Mazzei v. Money Store
829 F.3d 260
| 2d Cir. | 2016Background
- Mazzei, a mortgage borrower, sued The Money Store and related entities in a class action claiming post-acceleration late fees (and other fees) violated the loan Note; he obtained class certification under Rule 23(b)(3).
- The jury returned a verdict for Mazzei and the class on late-fee claims, awarding Mazzei about $134 and the class roughly $32 million (plus interest).
- After the verdict but before final judgment, The Money Store moved to decertify the class under Fed. R. Civ. P. 23(c)(1)(C) (and alternatively for JMOL under Rule 50), arguing Mazzei failed to prove class-wide privity for loans the defendant only serviced.
- The district court granted decertification, finding Mazzei had not introduced class-wide evidence of privity with respect to serviced-but-not-owned loans, and entered judgment only for Mazzei individually.
- On appeal the Second Circuit affirmed, holding post-verdict decertification is permitted, setting the standard for deference to jury findings, and concluding the district court did not abuse its discretion in decertifying.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a court decertify a class after a favorable jury verdict but before final judgment? | Mazzei: No—decertification after verdict improperly re-examines jury findings and conflicts with Rule 50/Seventh Amendment. | The Money Store: Yes—Rule 23 permits alteration before final judgment; court must monitor class suitability. | Court: Yes. Rule 23(c)(1)(C) authorizes post-verdict decertification; it does not violate the Seventh Amendment. |
| What standard must the district court apply to jury factual findings when deciding post-verdict decertification? | Mazzei: District court must be constrained (argues for Rule 50-level stringency). | The Money Store: District court may evaluate evidence for class issues; usual post-trial standards apply. | Court: Apply Rule 59 "seriously erroneous/miscarriage of justice/egregious" standard—defer to jury findings unless they meet that high threshold; for factual issues not necessarily decided by the jury, the court may find facts by preponderance. |
| Were Rule 23 requirements (typicality, predominance) satisfied given the evidence at trial? | Mazzei: Expert testimony and PSAs established class-wide privity and support typicality/predominance. | The Money Store: Mazzei failed to prove class-wide privity for loans it only serviced, undermining typicality and predominance. | Court: Affirmed decertification—trial evidence did not support class-wide privity; typicality and predominance therefore not met. |
| If class certification fails post-trial, must the court create subclasses rather than decertify? | Mazzei: The court should have narrowed the class or substituted a new representative. | The Money Store: Subclasses were not feasible because membership (owned vs. serviced loans) could not be identified from record. | Court: Decertification appropriate—no practicable basis to define or identify subclasses from the record. |
Key Cases Cited
- Sirota v. Solitron Devices, Inc., 673 F.2d 566 (2d Cir. 1982) (district court may decertify post-trial if Rule 23 requirements not met)
- Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 568 U.S. 455 (2013) (merits questions may be considered insofar as relevant to Rule 23 analysis)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (Rule 23(a) adequacy/typicality limits class scope)
- American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) (tolling of statutes of limitations for putative class members)
- Gasperini v. Center for Humanities, Inc., 518 U.S. 415 (1996) (post-trial judicial control over jury verdicts and Seventh Amendment considerations)
- Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010) (abuse-of-discretion standard for certification decisions)