Consenter Beware: Magistrate Jurisdiction In Class Actions

This article was first published on Law.com Network

An initial issue in any federal action is whether to consent to Magistrate Judge jurisdiction pursuant to 28 U.S.C. §636(c)(1).  This statute provides that “upon the consent of the parties, a full-time United States magistrate judge … may conduct any or all proceedings in a jury or nonjury civil matter and order the entry of judgment…”   The Magistrate Judge’s rulings are final and appealable to the applicable United States Court of Appeals.  28 U.S.C. § 636(c)(3).

Whether to consent to Magistrate Judge jurisdiction is a particularly significant decision in a class action.  While the consent of the parties must be unanimous, the putative class representatives can consent on behalf of the class.  It has been held that unnamed class members do not have “party” status within the meaning of §636(c)(1) and their consent is not required.  Day v. Persels & Assocs., LLC, 729 F.3d 1309 (11th Cir. 2013); Dewey v. Volkswagen AG, 681 F.3d 170, 180 (3d Cir. 2012); Williams v. General Electric Capital Auto Lease, Inc., 159 F.3d 266, 269 (7th Cir. 1998).

There is a variety of reasons why one might agree to Magistrate Judge jurisdiction.  One practical reason is the possibility of getting to trial more quickly.  A second may be the parties’ joint belief that the assigned district court judge is not the best choice to handle that particular case.  Regardless of the practicalities, one should be mindful of a potential risk to all parties from consenting to Magistrate Judge jurisdiction in a class action.  That risk concerns the potential that later in the proceedings after a settlement has been hammered out a would-be intervenor or an objector might try to collaterally challenge the consent.  The challenge might be couched in terms of absence of subject matter jurisdiction.

After obtaining a preliminary approval order conditionally approving the settlement and serving class notice, an objector may attempt to intervene into the class action pursuant to FRCP 24(a) and attain “party” status.  Williams, 159 F.3d at 269—70; Dewey, 681 F.3d at 180; Day, 729 F.3d at 1316.  If successful, the intervenor could then attempt to withhold his consent to magistrate jurisdiction and demand the assignment of an Article III district court judge.  Id.  The argument would be that, without the intervenor-objector’s consent, the Magistrate Judge lacks jurisdiction to enter an appealable final judgment.  Jaliwala v. United States, 945 F.2d 221, 223 (7th Cir. 1991).  There is an open question as to the extent an intervenor can challenge the pre-intervention orders of a magistrate who acted with the consent of the original parties.  See, New York Chinese TV Programs, Inc. v. U.E. Enterprises, 996 F.2d 21, 25 (2d Cir. 1993).

The Williams, Dewey and Day cases also recognize that non-intervening class members might try to collaterally attack the parties’ decision to consent to magistrate jurisdiction.

“Unnamed class member[s] could try to show in a collateral attack that the decision to proceed before a magistrate judge was a matter on which there was a potential … significant intra-class conflict and that the notice the absentee[s] received was inadequate to inform [them] of the conflict.”  Day, 729 F.3d at 1321.

Were such a collateral attack successful, the settlement approval might have to be vacated due to the purported intra-class conflict.  Practically speaking, it is difficult to imagine a scenario in which a class representative’s consent to a Magistrate Judge is aptly subject to such collateral attack.

Nevertheless, whether raised by an intervenor or collaterally by an objector, a successful attack on Magistrate Judge jurisdiction could be costly.  The parties may be required to incur the cost of additional class notice to advise the class of the new judge and dates.  The lack of consent could negate the Magistrate Judge’s jurisdiction and, possibly, the initial preliminary approval ruling which permitted class notice.  The objector’s or intervenor’s counsel likely would seek to modify the settlement agreement claiming the lack of adequate class representation which is a requirement for intervention as of right per FRCP 24.  He would also want to demonstrate additional benefits to the class to justify a fee.  In addition to costs and delay, class counsel could incur the ire of class members frustrated by further delay.

Although successfully moving for intervention into a preliminarily-approved class action, or collaterally attacking the consent is a significant hurdle, the potential disruption to the parties’ desire to resolve the case can be costly and time-consuming.  The foregoing risks must be carefully weighed before consenting to Magistrate Judge jurisdiction.