Speaking of the 3d DCA and Class Actions.....

It's almost as if the Florida Supreme Court read today's 3d DCA Watch and decided to weigh in with a definitive beat down.

It's true the beat down deals with an earlier, equally tragic 3d DCA opinion (which led to a brawl between Judges Shepherd and Gersten that I wrote about here) but the unusually pointed language directed to the bunker dwellers should certainly give them pause before they dink another consumer class.

A few observations:

The FSC's discussion of how the 3d went off and did their own fact-finding, totally ignoring the trial court's actual findings of fact and giving them no deference at all, is especially ironic given that certain judges purport to really hold the proper standard of review and limited role of the appellate court to be sacrosanct:

In this matter, the Third District erred by not applying the abuse of discretion standard of review to the trial court‟s grant of class certification. See Sosa, 15 So. 3d at 9-11. Rather, the Third District conducted a de novo review, as it gave no deference to the trial court‟s factual findings and made its own independent determination as to whether Sosa satisfied the requirements of rule 1.220. See id. More specifically, in lieu of pointing to the lack of competent, substantial evidence supporting the trial court‟s order, or stating why the trial court‟s conclusions of law were erroneous, the Third District made its own findings that Sosa and the putative class members did not satisfy the commonality and predominance elements of rule 1.220, and that Sosa failed to meet section 627.835‟s “knowingly” requirement. Then, the Third District held that the trial court erred because it did not find the same. This constituted a de novo review and error.

On top of that, the FSC gives a basic jurisprudence lesson to the 3d in how to handle the easily-met "commonality" element in the class action analysis, which the 3d hung its hat on in reversing the Tire Kingdom class yesterday:

 The approach of the Third District was erroneous and conflicted with the proper application of the commonality requirement articulated in Glen Cove and Olen Properties, because it diverted the proper focus from the common and routine course of conduct and billing practice of Safeway overcharging its customers to the mere factual differences surrounding each putative class member‟s claim. The Third District did not even consider that Safeway‟s common course of conduct and routine billing practice served as the basis for Sosa‟s and the putative class members‟ claims. Rather, to negate commonality, the Third District focused only on the possibility of mere factual differences in the individual circumstances surrounding each of the putative class members‟ claims and the variances in defenses to them. This was error, as the focus of a court in reviewing a finding of the commonality requirement is on whether the class members predicated their claims on the same common course of conduct by the defendant and the same legal theory.

Finally, in another irony given yesterday's Tire Kingdom opinion, the FSC held that the 3d got totally wrong whether or not you should examine the merits at the class certification stage:

The Third District in Sosa erred when it held that the trial court improperly granted Sosa‟s motion for class certification on the basis that Sosa failed to demonstrate that Safeway knowingly overcharged him in contravention of sections 627.840 and 627.835. See Sosa, 15 So. 3d at 11. The Third District erred because whether Safeway “knowingly” overcharged Sosa is a question of fact for a jury, and, therefore, Sosa was not required to prove that element in his pretrial motion for class certification. See Lynch v. Brown, 489 So. 2d 65, 66-67 (Fla. 1st DCA 1986). When it determined that Sosa could not serve as class representative because he failed to demonstrate that Safeway “knowingly” overcharged him, the Third District improperly conflated rule 1.220‟s class certification requirements with a question for the trier of fact. Rather, at issue during Sosa‟s motion for class certification was whether Sosa and the putative class members, based on the parties‟ arguments, pleadings, and discovery, met the requirements for class certification—an inquiry that restricted the trial court‟s examination to the substance of the motion and not the merits of the cause of action or questions of fact for a jury.

This was precisely what Judge Shepherd complained that the trial court got horribly wrong in Tire Kingdom:

First, not only are the trial court’s impressions not supported by the record, but also they constitute improper incursion by the trial court into the merits of the case. Controlling precedent makes clear that a trial court considering whether an action may be maintained is not to focus on the merits of the case, but only on the requirements of the rule....

Pot, meet my friend Kettle!

3d DCA Watch -- Order Has Been Restored Edition.

 It's that time of the week folks, so let's see what's a happenin, hotstuff, in the bunker of resplendently robed love:

Tire Kingdom v. Dishkin:

Judge Shepherd on class actions.

How do you think he ruled?

In other news, it was only a matter of time before the inevitable happened -- Kendall Coffey has an opinion on Casey Anthony.

See, everything is back to normal again.

11th Circuit Affirms Guts of YoPlus Class Cert Decision.

Judge Huck's Yoplus class certification decision was closely watched, and no doubt gave some indigestion.

Insert groan here.

Yet the 11th, via Judge Fay, has affirmed its reasoning and Judge Huck's "scholarly" analysis, though it was kicked back to remove any reliance element from the class definition:

The district court’s analysis in its Order on Motion for Class Certification is sound and in accord with federal and state law. The reasoning reflected therein is well within the parameters of Rule 23’s requirements for certification of a class. And, if the definition of the class had been in accord with the legal analysis, we would have readily affirmed.1 However, at the end of the district court’s Order, it defined the class in a manner which seems to conflict with its earlier sound analysis. In its analysis, the district court repeatedly stated that a plaintiff need not prove reliance on the allegedly false statement to recover damages under FDUTPA, but rather a plaintiff must simply prove that an objective reasonable person would have been deceived. And, this is correct. Notwithstanding this analysis, the district court went on to define the class as “all persons who purchased Yo-Plus in the State of Florida to obtain its claimed digestive health benefit.” Order at 21 (emphasis added). The class definition limits the class to those who purchased YoPlus “to obtain its claimed digestive health benefit,” which takes into account individual reliance on the digestive health claims. Had the district court defined the class in a manner which did not take individual reliance into account, such would be consistent with the district court’s earlier analysis. Thus, we vacate the Order certifying the class and remand to the district court for further consideration.

Seriously, what kind of maroon believes that "magic yogurt" somehow improves your digestive health?

(Wait a second, people are taking Donald Trump's run for the Presidency seriously.  On second thought, don't answer that.)

Supreme Court To Rescue Wal-Mart Employees!

Well, I guess it depends on your perspective:

The Supreme Court on Monday agreed to hear an appeal in the biggest employment discrimination case in the nation’s history, one claiming that Wal-Mart discriminated against hundreds of thousands of women in pay and promotion. The lawsuit seeks back pay that could amount to billions of dollars.

The question before the court is not whether there was discrimination but rather whether the claims by the individual employees may be combined as a class action. The court’s decision on that issue will almost certainly affect all sorts of class- action suits, including ones asserting antitrust, securities and, products liability and other claims.

If nothing else, many pending class actions will slow or stop while litigants and courts await the decision in the case.

“We are pleased that the Supreme Court has granted review in this important case,” Wal-Mart said in a statement. “The current confusion in class-action law is harmful for everyone — employers, employees, businesses of all types and sizes and the civil justice system. These are exceedingly important issues that reach far beyond this particular case.”

Brad Seligman, the main lawyer for the plaintiffs, said in a telephone interview after the court decision: “Wal-Mart has thrown up an extraordinarily broad number of issues, many of which, if the court seriously entertained, could very severely undermine many civil rights class actions. We welcome the court’s review of this limited issue, and we’re confident that the core of our action will go forward.” 

 In other news, expect more tort reform in the Florida legislature:

Now, because of a new conservative wave that has swept over the upper chamber, the business community that has longed for an overhaul of the state's litigation system -- a move supporters call "tort reform" -- think that their day might have come at last.

"No question, tort reform is now going to be an issue that we're going to be able to get through the Senate without gnawing our fingers off," said Barney Bishop, president and CEO of the Associated Industries of Florida, a business group.

Not as excited are the state's trial lawyers, who now face a possible onslaught of tort changes after an erosion of their support in the Senate. But Debra Henley, executive director of the Florida Justice Association, said her group was prepared for the fight.

"We've had tough fights on the rights and remedies of Florida's citizens for many years now," Henley said.

Soon the only thing left will be a bunch of business litigators suing each other -- and we all know how much fun that can be!

Another Teachable Moment.

Remember that case where Judge Seitz struck a motion for class cert because it was filed three months after the deadline?

Well these hapless plaintiffs can't seem to get anything right.

First they filed an amended complaint, adding some new class reps and a new defendant.

Sua sponte, Judge Seitz struck it because they were past the deadline to add new parties.

Oops!

The Judge also entered an order to show cause why sanctions should not be imposed for lead counsel's failure to file pro hac motions -- the response is worth a read.

Not content to leave well enough alone, the plaintiffs inexplicably moved for reconsideration of the Court's sua sponte Order striking their amended complaint.

How do you think the Court ruled?

Judge Tjoflat: "I Was Wron......"

There's a surprising lack of internet information regarding Fonzie from Happy Days' inability to say "I was wrong."

Here's the best link I could come up with, which isn't much.

But if you watch the above clip starting around 1:45, you'll remember what I mean.

Anyways, Judge Tjoflat overcame his inner Fonzie and admitted he just was flat-out wrong about CAFA jurisdiction, reversing himself in a widely-criticized opinion that was the subject of much tsurris in the district courts:

There is no requirement in a class action brought originally or on removal under CAFA that any individual plaintiff’s claim exceed $75,000.

 There, was that so hard?


"These days are yours and mine, Happy Days!"

Do Bankruptcy Judges Have Class (Certification Ability)?

While bankruptcy has been described as the epitomy of a class action (that is, an action by the debtor against all of his creditors), there has been some controversy over whether a bankruptcy court could certify a class consisting of debtors against a single lender. In a new opinion, the Fifth Circuit has held that Bankruptcy Judges may certify a class consisting of debtors, but not in the specific case. Matter of Wilborn, No. 09-20415 (5th Cir. 6/18/10).

In Wellborn, several debtors claimed that Wells Fargo was charging post-petition fees and expenses in chapter 13 cases without obtaining court approval. They sought to obtain certification of a class of debtors who had filed chapter 13 bankruptcy in the Southern District of Texas over a five year period where Wells Fargo was the lender or servicer. The Bankruptcy Court granted class certification as to a class consisting of 1,236 members.

The Fifth Circuit found that the Bankruptcy Court could certify a class of debtors within the same district even if they did not have the same judge. The court found this based upon the application of Fed.R.Bankr.P. 7023, which makes class actions applicable in bankruptcy court.

However, the Fifth Circuit found that the particular class action failed the requirements of Rule 23(b). Where the circumstances of the individual debtors varied, it was not proper to certify a class. The Court ruled:

Plaintiffs’ claims here fail under the predominance and superiority inquiries because individual issues for each class member, particularly with respect to damages, override class concerns when we consider how the case must be tried. As noted above, the claim that Wells Fargo charged, or charged and collected, undisclosed fees is based on § 506(b) of the Bankruptcy Code and Rule 2016. There is disagreement among the bankruptcy courts as to the scope of the requirement under § 506(b) and Rule 2016 for lenders to obtain court approval before assessing contractually-allowed fees.19 For purposes of reviewing the certification order, we will assume, without deciding, that prior disclosure and approval are necessary. See Langbecker v. Elec. Data Sys. Corp.20 However, when we “evaluate with rigor,” as we must, the claims and the Rule 23 requirements, we conclude that class adjudication of the case is not warranted. The cases of the individual named plaintiffs show how the circumstances of the fees charged by or paid to Wells Fargo may vary from debtor to debtor and illustrate the many underlying circumstances of the charges that would need to be considered. In the case of Wilborn, the parties entered into an agreed order to modify the stay after Wilborn defaulted on her loan post-petition. The agreed order required Wilborn to resume payments to Wells Fargo, but when Wilborn could not comply with the order, the automatic stay terminated under the terms of the order. In order to avoid the resulting foreclosure, Wilborn agreed to a loan modification, pursuant to which she agreed to pay certain fees and costs in addition to the delinquency. The Flournoys also defaulted on their loan postpetition, but the bankruptcy court entered an agreed order modifying the stay to allow the Flournoys to cure post-petition delinquencies and to pay fees and costs, which were then approved by the court. Finally, the bankruptcy court allowed Martin to sell her home outside of bankruptcy and all fees and costs accrued to the loan were paid at the closing.

The bankruptcy court certifying this class action recognized that differing events had occurred within each individual debtor’s bankruptcy case, but the court held that because all plaintiffs had fees and costs charged to their accounts by Wells Fargo during the pendency of the bankruptcies, common issues of law or fact predominate over individual issues. But this ignores how and why certain fees were charged or paid. The circumstances surrounding the charging of fees require an individual assessment of the claims. It appears that some debtors, like Wilborn, may have agreed to certain fees as an inducement to Wells Fargo for a loan modification and provided additional consideration for the modification. In other cases at least partial fees were approved for some debtors.

Such varying circumstances will require the court to examine each individual bankruptcy case. The bankruptcy court cannot require Wells Fargo to simply disgorge all fees that were not previously approved because it is evident that there has been a wide “array of charges tailored” to each individual debtor. See Maldonado, 493 F.3d at 525–26.

In some cases it may be appropriate to require Wells Fargo to disgorge fees, but we think that is for the bankruptcy court to decide. The differing circumstances of the debtors render the reasonableness of the individual charges a fact-specific inquiry rather than a class-oriented decision. See Maldonado, 493 F.3d at 526. In some instances, it may also be necessary to determine whether fees were actually imposed on the debtors or merely recorded on internal records. See In re Padilla, 379 B.R. 643, 662 (Bankr. S.D. Tex. 2007) (“The Bankruptcy Code does not prohibit [creditors] from maintaining internal records of costs incurred.”). Furthermore, where fees have been imposed Wells Fargo may have viable defenses to some plaintiffs’ claims, such as waiver or estoppel. See In re Monumental Life Ins. Co. Finally, the rulings of different 22 bankruptcy judges during their cases may affect the computation of allowable charges by Wells Fargo. In short, the myriad issues that may arise in each case as towhether and how fees and costs were imposed preclude a class-wide disposition of the case under Rule 23(b)(3).

For similar reasons, class certification is improper under Rule 23(b)(2). The Rule 23(b)(2) inquiry focuses on whether the putative class defendant “has acted or refused to act on grounds that apply generally to the class” so that injunctive or declaratory relief is appropriate for the class as a whole. See FED. R. CIV. P. 23(b)(2). Again, the circumstances and court orders differ between the judges and cases. And the injunctive or declaratory relief sought by the plaintiffs must predominate over claims for monetary relief. Maldonado, 493 F.3d at 524. This requires that requests for monetary relief be incidental to the class-wide injunctive or declaratory relief so that plaintiffs will be automatically entitled to the monetary remuneration once liability is established for the class. See Allison, 151 F.3d at 416. The monetary relief must be “capable of computation by means of objective standards and not dependent in any significant way on the intangible, subjective differences of each class member’s circumstances.” Id. at 415. The Plaintiffs’ request for disgorgement of fees is not merely incidental to the sought-after injunction and declaration. The amount that each plaintiff was charged, perhaps the amount that is “reasonable,” and any amount to be disgorged will depend on the specific circumstances of each class member and whether and how fees were imposed. See Maldonado, 493 F.3d at 524. We therefore disagree with the bankruptcy court’s determination that disgorgement amounts may be determined with mathematical certainty absent individual hearings. The class certification under Rule 23(b)(2) was therefore improper.

Opinion, at 11-13.

The conclusion from this opinion seems to be that class actions in bankruptcy are permissible, but that the requirements of Rule 23 still control. Merely because a practice affects multiple parties does not justify a class action.