Last month the Second Circuit affirmed a district court's decision to decertify a plaintiff class after a jury had awarded the class approximately US$32mm, plus prejudgment interest. In Mazzei v. The Money Store, Docket No. 15-2024 (2d Cir. July 15, 2016), a borrower sued The Money Store, TMS Mortgage Inc., and HomEq Servicing Corp for improperly charging late fees on missed mortgage payments that were not authorized by contract. The plaintiff won certification of a class of borrowers who had their loans owned or serviced by the defendants.

After the jury's verdict but before the court entered judgment, The Money Store moved to decertify the class under Federal Rule of Civil Procedure 23(c)(1)(C) on the grounds that the class was made up of two types of plaintiffs: (1) borrowers whose loans had been owned by The Money Store; and (2) borrowers whose loans had been serviced by The Money Store. Because only the first group of class members were in contractual privity with The Money Store, the class representatives could not satisfy Rule 23's typicality and predominance requirements.

Following the decertification order, the defendants were required to pay the plaintiff only US$133.80 as compensation for their improper late fees, and the rest of the plaintiff class recovered nothing. The Second Circuit declined to consider the plaintiff's argument that the district court should have substituted a new class representative who would not have violated the typicality requirement, because the plaintiff had failed to raise this argument prior to the appeal.