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Schwarzschild v. Tse

filed: June 22, 1995.

RICHARD T. SCHWARZSCHILD, PLAINTIFF-APPELLANT
v.
BERNARD K. TSE, ET AL.; LAWRENCE D. LUMMIS; ROBERT C. WILSON; PHILLIP E. WHITE; JAMES P. LALLY; WYSE TECHNOLOGY, INC.; WT ACQUISITION CORP.; AND CHANNELL INTERNATIONAL CORPORATION, DEFENDANTS-APPELLEES



Appeal from the United States District Court for the Northern District of California. D.C. No. CV-90-20052-RMW. Ronald M. Whyte, District Judge, Presiding.

Before: Betty B. Fletcher, Stephen Reinhardt, and John T. Noonan, Jr., Circuit Judges. Opinion by Judge Reinhardt.

Author: Reinhardt

REINHARDT, Circuit Judge:

We consider here a narrow question of procedure involving notices in class action cases. We must decide whether a defendant who has succeeded in obtaining summary judgment may subsequently compel the named plaintiff to give the class the Rule 23(c)(2) notice that is ordinarily given shortly after class certification, or whether by obtaining judgment before the notice is given the defendant has waived any right to have notice sent to the purported class members.

I.

Richard T. Schwarzschild [plaintiff] sued Bernard K. Tse, et al. [defendants], for violations of Sections 13(e) and 14(e) of the Securities and Exchange Act, as well as for violations of the California Corporations Code. Plaintiff filed his claim in January of 1990. In July of that year, he moved for class certification. The district court granted the motion to certify on October 24th, 1991 and denied the defendants' subsequent motion for reconsideration in July of 1992.

On October 9th, 1992, defendants filed a motion for summary judgment and a motion to decertify the class. On the same day, plaintiff filed a motion for an order approving class notice. On December 9th, 1992, the district court entered an order granting the defendants' motion for summary judgment and stating that the defendants' motion to decertify and the plaintiff's motion to distribute notice were moot. Almost six months after the grant of summary judgment, in May of 1993, defendants moved for an order directing the distribution of notice to the class concerning the pendency of an action.

On July 13, 1993, the district court granted the defendants' motion and ordered that notice concerning the pendency of an action be sent to all members of the plaintiff class.

Schwarzschild now appeals that order.*fn1 He contends that, once summary judgment has been granted upon the defendants' own motion, a district court may not require notification of the members of the class.

II.

This appeal involves the notice requirement of Federal Rule of Civil Procedure 23(c)(2), which states that:

In any class action maintained under subdivision (b)(3), the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice shall advise each member that (A) the court will exclude the member of the class if the member so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if the member desires, enter an appearance through counsel.

Fed. R. Civ. P. 23(c)(2). We review the district court's interpretation of the rule de novo.

Defendants maintain, and the district court agreed, that Rule 23(c)(2) compels a court to send notice concerning the pendency of the action to all members of the class even when summary judgment has already been granted upon the merits of the case. Plaintiff contends, in contrast, that notice is not required when a district court has already granted summary judgment in favor of the defendants upon their own motion. We agree with the plaintiff and hold that, by obtaining summary judgment before the class has been ...


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