Opinion ID: 693407
Heading Depth: 3
Heading Rank: 2

Heading: Dismissal of Certain Plaintiffs as Inadequate Representatives

Text: 86 The district court dismissed plaintiffs Kayes, G. Kennedy, Lacy, Maurer, L. Reynolds, and Schoenhofer as inadequate class representatives under Fed.R.Civ.P. 23.1 because it found them to be vindictive toward Defendants on the basis of their long-standing, multiple grievances against the present defendants.... Class Certification Order at 17. 87 We review the district court's determination regarding adequacy of representation for an abuse of discretion. Harmsen v. Smith, 693 F.2d 932, 943 (9th Cir.1982), cert. denied, 464 U.S. 822, 104 S.Ct. 89, 78 L.Ed.2d 97 (1983). 88 Vindictiveness is the eighth factor enumerated by this court in Larson v. Dumke, 900 F.2d 1363, 1367 (9th Cir.), cert. denied, 498 U.S. 1012, 111 S.Ct. 580, 112 L.Ed.2d 585 (1990), in its consideration of whether certain individuals were adequate class representatives. The district court based its finding that the dismissed plaintiffs were vindictive on three lawsuits filed by Maurer, Lacy, Filby, Kayes, L. Reynolds, and Schoenhofer against Defendants, and on the fact that Maurer campaigned for a seat on the Humbolt County Board of Supervisors based on an anti-Maxxam platform. Apparently G. Kennedy was considered vindictive because he initiated an Employee Stock Option Plan in an attempt to buy PLC from defendant Maxxam. 89 The first lawsuit the district court relied upon, Maurer v. Hurwitz, Cal.Super.Ct. No. 76564, was a suit brought in state court seeking essentially the same remedy that is being sought in this case--to recover the reversion that PLC received upon the termination of the Plan. That suit was held to be preempted by ERISA, resulting in the present suit. Maurer v. Hurwitz shows no more vindictiveness towards Defendants than does the case at bar, but rather indicates a desire to enforce the same rights. The other two suits relied upon by the district court apparently were shareholder derivative suits regarding the leveraged buyout of PLC. While those suits reveal some animosity towards the directors of PLC for allowing the takeover, or towards Maxxam for taking over PLC, they hardly constitute evidence of vindictiveness to such an extent that these plaintiffs cannot adequately represent the class. 90 Although it was enumerated as a factor in Larson, there have been no cases in this circuit in which a plaintiff has been found to be an inadequate class representative on the basis of vindictiveness. The reason we consider vindictiveness as a factor in evaluating adequacy of representation is to render ineligible individuals who possess animus that would preclude the possibility of a suitable settlement. For instance, in Lim v. Citizens Savings and Loan Ass'n, 430 F.Supp. 802, 811 (N.D.Cal.1976), the defendant argued that plaintiff's professed 'revenge' motive creates clear potential conflicts with the class because, in this frame of mind, plaintiff is likely to by-pass favorable settlement offers. Even in such a situation, however, the court did not find the vengeful plaintiff inadequate: Indeed, the vengeance of an aggrieved person more often engenders the zealous prosecution essential to a class action than the over-zealous prosecution which may threaten to strangle a class action. Id. at 812. 91 Viewed in this light, the lawsuits relied on by the district court hardly demonstrate animus that would jeopardize the interests of the class. Rather, they indicate a desire to protect shared financial interests. Similarly, while it is possible that the plaintiffs might try to use the class action as leverage to obtain a settlement in such pending litigation, see Davis v. Comed, Inc., 619 F.2d 588, 593-94 & 97 (6th Cir.1980), in the case at bar none of the litigation relied upon by the district court was still pending. 92 This court finds an abuse of discretion when it has a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached upon weighing of the relevant factors. A district court may abuse its discretion if it does not apply the correct law or if it rests its decision on a clearly erroneous finding of material fact. United States v. Plainbull, 957 F.2d 724, 725 (9th Cir.1992) (citations omitted). By giving undue weight to litigation which was neither pending, nor tending to show unusual animus towards Defendants other than a desire to protect named plaintiffs' rights, the district court may have abused its discretion. On the other hand, two other factors mentioned by the district court--the attempt to buy out PLC from Maxxam by Kayes, G. Kennedy, and L. Reynolds, and the anti-Maxxam platform by Maurer in his campaign--are factors which could properly be considered by the district court in its determination. 12 93 It is impossible to determine what weight the district court gave to each of these factors in its determination that the representatives were inadequate, or what standard it used in finding those representatives to be vindictive. Therefore, we remand this issue to the district court to reweigh the evidence, keeping in mind the policy behind considering vindictiveness as a factor in evaluating adequacy of representation. 94