In an “opt out” class action, sending notice to class members following class certification is not only routine, but required by due process. But does a district court have the right to order notice prior to a decision on class certification? In Gardener v. GMAC, Inc., No. 14-208 (4th Cir. Aug. 6, 2015), both the district court and the Fourth Circuit “assumed for the sake of argument” that Rule 23(d)(1)(B) provides the trial court with that authority. But each declined to accept the plaintiffs’ argument that the facts warranted such notice. Observing that pre-certification dismissal does not amount to res judicata of the absent class members’ claims, Judge Diaz concluded that the district court’s decision not to order notice before it granted summary judgment fell well within the court’s discretionary powers. The panel’s decisions suggests that unnamed class members’ interests must be “compelling” in order to justify pre-trial notice.
Late last year, we explained the tricky statute of limitations issues that can arise regarding “cross-jurisdictional class action tolling.” The issue arose in some of the many Pella window cases pending before Judge Norton in the District of South Carolina. Those cases have now raised several more interesting timeliness issues—when plaintiffs can consolidate pending cases to avoid dismissal on timeliness grounds, and when a failure to move for certification waives class claims.
In October of last year, the Judicial Panel on Multidistrict Litigation (JPML) transferred the Saltzman/Eubank case against Pella to Judge Norton. The Saltzman/Eubank case was originally filed in Illinois in 2006. The other Pella windows cases before Judge Norton were filed much more recently, and many of the plaintiffs face the kind of statute of limitations issues we discussed in our earlier post.
After the Saltzman/Eubank case was transferred to South Carolina, lead counsel in the multi-district litigation (MDL) developed a strategy to use the 2006 complaint in Saltzman/Eubank to avoid the statute of limitations issues in the later-filed cases. Plaintiffs argued that, in effect, the later cases were really just a continuation of the Saltzman/Eubank litigation. They attempted to consolidate with the later-filed cases, and they moved to file an amended complaint that would become the operative complaint for all of the cases in the MDL.
Plaintiffs’ argument was that the named plaintiffs in the later-filed cases were unnamed members of the class in Saltzman/Eubank. Thus, if they could consolidate all of the cases and file an amended complaint, they could argue that the later-filed claims related back to the original 2006 complaint. This would save claims in the later cases from being dismissed as untimely.
In his order, Judge Norton began his analysis with the motion to consolidate. He held that, even if he granted the motion for consolidation, it would not produce the result the plaintiffs wanted. Because consolidation under Rule 42(a) does not merge all the suits into a single action, it would not let plaintiffs file a complaint in the later-filed cases that would relate back to the 2006 complaint in Saltzman/Eubank. The Court also noted that it was unnecessary to consolidate the cases because they were already consolidated when they were transferred to the Court by the JPML.
Next, the Court turned to the motion to file an amended complaint. The Plaintiffs hoped to persuade the Court that all of the MDL plaintiffs were unnamed class members in the Saltzman/Eubank, thereby avoiding timeliness issues. The Court held that the plaintiffs in the later-filed actions were not unnamed class members in Saltzman/Eubank. Although the later-filed claims were part of the original complaint in Saltzman/Eubank, those claims were never certified. Instead, they were apparently abandoned during settlement negotiations in 2008. Citing authority from the 11th Circuit and other federal district courts, Judge Norton held that the failure to move for certification on these claims in Saltzman/Eubank resulted in a waiver. The Court also noted that “[t]o accept plaintiffs’ argument would essentially place Pella in legal limbo for five years, leaving it to speculate whether abandoned claims in a settled case would eventually be resurrected.”
The Fourth Circuit may have the opportunity to address some of these issues. This April, Judge Norton entered an order in Alexander v. Pella Corp, No. 2:14-mn-00001, 2:14-cv-540 (D.S.C. April 21, 2015). As in the case discussed in our earlier post, the Court rejected the argument that their claims were tolled during the pendency of Saltzman/Eubank. The plaintiffs moved the court to reconsider, arguing that their claims related back to the original 2006 complaint, as outlined above. The Court denied the motion to reconsider, and Plaintiffs have now filed an appeal to the Fourth Circuit.
Alexander v. Pella Corporation, No. 15-1828 (4th Cir. July 28, 2015) (docketing appeal from Order dismissing claims as untimely because cross-jurisdictional class action tolling did not apply and class members were not unnamed members of earlier suit and their claims did not relate back to the earlier complaint)
Presson v. DARA BioSciences, Inc., et. al., No. 15-CVS-9775 (Wake County Super. July 27, 2015) (putative class action on behalf of shareholders of DARA BioSciences, Inc. against company officers and directors, alleging breach of fiduciary duty and other claims arising out of a proposed merger with Midatech Pharma).
Bennett v. Commercial College of Asheboro, Inc., No. 15 CVS 1744 (Guilford County Super. July 23, 2015) (class action seeking damages and remedies by adult students of Brookstone College of Business, alleged to have suddenly closed without warning).
Smith v. Catamaran Health Solutions, LLC, No. 3:15-cv-2846 (D.S.C. July 20, 2015) (asserting numerous state and federal claims involving HealthExtras disability insurance, with federal jurisdiction asserted under the Class Action Fairness Act).
Castillo-Caceres v. Southern Produce Distributors, Inc., No. 7:15-cv-149 (E.D.N.C. July 17, 2015) (bringing class action and collective action on behalf of employees of produce packing operation based on alleged violations of the North Carolina Wage & Hour Act and the Fair Labor Standards Act).
Johnson v. Piggly Wiggly, No. 2:15-cv-2805) (D.S.C. July 16, 2015) (removal of Fair Labor Standards Act collective action and class action under the South Carolina Payment of Wages Act brought by South Carolina employees of Piggly Wiggly supermarkets).
Lipton v. McLean, No. 6:15-cv-2796 (D.S.C. July 15, 2015) (asserting a shareholder derivative action on behalf of shareholders of World Acceptance Corporation against company officers and directors, alleging breach of fiduciary duty and other claims)
Smalls v. TrueBlue, Inc., No. 1:15-cv-2710 (W.D.N.C. July 9, 2015) (transfer of putative national class action against temporary staffing companies for alleged violations of the Fair Credit Reporting Act; originally filed March 2, 2015 in the Western District of Washington).
Hoyt v. PML Clubs, Inc., No. 4:15-cv-02711 (D.S.C. July 8, 2015) (collective action by exotic dancers alleging that the defendants, who operated national chain of strip clubs, treated the dancers as independent contractors rather than employees and mishandled tips in violation of the Fair Labor Standards Act).
Rife v. Momma Rosa LLC, d/b/a Baroni’s Pizza, No. 2:15-cv-2673 (D.S.C. July 6, 2015) (asserting Fair Labor Standards Act collective action and class action under the South Carolina Payment of Wages Act on behalf of pizza delivery drivers alleging employment law violations, including pay less than minimum wage for untipped work).