Class Action Complaint Properly Dismissed on Grounds that Tender by Defendant Made Prior to Court Ruling on Motion to Amend Complaint to Add New Party-Plaintiffs because Plaintiffs could have Filed Separate Lawsuit or Filed Original Lawsuit to Avoid Risk of Mootness Fifth Circuit Holds
A putative class action was filed against Ticor Title, Chicago Title and others, alleging that Ticor “had overcharged them to record documents related to their residential real estate closings and that the other Defendants were also liable under theories of vicarious liability.” Murray v. Fidelity Nat’l Fin., Inc., 594 F.3d 419, 420 (5th Cir. 2010). After it became apparent that the original plaintiffs had not conducted business with any of the named defendants, but rather with a closely-named but unrelated entity called “Ticor Title of San Antonio,” plaintiffs’ counsel filed a motion for leave to amend the class action complaint to name new individuals (the Murrays), who had conducted business with Chicago Title, as party-plaintiffs. Id. Before the district court ruled on the motion, Chicago Title tendered a check to the potential new plaintiffs as payment in full of their claim against it; nonetheless, the district court granted the motion for leave to amend and a new class action complaint was filed. Id. Defense attorneys moved to dismiss the class action complaint on the grounds that plaintiffs’ claims had been rendered moot by the tender, and moved for summary judgment on the ground that none of the defendants had conducted business with the original plaintiffs. Id., at 420-21. The district court granted the motions, and the new plaintiffs appealed the dismissal of their class action claims against Chicago Title. Id., at 421. The Fifth Circuit affirmed.
The thrust of the appellate argument was as follows: “because Rule 15(a)(2) requires plaintiffs to seek leave of the court before amending, plaintiffs are forced to inform defendants of proposed class representatives before those representatives are protected by Zeidman v. J. Ray McDermott & Co., 651 F.2d 1030 (5th Cir. 1981) and Sandoz v. Cingular Wireless LLC, 553 F.3d 913 (5th Cir. 2008),” and this “provides defendants the opportunity to ‘pick off’ would-be class representatives by tendering the amount claimed individually by the plaintiff, thereby effectively preventing the original plaintiffs from amending a complaint to add other plaintiffs who better represent the interests of the putative class.” Murray, at 421. The Circuit Court refused to extend its holding in Zeidman to situations governed by Rule 15(a)(2). Id., at 421-22. The Fifth Circuit explained that its prior cases need not be extended because the new plaintiffs “could have availed themselves of Zeidman and Sandoz by filing a separate complaint, which could have been consolidated with the original suit, had that suit not been moot.” Id., at 422. In other words, the prospective new plaintiffs “had a readily available means of preventing the defendants from mooting their suit.” Id. If they had pursued that course of action (or if they had been the original party-plaintiffs), then Chicago Title would not have had an opportunity to moot their claims, id. Accordingly, the Fifth Circuit affirmed the district court order dismissing the class action claims on the grounds that the new plaintiffs’ claims had been rendered moot. Id., at 423.