Settling Doesn’t End Class Action, Court Rules

SAN FRANCISCO (CN) - Even though Allstate has agreed to a $20,000 settlement of claims it robo-called consumers' cellphones, the consumers should still have the opportunity to seek class certification, the Ninth Circuit ruled Tuesday.

Richard Chen and Florencio Pacleb sued the insurance company in 2013, claiming that Allstate made unsolicited automated calls to their cellphones in violation of the Telephone Consumer Protection Act.

Allstate then deposited $20,000 in full settlement of Pacleb's individual monetary claims in an escrow account "pending entry of a final district court order or judgment directing the escrow agent to pay the tendered funds to Pacleb, requiring Allstate to stop sending non-emergency telephone calls and short message services to Pacleb in the future and dismissing this action as moot."

On that basis, Allstate argued that the lawsuit should be dismissed as moot, but U.S. District Judge Phyllis Hamilton declined to do so.

The Circuit's three-judge panel affirmed Hamilton decision, finding that the precedent case Pitts v. Terrible Herbst Inc. does not allow a case to be dismissed as moot if a plaintiff is still able to seek class certification.

And even if the trial court were to enter judgment providing complete relief on Pacleb's individual claims for damages and injunctive relief before class certification, Pacleb can still seek such certification, the panel held.

Writing for the panel, Circuit Judge Raymond Fisher said in the 27-page opinion that, contrary to Allstate's contention, Pitts remains the law of the Ninth Circuit.

And even if Pitts were not controlling, Fisher said, "we would reject Allstate's attempt to moot this action before Pacleb had a fair opportunity to seek [class] certification."

He added, "That is, even if Allstate could moot the entire action by getting the district court to enter judgment in favor of Pacleb on his individual claims before he has had a fair opportunity to move for certification, we would decline Allstate's invitation to direct the district court to take that action."

Fisher said that Pacleb's individual claims are not moot "because he has not actually received all of the relief to which he is entitled on those claims," and it would be "inappropriate" for the trial court to enter a judgment under these circumstances.

"When a defendant consents to judgment affording complete relief on a named plaintiff's individual claims before certification, but fails to offer complete relief on the plaintiff's class claims, a court should not enter judgment on the individual claims, over the plaintiff's objection, before the plaintiff has had a fair opportunity to move for class certification," Fisher said.

He added that "a named plaintiff exhibits neither obstinacy nor madness by declining an offer of judgment on individual claims in order to pursue relief on behalf of members of a class."

Neither side's lead counsel immediately responded to an email requesting comment on Tuesday morning.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit