Court of Appeal: Release Bars Employee's Class Action

Watkins and Brown sued Wachovia Bank for mis-classification as exempt, as well as for individual wrongful termination and wage claims. There was a lot of litigation over arbitration, discovery and the like.

Brown ultimately settled her claims and signed a release, which covered all claims, including disputed claims for overtime. The trial court granted summary judgment against her, holding she no longer could participate in the class action. On the same day, the court denied the plaintiffs' motion for class certification of the wage claims.

Watkins settled her claims and signed a release as well. However, she purported to reserve the right to press any "class claims," and to receive an enhanced payment if the class claims were successful. She also reserved the right to appeal the denial of class certification.

On appeal, Brown argued that her release did not encompass claims for unpaid wages and that she was free to have signed the general release, but still maintain her wage claim. Relying on the recent decision in Chindarah v. Pick Up Stix, covered here, the court of appeal held that a release may properly include disputed claims for wages.

Then, the court turned to Watkins. The court held that Watkins could not preserve her right to appeal since she had signed a general release. Because parties cannot confer appellate jurisdiction and a court of appeal will not issue an opinion about a moot claim, the court dismissed the appeal. That left no appeal of the denial of class certification and, maybe, some annoyed absent class members?

The court of appeal was careful to distinguish what are called "pick off" cases. In those cases, the defendant pays a class representative all that s/he claims is due and then seeks dismissal of the action against that plaintiff. The plaintiff can stay in the case if s/he has an adequate economic interest in remaining in the case, such as the interest in attorneys' fees. But the court squarely held that a plaintiff accepting a voluntary settlement of all claims is not picked off and, therefore, not entitled to maintain a class action:

We believe that it is illogical to import the law governing "pick off" cases into the context of a voluntary settlement. Often, a plaintiff brings an action as a class action precisely because the attorney‟s fees involved in bringing the action individually would exceed the value of the any judgment the plaintiff could obtain individually. (Roper, supra, 445 U.S. at p. 338, fn. 9.) In such a situation, a "pick off" settlement, which gives the plaintiff only the relatively small amount sought as damages, may be inadequate to cover the substantial attorney‟s fees incurred in pursuing the litigation. Thus, the plaintiff who has been involuntarily picked off has not obtained satisfactory
relief, and is therefore permitted to continue pursuing the class litigation
until complete relief is received. This conclusion is supported by policy considerations which seek to prevent a defendant from avoiding class liability by picking off individual plaintiffs.

This is to be distinguished from the case of a voluntarily settling plaintiff. In such a case, the plaintiff has accepted an amount the plaintiff believes is sufficient to make the plaintiff whole. By voluntarily settling, the plaintiff has agreed to accept the offered sum in full satisfaction of the plaintiff‟s claim against the defendant. There are no public policy interests implicated by a settlement voluntarily accepted.

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Applied to this case, it is apparent that Watkins‟s appeal must be dismissed. She has voluntarily released her wage claim against Wachovia in exchange for a $51,000 payment. While she attempted to reserve her right to pursue her "class claim," her "class claim" is simply a procedural device by which she pursued her substantive claim for overtime wages. Having settled her substantive claim, the class claim disappears, and her appeal of the denial of class certification must be dismissed. Watkins cannot salvage her right to appeal by asserting an economic interest in class certification in terms of a right to shift her attorney‟s fees to the class, if successful. If the class obtains a judgment or settlement, such recovery would belong to the class. Having voluntarily settled, she is, by her own choice, no longer a member of the class and cannot share in any such recovery.

The opinion is Watkins v. Wachovia Corporation and the opinion is here.