Unpublished Disposition, 921 F.2d 280 (9th Cir. 1990)

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US Court of Appeals for the Ninth Circuit - 921 F.2d 280 (9th Cir. 1990)

No. 89-55928.

United States Court of Appeals, Ninth Circuit.

Before NELSON and REINHARDT, Circuit Judges, and PRICE,*  District Judge.


Appellants, Edward E. Garlits, Joseph Viola and the Yuban Family Trust, appeal the district court's denial of their claims and challenge the adequacy of the notice they received of the hearing at which their claims were denied. We do not reach these substantive claims, however, since we hold that appellants lack standing to bring this appeal since they opted out of the Settlement Class and equity does not weigh in favor of hearing their appeal. Accordingly, we DISMISS the appeal on the basis of appellants' lack of standing.

Standing is a question of law reviewed de novo. Bruce v. United States, 759 F.2d 755, 758 (9th Cir. 1985).

Generally, one who was not a party of record below does not have standing to appeal the lower court's judgment. Washoe Tribe of Nevada and California v. Greenley, 674 F.2d 816, 818 (9th Cir. 1982). Non-parties may be allowed to proceed with their appeals, however, where: (1) they participated in the district court proceedings; and (2) the equities of the case weigh in favor of hearing their appeals. Id.

Appellees argue that because appellants opted out of the Settlement Class, they are not bound by the Final Judgment and accordingly have no standing to appeal it. They contend that appellants' sole remedy is to file an independent action. Furthermore, appellees argue that appellants do not fit within the exception allowing nonparties to appeal since the equities do not weigh in appellants' favor.

In reply, appellants state that the cover letter attached to the Notice of Proposed Settlement sent by class counsel advised them to opt out of the settlement, not the plaintiff, class in order to preserve "any rights of appeal [they] may have [had]." They contend that appellees' position would put them to a "Hobson's Choice:" giving up their right to appeal by requesting exclusion from the settlement class or being stripped of their right to appeal by failing to request such exclusion.

The leading circuit case on non-party standing is Washoe Tribe. There, the State of Nevada sought to appeal a judgment prohibiting individual officers of the Nevada Department of Wildlife from enforcing hunting regulations against Washoe Indians hunting on lands allotted to them. The State was not a named party in the action below and it never directly participated in the lower court action in any way, much less filed an appearance or moved to intervene. 674 F.2d at 817. The court found that the State's furnishment of the officials' defense below did not constitute participation in the proceedings, rationalizing that the fictional legal distinction between state officials and the state itself (an action against the former does not constitute one against the latter) should not be disturbed when its inapplicability favors a state. Id. at 818. It also found that the equities did not favor allowing an appeal since the State's failure to intervene below appeared to be a tactical decision, by which it avoided possibly waiving immunity. Id. at 818-19.

Although appellants' case is somewhat distinguishable from Washoe Tribe, the equities still do not weigh in their favor. Unlike the State in Washoe Tribe, appellants did participate somewhat in the ongoing litigation below by filing their claims, submitting documentation on these claims, contacting class counsel to ascertain the status of their claims and having independent counsel represent them at a meeting between class counsel and FDIC's counsel. Furthermore, appellants' failure to intervene below does not seem to be a calculated tactical decision, since such a failure would not benefit them as it did the State in Washoe Tribe.

Despite these distinguishing factors, equity does not favor allowing the appellants standing to appeal. They made no effort to formally participate below (e.g., by having their independent counsel file an appearance). Instead, they merely participated informally, and even then only sporadically. Although their failure to intervene below does not appear to have been a tactical move, the fact remains that if they had intervened earlier to protect their interests they would never have been put to their perceived "Hobson's Choice" of having their right to appeal extinguished either by joining or opting out of the Settlement Class.

Appellants' perceived "Hobson's Choice" was implicated by class counsel's misleading Notice of Settlement which warned that all rights to appeal could be lost if a potential class member did not opt out of the Settlement Class. Appellants urge that their receipt of this misleading notice balances the equities in favor of granting them standing because absent the notice they would never have opted out of the class and lost their standing to appeal in the first place. However, since class counsel was the source of that misleading information, not the court or counsel for FDIC, appellants' receipt of the misinformation does not weigh sufficiently in favor of hearing this appeal.


The appeal is accordingly DISMISSED for appellants' lack of standing.


The Honorable Edward Dean Price, United States District Judge for the Eastern District of California, sitting by designation


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3