When Does an Unnamed Class Member Become a Party?
One of the unique issues in class action litigation is determining when, if ever, an absent class member becomes a party. In Day v. Persels & Associates, LLC, 729 F.3d 1309 (11th Cir. 2013), (Day v Persels) Miranda Day sued several debt management companies on behalf of herself and 125,000 consumers. Pursuant to 28 U.S.C. § 636(c)(1), Day, the putative class representative, and the defendants consented to adjudication of the claims by a magistrate judge, and later reached a proposed settlement agreement. Notice of the proposed settlement was sent to more than 98 percent of the putative class members, informing them of the procedure to object to the proposed settlement and of the date of the final fairness hearing before the magistrate judge. Six class members, including the Attorneys General of Connecticut, Florida, Maine, New York, and West Virginia objected. At the fairness hearing, the magistrate judge nevertheless certified the class, approved the settlement, and entered a final judgment. Id. at 1315-16.
One of the issues on appeal was whether absent class members are “parties” whose consent is required before a magistrate judge may enter a final judgment as contemplated by section 636(c)(1). Agreeing with the Third and Seventh Circuit Courts of Appeal, the Eleventh Circuit held that absent class members are not “parties” within the ordinary legal meaning of the term and, therefore, their consent is not required for adjudication before a magistrate judge. Id. at 1316. Citing to a litany of dictionaries, public acts, and restatements, the Court concluded that a “party” to an action “is a person whose name is designated on record as plaintiff or defendants” and means “one having the right to control proceedings, to make defense, to adduce and cross-examine witnesses, and to appeal from judgment.” Id. at 1317. Moreover, “[f]rom a practical standpoint, the inclusion of absent class members as parties under section 636(c) would virtually eliminate [section] 636(c) referrals to magistrate judges in all potential class actions, because it would de facto transform all such cases into opt-in style actions and fundamentally change the capacity of judgment…to bind both sides in the absence of express consents.” Id. at 1319.
All is not lost, however, for unnamed class members. The Eleventh Circuit pointed out that absent class members have at least three options to protect their rights against unwanted consent to a magistrate judge. First, they could apply to the district court to intervene under Federal Rule of Civil Procedure 24(a) and withhold their consent to proceed in front of a magistrate judge. Second, they could simply opt out of the settlement and thus not be bound by the settlement. Third, they could collaterally attack the decision to proceed under a magistrate judge on grounds of intra-class conflict.