November 07, 2018

Fourth Circuit: No Presumption of Timeliness Where One Class Action Plaintiff Moves to Intervene in Another Class Action Prior to the Opt-Out Deadline

Adam E. Polk – July 6, 2018

On May 17, 2018, the Fourth Circuit Court of Appeals held in Scott v. Bond that a class action plaintiff does not have an automatic right to intervene in a parallel class action, where the intervention motion is not timely. The Scott decision is a departure from the rule in the Third Circuit, which recognizes a presumption of timeliness for intervention motions filed by class members before the opt-out deadline.

The Scott decision arises out of two parallel class actions, each of which centers on the same theory of alleged misconduct. Both plaintiffs alleged that Cricket Wireless sold Code Division Multiple Access phones after it merged with AT&T knowing that such phones would be inoperable on AT&T’s wireless network. Tim Bond filed the first class action in federal court in March 2015, alleging state law claims. Michael Scott then filed an overlapping class action in September 2015 in state court, alleging one claim under the Magnusson-Moss Warranty Act. Cricket removed Scott’s case to federal court, and, in November 2016, related the Scott action to the first filed Bond action. In February 2017, pursuant to stipulation, Bond amended his complaint to add a Magnusson-Moss Warranty Act count. In August 2017, Cricket sent a letter to the court in the Bond case, advising that the parties had reached a proposed settlement that would also cover the claims in the Scott case.

On receiving notice of the Bond settlement, Scott filed a motion to intervene in the Bond case pursuant to Rule 24(a). The district court denied the motion as untimely, given that Scott’s case had been related to Bond’s in November 2016, and Scott had been aware that the cases alleged the same claims since February 2016 (when Bond amended to add the Magnusson-Moss count).

Scott appealed, arguing primarily that as an absent class member, he had no obligation to intervene before the settlement opt-out deadline. Emphasizing the need for fair notice to absent class members who are otherwise under no duty to take note of the lawsuit, Scott argued that the court must presume the timeliness of a motion to intervene filed by a class member before the opt-out deadline under the Third Circuit’s decision in Wallach v. Eaton Corp., 837 F.3d 356, 372, 374 (3d Cir. 2016).

The Fourth Circuit declined to follow Wallach, however, noting the need to avoid “derailing a lawsuit within sight of the terminal.” The Fourth Circuit, moreover, distinguished Wallach on grounds that the absent class member presumption of timeliness was intended to ensure fair notice to those absent class members who were otherwise unaware of the class claims; not plaintiffs in competing class actions familiar with the procedural developments in the parallel proceeding.

 

Adam E. Polk is a partner with Girard Gibbs LLP in San Francisco, California.

Adam E. Polk – July 6, 2018