Competing Duties and Courts: 11th Circuit Clarifies Procedures and Counsel Duties in Competing Class ActionsThe 11th Circuit recently addressed the issue of competing or overlapping class actions, which often create problems for both the plaintiffs’ counsel and the defense. In Medical and Chiropractic Clinic, Inc. v. Oppenheim, the 11th Circuit clarified what duties class counsel owes to class representatives and the correct forum for asserting challenges by competing class counsel.

Oppenheim is part of a series of class actions that related to the Tampa Bay Buccaneers’ advertising practices. In brief, the AW Firm filed the original Cin-Q class action, but mediation stalled because one of their lead attorneys refused to settle for less than $99 million. A different attorney, David Oppenheim, took over the role of “closer.” Despite this switch, mediation still failed, and the AW Firm moved for class certification.

A week later, the Bock Firm recruited Oppenheim to join it. When Oppenheim left the AW Firm, he believed that he would continue to work with the AW Firm on the Cin-Q class action and took information about the action with him to the Bock Firm. (Oppenheim’s former firm also accused him of sharing inside knowledge of the Cin-Q litigation with his new firm).

With Oppenheim on board, the Bock Firm filed a competing class action, Technology Training Associates, and reached a proposed settlement with the Buccaneers. That case reached the 11th Circuit in Technology Training Associates, Inc. v. Buccaneers Limited Partnership after the district court denied the Cin-Q plaintiffs’ motion to intervene. Relying on the compelling evidence of a “reverse auction” facilitated by Oppenheim’s inside knowledge, the 11th Circuit held that intervention was proper.

Just prior to the filing of the motion for preliminary approval of the Technology Training Associates settlement, however, one of the class representatives from the Cin-Q class action, the Medical and Chiropractic Clinic, Inc. (M&C), sued Oppenheim and the Bock Firm, claiming that Oppenheim breached the fiduciary duties owed to M&C as the class representative and that the Bock Firm aided and abetted that breach. M&C sought both monetary damages and an injunction preventing the Bock Firm from further participating in these class actions against the Buccaneers. The district court held that Oppenheim did not owe an individual fiduciary duty to M&C and granted summary judgment in favor of Oppenheim and the Bock Firm. M&C appealed.

Two Key Decisions

The 11th Circuit decided two issues. It first affirmed that the class counsel does not owe any individual fiduciary duty to the class representative:

“[o]ne cardinal rule defines the scope of counsel’s ethical obligations in class actions: class counsel owes a duty to the class as a whole and not to any individual member of the class” (Oppenheim, 2020 WL 7038400, at *6).

And an “important corollary stems from this principle: class counsel does not owe a particular duty to any group comprised of class members, such as class representatives, distinct from the duty owed to the class.”

“If courts required class counsel to give special ethical considerations to class representatives (or any other subset of the class), the remaining class members would necessarily receive reduced ethical considerations in comparison.”

If counsel had to choose some class members’ interests over others, class actions could splinter, leading to costly litigation between class members.

The second principle from this decision is of even greater practical interest to class action defendants: The 11th Circuit affirmed that the court where the proposed settlement is pending alone has authority to make decisions about the settlement.

Specifically, the 11th Circuit held that “M&C’s filing of this suit in state court against Oppenheim and the Bock Firm strikes us as an attempt to end run around the [Technology Training Associates] court, which was solely responsible for making all Rule 23 determinations related to the Bock Firm’s requests to certify a class and approve a class settlement.” The 11th Circuit explained that “Rule 23 makes clear that the district court in which a class action is filed operates as a gatekeeper. It is that court, and that court alone, that has the task of deciding a number of Rule 23 questions, including whether to certify a class, whether to appoint class counsel, and whether to approve a proposed class settlement.” Although M&C and the AW Firm intervened in the Technology Training Associates action as well, the 11th Circuit made clear that the earlier filing of the lawsuit to enjoin the Bock Firm’s participation was “wholly inappropriate.” The court where the class action settlement is reached “is the only forum in which such a challenge should have been launched—certainly not a different court.”

Importance for Competing Class Actions

Oppenheim is important for competing class actions in the 11th Circuit. Under Oppenheim, the only court that can evaluate competing class counsel’s right to represent the class is the court where the settlement is. By channeling disputes to the court presiding over the settlement, Oppenheim aims to consolidate disputes in the court most familiar with the settlement, and to discourage disappointed parties (and their lawyers) from shopping for friendly forums to seek injunctions or damages. This case will hopefully reverse a trend in recent years where competing class counsel attempt to use the court where their own case is pending to obtain a ruling allowing them to interfere with their competition. Oppenheim’s ruling about class counsel’s duties may have fewer practical effects, but it remains important, especially when viewed alongside the recent Johnson opinion that forbids incentive payments to class representatives. Any attempt to treat class representatives and class members differently will receive heightened scrutiny in the 11th Circuit, and the court has been serious about requiring class counsel to show the same loyalty to the named class representative as to the absent class member.