Justia Class Action Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
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
Doe v. Deja Vu Consulting, Inc.
A class of 28,177 exotic dancers alleged that dance clubs violated the Fair Labor Standards Act and state wage-and-hour laws by “intentionally misclassif[ying] class members as independent contractors, refus[ing] to pay minimum wage, unlawfully requir[ing] employees to split gratuities, and unlawfully deduct[ing] employee wages through rents, fines, and penalties.” The Agreement required that every club provide its dancers with an assessment to determine whether they should be classified as employees or an Independent Professional Entertainers and limited the control that the clubs may exercise over the Independent Entertainers. The Agreement also addresses tip-pooling, commissions, reimbursement for license and permit fees required to perform at the club, and provision of logo costumes; it divides a total award of $6.55 million into a Net Cash Payment Settlement Fund, Secondary Pool Remuneration, and attorneys’ fees. The district court approved a settlement over the objections of four class members. The Sixth Circuit affirmed, considering: the “high risk of continued litigation and the uncertain likelihood of success on the merits” and that the Agreement “offers value to the class in the form of cash, rent-credit or dance-fee payments, and long-term structural changes to Defendants’ business practices, all of which directly benefit class members.” The court rejected an argument that the settlement violated the procedural requirements of Federal Rule of Civil Procedure 23 because the class release was impermissibly broad and the class notice failed to adequately apprise the class members of their rights. View "Doe v. Deja Vu Consulting, Inc." on Justia Law
Pierce v. Wyndham Vacation Resorts, Inc.
Wyndham has four Tennessee resorts, where front-line sales employees sell ownership interests (timeshares) to people who do not own Wyndham timeshares. In-house sales employees sell upgraded timeshares to existing owners. Discovery sales employees sell non-ownership trials. Wyndham’s sales people receive a minimum-wage draw based on the hours they record each week, which is deducted from their commissions. In 2009, Wyndham began paying overtime. Plaintiffs filed suit (Fair Labor Standards Act, 29 U.S.C. 207(a)(1)), alleging that Wyndham required sales employees to underreport their hours or altered their timesheets to avoid paying overtime. The district court certified 156 employees from all three positions as a collective action. After a bench trial, the court found that, on average, each employee had worked 52 hours per week during the recovery period and awarded $2,512,962.91 in overtime pay and an equal amount in liquidated damages. The Sixth Circuit affirmed in part. The court properly certified the collective action as to in-house and front-line salespeople. The discovery salespeople, however, had a different title and sold a different product. A common policy cannot overcome the factual differences between the groups (what they sold and when they started work), which goes to the heart of the claim (total hours worked each week). The evidence, “representative, direct, circumstantial, in-person, by deposition, or otherwise,” supports a finding that Wyndham violated the Act by failing to pay overtime. The court remanded the issue of damages. View "Pierce v. Wyndham Vacation Resorts, Inc." on Justia Law
Macy v. GC Services Limited Partnership
Plaintiffs each received a letter from GC, a debt collector, notifying them that their credit-card accounts had been referred for collection. The letters contained the name and address of the original creditor and stated: [I]f you do dispute all or any portion of this debt within 30 days of receiving this letter, we will obtain verification of the debt from our client and send it to you. Or, if within 30 days of receiving this letter you request the name and address of the original creditor, we will provide it to you in the event it differs from our client, Synchrony Bank. Plaintiffs assert that the letters were deficient under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, in failing to inform Plaintiffs that GC was obligated to provide the additional debt and creditor information only if Plaintiffs disputed their debts in writing. Plaintiffs filed a purported class action. The court determined that GC’s letters created a “substantial” risk that consumers would waive important FDCPA protections by following GC’s deficient instructions, and certified a class of Kentucky and Nevada consumers, rejecting GC’s argument that Federal Rule of Civil Procedure 23 was not satisfied because Plaintiffs had not shown that each class member had standing. The Sixth Circuit affirmed, rejecting arguments that that the alleged FDCPA violations did not constitute harm sufficiently concrete to satisfy the injury-in-fact requirement of standing. Plaintiffs have Article III standing. View "Macy v. GC Services Limited Partnership" on Justia Law