Opinion ID: 728929
Heading Depth: 2
Heading Rank: 2

Heading: the appealability of the adverse certification ruling

Text: 14 That we have determined that Dugas settled his case with Trans Union does not end our inquiry. We next turn to the thorny question of whether a representative of a class action, who settles with a defendant after an adverse certification ruling, is precluded from appealing the adverse certification ruling. For the reasons that follow, we hold that when a representative of a class voluntarily and without objection settles his individual and class claims after an adverse certification ruling and consents to entry of judgment, that representative is precluded from appealing the district court's certification order absent an express reservation of a right to appeal that order. 15 We have held that in class action lawsuits, a class representative wears two hats. He represents both his personal interests and the interests of the class. See Roper v. Consurve, Inc., 578 F.2d 1106, 1110-11 (5th Cir.1978), aff'd sub nom. Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980). Recognizing the inherent potential for harm to putative class members, the Supreme Court has erected certain procedural hurdles to prevent defendants from buying out class representatives. For example, in United Airlines, Inc. v. McDonald, 432 U.S. 385, 392-96, 97 S.Ct. 2464, 2468-71, 53 L.Ed.2d 423 (1977), the Court held that putative members of a class may appeal the denial of class certification even though the class representatives' claims lacked merit. 16 In 1980, the Supreme Court issued a pair of decisions that further clarified the circumstances under which an adverse certification ruling could be appealed. The reach of the first of these decisions, Deposit Guaranty Nat'l Bank v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980), is directly at issue in this case. In Roper, the district court issued an adverse certification order, and thereafter the defendant offered to settle the case. The plaintiffs rejected the settlement offer, yet the district court entered judgment for the plaintiffs in the amount specified in the defendant's settlement offer, again over the plaintiffs' objections. On appeal to this court, the defendant argued that the plaintiffs' claims were moot because the case was settled. We rejected that contention and held that the representative plaintiffs could appeal the adverse certification ruling. 578 F.2d at 1110-11. 17 The Supreme Court affirmed. Stressing that [t]he factual context in which this question arises is important, 445 U.S. at 332, 100 S.Ct. at 1171, the Court held that [n]either the rejected tender nor the dismissal of the action over plaintiffs' objections mooted the plaintiffs' claim on the merits so long as they retained an economic interest in class certification, id. at 333, 100 S.Ct. at 1171. That economic interest, reasoned the Court, was the plaintiffs' desire to shift to successful class litigants a portion of those fees and expenses that have been incurred in this litigation and for which they assert a continuing obligation. Id. at 334 n. 6, 100 S.Ct. at 1172 n. 6. The Roper Court emphasized the important role class representatives play when they attempt to certify a class, and if such certification is denied, the importance of challenging the denial on appeal. 18 A district court's ruling on the certification issue is often the most significant decision rendered in these class-action proceedings. To deny the right to appeal simply because the defendant has sought to buy off the individual private claims of the named plaintiffs would be contrary to sound judicial administration. Requiring multiple plaintiffs to bring separate actions, which effectively could be picked off by a defendant's tender of judgment before an affirmative ruling on class certification could be obtained, obviously would frustrate the objectives of class actions.... 19 Id. at 339, 100 S.Ct. at 1174. 20 Dugas argues forcefully that ours as well as the Supreme Court's decision in Roper controls this case. He suggests that even though the facts of Roper involved a plaintiff who never voluntarily settled the case or never consented to entry of judgment, the Supreme Court nonetheless has endorsed the proposition that voluntary settlements do not extinguish a settling representative's right to appeal an adverse certification order. We disagree. 21 First, the Supreme Court in Roper did not paint with as broad a brush as we did. For example, in dictum, we stated that a class representative may appeal an adverse certification order even if the representative acquiesced in-- i.e., accepted--a settlement. 578 F.2d at 1110. The Supreme Court did not go that far: Should the[ ] substantive claims become moot in the Art III sense, by settlement of all personal claims for example, the court retains no jurisdiction over the controversy of the individual plaintiffs. 445 U.S. at 332, 100 S.Ct. at 1171 (emphasis added). We have since recognized that our decision [in Roper ] relied on broader grounds than the Supreme Court's decision. Zeidman v. J. Ray McDermott & Co., 651 F.2d 1030, 1042 (5th Cir. Unit A 1981); see also Mayfield v. Barr, 985 F.2d 1090, 1093 (D.C.Cir.1993) (stating in dictum that [t]he common feature of the[ ] ... Supreme Court decisions [in Roper and Geraghty ] ... is that the plaintiffs lost their claims involuntarily. (emphasis added)). 2 22 Second, and more to the point, the precise question we face in this case was left open in the companion case to Roper--United States Parole Comm'n v. Geraghty, 445 U.S. 388, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980). There, a prisoner filed a class action challenging new prison guidelines. The prisoner moved the district court for class certification, but the district court refused to certify the class. The prisoner appealed, but while his appeal was pending, he was released from prison. The defendants moved to dismiss the appeal as moot. The Court of Appeals rejected the defendants' claim, and the Supreme Court affirmed, holding that an action brought on behalf of a class does not become moot upon expiration of the named plaintiff's substantive claim, even though class certification has been denied. Id. at 404, 100 S.Ct. at 1212. The Court, however, declined to answer the precise question we face in this case: We intimate no view as to whether a named plaintiff who settles the individual claim after denial of class certification may, consistent with Art III, appeal from the adverse ruling on class certification. Id. at 404 n. 10, 100 S.Ct. at 1213 n. 10 (emphasis added). In light of this language, it would be unwise for us to hold that the Court answered a question in Roper that it expressly and unambiguously left open that same day in Geraghty. 23 We have yet to answer the Geraghty question. We do so today by looking to our sister circuits, who have addressed this question and come to the unanimous conclusion that a voluntary settlement, absent any reservation of a right to appeal the certification decision, prevents the class representative from appealing the adverse certification order. 24 The facts in Shores v. Sklar, 885 F.2d 760 (11th Cir.1989) (en banc), cert. denied, 493 U.S. 1045, 110 S.Ct. 843, 107 L.Ed.2d 838 (1990), are virtually indistinguishable from this case. In Shores, after the district court denied the class representative's motion to certify the class, the defendant presented the representative with a Rule 68 offer of settlement. The plaintiff-representative accepted the offer, and the district court thereafter entered judgment pursuant to the settlement offer. The representative then appealed the denial of class certification. An en banc panel of the Eleventh Circuit dismissed the appeal, holding that because [the class representative] consented to the entry of judgment without reserving his right to appeal any portion thereof, [the class representative] has waived his right to appeal the denial of class certification. Id. at 762. In reaching their conclusion, the Shores court was careful to distinguish the representative's individual claims from those of the class. Id. at 762-63. Nonetheless, in light of the representative's acceptance of the offer without any qualification and without reference to [the representative's] individual claims, the court concluded that acceptance of the offer indicate[d] that [the representative] consented to entry of judgment encompassing the entire action. Id. at 763. The court rejected the representative's contention that consent to judgment should be presumed to have encompassed only [the representative's] individual claims.... Id. Such a holding, reasoned the court, would conflict[ ] with the well-established principle that interlocutory orders are merged into the final judgment. Id. (citing 9 MOORE & LUCAS, MOORE'S FEDERAL PRACTICE p 110.07, at 109 (1987); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949)). 25 Here, Dugas voluntarily settled the entire action with Trans Union, consented to entry of judgment, and did not indicate that he was settling only his individual claims. Because interlocutory orders denying class certification merge with the final judgment for purposes of appeal, Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978); Cohen, 337 U.S. 541, 69 S.Ct. at 1221, we cannot presume that Dugas intended to settle only his individual claims. In fact, the settlement offer states that Trans Union offers to allow judgment to be taken against it for money damages in the amount of $1,000.00 together with an award of costs of the action,.... (Emphasis added.) This reference to the action together with Dugas' unconditional acceptance of Trans Union's offer and the district court's entry of judgment pursuant to the settlement agreement, plainly suggest that Dugas was settling all of his claims, individual and class alike, with Trans Union. Other courts have so held. See Shores, 885 F.2d at 762, 763 (settlement offer read  'to allow judgment to be taken against them ... in this action'  and reference to action indicated settlement of all claims); Seidman v. City of Beverly Hills, 785 F.2d 1447, 1448 (9th Cir.1986) (dismissal of action held to cover all claims). 26 The inescapable conclusion is that Dugas was wearing both hats when he settled his claim with Trans Union. We therefore hold that Dugas' settlement with Trans Union, which did not include a reservation of a right to appeal the certification ruling, divests us of jurisdiction to hear this appeal. In so holding, we join the chorus among other circuits who have come to the same conclusion. See Lusardi v. Xerox Corp., 975 F.2d 964, 979-80 n. 25 (3d Cir.1992); Walsh v. Ford Motor Co., 945 F.2d 1188, 1190-92 (D.C.Cir.1991) (opinion of Ginsburg, Ruth B., J.); Seidman, 785 F.2d 1447, 1448 (9th Cir.1986). 3 27 Dugas attempts to distinguish these cases on the ground that they involved the scope of settlement agreements, not the entry of an offer of judgment. This is a distinction without a difference. Dugas offers no argument, and we perceive none, that settlements and offers of judgment are materially different for purposes of determining whether Dugas may appeal a pre-settlement, adverse certification order. 28 Dugas also claims that because Roper was the controlling Fifth Circuit case, his acceptance of Trans Union's offer cannot be construed as unconditional: the parties were on notice that an appeal of the denial of class certification could be taken. This fact, Dugas claims, distinguishes this case from Shores. We take Dugas' claim to mean that when he settled with Trans Union, he did not settle the case on behalf of the class because there was controlling authority in this Circuit suggesting he did not have to reserve his right to appeal the adverse certification order. We reject this contention. There was no controlling case in this Circuit that governed Dugas' case. As we stated above, the Supreme Court's decision in Roper does not support Dugas' claims here, and Geraghty explicitly left open the precise question presented in this case. 29 We are mindful of the unique circumstances presented by class action lawsuits and the consequences that flow from dismissing a class representative's appeal from an adverse certification ruling. Our holding, however, does not compromise the integrity of class actions. First, we have said that a class representative need only reserve a right to appeal the certification ruling to preserve the class's interests. Thus, short of rejecting the defendant's offer or simply appealing the denial of class certification, 4 any attempt by a defendant to buy his way out of a class action is severely attenuated, if not eliminated, by the class representative's reservation of a right to appeal an adverse certification order. Second, even assuming the class representative does not reserve a right to appeal, we have held that a putative class member has standing to appeal an adverse certification ruling. See Nichols v. Mobile Bd. of Realtors, Inc., 675 F.2d 671, 675 (5th Cir. Unit B 1982). The rights of putative class members are adequately protected. 30 APPEAL DISMISSED.