Eleventh Circuit Confirms that Class Counsel Owes the Same Duties to Class Members as Named Plaintiffs

King & Spalding
Contact

On December 1, 2020, the Eleventh Circuit issued an opinion reaffirming that class counsel does not owe a heightened fiduciary duty to a class representative as compared to the duty owed to absent class members.

  • In June 2013, Cin-Q Autos, Inc. filed a putative class action against Buccaneers Limited Partnership (“the Buccaneers”), which does business as the Tampa Bay Buccaneers in the National Football League. The lawsuit alleged violations of the Telephone Consumer Protection Act (“TCPA”). Medical & Chiropractic Clinic, Inc. (“M&C”) later joined the Cin-Q class action as a named plaintiff.
  • Plaintiffs in the Cin-Q class action were represented by the firm of Anderson and Wanca. One of the Anderson and Wanca attorneys involved with the representation, David Oppenheim, then left to join the Bock Law Firm—an action that precipitated a protracted legal battle between the competing plaintiffs’ firms:
    • About a month after hiring Oppenheim, the Bock Law Firm filed its own class action in Florida state court against the Buccaneers, with Technology Training Associates as the named representative (“TTA State Action”). The Bock Law Firm screened Oppenheim from any involvement in the TTA State Action.
    • The Cin-Q plaintiffs moved to intervene in the TTA State Action. The Bock Firm voluntarily dismissed the TTA State Action but began mediating with the Buccaneers and reached a proposed settlement. The Bock Law Firm re-filed the TTA action in federal court (“TTA Federal Action”) and immediately sought preliminary approval of the class settlement. M&C and Cin-Q both filed to intervene in the TTA Federal Action.
    • M&C also sued Oppenheim and the Bock Law Firm in Florida state court, alleging that Oppenheim breached the duty he had to M&C as a named class representative—specifically, the duties of loyalty and confidentiality—by revealing information about the Cin-Q class action to his new law firm. The defendants removed the case to federal court and the parties filed cross motions for summary judgment.
  • The district court granted Oppenheim’s motion for summary judgment, finding that Oppenheim did not owe a duty to M&C different from his duty to the class, that M&C failed to show that Oppenheim had breached any heightened duty even if one existed, and that M&C had failed to prove any damages from an alleged breach.
  • The Eleventh Circuit affirmed, finding no error in the district court’s determination that M&C failed to prove that Oppenheim owed a fiduciary duty to M&C different than the fiduciary duty owed to the class. The Eleventh Circuit relied on Kincade v. General Tire & Rubber Co., 63 F.2d 501 (5th Cir. 1981), for the principle “that one cardinal rule defines the scope of an attorney’s ethical obligations in class actions: class counsel owes a duty to the class as a whole and not to any individual member of the class” (emphasis added). The court also cited Parker v. Anderson, 667 F.2d 1204 (5th Cir. 1982), to re-affirm an “important corollary” of the cardinal rule: that “class counsel does not owe a particular duty to any group comprised of class members, such as class representatives, distinct from the duty owed to the class.”
  • The Eleventh Circuit also affirmed the district court’s finding that M&C had failed to prove damages from an alleged breach of duty. M&C argued that Oppenheim’s alleged fiduciary breach undermined its negotiating position in the Cin-Q action by settling the TTA Federal Action for an artificially low amount, thereby creating a “reverse auction.” The Eleventh Circuit rejected this contention, holding that M&C’s theory of damages required proof that the TTA Federal Action was “to the detriment of the class.” Yet, that objection needed to be raised in the TTA Federal Action under Rule 23, rather than a collateral state court action that constituted “a thinly-veiled attempt to derail the TTA settlement.” The court reiterated that “in accordance with Rule 23, it is the district court—and only the district court—that is tasked with making determinations about class certification, class counsel, and class settlements.”
  • Although this appeal stemmed from a dispute between rival plaintiffs’ firms, the opinion imparts an important lesson for class-action defendants: namely, that class counsel cannot serve two masters if those masters’ interests diverge. Otherwise, “class counsel would be required to choose the interests of some class members over the rest of the class,” which would “splinter class actions, lead to costly litigation between class members, and encourage class members to opt-out.” Thus, defendants should not hesitate to call attention to such conflicts when they arise between class representatives and absent class members, perhaps in an adequacy challenge under Rule 23(a)(4).
  • Read the Eleventh Circuit’s opinion here.

Written by:

King & Spalding
Contact
more
less

King & Spalding on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.