Charlotte B Milliner v. Mutual Securities, Inc.

Background

Charlotte B. Milliner and Joann Brem filed a proposed class action against Mutual Securities, Inc. (MSI) in 2015. The case challenged MSI’s investment approach. After a settlement conference on June 1, 2018, the parties resolved Milliner’s and Brem’s individual claims and signed a written settlement agreement. The opinion states that the individual claims were released, but that the agreement did not release claims belonging to proposed class members.

On September 11, 2018, the court dismissed the case after explaining that it had been transferred to the judge only to enforce the settlement agreement. The order stated that the case could be reopened only for enforcement of the settlement agreement and directed the Clerk of Court to close the file.

Plaintiffs moved to vacate that dismissal order on July 16, 2019. In October 2019, the court denied the motion without prejudice because an appeal of an earlier order was still pending. The United States Court of Appeals for the Ninth Circuit later dismissed that appeal for lack of jurisdiction. The court then considered the motion to vacate.

Plaintiffs’ arguments

Plaintiffs asked the court to vacate the September 11, 2018 dismissal and permit the parties to submit a joint request for dismissal. They argued that the parties had agreed that MSI would file the dismissal after October 30, 2018, when the release of Milliner’s and Brem’s individual claims became effective. Plaintiffs relied on an August 4, 2018 email from their counsel discussing the timing of the dismissal.

Plaintiffs also argued that the earlier dismissal could prejudice proposed class members. Citing American Pipe & Construction Co. v. Utah, they asserted that the dismissal restarted the time-limit clock for proposed class members earlier than the parties had agreed.

Court’s reasoning

The court found that the settlement agreement did not support plaintiffs’ position. The provision concerning the release of the individual claims addressed when that release became effective but did not address when the entire action had to be dismissed. The provision concerning the mechanics of dismissal also did not specify when a dismissal was to be filed. The court concluded that plaintiffs appeared to have confused the effective date of the individual release with the dismissal of the entire action.

The court also held that plaintiffs had not identified a legal basis for the requested relief. Rule 41 governs voluntary dismissals but does not provide the mechanism for vacating a dismissal order. American Pipe did not involve a request to vacate a dismissal. The court explained that Rule 60 governs requests for relief from a final judgment or order.

The court treated the motion, to the extent appropriate, as a request under Rule 60(b)(6), which permits relief for any reason that justifies it and is reserved for extraordinary circumstances. The court denied that request as untimely because plaintiffs waited about 10 months to file the motion and gave no explanation for the delay. The record also showed that the parties’ attorneys knew about the dismissal on the date it was entered. Plaintiffs offered no evidence that any proposed class member had been harmed by the dismissal and did not establish extraordinary circumstances.

The court also declined to consider plaintiffs’ argument in their reply that the court had inherent power to correct its earlier order, because plaintiffs raised that argument for the first time in the reply.

Disposition

The court denied plaintiffs’ motion to vacate the dismissal order. This ruling addressed whether the prior dismissal should be reopened, not the merits of the underlying investment-related claims.