Keeping Tabs on the Ninth Circuit
September 09, 2022 - This Week at the Ninth

This Week at the Ninth: Class Opt-Outs and Non-Renewed Contracts

This Week at the Ninth - golf image

This week, the Ninth Circuit addresses the immediate appealability of orders invalidating class action opt-outs, and considers whether a decision not to renew a contract is an adverse employment action for purposes of a Title IX discrimination claim.

AGUILAR v. WALGREEN CO.

The Court dismisses for lack of jurisdiction an interlocutory appeal from an order invalidating class members’ elections to opt out.

The panel: Judges S. R. Thomas, Bea, and H. Thomas, with Judge Bea writing the opinion.

Key highlight: “Appellants cite no caselaw establishing that opt-out invalidation orders are not amenable to review after final judgement. Indeed, to the contrary, in the two appellate cases cited by Appellants that reviewed orders invalidating class action opt-outs, these reviews occurred after a final judgment was reached in those cases.”

Background: Law firms Gallo LLP and Wynne Law Firm (“Gallo/Wynne”) sought to represent a putative class of store managers in a wage-and-hour action against Walgreens in California state court. After their action was stayed in favor of another class action brought by different attorneys, Gallo/Wynne began sending mailings to Walgreens’ store managers, seeking to have them abandon the class action and join a new “mass action” that Gallo/Wynne had filed. After the parties to the class action settled, Gallo/Wynne then sent another letter to many members of the class urging them to opt out. 

After 102 class members opted out, class counsel asked the district court to invalidate any opt-outs from individuals who had received Gallo/Wynne’s purportedly misleading letter. The district court granted the request, providing these individuals with a new opportunity to opt out. At the urging of Walgreens, the district court then modified its order to cover all individuals represented by Gallo/Wynne, and not just those who had received the letter. It approved a corrective notice stating, among things, that aspects of the Gallo/Wynne letter had not been true, and that Gallo/Wynne “have a financial interest in having you opt out of the Settlement.” Gallo/Wynne, on behalf of their clients, filed a notice of appeal.

Result: The Ninth Circuit dismissed for lack of appellate jurisdiction. As it explained, under the collateral order doctrine, the Court had jurisdiction over orders that “(1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) [would] be effectively unreviewable on appeal from a final judgment.” Here, the Court held, the third requirement was not satisfied. The appellants themselves cited two cases in which courts had reviewed orders invalidating class-action opt outs on appeal from final judgment. And the appellants could identify no important interest that would be lost if they were required to wait until then, as the challenged order “places no limitations whatsoever on Gallo/Wynne’s ability to communicate or contract for legal services with their clients moving forward.” That fact distinguished a recent Sixth Circuit decision entertaining an interlocutory appeal from a similar opt-out order, which had enjoined the firm “from communicating with class members about the claims without court approval,” thereby threatening the “irreparable harm” of depriving the firm of the “First Amendment freedom to communicate with class members.” The Court also declined to issue a writ of mandamus, explaining that the appellants could not show that the district court’s order was “clearly erroneous as a matter of law.”

MACINTYRE v. CARROLL COLLEGE

The Court holds that the nonrenewal of an employment contract qualifies as an adverse employment decision sufficient to make out a prima facie case of Title IX employment discrimination.

The panel: Judges Christen, Lee, and Forrest, with Judge Lee writing the opinion.

Key highlight: “[C]ommon sense suggests that an employee may be dissuaded from alerting the company of discrimination if his or her contract may not be renewed as a result of it."

Background: Carroll College employed Bennett K. MacIntyre as a Community Living Director and then as Associate Athletics Director, and it paid him a stipend for coaching for the school’s golf team. In 2016, MacIntyre reported potential Title IX violations to the school’s HR director, and alleged workplace harassment, hostile work environment, and discrimination involving interim Athletic Director Kyle Baker and college president Tom Evans. A month later, Baker gave MacIntyre a poor performance review. MacIntyre filed a formal grievance and the school settled, agreeing to expunge the negative review, pay $15,000 in back pay, and hire MacIntyre as a full-time golf coach under a two-year contract. Carroll College soon started experiencing budgeting problems, and the school declined to renew MacIntyre’s golf coaching contract. MacIntyre filed another grievance alleging retaliation for complaining about Title IX violations, and then filed suit. The district court granted summary judgment for Carroll College, holding that MacIntyre failed to allege a prima facie case of retaliation because, in its view, the nonrenewal of the contract was not an adverse employment action.

Result: The Ninth Circuit reversed, holding that “[t]he district court erred when it concluded that the nonrenewal of MacIntyre’s two-year contract was not prima facie evidence of an adverse employment action.” As the Court explained, “[a]n adverse employment action is one that ‘well might have dissuaded a reasonable [person] from making or supporting a charge of discrimination,’” and includes a wide range of conduct such as reassigning job duties or giving an employee more dangerous work. “The nonrenewal of an employment contract is comparably likely to deter a reasonable employee from reporting discrimination,” the Court reasoned. And unlike Fourteenth Amendment cases relied upon by the district court, the Ninth Circuit has “never required adverse employment actions to rise to the level of a denial of an entitlement”—rather, even discretionary decisions, such as the non-renewal of a contract, may count.