On the other hand, the Seventh Circuit recently stated in dictum that, under Seventh Circuit precedent, an unnamed class member would have standing to appeal the approval of a class action settlement. In the Matter of VMS Ltd. Partnership Sec. Litig., 976 F.2d 362, 368 (7th Cir. 1992). The court in VMS cited Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th Cir. 1970), for this proposition.
See Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th Cir. 1970) (class action); Tryforos v. Icarian Development Co., 518 F.2d 1258, 1263 n. 22 (7th Cir. 1975) (shareholders' derivative suit). We held in Brand Name Prescription Drugs that in light of Marino and In re VMS Limited Partnership Securities Litigation, 976 F.2d 362 (7th Cir. 1992), Asgrow Seed is no longer authoritative. 115 F.3d at 458.
Defendant Ivy Tech's position is confusing and contradictory. While Ivy Tech correctly asserts that non-parties may not appeal judgments, see Marino v. Ortiz, 484 U.S. 301, 304 (1988); In re VMS Ltd. Partnership Sec. Litig., 976 F.2d 362, 366 (7th Cir. 1992), it claims that "only [the Chapter 7 trustee] had the standing to pursue an appeal" because the "parties in the District Court at the time judgment was entered were Ivy Tech and Wayne J. Lennington, Chapter 7 Trustee in Bankruptcy." Ivy Tech argues contradictorily that Brothers as Chapter 13 trustee — and not the debtor — could have brought the appeal, apparently overlooking its own position that named parties alone can bring appeals.
So they may not appeal. In re VMS Limited Partnership Securities Litigation, 976 F.2d 362 (7th Cir. 1992). Any contrary implication of Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th Cir. 1970), can no longer be considered authoritative, in light of VMS. See also Gottlieb v. Wiles, supra, 11 F.3d at 1007-12; Shults v. Champion, 35 F.3d 1056 (6th Cir. 1994); Guthrie v. Evans, supra. Class members who don't want to opt out or create a subclass can move to intervene, that is, to become a named plaintiff with a right of appeal, and if their motion is denied can, just like the opt-outs, appeal from that denial.
Neither were the class members. Absent class members are represented by the named plaintiffs and their lawyers, but they aren't parties, a point reflected in federal litigation by disregarding their citizenship. They are ignored in negotiating settlements as well. A real party's lack of assent means that there is no settlement; but the missing class members don't sign the settlement, and their objection is not dispositive. It is crammed down the throats of objectors, which cannot be done to real parties. What is more, the members of the Kamilewicz class could not have presented their malpractice arguments to the Supreme Court by petition for certiorari under sec. 1257: they did not discover the malpractice until later (it was not reflected in the record of the state proceeding); it was not litigated in the Hoffman case; class members can't seek appellate review without intervening, In re VMS Limited Partnership, 976 F.2d 362 (7th Cir. 1992); Research Corp. v. Asgrow Seed Co., 425 F.2d 1059 (7th Cir. 1970), which further illustrates their non-party status; and of course malpractice is not a federal claim, so it is outside the scope of sec. 1257. For some purposes missing class members are treated like parties, but only if the named plaintiffs adequately represent the interests of the class, and only if the unnamed members of the class receive adequate notice and elect not to opt out, Phillips Petroleum, 472 U.S. at 808-13 — which in this case is the very thing in dispute! It gets the cart before the horse to reject, as barred by a judgment, an effort by the absent class members to show that they were not properly brought into the state case and therefore are not affected by the judgment.
Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 1308-10 (3d Cir. 1993) (given agency, collective action, and information problems inherent in settlements of derivative litigation, and the court's broad view of objector standing, plaintiff-shareholder, who had attended the settlement hearing and objected, had standing to appeal); Marshall v. Holiday Magic, Inc., 550 F.2d 1173, 1176 (9th Cir. 1977) (class settlement affects legal rights of unnamed parties and therefore they have standing to appeal). See also In the Matter of VMS Ltd. Partnership Sec. Litigation, 976 F.2d 362, 368 (7th Cir. 1992) (standing to appeal from settlement approval if unnamed class member intervenes or appears in response to a Rule 23(e) notice; no standing to appeal a post-settlement order implementing the settlement agreement). In the Sixth Circuit, we have held that, under certain circumstances, non-named class members may have a right to appeal an adverse final judgment.
Bash v. Firstmark Standard Life Ins. Co., 861 F.2d 159 (7th Cir. 1988) (two objecting class members permitted to appeal from approval of settlement).See also Eng v. Coughlin, 865 F.2d 521 (2d Cir. 1989) (parties granted limited intervention for discovery purposes had no right to immediate appeal of order partially denying intervention, because limited intervenors would have right to appeal after final judgment). But see In re VMS Limited Partnership Securities Litig., 976 F.2d 362 (7th cir. 1992) (class member could not appeal a postjudgment order). There was a petition for rehearing in Bash in which the petitioner for the first time brought to the court's attention other cases, including Guthrie and Walker, which suggested that the appellants in Bash should not have been recognized as having the right to appeal.
In most cases, this means parties of record at the time the judgment was entered, including those who have become parties by intervention, substitution or third-party practice. In re VMS Ltd. Partnership Sec. Litig., 976 F.2d 362, 366 (7th Cir. 1992). But see In re Proceedings Before Federal Grand Jury, 643 F.2d 641, 643 (9th Cir. 1981).
Id.; see alsoGottlieb v. Wiles, 11 F.3d 1004, 1008 (10th Cir.1993); Croyden Associates v. Alleco, Inc., 969 F.2d 675, 678 (8th Cir.1992); In re VMS Limited Partnership Securities Litigation, 976 F.2d 362, 368 (7th Cir.1992). The same logic applied by the Eleventh Circuit in Guthrie to the issue of whether a non-named class member had standing to appeal a final judgment applies to the issue presently before the court, of whether a non-named class member has standing to seek removal of the legal counsel appointed to represent his class and appointment of new class counsel.
Id. at 1060-61. In In the Matter of VMS Ltd. Partnership Sec. Lit., 976 F.2d 362 (7th Cir. 1992), the Seventh Circuit adopted the reasoning of other circuits to the appeal of a post-settlement order. The court dismissed the VMS action holding that an unnamed class member has no right to appeal a post-settlement order.