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Eleventh Circuit Offers Guidance to Class Counsel Regarding Duties Owed to Class Representative and Class Members

Daniel Carlton and Bryant Paul Lin

Eleventh Circuit Offers Guidance to Class Counsel Regarding Duties Owed to Class Representative and Class Members
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Large-scale class actions often entail parallel proceedings, involving the same subject matter and defendants. Class counsel play a prominent role in shaping the outcome of these actions. The Eleventh Circuit’s decision in Medical & Chiropractic Clinic, Inc. v. Oppenheim provides important guidance to class counsel on the difficult responsibility of balancing duties owed to multiple constituencies in these proceedings.

Oppenheim stemmed from a series of class actions related to the Tampa Bay Buccaneers’ advertising practices. In one of those actions, Anderson & Wanca filed a class action on behalf of Medical & Chiropractic Clinic, Inc. (M&C) in federal district court in the Middle District of Florida. M&C, as class representative, entered into mediation with the Buccaneers, but the mediation was ultimately unsuccessful in resolving the case. Shortly thereafter, David Oppenheim, an attorney at the AW Firm involved in the mediation, left the firm to join the Bock Law Firm, LLC.

After Oppenheim joined the Bock Law Firm, the firm filed a separate class action against the Buccaneers in Florida state court, raising the same claims as those asserted by M&C. The Bock Law Firm’s client reached a proposed class settlement with the Buccaneers after agreeing voluntarily to dismiss the action without prejudice. Then, Bock refiled the action in a federal district court for the Middle District of Florida, seeking preliminary approval of the class settlement.

While approval of the proposed settlement was pending, M&C filed suit against Oppenheim and the Bock Law Firm in a Florida state court, asserting that they breached the fiduciary duties owed to M&C as a named class representative. M&C sought not only money damages and attorney fees but also an injunction preventing Bock from (1) representing clients in the class action and (2) reaching a settlement in any related matter. After the lawsuit was removed to federal court, the parties filed cross motions for summary judgment. The district court held that Oppenheim did not owe an individual fiduciary duty to M&C and granted summary judgment in favor of the defendants. M&C appealed that decision.

The Eleventh Circuit affirmed the district court’s grant of summary judgment. The court held that class counsel did not owe a special fiduciary duty to class representatives (i.e., M&C) that is distinct from the duty owed to the other class members as a whole. To hold otherwise, the Eleventh Circuit determined, would contradict the defining purpose of class actions: to consolidate multiple claims into one suit where a class of plaintiffs may speak with one voice. Moreover, if class counsel provided heightened ethical considerations to class representatives, it would invite potential conflict between the interests of the class representatives and the other class members. This could splinter class actions and lead to costly litigation between class members.

The Eleventh Circuit also held that M&C’s action, which challenged Oppenheim and the Bock Firm’s requests to certify the class and approve of the class settlement, was filed in an improper forum. According to the Eleventh Circuit, the federal district court for the Middle of District of Florida was “solely responsible” for making all determinations under Rule 23 of the Federal Rules of Civil Procedure, including whether to certify a class, whether to appoint class counsel, and whether to approve of the proposed class settlement. In essence, M&C’s action asked a state court judge to enjoin putative class counsel in a separate federal class action. The Eleventh Circuit instead found that the federal district court was the exclusive “gate keeper” under Rule 23.

Oppenheim thus provides two key points for class counsel to consider. First, class counsel owes the same duty to all class members. This indicates that a class member seeking to challenge a Rule 23 determination must show that the determination would negatively impact the entire class at large, not just a subset of class members. Second, competing class counsel must bring their Rule 23 challenges directly to the court where the class action was filed. This prevents counsel from forum shopping a more a different, but more favorable, jurisdiction in an effort to derail class certification or a class action settlement.