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T-Mobile Class Action Defense Cases–Smith v. T-Mobile: Ninth Circuit Dismisses Appeal In Labor Law Class Action Holding Settlement Of Individual FLSA Claims Without Opt-In Plaintiffs Rendered Appeal Moot

Settlement of State Labor Law Class Action and Federal Law FLSA Claims by Putative Class Action Plaintiffs, Following Denial of Conditional Certification of FLSA Collective Action and Before any Other Plaintiffs Agreed to Opt-In to Litigation, Rendered Moot Appeal from Denial of Motion for Conditional Certification Despite Effort to Preserve Right to Appeal Ninth Circuit Holds

Plaintiffs Mentha Smith and Justin Gossett, former sales representatives of T-Mobile, filed a putative class action against T-Mobile USA purportedly on behalf of 25,000 workers alleging labor law violations; specifically, the class action complaint “alleged that T-Mobile willfully failed to pay its hourly employees for all the hours they worked, forcing employees to work ‘off the clock’ and denying pay for hours worked during breaks.” Smith v. T-Mobile USA Inc., ___ F.3d ___ (9th Cir. June 15, 2009) [Slip Opn., at 7129, 7132]. The class action alleged violations of the federal Fair Labor Standards Act (FLSA), and of California’s Labor Code and Unfair Competition Law (UCL), id., at 7132. The district court denied plaintiffs’ first motion for conditional class action treatment of the FLSA claims, id., at 7132-33. However, the district court “tolled the statute of limitations until discovery was complete and the court could rule on a second motion for conditional certification.” Id., at 7133. Ultimately, the district court denied plaintiffs’ second motion for class action “collective” treatment of the FLSA claims, and plaintiffs settled their individual claims with T-Mobile. Id. The settlement included resolution of any attorney fee claim by plaintiffs, id., at 7133-34. Before finalizing this settlement, plaintiffs advised the district court that they desired to preserve their right to appeal its denial of their motion for conditional certification of an FLSA collective action, and the district court signed a stipulated judgment that purported to preserve plaintiffs’ right to appeal. Id., at 7134. Plaintiffs appealed, and the Ninth Circuit dismissed the appeal as moot.

The Ninth Circuit explained, “We review de novo whether a case is moot and whether plaintiffs have standing.” Smith, at 7135 (citations omitted). The Circuit Court also noted the well-established rule that “The case or controversy requirement of Article III restricts federal court jurisdiction to ‘disputes capable of judicial resolution.’” Id. (citation omitted). And under Supreme Court authority, “Generally, when a party settles all of his personal claims before appeal, an appeals court must dismiss the appeal as moot unless that party retains a personal stake in the case that satisfies the requirements of Article III.” Id. (citations omitted). The Ninth Circuit noted that it had not yet resolved the issue of “whether a Rule 23 class action plaintiff who settles his individual claims can preclude mootness by affirmatively preserving his claim to appeal in the settlement agreement and then asserting a procedural right to represent a class.” Id., at 7135 (citations omitted). But it again found it unnecessary to resolve this issue “because here, structural distinctions between a FLSA collective action and a Rule 23 class action foreclose appellants’ claims of a continuing personal stake.” Id. Put simply, “A plaintiff seeking FLSA collective action certification does not have a procedural right to represent a class in the absence of any opt-in plaintiffs.” Id., at 7136. Because plaintiffs settled their individual claims before any putative members of the class elected to opt-in to the class action litigation, the Ninth Circuit dismissed the appeal as moot, “join[ing] our sister circuits in holding that a FLSA plaintiff who voluntarily settles his individual claims prior to being joined by opt-in plaintiffs and after the district court’s certification denial does not retain a personal stake in the appeal so as to preserve our jurisdiction.” Id., at 7135-36 (citing Sandoz v. Cingular Wireless LLC, 553 F.3d 913, 915-19 (5th Cir. 2008); Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1247-49 (11th Cir. 2003)). The Circuit Court therefore dismissed the appeal, id., at 7137.

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