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North Carolina limits defendants’ ability to “pick off” class claims.

Disclaimer:  inside baseball, and also baseball, contained within.

In baseball’s version of the “pick-off,” a baserunner is caught standing too far from base and tagged out.  In the legal world, defendants sometimes “pick off” a class action by mooting the named plaintiff’s individual claim before a class has been certified.  A recent opinion from the North Carolina Supreme Court has restricted—but not eliminated—one of these maneuvers.  Read on to find out which. 

The case is Chambers v. Moses H. Cone Memorial Hospital, 372 N.C. 100, 824 S.E.2d 404 (N.C. 2020).  The plaintiff asserted claims on behalf of himself and others whom a hospital allegedly overcharged.  After the class complaint was filed, the hospital dismissed its claims for unpaid bills against the plaintiff with prejudice.  Since the plaintiff owed nothing—and had not paid on the alleged overcharges—the hospital moved to dismiss the class complaint, arguing the case was moot.  The trial court and the Court of Appeals agreed, and the plaintiff was called “out.”

The North Carolina Supreme Court reversed [the call].  Over a dissent from Justice Newby, the Supreme Court ruled that the plaintiff could continue with the case.  Looking to federal cases, especially Richardson v. Bledsoe, 829 F.3d 273 (3rd Cir. 2016), the Court held that a plaintiff whose individual claim is mooted by the defendant’s action may continue to represent a putative class where 1) the mooting event occurred before the plaintiff had a fair opportunity to seek class certification and 2) the plaintiff has not “unduly delayed” litigating class certification.  Where these conditions apply, the normal rule—that a plaintiff who lacks a personal stake in the outcome may not pursue a case—does not apply, and the plaintiff may seek class certification and a ruling on the merits. 

The Chambers exception operates by “relating back” the plaintiff’s claim, for mootness purposes, to the filing of the complaint.  Thus, the exception does not change the requirement that the plaintiff have a personal stake in the outcome—i.e., be on base—when the complaint is filed. 

Following Chambers, class action defendants in North Carolina can only pick off a class action where the named plaintiff has had the fair opportunity to seek class certification and unduly delayed that process. 

It remains to be seen, however, just how much time “fair opportunity” requires, and what the plaintiff must do to avoid a finding of undue delay.  The Court remanded the case to the trial court for adjudication of these questions, but provided the following insight:   

  • “[t]he question of what constitutes a fair opportunity in this context naturally will vary from case to case based on considerations such as the complexity of the case, the nature of discovery required to determine class certification, the stage at which the named plaintiff’s individual claims become moot, and other relevant factors.” op. at 19.
  • “[t]o act diligently, a named plaintiff need not file a class-certification motion with the complaint or prematurely; it is enough that the named plaintiff diligently takes any necessary discovery, complies with any applicable local rules and scheduling orders, and acts without undue delay.” op. at 20 (citing Stein v. Buccaneers Ltd. P’ship, 772 F.3d 698, 707 (11th Cir. 2014)). 

It also remains to be seen whether—and how—plaintiffs who lack a personal stake in the outcome of a case can satisfy the requirement that the class representative adequately represent the interests of the class.  As the dissent notes, the North Carolina Supreme Court has previously directed that class representatives must “have a genuine personal interest, not a mere technical interest, in the outcome of the case.”  Faulkenbury v. Teachers and State Emps.’ Ret. Sys. of N.C., 345 N.C. 683, 697, 483 S.E.2d 422, 431 (1997).  And the majority opinion recognizes that “obtaining class certification still requires [the named plaintiff] to meet the stringent requirements of Rule 23” and cites Faulkenbury for those prerequisites.  Thus, the question remains:  could potential class representatives whose claims are moot be ruled safe at first base and called out at second? 

It will be interesting to watch how courts apply this exception to mootness and whether plaintiffs delay moving for class certification in reliance upon it.  It will also be interesting to see whether courts will apply similar principles outside mootness to the requirements for class certification.  Stay tuned for more developments. 

August 31, 2020 Joseph D. Hammond
Posted in  News