On Wednesday, June 3, the Ninth Circuit Court of Appeals held in Brady v. Autozone, No. 19-35122, slip op. at 1 (9th Cir. June 3, 2020), https://cdn.ca9.uscourts.gov/datastore/opinions/2020/06/03/19-35122.pdf, that class claims become moot when “a class representative voluntarily settles only his individual claims without indicating any financial stake in the unresolved class claims.”

Michael Brady filed a putative class action complaint against AutoZone Stores, Inc., and Autozoners LLC, alleging violations of Washington’s minimum wage and meal break laws.  After the district court denied Brady’s motion for class certification and declined to modify its ruling, Brady settled his individual claims against AutoZone.  The settlement agreement did not “settle or resolve Brady’s Class Claims” but “did not provide that Brady would be entitled to any financial reward if the unresolved class claims were ultimately successful.”  The district court entered a final judgment and Brady appealed the class certification rulings.

In deciding whether what effect the settlement of individual claims had on class claims, the Ninth Circuit built on previous decisions in Narouz v. Charter Communications, LLC, 591 F.3d 1261 (9th Cir. 2010), holding that a class representative retains a continued financial interest in class claims where the class representative would “receive an ‘award enhancement fee’ if a class were certified and that he did not release claims for ‘attorney’s fees and costs,’ ”  Evon v. Law Offices of Signey Mickell, 688 F.3d 1015 (9th Cir. 2012), holding that class claims are not moot where the “settlement agreement did not expressly disclaim the class representative’s class claims,” and Campion v. Old Republic Prot. Co., 775 F.3d 1144 (9th Cir. 2014), holding that even where a settlement agreement did not explicitly resolve class claims the class representative must still retain a financial interest in the class claims to avoid mootness.

Here, the Ninth Circuit held that when a class representative voluntarily settles his individual claims he must “do more than expressly leave class claims unresolved to avoid mootness” – he must retain a financial stake in the outcome of the class claims “as evidenced by an agreement.”  Because Brady did not retain a financial stake in the class claims under the settlement agreement and did not produce any evidence of “an agreement to pay costs unless the class is certified,” the Ninth Circuit concluded the class claims were rendered moot.