Archives: Eastern District of North Carolina

Court Denies Certification of Settlement Class Where Settlement Only Benefited Named Plaintiff

View Rich Worf’s Complete Bio at RBH.comThe Second Circuit has observed that “[t]he [trial] judge [in a class action] should not regard himself as an umpire in typical adversary litigation. He sits also as a guardian for class members who have not received a notice or who lack the intellectual or financial resources to press objections.” Weinberger v. Kendrick, 698 F.2d 61, 69 n.10 (2d Cir. 1982). And this role is transparently on display when it comes to approving settlements, which is the court’s responsibility under Rule 23(e). Recent decisions in other circuits emphasize, particularly after Wal-Mart, that a court must still engage in a rigorous Rule 23 review even in the context of a settlement. See Rodriguez v. National City Bank, No. 11-8079 (3d Cir. Aug. 12, 2013) (declining to approve settlement class because it failed to meet newly articulated standards of commonality).

In Supler v. FKAACS, Inc., No. 5-11-CV-229 (E.D.N.C. Nov. 6, 2012), Judge Flanagan refused to approve a consent settlement in a Fair Debt Collection Practices case involving a company that allegedly left pre-recorded messages for a debtor without identifying it was a debt collector. She found four different barriers to class certification and settlement approval: (1) it was not administratively feasible to determine who was in the class because the defendant used multiple autodialing machines, only one of which allegedly transmitted illegal messages, and there were no records to show whom it called; (2) the injunctive remedy agreed to wasn’t meaningful or beneficial to the class because defendant wasn’t in the business anymore of collecting past-due accounts; (3) the damages remedy agreed to was not meaningful as it consisted of a $2,500 payment to the named plaintiff and a $17,500 cy pres payment to Legal Aid of North Carolina; and (4) the scope of the class was improperly confined to dates relevant chiefly to the named plaintiff’s interests.

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Debate Over Predominance in Issue Certification Continues as Supreme Court Denies Cert.

View Amanda Pickens’ Complete Bio at RBH.comParticularly with the Supreme Court’s denial of cert in Whirlpool v. Glazer, U.S., No. 13-431, cert. denied 2/24/14, “issue certification” itself remains an unresolved issue. In Whirlpool, the Sixth Circuit affirmed the district court’s order granting class certification of claims for breach of warranty, negligent design, and negligent failure to warn under Ohio law for Whirlpool’s front-load washing machines. Whirlpool argued that class certification was improper because individual issues of liability and damages predominated with respect to the action as a whole. Some years ago, Judge Dever discussed the notion of “issue certification” in Farrar & Farrar Dairy, Inc. v. Miller-St. Nazianz, Inc., 254 F.R.D. 68 (E.D.N.C. 2008), noting that “although the Fourth Circuit appears to address this issue in Gunnells v. Healthplan Services, Inc., 348 F.3d 417 (4th Cir. 2003), its analysis is unclear.” As Judge Dever read the opinion, the Fourth Circuit appeared to hold that only causes of action, not individual issues, can be certified. A bona fide circuit split exists on this issue. Compare Castano v. American Tobacco Co., 84 F.3d at 745 n. 21 (5th Cir. 1996), with McReynolds v. Merrill Lynch & Co., No. 11-3639 (7th Cir. 2012). This can be particularly important in consumer class actions. SeeCarving at the Joints: Using Issue Classes to Reframe Consumer Class Actions.” The Fourth Circuit has not touched the issue since Judge Dever wrote about it five years ago. The circuit split encourages forum shopping by plaintiffs hoping to certify issue-based class actions.

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After Co-Counsel Communication Issues, Court Appoints Sole Class Counsel

View Stuart Pratt’s Complete Bio at RBH.comIn Mitchell v. Smithfield Packing Co., Inc., No. 4:08-CV-182, 2013 WL 3819935 (E.D.N.C. July 23, 2013), Magistrate Judge Gates had to decide how to deal with putative class counsel who were having trouble communicating: “Communications between [co-counsel] appear to have completely broken down, and the court cannot envision any scenario in which they could continue to work together.” In the face of this, the Court had to choose which counsel to appoint as sole class counsel under Rule 23(g). Rule 23(g)(2) provides that “[i]f more than one adequate applicant seeks appointment, the court must appoint the applicant best able to represent the interests of the class.” In this case, the Court opted for experience, finding that one set of lawyers’ experience “in this area vastly outstrip[s]” the other. In so holding, Judge Gates went against the wishes of the named plaintiffs, which he held “not to be dispositive.”

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