Sixth Circuit Denies Writ Of Mandamus In Opioid Class Actions For District Court’s Order That Pushes Discretion Under Rule 16(b) to the Edge

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Shaina Wolfe

Duane Morris Takeaways: In the proceeding entitled In Re National Prescription Opiate Litigation, No. 21-4051, 2022 U.S. App. LEXIS 31328 (6th Cir. Nov. 10, 2022), the Sixth Circuit denied a petition for writ of mandamus regarding a District Court’s Scheduling Order in the giant opioid multidistrict class action and its allowance of the late pleadings amendments as to new defendants, Meijer Distribution, Inc., and Meijer Stores Limited Partnership (“Meijer Defendants”).  The newly-added Meijer Defendants argued that the District Court violated the Rule 16(b) of the Federal Rules of Civil Procedure by allowing Plaintiffs to improperly join them in the ongoing 3-year old case without first seeking leave of court and without demonstrating good cause.  The Sixth Circuit held that the District Court acted within its broad discretion and did not violate the Federal Rules of Civil Procedure because it provided a cut-off date that allowed for the specific amendments.  The Sixth Circuit explained “[t]hough unconventional, the District Court’s actions are not so extraordinary as to warrant mandamus.”  Id. at *1. The decision illuminates the broad discretion that district courts enjoy in managing class action litigation and the important role that scheduling orders play throughout the entire litigation.

Case Background

In July 2018, Plaintiffs filed the underlying lawsuit against a group of pharmacies.  The case was removed to federal court and ultimately became part of the opioid multidistrict class action proceeding entitled In Re National Prescription Opiate Litigation, 1:17-MD-2804 (N.D. Ohio 2017) (“MDL”).

Significantly, in the underlying case, the district court entered an order on May 3, 2018, which amended its Case Management Order and provided that “‘[i]f a case is later designated as a bellwether for motion practice or trial, a separate CMO will be entered that will provide further opportunity to amend.’” (“2021 Bellwether Order”).  See Petition at 4-5.

In 2021, the District Court selected the underlying case to proceed as a bellwether case against the pharmacies.  See Sixth Circuit Order at 1. Subsequently, on May 19, 2021, Plaintiff filed a supplemental pleading, adding the Meijer Defendants to the underlying case.  See id.; Petition at 5.  The amendments were made nearly three years after Plaintiff filed suit and more than 26 months after the deadline to add new defendants.

After unsuccessfully moving to strike the Meijer Amendments and certify the Court’s 2021 Bellwether Order for interlocutory appeal, on November 9, 2021, Defendants filed a petition for a writ of mandamus with the Sixth Circuit.  See Petition at 7.  In the Petition, the Meijer Defendants argued that the District Court allowed Plaintiff to add the Meijer Defendants years after the deadline for amending pleadings passed and without requiring Plaintiff to demonstrate good cause, as required by Rule 16(b) of the Federal Rules of Civil Procedure.  See Petition at 1.  The Meijer Defendants requested that the Sixth Circuit issue a writ ordering the District Court to strike the untimely amendments and dismiss the Meijer Defendants from the case.  See id. at 2.

The Sixth Circuit’s Ruling Denying The Writ Of Mandamus

The Sixth Circuit denied the writ of mandamus. It held that the District Court’s order, while “unconventional,” fell within the parameters of Rule 16(b).  See Sixth Circuit Order at 1.  The Court of Appeals explained that Rule 16(b) requires that “scheduling orders limit the time to join other parties” and the District Court’s 2021 Bellwether Order “explicitly provided permission for plaintiffs to amend their complaint if their case was selected as a bellwether.”  Id.  The Sixth Circuit reasoned that because Plaintiffs exercised their right to amend after the underlying case was chosen as a bellwether, Plaintiffs did not need to seek permission from the District Court.  Id. at 2.

The Sixth Circuit noted that the 2021 Bellwether Order allowed plaintiffs to amend whenever their case was selected as a bellwether, and there was no cut-off for amendments.  Id.  The Sixth Circuit acknowledged that, under the 2021 Bellwether Order and without any cut-off date, the amendments could have gone differently (i.e., made on the eve of trial or adding a defendant that was completely new to the litigation).  Id. at 2.  Instead, the Sixth Circuit determined that the Meijer Defendants suffered little, if any, prejudice.  Id. at 2-3.  Thus, the Court of Appeals explained, “[t]hat unusual aspect of the scheduling order did not clearly violate Rule 16 because it provided some limit (when the case was selected as a bellwether), although the order went right to the edge of the district court’s discretion under Rule 16.”  Id. at 2.

In denying the writ, the Sixth Circuit held that the Meijer Defendants “ha[ve] shown that the district court’s scheduling order was unconventional but not a judicial usurpation of power nor a clear abuse of discretion.”  Id. at 3.

Implications For Companies

The Sixth Circuit’s order recognizes the broad discretion that district courts have in managing their dockets and illustrates the importance that scheduling orders play in all types of cases, and specifically in MDLs and class actions.  Companies should pay close attention to all of the proposed deadlines included in any scheduling orders, and try to prevent these types of amendments from being entered at the outset.

Ohio State Wins More Than Just Games, As The Ohio Court of Appeals Reverses Class Certification In Favor Of The University

By Gerald L. Maatman, Jr., Jennifer A. Riley, Shaina Wolfe

Duane Morris Synopsis In Smith v. Ohio State University, 2022-Ohio-4101 (Ohio App. Nov. 17, 2022), The Ohio State University successfully appealed an Ohio Court of Claim’s (“trial court”) Order granting class certification in a lawsuit brought by a former undergraduate student.  The former student alleged that when the university only offered online classes due to COVID-19, it breached its contract by keeping all the tuition payments from her and other students without giving them the robust in-person experience promised when they initially paid their tuition bills.  The Ohio Court of Appeals held that while the trial court has broad discretion in granting class certification, it failed to determine proof of injury and economic damages relative to the former student and potential class members.  In crafting a class certification defense strategy, especially in a breach of contract case where the injury and damages typically are in play, employers should focus on the lawsuit basics when opposing class certification, i.e., demanding that plaintiffs show causation and injury in fact.

Case Background

Plaintiff, a former college student, filed a lawsuit alleging that Defendant, The Ohio State University (“OSU”), breached its contract and received unjust enrichment in Spring 2020 by failing to partially refund students their tuition and fees after transitioning from their robust, in-person education to “subpar” online education during COVID-19.  Id. at 4-5.

In June 2021, Plaintiff moved for class certification.  Id. at 5.  After briefing and oral argument, the trial court granted Plaintiff’s motion and certified a class consisting of all undergraduate students enrolled in classes at Defendant’s Columbus campus during the Spring 2020 semester. Notably, the trial court found that the class suffered the same injury, i.e., losing the benefit of in-person classes and access to the campus.  Id. at 9-10.

In appealing the trial court’s decision, Defendant raised several arguments for why the trial court’s decision was incorrect. Significantly, Defendant’s main, and ultimately successful, arguments focused on the trial court’s failure to conduct the “rigorous analysis” required by Ohio Civil Rule 23 (like Federal Rule of Civil Procedure 23) in determining whether Plaintiff had satisfied the prerequisites for class certification.  Id. at 10-11.

The Court Of Appeals’ Ruling Reversing Class Action Certification

The Ohio Court of Appeals agreed with Defendant and reversed the trial court’s order granting class certification for three reasons.

First, the Court of Appeals found that the Plaintiff failed to present sufficient evidence of an economic injury.  Id. at 17-18.  Instead, the trial court simply assumed that a “benefit” was lost based only on the fact Defendant closed its campus and switched to remote classes and services in response to the pandemic.  Id. at 18.

Second, the Court of Appeals found that the trial court failed to consider Defendant’s arguments and evidence contesting proof of injury.  Id. at 18-19.  Defendant submitted an expert report that included evidence that students paid the same for in-person and online learning and that the in-person teaching modality carried the possibility of substantial remote instruction even in a normal semester.  Id. at 19. Meanwhile, Plaintiff submitted no expert testimony regarding how and or whether other students were injured in this case.  Id.  Indeed, Plaintiff’s expert’s report excluded any survey questions or consideration of market preferences during an emergency such as the pandemic that forced the closure.  Id.

Third, the Court of Appeals found that the trial court’s analysis of Plaintiff’s unjust enrichment claim was merely folded into the same generalized injury analysis without any individualized consideration.  Id. at 19-20.

In holding that the trial abused its discretion, the Court of Appeals reasoned that, “[t]he trial court, in assuming an injury from the fact of closure and termination of in-person classes, did not assess these complicated and difficult considerations, particularly as they relate to whether [Plaintiff] presented any common evidence — or even a method to possibly determine — that class members suffered an economic injury considering the effect of the pandemic.”  Id. at 20.  Further, the Court of Appeals opined that “having accepted the closure of campus and temporary termination of in-person classes and services as an injury per se, and having failed to consider how the pandemic affects class certification in this case at all, the trial court did not undertake a rigorous analysis with respect to the number and nature of individualized inquires that might be necessary to establish liability with respect to both tuition and fees.”  Id.

Implications

In class actions asserting breach of contract claims, it is not uncommon for plaintiffs to seek class certification before developing their case through affidavits from other individuals and expert testimony.  Employers can use this to their advantage by attacking causation and damages. This strategy may not only hinder a plaintiff from notifying potentially thousands of other putative class members of the claims, but also potentially saving money through limited discovery.

Illinois Court Finds That Collective Action Certification In A Wage & Hour Case Demands More Than Barebones Affidavits When Balanced Against Facially Lawful Policies

By Gerald L. Maatman, Jr., Gregory Tsonis, Shaina Wolfe

Duane Morris Synopsis- In Roberts, et al. v. One Off Hospitality Group, Ltd., Case No. 21-CV-05868 (N.D. Ill. Nov. 10, 2022), a group of restaurants successfully defended against the proposed conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”) in a lawsuit brought by a bartender.  In a win for the defense at a stage where plaintiffs generally have a low evidentiary burden, the Court determined that barebones affidavits fall short of what a Plaintiff must show in terms of proof to anchor a conditional certification order. While Plaintiff alleged that the restaurants’ policy off-the-clock work and overtime policies violated the FLSA, Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois determined that Plaintiff did not make the “modest factual showing” that other similarly situated employees experienced the allegedly common, unlawful policy.  The decision demonstrates the importance and value in maintaining up-to-date lawful employee handbooks, and specifically, policies on wages and overtime.

Case Background

Plaintiff, an hourly non-exempt bartender, filed lawsuit alleging that One Off Hospitality Group — the owner and operator of several popular restaurants including Publican and Big Star — and several executives (“Defendants”) violated the FLSA and other Illinois wage and hour laws.  She alleged that Defendants failed to properly pay her by requiring her to clock-in and clock-out at the times of her scheduled shift, regardless of the time she actually worked, to avoid paying overtime compensation.  She further alleged that Defendants did not pay their employees for performing off-the-clock work and/or offered gift cards as compensation instead of cash.  When she recorded her overtime work, Plaintiff claimed that management reprimanded her for violating internal company policy.

On July 14, 2022, Plaintiff moved, pursuant to § 216(b) of the FLSA, for conditional certification of a collective action of all current and former hourly non-exempt employees who worked within Defendants’ restaurants.  In support of her motion, Plaintiff attached only two sworn declarations.  Plaintiff’s declaration focused on her unique experience, and detailed the compensation structure and missed overtime hours she experienced. Plaintiff also included a declaration from a former Floor Supervisor and Assistant General Manager that worked in Defendants’ restaurants, which focused on the company’s policy of requiring employees to work off the clock. In opposition, Defendants put forth their Employee Handbook and emphasized that their written, uniform policy at every location prohibited off-the-clock work.  Defendants also included sworn declarations from employees and managers stating the company policy and the repercussions for engaging in off the clock work.

The Court’s Ruling Denying Conditional Certification

The Court denied Plaintiff’s motion for conditional certification.  It found that Plaintiff had not made a “modest factual showing” that she and other employees were victims of a common policy or plan that violated the law. Id. at 3.

After analyzing the evidence, the Court held that Plaintiffs’ sworn declarations were insufficient and that she needed other corroborative evidence.  Notably, Court emphasized that, “[c]ritically absent are affidavits from any other similarly situated employees who worked at the defendants’ restaurants.” Id. at 4. Significantly, the Court explained that “[t]he need for additional support is particularly pronounced where, as here, the defendants maintained a facially lawful policy.” Id. The Court held that “‘modest factual support’ demands more than the barebones affidavits provided.” Id.

Implications for Employers

The Court’s decision in denying conditional certification is not an outlier, but over the past several years, nearly 80 percent of such motions have been granted in federal court due to the low burden applicable to § 216(b) of the FLSA.

Judge Kendall’s decision underscores the value of generally maintaining Employee Handbooks and, specifically, policies regarding wages and overtime.  In addition to providing clear guidelines to employees on what is allowed, these policies provide the first line of defense in FLSA lawsuits seeking to groups of allegedly similarly situated employees, particularly where plaintiffs marshal minimal evidence that certification of a collective action is appropriate.

Judges Continue To Push For Diversity In Selecting And Approving Class Counsel

By Gerald L. Maatman, Jr., Jennifer A. Riley, Shaina Wolfe

Duane Morris Takeaways – Requiring a legal team’s diversity in the courtroom is part of a growing trend by federal judge in selecting lead counsel in a class action. On both sides of a class action, plaintiffs and defense teams are increasingly staffing cases with junior and diverse attorneys, and allowing them meaningful opportunities to participate in litigation. In turn, federal judges are viewing such staffing methodologies as part and parcel of good practice management.

Background

The push for diversity in the law is hardly new.

Federal district judges around the nation – including judges in California, Illinois, Massachusetts, New York, and Texas – have issued general standing orders that encourage legal teams to allow diverse and less experienced attorneys take the lead in various segments of court proceedings. And in 2021, George Washington Law School released a leading guide to best practices for MDL and class actions, which advocated that judges “make appointments consistent with the diversity of our society and justice system.” George Washington Law School, Inclusivity and Excellence: Guidelines and Best Practices for Judges Appointing Lawyers to Leadership Positions in MDL and Class-Action Litigation, at 1 (March 15, 2021).

Over the last couple of years, some judges have acted on George Washington Law School’s advice by facilitating opportunities for diverse and/or junior attorneys to have a role in their cases. For example, recently, on October 26, 2022, Magistrate Judge Gabriel Fuentes of the U.S. District Court for the Northern District of Illinois advised the parties in multidistrict litigation that he would be holding a video hearing to discuss expert discovery and argue motions, and that he expected junior attorneys to take the lead. John Gross and Co., Inc., et al. v. Agri Stats, Inc., et al., 1:19-CV-08318 (N.D. Ill. Oct. 26, 2022).

Other judges in class action lawsuits have strongly encouraged, or even required, counsel to be diverse. For example, Judge Susan Illston of the U.S. District Court for the Northern District of California approved lead counsel in a class action lawsuit but noted “the apparent lack of diversity, including by female lawyers, among the group that argued” at a recent hearing. Sayce v. Forescout Technologies, Inc., No. 20-CV-00076, 2020 WL 6802469, at *9 (N.D. Cal. Nov. 19, 2020). Judge Illston “strongly urge[d] all parties to this case to make meaningful litigation opportunities available to junior and underrepresented lawyers throughout the pendency of this action.” Id.

With the increase in newly appointed judges, it is likely that even more federal judges will follow suit by not only instituting standing orders, but also in requiring law firms to send their junior and diverse attorneys to court. Now, more than ever, it is important for law firms to hire diverse attorneys, teach diverse attorneys to handle small and complex matters, and retain their diverse attorneys by allowing them to meaningfully participate in legal proceedings.

Implications for Law Firms

We expect that more courts and clients will begin to consider, and perhaps require, the diverse makeup of legal teams at increasing rates. Law firms can prepare for this critical demand of diverse legal teams by hiring, retaining, and actively involving diverse and junior lawyers, in both big and small cases, at the outset.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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