Justia Professional Malpractice & Ethics Opinion Summaries

Articles Posted in Class Action
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In this case, the plaintiff, Laura Mullen, claimed that the defendants, a youth volleyball club and its owners, fraudulently concealed previous sexual abuse allegations. The district court granted summary judgment in favor of the defendants, but also imposed sanctions against them and their lawyer for improperly interfering with the class notice process. The defendants appealed the sanctions.The United States Court of Appeals for the Seventh Circuit held that the district court did not abuse its discretion or commit clear error in imposing the sanctions. The court found that the defendants had intentionally interfered with the class notice and opt-out process and that their communications with class members during the notice period were potentially coercive. The court also upheld the decision of the district court to impose monetary sanctions against the defendants, which included the plaintiff’s reasonable attorney’s fees and expenses, as well as a civil penalty for each defendant.The court also affirmed the non-monetary sanctions imposed against the defendants' lawyer, who had contacted a class member directly and made a false statement to the court. Although the defendants argued that the lawyer had acted in good faith and did not knowingly or intentionally violate the rules of ethics, the court found that she had taken deliberate action to avoid confirming a high probability of wrongdoing.Finally, the court rejected the defendants' argument that the plaintiff should have been sanctioned. The defendants claimed that the plaintiff’s use of the term “rape” was inaccurate and irrelevant, that her actions before and after filing the complaint were inconsistent, that she did not have a proper basis for bringing the suit, and that she misrepresented evidence. The court found no merit in these arguments and affirmed the district court’s decision to deny sanctions against the plaintiff. View "Mullen v. Butler" on Justia Law

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In the multidistrict National Prescription Opiate Litigation, municipalities from across the nation, Indian Tribes, and other entities allege that opioid manufacturers, distributors, pharmacies, and retailers acted in concert to mislead medical professionals into prescribing, and millions of Americans into taking and often becoming addicted to, opiates. Two northeast Ohio counties, Trumbull and Lake, alleged that national pharmaceutical chains “created, perpetuated, and maintained” the opioid epidemic by filling prescriptions for opioids without controls in place to stop the distribution of those that were illicitly prescribed and that conduct caused an absolute public nuisance remediable by abatement under Ohio common law.The district court ordered a bellwether trial, after which a jury concluded that the “oversupply of legal prescription opioids, and diversion of those opioids into the illicit market” was a public nuisance in those counties and that defendants “engaged in intentional and/or illegal conduct which was a substantial factor in producing" that nuisance. The district court entered a $650 million abatement order and an injunction requiring defendants to “ensure they are complying fully with the Controlled Substances Act and avoiding further improper dispensing conduct.” On appeal, the Sixth Circuit certified a question of law to the Ohio Supreme Court: Whether the Ohio Product Liability Act, Ohio Revised Code 2307.71, abrogates a common law claim of absolute public nuisance resulting from the sale of a product in commerce in which the plaintiffs seek equitable abatement, including both monetary and injunctive remedies? View "Trumbull County v. Purdue Pharma, L.P." on Justia Law

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Field Asset Services, Inc. (“FAS”) is in the business of pre-foreclosure property preservation for the residential mortgage industry. Plaintiff was the sole proprietor of BB Home Services, which contracted with FAS as a vendor. Plaintiff alleged that FAS willfully misclassified him and members of the putative class as independent contractors rather than employees, resulting in FAS’s failure to pay overtime compensation and to indemnify them for their business expenses. FAS first argued that the district court abused its discretion by certifying the class, despite the predominance of individualized questions over common ones.   The Ninth Circuit filed (1) an order denying a petition for panel rehearing, denying on behalf of the court a petition for rehearing en banc, and amending the opinion filed on July 5, 2022; and (2) an amended opinion reversing the district court’s order certifying a class of 156 individuals who personally performed work for FAS, reversing the partial summary judgment in favor of the class, vacating the interim award of more than five million dollars in attorneys’ fees, and remanding for further proceedings.   The panel held that here, the class failed the requirement because complex, individualized inquiries would be needed to establish that class members worked overtime or that claimed expenses were reimbursable. The panel concluded that class certification was improper. The panel noted that FAS’s joint employment argument would likely succeed was an actual employee of a vendor suing FAS, claiming that FAS was an employer. The panel further held that the interim award of attorneys' fees must be vacated because the class certification and summary judgment orders were issued in error. View "FRED BOWERMAN, ET AL V. FIELD ASSET SERVICES, INC., ET AL" on Justia Law

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The Supreme Court held that judgment creditors cannot levy on their judgment debtor, obtain the judgment debtor's chose in action for legal malpractice against the attorney representing the judgment debtor in the litigation giving rise to the judgment, and prosecute the claim for legal malpractice against the attorney as successors in interest to their judgment debtor.Janice and Jeff Gray were awarded $127 million in a civil suit against James Lee Hohenshell. The court of appeals affirmed. While the appeal was pending, the Grays caused to be issued a writ of execution on the judgment against Hohenshell. Amongst the property levied on was any claims against Michael Oliver, Hohenshell's lawyer in the underlying suit. The Grays purchased this right for $5000 at the sheriff's sale. The Grays then filed this malpractice claim against Oliver as successors in interest to Hohenshell. The district court granted Oliver's motion for summary judgment, holding that public policy prohibits the assignment of a legal malpractice claim to an adversarial party in the underlying lawsuit. The Supreme Court affirmed, holding that judgment creditors cannot prosecute a claim for legal malpractice as successors in interest to their former litigation adversary where the claim for legal malpractice arose out of the suit in which the parties were adverse. View "Gray v. Oliver" on Justia Law

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Plaintiffs Mary Hall, as personal representative of the estate of Adolphus Hall, Sr., and Anaya McKinnon, as personal representative of the estate of Wanzy Lee Bowman appealed the dismissal of their class-action claims against Environmental Litigation Group, P.C. ("ELG"). Plaintiffs alleged ELG agreed to represent hundreds of clients who had been exposed to asbestos, including their respective decedents. Plaintiffs alleged ELG charged its clients an excessive fee above and beyond the amount listed in their respective contracts. The trial court dismissed their case with prejudice. The Alabama Supreme Court disagreed with the trial court’s judgment, reversed and remanded. On remand, the trial court appointed a special master, who again recommended dismissal of plaintiffs’ claims. The trial court held that the attorney-employment agreement was ambiguous and that this ambiguity was fatal to the plaintiffs' class-allegation claims. Thus, the trial court dismissed the class claims before the class-certification process began. At this point in the proceedings and under the standard of review, the Supreme Court saw no ambiguity in the attorney-employment agreements, negating the trial court's contrary conclusion as to the individualized inquiry necessary with regard to the plaintiffs' contract claims. The Court therefore reversed the trial court's order dismissing the plaintiffs' claims for class-based relief and remanded the matter for further proceedings. View "Hall v. Environmental Litigation Group, P.C." on Justia Law

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The Joyce law firm purchased professional liability insurance from Professionals Direct. In 2007 the firm won a large damages award for a class of securities-fraud plaintiffs and hired another law firm to sue to collect the money from the defendant’s insurers. Some class members thought the Joyce firm should have handled enforcement of the judgment itself under the terms of its contingency-fee agreement. They took the firm to arbitration over the extra fees incurred. Professionals Direct paid for the firm’s defense in the arbitration. After the arbitrator found for the clients and ordered the firm to reimburse some of the fees they had paid, the insurer refused a demand for indemnification. The district judge sided with the insurer, concluding that the award was a “sanction” under the policy’s exclusion for “fines, sanctions, penalties, punitive damages or any damages resulting from the multiplication of compensatory damages.” The Seventh Circuit affirmed. While the arbitration award was not functionally a sanction, another provision in the policy excludes “claim[s] for legal fees, costs or disbursements paid or owed to you.” Because the arbitration award adjusted the attorney’s fees owed to the firm in the underlying securities-fraud class action, the “legal fees” exclusion applies. View "Edward T. Joyce & Assocs. v. Prof'ls Direct Ins. Co." on Justia Law

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After the merger of NationsBank and BankAmerica, shareholders filed class actions alleging violations of securities laws. The district court appointed Oetting as lead plaintiff and the Green law firm, as lead counsel. The litigation resulted in a $333 million settlement for the NationsBank class. The Eighth Circuit affirmed approval of the settlement over Oetting’s objection. On the recommendation of Green, the court appointed Heffler as claims administrator. A Heffler employee conspired to submit false claims, resulting in fraudulent payment of $5.87 million. The court denied Green leave to file a supplemental complaint against Heffler. Oetting filed a separate action against Heffler that is pending. After distributions, $2.4 million remained. Green moved for distribution cy pres and requested an additional award of $98,114.34 in attorney’s fees for post-settlement work. Oetting opposed both, argued that Green should disgorge fees for abandoning the class, and filed a separate class action, alleging malpractice by negligently hiring and failing to supervise Heffler and abandonment of the class. The court granted Green’s motion for a cy pres distribution and for a supplemental fee award and denied disgorgement. The Eighth Circuit reversed the cy pres award, ordering additional distribution to the class, and vacated the supplemental fee award as premature. The district court then dismissed the malpractice complaint, concluding that Oetting lacked standing. The Eighth Circuit affirmed that collateral estoppel precluded the rejected disgorgement and class-abandonment claims; pendency of an appeal did not suspend preclusive effects. View "Oetting v. Norton" on Justia Law

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Plaintiffs filed a putative class action seeking to hold ProShares liable for material omissions and misrepresentations in the prospectuses for certain exchange-traded funds (ETFs) under the Securities Act of 1933, 15 U.S.C. 77k and 77o. Plaintiffs alleged that registration of statements omitted the risk that the ETFs, when held for a period of greater than one day, could lose substantial value in a relatively brief period of time, particularly in periods of high volatility. The district court concluded that the disclosures at issue accurately conveyed the specific risk that plaintiffs asserted materialized. The court agreed with the district court's conclusion that the relevant prospectuses adequately warned the reasonable investor of the allegedly omitted risks. View "In Re: ProShares Trust Sec. Litig." on Justia Law

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Plaintiff brought a class action suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., alleging various breaches of fiduciary duty to plan participants. The district court dismissed the complaint for failure to state a claim. The court concluded that the district court correctly dismissed Counts I and IV of the amended complaint which alleged that Idearc Defendants breached their fiduciary duties by allowing plan participants to buy and hold Idearc stock when it was no longer prudent to do so where the amended complaint failed to allege sufficient facts to overcome the "presumption of prudence" the court adopted in Kirschbaum v. Reliant Energy Inc. The court also concluded that the district court correctly dismissed plaintiff's claim for inaccurate disclosures and nondisclosures (Count II) where plaintiff alleged no specific circumstance or specific injury mandating the Idearc Defendants disclose non-public information to plan participants and no general duty to disclose non-public information existed under ERISA or under the court's precedents. The court affirmed the district court's dismissal of plaintiff's remaining claims. View "Kopp v. Klein, et al." on Justia Law

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Plaintiffs, current and former employees of Amgen and AML, participated in two employer-sponsored pension plans, the Amgen Plan and the AML Plan. The Plans were employee stock-ownership plans that qualified as "eligible individual account plans" (EIAPs) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1107(d)(3)(A). Plaintiffs filed an ERISA class action against Amgen, AML, and others after the value of Amgen common stock fell, alleging that defendants breached their fiduciary duties under ERISA. The court concluded that defendants were not entitled to a presumption of prudence under Quan v. Computer Sciences Corp., that plaintiffs have stated claims under ERISA in Counts II through VI, and that Amgen was a properly named fiduciary under the Amgen Plan. Therefore, the court reversed the decision of the district court and remanded for further proceedings. View "Harris v. Amgen" on Justia Law