District Court May Decertify a Class After Jury Verdict and Before Final Judgment: Second Circuit | Practical Law

District Court May Decertify a Class After Jury Verdict and Before Final Judgment: Second Circuit | Practical Law

In Mazzei v. Money Store, the US Court of Appeals for the Second Circuit held that the district court did not violate the Seventh Amendment by decertifying a class after a jury verdict and before the entry of final judgment. The court also clarified the standard of deference for jury findings when considering decertification.

District Court May Decertify a Class After Jury Verdict and Before Final Judgment: Second Circuit

by Practical Law Litigation
Published on 19 Jul 2016 • USA (National/Federal)
In Mazzei v. Money Store, the US Court of Appeals for the Second Circuit held that the district court did not violate the Seventh Amendment by decertifying a class after a jury verdict and before the entry of final judgment. The court also clarified the standard of deference for jury findings when considering decertification.
On July 15, 2016, in Mazzei v. Money Store, the US Court of Appeals for the Second Circuit held that the district court did not violate the Seventh Amendment by decertifying a class after a jury verdict and before the entry of final judgment ( (2d Cir. July 15, 2016)). The court also clarified the standard of deference for jury findings when considering decertification.
The plaintiff, Joseph Mazzei, started a class action against The Money Store, TMS Mortgage Inc., and HomEq Servicing Corp. (The Money Store), alleging an overcharge of late fees on mortgages. The district court certified the class and the case proceeded to trial. The jury returned a verdict in favor of Mazzei and the class on the late fee claims, awarding Mazzei $133.80 and the class approximately $32 million plus prejudgment interest. After trial and before the entry of judgment, The Money Store moved to decertify the class under FRCP 23(c)(1)(C) or, in the alternative, for judgment as a matter of law under FRCP 50.
The US District Court for the Southern District of New York agreed that Mazzei's failure to prove classwide privity of contract defeated class certification on the grounds of typicality and predominance. The district court granted defendants' motion to decertify the class, and entered judgment in favor only of Mazzei.
On Mazzei's appeal, the Second Circuit affirmed. The court first noted that FRCP 23 and judicial precedent permit decertification post-verdict. The court then held that decertification after a jury verdict and before the entry of final judgment is consistent with the Seventh Amendment right to a jury trial because:
  • Mazzei will receive the damages on his individual claim that the jury awarded.
  • Any member of the decertified class may file an individual action, and presumably receive their own jury trial, under American Pipe & Construction Co. v. Utah (414 U.S. 538 (1978)). That case tolls the statute of limitations for absent class members until class certification is denied.
  • Decertifying the class here has the same effect as granting a motion for a new trial under FRCP 59(a). Granting a Rule 59 motion does not violate the Seventh Amendment.
  • This is a necessary judicial supervision of the jury.
  • The right of absent class members to a jury trial is protected by Rule 23(c)(1)(C)'s decertification procedure by ensuring that any class claim that proceeds to final judgment and will bind them is fairly and appropriately the subject of class treatment.
The Second Circuit also held that when a district court considers decertifying a class after a jury verdict, it must defer to any factual findings the jury made unless those findings were seriously erroneous, a miscarriage of justice, or egregious. The court noted that this is the same standard used for a Rule 59 motion for a new trial based on the weight of the evidence. The court rejected Mazzei's argument for Rule 50's legally insufficient evidence standard because decertification, unlike judgment as a matter of law, does not resolve the merits of the absent class members' claims.