Michael Brady v. Autozone Stores, Inc. ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL BRADY, No. 19-35122
Plaintiff-Appellant,
D.C. No.
v. 2:13-cv-01862-
RAJ
AUTOZONE STORES, INC.;
AUTOZONERS LLC,
Defendants-Appellees. OPINION
Appeal from the United States District Court
for the Western District of Washington
Richard A. Jones, District Judge, Presiding
Argued and Submitted March 2, 2020
Submission Withdrawn March 3, 2020
Resubmitted May 27, 2020
Seattle, Washington
Filed June 3, 2020
Before: Sandra S. Ikuta, Ryan D. Nelson, and
Danielle J. Hunsaker, Circuit Judges.
Opinion by Judge R. Nelson
2 BRADY V. AUTOZONE STORES
SUMMARY *
Class Action / Mootness
The panel dismissed, as moot, an appeal from the district
court’s judgment in a putative class action after voluntary
settlement of individual claims.
The panel held that when a class representative
voluntarily settles only his individual claims without
indicating any financial stake in the unresolved class claims,
the class claims are rendered moot.
The panel rejected plaintiff’s arguments to the contrary.
The panel held that it could not assume that plaintiff
maintained a financial stake in the outcome of the case
merely because of a potential class representative
enhancement award. The panel also held that absent proof
that plaintiff was legally obligated to pay the advanced legal
costs unless the class was certified, those costs did not
provide plaintiff a financial stake in the outcome of the class
claims.
COUNSEL
Michael C. Subit (argued) and Christie J. Fix, Frank Freed
Subit & Thomas LLP, Seattle, Washington, for Plaintiff-
Appellant.
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
BRADY V. AUTOZONE STORES 3
Todd L. Nunn (argued), and Patrick M. Madden, and
Stephanie Wright Pickett, K&L Gates LLP, Seattle,
Washington, for Defendants-Appellees.
Toby J. Marshall and Blythe H. Chandler, Terrell Marshall
Law Group PLLC, Seattle, Washington; Jeffrey L. Needle,
Law Office of Jeffrey L. Needle, Seattle, Washington; for
Amicus Curiae Washington Employment Lawyers
Association.
Robert W. Ferguson, Attorney General; James P. Mills,
Assistant Attorney General; Office of the Attorney General,
Tacoma, Washington; for Amicus Curiae Washington State
Department of Labor and Industries.
OPINION
R. NELSON, Circuit Judge:
This case requires us to decide what happens when a
class representative voluntarily settles only his individual
claims without indicating any financial stake in the
unresolved class claims. We conclude that such a scenario
renders the class claims moot, and therefore dismiss this
appeal.
I
Plaintiff Michael Brady sued AutoZone Stores, Inc. and
Autozoners LLC (“AutoZone”), seeking damages
individually and on behalf of a putative class, for alleged
violations of Washington’s meal break laws. After several
years of litigation, the district court denied Brady’s motion
for class certification and later declined to modify its ruling.
Brady then settled his individual claims with AutoZone.
4 BRADY V. AUTOZONE STORES
The settlement agreement resolved those claims,
including claims for meal break, wage, and unfair business
practice violations, for $5,000. The agreement also resolved
Brady’s “claims to costs or attorneys’ fees.” The settlement
agreement was “not intended to settle or resolve Brady’s
Class Claims.” But it did not provide that Brady would be
entitled to any financial reward if the unresolved class claims
were ultimately successful.
The parties filed a stipulation in the district court
explaining that the settlement agreement resolved all of
Brady’s individual claims, “including but not limited to
claims for failure to provide meal periods, unpaid wages,
wrongfully withheld wages, unfair business practices, and
attorneys’ fees.” The district court then entered final
judgment, and this appeal of the class certification rulings
followed.
II
“A moot action is one where ‘the issues presented are no
longer live or the parties lack a legally cognizable interest in
the outcome.’” Nw. Envtl. Def. Ctr. v. Gordon, 849 F.2d
1241, 1244 (9th Cir. 1988) (quoting Murphy v. Hunt,
455 U.S. 478, 481 (1982) (per curiam)). “The test for
whether an appeal is moot after the putative class
representative voluntarily settles his individual claims is
whether the class representative retains a personal stake in
the case.” Campion v. Old Republic Prot. Co., 775 F.3d
1144, 1146 (9th Cir. 2014). That “personal stake” must be
“concrete” and “financial,” id., a question that “turns on the
language of [the] settlement agreement,” Evon v. Law
Offices of Sidney Mickell, 688 F.3d 1015, 1021 (9th Cir.
2012).
BRADY V. AUTOZONE STORES 5
Our cases applying these rules are instructive. In Narouz
v. Charter Communications, LLC, 591 F.3d 1261 (9th Cir.
2010), we addressed, for the first time, the question of
mootness in a putative class action after voluntary settlement
of individual claims. In that case, a class representative
voluntarily settled all claims “aside from those related to
[his] class allegation,” after which the district court entered
judgment. Id. at 1263 (internal quotation marks omitted).
On appeal, the defendant argued that the case was moot
because the class representative no longer had any interest in
the class claims. Id. at 1264. We disagreed. Id. at 1265.
Looking to the language of the settlement agreement, we
noted that the class representative would receive an “award
enhancement fee” if a class were certified and that he did not
release claims for “attorney’s fees and costs.” Id. Based on
these provisions, we held that the class representative
maintained “a continued financial interest in the
advancement of the class claims” such that the case was not
moot. Id.
We next addressed this issue in Evon. There, a class
representative accepted a Rule 68 offer of judgment that
settled her individual claims but was silent as to her class
claims. 688 F.3d at 1020–23. Because the settlement
agreement did not expressly disclaim the class
representative’s class claims, we held that those claims were
not moot. Id. We did not directly address whether the class
representative maintained a “continued financial interest,”
Narouz, 591 F.3d at 1265, in the class claims. See Evon,
688 F.3d at 1021.
After Evon, then, the state of the law was slightly
unclear. Did a settling class representative retain a personal
stake if he did not disclaim class claims in the settlement
agreement, as in Evon? Or, was more specific contractual
6 BRADY V. AUTOZONE STORES
language necessary to show an ongoing personal stake, as in
Narouz? Those questions were clarified in Campion. In that
case, the class representative settled his individual claims,
but the settlement agreement explicitly did not resolve his
class claims. 775 F.3d at 1145. We explained that our case
law required “a more concrete interest”—that is, a “financial
interest”—to avoid mootness. Id. at 1146. We also noted
that the Evon panel had no need to address that requirement
because the Evon class representative had such an interest—
the potential to receive a higher attorney’s fees award. Id.
at 1146–47. We then held that the Campion representative’s
claims were moot because the settlement agreement at issue
did not provide additional compensation for resolution of
class claims beyond the individual settlement. Id. at 1147.
These cases dictate the outcome here. Brady’s
settlement agreement does not indicate he will receive any
additional compensation for the class claims, unlike the
agreement in Narouz. Nor can Brady point to the possibility
of an award of attorney’s fees, like the representatives in
Narouz and Evon, because his agreement settled any claim
to attorney’s fees. Instead, this case is like Campion: while
Brady expressly did not resolve the class claims, he did not
retain a financial stake in them. Accordingly, as in Campion,
those claims are moot.
This holding makes practical sense. When Brady sued
AutoZone, he could bring only his own claims. Although he
invoked Federal Rule of Civil Procedure 23 and asked the
district court to hear the claims of putative class plaintiffs,
the court denied certification. Brady then settled his own
claims. Having done so, he would ordinarily have no interest
in the claims of the putative class plaintiffs. Any financial
interest Brady might have in helping them pursue their
claims would therefore have to stem from an agreement.
BRADY V. AUTOZONE STORES 7
Because Brady has pointed to no such agreement, he “lack[s]
a legally cognizable interest in the outcome” of the class
claims, rendering those claims moot. Gordon, 849 F.2d
at 1244 (internal quotation marks omitted).
Brady’s arguments to the contrary are unpersuasive.
Brady first argues that this case is not moot because he could
still receive a class representative enhancement award. But
our cases require us to consider the “language of [the]
settlement agreement.” Campion, 775 F.3d at 1146 (internal
quotation marks omitted). And here, unlike in Narouz, there
is no indication that Brady can or will receive an
enhancement award. We cannot assume that Brady
maintains a financial stake in the outcome of this case merely
because of a potential enhancement award. Narouz,
591 F.3d at 1265; see also Espenscheid v. DirectSat USA,
LLC, 688 F.3d 872, 874 (7th Cir. 2012) (holding that class
claims were not moot after the settlement of individual
claims because of “a provision of the settlement agreement”
allowing for “an incentive award” to class representatives).
Brady also argues that, unless the class is certified, he
will be liable to his attorneys for $35,562.73 in advanced
litigation costs. He cites Washington Rule of Professional
Conduct 1.8(e)(2), which provides an exception to the
general rule that a lawyer not give financial assistance to a
client by allowing for contingency arrangements in “matters
maintained as class actions.” According to Brady, this Rule
means that the costs accrued in this litigation are his
responsibility—not his attorneys’—unless the class is
certified.
Whatever the meaning of this Rule, it does not control
Brady’s financial obligations. And there is no evidence of
those obligations here. Brady has submitted no document—
such as an engagement letter or an affidavit—showing an
8 BRADY V. AUTOZONE STORES
agreement to pay costs unless the class is certified. Nor has
he cited any statute or rule imposing a legal obligation on
him in the absence of a written agreement. Absent proof that
Brady is legally obligated to pay the advanced legal costs
unless the class is certified, those costs do not provide Brady
a financial stake in the outcome of the class claims.
In sum, we hold that when a class representative
voluntarily settles his individual claims, he must do more
than expressly leave class claims unresolved to avoid
mootness. A class representative must also retain—as
evidenced by an agreement—a financial stake in the
outcome of the class claims. Absent such a stake, a class
representative’s voluntary settlement of individual claims
renders class claims moot.
This appeal is DISMISSED as moot.