Efrain Munoz v. Phh Corporation

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 24, 2023
• Docket: 22-15407
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS FEB 24 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

EFRAIN MUNOZ; et al., No. 22-15407

Plaintiffs-Appellants, D.C. No. 1:08-cv-00759-MMB-BAM v.

PHH CORPORATION, a Maryland MEMORANDUM* corporation; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Eastern District of California M. Miller Baker, International Trade Judge, Presiding

Submitted February 17, 2023** San Francisco, California

Before: WARDLAW, NGUYEN, and KOH, Circuit Judges.

Plaintiffs appeal the district court’s denial of their motion to modify a final

pretrial order in this certified class action alleging that Defendants violated the

Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607. As the

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). parties are familiar with the facts of this case, we do not recite them here. We have

jurisdiction under 28 U.S.C. § 1291. Reviewing for abuse of discretion, Johnson v.

Mammoth Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992), we reverse and

remand.

The final pretrial order “established the standard for seeking relief from the

order.” Wong v. Regents of Univ. of Cal., 410 F.3d 1052, 1060 (9th Cir. 2005). To

introduce an undisclosed witness or exhibit, Plaintiffs must satisfy either one of

two independent provisions of the final pretrial order. Under the first provision,

Plaintiffs are required to “demonstrate[] that the witness is for the purpose of

rebutting evidence that could not be reasonably anticipated at the pretrial

conference” and “demonstrate[] that the exhibit is for the purpose of rebutting

evidence that could not have been reasonably anticipated.”

The district court abused its discretion in barring under this first provision

one witness and one exhibit that Plaintiffs sought to introduce as evidence of

economic injury for purposes of Article III standing. Plaintiffs proffered this

evidence of economic injury in light of the Supreme Court’s intervening decision

in TransUnion v. Ramirez, 141 S. Ct. 2190 (2021), which was decided four weeks

after the final pretrial conference. Prior to TransUnion, the district court held on

summary judgment that Plaintiffs were not required to present such evidence

because their alleged informational injury was sufficient to satisfy the injury-in-

2 fact requirement of Article III standing. Munoz v. PHH Mortg. Corp., 478 F.

Supp. 3d 945, 983–84 (E.D. Cal. 2020). The operative complaint alleged that

Defendants “purposefully provided neither a meaningful disclosure nor a

meaningful choice to its borrowers regarding its captive reinsurance

arrangements.” Id. at 983 (citation omitted). Because this informational injury

“directly implicat[ed] one of the harms identified by and targeted for elimination

by Congress,” id. (citing 12 U.S.C. §§ 2603, 2604, 2607(c)), the district court

relied on Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), to conclude that Plaintiffs

“need not allege any additional harm beyond the one Congress has identified,”

Munoz, 478 F. Supp. 3d at 982 (quoting Spokeo, 578 U.S. at 342). Based on this

ruling, the parties represented in their joint pretrial statement that, as to Article III

standing, the sole disputed factual issue for trial concerned proof of the alleged

informational injury alone. The district court adopted the parties’ affirmative

representations in its final pretrial order, which did not list proof of economic

injury as a trial issue.

However, after the pretrial conference, TransUnion required Plaintiffs to

further prove “downstream consequences” from their alleged informational injury

because an “asserted informational injury that causes no adverse effects cannot

satisfy Article III.” 141 S. Ct. at 2214 (citations omitted). Because TransUnion’s

intervening change in the law foreclosed Plaintiffs’ ability to proceed to trial on an

3 informational injury theory of standing, Plaintiffs could not have reasonably

anticipated the need for their undisclosed evidence of economic injury. Indeed,

Defendants conceded below that TransUnion changed the law such that Plaintiffs

could no longer rely on an informational injury without also proving adverse

effects on a classwide basis.

Plaintiffs could not have reasonably anticipated the need for evidence of

economic injury five years prior to the final pretrial conference as a result of

Spokeo. As the district court’s summary judgment ruling recognized, Spokeo left

open the door for Plaintiffs’ alleged informational injury alone to confer Article III

standing. Munoz, 478 F. Supp. 3d at 982–83. Moreover, Plaintiffs were entitled to

rely on the district court’s summary judgment decision and the subsequent final

pretrial order, both of which made clear that evidence of economic injury was not

required for standing purposes. Cf. Leddy v. Standard Drywall, Inc., 875 F.2d 383,

386 (2d Cir. 1989) (“Once a district judge issues a partial summary judgment order

removing certain claims from a case, the parties have a right to rely on the ruling

by forbearing from introducing any evidence . . . in regard to those claims.”).

Because TransUnion’s effect on Plaintiffs’ ability to prove standing could

not have been reasonably anticipated at the pretrial conference, and Plaintiffs

justifiably relied on the district court’s summary judgment ruling and the final

pretrial order allowing them to proceed to trial on an informational injury alone,

4 the district court abused its discretion in barring their evidence under the first late

disclosure provision of the final pretrial order.1

REVERSED and REMANDED for further proceedings.

1 In light of our conclusion, we need not reach Plaintiffs’ other arguments that the district court erred in concluding that Plaintiffs did not meet the requirements of the second late disclosure provision and in declining to modify the final pretrial order under Fed. R. Civ. P. 16(e).