St. Patrick’s Day, 2014 was the day a Federal Judge signed an order submitted by the parties to preliminarily approve their class action settlement of the plaintiffs’ claims arising from the defendants’ lender force-placed insurance practices. Fladell v. Wells Fargo Bank, N.A., Case No. 13-cv-60721, Dkt. No. 168 (S.D. Fla. Order filed March 17, 2014). Even before the Federal Judge signed the Order submitted by the parties in the Miami case, Federal Courts in other jurisdictions stayed or dismissed other pending lawsuits arising from the defendant bank’s alleged lender force-placed insurance practices. See “They Were Against It Before They Were For It: Fladell” in Three Parts, on Insurance Claims and Issues Blog, December 29, 2014; Insurance Claims and Bad Faith Law Blog, December 30, 2014; and on Insurance Claims and Issues Blog, December 31, 2014.
The class certified for settlement purposes in Fladell included many more people than the Florida, Arkansas, and Oklahoma plaintiffs before the Court in South Florida. It swept across the entire United States to include anyone who had a claim against the bank and its co-defendants anywhere, in basic and simple terms. Fladell v. Wells Fargo Bank, N.A., Case No. 13-cv-60721, Dkt. No. 168, ¶ 4 (S.D. Fla. Order filed March 17, 2014). The claims alleged by the actual plaintiffs in the Fladell case included alleged claims for unjust enrichment, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing.
The Order preliminarily approving the Fladell settlement has been replaced with an order submitted by the parties for final approval, and by a judgment. However, even now, Fladell is not final. It is on appeal as of this writing.
Far from being dispositive in precluding other claims in other jurisdictions, Fladell may not be dispositive even in its own District. It has been held in the Southern District of Florida – as it has been held elsewhere – that the requirement of “predominance” of common issues in a purported nationwide class action is simply not satisfied in the face of a predominant need for an individualized inquiry “based upon the class member’s location.” Florida’s law on unjust enrichment in particular is different from many other States. Florida is not alone. Courts in many jurisdictions “have found variation in unjust enrichment laws to preclude a finding of predominance for multistate classes asserting unjust enrichment claims.” Karhu v. Vital Pharmaceuticals, Inc., No. 13-60768-CIV, 2014 WL 815253, *8-*9 (S.D. Fla. March 3, 2014)(holding that putative class action plaintiff did not meet burden of establishing that common issues predominate “with regard to the unjust enrichment claims of the Proposed Classes”; same holding with regard to Unfair Trade Practices claim), dismissed without prejudice by Order filed on March 27, 2014, notice of appeal filed on April 15, 2014 regarding denial of class certification and dismissal. (As of this writing, the appeal in Karhu is still pending.)
It is unclear why the Fladell plaintiffs’ unjust enrichment claims should be given any greater weight simply because the parties in Fladell stipulated that everyone else’s claims of any kind anywhere in the nation would be included in their settlement once a Court approved it. Certainly no reason appears why the Fladell plaintiffs’ claims for unjust enrichment should preclude the unjust enrichment claims of anyone else, nor why any of the claims alleged by the Fladell plaintiffs should preclude the claims of other people which Courts have held not to constitute a certifiable class action, such as deceptive and unfair trade practices laws, breach of the implied covenant of good faith and fair dealing, or alleged breach of fiduciary duties. Each and every one of these claims necessitates individualized determinations of facts which do not allow even common questions to predominate and so preclude not the claims, but preclude a certifiable class.
Although the Fladell class action settlement has been arguably reduced to a judgment, in the first place that judgment is not final; as noted earlier, it is on appeal.
Second, even if the Fladell class action settlement eventually involves a final judgment, class settlement certification can be collaterally attacked including on the ground of inadequate representation on common issues. See Hecht v. United Collection Bureau, Inc., 691 F.3d 218, 221-24 (2d Cir. 2012), and cases cited in it. See generally the outstanding article by Georgene Vairo, “Is the Class Action Really Dead? Is That Good or Bad for Class Members?” 64 Emory L.J. 477 (2014).
The issue seems to boil down to whether a Court lacks subject-matter jurisdiction. That the issue involved is at bottom a potential lack of jurisdiction is shown, for example, by the history of the Karhu case cited above. In that Southern District of Florida case, once the District Judge denied certification of the alleged nationwide class, the Judge was impelled to dismiss the entire case without prejudice because the Court lacked jurisdiction as a result of denying the nationwide class certification.
Attorneys in Fladell were thus justifiably concerned with the issue of jurisdiction because they provided a proposed order which the District Judge signed in Fladell that recited it would preclude all other claims filed anywhere in the United States because it barred all claims that were or supposedly could have been filed in Fladell. See Fladell v. Wells Fargo Bank, N.A., Case No. 13-cv-60721, Dkt. No. 168, ¶¶ 13 & 15 (S.D. Fla. Order filed March 17, 2014). The fact that these provisions were written into the preliminary class settlement certification order proposed in Fladell, which were carried forward when the class settlement was finally approved, reflect an understandable concern that the Fladell class action settlement may not apply anywhere outside of South Florida and, depending on the forthcoming resolution by the Eleventh Circuit Court of Appeals, may not apply anywhere including in South Florida.
The author’s forthcoming book on “Lender Force-Placed Insurance Practices” is scheduled for publication this Spring by the American Bar Association.
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Happy St. Patrick’s Day Eve, 2015!