Deposit Guaranty National Bank of Jackson, Mississippi v. Roper et al.
445 U.S. 326 (1980)
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Rule of Law:
A defendant's tender of full satisfaction for a named plaintiff's individual claim does not moot a class action case, and the plaintiff retains the right to appeal an earlier denial of class certification due to their continuing personal economic stake in shifting litigation costs to the class.
Facts:
- Respondents Roper and Hudgins held credit cards issued by petitioner Deposit Guaranty National Bank.
- The bank assessed a 1.5% monthly service charge on unpaid balances.
- Roper and Hudgins alleged that this charge, under certain circumstances, resulted in an effective annual interest rate that was usurious under Mississippi law and violated the National Bank Act.
- The alleged usurious practices affected a potential class of approximately 90,000 other Mississippi credit card holders.
Procedural Posture:
- Roper and Hudgins sued Deposit Guaranty National Bank in the U.S. District Court for the Southern District of Mississippi, seeking to represent a class of credit card holders.
- The District Court denied the plaintiffs' motion for class certification.
- The U.S. Court of Appeals for the Fifth Circuit denied the plaintiffs' request for an interlocutory appeal of the certification denial.
- The bank tendered the maximum recoverable individual damages to Roper and Hudgins, which they declined to accept.
- Over the plaintiffs' objections, the District Court entered judgment in their favor for the tendered amounts and dismissed the action.
- Roper and Hudgins, as named plaintiffs (appellants), appealed the denial of class certification to the U.S. Court of Appeals for the Fifth Circuit.
- The Fifth Circuit, with the bank as appellee, rejected the bank's mootness argument and reversed the District Court's denial of class certification.
- The bank (petitioner) successfully petitioned the U.S. Supreme Court for a writ of certiorari, limited to the question of mootness.
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Issue:
Does a defendant's tender of the full amount of named plaintiffs' individual damages, followed by the entry of judgment in their favor over their objection, moot the case and terminate their right to appeal the denial of class certification?
Opinions:
Majority - Chief Justice Burger
No, the case is not moot. The entry of judgment in favor of the named plaintiffs after an unaccepted tender of their individual claims does not moot their right to appeal the denial of class certification. The plaintiffs retain a personal stake in the appeal, satisfying Article III's case-or-controversy requirement, through their economic interest in shifting a portion of the litigation costs to the larger class that would be formed upon successful certification. The denial of class certification is a procedural ruling collateral to the merits, and preventing an appeal would allow defendants to strategically 'pick off' named plaintiffs, thereby frustrating the objectives of the class-action mechanism and wasting judicial resources.
Concurring - Justice Blackmun
No, the case is not moot and the named plaintiffs can appeal the certification denial. However, the right to appeal should not be limited only to situations where the named plaintiff has a potential to recover attorney's fees or costs. The reasoning in the companion case, United States Parole Comm'n v. Geraghty, provides a broader basis for concluding that the controversy over class certification remains live even after the named plaintiff's individual claim expires.
Concurring - Justice Rehnquist
No, the case is not moot and the appeal should be allowed. The key distinction is that the defendant made an unaccepted offer of tender. As long as the named plaintiffs are not required to accept a tender that only covers their individual claims, they still have an ongoing dispute with the defendant because they have not received all the relief requested in their complaint (i.e., relief for the class). This preserves the Article III adversity and prevents the defendant from making the class certification issue unreviewable.
Concurring - Justice Stevens
No, the case is not moot because the unnamed members of a putative class should be considered parties to the controversy for Article III purposes from the moment the complaint is filed. The case remains a live controversy until a final determination is made that it cannot be maintained as a class action. Therefore, the mooting of the named plaintiff's individual claim is irrelevant to the court's jurisdiction to decide the appeal of the class certification issue.
Dissenting - Justice Powell
Yes, the case is moot. Once the named plaintiffs were tendered the full amount of their individual damages, they no longer possessed any personal stake in the outcome of the litigation, and the case became moot under Article III. The asserted interest in shifting litigation costs is too speculative and remote to constitute a legally cognizable interest sufficient to sustain a live case or controversy. Without an interested plaintiff before the court, federal courts lack jurisdiction, and the appeal should have been dismissed.
Analysis:
This decision significantly strengthens the class action device, particularly for consumer and other small-claim lawsuits. It prevents defendants from strategically defeating a class action by 'picking off' the named plaintiffs with settlement tenders before class certification can be litigated and appealed. The Court established that a named plaintiff's procedural interest in sharing litigation costs constitutes a sufficient personal stake to satisfy Article III's case-or-controversy requirement, thereby ensuring that the critical class certification decision remains reviewable. This holding preserves the utility of class actions as a tool for aggregating small claims that might otherwise be economically infeasible to litigate individually.
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