Justia Class Action Opinion Summaries

When an employee left the company in 1997, took a $47,850 lump sum distribution of his pension. He later believed that the payment should have included the present value of future cost of living adjustments that would have been included had he received his pension as an annuity. In 2002, he filed a class action suit. The district court granted summary judgment on liability in favor of the class and the Seventh Circuit affirmed, holding that a COLA is an accrued benefit, as defined in ERISA, 29 U.S.C. 1002(23)(A). Before the district court ruled, the parties reached a settlement that each early retiree would receive roughly 3.5% of her original lump sum, unless the COLA on a normal-retirement-age-based annuity outweighed her early-retirement subsidy, a rare situation. The district court approved the proposed settlement and awarded attorney's fees. Objectors were not allowed to opt out. The Seventh Circuit affirmed, upholding determinations that the settlement was reasonable; that class counsel had adequately represented the early retirees and that further subclasses were unnecessary; that opt-out should be denied; and concerning attorney fees.

Plaintiffs appealed the district court's dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) of their putative consumer class action against defendants. Plaintiffs also appealed the district court's denial of leave to amend their second amended complaint, alleging that the design of defendants' retail gasoline dispensers was fundamentally flawed due to a residual fuel occurrence: when plaintiffs purchased premium grade fuel, they received between two and three-tenths of a gallon of residual fuel from the previous transaction, and therefore were overcharged when the previous purchaser had selected mid-range or regular grade fuel. The court agreed with the district court that plaintiffs' well-pleaded factual allegations, accepted as true, did not give rise to a reasonable inference that defendants have committed any misconduct for which the court could grant relief. Accordingly, further amendment would be futile and the district court did not abuse its discretion in denying leave to amend.

A registered nurse initiated a collective action on behalf of herself and all similarly situated individuals, alleging defendants violated the Fair Labor Standards Act, 29 U.S.C. 207 and 216(b), when they implemented a policy subjecting the pay of certain employees to an automatic meal break deduction whether or not they performed compensable work during breaks. Defendants made an offer of judgment under Fed. R. Civ. P. 68 in the amount of "$7,500.00 in alleged unpaid wages, plus attorneys' fees, costs and expenses as determined by the Court." The district court dismissed for lack of subject matter jurisdiction. The Third Circuit reversed, first noting that the FLSA does not contain conditional class certification language. The court nonetheless applied the "relation back doctrine," which allows a district court to retain jurisdiction over a matter that would appear moot after expiration of a named plaintiff's individual claims, to prevent use of a Rule 68 offer as a "sword."

Timothy Hop's automobile was damaged in an accident with a driver insured by Safeco Insurance Company. In addition to the costs of repair, Hop sought "residual diminished value" (RDV) for his vehicle. When Safeco failed to pay RDV, Hop filed a class action complaint for declaratory relief in the district court, seeking a declaration that Safeco was required to investigate and pay class members, people whose vehicles were damaged by a Safeco insured and who were not paid RDV by Safeco, for RDV of their vehicle. The district court granted Hop's motion for class certification. The Supreme Court reversed, holding that the district court abused its discretion in certifying a class action before Hop had satisfied the statutory requirements to bring an individual third party action against Safeco. Remanded with instructions to dismiss Hop's class action without prejudice.

The parties agree that the company attempted to collect an overdue hospital bill in a way that violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692 and that plaintiff is entitled to statutory damages of $1,000. Plaintiff's lawyer endeavored to transform the case into a class action, and the district court, frustrated by the effort, dismissed the whole action. The Seventh Circuit held that dismissal for want of prosecution was an abuse of discretion. All of the errors at issue were the fault of the lawyer and had nothing to do with the claim. The court should have considered other alternatives before dismissal.

A class action suit against tobacco-related entities, first filed in 1998, alleged that for years the tobacco companies conspired to conceal the facts about the addictive and dangerous nature of cigarettes by intentionally using incomplete, misleading, or untruthful marketing and advertising. The putative class consists of Illinois residents who bought or smoked cigarettes, seeking disgorgement of profits on an unjust enrichment theory. After extensive proceedings, the district court dismissed for failure to state a claim. The Seventh Circuit affirmed. Mere violation of a consumer's legal right to know about a product's risks, without anything more, cannot support a claim that the manufacturer unjustly retained the revenue from the product's sale to the consumer’s detriment. Plaintiffs did not allege that they suffered any harm, that they relied on the marketing, or that they would have acted differently had the defendants been truthful.

Named plaintiffs are residents of a residential area of about 2000 people. Defendants, chemical companies, operated a facility one mile north of the area. Plaintiffs allege that defendants dumped wastewater into a lagoon that seeped into an aquifer where it degraded into vinyl chloride, a carcinogen. The district court denied certification of a class seeking medical monitoring for village residents exposed to airborne vinyl chloride between 1968 and 2002, and a liability-only issue class seeking compensation for property damage from the exposure. The Third Circuit affirmed. The district court acted within its discretion in finding plaintiffs would be unable to prove a concentration of vinyl chloride that would create a significant risk of contracting a serious latent disease for all class members. A single injunction or declaratory judgment could not provide relief to each member of the class, due to individual issues unrelated to the monetary nature of the claim. Each person's work, travel, and recreational habits may have affected their level of exposure. Certification of a liability-only issue class could unfairly impact defendants and absent class members.

This case was remanded from the U.S. Supreme Court. Appellants Keith Litman and Robert Watchel asked the Third Circuit to reverse a district court order that compelled them to arbitrate their contract dispute with Cellco Partnership (d/b/a Verizon Wireless) on an individual rather than class-wide basis. In an unpublished opinion, the Third Circuit vacated the district court order because a recent Third Circuit precedent bound the Court to conclude that class arbitration should have been available to Appellants. Verizon responded by seeking a stay of the mandate and seeking review by the Supreme Court. Having reviewed the supplemental briefing and applicable legal authority, the Third Circuit concluded that the applicable law at issue that required the availability of classwide arbitration created a scheme inconsistent with the Federal Arbitration Act. Accordingly, the Court affirmed the district court’s order compelling individual arbitration in accordance with the terms of the individual Appellants’ contracts with Verizon.

Plaintiffs Carol Metz and others filed a putative class action against fifty-five banks, including Fifth Third. The claims arose out of a Ponzi scheme involving bogus promissory notes. Five months later, attorney Daniel Morris filed a motion to intervene on behalf of his clients. Attached to the motion was a complaint similar to Metz's complaint except it was premised on promissory notes issued by different entities. The district court granted the motion to intervene. After the district court had dismissed Fifth Third with prejudice, Morris filed an intervenors' complaint against Fifth Third. The complaint was virtually identical to the complaint attached to the motion to intervene Morris filed earlier. The district court dismissed the claims with prejudice and granted Fifth Third's request for sanctions. The Sixth Circuit affirmed the imposition of sanctions, holding (1) the district court's imposition of sanctions under the bad faith standard was proper; (2) the record set forth sufficient evidence to support the district court's decision; (3) the district court properly sanctioned Morris under its inherent authority even though Fed. R. Civ. P. 11 also applied; (4) the district court did not deny Morris due process; and (5) the amount of fees awarded was not excessive.

A six-year-old boy, with profound hearing impairment, was furnished with transportation to and from school as part of his individualized education program. The school district contracts with a private company for bus service. The boy alleged sexual abuse by a bus driver. The family sued under 42 U.S.C. 1983 and Title IX of the Education Amendments of 1972, 20 U.S.C. 1681-1688. The district court ruled in favor of the defendants. The First Circuit affirmed. The Section 1983 claim was properly rejected because transportation to and from school is not an exclusive state function; defendants did not act under color of state law. The Title IX claim failed because it is not clear that the "appropriate person," with the authority to take disciplinary action against the bus driver, actually knew about the alleged harassment and exhibited deliberate indifference toward it.