On June 3, 2020, the Ninth Circuit dismissed a wage and hour class action on the grounds that once the class representative plaintiff settled his individual claims and no longer had any financial stake in the litigation’s outcome, the entire litigation was moot.

In Brady v. AutoZone Stores, Inc. and Autozoners, LLC, Plaintiff Michael Brady brought a class action suit against AutoZone Stores, Inc. and Autozoners LLC for allegedly failing to provide its nonexempt employees with meal breaks in accordance with Washington state law.  After several years of litigation, Brady settled his individual claims and simultaneously waived any right to recover attorney’s fees and costs.  Even though Brady settled his individual claims, the settlement agreement included a provision explicitly stating that Brady did not intend to settle or waive his class claims.

Upon notice of the settlement the district court entered final judgment against Brady on the grounds that his class claims were now moot, despite the attempt to carve out his class claims.  Brady appealed, but the Ninth Circuit agreed with the district court and affirmed the lower court’s decision to dismiss the class.

In its holding, the Ninth Circuit clarified that the dismissal rested on the fact that Brady no longer maintained any financial interest in the outcome of the litigation.  The Court distinguished its holding in Brady from Narouz v. Charter Communications.  In Narouz the 9th Circuit found that the plaintiff still held a financial interest in the outcome of the litigation when he/she did not waive a right to recover attorney’s fees and costs. Because the class representative still maintained some financial stake, the Court could not dismiss the action as moot.

The Brady Court further explained that its decision was consistent with prior Ninth Circuit decisions in Evon v. Law Offices of Sidney Mickell and Campion v. Old Republic Protection Co., Inc.  In Evon, plaintiff settled her individual claims without any mention to her class claims – thus rendering her class claims moot.  Campion stands for the proposition that an express carve out of class claims is still not enough to retain a financial stake in the outcome of the litigation.  Taken together, the Court found that Brady relinquished any right to recovery, and his claims were correspondingly moot.

Notably, the Court found that the mere potential of an enhancement award is not sufficient to create a concrete financial stake that can save a class action.  In short, “we hold that when a class representative voluntarily settles his individual claims, he must do more than expressly leave class claims unresolved to avoid mootness.”  In light of the 9th Circuit holding in Brady, employers facing wage and hour class actions in the Ninth Circuit should consult with legal counsel if settling the class representatives’ individual claims, including a waiver of further right to recover, makes sense for the litigants’ goals and objectives.