Connelly et al v. Hilton Grand Vacations Company, LLC

Filing 98

ORDER Granting Plaintiffs' 91 Motion to Vacate Order 83 Dismissing Claims With Prejudice. Signed by Judge Janis L. Sammartino on 11/9/2017. (mpl)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 BRIAN CONNELLY, et al. on behalf of themselves and all others similarly situated, Case No.: 12-CV-599-JLS (KSC) ORDER GRANTING PLAINTIFFS’ MOTION TO VACATE ORDER DISMISSING CLAIMS WITH PREJUDICE 13 Plaintiffs, 14 15 16 v. HILTON GRAND VACATIONS COMPANY, LLC, (ECF No. 91) 17 Defendant. 18 19 20 Presently before the Court is Plaintiffs’ Motion to Vacate Order Dismissing Claims 21 With Prejudice (“MTN,” ECF No. 91). Also before the Court is Defendant’s Opposition 22 to the Motion (“Opp’n,” ECF No. 92) and Plaintiffs’ Reply in Support of the Motion 23 (“Reply,” ECF No. 95). After considering the Parties’ arguments and the law, the Court 24 GRANTS Plaintiffs’ Motion. 25 BACKGROUND 26 On March 9, 2012, Plaintiffs filed a putative class action against Defendant for 27 violations of the Telephone Consumer Protection Act (“TCPA”). (See generally “Compl.,” 28 ECF No. 1.) Plaintiffs then moved for class certification, which the Court denied. (ECF 1 12-CV-599-JLS (KSC) 1 No. 68.) Plaintiffs petitioned permission for interlocutory review of that order pursuant to 2 Federal Rule of Civil Procedure 23(f), and the Ninth Circuit denied the petition. (MTN 21; 3 see also ECF No. 72.) 4 On March 4, 2014, the Parties stipulated to dismiss Plaintiffs’ claims with prejudice 5 in order for Plaintiffs “to appeal the Court’s order denying class certification.” (“Stip.,” 6 ECF No. 82, at 2 (citing Berger v. Home Depot USA, Inc., 741 F.3d 1061 (9th Cir. 2014).) 7 At the time the Parties entered into the stipulation, Berger held “a dismissal of an action 8 with prejudice, even when such dismissal is the product of a stipulation, is a sufficiently 9 adverse—and thus appealable—final decision.” 741 F.3d at 1065. In the stipulation, the 10 Parties agreed: “If the order denying certification is affirmed, Plaintiffs will take nothing by way of their Complaint. If the order denying certification is reversed or the Ninth Circuit orders that a class or subclasses be certified or that an amended or renewed motion for class certification be pursued, the Parties agree that they will continue litigating this action from the same procedural stand point and factual record in place at the time of the appeal, subject to the direction by the Ninth Circuit.” 11 12 13 14 15 16 (Stip. 2.) 17 The Court granted the Parties’ stipulation and dismissed the action with prejudice. 18 (ECF No. 83.) Plaintiffs filed a notice of appeal, and the Parties argued their case in front 19 of the Ninth Circuit. See Connelly v. Hilton Grand Vacations Co., 693 F. App’x 669 (9th 20 Cir. 2014). While the Parties’ case was pending, the Supreme Court issued its opinion in 21 Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017), which abrogated Berger, and held 22 “[p]laintiffs in putative class actions cannot transform a tentative interlocutory order . . . 23 into a final judgment within the meaning of § 1291 simply by dismissing their claims with 24 prejudice.” Id. at 1715. The Ninth Circuit then dismissed Plaintiffs’ appeal for lack of 25 appellate jurisdiction and Plaintiffs filed the present Motion with this Court. 26 /// 27 28 1 Pin citations refer to the CM/ECF page numbers electronically stamped at the top of each page. 2 12-CV-599-JLS (KSC) 1 LEGAL AUTHORITY 2 Pursuant to Federal Rule of Civil Procedure 60(b)(6), “[o]n motion and just terms, 3 the court may relieve a party or its legal representative from a final judgment, order, or 4 proceeding for . . . any [] reason that justifies relief.” Fed. R. Civ. P. 60(b)(6). “[A] 5 voluntary dismissal . . . is a judgment, order or proceeding from which Rule 60(b) relief 6 can be granted.” In re Hunter, 66 F.3d 1002, 1004 (9th Cir. 1995). 7 An “intervening change in the controlling law” can provide a basis for granting a 8 Rule 60(b) motion. Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 9 873, 880 (9th Cir. 2009) (quoting 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 10 (9th Cir. 1999)). “The proper course when analyzing a Rule 60(b)(6) motion predicated 11 on an intervening change in the law is to evaluate the circumstances surrounding the 12 specific motion before the court.” Phelps v. Alameida, 549 F.3d 1120, 1133 (9th Cir. 13 2009). Courts must make a “case-by-case inquiry” based on balancing “numerous factors” 14 when deciding whether to grant a Rule 60(b)(6) motion. Jones v. Ryan, 733 F.3d 825, 839 15 (9th Cir. 2013). “[A] change in the law will not always provide the truly extraordinary 16 circumstances necessary to reopen a case[,]” and “something more than a ‘mere’ change 17 in the law is necessary.” Phelps, 569 F.3d at 1133 (quotation marks omitted). 18 When making this determination, courts should consider six factors: (1) the change 19 in the law; (2) the petitioner’s exercise of diligence in pursuing his claim for relief; (3) 20 whether reopening the case would upset the parties’ reliance interest in the finality of the 21 case; (4) the extent of the delay between the finality of the judgment and the motion for 22 Rule 60(b)(6) relief; (5) the relative closeness of the relationship between the decision 23 resulting in the original judgment and the subsequent decision that represents a change in 24 the law; and (6) concerns of comity. Eubank v. Terminix Int’l, Inc., No. 15cv00145-WQH 25 (JMA), 2016 WL 6277422, at *3 (S.D. Cal. Oct. 27, 2016) (citing Jones, 733 F.3d at 839– 26 40). 27 /// 28 /// 3 12-CV-599-JLS (KSC) 1 ANALYSIS 2 The Court analyzes these six factors to determine whether it is proper to vacate its 3 prior order dismissing the case. 4 I. The Change in the Law 5 Under this factor, courts consider the nature of the intervening change in the law. 6 Lopez v. Ryan, 678 F.3d 1131, 1135 (9th Cir. 2012). The Parties do not disagree that a 7 change in the law occurred here, as the Supreme Court’s decision in Microsoft clearly 8 abrogated Berger. (MTN 6; Opp’n 7.) But, Defendant argues Microsoft resolved a circuit 9 split so it does not constitute extraordinary circumstances to justify vacating a district court 10 order. (Opp’n 7 (citing Microsoft, 137 S. Ct. at 1712 (“We granted certiorari to resolve a 11 Circuit conflict over this question: Do federal courts of appeals have jurisdiction under 12 § 1291 and Article III of the Constitution to review an order denying class certification . . 13 . after the named plaintiffs have voluntarily dismissed their claims with prejudice?”).) 14 Plaintiffs argues the change in law is sufficient to justify relief. (Reply 7–13.) 15 Various courts have analyzed intervening changes in the law as it relates to Rule 16 60(b)(6) motions. In Phelps, the district court denied the petitioner’s habeas petition. 569 17 F.3d at 1127. Subsequently, the Ninth Circuit issued an opinion which made it clear that 18 petitioner’s arguments (which the district court had rejected) were legally correct. Id. 19 Petitioner filed a Rule 60(b)(6) motion, which the district court denied. Id. On appeal, the 20 Ninth Circuit reversed. In looking at the first factor, the Ninth Circuit found the change in 21 the law due to the intervening Ninth Circuit case “did not upset or overturn a settled legal 22 principle” because at the time the petitioner’s case was being litigated in the district court, 23 “the law in [the Ninth] circuit was decidedly un settled.” Id. at 1136. Thus, the court held 24 that the first factor weighed against granting the petitioner Rule 60(b)(6) relief because 25 “[t]he law regarding the core disputed issue in [the petitioner’s] case did not become settled 26 until fifteen months after his appeal became final, at which point it was clear” that the law 27 28 4 12-CV-599-JLS (KSC) 1 had materially changed. 2 Id. In contrast, in Lopez, the law was settled per Supreme Court 2 authority at the time the original judgment was made, but subsequently, the Supreme Court 3 recognized a narrow exception in the law, and the petitioner filed for Rule 60(b)(6) relief 4 due to the intervening change in the law. Lopez, 678 F.3d at 1134, 1136. In evaluating the 5 first factor, the Lopez court distinguished Gonzalez v. Crosby, 545 U.S. 524 (2005), where 6 the Supreme Court held it was “hardly extraordinary,” when the case was decided under 7 the then-prevailing authority in the Eleventh Circuit, the Supreme Court rejected the 8 Eleventh Circuit’s interpretation after petitioner’s case was no longer pending. See Lopez, 9 678 F.3d at 1131, 1136 (“Unlike the ‘hardly extraordinary’ development of the Supreme 10 Court resolving an existing circuit split, Gonzalez, 545 U.S. at 536,” [the change in 11 intervening law here] constitutes a remarkable—if ‘limited,’ development in the Court’s 12 equitable jurisprudence.”). The Lopez court held the factor weighed slightly in favor of 13 granting plaintiff relief. Id. at 1136. 14 Here, this Court dismissed this action, which the Parties had requested due to the 15 then-prevailing Ninth Circuit authority. At the time, the law was settled in the Ninth Circuit 16 (but not nationwide), and the Parties relied on this, making a choice to dismiss the case. 17 This situation is similar to the “hardly extraordinary” resolution of a circuit split by the 18 Supreme Court in Gonzalez. Cf. Lopez (where the law was settled nationwide but a narrow 19 exception was recognized, this weighed in favor of granting 60(b) relief); Phelps, 569 F.3d 20 at 2009 (where the law was unsettled in the circuit at the time of petitioner’s case, this 21 weighed against granting 60(b) relief). But the Court also must consider the timing of the 22 change in the law. See Gonzalez, 545 U.S. at 536 (noting the change in the law occurred 23 after petitioner’s case was no longer pending). Microsoft abrogated Berger while the 24 Parties’ case was pending in front of the Ninth Circuit and long after they relied on Berger 25 26 27 28 Similarly, in Eubank, there was no “prevailing interpretation” of the issue at hand and the law was unsettled when the original order was made. The plaintiffs filed for Rule 60(b) relief due to the change in the law that the court had relied on when dismissing plaintiffs’ claims. After evaluating the circumstances, the court found the first factor weighed in favor of granting 60(b) relief. 2016 WL 6277422, at *5. 2 5 12-CV-599-JLS (KSC) 1 to stipulate to dismiss their case.3 Given the foregoing, the Court finds this factor weighs 2 slightly against granting Rule 60(b) relief. 3 II. Plaintiff’s Exercise of Diligence in Pursuing Its Claim for Relief 4 Under the second factor, courts considers the plaintiff’s “exercise of diligence in 5 pursuing his claim for relief.” Jones, 733 F.3d at 839. This factor looks at the diligence in 6 pursuing review of the issue after the intervening change in the law. Gonzalez, 545 U.S. 7 at 537. Defendant does not dispute that Plaintiffs exercised diligence in pursuing their Rule 8 60(b) motion. (Opp’n 9.) This factor therefore weighs in favor of granting Rule 60(b) 9 relief. 10 III. Whether Reopening the Case Would Upset the Parties’ Reliance Interest in the 11 Finality of the Case 12 Under the third factor, courts consider the parties’ interest in finality. Jones, 733 13 F.3d at 839. This factor asks whether granting relief under Rule 60(b) would “‘undo the 14 past, executed effects of the judgment,’ thereby disturbing the parties’ reliance interest in 15 the finality of the case.” Phelps, 569 F.3d at 1137 (quoting Ritter v. Smith, 811 F.2d 1398, 16 1402 (11th Cir.1987)). 17 The Parties agree that the outcomes in their stipulation did not occur (i.e., either the 18 Ninth Circuit affirms this Court’s Order denying certification, or the Ninth Circuit reverses 19 the Order or orders that a class be certified). (Opp’n 11; Reply 14 (citing Stip. 2).) Instead, 20 the Ninth Circuit dismissed the appeal for lack of jurisdiction after a change in the law, a 21 scenario not codified in the stipulation. Plaintiffs argue the stipulation proves the Parties 22 had no interest in finality and had agreed to continue to litigate this case should Plaintiffs 23 succeed on appeal. (Reply 15.) Defendant argues the Parties did in fact exhibit a strong 24 interest in finality by dismissing this action with prejudice, and the Parties did not agree 25 that the case could be revived to proceed with Plaintiffs’ individual claims. (Opp’n 10 26 27 3 28 The Parties stipulated to dismiss the case on March 4, 2014, and the Supreme Court did not grant certiorari in Microsoft until January 15, 2016. Microsoft was decided on June 12, 2017. 6 12-CV-599-JLS (KSC) 1 (citing Stip. 2 (“If the order denying certification is affirmed, Plaintiffs will take nothing 2 by way of their Complaint.”).)) 3 Although the Parties dismissed their case with prejudice in this Court, neither party 4 thought they were done with this case in its entirety as there is no question Plaintiffs would 5 appeal the decision. Further, if Plaintiffs succeeded on appeal, the Parties agreed to 6 “continue litigating this action.” (Stip. 2.) But, as Defendants argue, the Parties did not 7 contemplate the current situation, and Defendants had an interest in the finality of 8 Plaintiffs’ right to pursue their case on an individual basis.4 Thus, because both Parties 9 present strong arguments, the Court finds this factor is neutral. 10 IV. The Extent of the Delay Between the Finality of the Judgment and the Motion 11 for Rule 60(b)(6) Relief 12 Under the fourth factor, courts “examine[] the delay between the finality of the 13 judgment and the motion for Rule 60(b)(6) relief.” Jones, 733 F.3d at 840 (citation 14 omitted). “This factor represents the simple principle that a change in the law should not 15 indefinitely render preexisting judgments subject to potential challenge” and examines 16 whether a petitioner seeking to have a new legal rule applied to an otherwise final case has 17 petitioned the court for reconsideration “with a degree of promptness that respects the 18 strong public interest in timeliness and finality.” Phelps, 569 F.3d at 1138 (internal 19 quotation omitted). 20 Defendant argues the case was dismissed with prejudice on March 6, 2014, over 21 three years ago, and this should not be disturbed. (Opp’n 12.) Plaintiffs argue they filed 22 their Rule 60(b) motion only six days after the Ninth Circuit’s decision and there is 23 24 25 26 27 28 4 It is unclear to the Court where Plaintiffs intend to take this case should the Court grant the Motion to Vacate. Plaintiffs state they “now stand to lose their due process right to appeal” their case because of the change in the law. (Reply 8.) Defendant argues Plaintiffs “gave up their right to pursue the case on an individual basis to litigate through final judgment and potential appeal of the class certification order at that time.” (Opp’n 10.) Although it seems the Parties will likely disagree as to how this case may proceed after this Order based on the case’s procedural posture and the wording of the stipulation, this future disagreement is not considered by the six factors at hand. 7 12-CV-599-JLS (KSC) 1 therefore no delay. (MTN 8.) This factor looks to the time between the finality of the 2 judgment and the 60(b) motion. See Ritter, 811 F.2d at 1402 (“The longer the delay the 3 more intrusive is the effort to upset the finality of the judgment.”). The final judgment 4 occurred over three years ago, but Plaintiffs filed their Rule 60(b) motion promptly after 5 the Ninth Circuit dismissed the appeal. The Court finds there is no unreasonable length of 6 time between the final judgment and the Rule 60(b) motion, and any delay was not the fault 7 of Plaintiffs. Thus, this factor weighs in favor of granting Rule 60(b) relief. 8 V. 9 The Relative Closeness of the Relationship Between the Decision Resulting in the Original Judgment and the Subsequent Decision That Represents a Change 10 in the Law 11 Under the fifth factor, courts consider “the degree of connection between” the two 12 cases at issue—“the decision embodying the original judgment and the subsequent decision 13 embodying the change in the law.” Lopez, 678 F.3d at 1137; Phelps, 569 F.3d at 1138–39. 14 This factor “is designed to recognize that the law is regularly evolving.” Phelps, 569 F.3d 15 at 1139. The mere fact that “tradition, legal rules, and principles inevitably shift and evolve 16 over time . . . cannot upset all final judgments that have predated any specific change in 17 the law.” Id. Accordingly, courts should examine whether there is a “close connection” 18 between the original and intervening decision at issue in a Rule 60(b)(6) motion. Id. 19 Plaintiff argues Microsoft greatly affected Plaintiffs’ case because Plaintiffs had 20 relied on Ninth Circuit precedent when dismissing their case with prejudice, so Plaintiffs’ 21 case and Microsoft are closely related. (MTN 8–9.) Defendant argues nothing in Microsoft 22 stands for the proposition that the dismissal of this case is invalid or should be overturned. 23 (Opp’n 12.) 24 In Microsoft, the district court struck the plaintiffs’ class allegations. The plaintiffs 25 then dismissed their case with prejudice, which the district court granted, and the plaintiffs 26 appealed the district court’s order striking their class allegations. 137 S. Ct. at 1711. The 27 appeal eventually went before the Supreme Court, which held plaintiffs could not 28 “transform a tentative interlocutory order . . . into a final judgment within the meaning of 8 12-CV-599-JLS (KSC) 1 § 1291 simply by dismissing their claims with prejudice.” Id. at 1715. The Court finds the 2 facts of Microsoft and the facts of this case are similar. Further, as mentioned above, 3 Plaintiffs chose to dismiss their case pursuant to Berger, which was abrogated by 4 Microsoft. Thus, the Court finds a close connection between Plaintiffs’ underlying case 5 and Microsoft. This factor weighs in favor of granting Rule 60(b) relief. 6 VI. Concerns of Comity 7 Under the sixth factor, courts consider concerns regarding comity. “[T]he need for 8 comity between the independently sovereign state and federal judiciaries is an important 9 consideration, as is the duty of federal courts to ensure that federal rights are fully 10 protected.” Phelps, 569 F.3d at 1139. The court in Phelps applied this factor in the context 11 of a habeas petition, but also identified “a central purpose of Rule 60(b) is to correct 12 erroneous legal judgments that, if left uncorrected, would prevent the true merits of a 13 petitioner’s constitutional claims from ever being heard.” Id. at 1140. Applying this factor 14 outside the habeas context, the district court in Eubank found this factor weighed in favor 15 of granting Rule 60(b)(6) relief because, if the court did not vacate its judgment, the 16 plaintiffs would be barred from bringing their representative action due to the court’s 17 dismissal of their action based on the prevailing law at the time. 2016 WL 6277422, at *6. 18 Plaintiffs argue if the Court denies 60(b) relief, they will lose their ability to have 19 their case heard because they relied on Berger in dismissing their case. (MTN 9.) 20 Defendant argues although it is true Plaintiffs will no longer have the ability to appeal this 21 Court’s class certification order, this does not offend principals of comity. (Opp’n 13.) 22 The Court finds there was no “erroneous legal judgment” to be “corrected” here, as the 23 Parties chose to dismiss the case. This is distinguishable from Eubank, where the court 24 dismissed the plaintiffs’ claims based on prevailing law, but then allowed Rule 60(b) relief 25 based on a change in the law. 2016 WL 6277422, at *6. Although the subsequent change 26 in the law is unfortunately timed from Plaintiffs’ perspective, the conscious choice cannot 27 be ignored. See United States ex rel. Technica, LLC v. Carolina Cas. Ins. Co., No. 08-CV- 28 1673-H (KSC), 2012 WL 1229885, at *12 (S.D. Cal. Apr. 12, 2012) (“Courts generally 9 12-CV-599-JLS (KSC) 1 decline to grant Rule 60(b) relief when the mistake alleged resulted from the moving 2 party’s deliberate and counseled decision. There is usually no basis for relief under Federal 3 Rule of Civil Procedure 60(b)(6) when adverse consequences are the result of a party’s 4 ‘free, calculated, and deliberate’ trial strategy. An improvident trial decision should not be 5 corrected after the fact by seeking relief under Rule 60(b)(6).” (internal citations omitted)). 6 Therefore, the Court finds this factor weights against granting 60(b) relief. 7 CONCLUSION 8 Evaluating all of the circumstances of this case, the Court in its discretion concludes 9 that the circumstances are extraordinary under the law and that relief pursuant to Rule 10 60(b)(6) is justified. For the foregoing reasons, the Court GRANTS Plaintiff’s Motion 11 (ECF No. 91) and VACATES its Order Dismissing the Action with Prejudice (ECF No. 12 83). 13 14 IT IS SO ORDERED. Dated: November 9, 2017 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 12-CV-599-JLS (KSC)

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