Bridges et al v. Freese et al
Filing
270
Memorandum Opinion and Order denying re 223 Supplemental MOTION to Certify Class , 102 MOTION to Certify Class , as set out herein. Signed by District Judge Tom S. Lee on 3/26/15 (LWE)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
MARY BRIDGES,
BOBBY GORDON, AND
JOHNNIE GRIFFIN, ALL
INDIVIDUALLY AND ON BEHALF OF 345
OTHER NAMED PLAINTIFFS
VS.
PLAINTIFFS
CIVIL ACTION NO. 3:13CV457TSL-JCG
RICHARD A. FREESE; TIM K.
GOSS; SHEILA M. BOSSIER;
DENNIS C. SWEET, III; FREESE
AND GOSS PLLC; SWEET AND FREESE
PLLC; BOSSIER AND ASSOCIATES PLLC;
AND DENNIS C. SWEET, D/B/A SWEET
AND ASSOCIATES, PLLC
DEFENDANTS
VS.
DON A. MITCHELL
THIRD-PARTY DEFENDANT
MEMORANDUM OPINION AND ORDER
This cause is before the court on the motion of plaintiffs
Mary Bridges and Bobby Gordon for class certification pursuant to
Federal Rule of Civil Procedure 23.
Defendants Richard A. Freese,
Tim K. Goss, Sheila M. Bossier, Dennis C. Sweet, III, Freese and
Goss PLLC, Sweet and Freese PLLC, Bossier and Associates PLLC and
Dennis C. Sweet d/b/a Sweet and Associates PLLC (hereafter
defendants) have responded in opposition to the motion.
The
court, having considered the memoranda of authorities, together
with attachments, submitted by the parties, concludes the motion
should be denied.
Plaintiffs Mary Bridges, Bobby Gordon and Johnnie Griffin,
along with 345 others, were previously represented by defendants
Freese, Goss, Sweet and Bossier (and their respective law firms)
and by third-party defendant Don Mitchell in three separate
lawsuits brought against, inter alia, BorgWarner Corporation, in
which the plaintiffs sought to recover damages for injuries they
claimed to have suffered as the result of the alleged release and
improper disposal and elimination of those certain toxic chemicals
(polychlorinated biphenyls, or PCBs) at a Crystal Springs
manufacturing facility.1
Plaintiffs’ counsel ultimately reached a
global settlement of nearly $28,000,000 with BorgWarner on behalf
of the 348 plaintiffs (the “Filed Claimants”), and on behalf of an
additional 2,471 clients who were not plaintiffs in the PCB
litigation but who also claimed they were injured from exposure to
PCBs (the “Unfiled Claimants”).
The terms of the settlement were
finalized in mid-2010 and in early 2011, defendants began the
process of disbursing settlement funds to the PCB claimants, filed
and unfiled.
1
Alford, et al. v. Kuhlman Corp., et al., Cause No.
3:07-CV-756 (S.D. Miss.) (filed Dec. 27, 2007 on behalf of 208
plaintiffs, including Mary Bridges and Johnnie Griffin); Allen, et
al. v. Kuhlman Corp., et al., Civ. A. No. 2008-0312 (Cir. Ct.
Copiah Cty., Miss.) (filed Aug. 8, 2008, on behalf of 40 named
plaintiffs, including Bobby Gordon); and Alexander, et al. v.
Kuhlman Corp., et al., Civ. A. No. 2008-0311 (Cir. Ct. Copiah
Cty.) (filed Aug. 7, 2008 on behalf of 100 named plaintiffs).
2
On July 23, 2013, plaintiffs Bridges, Gordon and Griffin
filed the present lawsuit for themselves and on behalf of a
putative class comprised of the other 345 former clients
represented by defendants, asserting myriad claims relating to
defendants’ representation of plaintiffs in the PCB litigation,
with particular reference to their handling of litigation expenses
and disbursement of settlement proceeds.
The complaint purports
to set forth claims for breach of fiduciary duty, tortious breach
of contract, fraudulent inducement, conversion, tortious
interference with contract, unjust enrichment and bad faith based
on allegations that defendants failed to properly allocate
litigation expenses among the Filed and Unfiled Claimants; charged
plaintiffs expenses that were exorbitant and unreasonable;
converted funds from the PCB settlement for their own personal and
unjust benefit; had an undisclosed conflict of interest related to
their ongoing representation of the State of Mississippi for
recovery of Medicaid and Medicare liens in other mass tort
litigation, while at the same time negotiating the PCB plaintiffs’
Medicaid and Medicare liens; improperly paid expenses and fees to
themselves before disbursing settlement funds to plaintiffs; and
unreasonably delayed payment to plaintiffs so as to use the
settlement funds to further defendants’ own monetary interests.2
2
Plaintiffs’ allegations and the background facts are
more fully set forth in this court’s opinion in this cause entered
3
Plaintiffs are now before the court seeking certification of a
plaintiff class defined as follows:
Those 348 individuals that entered into a settlement
agreement with BorgWarner Corporation in March of 2010
arising out of the civil actions of James Alford, et al.
Kuhlman Corporation, et al., Cause No.
3:07-cv-00756-HTW-LRA, In the United States District
Court for the Southern District of Mississippi; Dexter
Allen et al. v. Kuhlman Corporation et al.; Civil Action
No. 2008-0312 and Percy Alexander et al. v. Kuhlman
Corporation et al., Civil Action No. 2008-0311, In the
Circuit Court of Copiah County Mississippi, said
purported class members being legally represented by the
Defendants in the consummation of said settlement and in
the negotiation of Medicare and Medicaid liens allegedly
asserted against said settlement funds.
Class certification is governed by Rule 23 of the Federal
Rules of Civil Procedure.
To be certified under Rule 23, the
class must first satisfy four threshold requirements of Rule
23(a):
(1) numerosity (a “class [so large] that joinder of all
members is impracticable”); (2) commonality (“questions
of law or fact common to the class”); (3) typicality
(named parties' claims or defenses are typical ... of
the class”); and (4) adequacy of representation
(representatives “will fairly and adequately protect the
interests of the class”).
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613, 117 S. Ct.
2231, 138 L. Ed. 2d 689 (1997) (alterations in original) (quoting
Fed. R. Civ. P. 23(a)).
If the Rule 23(a) prerequisites are met,
on June 23, 2014 denying defendants’ motion to disqualify
plaintiffs’ counsel Chuck McRae, and the court’s October 6, 2014
opinion denying third-party defendant Don Mitchell’s motion to
dismiss the third-party complaint.
4
the proposed class must also satisfy the requirements of Rule
23(b)(1), (2) or (3).
Rule 23(b)(1) provides for certification of
a mandatory class, whose members have no right to opt out, when
“prosecuting separate actions by or against individual class
members would create a risk” of
(A) inconsistent or varying adjudications with
respect to individual class members that would
establish incompatible standards of conduct
for the party opposing the class; or
(B) adjudications with respect to individual
class members that, as a practical matter,
would be dispositive of the interests of the
other members not parties to the individual
adjudications or would substantially impair or
impede their ability to protect their
interests....:
Fed. R. Civ. P. 23(b)(1); see also In re Katrina Canal Breaches
Litig., 628 F.3d 185, 191 (5th Cir. 2010).
Rule 23(b)(2) allows
for certification where “the party opposing the class has acted or
refused to act on grounds that apply generally to the class, so
that final injunctive relief or corresponding declaratory relief
is appropriate respecting the class as a whole.”
23(b)(2).
Fed. R. Civ. P.
Finally, class certification under Rule 23(b)(3)
requires that “questions of law or fact common to class members
predominate over any questions affecting only individual members,”
and that “a class action is superior to other available methods
for fairly and efficiently adjudicating the controversy.”
Civ. P. 23(b)(3).
5
Fed. R.
The named plaintiffs, as the parties seeking certification,
bear the burden of proof to establish that the proposed class
satisfies the requirements of Rule 23.
McManus v. Fleetwood
Enterprises, Inc., 320 F.3d 545, 548 (5th Cir. 2003) (citation
omitted); see Wal–Mart Stores, Inc. v. Dukes, ––– U.S. ––––, 131
S. Ct. 2541, 2551, 180 L. Ed. 2d 374 (2011) (“Rule 23 does not set
forth a mere pleading standard.
A party seeking class
certification must affirmatively demonstrate his compliance with
the Rule—that is, he must be prepared to prove that there are in
fact sufficiently numerous parties, common questions of law or
fact, etc.”).
Plaintiffs contend they have sustained their burden
as they have shown that their proposed class meets all the
requirements of class certification under Rule 23(a) and also
satisfies Rule 23(b)(1), (2) and (3).
Defendants, however, argue
that plaintiffs’ proposed class meets none of the prerequisites to
a class action under Rule 23(a) or (b).
Having considered the
parties’ arguments, the court is satisfied that plaintiffs have
adequately demonstrated commonality, and perhaps typicality; but
in the court’s opinion, they have not established the requirement
of numerosity/impracticability or of adequacy of representation.
Addressing the Rule 23(a)(2) requirement of commonality, the
Fifth Circuit recently explained that in the wake of the Supreme
Court’s decision in Wal-Mart, it is no longer sufficient merely to
show that “there is ‘at least one issue whose resolution will
6
affect all or a significant number of the putative class
members.’”
M.D. ex rel. Stukenberg v. Perry, 675 F.3d 832, 839-40
(5th Cir. 2012) (quoting Forbush v. J.C. Penney Co., Inc., 994 F.2d
1101, 1106 (5th Cir. 1993)).
Instead, to satisfy the requirement
of commonality,
the claims of every class member must “depend upon a
common contention .... of such a nature that it is
capable of classwide resolution—which means the
determination of its truth or falsity will resolve an
issue that is central to the validity of each one of the
claims in one stroke.” Id.; see id. (“‘What matters to
class certification ... is not the raising of common
‘questions'—even in droves—but, rather the capacity of a
classwide proceeding to generate common answers apt to
drive the resolution of the litigation.’”) (quoting
Nagareda, 84 N.Y.U. L. REV. at 132). Thus, the
commonality test is no longer met when the proposed
class merely establishes that “there is ‘at least one
issue whose resolution will affect all or a significant
number of the putative class members.’” Forbush, 994
F.2d at 1106 (emphasis added) (citation omitted).
Rather, Rule 23(a)(2) requires that all of the class
member's claims depend on a common issue of law or fact
whose resolution “will resolve an issue that is central
to the validity of each one of the [class member's]
claims in one stroke.” Wal–Mart, 131 S. Ct. at 2551
(emphasis added).
Stukenberg, 675 F.3d at 840.
Defendants note the Supreme Court’s
observation in Wal-Mart that “‘[d]issimilarities within the
proposed class are what have the potential to impede the
generation of common answers,’” 131 S. Ct. at 2551 (quoting
Nagareda, 84 N.Y.U. L. REV. at 132); and they argue that the
purported class is rife with such “dissimilarities”.
In
particular, they contend that plaintiffs’ charge of fraudulent
7
misrepresentation necessarily raises individual issues of
reliance, making each plaintiff’s situation different from the
next.
They further contend that plaintiffs’ assertion of a claim
for the tort of outrage/intentional infliction of emotional
distress3 which cannot be resolved in “one stroke” as it requires
individual consideration of each claimant’s damages.
Despite defendants’ objection, the court is satisfied, even
under the more stringent explication of commonality emanating from
Wal-Mart, that this requirement is met.
All of the proposed class
members assert claims that improper deductions were made from
their share of the PCB settlement for illegitimate expenses and
further, that even the legitimate expenses of the litigation were
not properly allocated among them and the Unfiled Claimants.
In
addition, all proposed class members assert identical claims
against defendants for breach of fiduciary duty and conversion
relating to the deposit of the settlement proceeds in a noninterest bearing account in an out-of-state bank owned by
defendant Richard Freese.
“[These] contention[s] [are] ‘common’
to all the class members, [are] “central” to the validity of their
claims, and [are] “capable” of classwide resolution[,]” and thus
3
In Mississippi, the tort of “outrage” is considered
equivalent to a claim of intentional infliction of emotional
distress. See Buchanan v. Gulfport Police Dept., No.
1:08CV1299LG–RHW, 2012 WL 1906523, *12 n.6 (S.D. Miss. May 25,
2012).
8
are sufficient to satisfy Rule 23(a)(1).
In re Deepwater Horizon,
739 F.3d 790, 811 (5th Cir. 2014) (explaining that “a ‘contention’
regarding the class members' injury is sufficient to satisfy Rule
23, so long as the party seeking certification can show that this
contention is ‘common’ to all the class members, is ‘central’ to
the validity of their claims, and is ‘capable’ of classwide
resolution) (citing Wal-Mart).
The requirement of typicality is also satisfied.
As one
court has recently explained:
Typicality requires a showing that the claims of the
named plaintiffs are in fact those asserted as the
common class claims. In this sense, typicality is
commonality addressed from the perspective of the named
plaintiffs. Commonality requires showing that, in fact,
all members of the proposed class share a common claim,
the validity of which can be determined on a classwide
basis. Typicality requires showing that, in fact, the
proposed representatives have that claim. Often, once
commonality is shown typicality will follow as a matter
of course.
M.D. v. Perry, 294 F.R.D. 7, 29 (S.D. Tex. 2013).
In this sense,
the named plaintiffs’ claims are typical of the claims identified
above that are common to all class members.
However, while the
requirements of commonality and typicality are met, the remaining
requirements for class certification have not been met.
Plaintiffs argued in their initial motion for class
certification (filed May 1, 2014) that the requirement of
numerosity, i.e., a class so large that joinder of all members is
impracticable, is met, not just because of the number of proposed
9
class members - 348 – but also because “joinder of each of these
348 proposed claimants would be impracticable.”
In this vein,
they argued that since the purported class members have identical
claims regarding defendants’ charged expenses, conversion of
settlement funds and conflict of interest regarding Medicare and
Medicaid liens, then trying each of their claims individually
“would be impracticable and would be a waste of judicial
resources” and that “[j]udicial economy would certainly be served
by addressing all the claims of the purported class members in a
single class action to avoid the multiplicity and possible
contradictory judgments inherent in 348 separate lawsuits in
various counties and states.”
In their supplemental motion for
class certification, filed November 13, 2014, plaintiffs assert,
as an additional basis for finding impracticality of joinder, that
defendants’ own actions have rendered individual suits by the 348
class members impractical under Rule 23(a).
More specifically,
they state that when plaintiffs’ counsel began initiating
communication with former PCB clients, defendants sent “cease and
desist” letters to plaintiffs’ counsel threatening them with
criminal, civil and ethical repercussions if they had any further
communication with the former PCB clients.
Plaintiffs insinuate
that defendants’ threats have put them in the position of having
to proceed as a class rather than with individual claims since
10
defendants have taken the position that plaintiffs’ counsel are
precluded from contacting the former PCB clients directly.
In the court’s opinion, however, plaintiffs’ counsel’s own
conduct belies plaintiffs’ assertion that joinder is
impracticable.
First, as defendants aptly point out, plaintiffs’
counsel herein has filed two other lawsuits, each with
approximately 300 individual Unfiled Claimants, against defendants
challenging various aspects of the settlement distribution (on
some of the same bases as are asserted in this case).
See Patty
Windom, et al. v. BorgWarner, Inc., No. No. 3:13-cv-00741-CWR-FKB
(S.D. Miss.) (approximately 285 individual plaintiffs), and Carlos
Ivory, et al. v. Freese & Goss, PLLC, et al.; No. 3:13-00740
HTW-LRA (approximately 320 individual plaintiffs).
Moreover,
while this case has been pending – and indeed, while the motion
for class certification has been pending –
plaintiffs’ counsel
herein has filed a number of separate lawsuits on behalf of
individual Filed Claimants, i.e., members of the proposed
plaintiff class, and in one of those cases has joined 111
individual claimants.
See Alford v. Freese and Goss, et al.,
Cause No. 14-950 (Rankin Cty. Chancery Ct. May 21, 2014) (one PCB
Filed Claimant); Wilson v. Freese and Goss, et al., Cause No.
14-961 (Rankin Cty. Chancery Ct. May 22, 2014) (three PCB Filed
Claimants); Hartley v. Freese and Goss, et al., Civ. Action No.
3:14CV600DPJ-FKB (S.D. Miss. May 23, 2014) (110 PCB Filed
11
Claimants).
In other words, plaintiffs’ counsel has filed
separate individual actions on behalf of nearly one-third of all
prospective class members.
Given all these circumstances, the
court concludes that plaintiffs have failed to demonstrate the
impracticability of joinder for purposes of Rule 23(a)(1).
The adequacy requirement of Rule 23(a)(4) mandates an inquiry
into both “[1] the zeal and competence of the representative's
counsel and ... [2] the willingness and ability of the
representative to take an active role in and control the
litigation and to protect the interests of absentees[.]”
Berger
v. Compaq Computer Corp., 257 F.3d 475, 479 (5th Cir. 2001).
Furthermore, “it must appear that the representative will
vigorously prosecute the interests of the class through qualified
counsel.”
Id. at 482–83 (citation omitted).
Thus, the class
representative must possess a sufficient level of knowledge and
understanding to be capable of “controlling” or “prosecuting” the
litigation.
Id. (citation omitted).
Apart from their arguments regarding the adequacy of class
counsel, plaintiffs declare that two of the named plaintiffs have
exhibited sufficient knowledge to satisfy the requirements of Rule
23(a)(4).4
Having reviewed the evidence, though, the court is not
persuaded.
No serious argument can be made that Bobby Gordon is
4
Although Johnnie Griffin is a named plaintiff, no
argument is made that he is an adequate class representative.
Plaintiffs’ arguments relate only to Bridges and Gordon.
12
an adequate class representative.
The deposition excerpts
presented by plaintiffs in support of the class certification
motion demonstrate that Gordon has barely a clue what this case is
about.
That is, she lacks even a basic understanding of the
litigation.
Mary Bridges’ testimony reflects that she is more
knowledgeable than Gordon.
However, she, too, exhibits a
concerning lack of familiarity with or understanding of the
allegations of the case.
Bridges stated in her deposition that
she “think[s] this case is about monies that we did not receive as
clients from the lawyers” in the PCB litigation; but it appears
she is unaware of the factual basis for the allegation that monies
are due her and the putative class members.
Bridges testified
that at the time of the PCB settlement, she did not receive as
much money as she thought she would based on the BorgWarner
settlement matrix, which assigned points for specific illnesses.
Based on that matrix, Bridges had thought she would get $10,000 to
$12,000, but instead she got only about $5,000 to $7,000.
This
lawsuit, according to Bridges, is based upon her belief that “the
numbers just seemed wrong.”
Even now, when this case has been
pending for well over a year, and after she has had a number of
conversations with proposed class counsel (including an hour-anda-half meeting prior to her deposition), it is apparent that
Bridges does not know what this case is about.
13
She specifically
stated that she “is not sure” whether she is claiming
misrepresentations were made to her.
Further, she gave no
indication that she had any information or understanding that her
claims involved improperly charged and/or allocated expenses (and
indeed, she seemed to think that the problem with the settlement
is that she was not given proper credit/points under the
settlement matrix for her specific illnesses).5
She also gave no
hint that she believes she was deprived of interest on her
settlement funds (or that the lawsuit includes any such claim), or
that she had any basis other than a flawed application of the
settlement matrix for contending that monies are due her or the
members of the proposed class.
In short, she understands nothing
more than that there were (or may have been) some “problems” with
the settlement payments (the nature of which she is completely
5
Ms. Bridges testified as follows:
Q. Are you aware of the manner in which any damages
awarded would be allocated among class members?
A. I don’t know if they would go back through all of
your problems and do it the way they did it the first
time, or just give us all equal – equal amounts of money
that’s just owed to us. I mean, I don’t know.
...
Q. Okay. Do you have an opinion as to how damages
should be allocated if awarded in this case?
A. I would suggest that every – each client’s paperwork
be re-evaluated and see if the scales were done properly
or the amounts pertaining to the injuries – of the
client.
It is evident from her responses to these questions that Ms.
Bridges believes the problem to be that the PCB claimants did not
receive the proper amount in settlement based on the injuries they
sustained.
14
unaware), and that as a result, she and the proposed class members
may be due “some of the money that [they] did not get before.”
The court recognizes, of course, that class representatives
are not required to have detailed knowledge of the facts and legal
theories underlying their claims and that they are entitled to
rely to some extent on counsel.
See Berger, 257 F.3d at 483 n.15
(citing Longden v. Sunderman, 123 F.R.D. 547, 557–58 (N.D. Tex.
1988)(“In analyzing the ‘vigorous prosecution’ element of the
adequacy requirement, the Court concludes that the qualifications
and experience of class counsel is of greater consequence than the
knowledge of class representatives.”) (emphasis added).
However,
in all cases, “the class representatives' level of knowledge
remains a relevant factor,” Berger, 257 F.3d at 483 n.15, and to
qualify as adequate class representatives, they should “know more
than that they were involved in a bad business deal,” id. at 483
(internal quotation mark and citation omitted).
said of either Gordon or Bridges.
That cannot be
Accordingly, irrespective of
the qualifications of class counsel, the court concludes that the
named plaintiffs are not adequate class representatives.6
6
Defendants have moved to disqualify Chuck McRae as
counsel pursuant to the Mississippi Rules of Professional
Responsibility due to alleged conflicts of interest. On the basis
of the arguments set forth in that motion, they maintain that Mr.
McRae cannot adequately represent the proposed class. In light of
the court’s conclusion that the named plaintiffs’ insufficient
level of knowledge and understanding of the litigation precludes
them from representing the proposed class, the court, for purposes
of the motion to certify class, need not resolve the issue of Mr.
15
For the foregoing reasons, the court concludes that
plaintiffs have failed to satisfy all the requirements of Rule
23(a) and that for this reason, their motion for class
certification should be denied.7
Accordingly, it is ordered that plaintiffs’ motion for class
certification is denied.
SO ORDERED this 26TH
day of March, 2015.
McRae’s qualification to represent the proposed class. In any
event, the court does note that defendants have not contended that
Mr. McRae’s co-counsel would not be an adequate representative.
7
The court would note further that even if the plaintiffs
had satisfied the requirements of Rule 23(a), they have not
demonstrated that a class action is proper under any of the
provisions of Rule 23(b). First, the fact that plaintiffs’
counsel has filed multiple individual claims on behalf of nearly
one-third of the purported class members effectively forecloses
their position that a class action is warranted under Rule
23(b)(1) due to the risk of inconsistent or varying adjudications.
Plaintiffs do not argue in their motion that individual
adjudications would threaten the interests of other purported
class members. However, the fact of the other lawsuits initiated
and pursued by plaintiffs’ counsel would foreclose any such
argument, as well. Similarly, plaintiffs cannot reasonably be
heard to contend that “a class action is superior to other
available methods for fairly and efficiently adjudicating the
controversy”, as provided by Rule 23(b)(3), when plaintiffs’
counsel has been actively pursuing individual lawsuits on behalf
of individual PCB claimants. Lastly, a class action is not
available under Rule 23(b)(2) since, although plaintiffs purport
to seek equitable relief, the predominate relief they seek is
monetary damages. See Wal-Mart, 131 S. Ct. at 2557–60
(instructing that unless merely “incidental” to the requested
declaratory or injunctive relief, claims for individualized
monetary damages preclude class certification under Rule
23(b)(2)).
16
/s/Tom S. Lee
UNITED STATES DISTRICT JUDGE
17
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