Sixth Circuit Class Action Litigation | Winter 2019/2020
Sixth Circuit holds that an order granting a defendant’s motion for summary judgment – issued after class certification, but before class notice – binds only the named plaintiffs.
In a case alleging that the defendant, a medical records company, overcharged the plaintiffs for their medical records, the Sixth Circuit considered a relatively rare procedural question: What happens when a district court grants a defendant’s motion for summary judgment after the class has been certified but before class notice has been sent? The defendant argued that the panel should remand the case to the district court for the purpose of issuing opt-out notices, while the plaintiffs argued that the district court’s order should be limited to the named plaintiffs.
The panel agreed with the plaintiffs, holding that “[w]hen the defendant moves for and obtains summary judgment before the class has been properly notified, the defendant waives the right to have notice sent to the class, and the district court’s decision binds only the named plaintiffs.” The panel held that this “general rule” was supported by “Rule 23’s text and structure” because some of the Rule’s provisions – notice must inform class members that they may enter an appearance through an attorney, and a court may inform class members of the litigation process – are “largely pointless if a district court grants summary judgment before notifying the class.” The panel also held that post-judgment notice was not appropriate or equitable in this case because “class members would be prejudiced upon receiving notice of certification for a case they already lost on the merits.”
Even though the panel held that the district court’s order only applied to the named plaintiffs, it noted that its holding was “limited” to the scenario “[w]here a defendant moves for and obtains summary judgment before the absentee class members have been notified.” It also noted that the defendant “still obtained something valuable – a judgment in its favor on the merits that has been affirmed on appeal,” and that “principles of stare decisis (and possibly preclusion) will prove to be valuable assets for [defendant] should any absent class members choose to bring similar claims.”