Stephen Stetson v. West Publishing Corporation

FILED
NOT FOR PUBLICATION NOV 07 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
STEPHEN STETSON, individual and all No. 08-55818
others similarly situated; et al.,
D.C. No. 2:08-cv-00810-R-E
Plaintiffs - Appellants,
v. MEMORANDUM *
WEST PUBLISHING CORPORATION, a
Minnesota Corporation doing business as
BAR/BRI; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued September 30, 2009
Submitted November 7, 2011
Pasadena, California
Before: PREGERSON, REINHARDT, and WARDLAW, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Stetson, et. al. (“the Stetson plaintiffs”) appeal the dismissal of their class
action complaint against West and Kaplan (collectively “Defendants”) for alleged
violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. We have
jurisdiction pursuant to 28 U.S.C. § 1291. We reverse.
1. The district court erred in concluding that the Schall lawsuit precludes the
Stetson plaintiffs from filing a claim for damages and prospective relief against
Defendants. Schall was brought on behalf of two individual law students. The
Stetson plaintiffs were not a party to that action. Because their interests in a
monetary recovery and injunctive relief were not represented by the Schall
plaintiffs, they cannot be bound by the disposition of that case.
2. The district court erred in concluding that the Rodriguez settlement
precludes the Stetson plaintiffs from bringing their claim. Rodriguez was brought
on behalf of an earlier class of purchasers. Because the Stetson plaintiffs’ interests
in a monetary recovery were not represented by the plaintiffs in Rodriguez, they
are not now barred from filing a claim for damages.1
Nor are the Stetson plaintiffs precluded from seeking injunctive relief for
alleged conduct that took place before that settlement was entered. They were not
1
The only Stetson plaintiffs whose claims for damages may be precluded
are those who purchased bar review courses in July 2006, because they may have
been included in the Rodriguez settlement.
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virtually represented by the Rodriguez plaintiffs, and thus are entitled to their day
in court. Because they were not part of the Rodriguez class, the Stetson plaintiffs
could not have participated in or controlled that litigation. See Irwin v. Mascott,
370 F.3d 924, 929 (9th Cir. 2004) (discussing doctrinal requirements for a finding
of virtual representation). Although they shared a lawyer and some interests with
the Rodriguez class, the Rodriguez settlement did not necessarily address all their
potential interests, nor are those similarities sufficient for a finding of virtual
representation. Without greater privity, “the mere fact that a litigant in another
case represented ‘essentially identical’ interests to those of the plaintiff [cannot]
pose a bar to a separate plaintiff pursuing his own cause of action.” Green v. City
of Tucson, 255 F.3d 1086, 1101 (9th Cir. 2001) (en banc) (citing Richards v.
Jefferson County, 517 U.S. 793, 796 (1996)), overruled on other grounds by
Gilbertson v. Albright, 381 F.3d 965, 968–69 (9th Cir. 2004) (en banc).
Although the Rodriguez settlement does not preclude the Stetson plaintiffs
from seeking prospective relief on the allegations contained in their complaint, the
Stetson plaintiffs must also satisfy the standing requirements of City of Los
Angeles v. Lyons, 461 U.S. 95, 101–02 (1983) (setting forth test for standing to
seek prospective relief). Plaintiffs’ claims that they will be injured by BAR/BRI’s
continuing monopolistic behavior have been adequately pled for standing
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purposes. We need not determine whether, as a result of the reforms in the
Rodriguez settlement, plaintiffs’ standing claim will ultimately fail on the merits.
3. The district court also erred in concluding that the Stetson plaintiffs’
complaint failed to satisfy the pleading requirements articulated in Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007). The factual allegations contained in the
Stetson plaintiffs’ complaint nudge their claims across the line from conceivable to
plausible. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). The complaint in
Twombly contained allegations of parallel conduct that were accompanied by
nothing more than naked and conclusory assertions that an anti-competitive
agreement had been made. Twombly, 550 U.S. at 551–55. By contrast, the
complaint here sets forth detailed facts about the dealings between BAR/BRI and
Kaplan – including those that took place shortly after Kaplan demonstrated an
interest in entering the bar review market, which allegedly resulted in BAR/BRI
paying Kaplan large annual sums to refrain from doing so. These facts set forth a
claim that, if proven, would entitle plaintiffs’ to relief. See id. at 556; see also
Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).
4. Because the parties have indicated their desire to resolve this matter
through settlement, we refer this appeal to the Ninth Circuit Mediation Office to
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explore a resolution through mediation. The mandate shall not issue until further
order of this Court.
REVERSED and REMANDED; issuance of mandate STAYED.
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