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Ronald L. Huber; William J. Airgood; Anthony Defabbo v. Robert G. Taylor

September 29, 2011

RONALD L. HUBER; WILLIAM J. AIRGOOD; ANTHONY DEFABBO;
JOHN DINIO; ERNEST GISHNOCK; JOHN BIDLENCSIK; HILMA MULLINS AND WILLIAM DEEM, INDIVIDUALLY AND ON BEHALF OF THOSE SIMILARLY SITUATED PLAINTIFFS,
v.
ROBERT G. TAYLOR, II; ROBERT G. TAYLOR, P.C.; R.G. TAYLOR II, P.C.;
ESTATE OF ROBERT A. PRITCHARD; PRITCHARD LAW FIRM, PLLC; JOSEPH B. COX, JR.; JOSEPH B. COX, JR. LTD; AND COX AND COX, LLP DEFENDANTS.



The opinion of the court was delivered by: Chief Magistrate Judge Lisa Pupo Lenihan

OPINION ON MOTIONS FOR CLASS CERTIFICATION AND PARTIAL SUMMARY JUDGMENT

ECF Nos. 401, 407

I. HISTORY AND SCOPE OF CLAIM

As noted in this Court‟s last Opinion, the claims presently remaining before this Court in this 2002 action relate to Defendants‟ representation of the eight (8) above-named Plaintiffs (the "Named Plaintiffs"), and assertedly of others similarly situated, in consolidated individual personal injury actions for exposure to asbestos, in the State Court of Mississippi (the "Mississippi Asbestos Exposure Consolidated Litigation" or "Mississippi AECL"). More specifically, "Plaintiffs maintain, under the express law of the case as set forth by the Court of Appeals, a claim for breach of fiduciary duty under Texas law, by which they may be entitled, despite having incurred no actual injury, to disgorgement of all or some portion of the attorney fees paid by the Named Plaintiffs (or members of their putative class, if such class were to be certified). . . . And with evidence sufficient to raise a question of intentional breach of fiduciary duty, Plaintiffs might also be entitled to punitive damages under Texas law." See Opinion and Memorandum Order on Motion to Strike and Dismiss at 3-4 (emphasis added); id.at 2 n. 1 (detailing Circuit Court‟s finding of no actual harm).*fn1 Plaintiffs‟ claims turn on allegations that Defendants breached their Texas law fiduciary duty (by failing to adequately disclose material information, including, e.g., co-counsel arrangements and/or settlement information, to Mississippi AECL participants residing in Pennsylvania, Ohio and Indiana (the "Northern Clients"); allocating settlement funds disproportionately owing to conflicting fee incentives; and/or failing a duty of candor/disclosure by imposing excessive charges). See id. at 3; see also id. at 6 (explaining that a challenge to propriety of fees/expenses, rather than breach of disclosure of information related to them, would be precluded by, among other reasons, the law of the case/scope of the Circuit‟s remand).

Presently pending is Plaintiff‟s Motion for Class Certification, ECF No. 401, which, for reasons (a) among those well-briefed by Defendants and (b) set forth below, will be denied.*fn2

Also pending is Defendants‟ Motion for Partial Summary Judgment, ECF No. 407, requesting dismissal of claims based on alleged "conflicting fee incentives" and "retaliatory and ineffective withdrawals of representation". This Motion will, on the evidence of record, be granted.

II. ANALYSIS AS TO CLASS CERTIFICATION

A. Plaintiffs' Action, as Set Forth in Their Third Amended Complaint, is Predominantly One for Monetary Damages Under Texas Statutory Law and Not One for Injunctive or Declaratory Relief

As a preliminary matter, the Court is in accord with Defendants‟ observations regarding the restriction of certification under Rules 23(b)(1) or 23(b)(2) to those actions seeking predominantly injunctive or declaratory relief. See Barnes v. American Tobacco Co., 161 F.3d 127, 142 (3d Cir.1998) ("Subsection (b)(2) class actions are limited to those class actions seeking primarily injunctive or corresponding declaratory relief" and (b)(2) "does not extend to cases in which the appropriate final relief relates exclusively or predominately to money damages."); Wal-Mart Stores, Inc. v. Dukes, 2011 WL 2437013, *12 (U.S. June 20, 2011) (holding that claims for monetary relief may not be certified under 23(b)(2) where "the monetary relief is not incidental to the injunctive or declaratory relief");*fn3 Langbecker v. Elec. Data Sys. Corp., 476 F.3d 299, 318 (5th Cir. 2007) (explaining that focus on monetary damages set class apart from 23(b)(1) class actions, where principal goal is injunctive relief). See also generally 5 Moore‟s Federal Practice Section 23.41 & .42 (explaining that exception to certification under (b)(1) or (b)(2) for predominantly injunctive or declaratory relief, with monetary relief being "merely incidental", is under a "limited fund" theory);*fn4 Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415 (5th Cir. 1998)(determining that, even in hybrid case requesting injunctive/declaratory and monetary relief, "incidental" monetary relief "flow[s] directly from liability to the class as a whole" and should be that to which class members would then be automatically entitled, not dependent on "subjective differences of each class member‟s claims" and not requiring "additional hearing to resolve the disparate merits of each individual‟s case").

In this case, Plaintiffs‟ Third Amended Complaint as filed, purposefully abandons claims for injunctive relief and, as Defendants observe, focuses on claims for disgorgement of fees and punitive damages for alleged past misconduct under Texas statutory law. See Defendants‟ Joint Memorandum of Law in Opposition to Plaintiff‟s Motion for Class Certification ("Defendants‟ Joint Opposition") at 2.*fn5 Plaintiffs‟ requests for disgorgement of fees and punitive damages do not meet the requisite standard. See, e.g., Wal-Mart, 2011 WL 2437013 at *14 ("Rule 23(b)(2) does not speak of "equitable‟ remedies generally but of injunctions and declaratory judgments."); Jefferson v. Ingersoll Int‟l, Inc., 195 F.3d 894, 897 (7th Cir. 1999); see also Defendants‟ Joint Opposition at 2, 48 (noting that Plaintiffs characterize their case as seeking "the equitable remedies of disgorgement and an accounting, and punitive damages"); id. at 51 & n. 45 (providing citations to earlier Circuit Court cases holding that injunctive or declaratory relief, for purposes of Rule 23(b), are distinct/specific forms of relief and not an "umbrella term‟ encompassing, e.g., restitution or disgorgement). Nor is Plaintiffs‟ request for a retrospective declaration that Defendants violated fiduciary duties sufficient for purposes of the injunctive/declaratory relief requirement of (b)(1) and/or (b)(2). See Defendants‟ Joint Opposition at 48-49 (citing Third Amended Complaint request for order "declaring that Defendants violated their fiduciary duties"); Defendants‟ Joint Surreply in Further Opposition to Motion for Class Certification at 1-3 (noting Complaint‟s request for an order requiring defendants to "disclose potential and actual conflicts" and "terms of all settlements or pending settlements").*fn6 See also id. at 50-52 & n. 43 (providing extensive case citations illustrative of the well-established principle that injunctive or declaratory relief cases address present/future, versus past, harms). Cf. Matin v. Keitel, 205 Fed. Appx. 925, 928 (3d Cir. 2006) (affirming dismissal of declaratory judgment action seeking "merely a declaration that defendants violated . . . rights in the past").

In addition, as discussed below, Plaintiffs also fail certification under provisions of Rule 23(b) for want of predominance or cohesiveness.

B. Plaintiffs Fail to Satisfy Either "Predominance" or "Cohesiveness", as Required for Their Requested Class Certification Under Rule 23(b)

Plaintiffs assert, in their related briefings, that the individual issues inherent in this action and previously noted by this Court, including specifically the individual issues of disclosure, (a) constitute not an element of their claim, but solely an affirmative defense, and (b) are irrelevant to class certification. They err on both counts. First, Plaintiffs‟ claim has been, and remains under the law of the case, essentially that Defendants breached a Texas law fiduciary duty via a failure to adequately disclose. What was and was not disclosed is therefore obviously and necessarily a part of Plaintiffs‟ proof of that breach. That is, the information communicated to the Northern Clients (by Defendants, the client‟s local counsel, or their representatives) goes to an actual element of the claim and is part of Plaintiffs‟ prima facie case. Second, Plaintiffs‟ blanket proposition to the contrary notwithstanding, affirmative defenses are relevant to class certification.*fn7 And while differences in disclosure may not be relevant to the requirement of "typicality" under Rule 23(a) - which is ...

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