A putative class representative that settles her individual claims thereby waives the right to appeal the earlier denial of class certification, the Seventh Circuit rules. Muro v. Target Corporation, No. 08-1256 (7th Cir. August 31, 2009). A copy of the Seventh Circuit's decision is attached. The Seventh Circuit therefore reaches the same conclusions as the Fourth and Eighth Circuits, resolving an issue left open in United States Parole Commission v. Geraghty, 445 U.S. 388 (1980). The Seventh Circuit's ruling concludes that the plaintiff is deprived of the right of appeal because there is no longer an actual case or controversy at all stages of the litigation.
In Muro, the plaintiff had applied for and received a "Guest Card" from a national retailer, which allowed her to charge items at the store. After incurring charges, she paid off the balance of the account and then requested that it be closed. Several years later, she received a store-branded Visa credit card that she had not requested or applied for. She never activated the card and did not incur any charges or fees associated with the Visa card. Plaintiff then brought an action against the retailer claiming it had violated the Truth In Lending Act ("TILA") by issuing her a credit card without a request from her. 15 U.S.C. §1642. She styled her complaint as a class action on behalf of all people who had received the store-branded Visa card without first requesting or applying for it, including the store's customers who had the store's Guest Card and who received the Visa card.
The proposed class consisted of two distinct groups: the first consisted of those who had Guest Cards and received the Visa card without having made a request, and the second consisted of those who did not have a Guest Card yet received the Visa card without requesting it. The district court denied the motion for class certification for two primary reasons: First, in her complaint, plaintiff alleged that she had voluntarily cancelled her Guest Card prior to receiving the Visa card. Since she was not a Guest Card holder at the time she received her Visa card, she could not represent those in the first group of the proposed class. Second, the district court concluded that plaintiff did not demonstrate that the number of potential claimants in the second group was so numerous that joinder of all such claims was impracticable.
Notwithstanding the denial of class certification, the court concluded that plaintiff had stated an individual claim for violation of Section 1642. Plaintiff subsequently settled her individual claim with the retailer and thereafter filed an appeal of the denial of her request for class certification.
In rejecting her appeal, the Muro court concluded that as a result of the voluntary settlement of her Section 1642 claim, which included payment of her legal fees and costs, the representative had divorced herself from the litigation and no longer retained a community of interests with the prospective class. As a result, there was no live case or controversy that could justify the certification of a class action for her TILA claims.