Putative class members aren’t “parties” until a class is certified. Therefore, Whole Foods’ motion to dismiss nonresident class members from this diversity action was premature.
Addressing a question left unresolved by the U.S. Supreme Court in Bristol-Myers Squibb Co. v. Superior Court of California, a divided D.C. Circuit panel held that a federal district court cannot dismiss putative class members in a not-yet-certified class action because, absent class certification, those individuals are not parties before the court. Consequently, the court below properly denied a motion to narrow the putative class to D.C. residents in a wage suit against Whole Foods Market. Reflective of the significance of the procedural issue to class litigation, the U.S. Chamber of Commerce and Washington Legal Foundation filed briefs in support of Whole Foods; Public Citizen filed an amicus brief in support of the plaintiffs. Judge Silberman dissented (Molock v. Whole Foods Market Group, Inc., March 10, 2020, Tatel, D.).
A group of Whole Foods employees alleged that the retailer manipulated its incentive-based bonus program in such a manner that employees lost wages they were due. They filed a diversity action in the federal court in the District of Columbia, asserting various state-law claims and seeking to represent a class of past and present employees in a nationwide class action. Whole Foods argued that the court lacked personal jurisdiction to address the claims of nonresident putative class members, and sought dismissal of their claims. However, the district court denied the motion, agreeing with the employees that the motion was premature because the putative class members were not yet parties to the action. Addressing the court’s denial of the motion de novo on interlocutory appeal, the D.C. Circuit affirmed.
The jurisdictional question. In Bristol-Myers Squibb Co. v. Superior Court of California, (2017), a class action suit outside the employment context, a group of 600 plaintiffs pursued a mass tort action in California state court against a pharmaceutical firm. But only 86 plaintiffs were California residents. The U.S. Supreme Court found the state court could not exercise specific jurisdiction over the nonresidents because their claims lacked an “adequate link” with the state. The High Court was careful, though, to limit its holding to the due process considerations of a state court exercising jurisdiction in this context, and expressly reserved the question “whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court” in a class action when a resident of the forum state seeks to represent a nationwide class that includes nonresidents.
Who is a “party”? The Supreme Court has defined a party to a litigation generally as “one by or against whom a lawsuit is brought or one who becomes a party by intervention, substitution, or third-party practice.” In a certified class action, as yet non-named class members “may be parties for some purposes and not for others.” Elsewhere, the High Court has explained that unnamed class members are “considered ‘part[ies]’ for the purposes of appealing the approval of [a] settlement,” and also for purposes of claim preclusion. However, the appeals court pointed out, “unnamed class members are treated as nonparties for other purposes, including jurisdictional ones. In diversity suits, for example, unnamed class members are nonparties for the complete diversity requirement of 28 U.S.C. § 1332.” By contrast, however, the Supreme Court made it clear in Smith v. Bayer Corp. (2011) that putative class members “are always treated as nonparties,” the appeals court said. (In Smith, the Court found that putative class members in a previous action were non-parties, and so could not be barred by claim preclusion from seeking class certification in another state action.).
To the majority, it was straightforward: “Putative class members become parties to an action—and thus subject to dismissal—only after class certification. It is class certification that brings unnamed class members into the action and triggers due process limitations on a court’s exercise of personal jurisdiction over their claims. Any decision purporting to dismiss putative class members before that point would be purely advisory.” In the case at hand, the class has yet to be certified, so Whole Foods’ motion to dismiss the nonresident putative class members was premature.”Only after the putative class members are added to the action—that is, ‘when the action is certified as a class under Rule 23,’ should the district court entertain Whole Foods’s motion to dismiss the nonnamed class members.”
Dissent. Judge Silberman, dissenting, argued that the majority had adopted the “flawed premise” that Whole Foods was looking to dismiss the nonresident putative class “members” and “their claims” for lack of personal jurisdiction. In fact, though, “the defendant moved to dismiss the claims in the named plaintiffs’ complaint,” citing Bristol-Myers in support of the notion that, under F.R.C.P. 12(b)(2), the claims should be limited to those alleged injuries that occurred within the District of Columbia. As Whole Foods argued, insofar as its motion to dismiss “did target the claims of putative class members, Whole Foods sought to do so independent of the putative class members themselves.”
As Silberman saw it, the majority had overlooked the “fundamental proposition that a named plaintiff attempting to bring a class action has two legally cognizable interests”—his own claims on the merits; and, the right to represent the class. In the case at hand, the defendant had mounted “a run-of-the-mill attack on class certification at the pleading stage” and as such, its motion was ripe. Therefore, Silberman would reach the Bristol-Myers question and hold, as a jurisdictional matter, that “class claims unrelated to Whole Foods’ contacts with the District of Columbia cannot proceed.”
Moreover, rebutting the notion that his reasoning “would have a devastating impact on the viability of class actions,” Silberman pointed out that the Whole Food employees quite simply could have pursued their nationwide class action against the Delaware corporation in its home state without implicating personal jurisdiction concerns; alternatively, they could file statewide class actions in their own respective states.
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