Opinion
Civil Action No. 01-2427-CM.
March 2, 2005
MEMORANDUM AND ORDER
Plaintiffs brought this case alleging that defendant Deluxe Financial Services, Inc. (Deluxe) discriminated against plaintiffs because of their race, African-American, in violation of Title VII of the Civil Rights Act as Amended, 42 U.S.C. § 2000 et seq., and 42 U.S.C. § 1981.
This matter comes before the court on Deluxe's Motion to Enforce Judgment (Doc. 350), class plaintiffs' Cross Motion to Enforce Individual Settlements or, in the Alternative, Motion for Leave to Provide Notice of Settlement to Putative Class Members (Doc. 352), plaintiffs Antrina M. Carter and Damon T. Carter's Motion for Settlement Approval of Individual Settlements and for Leave to Provide Notice of Settlements to Putative Class Members (Doc. 362), class plaintiffs' Motion to Vacate Stipulations of Dismissal (Doc. 369), class plaintiffs' Motion to Substitute Party (Doc. 376), class plaintiffs' Amended Motion to Substitute Party or in the Alternative Motion to Intervene (Doc. 382), and Deluxe's Motion for Leave to File a Sur-Reply Memorandum in Opposition to Amended Motion to Add Parties or to Intervene (Doc. 388).
Also pending before the court is plaintiffs' Motion to Certify Class (Doc. 296), Deluxe's Motion to Strike Milliken Report and Opinions Offered in Support of Class Plaintiffs' Motion for Class Certification (Doc. 303), Deluxe's Motion to Strike Report of Charles Krider Offered in Support of Class Plaintiffs' Motion for Class Certification (Doc. 305), Deluxe's Motion for Leave to File a Sur-Reply Memorandum in Opposition to Plaintiff's Motion for Class Certification (Doc. 326), and plaintiffs' Motion for Leave to File Out of Time (Doc. 330).
I. Background Facts
Plaintiffs Stanley K. Aikens, Ramell L. Bailey, Antrina M. Carter, Damon T. Carter, Reginald J. Dockery and Karen M. Madison filed their original complaint on August 23, 2001. Plaintiffs filed an amended complaint on October 11, 2001, a second amended complaint on March 6, 2002, and a third amended complaint on July 2, 2002. With each amended complaint, plaintiffs added new claims and/or plaintiffs to the case. Plaintiffs filed their fourth amended complaint, alleging individual and class claims against Deluxe, on April 4, 2003. At that time, the named plaintiffs included the six original plaintiffs (Aikens, Bailey, A. Carter, D. Carter, Dockery, and Madison) and eight additional plaintiffs: Clifford McIntosh, Reginald Owens, Paul Williams, Gina Harris, Marvin Kirkwood, Gracie B. Caldwell, Patricia D. Ford, and Patrick Douglass.
Plaintiffs' fourth amended complaint alleged as individual claims: disparate treatment in violation of Title VII and § 1981 (Count I), hostile work environment in violation of Title VII and § 1981 (Count II), and retaliation in violation of Title VII and § 1981 (Count III). On each of the individual claims, plaintiffs requested damages in excess of $500,000 for back pay, front pay, prejudgment interest, compensatory damages, punitive damages, as well as all costs, expenses, expert witness fees and expenses, and attorney's fees. The fourth amended complaint alleged as class claims: promotion and hiring decisions in violation of § 1981 (Count IV), discrimination in compensation (Count V), discrimination in promotion (Count VI), and failure to hire (Count VII). On the class claims, plaintiffs requested that the court: (1) enter a judgment that the acts and practices of Deluxe are in violation of the laws of the United States; (2) award plaintiffs and all class members lost wages, including lost fringe benefits and back pay; (3) award plaintiffs and all class members compensatory and punitive damages; (4) award plaintiffs and all class members the costs of the action, including fees and costs of experts and attorney's fees; and (5) restrain Deluxe from retaliation against the plaintiffs or any other class member.
On July 9, 2003, Deluxe filed stipulations of dismissal with prejudice as to individual plaintiffs Harris and Kirkwood. On October 21, 2003, Deluxe filed a stipulation of dismissal with prejudice as to individual plaintiff Caldwell. On November 26, 2003, Deluxe filed stipulations of dismissal with prejudice as to individual plaintiffs Dockery and Ford. On February 3, 2004, Deluxe filed a stipulation of dismissal with prejudice as to individual plaintiff Douglass. In each instance, the individual plaintiffs dismissed both their individual and their class claims, and the stipulations were signed by counsel for Deluxe and counsel for the individual plaintiffs.
On March 1, 2004, the remaining named plaintiffs, Aikens, Bailey, A. Carter, D. Carter, Madison, McIntosh, Owens and Williams filed their motion to certify the class pursuant to Fed.R.Civ.P. 23. Plaintiffs proposed certification of a national class of all African-American non-exempt employees who were discriminatorily denied equal pay, promotions and training by Deluxe from January 1, 1998 to the present in eleven locations across the country. Deluxe opposed the certification. The certification motion was fully briefed in May 2004, but the court did not rule on the motion at that time. The parties had engaged in various mediation efforts throughout the litigation of this case, with intensified efforts throughout 2004.
All of the named plaintiffs worked at the Kansas City, Kansas, location.
Deluxe filed stipulations of dismissal with prejudice as to individual plaintiffs Aikens, Madison, and McIntosh on October 5, 2004. Deluxe filed stipulations of dismissal with prejudice as to individual plaintiffs Bailey, Owens, and Williams on October 18, 2004. Deluxe filed stipulations of dismissal with prejudice as to the remaining individual plaintiffs, A. Carter and D. Carter, on November 17, 2004. In each instance, the stipulations were signed by counsel for Deluxe and counsel for the individual plaintiffs, but not counsel for the uncertified class. Each of the individual plaintiffs agreed to dismiss their individual and class claims in settlement of the litigation.
II. Issues Surrounding Individual Plaintiffs' Settlements and Stipulations of Dismissal
Counsel for the uncertified class has moved to vacate the stipulations of dismissal as to Aikens, Bailey, A. Carter, D. Carter, Madison, McIntosh, Owens and Williams. Counsel for the uncertified class contends that no settlement has been reached as to the class claims as a whole, and thus the dismissals at issue, which are not signed by a representative on behalf of the class, do not comply with Fed.R.Civ.P. 41(a)(1)(ii). Counsel for the class also argues that the court should treat the putative class as if it was certified, and, pursuant to Fed.R.Civ.P. 23, analyze the validity of the individual plaintiffs' settlements and the effect that they have on the due process rights of the absent class members. Alternatively, counsel for the class has moved the court for an order pursuant to Fed.R.Civ.P. 23 directing that notice be provided to each absent class member: (1) advising that the named class representatives have settled their claims and withdrawn as class representatives; and (2) giving absent class members the opportunity to either object to the settlement, seek to be substituted as class representatives, or take other appropriate steps to protect their interests.
Counsel for the uncertified class also has moved, pursuant to Fed.R.Civ.P. 15(a) and 21, to add as parties (and class plaintiffs) Quentin Webb, John Parker, Jr., Herman Callands, Phillip Bell, Charles Gore and Anthony Thornton, all current or former Deluxe employees at the Kansas City, Kansas, location. Webb, Parker, Callands, Bell, Gore and Thornton all allege discrimination in pay, promotion and training and claim to be members of the putative class who have suffered from the same or similar discrimination as the original class plaintiffs. Alternatively, Webb, Parker, Callands, Bell, Gore and Thornton have moved to intervene in the case, pursuant to Fed.R.Civ.P. 24, in order to protect their interests as class members. Class counsel, on behalf of Webb, Parker, Callands, Bell, Gore and Thornton, contends that, if the court permits the original named plaintiffs to be dismissed from the case, the class would have no named representative. Thus, allowing them to step in as class representatives would ensure the continuation of the class and allow them to move forward with class certification. Otherwise, movants contend that they will have to file separate cases.
Deluxe contends that the class was never certified, and that the settlements by each of the individual plaintiffs of their individual and class claims have resolved the case in its entirety and were proper pursuant to Fed.R.Civ.P. 41. Deluxe also contends that court approval of the settlements is unnecessary pursuant to Fed.R.Civ.P. 23 because the class was never certified. Deluxe further argues that the uncertified class' arguments to vacate the settlements are without merit and that the uncertified class counsel's motions to add parties or intervene are moot since they were not filed until after all of the individual plaintiffs settled their claims. Deluxe highlights the apparent conflict between the individual plaintiffs and counsel for the uncertified class, who moved to vacate the stipulations of dismissal despite the individual plaintiffs' stated desire to resolve their claims with Deluxe and have the court approve the stipulations of dismissal.
Deluxe also points out that the addition of Webb, Parker, Callands, Bell, Gore and Thornton as plaintiffs and class representatives would add approximately 60 new claims to the case, all with factually varying circumstances that would require additional discovery. Deluxe claims that it would be prejudiced by the addition of six newly named plaintiffs at this late stage in the litigation, especially in light of the fact that Deluxe has settled all of the current plaintiffs' claims. Deluxe argues that Webb, Parker, Callands, Bell, Gore and Thornton and their claims were not unknown to counsel for the uncertified class and that they should have been added as named plaintiffs much earlier in the litigation. Deluxe further contends that the six new plaintiffs should file a new case or cases if they wish to pursue their claims.
The individual plaintiffs have requested that the court approve their individual settlements and stipulations of dismissal from the case. Each of the individual plaintiffs have stated their commitment to abide by their settlement agreements and confirm that they have settled all of their claims against Deluxe. The individual plaintiffs have taken the position that the court should order notice of the settlements to the putative class and permit newly appointed class representatives to continue in the litigation on behalf of the class.
The issues currently before the court revolve around the application of the procedural requirements of Fed.R.Civ.P. 23 to an uncertified class. Accordingly, the court first addresses the application of Rule 23 to this case and then addresses the issues regarding the stipulations of dismissal and the uncertified class members' motions to add parties or intervene.
III. Discussion
The decision whether to certify an action as a class action is committed to the discretion of the trial court. Reed v. Bowen, 849 F.2d 1307, 1309 (10th Cir. 1988). In exercising its discretion, the court must perform a "rigorous analysis" of whether the class satisfies the requirements of Rule 23. Gen. Tel. Co. of S.W. v. Falcon, 457 U.S. 147, 161 (1982). The court should make a determination to certify a class as early as is practicable and may alter or amend an order certifying a class any time before final judgment is entered. Fed.R.Civ.P. 23(c).
The plain language of Rule 23 indicates that the court has no duty or jurisdiction to approve a settlement in a case where a class is not certified. See Rule 23(e)(1)(A): "The court must approve any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class." (emphasis added). The Tenth Circuit has not addressed the issue of whether a putative class action constitutes a class action, subject to the procedural requirements of Rule 23, prior to certification. In an unpublished opinion, the Tenth Circuit has acknowledged that "Supreme Court dicta suggests that the procedural requirements established by Rule 23(e) come into play only after a class has been certified." Firestone v. Gallegos, 1999 WL 143859, at *2 n. 2 (10th Cir. March 17, 1999) (citing Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326, 332 n. 5 (1980); Sosna v. Iowa, 419 U.S. 393, 399 n. 8 (1975)). In the Firestone opinion, the Tenth Circuit also recognized that circuit authority is contrary to the Supreme Court dicta and that "[t]he majority rule holds that Rule 23(e) applies prior to class certification." Id.
In Firestone, the district court had concluded that, because the class was not certified at the time of dismissal, it was not a "class action" for purposes of Rule 23(e) and denied the plaintiffs' motion for approval of a stipulated dismissal pursuant to Rule 23(e), concluding that such approval was not required. Id. at *1-*2. The Tenth Circuit treated plaintiffs' motion for approval of the settlement as a motion under Rule 60(b) to reopen the judgment and upheld the district court's denial of relief pursuant to Rule 60(b). Id.
In light of the fact that this issue has not been settled by the Tenth Circuit, and because of the circumstances in this case, the court finds that the procedural requirements of Rule 23 should not be applied here. The court recognizes that, in different circumstances, at least one other court in this district has considered a class as certified even though a class certification motion had not been ruled upon. See Smith v. Josten's Am. Yearbook Co., 78 F.R.D. 154, 168 (D. Kan. 1978) (finding that "[t]he purpose of court scrutiny of proposed settlements is chiefly to protect nonparty members of the class from unfair or unjust settlements affecting their rights" and discussing abuses of the class action device).
However, having reviewed the parties' and the putative class' voluminous submissions in this case, the court does not believe that the parties have abused the class action device in reaching the settlements. The case is more than three years old. It appears the parties have spent significant time in court-sanctioned mediation sessions discussing the claims and working toward resolution of the issues — with regard to both the individual and the class claims. It is also apparent that counsel for the putative class has worked very diligently to maintain the class claims and would pursue the class action, even if it jeopardized the settlements already reached, and despite the named plaintiffs' stated desire to end the litigation with respect to their claims.
The court also finds no prejudice to the absent class members resulting from the settlements, or that lack of court approval of the settlements would prejudice the absent class members. It is undisputed that claims of the putative class are tolled during pendency of the class certification. See Crown, Cork Seal Co., Inc. v. Parker, 462 U.S. 345, 354-55 (1983) (holding that the commencement of a class action suspends the applicable statute of limitations for all asserted members of the putative class until a class certification decision is made). Thus, the absent class members may file separate actions to protect their claims within any time remaining in the applicable statute of limitations. Moreover, since no class has been certified, "the dismissal does not have a res judicata effect against the interests of absent class members." Firestone, 1999 WL 143859 at *2 (citing Diaz v. Trust Territory of the Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989)).
Neither the named plaintiffs who have requested approval of their stipulations of dismissal, nor the putative class members who have moved to vacate the stipulations of dismissal, have alleged any real harm to the absent class members by the settlements of the individual plaintiffs. Rather, the putative class members claim that they will be prejudiced by being forced to file new litigation and a motion to certify the class instead of having this court rule on the pending motion for class certification.
While filing a new lawsuit may be inconvenient to the putative class members, it does not result in prejudice. Notably, Webb, Parker, Callands, Bell, Gore and Thornton's claims add additional facts and claims to the issues already before the court that would require additional discovery and briefing of the class certification motion. The class action claims have evolved with the proposed fifth amended complaint. Arguably, adding all of the new claims, facts and theories to the existing lawsuit would be prejudicial to Deluxe.
Moreover, the court believes that it may be difficult to obtain class certification in this case because of the type of claims alleged, the very individualized nature of the facts with regard to each plaintiff, and because the primary relief the plaintiffs seek is monetary damages. See e.g. Monreal v. Potter, 367 F.3d 1224 (10th Cir. 2004) (upholding district court's determination that race and national origin discrimination and retaliation claims did not satisfy requirements of class action rule and that class action was inappropriate where plaintiffs failed to point to one particular policy that applied to the entire class and could be the basis for class-wide injunctive or declaratory relief, when claim for injunctive and declaratory relief was subsidiary to claim for monetary damages).
Accordingly, because the court has found that the requirements of Rule 23 do not apply to this case, the parties need not seek court approval of the individual plaintiffs' settlements, and there is no need to provide notice of the settlements to putative class members.
With regard to the putative class counsel's argument that the stipulations of dismissal were invalid without signature of counsel for putative class plaintiffs, the court finds no merit to the argument. At the time that Deluxe filed the joint stipulations of dismissal, the only parties to the case were Deluxe and the individually named plaintiffs, who had made class action allegations. No class had been defined or certified by the court, and the class itself had not become a party to the lawsuit. Accordingly, signature of a class representative or counsel for the class was not necessary to meet the requirements of Rule 41(a)(1)(ii) (requiring that stipulation of dismissal be signed by all parties who have appeared in the action).
Further, because all of the plaintiffs had filed stipulations of dismissal as to all of their claims before counsel for the putative class filed the motions to substitute parties or to intervene, the motions are moot. The filing of the stipulations of dismissal with prejudice as to A. Carter and D. Carter's claims on November 17, 2004, resolved any remaining claims in the case. Accordingly, the court has no authority to add new parties or to grant the putative class counsel's motion to intervene since those motions were filed after the final stipulations of dismissal.
IT IS THEREFORE ORDERED that Deluxe's Motion to Enforce Judgment (Doc. 350) is denied as moot, in light of the filing of A. Carter and D. Carter's stipulations of dismissal on November 17, 2004. IT IS FURTHER ORDERED that class plaintiffs' Motion to Vacate Stipulations of Dismissal (Doc. 369) is denied.
IT IS FURTHER ORDERED that class plaintiffs' Cross Motion to Enforce Individual Settlements or, in the Alternative, Motion for Leave to Provide Notice of Settlement to Putative Class Members (Doc. 352), class plaintiffs' Motion to Substitute Party (Doc. 376), and class plaintiffs' Amended Motion to Substitute Party or in the Alternative Motion to Intervene (Doc. 382) are all denied as moot.
IT IS FURTHER ORDERED that plaintiffs Antrina M. Carter and Damon T. Carter's Motion for Settlement Approval of Individual Settlements and for Leave to Provide Notice of Settlements to Putative Class Members (Doc. 362) is denied.
IT IS FURTHER ORDERED that Deluxe's Motion for Leave to File a Sur-Reply Memorandum in Opposition to Amended Motion to Add Parties or to Intervene (Doc. 388) is denied as moot.
IT IS FURTHER ORDERED that plaintiffs' Motion to Certify Class (Doc. 296), Deluxe's Motion to Strike Milliken Report and Opinions Offered in Support of Class Plaintiffs' Motion for Class Certification (Doc. 303), Deluxe's Motion to Strike Report of Charles Krider Offered in Support of Class Plaintiffs' Motion for Class Certification (Doc. 305), Deluxe's Motion for Leave to File a Sur-Reply Memorandum in Opposition to Plaintiff's Motion for Class Certification (Doc. 326), and plaintiffs' Motion for Leave to File Out of Time (Doc. 330) are all denied as moot.
IT IS FURTHER ORDERED that this case is dismissed.