A Nevada retail employee sued his employer for failure to either pay minimum wage or overtime to hourly workers, and he moved to bring into his suit all other hourly people who worked for the company in the same period. He asked the employer during discovery to provide the names and addresses of such workers. Instead, the company offered him a little more than 10 times as much as he said he was owed.

What happened. “Paterson” worked for a chain of gas stations and convenience stores owned by Terrible Herbst, Inc. His original suit, filed in April 2009, said he was owed $88. In July, a federal district court scheduled discovery to be concluded by January 2010. That day, Paterson asked Terrible Herbst for the names and addresses of other potential plaintiffs. The employer refused, and Paterson moved to compel it to comply. With that motion pending, the judge extended discovery by 3 months.

Meanwhile, Terrible offered Paterson $900 to satisfy his claim and court costs and attorney’s fees. Paterson turned it down, but Terrible moved to have his claim “mooted,” meaning that the offer would satisfy his charges and make the whole lawsuit go away. It would also have short-circuited the certification of the rest of the class. The district court agreed with Terrible and dismissed Paterson’s suit. He appealed to the 9th Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

What the court said. Appellate judges said the U.S. Supreme Court hasn’t ruled on the precise point at issue in this case but has provided what they viewed as helpful guidance. They noted that the district judge ruled against class certification before Paterson ever had the chance to find out who might be in the class. And, they disagreed with that decision, saying that had the class already been certified, buying off Paterson himself would not have made the lawsuit go away.

They also stated that even if the class had not yet been certified, simply mooting Paterson’s claim would not necessarily have ruled out the class action. Judges said they were deciding in line with earlier rulings by the 3rd (DE, NJ, PA), 5th (LA, MS, TX), and 10th (CO, KS, NM, OK, UT, WY) Circuits. Pitts v. Terrible Herbst, U.S. Court of Appeals for the 9th Circuit, No. 10-15965 (8/9/11).

Point to remember: The 11th Circuit (AL, FL, GA) this year ruled the other way, dismissing a plaintiff’s entire class action suit because the defendant bought him out. Surprisingly, a 9th Circuit judge helped rule in that case, so there was hope it would prevail there. But now there’s a definite circuit split that the Supreme Court may need to resolve.