Warren E. Burger: -- case is submitted. We'll hear arguments next in Deposit Guaranty National Bank against Roper. Mr. Goodman, you may proceed whenever you're ready.
William F. Goodman, Jr.: Mr. Chief Justice, may it please the Court. Rule 23 cases somehow tend to evoke emotional and hypothetical arguments from both sides. I will try to avoid such arguments insofar as possible. I will try to deal with the realities of this case on its merits because my hope is to persuade this Court to deal with this case in the same manner. Very briefly, two credit card holders sued the bank in 1971. The District Court denied certification in October, 1975. Interlocutory appeal was denied by the Court of Appeals in December, 1975. Over seven months later, the bank tendered to the two plaintiffs all that they demanded and the litigation was concluded. An appeal was then attempted on behalf of the unnamed and uncertified class and the Court of Appeals reversed, rejecting the mootness concept and went further to order certification, hence this petition.
Warren E. Burger: Meanwhile, I assume, unless the -- the other members of the potential class read about it in the newspapers, would not have known anything about this lawsuit or its issues or -- is that correct?
William F. Goodman, Jr.: We don't know the answer to that, Your Honor but we do know this that from 1971 to the present day, according to the record, not a single other customer of the bank has filed suit, joined this suit, sought to intervene or made a complaint. From 1971 to 1979, not a single, other customer has done any of those things. That we know from the record.
Warren E. Burger: Of course your friend might argue that the -- they may have refrained from doing so in reliance upon the existence of what they thought was a class action even though it was not certified.
William F. Goodman, Jr.: Well, of course my response to that, Your Honor would be that it was not certified. It was simply filed in the clerk's office and -- and entitled the class action, certification was denied. As I said, over seven months went by before the case was finally terminated and no one made any effort to join or intervene or enter the suit in any fashion and that leads me to -- to say that this Court has previously dealt in effect with two situations; one, an appeal for a certified anonymous class despite a mooted plaintiff and where the only identifiable person showing an evident continuing interest in the legal issue was counsel.
Thurgood Marshall: Mr. Goodman.
William F. Goodman, Jr.: Yes, sir.
Thurgood Marshall: That I don't know whether you said or not, nobody tried to intervene.
William F. Goodman, Jr.: Nobody tried.
Thurgood Marshall: Before or after up until now.
William F. Goodman, Jr.: And not now. That's exactly right, Your Honor. I meant to say that, I -- I may not have said it clear. No one has attempted to intervene at any point including up until today. Now, you have previously considered the situation where there was an appeal on behalf of a certified class. In addition, the Court has considered the situation where there was an appeal by an intervenor after denial of certification and after a settlement by the named "plaintiffs." But today, you'll consider in a situation where named plaintiffs with moot claims ask the appellate court to reverse the trial court's denial of class status with no intervenors.
William H. Rehnquist: Mr. Goodman, you referred to our previous cases and certainly in cases like Jacobs and Sosna and Franks and United Airlines and Rodriguez, we have dealt with various trees in the class action for us. Do you think all of our cases are reconcilable?
William F. Goodman, Jr.: Oh! I think that the cases are reconcilable, Your Honor. I think that sometimes when we write a particular opinion, maybe we -- we can't say it a little bit strong for the particular version that it's being put forth but -- and -- and I'm -- I am familiar with all those cases and that's what I was referring to. But today, you're confronted with a situation where the plaintiffs with moot claims are asking the appellate court somehow to engage in legal fiction and let me say this, I -- I think this is the heart of the lawsuit. An exercise in the legal fiction is unquestionably required to reverse on appeal and make the reversal, if Your Honors please, retroactive back-past the mootness occurrence until the time that the appellate court says the District Court should've certified the case. Now, that takes an exercise in legal fiction. The question before this Court is whether Article III permits engaging in such a legal fiction or perhaps better put, the question before the Court is whether such a legal fiction should be employed in the facts of this case.
Byron R. White: Well, let's take it in McDonald. Named -- the class action denied, the plaintiff recovers -- whatever he wanted and he's paid off and at that moment, you would think that he had no -- later, no more interest in the case. Intervenor comes in and he's permitted to appeal the denial of class action, right?
William F. Goodman, Jr.: Yes, sir.
Byron R. White: Now, the only difference between that case and this one is that there's no intervenor but that the named plaintiffs want to appeal it on behalf of the class, right?
William F. Goodman, Jr.: Yes, sir.
Byron R. White: And that -- and you say that they shouldn't be able to do it because the named plaintiff's interest is over, it's moot.
William F. Goodman, Jr.: Yes, sir.
Byron R. White: Now, in McDonald, I would think as soon as the named plaintiffs had been paid off, his case was moot in McDonald and the case was moot. It was just as dead as a doornail at least as dead as this one and yet, the intervenor wasn't permitted to appeal. So, why shouldn't the named plaintiffs be permitted to appeal here?
William F. Goodman, Jr.: That's the reason I tried to say with difference that what we are talking about is an exercise in legal fiction. And if I can -- if I can say so, that's what the Court did in McDonald, but the Court did it because it had a party before the Court who possessed a live controversy in person of an intervenor.
Byron R. White: You're just saying a live controversy -- because of the -- the named plaintiffs into -- the named plaintiff was out of the case. He was -- because his case was moot?
William F. Goodman, Jr.: Yes, sir.
Byron R. White: And there had never been a certified class.
William H. Rehnquist: In the -- in the intervenor in -- in effect didn't have to bring a class action. The intervenor could've brought a simple action on her own behalf. It -- it seems to me that -- that McDonald must mean that not only is the controversy revolving around a -- an amount of money due justiciable but that there is an additional element, the right to bring a class action which is also a judicial -- justiciable question.
William F. Goodman, Jr.: Well, McDonald of -- of course troubles me and I wouldn't be candid if I -- if I didn't say that it did. There's one sentence in McDonald that of course my friend seized upon and I wish it wasn't there, but that sentence was not necessary for the decision. That sentence was not essential for the decision as I read the decision United conceded it that particular --
Byron R. White: Yes, but the dissent said that the majority was quite wrong in saying that, but the majority stepped right to it.
William F. Goodman, Jr.: Yes, sir. But I -- as I recall the dissent, they were also dealing in other factors. My point is this, what the Court has done, right or wrong, so far, the Court has said, "Well, we can permit an appeal by certified class because it -- it acquires a separate and distinct legal status" and we've not only said that, we've said that's significant and so we can permit a certified class to appeal. Then we come along in McDonald and we say, we can take this a step further and we can permit an intervenor to appeal where we do not have a certified class. Now, if we're now going to say that anytime a lawyer files a suit and entitles it a class action, does not persuade the Court that case should be certified, the case becomes moot that counsel at his own instance and on his own behalf can continue to pursue the litigation as long as he chooses.
Thurgood Marshall: Well, Mr. Goodman --
William H. Rehnquist: What about -- what about Judge Thornberry's concurrence in the Fifth Circuit saying that if the named plaintiffs had accepted the tender, that's all a court had to decide -- had to -- to -- the Court didn't have to decide what the question would be then. These named plaintiffs had refused the tender.
William F. Goodman, Jr.: Yes. He was simply saying as I recall Your Honor that Judge Rubin went further than he -- than he had to go.
William H. Rehnquist: Yes.
William F. Goodman, Jr.: But I see no -- no distinction. In October, 1975, this case was stripped of its class action characteristics. It had none. Now, the bank was in --
John Paul Stevens: Except because there was no certification?
William F. Goodman, Jr.: No certification.
John Paul Stevens: Well, does the plaintiff ever have a right to appeal from a denial of a request for class certification and is (Voice Overlap) -- what?
William F. Goodman, Jr.: Excuse me Your Honor.
John Paul Stevens: Does he ever have such a right?
William F. Goodman, Jr.: Certainly unless in the interim his claim becomes moot.
John Paul Stevens: Unless he wins the lawsuit? What?
William F. Goodman, Jr.: Unless in the interim, his claim becomes moot.
John Paul Stevens: Supposing he -- he -- that his request is denied, then what is his -- what is he motivated to do? Should he try and win his individual claim? I assume he should and if he wins on his individual claim, does he lose the right to appeal the denial of the class certification?
William F. Goodman, Jr.: In our judgment, he does.
John Paul Stevens: Well then, how could he -- what is his motivation at that point if he's lost on the class certification? I guess it's in his interest then try not to win his lawsuit.
William F. Goodman, Jr.: Well, we have to assume that the motivation of a named plaintiff is to recover --
John Paul Stevens: His individual claims?
William F. Goodman, Jr.: Yes.
John Paul Stevens: But you also then have to assume he has no separate legal interest in representing a class.
William F. Goodman, Jr.: Well, you -- you have said that -- that he does as long as he himself possesses a live claim but not -- not that -- not in immortality.
Thurgood Marshall: And I -- I don't get it. He didn't accept this. He didn't agree to this, did he?
William F. Goodman, Jr.: Well, Your Honor --
Thurgood Marshall: The way thing I read that in the opinion -- indeed, the opinion in this case said that they didn't.
William F. Goodman, Jr.: Well -- well, let's talk about that a minute because that's one of the key things here. The --
Thurgood Marshall: Well, but the whole point is, if that was all of their claim, if you take the class action out and the only thing they're entitled to is 800 to 400, then they have great trouble with excess of 10,000, don't they? But, the other point is that they didn't agree that that's what the facts were. Now, what's behind that? Did -- did that -- the statement he made in the opinion that the plaintiffs do not agree with this, the appellants do not agree with this.
William F. Goodman, Jr.: Well, the -- there's also talk of settlement in the opinion and that's incorrect. Here's -- here's what happened and the record shows it. Seven months after the denial of class certification, the bank said to the two plaintiffs, "What are you claiming?" They responded, "The bank tendered to them every dollar they were claiming." Now, it's inferred in the Court of Appeals that there's something wrong about that. What did the bank do?
John Paul Stevens: That's incorrect. Mr. Goodman, that isn't really correct as to what say we're claiming. Weren't they from the beginning of the lawsuit making two separate claims; one, that they're entitled to $12 a piece or whatever it was, or hundred and -- I forgot the dollar and secondly, that they were entitled to represent a large group of persons who had similar claims. Didn't they make both claims?
William F. Goodman, Jr.: They did.
John Paul Stevens: And they -- they got half of it when you tendered them the money but they've never gotten, the first thing they asked, namely the right to represent everybody.
William F. Goodman, Jr.: Well, that --
John Paul Stevens: And when did they lose that right? When did they lose the right to assert that they had a right to represent everybody?
William F. Goodman, Jr.: Well, to -- to get right down at the lawsuit, Judge, there's no way that Rule 23, a rule of procedure, can somehow create appellate jurisdiction or power to decide a moot question.
John Paul Stevens: Well, but when did that the question become moot, the question of whether or not they could represent a class, when did that become moot?
William F. Goodman, Jr.: It became moot when there was nobody left in a lawsuit contending that the question still existed with counsel.
John Paul Stevens: Was it -- (Voice Overlap) --
William F. Goodman, Jr.: There's nobody before the Court was --
John Paul Stevens: The plaintiffs contended because they rejected your tender. They said, "We don't want your money, we still want to try and represent a class as we have from the beginning of this lawsuit." The only thing that's happened is that insofar as we claim wrongdoing in money, they've acknowledged we're right. So why should that cause them to forfeit their right to litigate the other half of their case?
William F. Goodman, Jr.: Because the -- the controversy is moot.
John Paul Stevens: The individual controversy but not the -- not the controversy concerning their claimed right to represent this class. When did that become moot?
William F. Goodman, Jr.: It became moot -- Your Honor as I've said, the minute their personal claims become --
John Paul Stevens: (Voice Overlap) so you could've sent them the money but before even the class certification issue arose.
William F. Goodman, Jr.: We could have but --
John Paul Stevens: It would've become moot then?
William F. Goodman, Jr.: Not as I read the decisions of the Court. As I read the decisions of the Court, you've got to give the trial court a fair chance and a fair opportunity to rule on the certification question. You can't just run in and -- and moot the case immediately.
John Paul Stevens: But why not --
William H. Rehnquist: Well, Mr. Goodman --
John Paul Stevens: Why not give the appellate court the same right then?
William H. Rehnquist: Mr. Goodman, don't -- don't you really have to get down a little deeper than perhaps this Court has in some of its class action cases here and recognize that at least many courts have read into Rule 23 that it's -- it's basically a case managed not by clients but by lawyers and that the clients themselves probably couldn't care less about giving $12 a piece from the bank and that somehow rather -- whether it's -- as Justice Stevens says the other half of the issue or at least another part of the issue; one is whether each client will recover particular sum of money and the other of which is whether a rather large class which will furnish a rather large attorney's fee to attorneys will be certified or will not be certified?
William F. Goodman, Jr.: That's -- that's a candid look at it, Your Honor and I -- and I think that and I -- I realize that -- that I'm not satisfying your inquiries over here and the reason is that I think you're assuming with those questions that the -- if -- that when you filed a lawsuit, that somehow the rule when it permits you to request class action status, permits you to litigate that question all the way up, but here's the problem. The Court of Appeals said -- I don't think it ever should've gotten to the question but it did and it said that the District Judge was wrong when he denied certification. Now, what the District Judge did was not void. It was simply wrong according to the Court of Appeals. Now, the Court of Appeals couldn't enter a -- a nunc pro tunc type ruling and -- and have that jump back in time to the time when the District Judge entered his ruling. Now, I think the problem is that if you are conscientious appellate judge and you have something before you and you think it was decided wrong below, you know, you feel like you need to decide it and correct it, but there are many instances --
John Paul Stevens: But Mr. Goodman, if you're talking in terms of power, I don't understand why a tender before the issue of certification is even presented at the trial judge, wouldn't equally moot the case.
William F. Goodman, Jr.: Well, I could -- I think I could make a strong argument that it would. But you --
John Paul Stevens: Sure, if you have made the argument that it would. I think that's exactly the argument you're making that whenever the tender is made to an individual claimant, if there had been no certification, there's nothing more to litigate.
William F. Goodman, Jr.: But -- but, as I understand the -- the rulings, you've made the -- made the important distinction between --
John Paul Stevens: But logically, that --
William F. Goodman, Jr.: -- the time of certification.
John Paul Stevens: Logically, that distinction is the same whether it's -- whether it's before presentation of certification or an erroneous denial of certification. Logically, you get the same mootness problem it seems to me.
William F. Goodman, Jr.: Yes, yes.
John Paul Stevens: And if we carry -- if we accept your argument, carry to a logical conclusion, I think we should equally have to hold and maybe we should, that the defendant can run in before -- as soon as the complainants filed and pay off the plaintiff.
William F. Goodman, Jr.: I don't know. One --
John Paul Stevens: Well, I don't know, why not?
William F. Goodman, Jr.: Put --
John Paul Stevens: You'd -- you'd defeat a lot of class actions that way and people get their money.
William F. Goodman, Jr.: The --
John Paul Stevens: The same thing you're doing here?
William F. Goodman, Jr.: The personal stake here, Your Honor is money --
John Paul Stevens: Same in my hypothetical.
William F. Goodman, Jr.: -- is money. And if these named plaintiffs recover their money, they have recovered their entire stake. Now, what's happened in -- in the Fifth Circuit and perhaps in other places around the country, this is exactly what's happened. First, they came along with Title 7 cases, let's say, and the named plaintiff controversy would become moot. But the Court would say, "Because it's this type of case and because Congress has entrusted the federal courts with particular responsibility in this kind of case, sort of a private attorney general concept that the nexus is there and we will continue with -- with the lawsuit, with legal fiction perhaps justified, perhaps not." They do that in a half of dozen of cases, Your Honor and then all of a sudden they get to a pure, commercial money lawsuit and they do the same thing and cite as authority these earlier title seven decisions which will bottom on an entirely different premise.
Warren E. Burger: You referring to the realism of this whole pattern of conduct earlier. What you're saying -- I'll put it this way. Is what you are saying and that what should be done is that if these class action people or if the lawyers sponsoring the litigation want to have -- wanted continuing, they should go out and drum up another plaintiff.
William F. Goodman, Jr.: Well that would --
Warren E. Burger: Is that what you're saying?
William F. Goodman, Jr.: I would hate to say it exactly that way. That's one way for him to continue it unfortunately.
Warren E. Burger: But isn't that the realistic aspect of -- of great many class action not necessarily this one or any category for the great many class actions? Not brought for the benefit of -- of the named plaintiff, who may get as a one famous case $8.63 but for the benefit of the lawyers.
William F. Goodman, Jr.: I wish I knew that one.
Warren E. Burger: Isn't that the realism?
William F. Goodman, Jr.: The realism and I -- I wish I knew how to say this correctly, the realism is if the case should not be here and shouldn't be litigated when there is no controversy. There is not a single dissatisfied customer out of 90,000 of Deposit Guaranty National Bank other than two who claimed money and has been tendered to them, not a single dissatisfied customer. So I submit that the realism of the matter is that because counsel wishes to pursue the litigation, it can be pursued so long as counsel deems appropriate. May I reserve the balance of my time?
Warren E. Burger: Very well. Mr. Lyons.
Champ Lyons, Jr.: Mr. Chief Justice and may it please the Court. There have been charges made during the briefing and to some extent during argument that this is an action maintained for the benefit of the attorneys. I don't mean to take unto umbrage but I do detect some suggestion of lack of unprofession -- of lack of professional conduct. There's been no evidence whatsoever. I'm confident that if there had been any evidence of it, the defendant would have been able to produce it. That is, we submit a smoke screen. This is not purely a commercial damage action. We must not lose sight of the fact that this is a charge of usury by national bank and in -- instrumentality of the United States in direct violation of a federal statute. Usury usually has been universally condemned by about every culture that our civilization has produced. This is not a technical usury claim of one half of point or so forth. This is a charge of 10% over the legal rate of interest. It involves claims that will range from $100 and on up. That maybe a small sum of money to the bank but it aggregates to the extraction of $12 million in illegal interest from a class composed of upwards of 90,000 people in the State of Mississippi and in that posture, the public interest is involved and this is an action charging a violation of a federal statute.
William H. Rehnquist: Well, Mr. Lyons, isn't that exactly of why we have to explore here not just the recovery of individual plaintiffs but whether in -- in adopting Rule 23, it was intended to confer not only the right to litigate about individual claims, but about the right to litigate whether or not a class should be certified as a class action?
Champ Lyons, Jr.: Yes, sir. And that is essential to my theory of the harmonizing of all of these cases which Your Honor referred to as many forests -- many trees in the class action forest. And in all of the cases, in which we find language that a properly certified class will avoid mootness in none of those cases, warrants the right to proceed as a class action a litigated issue in the case as it is here. In only one case, this Court granted certiorari and vacated the proceedings as moot where the class action was a litigated issue in the case and that's (Inaudible) against United States Parole. But in that case, the Court of Appeals had said, "No, the District Court was right there shouldn't be a class," it's different from the case here.
Warren E. Burger: What were your options when the Court denied class action certification?
Champ Lyons, Jr.: In fact, what happened when the Court denied class action certification in a Coopers & Lybrand proceeding, an interlocutory appeal was sought to the Fifth Circuit and the defendants successfully opposed it. In the seven months hiatus period that has been talking about was consumed during that proceeding. Then the plaintiffs came back and moved for summary judgment on their individual claim and at that time, the tender was made which was filed with the Court in the form of a confession of judgment. We served a counter offer of judgment which would've expressly made the defendants agree that the class issue is available for review. They wouldn't have anything of it and the District Court entered the judgment over our objection and the money remains in the Court as of this date. Now, the thing we can't lose sight of is that the Fifth Circuit held this was a classic case for class action treatment and there had been indeed an abuse of discretion. In that portion of the Fifth Circuit --
Potter Stewart: Well, that -- that question as I understand in view of our limited grant, is not --
Champ Lyons, Jr.: That before us --
Potter Stewart: -- before us here whether the Court of Appeals was right or wrong in the merits of the class action.
Champ Lyons, Jr.: That's correct, Your Honor.
Potter Stewart: Isn't that correct?
William F. Goodman, Jr.: That's correct. And they tendered to the named plaintiffs, was nothing more than a deliberate act to destroy the jurisdiction. It was a calculated gimmick and they -- they refer in their brief to being weary of the litigation. I think electrified of the possibilities of having to pay back the illegal entries is what motivated their entire conduct. The case of controversy rule that the -- the basis for it in the trial part of that Government, it makes sense that the judicial power not be exercised except in real cases and not in imaginary cases. It is also a device for ensuring the quality of an adversary proceeding in this form that we have historically come at custom the resolution of judicial controversies. I submit we have that here. There are cases where both parties said, "Please rule, we've got to have an answer to this," and the -- this Court has said, "Oh no, just because both parties want and ask that doesn't mean this Court is going to have a case of controversy jurisdiction." Those cases aren't important here. We've got one party that doesn't want any ruling. We've got one that says, "This isn't live and active controversy," and that's the plaintiffs. Now, mootness is a time dimension of standing. There is no question at the time of the commencement of this action, the named plaintiffs had standing and they possessed all of the prerequisites of Rule 23.
Thurgood Marshall: Mr. Lyons, let me get to this another way. I'm confused. Look, you -- you write to bank and you say, "Look, if you don't pay me my money that you owe me, I'm going to sue you" and the bank says, "Okay, I'll pay." You don't have any suit.
Champ Lyons, Jr.: No. That's right.
Thurgood Marshall: You filed a lawsuit and ten after you have filed it the bank comes in and says, "We will pay you." Are you still going for your class action? You have a right for your transaction?
Champ Lyons, Jr.: Yes, sir.
Thurgood Marshall: I have trouble with that.
Champ Lyons, Jr.: Yes, sir. And I think that there is no basis for trouble because of the -- the Sosna line of cases recognizes that this Court has already embraced the notion that standing can exist at the commencement of an action. Events can occur prior to certification which would moot the individual claim but nonetheless case of controversy jurisdiction is ongoing.
William H. Rehnquist: That -- that's a capable of -- of that of grant petition but evading review type of situation where you're not seeking a money judgment. You're seeking relief which the particular named plaintiff may not ever be able to obtain because of the -- and it's a durational residency requirement. I have trouble with transferring that over into the simple money judgment claim.
Champ Lyons, Jr.: Both are capable of repetition and yet evading review standard in the mootness field in the concept of voluntary cessation of illegal conduct is not being basis for mootness, arose historically in the injunctive context. This is an action for money damages but I submit that both doctrines have a field of operation here. The voluntary cessation of illegal conduct is already analog to paying two out of 90,000 claims. Therefore, that act ought not to be viewed as it existed for the purpose of mootness. They've argued in their brief that is not what the cause of mootness but the fact of it. That very rule, the voluntary cessation of legal conduct flies in the face of that. Secondly, capable of repetition yet evading review; we all recall the ICC case where there was a raid order that was going to expire and it did expire and they said, "No, capable of repetition evading review go forward." The ready analog to that and the money judgment case is in this case, there will be an evasion of review because if the case is moot, the bar of statute of limitations comes crashing down on the entire class.
William H. Rehnquist: But it won't be -- it won't be moot as to people who have not filed unless there's been an intervening event, the statute of limitation in this, not a question of mootness, it's a question of the bank having an affirmative substantive defense.
Champ Lyons, Jr.: Well, Your Honor, this Court has recognized in United Airlines against McDonald that the named plaintiff can appeal. And --
William H. Rehnquist: Upon timely intervention.
Warren E. Burger: Within 30 days after the entry of final judgment. The -- the intervenor can appeal, but the named plaintiff could have appealed. One of the bases for Coopers & Lybrand where the right has been in interlocutory review was withheld had to do with the fact that the collateral order doctrine didn't apply because of effective review available after final judgment, at the behest of the named plaintiff. In nine to nothing opinion of this Court citing in United Airlines against McDonald, so the -- the statute of limitations has got to be told during dependency of all possible process to exhaust the ruling -- challenge to the ruling of the District Court. The -- the finding of a District Judge on certification must be deemed infallible if the defendants have their way and clearly, erroneous refusal to certify has the effect of destroying the case. Now, in this case, the defendants attempted to -- the plaintiff -- excuse me, sir.
Thurgood Marshall: Did somebody intervene?
Champ Lyons, Jr.: Pardon?
Thurgood Marshall: Couldn't a member of the class have intervened?
Champ Lyons, Jr.: Could have intervened?
Thurgood Marshall: Yes, said -- (Voice Overlap) it wasn't to destroy it.
Champ Lyons, Jr.: He could've intervened for himself only and under the teaching of United, I would assume he could intervene to appeal the class certification issue. This appeal was noticed before United was written where the right of intervenor to come in prospect -- prosecute the appeal was not as clearly established.
John Paul Stevens: But he couldn't have appealed the class certification issue until the case was over.
Champ Lyons, Jr.: That's right. He would've been --
John Paul Stevens: And if he won the case, he'd lose his right to appeal.
Byron R. White: (Voice Overlap) right to intervene during the trial was to try his own case like the named plaintiff was trying.
Champ Lyons, Jr.: Well, of course, in United, there was condemnation of setting up the multiplicity of action whereby the named -- the -- the non-member class comes --
Byron R. White: But there, there was judgment.
Champ Lyons, Jr.: -- in and intervenes as a spectator to a final judgment.
Byron R. White: There was judgment entered there and there was a -- and so that the -- the intervention didn't occur until after judgment.
Champ Lyons, Jr.: In United, that's correct. But the statute of limitations arguments we're all made were non -- were unavailable, unavailing in a context where the -- the named plaintiff himself could have appealed.
Thurgood Marshall: As a matter of practicality, somebody intervened and won't let them pay them off. (Voice Overlap)
Champ Lyons, Jr.: That, I think that that's the point because they had rejected that kind of offer of judgment and it would've just been a pick off system, one right after another. I mean there's a strong argument that they were estopped and it belonged in the absence of intervenors because the clear implication of it is, "Oh, if we'd only had an intervenor, we would have a right controversy to review the class wide issue on when in truth and in fact, they would have paid him off one at a time" and I further submit that too many of them that showed up that it turned me over to grievance committee.
William H. Rehnquist: When you talk about a pick off system, it -- couldn't you equally well refer to as a system of a defendant settling with plaintiffs who present their claims. I mean I -- it all depends on how you couch the language, I suppose.
Champ Lyons, Jr.: Its -- it's a pick off anyway you slice it whether it occurs before certification or after and it's a calculated gimmick to avoid Rule 23 treatment. If it was so easy, some lawyers in a big case that went through this Court on big occasions, missed the boat because in (Inaudible), they could have tendered a $1.10 and get rid of the whole case if this result is valid.
Byron R. White: Well --
Champ Lyons, Jr.: That --
Byron R. White: -- I suppose the -- suppose the -- your -- you've -- you go to the bank and you say you've been violating the usury laws. "Why don't you pay us all off?" And the bank says, "Well, we'll think about it" and you say, "Well, you better because I'm going to sue you." So they call you up and say, "Well, we're going to pay you. We'll pay you. Your -- your two -- you've got two clients, we'll pay both of your clients." And you say, "Well, I'm awfully happy about that. Please pay us and then I'm going to file a suit on behalf of the clients" and I don't suppose you could do that.
Champ Lyons, Jr.: No, Sir because you've --
Byron R. White: Why not?
Champ Lyons, Jr.: -- got to have standing at the commencement of the action.
Byron R. White: You have to have your own interest.
Champ Lyons, Jr.: Yes, sir.
Byron R. White: And -- but the day after as soon as you file, the day you file, you -- you're no longer subject to being picked off.
Champ Lyons, Jr.: Not the class claim because the --
Byron R. White: That's what I mean.
Champ Lyons, Jr.: -- the class claim is a properly certifiable class claim and that is the distinction.
Byron R. White: You -- you say you have the -- you have the right to have that issue finally decided on appeal whether you're picked off or not.
Champ Lyons, Jr.: Yes, sir. Once you have standing going in --
Byron R. White: Once the case starts, the case can't be possibly be mooted by being paid off or your recovering judgment.
Champ Lyons, Jr.: That's right. Even the Seventh Circuit has ruled that the pre-certification payoff won't cut it. That's Susman against Lincoln American (Voice Overlap) --
Byron R. White: Even if -- even if the case as other -- might otherwise be called moot, it just isn't moot for the class on the class actions.
Champ Lyons, Jr.: If it's a properly certifiable class, that's correct, sir and that harmonizes with Sosna in that line of cases.
Byron R. White: And I -- and I suppose you -- suppose you are paid off, you file a suit, class action is denied and then you're paid off. And then you go out and that you file a separate suit on behalf of the class, you'll be thrown out I guess.
Champ Lyons, Jr.: You wouldn't have the standing of bringing new action because --
Byron R. White: But you have the -- but you have standing to maintain --
Champ Lyons, Jr.: You can (Inaudible)
Byron R. White: -- the old one.
Champ Lyons, Jr.: -- can be ongoing proceeding. Yes, sir, Your Honor. The -- in this case, the rules of mootness of this Court have been -- there must be a mootness on all claims, that's Powell against McCormick. Part of the claim remains unsatisfied. 80 or two out of 90,000 are the only claims that have been satisfied. The mootness rules of this Court have said there must be the complete ratifications of the effects of illegal conduct. That has been no such complete ratification.
William H. Rehnquist: Is your position consistent with Jacobs versus the Indianapolis School Board, do you think?
Champ Lyons, Jr.: Yes, Sir. In Jacobs, the question of certification was not before the Court at this time -- at -- in -- in this proceeding. The -- the litigation of whether or not there should've been a certification never came up. The Sosna case is harmony -- is -- is in harmony with this. The Sosna case said that the fact of the certified class maybe a sufficient basis to avoid a finding of mootness. I respectfully submit that the certifiability of the class is also a basis for the avoidance of mootness and that the Sosna case isn't consistent -- in -- inconsistent with that because nobody litigated in Sosna.
William H. Rehnquist: But you have to pray for certification in your complaint then --
Champ Lyons, Jr.: Yes.
William H. Rehnquist: -- in order to harmonize it with Jacobs.
Champ Lyons, Jr.: Yes, sir. You have to ask for certification and you've have to have it refused and you have to keep litigating it, which we did. Now, the footnote --
Warren E. Burger: What you say on the practical side of it, these problems would be solved if there was a requirement of the transaction -- denial of certification be appealed within 30 days and resolved right at the threshold.
Champ Lyons, Jr.: That would be a solution to the problem and would avoid the dilemma that no -- no review of certification creates, but if there can be no immediate review of certification as we understand the law to be today, then -- unless, there is review after judgment, then you're down the dead end street of no review and you have to indulge in the presumption that the District Court's discretion on the denial of class action is infallible. And I frankly find that abhorrent to the system of the justice that I've come to expect with the right to review of final judgment of the District Court of the United States on all your claims.
Warren E. Burger: Well, all -- that -- that presupposes that it is a valid case or controversy type of Article III claim to say that you want to represent the class of people whom you don't know probably and very often, you wouldn't know them. Has the Court ever really decided yet clearly that that is a --
Champ Lyons, Jr.: Case of controversy.
Warren E. Burger: -- a right itself clearly?
Champ Lyons, Jr.: Well, the Court has said this that there is no absence of case of controversy when a named plaintiff's claim becomes moot before certification can take place. And that the doctrine of relation back where the issue will otherwise evade review is available. Now, they say there's a fiction involved here. I submit if there'll be a fiction, the greater fiction is to say that the case of controversy has gone and there is no mootness simply because two out of 90,000 claims have been satisfied.
William H. Rehnquist: When you refer to the doctrine relation back, are you referring to Sosna?
Champ Lyons, Jr.: Footnote 11 in Sosna.
William H. Rehnquist: Well, though, that simply left the question open, didn't it?
Champ Lyons, Jr.: Your Honor, it does speak in the context of a transitory temporal type claim. We respectfully submit the doctrine is equally applicable here where the transitory appeal time has got to run before you can get up and then you get your review and then you ought to relate back to the day you were in District Court asking for certification. The defendant's never challenged the standing at that time.
William H. Rehnquist: That -- those are the kind of open questions that we've got to decide --
Champ Lyons, Jr.: Yes, Your Honor.
William H. Rehnquist: -- or put to one side in this case.
Champ Lyons, Jr.: I don't think it requires any expansion of any existing precedent. I think it's just a situation of new wine in old bottles. It's just that these are new facts which have never clearly been opened and I -- I submit that it's just an -- an essential ingredient of the method by which we administer justice that that relationship back principle applies --
John Paul Stevens: Mr. Lyons --
Champ Lyons, Jr.: -- because there is no way to go an appeal and go to the Fifth Circuit and get it reversed just like that. And even that Mr. Chief Justice's suggestion of opening up for 30 days to take your appeal, you're still going to consume many months probably before you could get a ruling if it were reviewed for that at that time.
John Paul Stevens: Mr. Lyons, apart from cases involving short time in the doctrine of evading review -- I -- I forgot the exact language, apart from those cases, has the Court ever squarely held that a tender in advance of an attempt to certify will not moot a case in a class section?
Champ Lyons, Jr.: This Court has not, the Seventh Circuit has.
John Paul Stevens: But -- but logically, it seems to me that -- we really -- that's sort of a, the bedrock of the whole argument is whether a tender even then might moot it because I think their argument applying advanced, simple certification as well after and he doesn't want to press that because I know it's an extreme position, but don't you have to start from the proposition that there is a case or controversy prior to certification even though the named plaintiff has been tendered all he's asked and therefore, he's no longer a good class representative, would be the argument.
Champ Lyons, Jr.: Yes, sir. We -- that -- that's correct because of the existence of a properly certifiable class.
John Paul Stevens: But it's -- it's certifiable but 10 days after the lawsuit starts, the named plaintiff has tendered as $300 or whatever it is. Now, he's happy. If he refuses that tender, how can he be a good class representative anymore?
Champ Lyons, Jr.: If he refuses the tender?
John Paul Stevens: Yes, he -- he's -- because he's -- he's no longer -- is shown he's not really interested in his own claim anymore.
Champ Lyons, Jr.: Well, he's interested in his own claim to the extent that he doesn't want to do anything to jeopardize the other prong of his being there and that's the fiduciary duty to the class.
John Paul Stevens: But I still try -- I must confess, I'm little troubled by Mr. Justice White's example. In terms of Article III, why is there such a difference between going into the bank informally and say, "Pay us off now and we won't sue you" and then there's -- there's no lawsuit. They obvious can't come in the next day and represent the class and paying him off three days after the lawsuit is filed. Why didn't that moot the case?
Champ Lyons, Jr.: Because -- well, one distinction is when the payoff after the lawsuit is filed, that is the voluntary -- voluntary cessation of illegal conduct which is calculated to eviscerate Rule 23 what this Court ought not tolerate.
John Paul Stevens: No, it's not because it's voluntarily ceasing illegal conduct. They say we think we've done everything lawful all along but we want to get out of your hair and so we're going to pay you off and you can't sue us anymore.
Champ Lyons, Jr.: And -- and --
John Paul Stevens: And -- and then, how do we have a live case of controversy that can even be certified?
Champ Lyons, Jr.: Well, they did it because they wanted to avoid the fact that there's a good class action here, that's what they did it for.
William H. Rehnquist: That's since WT grant on its head to say that paying a money judgment is a voluntary cessation of illegal conduct. That's always been in the injunctive context before.
Champ Lyons, Jr.: Not when it's a partial payment. It's not a complete ratification of the effects of the illegal conduct which is also an essential ingredient of mootness that the illegal conduct be completely covered up and everything be taken care off and resolved and made hold. They say they were just paying their piece, they tendered a crumb. They're not even half a loaf.
Warren E. Burger: Mr. Lyons, you spoke of the fiduciary duty of the named plaintiff to the punitive class, from when is to that fiduciary rate of relationship arise? How does one individual or two give birth to a fiduciary relationship to 90,000 people they never saw --
Champ Lyons, Jr.: By --
Warren E. Burger: -- I don't know.
Champ Lyons, Jr.: -- permitting his name to be used in the U.S. District Courthouse on a complaint where the claim asked them for a class action treatment.
Warren E. Burger: Well --
Champ Lyons, Jr.: That's a commitment to that class.
Potter Stewart: That was a -- that was the theory of the Court of Appeals and the opinion written by Judge Rubin but it wasn't necessarily the theory of Judge Thornberry and yet, it's not one that you have to adopt.
Champ Lyons, Jr.: Yes, that -- that is very correct. We're here whether we answered the call of (Voice Overlap) his right.
Potter Stewart: Whether it's a matter of (Voice Overlap) or voluntary action.
Champ Lyons, Jr.: (Inaudible) on that in the abstract if the Court is interested but for the purposes of resolving this case, that question is not going to affect the result.
Warren E. Burger: There's nothing or I'll put those question to you. What is there in the class action rule that would suggest this fiduciary concept that Judge Rubin --
Champ Lyons, Jr.: I don't think that class action rule could procedurally -- a rule of procedure could dictate what and what isn't substantive fiduciary duty, but I think that once you cast yourself in that role that just under the general rules that apply to fiduciaries, you got certain responsibilities.
Potter Stewart: In other words, do you -- you don't need to contend that you had a duty to appeal.
Champ Lyons, Jr.: Absolutely not. As a matter of fact in Fifth Circuit --
Potter Stewart: Well, the Court of Appeal held that you did.
Champ Lyons, Jr.: In the Fifth Circuit, I contend it that there was a right but not a duty. That the duty --
Potter Stewart: -- a privilege, an option not a right.
Thurgood Marshall: Class action was just a procedure. It -- it has no jurisdictional value at all, does it?
Champ Lyons, Jr.: That's correct. And -- and (Voice Overlap) to have a ruling on a procedure --
Thurgood Marshall: That's why I'm wondering when a fiduciary thing gets in there.
Champ Lyons, Jr.: Well, if -- if I come forward and I say, "I want to represent myself and everybody else," and I avail myself with a federal procedural rule --
Thurgood Marshall: That's --
Champ Lyons, Jr.: I'm not sure --
Thurgood Marshall: But my point is, is that before or after the class is certified, that's my point that the fiduciary part comes in. The -- does -- is there before it'd certified?
Champ Lyons, Jr.: Well, if it takes to payoff before certification, he is liable to get into pack of trouble.
Warren E. Burger: But if there is a fiduciary duty, it's -- it's got to be a two-way street and if there -- if -- if that's the concept, then it may have been -- it might be that making a settlement that conceivably would moot the action would be a violation of that fiduciary duty and that when these people accepted the money --
Champ Lyons, Jr.: They didn't accept money, Your Honor. That money is still on deposit (Voice Overlap) --
Warren E. Burger: Now, under -- I'm not speaking in your case, I'm speaking of the abstract --
Champ Lyons, Jr.: Yes sir.
Warren E. Burger: -- of class actions when if -- if settlement is made and people get 300 or 200 or whatever. On fiduciary theory, they might be violating their fiduciary duty.
Champ Lyons, Jr.: If this act of certification has been refused.
Warren E. Burger: Well, before or after?
Champ Lyons, Jr.: Well, before, I think it's a real problem because you could extract a greater claim in your own individual behalf and it's really worth in order to avoid the -- the threat to the defendant of the class recovery. And then you're making a personal gain by reason of somebody else as being involved that after certification, it would be my view that the duty ought to be on the member of the class to ascertain the intention of the plaintiff as to whether he was going to appeal. That's clearly recognized that he's got the right to appeal in Coopers & Lybrand running in United Airlines. And if the named plaintiff decides that the -- he's -- he's not going to appeal, then you could have the intervention. Our notice of appeal was filed on the 25th day. We've never had an end of -- evidentiary hearing of what the 90,000 people are thinking or did think. We don't -- we'd like -- be interested to know on how many of them opt out if we get back and go to a judgment. But the fact if it is, there was a five-day period after we filed our notice of appeal when -- for ought appearing would be intervene or sat back and say, "Our rights are being protected, the case is going forward, we're going to have judgment next into erroneous order, reviewed by the Fifth Circuit and we feel confident that it will be overturned," particularly, in view of the fact that they had already been the same type of case go all the way through the Alabama federal court system through certification and then settlement.
Warren E. Burger: But all this is hypothetical because -- would you care to venture a guess as to how many of the 90 people -- 90,000 people know anything about this in the absence of a certification and notices?
Champ Lyons, Jr.: No, I have no way of knowing what communication that -- that the bank has made available to them over the years if they would have inquired the bank as to what is going on in this lawsuit. In -- in summary, the defendant has a huge windfall. The ratification of this theory of mootness will allow them to keep their windfall after paying only two out of 90,000 claims. This would eviscerate Rule 23. It would violate the Rule 1 mandate for the just determination of every action. It allow -- elevates the District Court's ruling on certification to a level of infallibility which destroys rights. It destroys the federally created right to review and adverse procedural ruling and it allows the adverse procedural ruling to control this Court's subject matter of jurisdiction.
Byron R. White: But are you suggesting that he say they -- they just didn't pay off everybody but are -- are you suggesting as they admitted liability?
Champ Lyons, Jr.: It was without prejudice.
Byron R. White: Well, that's what I thought. So you don't -- I mean a lot of people pay plaintiffs off just to get rid of a lawsuit and there's nothing wrong with that. They'd rather -- they'd rather pay than litigate.
Champ Lyons, Jr.: Of course they paid here to get away the class action too (Voice Overlap) --
Byron R. White: Well, that's what -- I know but they didn't admit liability.
Champ Lyons, Jr.: They did not admit liability, yes.
Byron R. White: Yes. They may not have been in -- in the long run, you may lose your case.
Champ Lyons, Jr.: Absolutely and had the merits here.
Byron R. White: Exactly, so you may not have been entitled to your payment.
Champ Lyons, Jr.: But we have not had them trial on the merits. In summary, there is a logical nexus between the named plaintiffs and the class. This Court has the requisite concreteness and adversity sufficient to recognize case of controversy jurisdiction. They had standing going in. This Court has already embraced in Sosna, the notion that something might happen to that standing as it stood on the day the plaintiff walked into the courthouse and then certification occurs subsequently without destruction of case of controversy jurisdiction. That rule needs to be logically applied in this case so as to recognize the right of a named plaintiff who has been the victim of an erroneous ruling on the right to certify the class to have it reviewed. The proper test should be as to whether a case of controversy jurisdiction exists, is -- does the named plaintiff represent a properly certifiable class and that properly certifiable class is a question he is entitled to have an answer in the federal judicial system and it ought not to stop it at District Court level. We respectfully submit that the judgment of the United States Court of Appeals for the Fifth Circuit is due to be affirmed.
Byron R. White: Can I -- can I ask you one thing? Could -- could the defendant have insisted on having the case dismissed if you -- where he tenders a settlement and you refuse it?
Champ Lyons, Jr.: I -- we contended all along, Your Honor, that the dismissal of the case after we had claimed for class action treatment ought not to take in place. But, since the District Court had ruled against us on our right to class action, then I would suppose the District Court will have the right to say, "Case dismissed," for whatever reason. No more claims live as far as I'm concerned, but then we took it -- we didn't get in --
Byron R. White: Well, what -- what is the -- what is the status of the named plaintiffs' case now on this case?
Champ Lyons, Jr.: The named plaintiffs' claim was paid into the registry of the District Court.
Byron R. White: Yes, and what happened to the case?
Champ Lyons, Jr.: The case was dismissed by the District Judge.
Byron R. White: Why?
Champ Lyons, Jr.: Well, the certification had been refused and then the money was paid into the court and based upon the tender --
Byron R. White: But --
Champ Lyons, Jr.: -- the judgment was entered, dismissing a -- remain -- the remaining portion of the case.
Byron R. White: Well, and what have you tried to appeal?
Champ Lyons, Jr.: We appealed the right to proceed on behalf of the class.
Byron R. White: Why didn't you appeal with dismissal?
Champ Lyons, Jr.: Yes, we filed a notice of appeal of the entire action and took it to the Fifth Circuit. Now, I'm not sure where -- where that leaves me but that's what we've all along sought to review the right to proceed on the part of the class and we consider that problem before the Court. Thank you.
Warren E. Burger: Mr. Goodman, you have about eight minutes left, you have three of the three of them before we rise.
William F. Goodman, Jr.: Alright sir. The notice of appeal is a strange thing in this case. The appeal was not filed for the named plaintiffs but was filed for -- solely on behalf of an anonymous unnamed, uncertified class. Reference has been made to illegal conduct on the part of the bank. Now, the record before you shows that the Legislature of the State of Mississippi has not only specifically outlined the charges that can be made for credit card arrangements, such as this but has made that retroactive. So, you could say to me what are you concerned about, not the merits of the case, if the Court please, but concerned about with no champion and we say no jurisdiction concerned about notices, about a dispute that started in 1971 being sent by a court to 90,000 customers, disturbing our normal, good, respectful business relationship with those customers. That's what the bank is concerned about. And we submit that in a case of no jurisdiction, that shouldn't take place when here comes a notice from a court which of course a great many of them will not understand, suggesting that they opt in or opt out as the case maybe of litigation of this type. Now, counsel says that if certification is significance that this puts the trial judge in -- in a position of -- of power that perhaps he shouldn't assume. I submit that certification does require integrity at the trial level, the question of certification and I submit that so does the entire judicial process require integrity at the trial level. How many cases reach this elevated status? Our system depends upon integrity at the trial level and whether we sometimes like it or not in the abstract, Article III dictates that the trial judge many times rule upon questions that are never reached on appeal. Thank you.
Warren E. Burger: We'll resume at one o'clock. Mr. Goodman, you may continue.
William F. Goodman, Jr.: Mr. Chief Justice, after deliberation over lunch, we believe that we've concluded our argument unless the Court has further questions.
Warren E. Burger: I hear none.
William F. Goodman, Jr.: Thank you.
Warren E. Burger: Thank you gentlemen. The case is submitted.