Cruz-Alvarez and Forman Examine Recent Decertification of Class Action After Jury Award

Shook, Hardy & Bacon Miami Partner Frank Cruz-Alvarez and Associate Rachel Forman discuss the proceedings of Mazzei v. The Money Store et al in an August 9 Washington Legal Foundation article, “Second Circuit Upholds Decertification of Class Action After Jury Award.”

In their article, the authors offer an analysis of the U.S. Court of Appeals for the Second Circuit’s decision to affirm a district court’s ruling to decertify a class action after jury award. In Mazzei v. Money Store, “the plaintiff … sued the defendants, purporting to represent a putative class of borrowers, for breach of contract based on the defendants’ alleged violation of the mortgage agreement by imposing post-acceleration late fees.” The jury found in favor of the plaintiff and the class, but during trial the defendants “learned that privity of contract did not exist between certain absent class members and The Money Store.” Therefore, the defendants moved pursuant to “Rule 23(c)(1)(C) to decertify the class on the ground that the plaintiff failed to prove class-wide privity of contract between The Money Store and the borrowers whose loans it only serviced, but did not actually own.”

The district court granted the defendants’ motion, and on appeal “the Second Circuit affirmed the district court’s decision to decertify the class for plaintiff’s failure to prove typicality and predominance, and using its newly declared standard held that the jury’s finding that the plaintiff established privity of contract between the class members and the defendants was at least ‘seriously erroneous.’” Cruz-Alvarez and Forman find that “the Mazzei opinion effectively confirms two things: (1) that a class action plaintiff bears the burden of proving that its putative class comports with the requirements of Rule 23 well beyond the phase of class certification; and (2) all is not lost for defendants in the fight for decertification after a jury renders an unfavorable verdict.”

The authors add, “Prudent defense counsel may be wise to reconsider an early settlement strategy and continue to develop evidence and argument to support decertification while the parties litigate the merits of the case through to trial.”