Justia Class Action Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Smith v. General Motors LLC
In 2005-2006, GM changed the dashboard used for GMT900 model cars from a multi-piece design to a single-piece design, which made the dashboard prone to cracking in two places. Plaintiffs, from 25 states, alleged that GMT900 vehicles produced in 2007-2014 contained a faulty, dangerous dashboard and that GM knew of the defective dashboards before GTM900 vehicles hit the market. The complaint contained no allegation that any of the plaintiffs have been hurt by the allegedly defective dashboards. The complaint, filed on behalf of a nationwide class, alleged fraudulent concealment, unjust enrichment, and violations of state consumer protection statutes and the Magnusson-Moss Warranty Act.The Sixth Circuit affirmed the dismissal of the case. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Although the plaintiffs claimed that routine testing, customer complaints, and increased warranty claims alerted GM to the defective dashboards and accompanying danger, that is not enough to survive a motion to dismiss without specifics about how and when GM learned about the defect and its hazards, and concealed the allegedly dangerous defect from consumers. Even accepting that GM produced defective vehicles, under the common legal principles of the several states, the plaintiffs must show that GM had sufficient knowledge of the harmful defect to render its sales fraudulent. View "Smith v. General Motors LLC" on Justia Law
In re: National Prescription Opiate Litigation
In multi-district litigation (MDL), the district court certified an opt-out “negotiation class” under Federal Rule of Civil Procedure 23, consisting of all cities and counties (34,458 identified entities) throughout the United States for purposes of negotiating a settlement. These municipalities brought RICO and Controlled Substances Act claims, alleging that opioid manufacturers, distributors, pharmacies, and retailers acted in concert to mislead medical professionals into prescribing, and millions of Americans into taking and often becoming addicted to, opiates. Unlike a litigation class, formed to aggregate and try common issues, the negotiation class would attempt to reach a settlement while the individual MDL cases continue on litigation paths. Negotiation class members would likely not have a second opportunity to opt-out and would have to decide at the class certification stage—without knowing the settlement figure— whether they wish to bind themselves. A proposed agreement could only be accepted if a supermajority of six categories of voting class members assent to it.Several defendants objected; 556 putative class members opted-out of the negotiation class. In consolidated appeals, the Sixth Circuit reversed the class certification. Rule 23 does not identify negotiation as a separate category of certification distinct from settlement. The negotiation class device frustrates a court’s analysis of whether a class action is the superior method of adjudication and avoids some of the procedural requirements of litigation class certification without halting the underlying litigation. View "In re: National Prescription Opiate Litigation" on Justia Law
Vicki Linneman v. Vita-Mix Corp.
Some Vita-Mix blenders contained tiny flecks of polytetrafluoroethylene, a substance commonly used in kitchen appliances and used in the blenders' seals. Normal wear-and-tear caused tiny pieces to rub off from the seal into the blender container. Blender owners filed this class action. The parties entered into a settlement for two classes of plaintiffs: a household class and a commercial class. Household class members could request either a $70 gift card or a replacement blade assembly. Commercial class members could request only a replacement blade assembly. The court preliminarily approved this settlement.The court calculated attorneys' fees by multiplying the hours class counsel reasonably worked on the case by a reasonable hourly rate, resulting in an award of about $2.2 million. Based on the purportedly exceptional nature of the litigation, the court enhanced that figure by 75% for a final award of about $4 million, plus post-judgment interest.The Sixth Circuit vacated. The district court correctly used the lodestar method of calculation and correctly interpreted the settlement agreement but erred when it determined the billing rates based on class counsel’s affidavits. A lawyer seeking fees has the burden to show the reasonableness of his billing rate with something in addition to the attorney’s own affidavits” The district court abused its discretion when it used an upward multiplier, without addressing a crucial question: whether this case involves “rare and exceptional circumstances.” The court upheld the award of post-judgment interest. View "Vicki Linneman v. Vita-Mix Corp." on Justia Law
Hicks v. State Farm Fire & Casualty Co.
Under its replacement-cost homeowner insurance contracts, State Farm calculated its payment obligations by estimating the amount it would cost to repair or replace damaged property and subtracting depreciation and the deductible. During the class period, State Farm depreciated costs for both materials and labor.Policyholders filed a putative class action. The Sixth Circuit held that in an insurance contract that incorporates Kentucky’s “replacement cost minus depreciation” formula, the insurer cannot depreciate the costs of labor when determining payments. State Farm changed its practice and created a refund program for those who had received payments between the decision and the date State Farm stopped deducting labor depreciation. Most policyholders received refunds of less than $1,000. The court certified the class as: All persons and entities that received “actual cash value” payments ... from State Farm … for loss or damage to a dwelling or other structure in … Kentucky ... where the cost of labor was depreciated," excluding those that received payment in the full amount of insurance.The Sixth Circuit affirmed. The claims share a common legal question central to the validity of each claim: whether State Farm breached the standard form contracts by deducting labor depreciation. No individualized proof is necessary to resolve this question on a classwide basis. That common question predominates over individual questions, although damages will vary. The court did not abuse its discretion in finding class litigation to be the superior method of adjudication and class membership is ascertainable View "Hicks v. State Farm Fire & Casualty Co." on Justia Law
Nessel v. AmeriGas Partners. L.P.
Michigan filed suit, alleging that AmeriGas, Michigan's largest provider of residential propane, violated the Michigan Consumer Protection Act (MCPA). Section 10 of the MCPA, Mich. Comp. Laws 445.910, titled “class actions by attorney general,” 10 states that: The attorney general may bring a class action on behalf of persons residing in or injured in this state for the actual damages caused by any of the following: (a) A method, act or practice in trade or commerce defined as unlawful under section 3 [unfair, unconscionable, or deceptive methods, acts, or practices].AmeriGas removed the case to federal court, citing the Class Action Fairness Act (CAFA), 119 Stat. 4. The district court remanded to state court, finding that the lawsuit did not qualify as a “class action” because Section 10 “lacks the core requirements of typicality, commonality, adequacy, and numerosity that are necessary to certify a class under [Federal Rule of Civil Procedure] 23.” The Sixth Circuit affirmed. Section 10 is not a state statute “similar” to Rule 23 for purposes of CAFA removability, 28 U.S.C. 1332(d)(1)(B). The court declined “to effectively invalidate the Michigan Legislature’s determination that an Attorney General should be able to sue for injuries to consumers pursuant to Section 10.” View "Nessel v. AmeriGas Partners. L.P." on Justia Law
McClain v. Hanna
McClain sued Hanna and Hanna’s two law firms under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, and an analogous Michigan statute, Mich. Comp. Laws 445.251, asserting both individual and class claims. Within a week, Hanna offered McClain a settlement under Federal Rule of Civil Procedure 68. That settlement allowed judgment to be entered in McClain’s favor “as to all counts” of his complaint and gave McClain his full damages (both actual and statutory) plus his litigation costs and reasonable attorney’s fees. Four days later, McClain accepted the settlement offer but simultaneously filed a “placeholder” motion for class certification, apparently to preempt a mootness ruling. Even so, the district court found the class claims to be moot and dismissed both the individual and class claims. McClain noted that the settlement called for judgment in his favor; the court entered an amended judgment “for Plaintiff Theodore McClain as to all counts in Plaintiff’s complaint[.]” The Sixth Circuit affirmed, declining to address mootness because the judgment did not declare any of the claims moot. Parties may not challenge a judgment to which they have consented. McClain waived his right to pursue the class claims. View "McClain v. Hanna" on Justia Law
Hamama v. Adducci
The federal government entered final removal orders against about 1,000 Iraqi nationals in 2017, and has detained them or will detain them. Most remain in the U.S. due to diplomatic difficulties preventing their return to Iraq. The district court certified three subclasses: (1) primary class members without individual habeas petitions who are or will be detained by ICE, (2) those in the first subclass who are also subject to final removal orders, and (3) those in the first subclass whose motions to reopen their removal proceedings have been granted and who are being held under a statute mandating their detention. The Sixth Circuit previously vacated two preliminary injunctions, citing lack of jurisdiction under 8 U.S.C. 1252(g) and (f)(1). One prevented the removal of certain Iraqi nationals; another required bond hearings for each class member who had been detained for at least six months. A third injunction requires the government to release all primary subclass members, those in the first subclass, once the government has detained them for six months, no matter the statutory authority under which they were held. The district court concluded that the class members showed that the government was unlikely to repatriate them to Iraq in the reasonably foreseeable future and that the government “acted ignobly.” The Sixth Circuit vacated the injunction. Congress stripped all courts, except the Supreme Court, of jurisdiction to enjoin or restrain the operation of 8 U.S.C. 1221–1232 on a class-wide basis. View "Hamama v. Adducci" on Justia Law
Kenneth Chapman v. Tristar Products, Inc.
Plaintiffs sued, claiming that certain Tristar pressure cookers had defective lids that could come open while the cookers were in use, exposing the user to possible injury. The district court certified three separate state classes for trial: Ohio, Pennsylvania, and Colorado. During a trial recess, the parties agreed to a settlement with a nationwide class. The parties agreed to the principal amount but, with Tristar’s agreement not to dispute an award at or below $2.5 million, deferred determination of attorneys’ fees. Class members would receive a coupon to purchase a different Tristar product and a warranty extension. The court calculated the value of the coupons and warranty extensions as $1,020,985 and approved attorneys’ fees of $1,980,382.59. At a fairness hearing, Arizona made its first appearance, arguing as amicus, along with the U.S. Department of Justice, that the settlement was unfair because of the division between the principal settlement and attorneys’ fees. None of the class joined in objections to the settlement. The court indicated that it would approve the settlement. Before the court issued its order, Arizona sought to officially intervene under either Rule 24(a) Rule 24(b). The court rejected each of Arizona’s requests for lack of Article III standing. The Sixth Circuit dismissed an appeal, rejecting the state’s arguments that it had standing under the parens patriae doctrine, under the Class Action Fairness Act, 28 U.S.C. 1715, and because it has a participatory interest as a “repeat player.” View "Kenneth Chapman v. Tristar Products, Inc." on Justia Law
Zehentbauer Family Land, LP v. Chesapeake Exploration, L.L.C.
The defendants, exploration and production companies, contracted with landowners (plaintiffs) to drill for oil and gas on leased properties in Ohio’s Utica Shale Formation between 2010-2012. The agreements provide for royalty payments to the plaintiffs based on the gross proceeds received by the defendants from the sale of each well’s oil and gas production. The defendants sell the oil and gas extracted from the leased properties to “midstream” companies affiliated with the defendants. To calculate the price that an unaffiliated entity would have presumptively paid for the oil and gas, the defendants use the “netback method.” The plaintiffs claim the defendants underpaid their royalties because the netback method does not accurately approximate an arm’s-length transaction price, and improperly deducts post-production costs from the price. The district court granted class certification under FRCP 23(b)(3). The Sixth Circuit affirmed. While the plaintiffs have not met their burden of showing that common issues predominate with respect to a theory that the defendants sold oil and gas to midstream affiliates at below-market prices, the plaintiffs no longer pursued that theory at the class-certification stage. The plaintiffs satisfy the requirements of Rule 23(b)(3) with their liability theory based on the defendants’ deductions of post-production costs. View "Zehentbauer Family Land, LP v. Chesapeake Exploration, L.L.C." on Justia Law
Doe v. City of Memphis
Three women allege that Memphis failed to submit for testing the sexual assault kits (SAKs) prepared after their sexual assaults. They allege that Memphis possessed over 15,000 SAKS that it failed to submit for testing, resulting in spoliation, and sought to certify a class of women whose kits Memphis failed to test. The district court dismissed with prejudice all of Plaintiffs’ claims except those under the Equal Protection Clause. Two years of discovery apparently cost Memphis over $1 million. Discovery revealed that the SAKs of two plaintiffs were tested soon after their assaults. The third plaintiff’s SAK was submitted for testing 10 years after her 2003 assault. The district court granted Memphis summary judgment as to two plaintiffs and struck the class allegations, finding that no amount of additional discovery would allow Plaintiffs to sufficiently demonstrate commonality. The Sixth Circuit reversed. Plaintiffs were moderately diligent in pursuing discovery, although somewhat blameworthy in relying on the city’s representations that discovery would be forthcoming. Memphis unreasonably delayed producing discovery material and additional discovery might have changed the outcome. Expenditures of time and money alone do not justify terminating discovery where a plaintiff has been diligent and may still discover information that could establish a genuine issue of material fact. View "Doe v. City of Memphis" on Justia Law