Fourth Circuit Holds Magistrate Judge Jurisdiction Does Not Require Absent Class Members’ Consent

21 April 2022 Consumer Class Defense Counsel Blog
Author(s): Andrew W. Arsht Jay N. Varon

Federal law delineates a magistrate judge’s exercise of jurisdiction over a civil case. Specifically, with the “consent of the parties,” a magistrate judge may conduct “any or all proceedings . . . and order the entry of judgement.” 28 U.S.C. § 636(c)(1). Recently, in McAdams v. Robinson, 26 F.4th 149 (4th Cir. 2022), the Fourth Circuit determined that the word “parties” in this statute does not include absent class members. Consequently, a magistrate judge may conduct proceedings and enter judgment with the consent of only the named parties.

The case began as a putative consumer class action, when Demetrius and Tamara Robinson alleged that Nationstar Mortgage LLC had violated federal and state law by failing to timely process loss mitigation applications. Six years after the Robinsons filed their case, the named parties submitted a proposed settlement agreement seeking court approval of a class settlement and jointly asked to proceed before a magistrate judge. The proposed settlement included a fund of $3,000,000, with $300,000 allocated toward administrative expenses and $1,300,000 allocated toward attorneys’ fees. The assigned magistrate judge, who was also the mediator for the settlement negotiations, reviewed and approved the settlement agreement and the attorneys’ fee request.

Pia McAdams, an absent class member who was pursuing a separate class action lawsuit against Nationstar, objected on a variety of grounds. The magistrate judge overruled those objections, and McAdams appealed.

On appeal, McAdams argued that the magistrate judge did not have jurisdiction to enter judgment because she had not consented to the appointment. While acknowledging that absent class members may be parties for some purposes (citing Devlin v. Scardelletti, 536 U.S. 1, 9-10 (2002)), the Fourth Circuit rejected McAdams’ argument. It interpreted the term “parties” in 28 U.S.C. § 636(c)(1) to mean only named parties. The court held that the ordinary meaning of the word “party” includes “those whose names are designated as a plaintiff or defendant and those who can control the proceedings.” Finding that absent class members do not meet this definition because they “aren’t named parties, and they can’t control proceedings,” the court noted the significant practical advantages of this interpretation. If absent class members were “parties,” district courts would have to provide class-wide notice “of the availability of a magistrate judge” to conduct proceedings and order the entry of judgment. 28 U.S.C. § 636(c)(2). In rejecting that result, the court explained that such notice would be “unduly burdensome on the clerk of court.”

With this result, the Fourth Circuit joins the Third, Seventh, Ninth, and Eleventh Circuits in holding that absent class members are not “parties” for purposes of the consent necessary for a magistrate judge to have jurisdiction over case proceedings or to order entry of judgment. At a minimum, this interpretation streamlines the ability of named parties to obtain magistrate judge oversight, if desired, in class cases. Class action plaintiffs and defendants may pursue that appointment in the hopes of faster, less expensive adjudication without concern that absent class members will impede such efforts.

Despite the Fourth Circuit’s holding, defendants should be wary of the Supreme Court’s caution that absent class members “may be parties for some purposes.” For example, many courts have placed limitations on contacts with putative class members (as if they were quasi-represented parties), even if they are not formally considered “parties” under 28 U.S.C. § 636(c)(1) for the purposes of consent to a magistrate judge. If you have questions about whether an absent class member is a party in different contexts, you should consult with your legal counsel.

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