Toms v. Allied Bond & Collection Agency, Inc. , 179 F.3d 103 ( 1999 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ROBERT TOMS, on behalf of himself
and all others similarly situated,
Plaintiff-Appellant,
v.
ALLIED BOND & COLLECTION
AGENCY, INCORPORATED,
Defendant-Appellee.
No. 98-1942
NATIONAL ASSOCIATION OF CONSUMER
ADVOCATES; TRIAL LAWYERS FOR
PUBLIC JUSTICE; VIRGINIA TRIAL
LAWYERS' ASSOCIATION; VIRGINIA
POVERTY LAW CENTER,
INCORPORATED; AMERICAN CIVIL
LIBERTIES UNION OF VIRGINIA
FOUNDATION,
Amici Curiae.
Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Raymond A. Jackson, District Judge.
(CA-96-955-2)
Argued: April 9, 1999
Decided: June 1, 1999
Before WILKINSON, Chief Judge, and WIDENER and KING,
Circuit Judges.
_________________________________________________________________
Dismissed by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Widener and Judge King joined.
COUNSEL
ARGUED: Owen Randolph Bragg, HORWITZ, HORWITZ &
ASSOC., Chicago, Illinois, for Appellant. Carol Thomas Stone, JOR-
DAN, COYNE & SAVITS, L.L.P., Fairfax, Virginia, for Appellee.
ON BRIEF: Dale W. Pittman, LAW OFFICES OF DALE W. PITT-
MAN, Petersburg, Virginia, for Appellant. Jennifer R. Helsel, JOR-
DAN, COYNE & SAVITS, L.L.P., Fairfax, Virginia, for Appellee.
David Rubenstein, VIRGINIA POVERTY LAW CENTER, INC.,
Richmond, Virginia; Patricia Sturdevant, NATIONAL ASSOCIA-
TION OF CONSUMER ADVOCATES, Washington, D.C., for Amici
Curiae.
_________________________________________________________________
OPINION
WILKINSON, Chief Judge:
We face here the appeal of an adverse class certification ruling by
a plaintiff who settled his claim with defendants after class certifica-
tion was denied. Robert Toms filed individual and class claims
against Allied Bond & Collection Agency for alleged violations of the
Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq.
After the district court denied Toms' motion to certify a class, Toms
and Allied entered into a settlement. Toms now appeals the denial of
class certification. We hold that the settlement extinguished Toms'
interest in this litigation. The case is therefore moot, and we dismiss
this appeal.
I.
On March 27, 1996, Allied mailed Toms a collection letter for a
$42.98 debt Toms owed to his telephone company. As required by the
FDCPA, the letter included a "thirty-day validation notice" informing
Toms that he had the right to dispute the debt within thirty days after
receipt of the notice. See 15 U.S.C. § 1692g.
On April 10, 1996, Allied sent Toms a second letter again seeking
to collect the debt. This letter stated that "failure to receive full-
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payment within the next five (5) days will necessitate further action
to enforce collection." A friend paid the debt on Toms' behalf.
Toms then filed a complaint in the United States District Court for
the Eastern District of Virginia charging Allied with violating the
FDCPA. Toms alleged that the collection agency's five-day warning
letter "contradict[ed] and overshadow[ed]" its original thirty-day vali-
dation notice and thus violated the notice requirements of the Act. He
further claimed that Allied used false representations or deceptive
means in its attempt to collect the debt, also in violation of the
FDCPA. See 15 U.S.C. § 1692e. Toms sought certification of a class
consisting of all other Virginia residents who had received similar let-
ters from Allied in the prior year. The complaint requested declara-
tory relief, statutory damages, and attorneys' fees.
After a hearing, the district court held that Toms and his attorneys
did not satisfy the adequacy requirement for class certification. See
Fed. R. Civ. P. 23(a)(4). Examining Toms' contract for legal services,
the court determined that Toms would bear no responsibility for liti-
gation expenses if the class were certified. Concerned that this
arrangement put no plaintiff in control of the litigation and that it vio-
lated local ethics rules, see Virginia Code of Professional Responsi-
bility DR 5-103(B), the district court declined to certify the class.
Toms and Allied then negotiated a settlement of his claims, and the
district court entered a final order of dismissal. Toms now appeals the
denial of class certification.
II.
"To qualify as a case fit for federal-court adjudication, an actual
controversy must be extant at all stages of review . . . ." Arizonans for
Official English v. Arizona, 520 U.S. 43, 67 (1997) (internal quotation
marks omitted). On appeal, just as at trial, a party must hold a con-
crete interest in the litigation to invoke the jurisdiction of the court.
If the plaintiff loses that interest, the case becomes moot.
The Supreme Court has recognized two such interests in the class
action context. A plaintiff seeking class certification may assert an
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interest either in his individual substantive claim or in shifting the
costs of litigation to the remainder of the class. Deposit Guar. Nat'l
Bank v. Roper, 445 U.S. 326, 336-37 (1980).
These interests, however, are not inalienable -- a plaintiff can bar-
gain them away by negotiating a settlement agreement with the defen-
dant. Indeed, four circuits have held that a named plaintiff's
unqualified release of claims relinquishes not only his interest in his
individual claims but also his interest in class certification. See Dugas
v. Trans Union Corp., 99 F.3d 724, 727-29 (5th Cir. 1996); Walsh v.
Ford Motor Co., 945 F.2d 1188, 1191 (D.C. Cir. 1991); Shores v.
Sklar, 885 F.2d 760, 762-64 (11th Cir. 1989) (en banc) (release by
consent to judgment); Seidman v. City of Beverly Hills, 785 F.2d
1447, 1448 (9th Cir. 1986) (same). The question in this case, then, is
whether Toms released both his interests when he entered into his set-
tlement with Allied.
We hold that he did. The settlement agreement between Toms and
Allied is detailed and specific. Allied agreed to pay Toms two thou-
sand dollars -- twice the maximum statutory damages available under
the FDCPA. See 15 U.S.C. § 1692k. In consideration for that pay-
ment, Toms expressly relinquished "any and all" claims "of any kind
or nature whatsoever he may have individually." In addition, Toms
released "any and all" monetary claims "including any claims for
attorney's fees, costs, or compensation as class representative, he may
have as a member/representative of the putative class, which in any
way are related to or arise from those matters pleaded" in this litiga-
tion.
This two-pronged release tracks Toms' dual interests in this case.
With the first prong, Toms released "any and all" of his individual
claims against Allied. And with the second, he relinquished in equally
broad form "any and all" claims for costs or fees "as a mem-
ber/representative of the putative class." Since Toms' desire to shift
his costs to the uncertified class "relate[s] to" and "arise[s] from" the
matters pleaded in this case, this second prong releases Toms' interest
in fee shifting. As such, Toms released both of his interests in this
case.
Since the settlement agreement extinguishes Toms' entire interest,
this case is now moot. Toms contends, however, that the Supreme
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Court's twin decisions in Roper, 445 U.S. 326, and United States
Parole Commission v. Geraghty, 445 U.S. 388 (1980), dictate that he
be permitted to pursue this appeal. Neither Roper nor Geraghty, how-
ever, permit a plaintiff who has voluntarily released all interest in a
case to appeal a denial of class certification. Indeed, the named plain-
tiffs in each of those cases lost their interests involuntarily. See
Dugas, 99 F.3d at 727. In Roper, the district court entered a judgment
over the plaintiffs' objections imposing a settlement that those plain-
tiffs had rejected. Emphasizing the "importan[ce]" of this "factual
context," the Supreme Court held that the involuntary settlement of
the named plaintiffs' individual claims did not extinguish their inter-
est in class certification. Roper, 445 U.S. at 332-33. And in Geraghty
the court expressly reserved the question of whether a named plaintiff
who settles his case "may, consistent with Art[icle] III, appeal from
the adverse ruling on class certification." 445 U.S. at 404 n.10. Con-
sequently, neither case applies where, as here, the named plaintiff vol-
untarily relinquishes all of his interests in the action.
Toms also asserts that he may continue to pursue this case because
he reserved the right to appeal the class certification ruling in his set-
tlement agreement. Toms argues that other courts have indicated that
they might read even broad settlements to preserve plaintiffs' interests
in class certification if those settlements included such a reservation.
See Dugas, 99 F.3d at 728-29; Walsh, 945 F.2d at 1191-92. The set-
tlement agreement in this case, however, does not lend itself to such
an interpretation. As noted, the agreement includes a detailed, specific
release of both Toms' individual and his class-based interests. With-
out an interest in the litigation, no case or controversy remains. And
without the anchor of an underlying case or controversy, any
attempted reservation of Toms' right to appeal is simply without
effect. To the extent the agreement reserves the right to appeal "for
the putative class," no other member of that class has stepped forward
to invoke that right.
Toms contends that dismissing his appeal will permit defendants to
"buy off" named plaintiffs and thus prevent class actions from going
forward. The Supreme Court recognized this concern in Roper --
where, as noted, the plaintiffs had not given up their entire interest in
the litigation. See 445 U.S. at 339-40. Yet fear of buyoffs cannot lead
us to refuse to respect the customary processes of settlement when the
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results of those processes are clear. Here, Allied bargained to achieve
surcease in this litigation. Toms wished to secure for his claim what
he thought it was worth. And the resulting bargain extinguished
Toms' entire interest in this case. The salutary effect of the settlement
process is to resolve cases and controversies. Courts are not at liberty
to perpetuate such controversies when, by virtue of settlement, they
no longer exist.
III.
No party can create jurisdiction merely by agreement; the Constitu-
tion vests authority in the courts only where a concrete interest is
present. In negotiating a settlement with Allied, Toms received con-
sideration for and released his entire interest in this litigation. His per-
sonal stake has been extinguished, and no other plaintiff has stepped
forward to pursue the class claim. "[F]ederal courts do not sit simply
to bestow vindication in a vacuum." Zimmerman v. Bell, 800 F.2d
386, 390 (4th Cir. 1986). As this action no longer presents a case or
controversy, it must be
DISMISSED.
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