Class certification is often the pivotal moment in a class action. In many cases, the prospect of ruinous liability – to say nothing of the difficulty of trying a class action – induces defendants to settle shortly after the class is certified. But class certification does not necessarily guarantee that plaintiffs will win: because class certification orders are “inherently tentative,” a court may revisit its decision to certify a class if it no longer appears that the class satisfies the requirements of Rule 23. And as a recent case from the Southern District of New York demonstrates, a defendant may successfully obtain decertification even after a jury renders its verdict.
That case, Mazzei v. Money Store, arose out of allegations that a pair of mortgage servicers (and former lenders) unlawfully assessed late fees and accelerated the balance due on loans that fell into default. The plaintiff, who took out a second mortgage from the defendants, brought a class action on behalf of a putative class of mortgage borrowers. The court certified a class of plaintiffs who were charged late fees after their loans were accelerated, and the jury ultimately found in the plaintiffs’ favor. The defendants then moved to decertify the class on the basis, among others, that the plaintiffs had failed to demonstrate the existence of a contractual relationship between the plaintiff borrowers and the defendant servicers on a classwide basis.
The court granted the defendants’ motion to decertify the class. It first determined that a borrower may not assert a breach of contract claim against a mortgage servicer absent evidence of a contractual relationship between the two. The court then held that classwide relief was improper because the plaintiffs had not “presented classwide proof on whether there were valid assignments” of their mortgage loans to the defendants. It emphasized that plaintiffs’ proof of a contractual relationship consisted largely of expert testimony about “mortgage industry standards and practices” and about whether the pooling and servicing agreement it executed with the named plaintiff was “typical of the industry.” It ultimately concluded that this evidence was insufficient to support class certification, reasoning that “general background testimony about industry practices” cannot substitute for classwide proof of contractual relationships.
Although the court acknowledged that it was “theoretically possible” to prove the existence of a contractual relationship on a classwide basis, it suggested that individual factual issues with respect to each plaintiff’s loan would likely predominate over class-wide issues. While the court acknowledged that decertification was a “drastic step” and was particularly disfavored after a trial on the merits, it nonetheless held that decertification would avert a manifest injustice – a $54 million recovery for the class without class-wide proof of a contractual relationship. And it stressed that its holding would also vindicate the interest of absent class members by “protect[ing] them from being saddled with the fact that plaintiff failed to produce enough evidence to protect their interests at trial.”
It is unclear whether Mazzei’s holding applies beyond its atypical facts. After all, it is unusual to see a class action for breach of contract, let alone one in which the relevant contracts did not uniformly bind all members of the class (although, to be sure, difficulties in proving contractual privity on a classwide basis may preclude certification of breach-of-warranty claims or other claims commonly asserted in class actions). But Mazzei suggests that courts should closely scrutinize classes even after certification: as the court noted, it may not be clear that the named plaintiff is an atypical class representative or that individualized issues predominate over class-wide ones until after the plaintiffs have presented their evidence at trial. And if a court can determine from the evidence at trial that the class does not satisfy the requirements of Rule 23, even a large judgment may not prevent a court from decertifying a deficient class.
 See Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n.11 (1978).
 Mazzei v. Money Store, 308 F.R.D. 92 (S.D.N.Y. 2015).
 Id. at 109-11.
 Id. at 112 (quoting Jermyn v. Best Buy Stores, L.P., 276 F.R.D. 167, 168-69 & n.1 (S.D.N.Y. 2011)).
 Id. at 113. (citing Rector v. City & County of Denver, 348 F.3d 935, 949 (10th Cir. 2003)).