Opinion ID: 591435
Heading Depth: 2
Heading Rank: 2

Heading: ERG As a Limited Partner

Text: 22 As an alternative basis for its right to appeal, ERG points out that as a Lynnhaven limited partner, it stands to lose its entire partnership interest as a result of the district court's order refusing to enjoin the disposition of the Lynnhaven property. (Supp.Juris.Mem. ERG, filed Nov. 12, 1991, at 8.) Furthermore, ERG argues that as a limited partner and spokesman protection groups that include a large number of other limited partner class members (Supp.Juris.Mem. ERG, filed Nov. 12, 1991, at 3), its interest extends beyond Lynnhaven since the decision in this case will directly impact the types of dispositions that will likely be proposed in the future. These interests, however, are insufficient to confer on ERG a right to appeal. 23 In spite of its interest and participation in this Class Action prior to and after settlement, ERG was not a named plaintiff in the Class Action; ERG's posture as an unnamed Class member curtails its right to appeal. We have found no cases addressing this specific issue in this or any other circuit, and the parties have not cited any. But the reasoning in recent class action cases in other circuits informs our analysis. 24 An appeal at any stage of a class action spawns issues not generated in other contexts. Several circuits, including this one, have addressed the issue of whether an unnamed class member can appeal the district court's approval of a consent decree and have reached conflicting conclusions. In Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th Cir.1970), appellants were unnamed members of the defendant class who received notice of various hearings in the settlement negotiation process, notice of a proposed settlement in compliance with Fed.R.Civ.P. 23(e) and notice of a fairness hearing but had not raised any objection to the consent judgment and took no action until after the settlement had been approved. This court dismissed the appeal but stated that if an unnamed class member intervenes or even appears in response to a notice pursuant to Fed.R.Civ.P. 23(e) and objects to the dismissal or compromise, he has a right to appeal from an adverse final judgment. Id. at 1060; accord Armstrong v. Board of School Directors, 616 F.2d 305, 327 (7th Cir.1980). Likewise, the Ninth Circuit seems to take the view that if appellants have a legal right affected by the settlement, they have a right to appeal the approval of the consent decree. See Marshall v. Holiday Magic, 550 F.2d 1173, 1176 (9th Cir.1977) (appellants fell into defendant class and even though they did not appear at the fairness hearing, the court determined they had a right to appeal). Some circuits have allowed appeal by unnamed class members without addressing the issue of the right to appeal. See Croyden Assoc. v. Alleco, Inc., 969 F.2d 675 (8th Cir.1992) (collecting cases). 25 The more recent cases have taken a different tack in addressing this issue and followed the Eleventh Circuit's reasoning in Guthrie v. Evans, 815 F.2d 626, 628 (11th Cir.1987), which concluded that a class member who is not a named plaintiff does not have a right to appeal a final judgment in a class action. Accord Croyden Assoc., 969 F.2d at 679 (noting the split in the circuits but finding Guthrie 's reasoning persuasive); Walker v. City of Mesquite, 858 F.2d 1071 (5th Cir.1988). Guthrie gave three reasons for concluding a class member who is not a named plaintiff does not have a right to appeal the final judgment in a class action. First, unnamed individuals cannot represent the class absent the procedures in Fed.R.Civ.P. 23. Second, class members who disagree with the course of a class action can avail themselves of other procedures to protect their interests. Third, class actions would be unmanageable and non-productive if each member could decide to appeal individually. Guthrie, 815 F.2d at 628. 26 Research Corp. would control in this circuit if ERG were appealing the approval of the settlement agreement (which it did not do), but for three reasons we find Guthrie 's analysis persuasive where an unnamed class member like ERG is appealing a post-settlement order implementing the settlement agreement. 8 First, ERG represents only its own interests in its appeal--which apparently do not coincide with the interests of the Class since Class Counsel favored the sale and has not appealed the district court's order. Even if ERG represents protection groups as it asserts in its jurisdictional memorandum, the district court has not scrutinized ERG to determine if it fairly and adequately would protect the interests of the class as required for representative parties under Fed.R.Civ.P. 23(a). Cf. id. at 628. 9 27 Second, allowing ERG or other unnamed class members to directly appeal each of the district court's orders approving a sale would wholly thwart the purpose behind class actions. This Class Action was designed to render manageable the Consolidated Actions which would otherwise have been unwieldy because of the number of class members. Cf. Guthrie, 815 F.2d at 629. This is only the first sale initiated since the Class entered the Settlement Agreement that provided the mechanism for selling real estate in which limited partners invested over one billion dollars. The settlement in this class action will completely unravel if the thousands of unnamed Class members are free to descend on this court to challenge each sale approved by the district court. Now that the consent decree has been issued and unnamed Class members have waived their opportunity to appeal it, the interest of the Class in proceeding to implement the settlement precludes a countermarch at the behest of an unnamed class member representing its own interests. 28 Third, ERG may have alternative avenues of relief if it thinks its interests are not adequately represented by the Class. We need not recite the possibilities since ERG has able counsel, and we do not desire to encourage one or more avenues of alternative litigation. 29 Although ERG could have appealed the district court's approval of the Settlement Agreement under Research Corp., we decline to expand Research Corp.'s holding to allow the appeal of post-judgment orders by unnamed class members. Rather, in such proceedings, we hold that an unnamed class member cannot appeal. Allowing unnamed class members' appeals after each post-settlement order would impede the implementation of the settlement agreement--which not only the named plaintiffs but unnamed class members have had an opportunity to challenge. At this stage in the proceedings, direct appeal for an unnamed class member should be foreclosed although collateral avenues of relief remain open.