Justia Class Action Opinion Summaries

In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d).

The district court certified a class action and a proposed class in an action under the Employee Retirement Income Security Act, 29 U.S.C. 1001. The suit claimed that Blue Cross breached its fiduciary duty by imposing and failing to disclose an other-than-group subsidy and that the OTG subsidy violated Mich. Comp. Laws 550.1211(2). The state insurance commissioner took the position that state law allows the assessment and that revenue it generates funds Medigap coverage. The Sixth Circuit reversed, holding that the class action is not the superior method of adjudication (Federal Rule of Civil Procedure 23(b)(3)) and prosecuting separate actions does not present the risk of inconsistent adjudications (FRCP 23(b)(1)(A)). ERISA fiduciary status is a crucial threshold factual issue specific to every class member, requiring the court to make individualized determinations. Resolution of the legality of the subsidy before that determination would also mitigate the state's concerns about stopping collection of the fee. Potential awards at stake would not preclude individual class members from seeking relief and there was no evidence that individual litigation would create a risk of inconsistent adjudications that would establish incompatible standards of conduct for the defendant.

The first plaintiffs alleged that Fidelity failed to provide a discount, required by its filed rates, when issuing title insurance to homeowners who had purchased a title insurance policy for the same property from any other insurer within the previous 10 years. The second plaintiff brought the same claims against First American. The district court denied their motion to certify a class. The Sixth Circuit affirmed. Although the claims involve small amounts, so that the plaintiffs are likely unable to recover except by class action, the plaintiffs did not establish that issues subject to generalized proof and applicable to the whole class predominate over issues subject to individualized proof. The need to establish entitlement to join the class and the need to prove individual damages are not fatal to class certification, but the Ohio insurance rate structure would necessitate individual inquiries on the issue of liability. The plaintiffs phrased their claims in a way that would require examination of individual policies and whether the company received the requisite documentation for the discount.

The representative of the estate of a deceased individual filed a civil rights suit (42 U.S.C. 1983). The court denied the motion of another (Gresham) for joinder, amendment of the complaint to include Gresham's claims, and class action certification. The Sixth Circuit held that it lacked jurisdiction to consider an appeal. Gresham was not a party to the case, in which there has been no entry of a final or appealable order disposing of all issues. The court declined to treat the filing as a petition for mandamus.