Dugas v. Trans Union Corp.

• Decision Date: 14 November 1996
• Docket Number: No. 96-30276,96-30276
• Citation: 99 F.3d 724
• Parties: Earl DUGAS, Jr., Plaintiff-Appellant, v. TRANS UNION CORPORATION, Defendant-Appellee. (Summary Calendar). United States Court of Appeals, Fifth Circuit
• Court: U.S. Court of Appeals — Fifth Circuit

Page 724

99 F.3d 724

65 USLW 2342

Earl DUGAS, Jr., Plaintiff-Appellant, v. TRANS UNION CORPORATION, Defendant-Appellee.

No. 96-30276

(Summary Calendar).

United States Court of Appeals,

Fifth Circuit.

Nov. 14, 1996.

Daniel A. Edelman, Edelman & Combs, Chicago, IL, Garth Jonathan Ridge, Baton Rouge, LA, for plaintiff-appellant.

Glenn Paul Orgeron, New Orleans, LA, Monica L. Thompson, Keck, Mahin & Cate, Chicago, IL, for defendant-appellee.

Appeal from the United States District Court for the Middle District of Louisiana.

Before DAVIS, EMILIO M. GARZA and STEWART, Circuit Judges.

STEWART, Circuit Judge:

Earl Dugas, Jr. appeals the district court's denial of class certification for claims brought under the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.). Before appealing the district court's adverse certification ruling, Dugas settled his individual and class claims with the defendant, Trans Union Corporation; Dugas did not reserve a right to appeal the certification ruling. Finding no jurisdiction, we dismiss the appeal.

BACKGROUND

Earl Dugas, Jr., on his own behalf and on behalf of a class, brought suit against Trans Union Corporation (Trans Union) alleging violations of the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.). Dugas subsequently moved the district court for class certification, but the district court declined to certify the class. Approximately one week later, Trans Union, pursuant to Fed.R.Civ.P. 68, offered to settle the case for $1,000. The settlement offer stated in pertinent part:

"In view of the Court's bench ruling denying class certification ... Defendant Trans, [sic ] Union Corporation ... pursuant to Rule 68 of the Federal Rules of Civil Procedure, hereby 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 and, reasonable attorney's fees as determined by the Court...."

Emphasis added. Dugas accepted Trans Union's offer of settlement in a one-sentence "ACCEPTANCE OF OFFER OF JUDGMENT." The acceptance read simply: "Plaintiff Earl Dugas, Jr. accepts Trans Union Corporation's Offer of Judgment dated May 8, 1995." The district court thereafter entered judgment accordingly. Dugas then timely filed this appeal challenging the district court's denial of class certification. ¹

Trans Union moves to dismiss this appeal on the ground that Dugas accepted their offer of settlement and that acceptance, argues Trans Union, without any reservation of a right to appeal the district court's denial of class certification, bars Dugas' appeal. Dugas on the other hand, argues first, that he did not really "settle" the case, and second, that a settlement of a class action suit by the representative of the class does not preclude Dugas from appealing the district court's decision denying class certification.

We hold that because Dugas voluntarily settled the entire action with Trans Union, voluntarily consented to entry of judgment, and did not reserve a right to appeal the adverse certification ruling, we have no jurisdiction to hear this appeal.

I. THE SETTLEMENT

We turn first to the issue of whether Dugas settled his case with Trans Union. Dugas argues that he "did not 'settle' his individual claim in any normal sense of the word: [Dugas'] acceptance of the offer of judgment merely expedited the judgment which the court would have entered anyway. Dugas is therefore akin to the plaintiff against whom judgment is entered over his objection, as opposed to one who voluntarily settles his claims at a 'compromise' level of damages."

We reject Dugas' argument for two reasons. First, at no time did Dugas object to the settlement or entry of judgment, and there is no evidence in the record suggesting that Dugas was pressured in any way to accept Trans Union's offer. Second, we reject Dugas' claim that § 1692k of the Fair Debt Collection Practices Act compelled the district court to enter a $1,000 judgment for Dugas. This fait accompli argument is belied by the plain terms of § 1692k, which provides in part:

any debt collector who fails to comply with any provision of this title ... with respect to any person is liable to such person in an amount equal to the sum of-- ...

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (I) such amount for each named plaintiff as could be recovered under subparagraph (A)....

Emphasis added. Contrary to Dugas' contention, § 1692k plainly states that the trial court "may" award $1,000 in damages. Thus, prior to Trans Union's offer to settle this case, there was no guarantee, as a matter of law, that the district court would enter judgment for Dugas in the amount of $1,000. In addition, there is no evidence in the record suggesting that the district court indicated in any way, prior to Trans Union's settlement offer, that he was determined to enter a $1,000 judgment in favor of Dugas. Under these facts, it is clear that Dugas settled his case with Trans Union. A contrary conclusion would render every class action settlement of this kind vulnerable to attack on appeal, thereby discouraging settlement.

II. THE APPEALABILITY OF THE ADVERSE CERTIFICATION RULING

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.

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.

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.

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.

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....

Id. at 339, 100 S.Ct. at 1174.

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.

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...