Zeidman v. J. Ray McDermott & Co.

Fred Zeidman and Steven Youngelson (plaintiffs) sought certification for a class of nonprofessional and noninstitutional investors who sold their shares of stock during a certain period in a suit against J. Ray McDermott & Co. and others (McDermott) (defendants) regarding a tender offer for control of the company. To establish numerosity, Zeidman and Youngelson initially offered evidence of the total number of shares traded during the relevant period, which included shares traded by professional and institutional investors who had been excluded from the class. The district court found that this failed to establish numerosity vis-a-vis the shares sold by nonprofessional and noninstitutional investors and denied class certification, but the court held the issue of numerosity open pending submission of additional evidence. Additional numerosity evidence was offered by Zeidman and Youngelson but not considered by the district court, which instead decided to dismiss the case for mootness because McDermott had tendered to Zeidman and Youngelson the full amount of their individual claims. Zeidman and Youngelson appealed and argued that the district court abused its discretion by holding the numerosity issue open pending the submission of additional evidence and that the dismissal for mootness was also an abuse of discretion.