Justia Class Action Opinion Summaries

More than 13 years ago, lawyers around the country began class actions challenging the installation of fiberoptic cable on property without landowners’ consent. The cases began to settle on a state-by-state basis, leaving the lawyers to allocate awarded and expected attorney’s fees. The lawyers informally grouped themselves based on their negotiation and litigation positions. The Susman Group participated in mediation and agreed to a fee division, but balked at signing a written agreement, ostensibly because Susman disliked its enforcement terms. The district court held that Susman is bound by the agreement despite his failure to sign. The Seventh Circuit affirmed, reasoning that, given the parties’ lengthy course of dealing, Susman’s failure to promptly object to the written agreement can objectively be construed as assent. A finding that Susman’s refusal to sign was a case of “buyer’s remorse” rather than a genuine objection to the enforcement terms in the agreement was supported by the record. View "McDaniel v. Qwest Commc'ns Corp." on Justia Law

Plaintiffs filed a class action suit against B&B and others, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962. The alleged scheme involved "Population Equivalents" (PEs), specified quantities of sewage that a house or other building was estimated to dump into the local sewage system. The complaint alleged that B&B had improperly taken control of the Wasco Sanitary District and used that control to divert to itself permit fees that should have gone to the district to finance an expansion of its sewage system. The district court dismissed the claim for want of RICO standing because plaintiffs could not demonstrate an injury to their business or property. On appeal, defendants challenged the district court's denial of their application for an award of attorneys' fees under Fed. R. Civ. P. 11(b)(1) and (2). The court concluded that plaintiffs' suit, while meritless, was not frivolous. Accordingly, the court affirmed the judgment of the district court. View "Fiala, et al. v. B&B Enterprises, et al." on Justia Law

Crockett’s former law firm subscribed to a LexisNexis legal research plan that allowed unlimited access to certain databases for a flat fee. Subscribers could access other databases for an additional fee. According to Crockett, LexisNexis indicated that a warning sign would display before a subscriber used a database outside the plan. Years after subscribing, Crockett complained that his firm was being charged additional fees without any warning that it was using a database outside the Plan. LexisNexis insisted on payment of the additional fees. The firm dissolved. Crockett’s new firm entered into a LexisNexis subscription agreement, materially identical to the earlier plan; it contains an arbitration clause. Crockett filed an arbitration demand against LexisNexis on behalf of two putative classes. One class comprised law firms that were charged additional fees. The other comprised clients onto whom such fees were passed. The demand sought damages of more than $500 million. LexisNexis sought a federal court declaration that the agreement did not authorize class arbitration. The district court granted LexisNexis summary judgment. The Sixth Circuit affirmed. “The idea that the arbitration agreement … reflects the intent of anyone but LexisNexis is the purest legal fiction,” but the one-sided adhesive nature of the clause and the absence of a class-action right do not render it unenforceable. The court observed that Westlaw’s contract lacks any arbitration clause.View "Reed Elsevier, Inc. v. Crockett" on Justia Law

A class of Motorola investors claimed that, during 2006, the firm made false statements to disguise its inability to deliver a competitive mobile phone that could employ 3G protocols. When the problem became public, the price of Motorola’s stock declined. The parties settled for $200 million. None of the class members contends that the amount is inadequate. Two objected to approval of counsel’s proposal that it receive 27.5 percent of the fund. One objector protested almost a month after the deadline and failed to file a claim to his share of the recovery. The Seventh Circuit dismissed his appeal, stating that he lacks any interest in the amount of fees, since he would not receive a penny from the fund even if counsel’s share were reduced to zero. The other objector claimed that fee schedules should be set at the outset, preferably by an auction in which law firms compete to represent the class. Noting the problems inherent in such a system, the court held that the district judge did not abuse her discretion in approving the award. View "Liles v. Motorola Solutions, Inc." on Justia Law

Plaintiffs filed a class action on behalf of stock purchasers, alleging that Boeing committed securities fraud under the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and SEC Rule 10b-5. The suit related to statements concerning the new 787-8 Dreamliner, which had not yet flown, and did not specify a damages figure. At argument the plaintiffs’ lawyer indicated that the class was seeking hundreds of millions of dollars. The district court dismissed the suit under Rule 12(b)(6) before deciding whether to certify a class. Plaintiffs appealed the dismissal; Boeing cross-appealed denial of sanctions on the plaintiffs’ lawyers for violating Fed. R. Civ. P. 11. The Seventh Circuit affirmed dismissal with prejudice, but remanded for consideration under 15 U.S.C. 78u-4(c)(1), (2), of Rule 11 sanctions on the plaintiffs’ lawyers. No one who made optimistic public statements about the timing of the first flight knew that their optimism was unfounded; there is no securities fraud by hindsight. Plaintiffs’ lawyers had made confident assurances in their complaints about a confidential source, their only barrier to dismissal of their suit, even though none of them had spoken to the source and their investigator had acknowledged that she could not verify what he had told her. View "City of Livonia Emps' Ret. Sys. v. Boeing Co." on Justia Law

The Chicago-area law firms (Anderson) represent plaintiffs in class action lawsuits under the Telephone Consumer Protection Act-Junk Fax Prevention Act, which authorizes $500 in damages for faxing an unsolicited advertisement, 47 U.S.C. 227(b)(1)(C), (b)(3). This award triples upon a showing of willfulness, and each transmission is a separate violation. Advertisers would pay a fee, and B2B would send an ad to hundreds of fax numbers without obtaining permission from the recipients. When Anderson learned that defendants in four cases under the Act had contracted with B2B, B2B records became the focus of discovery. Despite obtaining all information necessary to certify classes in the four cases, Anderson continued pushing for B2B, and, at a deposition at which B2B was represented by Ruben, obtained the names of other B2B clients, and sent solicitation letters. Anderson attempted to give Ruben $ 5000. Defendants in new cases learned that Anderson had promised B2B confidentiality and unsuccessfully challenged class certification. The Seventh Circuit affirmed, stating that when an ethical breach neither prejudices an attorney’s client nor undermines the integrity of judicial proceedings, state bar authorities are generally better positioned to address the matter through disciplinary proceedings, rather than the courts through substantive sanction in the underlying lawsuit. View "Reliable Money Order, Inc. v. McKnight Sales Co., Inc." on Justia Law

In this action under the All Writs Act, 28 U.S.C. 1651, and the Anti-Injunction Act, 28 U.S.C. 2283, the court considered whether, following the approval of a federal class action settlement, the district court properly enjoined a state court action for legal malpractice directed at counsel for the plaintiff class. The court held that the "in aid of jurisdiction" exception to the Anti-Injunction Act could not form the basis for the district court's injunction of the state court action, as the limited circumstances in which the injunction of an in personam action could be appropriate "in aid of" the court's jurisdiction were not present in this case. The court also concluded that where, as here, the parties had a full and fair opportunity to litigate the reasonableness of counsel's representation, a subsequent malpractice action could be enjoined under the relitigation exception. View "Barroway v. Computer Assoc., et. al." on Justia Law

Appellants, attorney Barbara Bonar and her law firm, claimed entitlement to a portion of the attorney's fees awarded in a class action settlement. Bonar and Appellees, a law firm and attorneys, initiated the class action as co-counsel. Before the settlement was negotiated, Bonar withdrew. Bonar claimed she was forced to withdraw. Following a bench trial, the circuit court concluded Bonar was not entitled to any of the attorney's fees because her withdrawal was voluntary. The court of appeals affirmed. The Supreme Court affirmed, holding (1) the weight of the evidence supported the conclusion that Bonar withdrew from the case voluntarily, and therefore, Bonar was not entitled to any portion of the attorney's fees awarded to class counsel; (2) the trial court did not improperly limit discovery; and (3) the trial court did not violate Bonar's right to a fair trial by commenting on Bonar's conduct. View "B. Dahlenburg Bonar, P.S.C. v. Waite, Schneier, Bayless & Chesley Co., LPA" on Justia Law

In a suit alleging engine defects in Volkswagen and Audi vehicles, the district court awarded $30 million in attorneys' fees to several groups of plaintiffs' attorneys who achieved a class action settlement agreement. The award was based in federal law. The First Circuit vacated the fee award and remanded for calculation using Massachusetts law. In a diversity suit, where the settlement agreement expressly states that the parties have not agreed on the source of law to apply to the fee award and there is an agreement that the defendants will pay reasonable fees, state law governs the fee award. View "Volkswagen Grp of Am. v. McNulty Law Firm" on Justia Law

This case concerned the scope of absolute privilege that grants immunity to litigants and their attorneys from being sued for defamation based on public statements they make about a judicial proceedings either before or after the proceeding is filed. Specifically, the issues before the Supreme Court in this case were: (1) whether pre-litigation statements made by an attorney to prospective clients in the presence of the press regarding a potential mass-tort lawsuit; and (2) whether statements made directly to the press by an attorney or party after such lawsuit was filed, are absolutely privileged, thus barring any lawsuit for defamation. The district court found in the affirmative on these issues and granted summary judgment to the defendants. The Court of Appeals reversed that decision, finding that absolute privilege did not apply to statements made before or after a complaint was filed when the statements were made before the press. Upon review, the Supreme Court held that absolute privilege indeed does apply to pre-litigation statements made by attorneys in the presence of the press if (1) the speaker is seriously and in good faith contemplating a lawsuit at the time the statement was made; (2) the statement is reasonably related to the proposed litigation; (3) the attorney has a client or identifiable prospective clients at the time the statement was made; and (4) the statement is made while the attorney is acting in the capacity of counsel or prospective counsel. View "Helena Chemical Co. v. Uribe" on Justia Law