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Sheinberg v. Sorensen

May 28, 2010

LAWRENCE SHEINBERG AND GILES HAZEL, APPELLANTS,
v.
ROBERT SORENSEN, ET AL.



On Appeal of a Decision of the United States District Court for the District of New Jersey (Civ. No. 00-6041) United States Magistrate Judge: Claire C. Cecchi

The opinion of the court was delivered by: Pollak, District Judge

PRECEDENTIAL

Argued April 15, 2010

Before: SLOVITER and HARDIMAN, Circuit Judges, and POLLAK, District Judge.*fn1

OPINION OF THE COURT

Eight years ago, this case, pending in the United States District Court for the District of New Jersey, was certified as a class action. Three years ago, the District Court decertified the class in an opinion stressing the inadequacies of then-class counsel. After plaintiffs-appellants obtained new counsel, they moved to recertify the class. The District Court denied that motion, and plaintiffs brought this interlocutory appeal. Because the District Court failed to apply the correct standards in ruling on the motion for recertification, we will vacate and remand.

I.

In 2000, a light bulb manufacturer known as DuroTest closed. Thereafter, plaintiffs, former DuroTest employees, filed suit in New Jersey federal court against companies affiliated with DuroTest and against Robert Sorensen, the Chief Executive Officer of those companies. Plaintiffs seek damages for alleged violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq., and New Jersey state law. On May 20, 2002, the District Court certified the case as a class action, and in December 2005, a different District Judge denied the parties' cross-motions for summary judgment.

In February 2006, the parties consented to have a magistrate judge conduct all further proceedings in the case, and on August 22, 2006, United States Magistrate Judge Hedges limited the membership of plaintiffs' FLSA and ERISA classes to individuals who had previously responded to a questionnaire mailed by class counsel. In February 2007, however, Judge Hedges decertified the class in its entirety, citing numerous mistakes made by class counsel, including the failure to send class notice pursuant to Rule 23(c)(2)(B).

On October 3, 2007, plaintiffs' counsel filed a notice of withdrawal, and new counsel for the plaintiffs filed an entry of appearance. United States Magistrate Judge Cecchi approved the substitution of counsel by order dated December 10, 2007. After a settlement conference on February 13, 2008, plaintiffs moved to recertify the class. Judge Cecchi denied the recertification motion in an opinion and order dated April 4, 2008, holding that plaintiffs' newly-substituted counsel had continued the pattern of errors and omissions that had marred prior counsel's representation of the class. This interlocutory appeal followed.

We have jurisdiction pursuant to 28 U.S.C. § 1292(e) and Rule 23(f) of the Federal Rules of Civil Procedure, and we review the District Court's ruling on recertification for abuse of discretion. See Beck v. Maximus, Inc., 457 F.3d 291, 295 (3d Cir. 2006).

II.

Although questions concerning the adequacy of class counsel were traditionally analyzed under the aegis of the adequate representation requirement of Rule 23(a)(4) of the Federal Rules of Civil Procedure, those questions have, since 2003, been governed by Rule 23(g). See Fed. R. Civ. P. 23(g), 2003 Advisory Committee Note. That rule instructs that "a court that certifies a class must appoint class counsel." Id. 23(g)(1). Thus, under the plain language of the rule, a district court's decision to certify a class must precede the appointment of class counsel.

The rule lists four factors that must be considered once a district court proceeds to the stage of appointing class counsel: "the work counsel has done in identifying or investigating potential claims in the action," "counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action," "counsel's knowledge of the applicable law," and "the resources that counsel will commit to representing the class." Id. 23(g)(1)(A)(i)-(iv). A district court must also ensure that "[c]lass counsel [will] fairly and adequately represent ...


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