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Taylor Russell, On Behalf of Himself and All Others Similarly Situated v. United States

December 1, 2011

TAYLOR RUSSELL, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
UNITED STATES, DEFENDANT-APPELLEE. TAYLOR RUSSELL, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
UNITED STATES,
DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Northern District of California in Case No. 09-CV-3239, Judge William H. Alsup.

The opinion of the court was delivered by: Bryson, Circuit Judge.

Appeal from the United States District Court for the Northern District of California in Case No. 09-CV-3239, Judge William H. Alsup.

Before LOURIE, BRYSON, and REYNA, Circuit Judges.

Taylor Russell filed a class action complaint against the United States seeking relief for himself and a class of similarly situated persons regarding interest charges that the government had assessed against him and the other putative class members on military credit accounts. Prior to ruling on Mr. Russell's motion for class certification, the district court dismissed his individual action as moot on the ground that the government, by issuing a payment to Mr. Russell during the pendency of the lawsuit, had satisfied his individual claim. Mr. Russell argues on various grounds that the district court erred by dismissing his claim. We vacate the district court's order dismissing the case and remand for further consideration consistent with this opinion.

I

The Army and Air Force Exchange Service ("the Exchange"), an instrumentality of the United States, issues credit cards to military personnel to purchase uniforms and other merchandise from post-exchange stores on U.S. military bases. During the period relevant to this case, the credit-card plan under the Exchange's credit program agreement offered two types of purchases: the Uniform Clothing Deferred Payment Plan ("UCDPP") for uniforms and the Deferred Payment Plan ("DPP") for other goods. UCDPP balances were not subject to finance charges, while DPP balances were.

Mr. Russell opened a credit account with the Exchange in 1997. His agreement with the Exchange provided for a variable interest rate of bank prime rate plus 4.75%, with a minimum rate of 12%. In 2000, Mr. Russell became delinquent on the balance of his DPP account. He incurred finance charges associated with that delinquent balance until February 2009.

In July 2009, Mr. Russell filed this action against the government alleging that the Exchange had breached its credit agreement with him and others by charging a rate of interest on delinquent debt that exceeded the rate specified by the credit agreements.*fn1 After the action was filed, the Exchange conducted an audit and subsequently adjusted the DPP accounts of 46,851 individuals. Mr. Russell's account was among those audited and adjusted. The audit revealed that refunds were due to approximately 33,902 customers who had DPP accounts, including Mr. Russell.

In May 2010, the Exchange conducted a second audit that was designed to identify the interest overcharges on a large number of additional accounts. That audit resulted in adjustments to the DPP accounts of an additional 103,320 individuals, of whom 69,198 received refunds.

Meanwhile, on February 11, 2010, the Exchange sent Mr. Russell a refund check in the amount of $149.78 through his litigation counsel. That amount exceeded the $133.66 that Mr. Russell, in his interrogatory responses, had asserted was due to him in connection with his DPP claim. Shortly after sending the check to Mr. Russell, the government moved to dismiss his pending claim as moot. While that motion was pending, Mr. Russell moved to have his action certified as a class action. The district court subsequently dismissed Mr. Russell's individual action as moot. It then denied his motion for class certification without prejudice, noting the possibility that a plaintiff whose account had not been adjusted could intervene and assume the role of lead plaintiff and potential class representative. The court also noted that Mr. Russell's claim for attorney's fees "remain[ed] alive." On June 22, 2010, because no appropriate plaintiff had intervened in the action and because no motion for attor-ney's fees had been filed, the district court entered final judgment of dismissal.

Mr. Russell then filed an appeal to this court (No. 2010-1498), challenging the dismissal of his action. Subsequently, Mr. Russell filed a motion in the district court pursuant to Fed. R. Civ. P. 60(b). In his motion, he sought relief from the judgment based on his asserted discovery that the Exchange's refund check of $149.78 was insufficient to fully compensate him for the loss attributable to the erroneous calculation of the interest due on his DPP account balance. The district court denied that motion. Mr. Russell then took an appeal to this court (No. 2011-1230) from that order. We have consolidated the two appeals for decision.

II

With respect to the dismissal order, Mr. Russell argues that the government's proffer of $149.78 did not warrant dismissal of his action for several reasons. First, he contends that the proffer was not sufficient to provide full satisfaction of even his own claim, particularly as it provided no compensation for attorney's fees and costs. Second, he contends that it was improper for the ...


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