Efrain Munoz v. Phh Corporation ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 24 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
EFRAIN MUNOZ; et al., No. 22-15407
Plaintiffs-Appellants, D.C. No.
1:08-cv-00759-MMB-BAM
v.
PHH CORPORATION, a Maryland MEMORANDUM*
corporation; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of California
M. Miller Baker, International Trade Judge, Presiding
Submitted February 17, 2023**
San Francisco, California
Before: WARDLAW, NGUYEN, and KOH, Circuit Judges.
Plaintiffs appeal the district court’s denial of their motion to modify a final
pretrial order in this certified class action alleging that Defendants violated the
Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607. As the
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
parties are familiar with the facts of this case, we do not recite them here. We have
jurisdiction under 28 U.S.C. § 1291. Reviewing for abuse of discretion, Johnson v.
Mammoth Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992), we reverse and
remand.
The final pretrial order “established the standard for seeking relief from the
order.” Wong v. Regents of Univ. of Cal., 410 F.3d 1052, 1060 (9th Cir. 2005). To
introduce an undisclosed witness or exhibit, Plaintiffs must satisfy either one of
two independent provisions of the final pretrial order. Under the first provision,
Plaintiffs are required to “demonstrate[] that the witness is for the purpose of
rebutting evidence that could not be reasonably anticipated at the pretrial
conference” and “demonstrate[] that the exhibit is for the purpose of rebutting
evidence that could not have been reasonably anticipated.”
The district court abused its discretion in barring under this first provision
one witness and one exhibit that Plaintiffs sought to introduce as evidence of
economic injury for purposes of Article III standing. Plaintiffs proffered this
evidence of economic injury in light of the Supreme Court’s intervening decision
in TransUnion v. Ramirez, 141 S. Ct. 2190 (2021), which was decided four weeks
after the final pretrial conference. Prior to TransUnion, the district court held on
summary judgment that Plaintiffs were not required to present such evidence
because their alleged informational injury was sufficient to satisfy the injury-in-
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fact requirement of Article III standing. Munoz v. PHH Mortg. Corp., 478 F.
Supp. 3d 945, 983–84 (E.D. Cal. 2020). The operative complaint alleged that
Defendants “purposefully provided neither a meaningful disclosure nor a
meaningful choice to its borrowers regarding its captive reinsurance
arrangements.” Id. at 983 (citation omitted). Because this informational injury
“directly implicat[ed] one of the harms identified by and targeted for elimination
by Congress,” id. (citing 12 U.S.C. §§ 2603, 2604, 2607(c)), the district court
relied on Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), to conclude that Plaintiffs
“need not allege any additional harm beyond the one Congress has identified,”
Munoz, 478 F. Supp. 3d at 982 (quoting Spokeo, 578 U.S. at 342). Based on this
ruling, the parties represented in their joint pretrial statement that, as to Article III
standing, the sole disputed factual issue for trial concerned proof of the alleged
informational injury alone. The district court adopted the parties’ affirmative
representations in its final pretrial order, which did not list proof of economic
injury as a trial issue.
However, after the pretrial conference, TransUnion required Plaintiffs to
further prove “downstream consequences” from their alleged informational injury
because an “asserted informational injury that causes no adverse effects cannot
satisfy Article III.” 141 S. Ct. at 2214 (citations omitted). Because TransUnion’s
intervening change in the law foreclosed Plaintiffs’ ability to proceed to trial on an
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informational injury theory of standing, Plaintiffs could not have reasonably
anticipated the need for their undisclosed evidence of economic injury. Indeed,
Defendants conceded below that TransUnion changed the law such that Plaintiffs
could no longer rely on an informational injury without also proving adverse
effects on a classwide basis.
Plaintiffs could not have reasonably anticipated the need for evidence of
economic injury five years prior to the final pretrial conference as a result of
Spokeo. As the district court’s summary judgment ruling recognized, Spokeo left
open the door for Plaintiffs’ alleged informational injury alone to confer Article III
standing. Munoz, 478 F. Supp. 3d at 982–83. Moreover, Plaintiffs were entitled to
rely on the district court’s summary judgment decision and the subsequent final
pretrial order, both of which made clear that evidence of economic injury was not
required for standing purposes. Cf. Leddy v. Standard Drywall, Inc., 875 F.2d 383,
386 (2d Cir. 1989) (“Once a district judge issues a partial summary judgment order
removing certain claims from a case, the parties have a right to rely on the ruling
by forbearing from introducing any evidence . . . in regard to those claims.”).
Because TransUnion’s effect on Plaintiffs’ ability to prove standing could
not have been reasonably anticipated at the pretrial conference, and Plaintiffs
justifiably relied on the district court’s summary judgment ruling and the final
pretrial order allowing them to proceed to trial on an informational injury alone,
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the district court abused its discretion in barring their evidence under the first late
disclosure provision of the final pretrial order.1
REVERSED and REMANDED for further proceedings.
1
In light of our conclusion, we need not reach Plaintiffs’ other arguments that the
district court erred in concluding that Plaintiffs did not meet the requirements of
the second late disclosure provision and in declining to modify the final pretrial
order under Fed. R. Civ. P. 16(e).
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