Deposit Guar. Nat'l Bank of Jackson v. Roper
445 U.S. 326 (1980)

Annotate this Case

U.S. Supreme Court

Deposit Guar. Nat'l Bank of Jackson v. Roper, 445 U.S. 326 (1980)

Deposit Guaranty National Bank of Jackson v. Roper

No. 78-904

Argued October 2, 1979

Decided March 19, 1980

445 U.S. 326

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

Respondents, holders of credit cards issued by petitioner bank, sued petitioner for damages in Federal District Court, seeking to represent both their own interests and those of a class of similarly situated credit card customers. The complaint, based on the National Bank Act, alleged that usurious finance charges had been made against the accounts of respondents and the putative class. The District Court denied respondents' motion to certify the class, ruling that the circumstances did not meet all the requirements of Federal Rule of Civil Procedure 23(b)(3). After the Court of Appeals denied respondents' motion for interlocutory appeal, petitioner tendered to each respondent the maximum amount that each could have recovered, but respondents refused to accept the tender. The District Court, over respondents' objections, then entered judgment in their favor on the basis of the tender and dismissed the action, the amount of the tender being deposited by petitioner in the court's registry. Respondents thereafter sought review of the class certification ruling, and the Court of Appeals concluded, inter alia, that the case had not been mooted by the entry of judgment in respondents' favor and reversed the adverse certification ruling.

Held: Neither petitioner's tender nor the District Court's entry of judgment in favor of respondents over their objections mooted their private case or controversy, and their individual interest in the litigation -- as distinguished from whatever may be their representative responsibilities to the putative class -- is sufficient to permit their appeal of the adverse certification ruling. Pp. 445 U. S. 331-340.

(a) In an appropriate case, appeal may be permitted from an adverse ruling collateral to the judgment on the merits at the behest of the party who has prevailed on the merits, so long as that party retains a stake in the appeal satisfying Art. III's case or controversy requirements. Here, neither the rejected tender nor the dismissal of the action over respondents' objections mooted their claim on the merits so long as they retained an economic interest in class certification. Pp. 445 U. S. 332-335.

(b) The denial of class certification is an example of a procedural ruling, collateral to the merits of a litigation, that is appealable after

Page 445 U. S. 327

the entry of final judgment. The denial of certification stands as an adjudication of one of the issues litigated. Respondents have asserted throughout this appellate litigation a continuing individual interest in the resolution of the class certification question in their desire to shift part of the costs of litigation to those who will share in its benefits if the class is certified and ultimately prevails. Thus, they are entitled to have this portion of the District Court's judgment reviewed. To deny the right to appeal simply because the defendant has sought to "buy off" the individual claims of the named plaintiffs would be contrary to sound judicial administration. Pp. 445 U. S. 336-340.

578 F. d 1106, affirmed.

BURGER, C.J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, REHNQUIST, and STEVENS, JJ., joined. REHNQUIST, J., post, p. 445 U. S. 340, and STEVENS, J., post, p. 445 U. S. 342, filed concurring opinions. BLACKMUN, J., filed an opinion concurring in the judgment, post, p. 445 U. S. 344. POWELL, J., filed a dissenting opinion, in which STEWART, J., joined, post, p. 445 U. S. 344.

MR. CHIEF JUSTICE BURGER delivered the opinion of the Court.

We granted certiorari to decide whether a tender to named plaintiffs in a class action of the amounts claimed in their individual capacities, followed by the entry of judgment in their favor on the basis of that tender, over their objection, moots the case and terminates their right to appeal the denial of class certification.

I

Respondents, holders of credit cards issued on the "BankAmericard" plan by petitioner Deposit Guaranty National Bank, sued the bank in the United States District Court for the Southern District of Mississippi, seeking to represent both

Page 445 U. S. 328

their own interests and those of a class of similarly aggrieved customers. The complaint alleged that usurious finance charges had been made against the accounts of respondents and a putative class of some 90,000 other Mississippi credit card holders.

Respondents' cause of action was based on provisions of the National Bank Act, Rev.Stat. §§ 5197, 5198, as amended, 12 U.S.C. §§ 85, 86. Section 85 permits banks within the coverage of the Act to charge interest "at the rate allowed by the laws of the State, Territory, or District where the bank is located." In a case where a higher rate of interest than allowed has been "knowingly" charged, § 86 allows a person who has paid the unlawful interest to recover twice the total interest paid. [Footnote 1]

The modern phenomenon of credit card systems is largely dependent on computers, which perform the myriad accounting functions required to charge each transaction to the customer's account. In this case, the bank's computer was programmed so that, on the billing date, it added charges, subtracted credits, added any finance charges due under the BankAmericard plan, and prepared the customers' statements. During the period in question, the bank made a monthly service charge of 1 1/2% on the unpaid balance of each account. However, customers were allowed 30 days within which to pay accounts without any service charge. If payment was not received within that time, the computer added to the customer's next bill 1 1/2% of the unpaid portion of the prior bill, which was shown as the new balance. The actual finance charges paid by each customer varied depending on the stream of transactions and the repayment plan selected. In addition, the effective annual interest rate paid by a customer would vary because the same 1 1/2% service charge was assessed

Page 445 U. S. 329

against the unpaid balance no matter when the charged transactions occurred within the 30-60-day period prior to the billing date. This 1 1/2% monthly service charge is asserted to have been usurious because, under certain circumstances, the resulting effective annual interest rate allegedly exceeded the maximum interest rate permitted under Mississippi law.

The District Court denied respondents' motion to certify the class, ruling that the circumstances did not meet all the requirements of Federal Rule of Civil Procedure 23(b)(3). [Footnote 2] The District Court certified the order denying class certification for discretionary interlocutory appeal, pursuant to 28 U.S.C. § 1292(b); the proceedings were stayed for 30 days pending possible appellate review of the denial of class certification.

The United States Court of Appeals for the Fifth Circuit denied respondents' motion for interlocutory appeal. The bank then tendered to each named plaintiff, in the form of an "Offer of Defendants to Enter Judgment as by Consent and Without Waiver of Defenses or Admission of Liability," the maximum amount that each could have recovered. The amounts tendered to respondents Roper and Hudgins were $889.42 and $423.54, respectively, including legal interest and court costs. Respondents declined to accept the tender and made a counteroffer of judgment in which they attempted to reserve the right to appeal the adverse class certification ruling. This counteroffer was declined by the bank.

Page 445 U. S. 330

Based on the bank's offer, the District Court entered judgment in respondents' favor, over their objection, and dismissed the action. The bank deposited the amount tendered into the registry of the court, where it remains. At no time has any putative class member sought to intervene either to litigate the merits or to appeal the certification ruling. It appears that, by the time the District Court entered judgment and dismissed the case, the statute of limitations had run on the individual claims of the unnamed class members. [Footnote 3]

When respondents sought review of the class certification ruling in the Court of Appeals, the bank argued that the case had been mooted by the entry of judgment in respondents' favor. In rejecting the bank's contention, the court relied in part on United Airlines, Inc. v. McDonald,432 U. S. 385 (1977), in which we held that a member of the putative class could appeal the denial of class certification by intervention, after entry of judgment in favor of the named plaintiff, but before the statutory time for appeal had run. Roper v. Conserve, Inc., 578 F.2d 1106 (CA5 1978). Two members of the panel read Rule 23 as providing for a fiduciary-type obligation of the named plaintiffs to act in a representative capacity on behalf of the putative class by seeking certification at the outset of the litigation and by appealing an adverse certification ruling. In that view, the District Court also had a responsibility to ensure that any dismissal of the suit of the named plaintiffs did not prejudice putative class members. One member of the panel, concurring specially, limited the ruling on mootness to the circumstances of the case, i.e., that, after filing of a class action, the mere tender of an offer of settlement to the named plaintiffs, without acceptance,

Page 445 U. S. 331

does not moot the controversy so as to prevent the named plaintiffs from appealing an adverse certification ruling.

Having rejected the bank's mootness argument, the Court of Appeals reviewed the District Court's ruling on the class certification question. It concluded that all the requisites of Rule 23 had been satisfied, and accordingly reversed the adverse certification ruling; it remanded with directions to certify the class and for further proceedings.

Certiorari was sought to review the holdings of the Court of Appeals on both mootness and class certification. We granted the writ, limited to the question of mootness, to resolve conflicting holdings in the Courts of Appeals. [Footnote 4] 440 U.S. 945.

II

We begin by identifying the interests to be considered when questions touching on justiciability are presented in the class action context. First is the interest of the named plaintiffs: their personal stake in the substantive controversy and their related right as litigants in a federal court to employ in appropriate circumstances the procedural device of a Rule 23 class action to pursue their individual claims. A separate consideration, distinct from their private interests, is the responsibility of named plaintiffs to represent the collective interests of the putative class. Two other interests are implicated: the rights of putative class members as potential intervenors, and the responsibilities of a district court to protect both the absent class and the integrity of the judicial process by monitoring the actions of the parties before it.

The Court of Appeals did not distinguish among these distinct interests. It reviewed all possible interests that, in its view, had a bearing on whether an appeal of the denial of certification should be allowed. These diverse interests are interrelated, but we distinguish among them for purposes

Page 445 U. S. 332

of analysis, and conclude that resolution of the narrow question presented requires consideration only of the private interest of the named plaintiffs.

A

The critical inquiry, to which we now turn, is whether respondents' individual and private case or controversy became moot by reason of petitioner's tender or the entry of judgment in respondents' favor. Respondents, as holders of credit cards issued by the bank, claimed damages in their private capacities for alleged usurious interest charges levied in violation of federal law. Their complaint asserted that they had suffered actual damage as a result of illegal acts of the bank. The complaint satisfied the case or controversy requirement of Art. III of the Constitution.

As parties in a federal civil action, respondents exercised their option as putative members of a similarly situated cardholder class to assert their claims under Rule 23. Their right to assert their own claims in the framework of a class action is clear. However, the right of a litigant to employ Rule 23 is a procedural right only, ancillary to the litigation of substantive claims. Should these substantive claims become moot in the Art. III sense, by settlement of all personal claims, for example, the court retains no jurisdiction over the controversy of the individual plaintiffs.

The factual context in which this question arises is important. At no time did the named plaintiffs accept the tender in settlement of the case; instead, judgment was entered in their favor by the court without their consent, and the case was dismissed over their continued objections. [Footnote 5] Neither the

Page 445 U. S. 333

rejected tender nor the dismissal of the action over plaintiffs' objections mooted the plaintiffs' claim on the merits so long as they retained an economic interest in class certification. Although a case or controversy is mooted in the Art. III sense upon payment and satisfaction of a final, unappealable judgment, a decision that is "final" for purposes of appeal does not absolutely resolve a case or controversy until the time for appeal has run. Nor does a confession of judgment by defendants on less than all the issues moot an entire case; other issues in the case may be appealable. We can assume that a district court's final judgment fully satisfying named plaintiffs' private substantive claims would preclude their appeal on that aspect of the final judgment; however, it does not follow that this circumstance would terminate the named plaintiffs' right to take an appeal on the issue of class certification.

Congress has vested appellate jurisdiction in the courts of appeals for review of final decisions of the district courts. 28 U.S.C. 1291. Ordinarily, only a party aggrieved by a judgment or order of a district court may exercise the statutory right to appeal therefrom. A party who receives all that he has sought generally is not aggrieved by the judgment affording the relief and cannot appeal from it. Public Service Comm'n v. Brashear Freight Lines, Inc.,306 U. S. 204 (1939); New York Telephone Co. v. Maltbie, 291 U.S. 645 (1934); Corning v. Troy Iron & Nail Factory, 15 How. 451 (1854); 9 J. Moore, Federal Practice

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