed Robyn R. Freedman, an attorney licensed in F lorida, to assist in the credit counseling services , and Freedm an was assigned to represent Day

. Day paid six monthly payments of $212.39 from January to June 2008 for a total payment of $1,274.34. None of the money that Day paid to the law firms was disb ursed to her creditors. Instead, the funds paid for fees of the law firms

. As a result of nonpayment, one of Day’s creditors sued her on April 17, 2008, and Day tried to contact both CareOne and Ruther & Associates immediately after being served

. In res ponse to her inquiries, Day received an email from Freedman on April 2 1 , 2008, that told her that Freedman had reviewed her file and would be

Case: 12-11887 Date Filed: 09/10/2013 Page: 4 of 685 working with the paralegal negotiators at CareOne to resolve her disputes with her creditors. Day received no fur ther assistance from CareOne or any of the attorneys or law firms, and a default judgment wa s entered against her on July 10 , 2008. After the court entered a default judgment , Day received a form answer to the complaint of her creditor that stated that it had been prepared by or with the assistance of Legal Advice Line , LLC. In July 2008, another creditor sued Day. She again tried to contact CareOne, the law firms, and Freedman. A CareOne representative assured D ay that CareOne would take care of the matter, but CareOne, Freedman, and the law firms failed to assist Day in that matter. Day filed fo r bankruptcy on July 15, 2008. Day sued CareOne, Persels & Associates, Ruther & Associates, Persel s, Ruther, Freedma n , several companies that had provided debt settlement services but not legal representation to her, and one individual , who had provided debt settlement servi ces to her. Day sued on behalf of herself and a class of 10,0 00 similarly situated residents of Florida who had sought credit counseling services from CareOne. Fed. R. Civ. P. 23(b)(3). In her complaint, Day alleged that the debt management defendants were liable to her and the class under the Florida Deceptive and Unfair Trade Practices Act, the C redit Repair Organizations Ac t, and based on several causes of action under common law

. The defendants who did not provide legal representation, including CareOne, moved to stay the action

Case: 12-11887 Date Filed: 09/10/2013 Page: 5 of 686 against them and compel arbitration. The district court granted t he motion to compel arbitration and stayed the actio n against all of those defendants except CareOne. The district court concluded that any claims against CareOne that arose from the retainer agreement could not be stayed because that agreement did not
in clude an arbitration provision. Day and the legal service defendants , including CareOne, then consented to have a magistrate judge conduct all proceedings and to allow the magistrate judge to enter a final judgment. See 28 U.S.C. § 636(c). Day filed a n amended complaint on behalf of h erself and about 10,000 similarly situated Florida residents. Fed. R. Civ. P. 23(b)(3)

. The amended complaint added Legal Advice Line as a defendant. In her amended complaint, Day alleged that the legal service defendants were liable to her and the class under the Credit Repair Organizat ions Act and several causes of action under common law

. Eighteen days after Day filed the amended complaint , Day and the legal services defendants , including Legal Advice L ine, notified the court that they had reached an agreement in principle on the resolution of the case and that they intended to enter a fina l settlement agreement in about 60 days. Day and the legal services defendants then entered a settlement agreement

. The settlement agreement de fined the class as all persons in the United States who had entered agreements for legal advice concerni ng debt with the legal service defendants on or

Case: 12-11887 Date Filed: 09/10/2013 Page: 6 of 687 after April 28, 2008 , except th ose consumers who were class members in a class

a ction pending in the Eastern District of Washington. The class , as defined by the settlement agreement, included over 125,000 absent plaintiffs.
T he settlement agreement limited the ability of the legal service defendants to collect fees from a client who entered a retainer agreement for debt management services after Octo b er 1 , 2010. Under the agreement, the legal service defendants could collect fees from one of these clients only after the defendants negotiated a settlement with that client’s creditor. The agreement also required the legal services defendants to modify their retainer agreement to disclose the amount that the client would pay in legal fees and to establish processes to ensure that clients seeking the assistance of an attorney were able to communicate with the attorney within a reasonable time. The agreement included a $100,000 cy pres payment to the American Bar Foundation. The agreement required that the legal services defendants pay the costs of administering the settlement and a $5, 000 incentive payment to Day. The agreement also provided that the legal services defendants would pay attorney’s fees up to $300,000, and that the complaint would be dismissed with prejudice. The agreement provided n o monetary relief to the absent plain tiffs , but rel eased any claims that an absent pla intiff had against the legal services defendants

.

Case: 12-11887 Date Filed: 09/10/2013 Page: 7 of 688 The magistrate judge conditionally certified the class, appointed Day’s counsel as class counsel , scheduled a fairness hearing, approved the notice of proposed class action, and granted preliminary approval to the settlement agreement. The parties sent n otice of the class action and the settlement to over 98 percent of the class members and the attorneys general of every state except Washington. The no tice informed class members that they could opt out of the class and that, if they opted out of the class, the settlement woul d not bar them from pursuing their individual cl aims against the legal service defendants. Three hundred and twenty

- five class m e mbers opted out of the class. The notice also informed class members of the procedure to object to the proposed settlement. The n otice explained that the final approval hearing would be “before Magistrate Judge Thomas G. Wilson,” but the notice did not in form class members that Day had consented to have the magistrate judge enter a final judgment or provide any other notice that the magistrate judge would enter a final judgment. Five class members, in cluding Raymond Gunn , and the Attorneys General of Con necticut, Florida, Maine, New York, and West Virginia objected to t he settlement agreement

. In his o bjection, Gunn argued that the settlement agreement was not fair, adequate, and reasonable because the class members received no monetary relief in return for an overly broad release of claims that could

Case: 12-11887 Date Filed: 09/10/2013 Page: 8 of 689 potentially be valuable, that the cy pres distr ibution was inappropriate, that the American Bar Foundation was an inappropriate recipient even if a cy pres distr ibution were warranted, and that the attorney’ s fee and incentive payment could not be justified in the light of the result achieved for the class

. During the week before the settlement hear ing, Day and the legal services defendants filed separate motions for final approva l of the settlement agreement, and t he motions explain ed that the settlement had been revised in response to Gunn’s objections in two ways. First, the revised agreement did not release claims of legal m alpractice that were un related to the allegations in the complaint.
Seco nd, the revised agreement changed the recipient of the cy pres payment from the American Bar Foundation to two organizations with purposes more closely aligned with the members of the class. Day’s motion for approval stated that information provided durin g informal discovery established that the defendants would be unable to pay a substantial settlement or judgment

. At the fairness hearing, c lass counsel argued that the settlement should be approved because it held the defendants accountable for their a ct ions and no objector had offer ed a better solution. Class counsel also assert ed that few of the class members had object ed or chosen to be excluded from the class and that it was uncertain if any judgment could be collected. When the district court as k ed class counsel what inquiry he made into collectability, class counsel responded that he

Case: 12-11887 Date Filed: 09/10/2013 Page: 9 of 6810 had inquired about collectability and relied on the response of the legal service defendants. Counsel for Persels & Associates also stated that the recovery of a ju dgment was doubtful because Persels & Associates had suffered net losses for two years and owed $14 million on a separate settlement agreement. Counsel for
CareOne asserte d that , if the matter was not settled , adjudication against CareOne would be delayed because it intended to appeal the denial of the m otion to compel arbitration. Gunn argued that the court should not approve the settlement. Gunn argued that the settlement agreement required class members to relinquish valuable rights for no monetary c ompensation. He also argued that the injunctive relief failed to compensate the class because it required only that the legal service defendants

co mply with federal regulations. After the hearing, the managing memb er of Persels & Associates , Ruther, filed a declaration about the financial condition of Persels & Associates. Ruther averred that Persels & Associates had sustained a net loss of $5,857,269 during the calendar years of 2010 and 2011. Ruther also averred that Persel & Associates had

enter ed a settlement agreement in another matter in which it was required to pay $18 million and that Persels & Associates still owed $14 million under that agreement. Ruther averred that the amount owed under that agreement was secured by all assets of the fi rm. Ruther also averred that CareOne had modified

Case: 12-11887 Date Filed: 09/10/2013 Page: 10 of 6811 software at his request and that he had been told that the cost of this modification exceeded $350,000. Ruther’s declaration included no additional information about
the financ ial condition of any defenda nt, but Ruther had averred , in a previous declaration, that , “[t]o the best of [his] knowledge, understanding and belief , ” Ruther, Persels, and Freedman would be unable to satisfy a judgment because they “are married and [their] assets are held jointly with their spouses and are therefore protected from levy or execution. ” The magistrate judge certified the class and approved the settlement agreement. The magistrate judge explained that, although the settlement agreement provided no mon etary relief, th e agreement was fair, adequate , and reasonable because of “(1) the ability of the Class member s to opt out of the settlement agreement; (2) the financial inability of the defendants to pay a meaningful award, much less to respond to a large judgment; and ( 3) my complete confidence in the ability and integrity of . . . counsel . . . .” The magistrate judge then applied the following six factors to determine whether the settlement was fair, adequate and reasonable: (1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense, and duration of litigation; (5) the substance and amount of opposition to the sett lement; and (6) the stage of proceedings at which the settlement is achieved. Case: 12-11887 Date Filed: 09/10/2013 Page: 11 of 6812 The mag istrate judge stated that “recovery is not certain even if the C lass is successful at tria l, since they may not be able to collect on the judgment” because “the law firm defendants [are] facing financial hardship.” The magistrate judge then stated that the settlement agreement was fair because “the likelihood of the
C lass succeeding on the merits is far from clear.” The magistrate judge explained that the “range of actua l recovery” was “from zero to a minimal recovery” because the class members would not be able to c ollect a significant judgment, which supported the conclusion that “the point at which the settlement is fair, reasonable, and adequate includ es no monetary r ecovery by the C lass members.” The magistrate judge also concluded that the likely complexity and expense of further litigation supported the approval of the agreement, that the substance and amoun t of opposition “d[id] not warrant disapproval” of the agr eement, and that the stage of proceedings at which the settlement had been achieved supported the approval of the agreement. The magistrate judge certified the class, awarded class counsel $300,000, and awarded Day $5,000

. II. STANDARD S OF REVIEW This appeal is governed by two sta ndards of review. We review our subject matter jurisdiction de novo . Belleri v. United States , 712 F.3d 543, 547 (11th Cir. 2013). We review the approval of a settlement in a class action for abuse of

Case: 12-11887 Date Filed: 09/10/2013 Page: 12 of 6813 discretion. Faught v. Am. Home Shield Corp. , 66 8 F .3d 1233, 1239 (11th Cir. 2011). III. DISCUSSION We divide our dis cussion in two parts. Fi rst, we explain that the magistrate judge had subject

- matter jurisdiction to enter a final judgment . Secon d , we explain that the mag istrate judge abused his discretion when he found that the leg al service defendants were financially un able to satisfy a significant judgment. A. The Magistrate Judge Had Subject

- Matter Jurisdiction to Enter a Final Judgment

. We divide our discussion of our jurisdiction in two parts. First, we ex plain that the magistrate judge had statutory jurisdiction to enter a final judgment

. Second, we explain that the magistrate judge had constitutional jur isdiction to enter the judgment

.

1. The Magistrate Judge Had Jurisdiction, Un der the Federal Magistrates Act, to Enter a Final Judgment. The Federal Magistrates Act provides that , “[u]pon the consent of the parties,” a magistrate judge “may conduct any or a ll proceedings in a jury or

no n jury civil matter and order the entry of judgment in the case, when specially designated to exercise such jurisdiction by the district court or courts he serves.” 28 U.S.C. § 636(c)(1). After the magistrate judge enters a final judgment, “an aggrieved p arty may appeal directly to the appropriate United States court of

Case: 12-11887 Date Filed: 09/10/2013 Page: 13 of 6814 appeals.” 28 U.S.C. § 636(c)(3 ). The National Association of Consumer Advocates, as amicus curia e , argues that the magistrate judge lack ed ju risdiction because the absent plaintiffs are p arties under section 636(c)(1) and never consented to the entry of a final judgment by a magistrate judge, but we disagree. We conclude , as have the Thir d and Seventh Circuit s , that absent class members are not “ parties ” whose consent is required for a m agistrate judge to enter

a final judgment under section 636(c)

. See Dewey v. Volkswagen Aktiengesellschaft , 681 F.3d 170, 181 (3d Cir. 2012); Williams v. Gen. Elec. Capital Auto Lease, Inc. , 159 F.3d 266, 269 (7th Cir. 1998) ; see a lso , William B. Rubenstein, et al., Newberg on Class Actions § 1:1 (“Class actions are a form of representative litigation. One or more class representatives litigate on behalf of those class members, and those class members are bound by the outcome of the

re presentative’s litigation.”)

. Our conclusion is supported by the ordinary legal meaning of the term “parties” in 1979, the presumption of consistent usage, and the practical approach to interpret ing the term “party” adopted by the Supreme Court
in Devlin v. Scardelletti , 536 U.S. 1, 7

– 14 122 S. Ct. 2005 , 2009

– 13 (2002).
W hen Congress leaves a term in a statute undefined, “we must ‘give it its ordinary meaning,’ keeping in mind the context of the statute.” United States v. Jimenez , 705 F.3d 1305, 1308 (11th Cir. 2013) (quoting United States v. Santos , 553 U.S. 507, 511, 128 S. Ct. 2020, 2024 (2008)). “And when the law is the

Case: 12-11887 Date Filed: 09/10/2013 Page: 14 of 6815 subject, ordinary legal meaning is to be expected . . . .” Antonin Scalia & Bryan A. Garner , Reading Law : The Interpretation of Legal Texts 73 (2012) . To interpret the term “party” in context, it “must be given the [ordinary legal] meaning [it] had when the text was adopted.” Id. at 78. The ordinary legal meaning of the term “party , ” when Congress added the relevant language of section 636(c)(1) in 1979 , suggests that t he term “parties” excludes absent class members. See Federal Magistrate Act of 1979 , Pub. L. No.
96

– 82, § 2, 93 Stat. 643 (1979). This conclusion is supported by the contemporaneous version of Black’s Law Dictionary , the contempor aneous First
Restatement of Judgments, the Second Restatement of Judgments published three years after the addition of the relevant language, and a de cision of the Supreme
Court six years after the amendment to section 636(c)(1). The fifth edition of Black’s Law Dictionary , published the same year that Congress added the relevant language, explained that “[a] ‘party’ to an action is a person whose name is designated on record as plaintiff or defendant.” Black’s Law Dictionary 1010 (5th ed. 1979). Black’s Law Dictionary also made clear that the term “ party ” “[i]n general, means one having the right to control proceedings, to make defense, to adduce and cross

- examine witnesses, an d to appeal from judgment,” and that “ party ” “refers to those by or against whom a legal suit is brought.” Id. Absent class members are not designated on record as a plaintiff or

Case: 12-11887 Date Filed: 09/10/2013 Page: 15 of 6816 defendant. Absent class members also ordinarily lack the power to control proceedings. And a suit is n ot brought “by or against” absent class members. Instead, the Federal Rules of Civil Procedure provide that “[o]ne or more members of a class may sue or be sued as representative parties on behalf of all members” when the requ irements f or a class action have been met. Fed. R. Civ. P. 23(a). The Restatement (First) of Judgments, which was the only version available when Congress added the relevant language, explained that “[a] class action is an illustration of a situation wher e it is not feasible for all persons whose interests may be affected by an action to be made parties to it.” Restat ement (First) of Judgments § 86 cmt. b (1942). And the Restatement (First) made clear that, as the Seventh Circuit has noted, “[g]enerally speaking, absent class members are not ‘parties’ before the court in the sense of being able to direct the litigation,” Williams , 159 F.3d at 269, because “the expense and difficulty of making all persons who have interests in the proceeding parties to it outweigh the normal desirability of not depriving persons of causes of action or of defenses without giving them an opportunity to be heard,” Restatement (First) of Judgments § 86, cmt. B (1 942). In the absence of class members as parties, the class representative, who is a named plaintiff, must “purport to act on behalf of all.” Id. The Restatement (Second) of Judgments, which was published three years after the relevant portion of section 636(c)(1) was added, adhered as fol lows to the

Case: 12-11887 Date Filed: 09/10/2013 Page: 16 of 6817 understanding of the term “pa rty” in a class action that had been expressed in the Restatement (First): A person who is not a party to an action but who is represented by a party is bound by and entitled to the benefits of a judgment as though he were a party. A person is represented by a party who is . . . [t]he representative of a class of persons similarly situated, designated as such with the approval of the court, of which the person is a member. Restatement (Second) of Judgments § 41(1)( e) (1982). The Restatement ( Second) explained that the class representative had “the requisite authority, and generally the exclusive authority, to participate as a party on behalf of the represented person.” Id. § 41 cmt. a. And the decision of the Su preme Court in Phillips Petroleum Co. v. Shutts , 472 U.S. 797, 105 S. Ct. 2965 (1985), six years after the addition of the relevant portion of s ection 636(c)(1), also suggests that, at least for purposes of the
manageme nt of the litigation, an absent class member who has not intervened is not a party. In Shutts , the Supreme Court held that a class representative may choose to file a class action in a jurisdiction that would not otherwise have
person al jurisdiction over the absent class member so long as su fficient n otice is provided to the absent class members and they are given an opportunity to opt out. Id. at 811

– 12, 105 S. Ct. at 2974

– 75 . The Court explained that an opt

- in procedure, similar to a requirement that each absent class member consent to th e entry of a judgment by a magistrate judge, was unnecessary for a state court to

Case: 12-11887 Date Filed: 09/10/2013 Page: 17 of 6818 exercise personal jurisdiction because a rule “[r]equiring a plaintiff to affirmatively request inclusion would probably impede the prosecution of those class actions involvi ng an aggregation of small individual claims, where a large number of claims are required to make it economical to bring suit.” Id. These authorities
sugges t that Congress excluded absent class members when it used the term “parties” in section 636(c)(1) because the ordinary legal m eaning of “parties” excluded absent class members. See also Pearson v. Ecological Sci. Corp. , 522 F.2d 171, 176 (5th Cir. 1975) (referring to absent class members as “nonparty class members”). Our reading of the term “parties” in sect ion 636(c)(1) to exclude absent class members is also supported by the “presumption that a given term is used to mean the same thing throughout a sta tute

. ” See Barber v. Thomas , –– U.S.

–– , 130 S. Ct. 2499, 2506 ( 2010) (quoting Brown v. Gardner , 513 U.S. 115, 118, 115 S. Ct. 552, 555 (1994)). Section 636 uses the word “parties” in several places: subsection (c)(1) requires the “consent of the parties” for the exercise of jurisdiction by a magistrate judge in a civ il action; subsection (c)(2) provides that, if a magistrate judge is designated to exercise jurisdiction, “the clerk of court shall, at the time the action is filed, notify the parties of the availability of a magistrate judge to exercise such jurisdiction ”; subsection (c)(2) also provides that, after the “decision of the parties [has] be[en] communicated to the clerk of court[,] . . . the district court

Case: 12-11887 Date Filed: 09/10/2013 Page: 18 of 6819 judge or the magistrate judge may again advise the parties of the availability of the magistrate judge, but in so doing, shall also advise the parties that they are free to withhold consent without adverse substantive consequences”; and subsection (b)(1)(c) states that a magistrate judge who has been assigned to conduct evidentiary hearings, but not to rende r a judgment, “shall file his proposed findings and recommendations . . . with the court and a copy shall forthwith be mailed to all parties.” 28 U.S.C. § 636(b), (c). If we were to interpret the word “parties” in the

cons ent provision to include absent class members, we w ould also interpret the word “parties” in the other provisions o f section 636 to include absent class members based on the presumption that a word is used consistently throughout a

statute. But t o apply that broad definition of the word “parties” throughout the statute would greatly increase the costs of class actions and the burdens on the courts. Under subsection (b)(1), the court would be responsible for notifying all absent members of a class of the report and recommendations of a m agistrate judge. And if the absent class members consented to adjudication of their claim s by a magistrate judge, the clerk of the court would be required, under subsection (c)(2), to notify those absent class members of the availability of a magistrate judge to exercise such jurisdiction. To be sure, subsection (c)(3) instructs that “an aggrieved party may appeal directly to the appropriate United States court of appeals,” id. § 636(c)(3), and the Supre me Court has held that , under its

Case: 12-11887 Date Filed: 09/10/2013 Page: 19 of 6820 precedents, an absent class member who unsuccessfully objects to a proposed settlement may appeal the approval of that settlement , Devlin , 536 U.S. at 14, 122
S. Ct. at 2012 . But the Supreme Court in Devlin did not purpor t to determine the meaning of the term “party” in any provision of section 636. For the purpose of the consent requir ement of section 636(c), absent class members “are more accurately regarded as having something less than full party status.” See William s , 159 F.3d at 269. Our decision that absent class members are not “parties” under section 636(c)(1) is also supported by the pragmatic approach to defining the term “party”

a dopted by the Supreme Court in Devlin

. In that decision , the Court explained that, in a class acti on, “[n]onnamed class members . . . may be parties for some purposes and not for others,” and “[t]he label ‘party’ does not indicate an absolute characteristic, but rather a conclusion about the applicability of various procedural rule s that may differ based on context.” Devlin , 536 U.S. at 9

– 10, 122 S. Ct. at 2010. The C ourt then explained that absent class members are treated as parties for some purposes “to simplify litigation involving a large number of class members with similar claims.” Id. at 10, 122 S. Ct. at 2010

– 11. The Court also expl ained that the rule that absent class members are not parties for the purpose of diversity jurisdiction “is likewise justified by the goals of class action litigation” because “[e]ase of admin istration of class actions would be compromised by

Case: 12-11887 Date Filed: 09/10/2013 Page: 20 of 6821 having to consider the citizenship of all class members” and “considering all class members for these purposes would destroy diversity in almost all class actions.” Id. , 122 S. Ct. at 2011.
T he purposes o f cla ss actions support the exclusion of absent class members from the term “parties” in section 636(c). “From a practical stand point,” the inclusion of absent class members as parties under section 636(c) “would virtually eliminate § 636(c) referrals to magistrate judges in all potential class actions, because it would de facto transform all such cases into ‘opt

- in’ style actions and fundamentally change the capacity of the judgment . . . to bind both sides in the absence of express consents.” Williams , 159 F.3d at 269. Such a decision would not serve the “goals of class action litigation” including “simplif[ication] [of] litigation involving a large number of class members with similar claims” and “[e]ase of administration.” Devlin , 536 U.S. at 10, 122 S. Ct. at 2010

– 11. In the context of personal jurisdiction, the Su preme Court has explaine d that “[r]equiring a plaintiff to affirmatively request inclusion would probably impede the prosecution of those class actions involving an aggregation of small in dividual claims, where a large number of claims are required to make it economical to bring suit.” Shutts , 472 U.S. at 81 2

– 13, 105 S. Ct. at 2975. “[T] he benefit offered in return for consent to trial before a magistrate judge is the prospect of an earli er trial or other form of case resolution than could be arrived at by a district judge.” R.

Case: 12-11887 Date Filed: 09/10/2013 Page: 21 of 6822 Lawrence Dessem, The Role of the Federal Magistrate in Civil Justice Reform , 67 St. John’s L. Rev. 799, 828 (1993). The benefit of an earlier, and potentially less expensive, adjudication is most likely to be substantia l when a class action “involv[es] an aggregation of small individual claims, where a large number of claims are required to make it economical to bring suit.” Shutts , 472 U.S. at 8 13, 105 S. Ct. at 2975. The limitation on the holding in Devlin to “nonnamed class members . . . who have objecte d . . . at the fairness hearing,” 536 U.S. at 14, 122 S. Ct. at 2013 , als o supports the conclusion that, at least when the class member s have not participated in proceedings , absent class members are not parties under section 636(c)

. In Devlin , the Court explain ed that to refuse to allow a class member who had objected to a se ttlement at a fairness hearing to appeal the approval of the settlement “would deprive nonnamed class members of the power to preserve their own interests in a settlement that will ultimately bind them, despite their expressed objections before the trial c ourt.” Id

. at 10, 122 S. Ct. at 2011. We have explained, “ Devlin held that nonnamed members of class actions who have timely objected to a class settlement may appeal the denial of their objections without first moving to intervene.” AAL High Yield Bond Fund v. Deloitte & Touche LLP , 361 F.3d 1305, 1309 (11th Cir. 2004). And our sister circuits agree that Devlin is limited to treating absent class members as parties for the purpose of appeal only

Case: 12-11887 Date Filed: 09/10/2013 Page: 22 of 6823 when they objected to a settlement approved by the distri ct court. See, e. g. , Robert F. Booth Trust v. Crowley , 687 F.3d 314, 319 (7th Cir. 2012) (“ Devlin holds that a member of a class certified under Rule 23, who asks the district court not to approve a settlement, need not intervene in order to appeal an adv erse decision.”); Skilstaf, Inc. v. CVS Caremark Corp. , 669 F.3d 1005, 1019 (9th Cir. 2012) (“In Devlin , the Supreme Court considered whether a non

- named, absent class member who objects to a settlement, but who cannot opt out because the class action was certified under Rule 23(b)(1), must intervene to appeal an objection overruled by the district court.”); Abeyta v. City of Albuquerque , 664 F.3d 792, 796 (10th Cir. 2011) (“[T]he Devlin exception to the Marino rule will only apply where the nonparty has a unique interest in the litigation and becomes involved in the resolution of that interest in a timely fashion both at the district court level and on appeal.”); In re Orthopedic Bone Screw Prods. Liab. Litig. , 350 F.3d 360, 363 n. 3 (3d Cir. 2003) (“Objecto rs . . . do not qualify as a party for purposes of appe aling [an] original settlement,” when they “neither objected at the fairness hearing nor appealed the settlement, which is now final.”); In re Gen. Am. Life Ins . Co. Sales Practices Litig. , 302 F.3d 79 9, 800 (8th Cir. 2002) (“ Devlin concerned the appellate rights of an unnamed class member who challenged the fairness of a settlement in a mandatory class action.”); cf. In re Lupron Mktg. & Sales Practices Litig. , 677 F.3d 21, 29

– 30 ( 1st Cir. 2012) (“The question . . . becomes whether

Case: 12-11887 Date Filed: 09/10/2013 Page: 23 of 6824 Devlin , which created an exception for unnamed class members who have objected to settlement agreements, extends to this situation in which unnamed class members have objected to a cy pres distribution.”). No circuit court has concluded that Devlin requires a federal court to treat a passive absent class member as a party for any purpose

. Th is reading of Devlin makes sense in the light of the general rule that , when absent class members have not attempted to participate in the litigation, those “absent class members are not ‘parties’ before the court in the sense of being able to direct the litigation.” Williams , 159 F.3d at 269.
T he consumer advocates ar gue that Devlin suggests that absent class members are parties under section 636(c) because “without a right to consent individually , absentees are bound to the named plaintiff’s relinquishment of their rights to an adjudication before an Article III judge ,” but the absent class members in this case were not bound in the same sense that the unnamed class member in Devlin was bound. In Devlin , the Court held “that nonnamed class members . . . who have objected in a timely manner to approval of [a] settlement at [a] fairness hearing have the power to bring an appeal without first intervening,” 536 U.S. at 14, 122 S. Ct. at 2013, and explained that “[w]hat is most important to this case is that nonnamed class members are parties to the proceedings in the sense of being bound by the settlement,” id. at 10, 122 S. Ct. at 2011. The Court observ ed that to refuse to allow a class member who had objected to a settlement at a fairness

Case: 12-11887 Date Filed: 09/10/2013 Page: 24 of 6825 hearing to appeal the approval of the settlement “would deprive nonnamed c lass members of the power to preserve their own interests in a settlement that will ultimately bind them, despite their expressed objections before the trial court.” Id. The Court also explain ed that this result was especially necessary because the “peti tioner had no ability to opt out of the settlement.” Id. A holding that the unnamed class member in Devlin could not appeal the approval of a settlement even though he had objected at a fairness hearing “would [have] deprive[d] nonnamed class members of the power to preserve their own interests,” and removed unnamed class members’ “only means of protecting [themselves] from being bound by a disposition of [their] rights.” 536 U.S. at 10

– 11, 122 S. Ct. at 2011. Absent class members would not be deprive d of the only means to protect their interests in adjudication before an Article III judge if we were to conclude that they are not parties within the mea ning of section 636(c). Absent class members would instead retain at least three options to protect t heir rights to the adjudication of their claims by an Article III judge when a class is certified and the named plaintiff has consented to adjudication by a magistrate judge: (1) as the Seventh Circuit explained in Williams , absent class members could “app ly to the district court to inter vene under Rule 24(a), become . . . part[ies] to the lawsuit, and then exercise [their] right to withhold [their] consent to proceed before the

Case: 12-11887 Date Filed: 09/10/2013 Page: 25 of 6826 magistrate judge,” 159 F.3 d at 269; (2) unlike the absent class member in Devli n , the absent class members in many class actions , including this one, could opt out of a settlement and not be bound by the judgment entered by a non

- Article III judge, see Devlin , 536 U.S. at 10

– 11, 122 S. Ct. at 2011; and (3) “unnamed class member[s] co uld try to show in a collateral attack that the decision to proceed before a magistrate judge was a matter on which there was a potential (or, in the light of the fully developed record, an actual) significant intra

- class conflict and that the notice the a bsentee[s] received was inadequate to inform [them] of the conflict,” Williams , 159 F.3d at 269

– 70. As to the first option, although we have not addressed the question, see Gen. Trading, Inc. v. Yale Materials Handling Corp. , 119 F.3d 1485, 1496 (11th Cir . 1997) (“[a]ssuming arguendo that this court would require the consent of latecomers . . . .”), the general view of the federal courts is that, “without the consent of . . . ‘intervenors’, the magistrate judge’s order has the effect only of a report and r ecommendation to the district judge, who upon the filing of objections must review de novo the recommendation,” N.Y. Chinese TV Programs, Inc. v. U.E. Enter s. , 996 F.2d 21, 25 (2d Cir. 1993); see also Jaliwala v. United States , 945 F.2d 221, 223 (7th Cir. 1991) (“Without consent [from intervenors], the magistrate had no power to enter an appealable final judgment.” ); 12 Charles Alan Wright, et al. , Federal Practice and Procedure § 3071.2 (2d ed. 1997) (“If consents are not obtained, these added parties, lik e any

Case: 12-11887 Date Filed: 09/10/2013 Page: 26 of 6827 others who have not consented, retain the option of nullifying any resulting judgment on the ground that they never consented.”). And the practice in at least some district courts in our Circuit has been for a magistrate judge to draft a report and recommendation for the district court when a motion to intervene is filed because “a motion to intervene is a dispositive motion which must ultimately be decided by an Article III judge in the absence of consent.” Newman v. Sun Capital, Inc. , No. 2:09

- cv - 445, 2010 WL 326069, at *1 (M.D. Fla. Jan. 21, 2010 ); see also Smith v. Powder Mountain, LLC , Nos. 08

- 80820

- civ, 08

- cv - 81185, 2010 WL 5483327, at *1 (S.D. Fla. Dec. 8, 2010 ) (“[T]he motion presently before the Court is a motion to intervene, which, because of its dispositive nature, cannot be decided by a magistrate judge absent the parties’ consent.”). In contrast with the problem in Devlin , a requirement that the absent class members individually consent to jurisdiction before a magistrate judge is n ot necessary to preserve absent class members’ “only means of protecting [themselves] from being bound by a disposition of [their] rights [they] find[] unacceptable.” Devlin , 536 U.S. at 10

– 11, 122 S. Ct. at 2011. As this Court has explained, Devlin applies to “parties who are actually b ound by a judgment, not [absent class members] who merely could have been bound by the judgment.” See AAL High Yield Bo nd Fund , 361 F.3d at 1310; cf. Gautreaux v. Chi. Hous. Auth. , 475 F.3d 845, 851 (7th Cir. 2007) (“ Devlin

. . . reflects a concern that, without an

Case: 12-11887 Date Filed: 09/10/2013 Page: 27 of 6828 opportunity to appeal, unnamed class members will have no other recourse than to accept the terms of a settlement and to forfeit further pursuit of their claim.”); P.A.C.E. v. Sch. Dist. of Kan. City , 312 F.3d 341 , 343 (8th Cir. 2002) (“ [P.A.C.E.] relies only on Devlin , which is not on point [in a challenge to the certification of a class] because it involved a final order app roving settlement of the case.” ). The absent class members could have been bound by the n amed plaintiff’s consent to the jurisdiction of a magistrate judge, but they als o could have avoided that result in the three separate ways discussed earlier. The consumer advocates argue that we should read the term “parties” in

s ection 636(c) to exclude absent class members to avoid a constitutional question about the authority of the district court to enter a judgment under Article III , but we disagree. “Courts do not use this tool when the text of the statute is unambiguous.” Price v. Time, Inc. , 416 F.3d 1327, 1342 (11th Cir. 2005) . Based on the above authorities, t he ordinary legal meaning of “parties” in 1979 is clear. And we will explain in the following sub section that section 636(c), as we read it, does not violate Article III of the Constituti on in any event. 2. The Magistrate Judge Had Jurisdiction, U nder Ar ticle III, to Enter a Final Judg ment

. Article III, Section 1, of the Constitution requires that “[t]he judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” Judges of

Case: 12-11887 Date Filed: 09/10/2013 Page: 28 of 6829 Article III courts “shall hold their Offices during good Behavio u r” an d “receive for their Services . . . a Compensation[] [that] shall not be diminished.” U.S. C onst. Art. III, § 1. The Supreme Court has identified two purposes served by this constitutional provision: f irst, Article III acts “to safeguard litigants’ right to have claims decided before judges who are free from potential domination by other branche s of government,” Commodity Futures Trading Comm’n v. Schor , 478 U.S. 833, 848, 106 S. Ct. 3245, 3255 (1986) (citations and in ternal quotation marks omitted); and, s econd, Article III “serves . . . to protect the role of t he independent judiciary within th e constitutional scheme of tripartite government , ” Id. (citations and internal quotation marks omitted). We have explaine d that section 636(c) “is constitutional because the act requires that the parties and the district court consent to the transfer of the case to a magistrate and because the district court retains sufficient control over the magistrate.” Sinclair , 814 F.2d at 1519. We divide our discussion of jurisdiction under Article III in three parts. First, we expla in that section 636( c) is facia lly constitutional . Second, we explain that section 636(c) is constitutional as applied to class actions

. Third, we explain that, because the argument about due process raised by the amicus curiae does not involve subject

- matter jurisdiction, we will not consider it.

a . Section 636(c) I s Facially Constitutional. Case: 12-11887 Date Filed: 09/10/2013 Page: 29 of 6830 The consumer advocates argue that section 636(c) facially violates Article III, but we held otherwise in Sinclair . 814 F.2d at 1519. “[I]t is the firmly established rule of this Circuit that each succeeding panel is bound by the holding of the first pane l to address an issue of law, unless and until that holding is overruled en banc, or by the Supreme Court.” United States v. Joseph , 709 F.3d 1082, 1098

– 99 (11th Cir. 2013) (quoting United States v. Hogan , 986 F.2d 1364, 1369 (11th Cir. 1993)). The cons umer advocates suggest that the decision of the Supreme Court in Stern v. Marshall , –– U.S.

–– , 131 S. Ct. 2594 (2011), abrogated our decision in Sinclair , but we disagree. In Stern , the Court held that, under Art icle III, a “Bankruptcy Court . . . lacked the constitutional authority to enter a final judgment on a state law counterclaim that is not resolved in the process of ruling on a creditor’s proof of claim.” Id. at 2620. The Court explained that the entry of a judgment is an exercise of “the essent ial attributes of judicial power.” Id. at 2618

. The Court rejected an argument that a bankruptcy judge could enter a judgment as an “adjunct” of a district court and explained that a bankruptcy judge entering a judgment subject to review by the district court only if a party appealed “can no more be deemed a mere ‘adjunct’ of the district court than a district court can be deemed such an ‘adjunct’ of the court of appeals.” 131 S. Ct. at 2619. And the Court explained that, when “the essentia l attributes o f judicial power that are

Case: 12-11887 Date Filed: 09/10/2013 Page: 30 of 6831 reserved to Article III courts” are exercised, “it does not matter who appointed the .

. . judge or authorized the judge to render final judgments in such proceedings.” Id. (citations and internal quotations omitted).
Stern did n ot abrogate our decision in Sinclair . In Sinclair , we concluded that section 636(c) was constitutional because “[a]t least nine other circuits” had reached that conclusion and “we f[ou]nd the reasoning of th[o]se cases persuasive.” Sinclair , 814 F.2d at 1519

. Stern suggests that some of the factors cited in those decisions may not provide the district court sufficient control over magistrate judges to avoid a problem under Article III when a magistrate judge enters a judgment. For example, the decisions of our sister circuits relied on the authority of Article III judges over the selection and retention of magistrate judges and the ability to appeal to an Article III judge to support the constitutionality of section 636(c). See , e .g. , Pacemaker Diagnostic Clinic of America, Inc. v. Instromedix, Inc. , 725 F.2d 537, 545

– 46 (9th Cir. 1984). But these decisions also relied on other factors including the “authority to cancel an order of reference, sua sponte or on application of the parties, in indiv idual cases” for good cause, that the Supreme Court did not address in Stern

. I d. at 545. And, in Sinclair , we explained that the “district court [must] consent to the transfer of the case to a magistrate” under section 636(c). Sinclair , 814 F.2d at 151 9. “[T]he doctrine of adherence to prior precedent . . . mandates that the intervening Supreme Court case actually

Case: 12-11887 Date Filed: 09/10/2013 Page: 31 of 6832 abrogate or directly conflict with, as opposed to merely weaken, the holding of the prior panel.” United States v. Kaley , 579 F.3d 1246, 12 55 (11th Cir. 2009).
Because Stern did not address many of the factors that led to our conclusion that section 636(c) is constitutional, Stern did not abrogate our decision in Sinclair

. b

. Section 636(c), As Applied to Class Actions, Does Not Violate Arti cle III. The consumer advoc a tes also argue that section 636(c) as applied to class actions violates Article III because it allows a magistrate judge to enter a judgment wi thout the consent of the absent class members, but we agree with the Seventh Circuit that section 636(c) does not violate Article III as applied to class actions

. Williams , 159 F.3d at 270

. W e have explained that one reason that “section 636(c) is constitutional [is] because the act requires that the parties . . . consent to the transfer of the case to a magistrate,” Sinclair , 814 F.2d at 1519, and in a class action , the named party “is the ‘p arty’ to the lawsuit who acts on behalf of the entire class, including with regard to the decision to pr oceed before a magistrate judge,” Williams , 159 F.3d at 269. Because of the representa tion of the named party, absent c lass members do not have the sam e constitutional interest in the conduct of litigation as a named party

. T his conclusion is consistent with the explanation of the Supreme Court , in another context, that “the Due Process Claus e . . . does not afford [absent class members ] as much protect ion from state

- court

Case: 12-11887 Date Filed: 09/10/2013 Page: 32 of 6833 jurisdiction as it does the [named party].” Shutts , 472 U.S. at 811, 105 S. Ct. at 2974. Absent class members have sufficient tools to protect any interest that they have in litigating before an Article III judge. As we explained in the previous subsection, absent class members retain at least three options to protect their rights to the adjudication of their claims by an Article III judge when a class is c ertified and the named class member has consented to adjudication by a magi strate judge: (1) absent class members can apply to intervene in the lawsuit ; (2) absent class

mem bers in many class actions can opt out of a settlement and not be bound by the judgment entered by a non

- Article III judge, see Devlin , 536 U.S. at 10

– 11, 122 S. Ct. at 2011; and (3) absent class member s can bring a collateral attack of the decision of the named class member to consent to the entry of a judgm ent by the magistrate judge, Williams , 159 F.3d at 269

– 70. The consumer advocates argue that the magis trate judge in this case lacked jurisdiction to enter a judgment because Day lacked authority to bind absent class members when she consented to the jurisdiction of the magistrate judge before the class had been certified, but we disagree. “[A] plaintiff who files a proposed class action cannot legally bind members of the proposed class before the class is certified.” Standard Fire Ins. Co. v. Knowles , –– U.S.

–– , 133 S. Ct. 1345, 1349 (2013). T he absent class members were not bound by the consent of Day . As we

Case: 12-11887 Date Filed: 09/10/2013 Page: 33 of 6834 explained earlier, absent class member s who objected to the jurisdiction of the magistrate judge could have “appl[ied] to the district court to inter vene under Rule 24(a), become . . . part[ies] to the lawsuit, and then exercise [their] right to

w ithhold [their] consent to proceed before the magistrate j udge. ” Williams , 159 F.3d at 269

. And the practice in at least some districts in our Circuit has been for a magistrate judge to draft a report and recommendation for the district court when a motion to intervene is filed because “a motion to intervene is a dispositive motion which must ultimately be decided by an Article III judge in the absence of
consent.” Newman , 2010 WL 326069, at *1 ; see also S mith , 2010 WL 5483327,

at *1 (“[T]he motion presently before the Court is a motion to intervene, which, because of its dispositive nature, cannot be decided by a magistrate judge absent the parties’ consent.”).

c. We Will Not Address the Argument of th e Amicus Curiae About Due Process. The consumer advocates argu e that the notice to the absent class members violated their right to due process because it did not provide adequate notice that a magistrate judge would enter a final judgment, but we need n ot address this argument. “This Court has repeatedly held that an issue not raised in the district court and raised for the first time in an appeal will not be considered by this court.” Access Now, Inc. v. Sw. Airlines Co. , 385 F.3d 1324, 1331 (11th Cir . 2004) (internal quotation marks omitted). We have explained that, if we were to address

Case: 12-11887 Date Filed: 09/10/2013 Page: 34 of 6835 issues that had not been raised before the district court, “we would not only waste

our resources , but also deviate from the essential nature, purpose, and competenc e of an appellate court.” Id. No party challenged in front of the magistrate judge the adequ acy of the notice to the absent class members. Because the parties did not give the magistrate judge an opportunity to consider the adequacy of the notice, we

ne e d not consider this argument. Moreover, we will not allow an amicus curiae who asserts an argument on behalf of absent class members in a class action to attempt to “control the course of th[e] litigation to the extent of requesting individual relief not requested by anyone else.” Bing v. Roadway Express, Inc. , 485 F.2d 441, 452 ( 5th Cir. 1973). The consumer a dvocates argue that we should address the due process argument because “[t]he failure of notice here concerns notice to the class members of their constitutional rights to an Article III judge, which appellees do not (and cannot) dispute presents a ‘jurisdictional question’ that should be raised

sua sponte even when no one brings it to the court’s attention,” but we disagree

. Whether the magistrate judge had jurisdiction to enter a final judgment under section 636(c) and Article III is a question of subject

- matter jurisdiction. But the adequacy of the notice is not a question of subject

- matter jurisdiction that we mu st raise sua sponte . The contents of the notice are relevant only to the question

w hether , if the consents of the absent class members are necessary , they impliedly

Case: 12-11887 Date Filed: 09/10/2013 Page: 35 of 6836 consented to the jurisdiction of the magistrate judge under the decision of the Supreme Court in Roell v. Withrow , 538 U.S. 580, 123 S. Ct. 1696 (2003), which held that the consent of a party may be inferred from conduct during litigation i n some circumstances, id. at 582, 123 S. Ct. at 1699. The contents or sufficiency of the notice are not relevant to any question about our subject

- matter jurisdicti on if absent class members were not required to consent to litigate before the magistrate j udge. The consumer advocates argue that, even if the argument about due process is not related to the jurisdiction of the magistrate judge under Article III and section 636(c), “the issue would still be jurisdictional,” but this argument is based

on a mis u nderstand ing of the distinction between personal and subject

- matter jurisdiction. Our law is clear that “objections to personal jurisdiction

— unlike subject matter jurisdiction

— are waivable.” Oldfield v. Pueblo de Bahia Lora,
S.A. , 558 F.3d 1210, 1218 n.2 1 (11th Cir. 2009). The consumer advocates cite the decisions of the Supreme Court in Shutts , and Mullane v. Central Hanover Bank &
Trust Co. , 339 U.S. 306, 70 S. Ct. 652 (1950), as support for the argument that the sufficiency of the notice implicates a jurisdictional question that we must address, but both of these decisions addressed personal jurisdiction , Shutts , 472 U.S. at 814, 105 S. Ct. at 2976 ; Mullane , 339 U.S. at 313 , 70 S. Ct. at 656

. The Supreme Court has explained that, “[b]ecause the requirement of personal jurisdiction represents

Case: 12-11887 Date Filed: 09/10/2013 Page: 36 of 6837 first of all an individual right, it can, like other such rights, be waived.” Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 7 03, 102 S. Ct. 2099, 2105 (1982). “[U]nlike subject

- matter jurisdiction, which even an appellate court may review sua sponte , . . . a defense of lack of jurisdiction over the person . . . is waived if not timely raised in the answer or a responsive pleadi ng.” Id. at 704, 10 2 S. Ct. at 2105 (internal quotation marks omitted). W e cannot address an argument of an amicus curiae based on a personal right of the unnamed class members that was not presented to the district court or in the brief of the appellant

. B . The Magistrate Judge Abused His Discretion W hen He Approved the Settlement Agreement. “In order to approve the settlement agreement, the district court was required to determine that it was fair, adequate, reasonable, and not the product of collusion.” Leverso v. South Trust Bank of Ala., Nat’l Ass’n , 18 F.3d 1527, 1530 (11th Cir. 1994). The magistrate judge recognized that w e have identified the following six factors that a court should consider to decide whether a settlement agreement in a class action is fair: (1) the likelihood of success at trial; (2) t he range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settle ment; and (6) the stage of proceedings at which the settlement was achieved. Case: 12-11887 Date Filed: 09/10/2013 Page: 37 of 6838 Bennett v. Behring Corp. , 737 F.2d 982, 986 (11th Cir. 1984). The key factor in this appeal is the third one: the range of possible recovery.
T he magistrate judge approved a settlement that provided no monetary relief to the absent class members because he found that the defendants were not financially able to pay a meaningful award, but this finding is not supported by the record. The only evidence of the ability of the def endants to satisfy a judgment that was introduced at the fairness hearing concerned a single defendant, Persels & Associates. T he day of the fairness hearing, the legal service defendants filed an affidavit in which Ruther averred that Persels & Associate s had sustained nearly $6 million in losses during the calendar years of 2010 and 2011 and that Persels & Associates had an outstanding debt of $14 million from a previous settlement agreement. But this declaration establishes only that one of seven defen dants would be unable to satisfy a significant judgment. The declaration does not prove that the other six defendants would be unable to satisfy a judgment or even address the ability of those six def endants to satisfy a judgment. T here is no support in the record for the finding of the magistrate judge that the defendants would be unable to satisfy a judgment, and the magistrate judge abused his discretion when he made that finding. This erroneous finding that the defendants would be unable to satisfy a substantial judgment was centra l to the decision of the magistrate judge that the

Case: 12-11887 Date Filed: 09/10/2013 Page: 38 of 6839 settlement agreement was fair, adequate, and reasonable. The magistrate judge stated that one of three factors that persuaded him to approve the settlement agreement even th ough absent class members received no monetary relief was “the financial inability of the defendants to pay a meaningful award.” And the magistrate judge also relied on the finding that the defendants would be unable to satisfy a judgment to find that “th e range of possible recovery,” Bennett , 737 F.2d at 986 , was “from zero to a minimal recovery,” and to conclude that “the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable,” id. , “includes no monetary r ecovery by the Class members.” The magistrate judge abused his discretion when he approved the settlement based on a clearly erroneous factual finding. See Indigo Room, Inc. v. City of Fort Myers , 710 F.3d 1294, 1299 (11th Cir. 2013 ). Although a court does not abuse its discretion when it makes a factual finding unless that finding was clear ly

erroneous , see id. , a court commits a clear error when it makes a factual finding that has no support in the record, see United States v. Newman , 614 F.3d 1232,
1 238

– 39 (11th Cir. 2010). CareOne argues that the record supports the finding that the other defendants would also be unable to satisfy a judgment, but we disagree . CareOne argues that it was unclear whether CareOne would remai n a party to the litigation, the income and asse ts of Ruther & Associates are irrelevant because that firm was the

Case: 12-11887 Date Filed: 09/10/2013 Page: 39 of 6840 predecessor of Persels & Assoc iates, and the three individual defendants ’ assets

we re protected from levy or execution because all of the individual defendants were marri ed and held all of their assets jointly. But no one has arg ued or int roduced any evidence to suggest that CareOne would be unable to satisfy a judgment. Although CareOne stated that it would appeal the denial of its motion to compel arbitration, at this point only spe culation supports a finding that CareOne was likely to prevail. This speculation is not sufficient to support the exclusion of the assets of CareOne from “the range of possible recovery. ” Bennett , 737 F.2d at 986. And the record does not s upport a finding that the three individual defendants would be unable to satisfy a judgment. Ruther averred that the three individual defendants could not satisfy a judgment because “all of [them] are married and [their] assets are held jointly with their spouses and are therefore protected from levy or execution,” but this statement was only based on his “best . . . knowledge, understand ing and belief. ” T he record contains no information about the financial condition of these three defendants other than the speculation of the managing partn er of Persels & Associates. And even if we accepted CareOne’s argument as to all of these defendants, CareOne excludes one defendant: Legal Advice Line. Nothing in the record supports a finding that Legal Advice Line would be unable to satisfy a judgment.

Case: 12-11887 Date Filed: 09/10/2013 Page: 40 of 6841 Day argues that the magistrate judge did not abuse his discretion when he failed to consider whether defendants other than Persels & Associates would be able to satisfy a judgment “because all of the parties recognized that Persels & Associates would be primarily liable for any judgment under the amended complaint,” but we disagree . The imposition of primary liability on Persels &
Ass ociates would not prevent the imposition of secondary liability on the other defendants. Black’s Law Dictionary defines secondary liability as “[l]iability that does not arise unless the primarily liable party fails to honor its obligation.” Black’s Law Dictionary 998 (9th ed. 2009). To be sure, Florida law provides that “[i]n a negligence action, the court shall enter judgment again st each party liable on the basi s of such party’s percentage of fault.” Fla. Stat. § 768.81(3). But Florida law would not have governed the claims of most of the nationwide class, and the amended complaint also included federal claims. The assets and income of the other defendants could still be used to satisfy a judgment because the defendants would be secondarily liable. See Weingart v. Allen & O’Hara, Inc. , 654 F.2d 1096, 1106 (5th Cir. 1981 ). IV. CONCLUSION
We VACAT E the final judgment that approved the settlement agreement and REMAND for further proceedings.

Case: 12-11887 Date Filed: 09/10/2013 Page: 41 of 6842 PRO, District Judge, dissenting in part and concurring in part : I concur in the judgment remanding this case to the district court, and I agree the magistrate judge abused his discretion when he approved the Settlement Agreement as fair, reasonable, and adequate as required by Federal Rule of Civil Procedure 23(e)(2). I write separately, however, because I would hold that unnamed class members become “parties” upon class certification whose consent is required under 28 U.S.C. § 636(c)(1) for a magistrate judge to exercise jurisdiction. As a result, I would hold this Court likewise lacks jurisdiction under § 636(c)(1). Accordingly, I would vacate for lack of jurisdiction the magistrate judge’s Order approving the class action settlement and remand for further proceedings.
I. Among the most important requirements in federal class actions are that the unnamed class members bound by the judgment must be properly noticed and certified by a court of competent jurisdiction, and that any settlement be properly approved by the court as “fair, r easonable, and adequate.” Fed. R. Civ. P. 23(e)(1)

- (2). In this case, we are asked to decide whether the magistrate judge, acting pursuant to consent jurisdiction under § 636(c)(1), properly approved a class action settlement agreement as fair, adequate , and reasonable. However, because our jurisdiction to review this case is dependent on the magistrate judge’s jurisdiction,

Case: 12-11887 Date Filed: 09/10/2013 Page: 42 of 6843 before we can consider whether the magistrate judge properly approved the class action settlement in this case, we must be satisfi ed that the magistrate judge had jurisdiction under § 636(c)(1) to approve the settlement. Under § 636(c)(1), a magistrate judge may exercise jurisdiction over a case in which a district court has jurisdiction “[u]pon the consent of the parties” and
upon s pecial designation by the district court. In this class action , named plaintiff Miranda Day (“Day”) brought suit on behalf of herself and a putative class of 10,000 Florida consumers who had contracted for debt settlement services with Defendants/Appellee s Ruther & Associates, Persels & Associates, Neil J. Ruther, Jimmy B. Persels, Robyn R. Freedman (collectively, the “Law Firm Defendants”), CareOne Services In., f/k/a FreedomPoint, Inc. (“CareOne”), and other defendants including Ascend One Corp., 3C Inc. , and Bernaldo Dancel. The district court had jurisdiction over the case pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d), as well as federal question jurisdiction under 28 U.S.C. § 1331. Before class certification, named plaintiff Day and all defendants filed a Notice, Consent, and Reference of Civil Action to a Magistrate Judge pursuant to 28 U.S.C. § 636(c)(1) in which they consented to have a United States magistrate judge “conduct all proceedings in this case including trial, th e entry of final judgment, and all post

- trial proceedings.” Plaintiff’s counsel signed the consent form on behalf of “Miranda L. Day” only, with no indication Day claimed

Case: 12-11887 Date Filed: 09/10/2013 Page: 43 of 6844 authority to act on behalf of a putative class. The district judge approved the

con sent form and submitted the case to the magistrate judge. Day subsequently filed an Amended Class Action Complaint on behalf of herself and 10,000 Florida consumers alleging a scheme similar to that in her original Complaint. Day asserted claims agains t the Law Firm Defendants, CareOne, and Legal Advice Line, LLC (“Legal Advice Line”), which was added as a new defendant, for violations of the Credit Repair Organizations Act and various common law claims. Approximately three weeks after the Amended Cl ass Action Complaint was filed, Day and the defendants notified the magistrate judge they had “reached an agreement in principle regarding the settlement of this case.” Day subsequently filed a Motion for Preliminary Approval of the Settlement Agreement. Although Day brought the Amended Class Action Complaint on behalf of a putative class of 10,000 Florida consumers, the proposed Settlement Agreement sought certification of a nationwide class including 125,011 consumers who contracted with Ruther & Associ ates and Persels & Associates for debt settlement services on or after April 28, 2005. Day did not amend the Amended Class Action Complaint to allege it was being brought on behalf of a nationwide class of 125,011 consumers. The magistrate judge granted preliminary approval of the proposed Settlement Agreement, conditionally certified the class of 125,011 consumers,

Case: 12-11887 Date Filed: 09/10/2013 Page: 44 of 6845 appointed Day’s counsel as class counsel, approved the proposed Notice to class, and set the fairness hearing. Pursuant to the approved notice plan, the settlement administrator sent the Notice to the 125,011 class members. The settlement administrator also sent the Notice to the Attorney General of the United States and the Attorney General of every state and ter ritory except Washington, where a separate statewide class action already was pending. The Notice advised class members they could opt out of the class, so they would not be bound by the terms of the proposed Settlement Agreement and would not be preclude d from filing or prosecuting any claims they may have on their own behalf. The Notice also advised class members of the procedure for objecting to the proposed Settlement Agreement. The Notice did not explain that plaintiffs’ class representative Day and the defendants had consented to the magistrate judge’s jurisdiction under § 636(c)(1). The only reference to the magistrate judge was on page six of the seven

- page Notice, where it stated “[t]he final approval hearing will be . . . before Magistrate Judg e Thomas G. Wilson, U.S. District Court for the Middle District of Florida.” Otherwise, the Notice repeatedly referred to “the Court,” except on the final page where it admonished class members in boldface, capitalized type not to telephone “the judge’s c hambers concerning this notice or this case.”

Case: 12-11887 Date Filed: 09/10/2013 Page: 45 of 6846 Five class members, including Appellant Raymond Gunn (“Gunn”), filed objections to the proposed Settlement Agreement. In his Objection, Gunn argued the proposed Settlement Agreement was not fair, reasonable, and adequate as required by Rule 23(e)(2) for a variety of reasons. The Attorneys General of Connecticut, Florida, Maine, New York, and West Virginia also submitted an objection letter urging the magistrate judge to reject the proposed Settlement Agreemen t on the basis it was not fair, reasonable, and adequate, primarily because of the lack of monetary relief to the class members. In their objection, the Attorneys General noted they were speaking on behalf of over 17,000 class members who are residents of their respective states. After a fairness hearing, the magistrate judge granted final approval of the Settlement Agreement. Gunn now appeals the magistrate judge’s Order granting final approval of the Settlement Agreement, arguing the settlement was not fair, adequate, and reasonable. Two amicus briefs were filed in support of Gunn, one by the National Association of Consumer Advocates (“NACA”) and the other by the States of New York, Arkansas, Florida, Hawaii, Illinois, Iowa, Kansa s, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Was hington, West Virginia, and the District of Colum bia

. Like Gunn, the twen ty

- five Amicus States and the District of Columbia Case: 12-11887 Date Filed: 09/10/2013 Page: 46 of 6847 argue the Settlement Agreement was not fair, adequate, and reasonable. For the first time on appeal, NACA raises a new issue regarding whether the magistrate judge had constitutional authority to approve the class action settlement.
II. A. In its amicus brief, NACA argues the magistrate judge lacked constitutional authority to approve the Settlement Agreement because the unnamed class members did not consent to the magistrate judge’s exercise of jurisdicti on. NACA further argues § 636(c) is unconstitutional as applied to this case because the unnamed class members did not receive constitutionally adequate notice that the named parties had consented to a magistrate judge. Finally, NACA argues § 636(c) is f acially unconstitutional because it allows magistrate judges to exercise powers reserved to Article III judges under the Constitution. The question of whether the magistrate judge had jurisdiction to approve the Settlement Agreement was not raised by Day, the defendants, or any objector either below or on appeal. Generally, the Court will not consider issues raised in an amicus brief “that were neither raised in the district court nor argued by appellants on appeal.” Richardson v. Ala. State Bd. of Educ. , 935 F.2d 1240, 1247 (11th Cir. 1991). However, “every federal appellate court has a special obligation to satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under

Case: 12-11887 Date Filed: 09/10/2013 Page: 47 of 6848 review,” regardless of whether the parties rais e the issue. King v. Cessna Aircraft
Co. , 505 F.3d 1160, 1170 (11th Cir. 2007) (quotation omitted). The Court’s jurisdiction to review a final judgment entered by a magistrate judge ar ises from 28 U.S.C. § 636(c)(3). McNab v. J & J Marine, Inc. , 240 F .3d 1326, 1327

- 28 (11th Cir. 2001) (per curiam); 28 U.S.C. § 1291; 28 U.S.C. § 636(c)(3) (providing that when the parties properly consent to a magistrate judge, the parties may “appeal directly to the appropriate United States court of appeals from the ju dgment of the magistrate judge”). A magistrate judge may exercise jurisdiction and enter final judgment under § 636(c)(1) “[u]pon the consent of the parties” and upon special designation by the district court having jurisdiction over the case. Failure of the parties to consent to the magistrate judge’s exercise of jurisdiction deprives this Court of jurisdiction over an appeal from a final judgment entered by a magistrate judge. McNab , 240 F.3d at 1328. The Court always has jurisdiction to determine its own jurisdiction and that of the lower court in cases it reviews, and “whether the parties consented to the magistrate judge’s jurisdiction to enter final judgment” pursuant to § 636(c) is a jurisdictional question to be considered sua sponte. McNab , 240 F.3d at 1328; Kirkland v. Midland Mortg. Co. , 243 F.3d 1277, 1279

- 80 (11th Cir. 2001). Here, if the magistrate judge lacked jurisdiction because the unnamed class members are “parties” who did not consent under § 636(c)(1), then this Court would lack

Case: 12-11887 Date Filed: 09/10/2013 Page: 48 of 6849 jur isdiction under § 636(c)(3). Consequently, the Court must determine whether the magistrate judge had jurisdiction under § 636(c)(1) even though Appellant Gunn did not raise this issue in his objection below or on appeal. Consent to a magistrate judge’s j urisdiction under § 636(c)(1) must be “explicit, voluntary, clear, and unambiguous.” McNab , 240 F.3d at 1328. However, such consent “can be inferred from a party’s conduct during litigation.” Roell v. Withrow , 538 U.S. 580, 582 (2003). For example, a p arty impliedly consents when “the litigant or counsel was made aware of the need for consent and the right to refuse it, and still voluntarily appeared to try the case before the Magistrate Judge.” Id. at 590; see also Chambless v. Louisiana

- Pac. Corp. , 4 81 F.3d 1345, 1350 (11th Cir. 2007). “[P]arties added to a case after the original litigants have filed a consent under § 636(c) must also agree to the submission of the case to the magistrate judge; if they do not, then the case must be returned to a di strict judge.” Williams v. Gen. Elec. Capital Auto Lease, Inc. , 159 F.3d 266, 268

- 69 (7th Cir. 1998); see also N.Y. Chinese TV Programs, Inc. v. U.E. Enters., Inc. , 996 F.2d 21, 24

- 25 (2d Cir. 1993) (requiring intervenors’ express consent to the magistrate judge’s jurisdiction); Caprera v. Jacobs , 790 F.2d 442, 444

- 45 (5th Cir. 1986) (per curiam) (holding that a magistrate judge did not have jurisdiction to enter the order of dismissal because later

- added defendants did not expressly consent to the

Case: 12-11887 Date Filed: 09/10/2013 Page: 49 of 6850 magistrate judge’s jurisdiction); In re Litig. Relating to the Riot of Sept. 22, 1991 at the Maximum Sec. Unit of the Mont. State Prison , No. 94

- 35710, 1996 WL 205487, at *2 (9th Cir. Apr. 26, 1996) (unpubl ished) (“Once the additional defendants were added to the action but did not expressly consent to the magistrate judge’s jurisdiction, the magistrate judge lacked jurisdiction over the entire action.”). Thus, if upon class certification unnamed class memb ers become “parties” under § 636(c), then their consent is required for the magistrate judge’s jurisdiction over the case. Congress did not define the term “parties” for § 636(c) (1) purposes . When Congress leaves a term in a statute undefined, “we must g ive it its ordinary meaning, keeping in mind the context of the statute.” United States v. Jimenez , 705 F.3d 1305, 1308 (11 th Cir. 2013) (quotation omitted). “ We assume that Congress used the words in a statute as they are commonly and ordinarily underst ood, and if the statutory language is clear, no further inquiry is appropriate.” Fed. Reserve Bank of Atlanta v. Thomas , 220 F.3d 1235, 1239 (11 th Cir. 2000). If the statutory language is ambiguous, the Court may examine extrinsic materials and employ ca nons of construction to determine Congress’s intent. Garcia v. Vanguard Car Rental USA, Inc. , 540 F.3d 1242, 1246

- 47 (11 th Cir. 2008) (canons of construction); Shotz v. City of Plantation, Fla. , 344 F.3d 1161, 1167 (11 th Cir. 2003) (extrinsic materials).

Case: 12-11887 Date Filed: 09/10/2013 Page: 50 of 6851 The term “parties” in § 636(c)(1) is ambiguous because it is not clear whether unnamed class members are included in that term once a class is certified. I therefore turn to extrinsic sources and canons of construction to determine whether, upon certifi cation, unnamed class members become “parties” whose consent is required for a magistrate judge to exercise jurisdiction under § 636(c)(1)

. Congress added the relevant language of § 636(c)(1) in 1979. See Act of Oct. 10, 1979, Pub. L. No. 96

– 82, § 2, 93 Stat. 643 (1979). Looking to extrinsic sources of what Congress may have understood “parties” to mean in 1979, the fifth edition of Black’s Law Dictionary, published the same year, explained that “[a] ‘party’ to an action is a person whose name is designated on record as plaintiff or defendant.” Black’s Law Dictionary 1010 (5th ed. 1979). Black’s Law Dictionary also states that the term party “[i]n general, means one having right to control proceedings, to make defense, to adduce and cross

- examine witnesses, and to appeal from judgment,” and that party “refers to those by or against whom a legal suit is brought.” Id. Although a class action is brought and controlled by the named class repre sentatives, unnamed class members are “those by or agains t whom legal suit is brought” once a class is certified. Thus, unnamed class members arguably would fall within Black’s Law Diction ary’s definition of “parties.” The Restatement (First) of Judgment s, however, explained that “[a]

Case: 12-11887 Date Filed: 09/10/2013 Page: 51 of 6852 class action is an illustration of a situation where it is not feasible for all persons whose interests may be affected by an action to be made parties to it, ” and that the named plaintiff must “purport to act on behalf of a ll,” suggesting that unnamed class members are not “parties.” Restatement (First) of Judgments § 86, cmt. b (1942).
A lthough secondary sources such as dictionaries and Restatements provide some guidance , given the rule of statutory construction that Cong ress is presumed to know the law, including judici al interpretations of that law, when it legislates , pre - 1979 cases are stronger indicia of whom or what Congress may have considered to be a “party ” in 1979

. See Cannon v. Univ. of Chicago , 441 U.S. 677, 6 96

- 98 (1979) . In 1974

– five years before Congress added the relevant language to § 636(c)(1)

– the Supreme Court held that unnamed class members are “parties” in the sense that filing a lawsuit on behalf of the class tolls the statute of limitations for their claims. Am. Pipe & Constr. Co. v. Utah , 414 U.S. 538, 550

- 51 (1974) (stating that unnamed class members “stood as parties to the suit” for tolling purposes unless and until they opted out) ; cf

. In re Cement Antitrust Litig. , 688 F.2d 1297, 1310 (9 th Cir. 1982) (holding that unnamed class members are included in the term “party” under 28 U.S.C. § 455, a judicial recusal statute amended by Congress in 1974)

.

Case: 12-11887 Date Filed: 09/10/2013 Page: 52 of 6853 Moreover, before the enactment of § 636(c)(1), two circuits and several district courts concluded that unnamed class members may be subject to the “party” discovery rules of the Federal Rules of Civil Procedure. See, e.g. , Dellums v. Powell , 566 F.2d 167, 187 (D.C. Cir. 1977) (stating “[w]hile it is true that discovery against absentee class members under Rules 33 and 34 cannot be had as a matter of course, the overwhelming majority of courts which have considered the scope of discovery against absentees have concluded that such discovery is available ” under certain circumstances and listing cases); Brennan v. Midwestern United Life Ins. Co. , 450 F.2d 999, 1004

- 05 (7th Cir. 1971) (holding unnamed class members are “parties” subject to the “‘party’ discovery procedures provided by Rules 33 and 34,” alth ough it should not be routine to subject unnamed class members to discovery). But see Wainwright v. Kraftco Corp. , 54 F.R.D. 532, 533

- 34 (N.D. Ga. 1972) (holding that party discovery rules did not apply to unnamed class members); Fischer v. Wolfinbarger , 55 F.R.D. 129, 132 (N.D. Ky. 1971) (same). Although discovery on unnamed class members is circumscribed, it is not because they are not “parties.” It is because unnamed class members normally “[have] no duty to actually engage in the prosecution of the a ction,” and because discovery on unnamed class members may be misused “as a tactic to take undue advantage of the class members or as a stratagem to reduce the number of claimants.” Brennan , 450 F.2d at 1005. Allowing unfettered discovery of

Case: 12-11887 Date Filed: 09/10/2013 Page: 53 of 6854 unnamed clas s members also may undermine the efficiency goals of class action litigation. If unnamed class members are not “parties,” it is unclear why courts would apply Rules 33 and 34 when parties seek to propound discovery on unnamed class members as opposed to a pplying non

- party discovery rules. The Seventh Circuit in Brennan specifically rejected the argument that “absent class members are not ‘parties’ to a suit and consequently not subject to the ‘party’ discovery procedures provided by Rules 33 and 34.” Id. at 1004

- 05. Following the enactment of § 636(c)(1) in 1979, case law building on American Pipe also recognizes that unnamed class members “may be parties for
some purposes and not for others. The label ‘party’ does not indicate an absolute characteristi c, but rather a conclusion about the applicability of various procedural rules that may differ based on context.” Devlin v. Scardelletti , 536 U.S. 1, 9

- 10 (2002) . For instance, unnamed class members are “parties” in the sense that filing an action on beh alf of the class tolls statutes of limitations against the class and that unnamed class members who have objected to approval of a class action settlement may appeal without intervening , but unnamed class members are not “parties” for the purpose of divers ity jurisdiction. Id. at 10, 14 (citing Am. Pipe & Constr. Co. v. Utah , 414 U.S. 538 (1974) ) . In Phillips Petroleum Co. v. Shutts , 472 U.S. 797 , 810 (1985), the Supreme Court also indicated that unnamed class members may be “parties” in some circumstance s because it states that they “are almost never

Case: 12-11887 Date Filed: 09/10/2013 Page: 54 of 6855 subject to counterclaims or cross

- claims, or liability for fees or costs.” If unnamed class members are not “parties,” it is unclear how they ever could be subject to counterclaims, cross

- claims, or liabilit y for fees or costs. S ee also Crown, Cork & Seal Co. v. Parker , 462 U.S. 345, 354 (1983) ( stating that a putative unnamed class member “clearly would have been a party in Pendleton if that suit had been permitte d to continue as a class action”). Thus , Devlin , Shutts , and Crown are consistent with American Pipe and other pre

- 1979 case law holding that unnamed class members can be “ parties ” in some circumstances. Given the pre

- 1979 authority finding that unnamed class members may be “parties” in various c ircumstances, Congress presumabl y was aware that the term “parties ” could include unnamed class members if left open to judicial interpretation. Congress could have explicitly excluded unnamed class members if that was its intent , but it did not do so. It is “settled policy to avoid an interpretation of a federal statute that engenders constitutional issues if a reasonable alternative interpretation poses no constitutional question.” Gomez v. United States , 490 U.S. 858, 864 (1989); see also Zadvydas v. Davis , 533 U.S. 678, 689 (2001) (stating “[i]t is a cardinal principle of statutory interpretation . . . that when an Act of Congress raises a serious doubt as to its constitutionality, this Court will first ascertain whether a

const ruction of the statute is fairly possible by which the question may be

Case: 12-11887 Date Filed: 09/10/2013 Page: 55 of 6856 avoided.” (quotations omitted)). If unnamed class members are not “parties” with a right to consent individually under § 636(c)(1) after certification, then they would be bound by the named plaintiff’s relinquishment of their r ights to an Article III judge, which raises constitutional concerns regarding whether a magistrate judge properly may exercise jurisdiction under § 636(c)(1) without the consent of the unnamed class members. Cons truing the statute to find that unnamed class members are “parties” is a reasonable alternative interpretation in light of the pre

1979 case law, and avoids a constitutional question. Additionally, courts construe statutory grants of power strictly. See
C hristianson v. Colt Indus. Operating Corp. , 486 U.S. 800, 818 (1988); Healy v.
Ratta , 292 U.S. 263, 269

- 70 (1934). Given the Article III concerns present here, strict construction is particularly appropriate. In this context, the magistrate judge is acti ng in essence as an Article III judge under § 636(c), not as a magistrate judge making non

- dispositive rulings or a report and recommendation concerning a dispositive matter under § 636(b). As discussed above, w hether the parties have properly consented t o a magistrate judge is a jurisdictional issue because the parties’ consent is required to trigger a magistrate judge’s jurisdiction to finally adjudicate a civil case in accord with § 636(c) . Indeed, “[t]he unanimous and voluntary consent of the parties is the constitutional linchpin of this power.” Williams v. Gen. Elec. Capital Auto Lease, Inc. , 159 F.3d 266, 268 (7th Cir. 1998)

Case: 12-11887 Date Filed: 09/10/2013 Page: 56 of 6857 (quotation omitted). Also, it is through consent that magistrate judges derive their statutory authority under § 636(c)(1) t o dispositively adjudicate unnamed class members’ claims. See N.Y. Chinese TV Programs , 996 F.2d at 24 (stating that “the consent of each party is essential to the validity of the statutory system that allows a magistrate judge to make binding adjudicatio ns”). I therefore would hold that upon certification, unnamed class members become “parties” who must consent to a magistrate judge’s jurisdiction under § 636(c) (1)

. This construction does not preclude a district judge from referring matters to a magist rate judge in class actions in accord with § 636(b)(1)(A)

- (B). 1 Construing the term “parties” to include unnamed class members may make it somewhat burdensome for the court to mail a copy of proposed findings of fact and recommendations under § 636(b)(1)( B) “to all parties” as required by § 636(b)(1)(C). See Barber v. Thomas , 130 S. Ct. 2499, 2506 (2010) (stating there is a “presumption that a given term is used to mean the same thing throughout a

1 Section 636(b)(1)(A) provides “ a judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal case, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action. ” Section 636(b)(1)(B) provides that “a judge may also designate a magistrate judge to conduct hearings, including evidentiary hearings, and to su bmit to a judge of the court proposed findings of fact and recommendations for the disposition, by a judge of the court, of any motion excepted in [§ 636(b)(1)(A)], of applications for posttrial relief made by individuals convicted of criminal offenses and of prisoner petitions challenging conditions of confinement.”

Case: 12-11887 Date Filed: 09/10/2013 Page: 57 of 6858 statute”) (quotation omitted). However, the impact on the utilization of magistrate judges will be minimal. First, it still may be practicable for the clerk’s office to notify unnamed class members in small class actions. Second , it is unclear whether the burden of notifying the unnamed class members of a repo rt and recommendation is great enough to find Congress did not intend for unnamed class members to be “parties.” The requirement that the court notify all unnamed class members does not apply to

non - dispositive pretrial matters decided by the magistrate j udge under § 636(b)(1)(A). Rather, it applies only to reports and recommendations under § 636(b)(1)(B), which generally are case dispositive matters customarily committed to an Article III district judge. 2 Finally, even if construing “parties” to inclu de unnamed class members would result in some large class actions not being referred to magistrate judges under § 636(c), the impact on the overall utilization of magistrate judges would be minimal. Statistics published annually by the Administrative Offi ce of the United States Courts show that for the twelve month period ending September 30, 2012, magistrate judges disposed of 1,068,153 matters, including 264,981 matters in civil

2 Sections 636(c)(1)

- (2) would not require notice to unnamed class members until a class is certified, at which point unnamed class members would receive notice under Federal Rule of Civil Pro cedure 23(c)(2). Thus, including unnamed class members in the term “party” would not result in a greater burden on the courts under §§ 636(c)(1)

- (2).

Case: 12-11887 Date Filed: 09/10/2013 Page: 58 of 6859 cases. 3 During that period, magistrate judges concluded with finality 15,04 9 civil cases pursuant to consent jurisdiction, including 360 civil jury trials and 139 civil nonjury trials. It is not reported how many class actions were included in the total number of civil cases concluded by magistrate judges on consent of the parties under § 636(c), but given the relatively small number of class actions comprising the civil caseload of the United States District Courts overall, the number presumably is small. To the extent this construction of “parties” burden s the court and the manner in which magistrate judges are utilized with respect to class action cases , any such burden must be weighed against the constitutional and statutory limits of magistrate judges’ power to dispositively adjudicate unnamed class mem bers’ claims. Due to the prerequisite Congress imposed to permit magistrate judges to act as Article III judges only with the parties’ consent under § 636(c), large class actions may not be am ong the types of cases which realistically may proceed before a magistrate judge under § 636(c). The Supreme Court has indicated that the decision whether unnamed class members are “parties” should be made in reference to the goals of class action litigation. See Devlin , 536 U.S. at 10. But having a magistrate jud ge finally adjudicate class actions is not a goal of class action litigation. To the extent

3 U.S. Magistrate Judges , http://www.uscourts.gov/Statistics/JudicialBusiness/2012/us

magistrate

- judges.aspx (last visited September 4 , 2013). Case: 12-11887 Date Filed: 09/10/2013 Page: 59 of 6860 magistrate jud ges’ resolution of class actions promotes efficiency, efficiency is not the only goal of class action litigation, particularly in light of the unname d class members’ right to have their claims adjudicated by an Article III decision maker as well as the court’s fiduciary responsibility to unnamed class members. See Holmes v. Cont’l Can Co. , 706 F.2d 1144, 1147 (11th Cir. 1983) (“[ C]areful scrutiny by the court is necessary to guard against settlements that may benefit the class representatives or their attorneys at the expense of absent class members.” (quotation omitted)); Synfuel Techs., Inc. v. DHL Express (USA), Inc. , 463 F.3d 646, 652

- 53 (7th Cir. 2006) (stating the district court’s role in reviewing a settlement agreement is “akin to the high duty of care that the law requires of fiduciaries.” (quotation omitted)). When considering the scope of magistrate judges’ power under § 636(c), practical efficiency concerns are less important than constitutional and statutory considerations. Moreover, what was “most important” to Devlin ’s holding that unnamed class members are “ parties ” for the purposes of appeal was that, without the right to appeal approval of a class action settlement, unnamed class members would be bound by a settlement to which they did not agree. 536 U.S. at 10

- 11. Here, without the right to individually consent to a magistrate judge under § 636(c), 125,011 unn amed class members would be bound by Day’s relinquishment of their rights to an Article III judge which they did not know about, much less expressly

Case: 12-11887 Date Filed: 09/10/2013 Page: 60 of 6861 or impliedly consent to. This is particularly troubling because the Notice the unnamed class members recei ved did not explain that Day and the defendants had consented to the magistrate judge’s jurisdiction under § 636(c)(1), and the only mention of the magistrate judge was buried on page six of the seven

- page Notice. Additionally, unnamed class members would be bound by a final adjudication of their claims by a magistrate judge without their consent. 4 In holding that unnamed class members are “parties” upon certification who must consent to a magistrate judg e’s jurisdiction under § 636(c), I would depart from the Third and Seventh Circuits. Both have held that “unnamed class members are not ‘parties’ within the meaning of § 636(c)(1), and that their consent is not required for the magistrate judge to exercis e jurisdiction over a case.” Dewey v. Volkswagen Aktiengesellschaft , 681 F.3d 170, 181 (3d Cir. 2012); see also Williams , 159 F.3d at 269

- 70. The Third and Seventh Circuits reasoned that the unnamed class members’ consent is not necessary under § 636(c) because “[g]enerally speaking, absent class members are not ‘parties’ before the court in the sense of being able to direct the litigation.” Williams , 159 F.3d at 269. Rather, the named plaintiff “is the ‘party’ to the lawsuit who acts on behalf of the e ntire

4 This would include class members who wer e never identified as putative class members in any operative complaint in this case. Day brought the Amended Class Action Complaint on behalf of a putative class of 10,000 Florida consumers, and Day never amended her Amended Class Action Complaint to inc lude the nationwide class. Yet her pre

- certification consent would bind 115,000 consumers who technically were not even part of the putative class identified in the original or the Amended Class Action Complaint.

Case: 12-11887 Date Filed: 09/10/2013 Page: 61 of 6862 class, including with regard to the decision to proceed before a magistrate judge. This is an inherent part of representational litigation.” Id. The holding in Dewey and Williams that unnamed class members are not “parties” whose consent is necess ary for a magistrate judge to exercise jurisdiction is at odds with Williams ’s acknowledgement that consent is the constitutional “linchpin” of the magistrate judge’s authority under § 636(c)(1). 159 F.3d at 268. As discussed above, magistrate judges der ive both statutory and constitutional authority to adjudicate later

- added parties’ claims only through consent. Thus, a class representative’s pre

- certification consent to a magistrate judge that purports to bind the unnamed class members upon certificati on has greater import than a tactical litigation decision that is an “inherent part of representational litigation.” Id. at 269. Instead, consent is the constitutional and statutory source of the magistrate judge’s power to in essence sit as an Article I II judge and dispositively adjudicate the unnamed class members’ claims. Moreover, the options set forth in Williams and Shutts for unnamed class members to avoid being bound by a named class representative’s pre

- certification consent to a magistrate j udge are not realistic alternatives. The Seven th Circuit suggested that if unnamed class member s prefer an Article III judge, they may move to intervene under Federal Rule of Civil Procedure 24(a) to “become a party to the lawsuit, and then exercise her r ight to withhold her consent to proceed before

Case: 12-11887 Date Filed: 09/10/2013 Page: 62 of 6863 the magistrate.” Williams , 159 F.3d at 269. The Seventh Circuit alternatively suggested that “after the entry of final judgment, the unnamed class member can raise a collateral attack based on due process ag ainst the named representative’s decision to consent under § 636(c).” Id. Another option from Shutts is that an unnamed class member may opt out of the settlement and not be bound by the judgment entered by a non

- Article III judge. See Shutts , 472 U.S. at 812. However, these three options are illusory if the unnamed class members are not aware of their right to an Article III judge. For instance, in this case, it is unclear how the unnamed class members intelligently could have exercised their right to opt

- out because the Notice did not inform them of their right to an Article III judge, that Day had purported to relinquish that right, and that class members could exercise any of the three options if they wished to preserve their right to an Article
III judge. At the time the Seventh Circuit authored Williams , it did not have the benefit of two recent United States Supreme Court cases, Standard Fire Insurance Company v. Knowles , 133 S. Ct. 1345 (2013), and Smith v. Bayer Corporation , 131 S. Ct. 2368 (20 11). In Standard Fire , the Supreme Court held that a pre

certification stipulation regarding the amount of damages the class would seek did not bind members of the proposed class. 133 S. Ct. at 1348

- 49. “That is because a plaintiff who files a proposed class action cannot legally bind members of the

Case: 12-11887 Date Filed: 09/10/2013 Page: 63 of 6864 proposed class before the class is certified.” Id. at 1349. In Smith , the Supreme Court held that when a party seeks class certification but fails to obtain it, an unnamed class member from the proposed cla ss is not precluded from seeking to certify the class in another case, as “[n]either a proposed class action nor a rejected class action may bind nonpar ties.” 131 S. Ct. at 2379

- 80. Although Smith predates Dewey , the Third Circuit does not cite Smith , so it is unclear whether the Dewey Court took Smith ’s holding into account when it held that unnamed class members’ consent is not required for the magistrate judge to exercise jurisdiction. Regardless, neither the Third Circuit nor the Seventh Circuit had the guidance of Standard Fire

. 5
Under Standard Fire and Smith , some pre - certification decisions by named class representatives cannot bind putative unnamed class members. Given that magistrate judges derive both constitutional and statutory authorit y to adjudicate later

- added parties’ claims only through consent, consent under § 636(c) is not the type of pre

- certification litigation decision named class representatives may make that would bind unnamed class members upon certification. Rather, upon

5 The Seventh Circuit’s holding in William s has been further eroded by Devlin because Devlin ’s holding overruled one of the cases on which Williams relies. In reasoning that “absent class members are not ‘parties’ before the court in the sense of being able to direct the litigation,” Williams cit es In re Brand Name Prescription Drugs Antitrust Litigation , 115 F.3d 458, 458 (7th Cir. 1997), in which the Seventh Circuit held that unnamed class members do not have a right to appeal absent intervention. Williams , 159 F.3d at 269. Because Devlin hold s that unnamed class members who object to the proposed settlement are parties for the purpose of an appeal without having to intervene, Devlin overrules In re Brand Name Prescription Drugs Antitrust Litigation

. Case: 12-11887 Date Filed: 09/10/2013 Page: 64 of 6865 c ertification, unnamed class members become later

- added “parties” whose consent is required to allow the magistrate judge to exercise jurisdiction over the dispositive resolution of the case. The Seventh Circuit expressed the concern that treating unnamed class membe rs as “parties” whose consent i s requ ired “would virtually eliminate § 636(c) referrals to magistrate judges in all potential class actions, because it would de facto transform all such cases into ‘opt

- in’ style actions and fundamentally change the capacity of the judgment . . . to bind both sides in the absence of express consents.” Williams , 159 F.3d at 269 . I disagree the impact would be so extreme. T he practical effect would be that the district judge will decide class actions unless the p arties consent as required by applicable law to give th e magistrate judge jurisdiction. And, as previously discussed, holding that unnamed class members become “parties” under § 636(c)(1) upon certification has minimal impact on the utilization of magistr ate judges . Rather than doing violence to the utilization of magistrate judges, requiring adequate notice and the parties’ express or implied consent to a magistrate judge’s jurisdiction ensures proper adherence to the legal requirements Congress imposed on non - Article III magistrate judges, thereby preserving the legitimacy of the magistrate judge system and protecting litigants’ rights and the integrity of the federal courts.

Case: 12-11887 Date Filed: 09/10/2013 Page: 65 of 6866 B. Here, Day did not have the authority to consent to a magistrate judge on be half of the unnamed class members before class certification. Following conditional class certification, Day consented to the magistrate judge on her own behalf throug h her litigation conduct by voluntarily appearing before the magistrate judge at the fairness hearing. See Roell , 538 U.S. at 590 . Of the 125,011 class members, Day was the only non

- objecting class member to appear personally or through counsel. However, Day’s post

- certificatio n implied consent to the magistrate judge did not bind the unnamed class members because, upon certification, unnamed class members become later

- added “parties” whose consent is required under § 636(c)(1). The unnamed class members did not independently satisfy § 636(c)(1)’s consent requirement. The unnamed class members did not expressly consent to the magistrate judge’s jurisdiction. The unnamed class members also did not impliedly consent to the magistrate judge’s jurisdiction through their litigatio n conduct, i.e., by not objecting to the magistrate judge’s jurisdiction. The Notice did not explain that Day and the defendants had consented to a magistrate judge to preside over the proceedings, and the only reference to “magistra te judge” was on the second

- to

- last page of the Notice, where it stated “[t]he final approval hearing will be

. . . before Magistrate Judge Thomas G. Wilson.” Otherwise, the Notice

Case: 12-11887 Date Filed: 09/10/2013 Page: 66 of 6867 repeatedly referred to “the Court,” except on the final page where it admo nished class members not to telephone the judge’s chambers concerning the Notice. The unnamed class members’ failure to object to the magistrate judge’s jurisdiction in the face of the Notice provided is not sufficient to constitute implied consent throug h litigation conduct. See Roell , 538 U.S. at 590 (stating that a party impliedly consents to a magistrate judge when “the litigant or counsel was made aware of the need for consent and the right to refuse it, and still voluntarily appeared to try the case before the Magistrate Judge”). Because the unnamed class members are later

- added parties whose consent was required, and because the unnamed class members did not consent, the magistrate judge lacked jurisdiction to approve the class action settlement in this case.
III. I would hold that the unnamed class members became “parties” upon certification whose express or implied consent was required under § 636(c)(1). I further would hold the magistrate judge lacked authority to approve the class action settle ment because Day’s post

- certification implied consent to the magistrate judge operated only on her own behalf , and the unnamed class members did not satisfy § 636(c)(1)’s consent requirement. Because the requirements of § 6 36(c)(1) were not satisfied, thi s Court likewise lacks appellate j urisdiction under

Case: 12-11887 Date Filed: 09/10/2013 Page: 67 of 6868 § 636(c)(3). I concur in the judgment vacating and remanding for further proceedings. Case: 12-11887 Date Filed: 09/10/2013 Page: 68 of 68