Eleventh Circuit Vacates Order, Holds Unnamed Plaintiffs Not Certified and Named Plaintiffs Lack Standing

In Spears-Haymond v. Wells Fargo Bank, No. 13-12082 (Feb. 10, 2015), the Eleventh Circuit ruled that the district court lacked jurisdiction to consider unnamed class members’ potential claims against Wells Fargo.

This action arises from the result of five separate putative class action cases.  The plaintiffs in Garcia v. Wachovia Corporation claimed that Wells Fargo illegally charged overdraft fees for their checking accounts.[1]  The customer agreement allows Wells Fargo to compel arbitration of disputes.  Since Wells Fargo did not move to compel arbitration, the district court found that Wells Fargo waived its right to compel arbitration.[2]  Subsequently, Wells Fargo filed conditional motions to compel arbitration for unnamed putative class members.  Wells Fargo appeals the district court’s denial of these conditional motions.[3]

The Eleventh Circuit vacated the lower court’s order for two reasons: the class of unnamed plaintiffs putative class members was not certified, and the named plaintiffs lack standing to defend the appeal the district court’s ruling on appeal.

At the time of the district court’s ruling, the unnamed plaintiffs had not been certified as a class.  The Eleventh Circuit emphasizes that “[c]ertification of a class is the critical act which reifies the unnamed class members and, critically, renders them subject to the court’s power.”[4]  The certification requirement is necessary to create an Article III case or controversy between the parties.[5]  Because the unnamed plaintiffs were not certified as a class, they present no controversy over which the district court has jurisdiction.  In addition, the unnamed plaintiffs had not yet filed any claims.  Therefore, there were no active claims for the court to adjudicate.  As the court cannot adjudicate hypothetical claims, the district court should not have ruled on the unnamed class members’ nonjusticiable potential claims.[6]  Therefore, Article III’s jurisdictional requirements precluded the court from adjudicating Wells Fargo’s conditional motions.

Article III also governs the named plaintiffs’ standing.  The named plaintiffs lack standing under Article III to seek affirmance of the district court’s provisional ruling that Wells Fargo has waived its right to compel arbitration.  The named plaintiffs would be third parties to any action between Wells Fargo and unnamed plaintiffs, and third parties generally lack standing.  All unnamed plaintiffs are fully able to assert their rights, and all have the option to utilize the provisional ruling that Wells Fargo waived arbitration.  Moreover, the named plaintiffs have already received a provisional ruling on their rights.  They have no stake in the outcome of any unnamed plaintiff’s potential future action.[7]

In sum, the Eleventh Circuit concluded that unnamed plaintiffs presented no justiciable case or controversy and the named plaintiffs lacked standing to appeal the lower court’s order.

[1] Garcia v. Wachovia Corp., 699 F.3d 1273, 1275 (11th Cir. 2012).  The five actions were filed against Wells Fargo and Wachovia.  Since Wells Fargo acquired Wachovia in 2009, the court refers to both banks as Wells Fargo.

[2] Id.

[3] Spears-Haymond v. Wells Fargo Bank, No. 13-12082, 7 (11th Cir. Feb. 10, 2015).

[4] Id, at 10.

[5] Id, at 11.

[6] Id.

[7] Id, at 14.

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