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Henson v. Fidelity National Financial, Inc.

United States Court of Appeals, Ninth Circuit

November 15, 2019

Melissia Henson; Keith Turner, Plaintiffs-Appellants,
v.
Fidelity National Financial, Inc., Defendant-Appellee.

          Argued and Submitted June 10, 2019 Anchorage, Alaska

          Appeal from the United States District Court No. CV 14-1240 ODW for the Central District of California Otis D. Wright II, District Judge, Presiding

          Cyril V. Smith (argued), Zuckerman Spaeder LLP, Baltimore, Maryland; Taras Kick and Robert J. Dart, The Kick Law Firm APC, Los Angeles, California; for Plaintiffs-Appellants.

          Michael J. Gleason (argued), Hahn Loeser & Parks LLP, San San Diego, California, for Defendant-Appellee.

          Before: A. Wallace Tashima, William A. Fletcher, and Marsha S. Berzon, Circuit Judges.

         SUMMARY[*]

         Motion for Relief from Judgment

         The panel reversed the district court's order denying plaintiffs' Fed.R.Civ.P. 60(b)(6) motion for relief from judgment in an action under the Real Estate Settlement Procedures Act.

         Plaintiffs sought relief from judgment based on an intervening change in the law in Microsoft Corp. v. Baker, 137 S.Ct. 1702 (2017) (holding that plaintiffs in putative class actions cannot transform a tentative interlocutory order into a final appealable judgment simply by dismissing their claims with prejudice). The panel addressed the analysis that courts should employ to guide their discretion when evaluating the merits of a Rule 60(b)(6) motion on the ground of an intervening change in the law in a non-habeas corpus case. The panel held that many of the factors set out in Phelps v. Alameida, 569 F.3d 1120 (9th Cir. 2009), a habeas case, are relevant, but courts must consider all of the relevant circumstances surrounding a specific motion.

         The panel examined the district court's analysis of the six Phelps factors, including the nature of the change in the law, plaintiffs' diligence in pursuing relief, the parties' reliance interest in the finality of the case, the delay between the judgment and the Rule 60(b) motion, the relationship between the original judgment and the change in the law, and comity concerns. The panel also examined additional considerations, such as the importance of heeding the intent of the rulings of the federal appellate courts, how best to stay true to the Supreme Court's reasoning in Microsoft, and the negotiated nature of the voluntary dismissal in this case. The panel concluded that the district court's denial of plaintiffs' Rule 60(b)(6) motion was an abuse of discretion because it rested upon an erroneous view of the law as to several significant factors, and granting relief was appropriate. The panel reversed and remanded with directions to grant the Rule 60(b)(6) motion and for further proceedings.

          OPINION

          TASHIMA, Circuit Judge

         Federal Rule of Civil Procedure 60(b)(6) is a grand reservoir of equitable power that allows courts to grant relief from a final judgment for "any" reason that "justifies relief." Fed.R.Civ.P. 60(b)(6). In Phelps v. Alameida, 569 F.3d 1120, 1135-40 (9th Cir. 2009), we set out the analysis that courts should employ to guide their discretion when evaluating the merits of a Rule 60(b)(6) motion that seeks relief from the dismissal of a habeas corpus petition on the ground of an intervening change in the law. However, we explicitly left open the question of whether the same Rule 60(b)(6) factors we identified in Phelps are also applicable beyond the habeas corpus context. See id. at 1135 n.19. Confronted with the appeal of a district court's denial of a Rule 60(b)(6) motion that was also predicated on an intervening change in the law, but in a non-habeas case that entails entirely different circumstances than did Phelps, we now begin to answer that question. While we conclude that many of the Phelps factors are relevant to the Rule 60(b)(6) analysis in the present context, we reemphasize that courts must consider all of the relevant circumstances surrounding the specific motion before the court in order to ensure that justice be done in light of all the facts. See id. at 1133.

         I

         On September 9, 2013, Plaintiffs-Appellants Melissia Henson and Keith Turner (collectively "Plaintiffs"), two individuals who participated in separate real estate transactions, filed this putative class action lawsuit against Defendant-Appellee Fidelity National Financial, Inc. ("Fidelity"). Plaintiffs claimed that Fidelity's practice of receiving payments from three overnight delivery vendors, in exchange for referring document delivery business to those vendors in connection with the settlement of federally related mortgage loans, violated §§ 8(a) and 8(b) of the Real Estate Settlement Procedures Act ("RESPA"), Pub. L. No. 93-533, 88 Stat. 1724, 12 U.S.C. § 2607.

         Fidelity moved to dismiss the complaint, and the district court granted the motion as to all claims except for Turner's claim under RESPA § 8(a). The district court dismissed all of Henson's claims on statute of limitations grounds, and also dismissed with prejudice both Henson's and Turner's claims under RESPA § 8(b) for failure to state a claim. After filing an answer, Fidelity moved for judgment on the pleadings with respect to Turner's remaining claim under RESPA § 8(a), but the district court denied that motion.

         Turner subsequently moved for class certification. A week later, Turner moved in the alternative to continue the hearing on class certification in order to allow discovery on class certification issues. The district court denied both the discovery and class certification motions, finding that class member-specific questions would predominate over any class-wide inquiries.

         Plaintiffs then entered into a detailed, negotiated stipulation of dismissal with Fidelity. Relying on Ninth Circuit precedent that permitted a plaintiff to obtain appellate review of certain interlocutory orders, including an order denying class certification, by dismissing any active claims with prejudice, Plaintiffs agreed to voluntarily dismiss the case with prejudice so that they could appeal both the district court's denial of class certification and the partial grant of the motion to dismiss. See Omstead v. Dell, Inc., 594 F.3d 1081, 1085 (9th Cir. 2010) ("[A] plaintiff that deems an interlocutory ruling to be so prejudicial as to deserve immediate review . . . has the alternative of dismissing the complaint voluntarily with prejudice.") (citation omitted); see also Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1065 (9th Cir. 2014) ("[A] dismissal of an action with prejudice, even when such dismissal is the product of a stipulation, is a sufficiently adverse-and thus appealable-final decision."). The stipulation provided:

Plaintiffs Keith Turner and Melissia Henson and Defendant Fidelity National Financial, Inc., through their undersigned counsel, hereby stipulate to request dismissal of the above-captioned case with prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2), and further stipulate that:
The parties understand that plaintiffs Turner and Henson will file an appeal to the dismissal in order to appeal certain of the Court's orders, including its order denying class certification and its order granting (in part) defendant's motion to dismiss. See Omstead v. Dell, Inc., 594 F.3d 1081, 1085 (9th Cir. 2010). If the orders appealed are affirmed, plaintiffs will take nothing by way of their complaint. By stipulating to this dismissal, [Fidelity] does not agree that such a dismissal establishes appellate jurisdiction and does not waive its ability to challenge appellate jurisdiction.
The parties stipulate that by Plaintiffs voluntarily dismissing their claims with prejudice, the Court's April 29, 2014 order on Defendant's Motion for Judgment on the Pleadings is not a final judgment and shall not provide a basis for collateral estoppel against Defendant in subsequent litigation.
Plaintiffs agree to reimburse [Fidelity] $837.96 for certain costs that it has incurred in this action through the date of the filing of this stipulation . . . .
It is further agreed that if Plaintiffs or Plaintiffs' counsel should re-file the claims at issue in this lawsuit or file a different lawsuit based on the same claims and conduct on behalf of a different Plaintiff(s), any such claims will be filed in the District Court for the Central District of California.

         The district court entered the parties' proposed order and dismissed the complaint with prejudice on the terms provided in the stipulation. Henson and Turner then timely filed separate notices of appeal from the final dismissal order. Both notices of appeal specifically identified the order granting in part Fidelity's motion to dismiss (as to Henson's claims and the RESPA § 8(b) claims), and the order denying class certification, as orders included in the final judgment to be reviewed on appeal.

         After Henson's and Turner's appeals were fully briefed, but before they were calendared for oral argument, the cases were stayed pending the United States Supreme Court's decision in Microsoft Corp. v. Baker, because that case appeared poised to address some of the appellate jurisdiction questions raised by Fidelity in Henson's and Turner's appeals. In Microsoft, the district court had similarly granted a stipulated motion to dismiss with prejudice. The parties had entered into the stipulation so that the plaintiffs could seek immediate appeal of the district court's earlier order striking consumers' class allegations. See Microsoft Corp. v. Baker, 137 S.Ct. 1702, 1706-07, 1711-12 (2017). Under the stipulation, the plaintiffs had "reserved the right to revive their claims should the Court of Appeals reverse the District Court's certification denial." Id. at 1707. On appeal, however, Microsoft had challenged appellate jurisdiction, arguing that the voluntary dismissal could not support appellate review of the district court's interlocutory order striking class allegations. Id. at 1711. The Ninth Circuit rejected Microsoft's argument, holding that it had jurisdiction to entertain the appeal under 28 U.S.C. § 1291. Id. at 1711-12.

         On June 12, 2017, nearly three years after Plaintiffs had filed their stipulated voluntary dismissal, the Supreme Court issued its decision in Microsoft. The Court held that "[p]laintiffs in putative class actions cannot transform a tentative interlocutory order into a final judgment within the meaning of § 1291 simply by dismissing their claims with prejudice-subject, no less, to the right to 'revive' those claims if the denial of class certification is reversed on appeal." Id. at 1715 (citations omitted). The Court explained that the tactic of using a stipulated voluntary dismissal to seek immediate review of an order denying class certification "undermine[s] § 1291's firm finality principle" and subverts Federal Rule of Civil Procedure 23(f), which gives appellate courts discretion to choose whether to permit immediate appeals of interlocutory class certification orders. See id. at 1707, 1712-15. In so holding, the Supreme Court reversed the Ninth Circuit's rule-on which Henson and Turner had relied-that a stipulated voluntary dismissal of a class action was a sufficiently adverse final order, as long as the individual plaintiffs' cases had not settled, to give rise to appellate jurisdiction to review a district court's denial of class certification. See Baker v. Microsoft Corp., 797 F.3d 607, 612 (9th Cir. 2015); see also Berger, 741 F.3d at 1065.

         In light of Microsoft, Fidelity moved to dismiss both Henson's and Turner's appeals. Fidelity argued that the Supreme Court's rule in Microsoft applied directly and deprived the Ninth Circuit of jurisdiction over Turner's appeal from the denial of class certification. And Fidelity suggested that the Ninth Circuit also lacked jurisdiction to hear Henson's appeal from the district court's dismissal order because the Supreme Court's rule in Microsoft applied beyond the class certification context and meant that a voluntary dismissal could never constitute a final order under § 1291.

         In response, Plaintiffs argued that their case was factually distinguishable from Microsoft because, before the stipulated voluntary dismissal of the single remaining claim, the district court had already involuntarily dismissed all of Henson's claims and one of Turner's claims. Plaintiffs maintained that the Ninth Circuit had jurisdiction over their appeals because Microsoft did not overrule cases from "[e]very circuit permit[ting] a plaintiff, in at least some circumstances, voluntarily to dismiss remaining claims or remaining parties from an action to conclude the whole case in the district court and ready it for appeal."

         A Ninth Circuit motions panel subsequently entered identical orders in Henson's and Turner's appeals, denying Fidelity's motions to dismiss and remanding to the district court. The orders stated:

Appellee's motion to dismiss this appeal . . . is denied. In light of the Supreme Court of the United States' decision in Microsoft Corp. v. Baker, the court sua sponte remands this case to allow the parties to seek appropriate relief in the district court in the first instance. See Microsoft Corp. v. Baker, 137 S.Ct. 1702, 1715 (2017).[1]

         On remand, Fidelity refused to stipulate that the case should proceed before the district court on Turner's RESPA § 8(a) claim, which had survived Fidelity's motion to dismiss and motion for judgment on the pleadings, but which had been voluntarily dismissed pursuant to the stipulation. As a result, Plaintiffs moved to vacate the prior dismissal pursuant to Federal Rule of Civil Procedure 60(b)(6).

         In their Rule 60(b) motion, Plaintiffs argued that their circumstances, including Microsoft's intervening change in the law, entitled them to relief from judgment under the factors set out in Phelps, 569 F.3d at 1135-40, which addressed Rule 60(b)(6) relief in light of an intervening change in the law. In addition, Henson argued that even if the district court declined to vacate the dismissal order and revive the entire case, it should nonetheless grant her more limited relief by entering a new final judgment from which she could appeal the court's earlier involuntary dismissal of her claims, because ...


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