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Employers Beware – An Award of Attorney Fees and Costs to a Successful Workers’ Compensation Appellant is Not Dependent on How Many Claimed Conditions are Approved/Denied
Expert Article by Alexander Kipp
Late last year, in Holmes v. Crawford Machine, Inc., Slip Opinion No. 2012-Ohio-5380, the Ohio Supreme Court held that R.C. 4123.512(F) entitles a successful workers’ compensation claimant to recovery all attorney fees, up to the $4,200 statutory maximum, and all costs, rather than apportioned amounts, when a trial court approves only one of the claimant’s multiple claimed medical conditions. In other words, as long as the trial court approves one claimed condition, R.C. 4123.512(F) entitles a claimant to also recover attorney fees and costs related to specifically disallowed conditions. The Court’s ruling resolved a conflict of decisions between the Third and Tenth District Courts of Appeals.
The case involved a workers’ compensation claim filed by Jeff Holmes for injuries to his hand, arm, shoulder, and back that he alleged were caused when he suffered an electric shock while working for Crawford Machine, Inc. Holmes’s claim was ultimately allowed administratively for: left-shoulder strain; electrical shock; low back strain; left-rotator-cuff tear; left-posterior-shoulder dislocation; and abrasion of right fifth finger. Crawford Machine appealed the administrative order to the Crawford County Court of Common Pleas. Holmes petitioned the court for approval of all of his allowed conditions.
Following a jury trial, the court ruled that Holmes was entitled to participate in the Ohio Workers’ Compensation system for the condition of “abrasion right fifth finger” but was not entitled to participate for any of the other conditions that had been administratively allowed. Holmes then petitioned the court for recovery from Crawford Machine of the legal fees and costs he incurred during the appeal process. Crawford Machine argued that Holmes was not entitled to reimbursement of his attorney fees and costs because he had not incurred any attorney fees or costs in relation to his fifth-finger-abrasion condition. The trial court granted Holmes’s motion and ordered Crawford Machine to pay Holmes $4,200 in attorney fees and $7,551.23 in costs.
Crawford Machine appealed from the judgment granting attorney fees and costs, and Holmes appealed from the judgment allowing one, but not all, of his claimed conditions. The Third District Court of Appeals upheld the judgment allowing only one of Holmes’s claimed conditions, and reversed the judgment awarding attorney fees and costs. The Third District certified that its ruling regarding attorney fees and costs was in conflict with a Tenth District Court of Appeals decision on the same legal issue. The Ohio Supreme Court agreed to review the case to resolve the conflict.
Writing for the majority, Justice McGee Brown wrote, “The plain language of R.C. 4123.512(F) requires a trial judge to order reimbursement to a claimant for costs, including attorney fees up to $4,200, if the claimant’s right to participate in the fund is established or upheld on appeal. In this case, Holmes was adjudicated to be entitled to participate in the fund for a fifth-finger abrasion. Therefore, pursuant to R.C. 4123.512(F), the trial court was required to reimburse him for his costs, including attorney fees, associated with his appeal. Since R.C. 4123.512(F) does not require apportionment of these costs based on the outcome of Holmes’s particular conditions, the trial court did not abuse its discretion when it made no such division of costs”… Therefore, once a claimant’s right to participate in the workers’ compensation fund has been established, a trial court does not abuse its discretion under R.C. 4123.512(F) by awarding the claimant reimbursement for costs related to the conditions for which the trier of fact determined the claimant was ineligible to participate in the fund.”
This case should caution employers to choose wisely when it comes to appealing and contesting workers’ compensation claims beyond the administrative levels. As Crawford Machine found out, when multiple conditions are at issue, it may be wise to forego challenging minor cuts, scrapes, and bruises, rather than end up paying nearly $12,000 for a pinky-finger abrasion that was treated with a Band-Aid.
ACI event related to Employment Law
When: Thursday, March 21 to Friday, March 22, 2013
Where: The Carlton Hotel, New York, NY, USA
For more information, and to register: click here
How well do you know your third parties?
As international trading companies in Europe and across the world look to new markets in an attempt to keep profit margins at acceptable levels during this prolonged economic slump, legal and compliance teams must ensure that not only their internal compliance systems are robust but also maintain a cost effective and efficient third party screening and monitoring programme to facilitate not only the expansion of trade into new regions but also protect your organization against increasing risks which exist in more traditional markets.
Companies across all sectors must be able to account for their suppliers, distributors, freight forwarders, agents, brokers, advisors and joint venture business partners to ensure these third parties are not potentially exposing your organisation to significant commercial losses, reputational damage and regulatory fines through their actions. Potential liability can arise from anywhere including corruption and bribery allegations, breach of economic or trade sanctions or global export controls, potential fraud and money laundering, or anti-competitive behaviour. Both prime contractors and all third parties down the supply chain must implement robust screening, due diligence and monitoring systems and be ready to answer questions, produce documents and have sufficient checks on their own third parties in order to win and retain business.
C5’s forum Managing Third Party Relationship Risks will bring together a leading faculty of experienced in-house and private practice lawyers, compliance executives to discuss not only the hottest regulatory risks but also potential reputational and commercial risks which must be considered at the outset of any relationship. Throughout this forum legal and compliance experts from some of the world’s largest companies will discuss the biggest risks they consider when engaging with third parties. Use this opportunity to benchmark your practices and pick up critical knowledge from the international third party compliance community by participating in such critical discussions including:
- How to Categorise Third Parties as Low, Medium and High Risk by Asking the Right Questions: Effectively Taking a Risk Based Approach
- Successfully Negotiating Adequate Clauses in a Third Party Contract: Audit, Inspection and Termination Rights
- Identifying Key Areas of Concern in Regards to Corruption and Bribery Risks and working with your Business Partners and other Third Parties to Minimise Exposure
- Maintaining Robust Ongoing Monitoring Systems on Third Parties: What to do When a Problem is Uncovered Mid-Relationship
- Assessing Reputational and Commercial risks presented by a Third Party’s Business Practices: Deciding what is and is not a Deal-Breaker
- Taking Responsibility for Third Party Compliance: How much Training and Support Should Be Given to a Third Party?
Use this opportunity to benchmark your practices with leading local and international organisations and pick up critical knowledge from the European compliance experts. This is an outstanding career, business networking and information sharing opportunity.
The clearance and approval process…pre-approval concerns…product labeling… clinical trials and IDEs…MDRs… QSRs… post-market controls…recalls and withdrawals…enforcement – all are critical aspects in the commercialization process for medical devices, which are governed by FDA law and regulation.
Recent court cases, and high-profile trials concerning FDA-regulated products have made it clear that it is essential for attorneys who do not have regulatory practices — but who do deal with FDA-regulated medical devices — to have a familiarity with these concepts. The changing business dynamics of the life sciences industry have also made it critical for business executives, policy analysts and securities experts who work in this field to have a clear understanding of the dynamics of the FDA.
Many products liability lawyers, patent counsel, business and investment experts, medical and regulatory affairs professionals, and those involved in pricing and reimbursement — despite their tenure in working with FDA-regulated devices — are not well-versed in the essentials of the approval process and the regulatory hurdles of the post-approval period. Whether you are a products liability or patent litigator, in-house counsel, in-house business development or federal affairs professional, FDA Boot Camp – Devices Edition will provide you the insights you need.
Learn about the FDA approval process and the ins and outs of post-approval challenges
ACI’s second annual FDA Boot Camp – Devices Edition has been designed to give products or patent litigators, as well as patent prosecutors, industry in-house counsel, and life sciences investment and securities experts, a strong working knowledge of core FDA competencies.
A distinguished faculty of top FDA regulatory device experts — a “Who’s Who of the FDA Bar” — will share their knowledge and give you critical insights on:
- The organization, jurisdiction, functions, and operations of the FDA
- An overview of medical device regulations
- The classification of devices and the concept of “risk-based” classification
- Clinical trials and IDEs
- The 510(k) clearance process – what you need to know now and what to expect in the future
- The premarket approval process (PMAs) and drug labeling and promotion
- General post-market controls and MDRs
- QSRs vs. cGMPs and ISO
- Mitigating the impact of enforcement actions
- Recalls, product withdrawals, and FDA oversight authority
ERISA “Fiduciary Exception” Does Not Exempt Attorney Correspondence Created After the Filing of a Complaint from Work-Product Protection
Expert Article by Emily Seymour Costin
On May 31, 2012, Magistrate Judge Ann Marie Donio of the United States District Court for the District of New Jersey denied plaintiffs’ motion to compel the production of 54 e-mails on the basis that these documents were protected from disclosure by the work-product doctrine.
In doing so, Judge Donio held that these documents did not fall within the “fiduciary exception” commonly applied in the ERISA context so as to mandate their disclosure because the documents were created specifically for use in litigation against the beneficiary requesting the documents. See Goldenberg v. Indel, Inc., et al., Case No. 09-5202, Order dated May 31, 2012 (Doc. No. 205).
Plaintiffs filed their putative class action complaint on October 9, 2009, alleging that Defendants mismanaged the Inductotherm Companies Master Profit Sharing Plan (“the Plan”). Plaintiffs are both past and present participants in the Plan. Plaintiffs’ complaint asserts claims against three sets of Defendants: (1) the “Inductotherm Defendants” which include the individual Trustees of the Plan and Indel, Inc.; (2) the “FSC Defendants” which include Financial Services Corporation, FSC Securities Corporation, and the Wharton Business Group, which allegedly provided advice to the Plan’s Trustees concerning investment of the Plan’s assets; and (3) the “SunAmerica Defendants” which include the American International Group, SunAmerica Asset Management Corporation, SunAmerica Capital Services, Inc., and SunAmerica Fund Services, Inc., entities related to the SunAmerica Money Market Fund, a fund used as a sweep account for some of the Plan’s assets.
At issue in Plaintiff’s motion to compel was Defendants’ claim of protection for e-mails sent after the filing of the complaint in this matter. The e-mails contain mostly correspondence between Indel, Inc.’s corporate counsel; non-attorney representatives of the FSC Defendants and the Wharton Defendants; and non-attorney representatives of the Inductotherm Defendants. During discovery, Defendants withheld the e-mails asserting work product protection and the common interest privilege. Plaintiffs subsequently filed a motion to compel the production of the e-mails.
Plaintiffs asserted that the work-product doctrine did not apply to the e-mails in question because: (1) the e-mails were not created for the purpose of litigation; (2) the e-mails were not created by or for an attorney; and (3) the Indel Defendant’s in-house counsel was not acting in his capacity as an attorney. Plaintiffs further asserted that, by sharing the e-mails with the FSC Defendants and the Wharton Defendants, the Inductotherm Defendants waived work product protection. Plaintiffs also asserted that the common interest privilege did not protect the e-mails from this alleged waiver.
In response, Defendants asserted that all e-mails were created in response to the complaint and solely for litigation purposes and that Indel’s in-house counsel was acting in his capacity as corporate counsel for Indel. Defendants further asserted that the sharing of the e-mails between Defendants did not waive the work-product doctrine, and that even if the doctrine had been waived, the common interest privilege would apply to afford protection from disclosure.
After examining the work-product doctrine in some detail, and an in camera review of the documents, the Court held that documents were prepared “in anticipation of litigation” because the e-mails (1) were sent after the date the complaint was filed, and (2) made references to the complaint or issues raised in the complaint. Further, the Court found that the documents were prepared “because of” the complaint and for no other reason and, therefore, they met the two-prong test for work product protection. The Court further held that the work-product protection was not waived when the e-mails were shared with the other defendants because the protection for work-product is only waived when the information is disclosed in a manner inconsistent with keeping the documents from the adversary.
Plaintiffs then asserted that, if the documents were protected by the work-product doctrine, the ERISA “fiduciary exception” nevertheless required Defendants to produce them. The Court rejected this argument and rightfully held that the fiduciary exception did not apply to documents created specifically for use in litigation against the beneficiary requesting the documents.
The Court noted that the fiduciary exception generally provides that “where beneficiaries sue their fiduciaries alleging breaches of fiduciary duty, the attorney-client privilege does not attach to legal advice rendered to the fiduciaries for assistance in the performance of fiduciary duties.” Wachtel v. Health Net, Inc., 482 F.3d 225, 233 (3d Cir. 2007) (citing Donovan v. Fitzsimmons, 90 F.R.D. 583, 585 (N.D.Ill. 1981)). Further, this exception to the attorney client privilege is “premised on both the beneficiaries’ right to inspection and their identity as the ‘real’ clients.” Wachtel, 432 F.3d at 233.
Here, however, the Court noted that the e-mails were all created after Plaintiffs filed their complaint and in connection with the fiduciaries’ defense of the action – that is, for the fiduciaries’ “own personal defense in contemplation of adversarial proceedings against its beneficiaries.” Where the information or communications sought were created solely for adversarial proceedings against the beneficiaries, the Court concluded that the fiduciary exception to work product simply does not apply. Therefore, because the Court found that the e-mails were protected by the work-product doctrine, that the work-product doctrine had not been waived, and that the ERISA fiduciary exception did not apply in this situation, plaintiffs’ motion to compel was denied.
In so ruling, the Court explicitly rejected Plaintiffs’ argument to endorse a more extensive application of the fiduciary exception. Rather, the Court confirmed that the fiduciary exception is a narrow exception, limited only to instances when the beneficiary of a fiduciary relationship seeks to acquire communications or documents otherwise protected by the attorney-client privilege or the work-product doctrine when the documents were created “in furtherance of a fiduciary duty.”
Expert Article by Emily Seymour Costin
It’s that time of year again. Final exams are almost over, the school year is ending, and summer recess is almost here. With graduations looming, May often serves as a time to reflect on the past and look to the future. Inspired by the sense of nostalgia this time of year brings, we thought it would be a good time to reflect on how ERISA stock drop class actions have fared in the Circuit Courts of Appeal during this spring semester of 2012.
In re Citigroup ERISA Litigation and Gearren v. McGraw-Hill Cos., Inc.
Last fall, the Second Circuit joined the Third, Fifth, Sixth and Ninth Circuits in holding that the presumption of prudence is the applicable standard in reviewing breach of fiduciary duty claims related to investments in employer stock. In re Citigroup ERISA Litig., 662 F. 3d 128 (2d Cir. 2011). On December 6, 2011, plaintiffs-appellants petitioned for rehearing or rehearing en banc, asking the Second Circuit to reconsider this significant decision, purporting to raise three questions of law of exceptional importance: (1) Is a judicially created presumption of prudence for employer securities offered in defined contribution plans mandated by or consistent with ERISA? (2) If such a presumption exists, what is its strength? (3) Does ERISA’s duty of loyalty impose upon defined contribution plan fiduciaries a duty to disclose to plan participants material adverse information about company stock which the fiduciaries know but plan participants do not?
Despite the additional support of an amicus curie brief submitted by the Secretary of Labor, plaintiffs-appellants were unsuccessful in challenging the decision. In a summary order, the Second Circuit denied the petition on February 23, 2012, thereby confirming that the presumption of prudence is here to stay in the Second Circuit. This marks the bitter end of plaintiffs’ class action bid arising from the drop in the price of McGraw Hill and Citigroup stock held in their 401(k) plans after the financial crisis of 2008. Grade: Fail.
Our advisory, summarizing these two cases in more detail, can be accessed through the link below:
Pfeil v. State Street Bank & Trust Co.
The Sixth Circuit recently took the opportunity to resolve a district court split on the issue of whether the “Kuper/Moench presumption” may be applied when considering a motion to dismiss, holding that the presumption of “reasonableness” adopted in Kuper v. Iovenko, 66 F.3d 1447 (6th Cir. 1995) is not an additional pleading requirement and, thus, does not apply at the motion to dismiss stage. Pfeil v. State Street Bank & Trust Co., No. 10-2302, 2012 WL 555481 (6th Cir. Feb. 22, 2012).
In Pfeil, plaintiffs alleged that State Street Bank and Trust – as the fiduciary for the two primary retirement plans offered by General Motors – breached its fiduciary duty under ERISA by continuing to allow participants to invest in GM common stock, even though public information indicated that GM was headed for bankruptcy. The district court dismissed the complaint, holding that State Street’s alleged breach of duty could not have plausibly caused the losses to the plan.
After acknowledging that State Street was entitled to the Kuper/Moench presumption, the Sixth Circuit noted that it had not addressed whether the presumption applies at the pleading stage and, therefore, took the “opportunity to address whether a plaintiff must plead enough facts to overcome the Kuper presumption in order to survive a motion to dismiss.” In this regard, the Sixth Circuit held that the presumption does not apply at the pleading stage because the plain language of Kuper stated that a plaintiff could rebut the presumption of reasonableness by “showing” that a prudent fiduciary acting under similar circumstances would have made a different investment decision. Further, in Kuper, the presumption was cast as an evidentiary presumption and the Sixth Circuit applied the presumption to a fully developed evidentiary record, and not merely the pleadings. Moreover, the Court noted that this holding is consistent with the standard for motions to dismiss in general because application of the presumption necessarily concerns weighing questions of fact that would be inconsistent with the Rule 12(b)(6) standard. Apparently, the Court never grasped the notion that since all of the alleged facts are assumed to be true, the standard can and should be applied to see if the claims alleged are “plausible.”
The Sixth Circuit has thus set itself apart as the only Circuit to affirmatively reject the Kuper/Moenchpresumption as a standard that may be applied at the pleading stage. The plaintiffs’ bar undoubtedly views this as a major victory, and courts in the Sixth Circuit will likely see a rise in ERISA stock drop suits, now that plaintiffs are far more likely to advance to the long (and costly) discovery phase of litigation. Grade: Pass.
The Class of 2013?
Two other potential class actions are worth noting and (we expect) may resurface in the fall semester, if not sooner:
Lanfear v. Home Depot
In Lanfear, the Northern District of Georgia concluded that plaintiffs failed to plausibly plead that Home Depot stock was an imprudent investment during the proposed class period. Although the district court refused to explicitly adopt the Moench presumption, it nonetheless analyzed the facts under the Moench presumption and determined that plaintiffs’ stock drop claim would still fail. Now on appeal, the Eleventh Circuit is expected to either explicitly adopt (or reject) the Moench presumption in its opinion. The Lanfear case was argued on October 7, 2011. Lanfear v. Home Depot, 11th Cir. Case No. 10-13002.
Harris v. Amgen, Inc. et al.
Likewise, in the first stock drop case following its adoption of the Moench presumption in Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010), the Ninth Circuit will address whether plaintiffs have alleged sufficient facts to overcome the presumption in a case arising from a temporary drop in Amgen’s stock price following negative publicity surrounding one of its products. Because Quan was decided on a summary judgment motion, the Amgen panel may take the opportunity to opine on whether the Moench presumption should apply at the pleading stage. The Amgen case was argued on February 17, 2012. Harris v. Amgen, Inc., et al, 9th Cir. Case No. 10-56014.
The nation’s premier ERISA litigation conference devoted entirely to managing and defending complex ERISA-related claims returns for its fifth installment, led by an unparalleled faculty of leading in-house counsel and expert outside defense counsel, as well as federal and state judges from across the nation.
Increasingly complex theories of liability, mounting requests for attorneys’ fees, continuing scrutiny of and litigation arising from investment decisions, PPACA compliance and litigation concerns, new and emerging regulations affecting disclosures from plan sponsors and service providers, a very sophisticated plaintiffs’ bar, the ongoing fallout from Cigna v. Amara, new developments regarding the 404(c) defense, the impact of Tussey v. ABB, Inc.on fee cases, overwhelming discovery burdens, and preemption complexities– these are just some of the issues facing plan sponsors, fiduciaries, service provides, insurance companies, and defense lawyers today.
Building on the incredible success of our past ERISA events, and in response to demand from the market, ACI has developed its 5th National Forum on Defending and Managing ERISA Litigation. This advanced forum has been designed to bring together the nation’s leading in-house counsel and outside defense attorneys to engage in a two-day seminar geared towards developing winning litigation strategies and overcoming new and emerging theories of liability from the plaintiffs’ bar. Our expert faculty, led by seasoned in-house counsel, top defense attorneys, and renowned federal and state judges, will provide you with the proven strategies, innovative tactics, and key insights needed to mount a rigorous defense
Comcast Corp. v. Behrend: Supreme Court Grants Certiorari Regarding Evidence Requirements at Class Certification
Expert Article by Wystan M. Ackerman
Yesterday, the U.S. Supreme Court granted certiorari in Comcast Corp. v. Behrend, No. 11-864 (docket), to address the question of “[w]hether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.” The Court will review the Third Circuit’s opinion in Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011).
This case is a putative antitrust class action alleging that acquisitions by Comcast of other cable providers and “swap agreements” that Comcast entered into with competing cable providers were anticompetitive and led to monopolization by Comcast of the Philadelphia market area. The case has a complex factual and procedural history. The district court ultimately certified a class, finding, after a four-day evidentiary hearing, that antitrust impact could be proven through common evidence to establish damages on a class-wide basis. The Third Circuit affirmed, applying its “rigorous analysis” standard from In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008), but noting that “at the class certification stage, we are precluded from addressing any merits inquiry unnecessary to making a Rule 23 determination.” Behrend, 655 F.3d at at 190. In discussing class certification standards, the Third Circuit concluded that:
Many of Comcast’s contentions ask us to reach into the record and determine whether Plaintiffs actually have proven antitrust impact. This we will not do. Instead, we inquire whether the District Court exceeded its discretion by finding that Plaintiffs had demonstrated by a preponderance of the evidence that they could prove antitrust impact through common evidence at trial.
Although in Hydrogen Peroxide we heightened the inquiry a district court must perform on the issue of class certification, nothing in that opinion indicated that class certification hearings were to become actual trials in which factual disputes are to be resolved. Indeed, as we explained in Hydrogen Peroxide, a district court may inquire into the merits only insofar as it is “necessary” to determine whether a class certification requirement is met. 552 F.3d at 316. Eisen still precludes any further inquiry. See Eisen, 417 U.S. at 178, 94 S.Ct. 2140 (“[T]he question is not whether the plaintiff or plaintiffs … will prevail on the merits, but rather whether the requirements of Rule 23 are met.” (quoting Judge Wisdom’s holding inMiller v. Mackey Int’l, Inc., 452 F.2d 424, 427 (5th Cir.1971))); Hydrogen Peroxide, 552 F.3d at 317 (“Eisen is best understood to preclude only a merits inquiry that is not necessary to determine a Rule 23 requirement.”). We allow preliminary merits inquiries when necessary for Rule 23 because of the potentially “decisive effect on litigation” of a certification decision, Newton, 259 F.3d at 167, but those inquiries remain limited and non-binding on the merits at trial, Hydrogen Peroxide, 552 F.3d at 318. Nothing in Hydrogen Peroxide requires plaintiffs to prove their case at the class certification stage; to the contrary, they must establish by a preponderance that their case is one that meets each requirement of Rule 23. To require more contravenes Eisen and runs dangerously close to stepping on the toes of the Seventh Amendment by preempting the jury’s factual findings with our own.
Id. at 197, 199-200.
With respect to the specific issue of damages, which is the focus of the question presented as formulated by the Supreme Court, the Third Circuit wrote that:
At the class certification stage we do not require that Plaintiffs tie each theory of antitrust impact to an exact calculation of damages, but instead that they assure us that if they can prove antitrust impact, the resulting damages are capable of measurement and will not require labyrinthine individual calculations. Cf. Newton, 259 F.3d at 187. We are satisfied that Plaintiffs’ damages model meets this burden.
Additionally, the cases that Comcast offers are distinguishable on multiple grounds. Most to the point, those cases considered the merits of experts’ theories following adverse jury verdicts; here, we address only whether Plaintiffs have provided a method to measure and quantify damages on a class-wide basis. We have not reached the stage of determining on the merits whether the methodology is a just and reasonable inference or speculative.
Id. at 206.
Judge Jordan dissented from the ruling on damages, finding that, under Daubert, the plaintiffs’ proffered expert testimony “fails the requirement of ‘fit’ because it is disconnected from Plaintiffs’ only viable theory of antitrust impact . . . and, thus, the proffered expert testimony cannot help the jury determine whether reduced overbuilding caused damages.” Id. at 216 (Jordan, J., dissenting).
Comcast’s petition for certiorari focuses on the Supreme Court’s opinion last term in Wal-Mart Stores, Inc. v. Dukes, arguing that Wal-Mart requires the lower courts to decide the types of merits issues that the Third Circuit refused to take up. The petition also argues that the Third Circuit’s focus on whether the claims could be proven through common evidence was the wrong approach because Wal-Mart requires a determination of whether class certification requirements were in fact proven. The cert petition, however, was seeking somewhat broader review than the Supreme Court ultimately granted – the Court’s order granting certiorari appears to limit its review to the damages question and the issue of the admissibility of expert testimony.
This case could have broad impact on class actions, including insurance cases, but that will depend on how the opinion is written (which could take seven months to a year). If the Court were to simply hold thatDaubert applies at class certification (as Wal-Mart suggested in dictum) and then determine whether or not the expert in this case has satisfied that standard (or perhaps remand for the district court to reassess that question), that would not constitute any significant shift in federal class action law. The general rule most courts are following is that Daubert applies at class certification, although there is some debate about how strongly it applies (see my posts about the Seventh Circuit’s decision in Messner and the Eighth Circuit’s decision in Zurn Pex Plumbing). The Court might resolve that debate, but in my view that is a relatively small quibble in the grand scheme of class action law. If the Court were to, in the course of addressing the damages and expert testimony issues, also comment on the extent to which the merits must be considered at class certification and whether the Third Circuit got that right or wrong under Wal-Mart, that type of ruling would have a much greater impact. It seems possible the Court could go that far even though the question presented is not as broad as Comcast may have desired. If the Court reaches into the issue of the extent to which the merits can be considered on class certification, Wal-Mart’s discussion of deciding merits issues at class certification, which is strongly favorable to defendants seeking such rulings, could be reaffirmed and extended, or it could be scaled back, swinging the pendulum back towards plaintiffs. It is also possible that the Court could address in a broader fashion the extent to which the need for individual adjudication of damages, where a court concludes that liability can be resolved on a class-wide basis, makes class certification inappropriate.
Expert article by Wystan M. Ackerman
Last year, in Smith v. Bayer Corp., 131 S. Ct. 2368 (2011), the Supreme Court held that a denial of class certification was not binding on absent members of the putative class, and thus a federal district court that had denied class certification could not enjoin an absent, non-named member of the putative class from pursuing certification of essentially the same proposed class in a state court. The Court noted, however, that repetitive relitigation of class certification is a significant problem for the judicial system. In dictum, the Court stated that “our legal system generally relies on principles of stare decisis and comity among courts to mitigate the sometimes substantial costs of similar litigation brought by different plaintiffs,” and that “we would expect federal courts to apply principles of comity to each other’s class certification decisions when addressing a common dispute.” Id. at 2381-82.
In Smentek v. Dart, No. 11-3261, 2012 U.S. App. LEXIS 12325 (7th Cir. June 19, 2012) (Posner, J.), the Seventh Circuit recently addressed how far that principle of comity goes, holding that comity does not require a trial judge to adhere to prior decisions by other trial judges. Rather, comity is merely a “weak notion . . . requiring a court to pay respectful attention to the decision of another judge in a materially identical case, but no more than that even if it is a judge of the same court or a judge of a different court within the same judiciary.” Id. at *10.
Smentek involved a series of class actions filed by prisoners in the Northern District of Illinois, alleging that the failure to make sufficient dental services available at the Cook County Jail was a constitutional violation. Two district judges denied class certification, but a third judge granted certification. The defendant argued that the dictum in Smith v. Bayer Corp. regarding comity among federal courts required the district judge deciding the third case to follow her colleagues’ rulings. The Seventh Circuit, in an opinion by Judge Poser, rejected this argument, explaining that “[t]he mandatory comity for which the defendants in our case contend is just another name for collateral estoppel,” which Smith v. Bayer Corp. had found expressly inapplicable. Id. at *8.
The result here is not surprising to me. When I first read Smith v. Bayer Corp., without studying case law about comity, I had assumed the Court was referring to a relatively weak form of comity, and it did not occur to me that defendants would make the argument for the strong form of comity that was asserted inSmentek.
But there ought to be some solution that enables a defendant to avoid re-litigating class certification over and over, and relieves the burden that imposes on conscientious trial court judges who will not simply rubber stamp one of their colleagues’ rulings but feel a need to take a fresh look at the case before them. An appellate decision is not the answer where the defendant wins in the trial court the first time (or two or three) and cannot appeal. I’ve mused before about whether a defendant faced with this problem could bring a declaratory judgment action against a class of would-be class representatives for the purpose of obtaining one final, dispositive ruling on class certification. But I’m not aware of anyone testing that novel approach.
Expert Article by Emily Seymour Costin
Although more than fifteen years have passed since the Third Circuit issued its seminal decision in Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995), courts are still grappling with its application and reach.
Indeed, district courts nationwide have reached conflicting decisions on whether the “Moench presumption” may be applied when considering a motion to dismiss. On February 22, 2012, the Sixth Circuit resolved a split among its district courts, holding that the Moench presumption of “reasonableness” is not an additional pleading requirement and, thus, does not apply at the motion to dismiss stage.
However, on May 8, 2012, the Eleventh Circuit considered and rejected the Sixth Circuit’s reasoning. Embracing the reasoning previously articulated by the Second and Third Circuits, the Eleventh Circuit held that the Moench analysis is not an evidentiary presumption, but can be applied to dismiss a claim under Fed. R. Civ. P. 12(b)(6). The Sixth Circuit now stands as the only Circuit to affirmatively reject the Moench presumption as a standard that may be applied at the pleading stage. These recent Circuit court opinions beg the question: When does the Moench presumption of prudence apply?
Expert Article by Nathan Pangrace
The Sixth Circuit Court of Appeals recently made it easier for Ohio employees to prove a claim of discrimination under the Americans with Disabilities Act (ADA). The court reversed 17-year-old precedent and found the “but for” causation standard appropriate for ADA claims.
In Lewis v. Humboldt Acquisition Corp., No. 09-6381 (6th Cir. May 25, 2012), the employer terminated the plaintiff from her position as a registered nurse at one of the employer’s retirement homes. The plaintiff sued the employer under the ADA, claiming that the employer fired her because she had a medical condition that made it difficult for her to walk and that occasionally required her to use a wheelchair. The employer responded that it terminated the plaintiff based on an outburst at work in which she allegedly yelled, used profanity and criticized her supervisors.
When it came time to present her ADA claim to a jury, the plaintiff asked the court to instruct the jury that she could prevail if her disability was a “motivating factor” in the employer’s decision to terminate her. The employer asked the court to instruct the jury that the plaintiff could prevail only if the employer’s decision was “solely” because of the plaintiff’s disability. In requesting this instruction, the employer relied on 17 years of Sixth Circuit precedent requiring courts to instruct juries that ADA claimants may win only if they show that their disability was the “sole” reason for any adverse employment action against them.
The court rejected both approaches. It held that the plaintiff was required to show her disability was a “but for” cause of the employer’s decision to terminate her. In other words, the plaintiff was required to prove that “but for” her disability, her employer would not have terminated her. The court noted that its previous interpretation of the ADA was out of sync with the other circuits, none of which use the “sole” reason test.
With this decision, the Sixth Circuit reversed 17 years of precedent and eased the burden for employees bringing discrimination claims under the ADA. The court’s decision puts it in line with other federal circuits, but it is undoubtedly a loss for employers in the Sixth Circuit who will likely see an uptick in ADA claims.