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Zepeda v. Paypal, Inc.

United States District Court, N.D. California, Oakland Division

September 2, 2014

MOISES ZEPEDA, MICHAEL SPEAR, RONYA OSMAN, BRIAN PATTEE, CASEY CHING, DENAE ZAMORA, MICHAEL LAVANGA, and GARY MILLER, on behalf of themselves and all others similarly situated, Plaintiffs,
PAYPAL, INC., E-BAY INC., and DOES 1 through 10, inclusive, Defendants.



The Court previously referred Putative Interveners' Motion to Intervene and Amend Complaint to Magistrate Judge Joseph C. Spero ("the Magistrate") for determination as a non-dispositive matter, pursuant to 28 U.S.C. § 636(b)(1)(A). On April 23, 2014, the Magistrate denied the motion. Dkt. 224. The parties are presently before the Court on Putative Interveners' Objection to Order of Magistrate Judge ("Objection"). Dkt. 225. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby OVERRULES the Objection. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).



This instant case and related action, Fernando, et al. v. PayPal, Inc., et al., Case No. 10-CV-01668 SBA, involve claims against PayPal and its parent entity, eBay, arising from: (1) the placement of "holds" or "reserves" by PayPal on funds held in PayPal accounts; (2) related alleged violations of the Electronic Fund Transfer Act, 15 U.S.C. § 1693 et seq. ("EFTA") and; (3) alleged violation of the settlement in In re PayPal Litigation (Comb), Case No. C 02-01227 JF. The party-plaintiffs in this action are: Moises Zepeda, Michael Spear, Ronya Osman, Brian Pattee, Casey Ching, Denae Zamora, Michael Lavanga and Gary Miller.[2]

Following separate mediations in 2011, the parties agreed to consolidate all claims asserted in Fernando into this case and to settle the action on a class action basis. Moon Decl. ¶¶ 2-3, Dkt. 211-1. Pursuant to that agreement, Plaintiffs filed a Second Amended Complaint on October 9, 2012, asserting all claims alleged in both cases. Dkt. 112. On May 31, 2013, Plaintiffs moved for preliminary approval of the parties' settlement. Dkt. 166. The Court denied the motion without prejudice due to concerns regarding the release and the value of the settlement for class members. Dkt. 166, 205. Plaintiffs filed their amended motion for preliminary approval on August 15, 2014. Dkt. 235.


During the midst of the parties' efforts to settle the action (as discussed above), non-party Reginald Burgess ("Burgess") filed a pro se motion to intervene, which the Court denied on December 3, 2012. Dkt. 125. Burgess moved for reconsideration so that he could participate in the settlement conference then scheduled to transpire before Magistrate Judge Cousins. Dkt. 128. The Court denied that motion as well on December 14, 2012. Dkt. 129.

On April 22, 2013, Burgess, now represented by attorney Garrett Skelly ("Skelly"), filed a Notice of Appearance & Joinder of Class Member Reginald Burgess as an Indispensable Party of Right to Appear ("Notice of Appearance"), which proclaimed his intervention in the action. Dkt. 142. The Court construed the Notice of Appearance as an improper request to intervene, and struck said document without prejudice to submitting his request as a properly noticed motion. Dkt. 147. The Court explained: "To the extent Burgess desires to intervene in the action, he must first meet and confer with the parties regarding his request. If no stipulation is reached, Burgess may file a noticed motion to intervene in the manner permitted by the Federal Rules of Civil Procedure and the Local Rules of this Court." Id. at 3.

On May 1, 2013, Burgess, along with Fred and Amy Rickel (parties in the Fernando case), filed a noticed Motion to Intervene and Amend Complaint, in which they sought leave to intervene and to file an amended complaint. Dkt. 149. The motion alleged that the present pleadings are inadequate and that new counsel (i.e., Skelly) should be appointed to replace the present Plaintiffs' counsel. The Court denied the renewed motion to intervene on the ground that Skelly had failed to meet and confer in good faith with the other parties, as specifically ordered in its prior order. Dkt. 161.

On June 12, 2013, Burgess and the Rickels, now joined by Lacy Reintsma (also from the Fernando action), Caleb Reinstma and Colette Tapia, filed an "Administrative Motion to Intervene and Admend [sic] The Complaint Re: Motions to Intervene Per Zepeda Dkt 97 and Dkt 149" which sought leave to file a motion to intervene. Dkt. 176.[3] On February 10, 2014, the Court denied the motion as moot, since leave of court to file such motion was unnecessary in light of the Court's prior order. Dkt. 196. For the benefit of Skelly and Putative Interveners, however, the Court explained in the order that the proposed intervention was ostensibly neither necessary nor appropriate for the reasons they articulated; to wit, that the existing pleadings and the proposed class action settlement are inadequate. Id. at 2. By way of example, the Court cited several circuit and district court cases holding as such, and directed Putative Interveners to take such authority into consideration in determining whether to, yet again, renew their motion to intervene. Id.


On February 14, 2014, Putative Interveners, apparently undaunted by the legal authorities cited in the Court's February 10, 2014 order, filed the instant motion to intervene. Dkt. 200. Pursuant to 28 U.S.C. § 636(b)(1)(A), the Court referred the motion to Magistrate Judge Joseph C. Spero for determination. Dkt. 203. On February 19, 2014, the day after the referral order was issued, Putative Interveners filed a document styled as a "Notice of Refusal to Consent to, and Objection to Proceedings, Before Magistrate." Dkt. 204. The gist of the objection was that a motion to intervene is dispositive in nature, and therefore, cannot be referred to a magistrate judge under § 636(a)(1)(A) without the parties' consent. The Court overruled the objection on procedural and substantive grounds. Dkt. 206. However, the Court amended its Order of Reference to reflect that the Magistrate "may issue a report and recommendation under 28 U.S.C. § 636(b)(1)(B), to the extent that he concludes that Putative Interveners' motion is outside the scope of § 636(b)(1)(A)." Id. at 3.

On April 23, 2014, the Magistrate issued his order denying Putative Interveners' renewed motion to intervene and amend. Dkt. 224. In his ruling, the Magistrate concluded that neither mandatory nor permissive intervention under Federal Rule of Civil Procedure 24 was appropriate in light of Putative Interveners' failure to show that their interests would be impaired absent intervention or that their interests are not adequately represented by the existing parties. Id. at 9-14. The Magistrate also rejected Putative Interveners' assertion that this Court had no authority to refer an allegedly dispositive motion to him under § 636(b)(1)(A). Id. at 14-15. Alternatively, the Magistrate indicated that to the extent that the ...

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