Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Fleet Owners Fund is a multi-employer “welfare benefit plan” under the Employee Retirement Security Act (ERISA), 29 U.S.C. 1001, and a “group health plan” under the Patient Protection and Affordable Care Act (ACA), 26 U.S.C. 5000A. Superior Dairy contracted with Fleet for employee medical insurance; the Participation Agreement incorporated by reference a 2002 Agreement. In a purported class action, Superior and its employee alleged that, before entering into the Agreement, it received assurances from Fleet Owners and plan trustees, that the plan would comply in all respects with federal law, including ERISA and the ACA. Plaintiffs claim that, notwithstanding the ACA’s statutory requirement that all group health plans eliminate per-participant and per-beneficiary pecuniary caps for both annual and lifetime benefits, the plan maintains such restrictions and that Superior purchased supplemental health insurance benefits to fully cover its employees. Fleet argued that the plan is exempt from such requirements as a “grandfathered” plan. The district court dismissed the seven-count complaint. The Sixth Circuit affirmed, concluding that plaintiffs lacked standing to bring claims under ERISA and ACA, having failed to allege concrete injury, and did not allege specific false statements. View "Soehnlen v. Fleet Owners Insurance Fund" on Justia Law

Abraham operated B2B, a fax advertising company. Abraham has testified that she believed it was legal to send fax advertising to companies that had an established business relationship with the sender and mistakenly thought the companies on her list met that standard. B2B faxed an advertisement for Top Flite—a Michigan mortgage company—to more than 4,000 fax numbers, using that list. Recipients alleged that the fax was unsolicited and that they did not have an established business relationship with Top Flite and filed suit under the Telephone Consumer Protection Act, 47 U.S.C. 227. The district court denied class certification, making “no determinations” as to the requirements in Rule 23(a), but focusing on Rule 23(b)(3)'s requirement of predominance. The court expressed concern that individual class members might have consented to receiving the challenged faxes, and that determining whether they had consented would require investigation of each person or business. Top Flite then offered to allow an injunction and judgment of $1,550. Under Rule 68(b), the offers lapsed. Top Flite successfully moved to dismiss, arguing that because the court had denied class certification and plaintiffs had failed to accept offers of judgment that encompassed all of the individual relief sought, the complaints were moot. The Sixth Circuit reversed. Speculation alone regarding individualized consent was insufficient to defeat plaintiffs’ showing of predominance under Rule 23(b)(3) and the unaccepted settlement offer was a nullity. View "Bridging Communities, Inc. v. Top Flite Financial, Inc." on Justia Law

In 2010, plaintiffs, former employees of establishments that operate in “Fourth Street Live,” a Louisville entertainment district, sued, alleging violations of the Kentucky Wage and Hour Act, KRS 337.385, based on policies regarding off-the-clock work and mandatory tip-pooling. In 2012, the district court granted class certification under Rules 23(a) and 23(b). In 2013, the defendants unsuccessfully moved for reconsideration, citing the Supreme Court’s 2013 "Comcast" decision. In 2014, the parties reached a financial settlement. It took almost another year to reach an agreement regarding non-monetary terms. In March 2015, the parties filed a joint status report declaring that they had reached a settlement agreement and anticipated filing formal settlement documents in April. The defendants then became aware of a February 2015 Kentucky Court of Appeals holding that KRS 337.385 could not support class-action claims. Defendants unsuccessfully moved to stay approval of the settlement. The court granted preliminary approval of the settlement. The Sixth Circuit denied an appeal as untimely because the defendants had not challenged an appealable class-certification order under Rule 23(f). Defendants filed another unsuccessful decertification motion with the district court. The court granted final approval of the settlement as “a binding contract under Kentucky law.” The Sixth Circuit affirmed. A post-settlement change in the law does not alter the binding nature of the parties’ agreement. View "Whitlock v. FSL Management, LLC" on Justia Law

In 2013, Flint, Michigan, decided to switch its primary drinking water provider from the Detroit Water Department to the new Karegnondi Water Authority (KWA). KWA was not yet operational, so Flint needed an interim water source and chose the Flint River, which it had previously used for back-up service. According to several reports, the river was highly sensitive and required anti-corrosive treatment to prevent heavy metals from leaching into the water. The city contracted with Lockwood, a Texas-based corporation, for design engineering services in rehabilitating Flint’s Water Treatment Plant. The Michigan Department of Environmental Quality approved Lockwood’s plans, which did not include necessary upgrades for anti-corrosive treatment. Flint began supplying residents with Flint River drinking water. Within days, residents complained of foul smelling and tasting water. Within weeks, some residents’ hair began to fall out; their skin developed rashes. Within a year, there were positive tests for E. coli, a spike in deaths from Legionnaires’ disease, and reports of dangerously high blood lead levels in children. Residents sued, alleging professional negligence. Lockwood removed the action to federal court, citing diversity jurisdiction (28 U.S.C. 1332(d)(2)). Plaintiffs argued that the mandatory “local controversy” exception to jurisdiction under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d)(4)(A) applied. The district court remanded, noting that more than two-thirds of the putative class members were likely Michigan citizens. The Sixth Circuit affirmed, noting that injuries were limited to the area of the water system and the significant involvement of Lockwood’s Michigan-based affiliate. View "Mason v. Lockwood, Andrews & Newnam, P.C." on Justia Law

Conway filed a putative class action suit against PRA under the Fair Debt Collection Practices Act and survived a motion to dismiss. PRA offered Conway judgment in his favor. Conway declined. PRA again moved to dismiss, arguing that, as PRA had offered Conway all the relief he sought, there was no longer a live controversy. Heeding then-governing Sixth Circuit precedent, the district court dismissed for lack of subject matter jurisdiction and found the issue of class certification moot. The Sixth Circuit vacated, citing the intervening Supreme Court holding in Campbell-Ewald Co. v. Gomez (2016) that an unaccepted offer of judgment generally does not moot a case, even if the offer would fully satisfy the plaintiff’s demands. The court rejected PRA’s attempt to distinguish Campbell-Ewald because the court simultaneously entered a final judgment against Conway granting him all the relief he wanted. The district court erred in entering that judgment. Campbell-Ewald revived the Article III controversy between Conway and PRA that Sixth Circuit precedent wrongly extinguished. That a judgment that should never have been entered does not extinguish a plaintiff’s stake in the litigation; an appeal remains alive if the effects of a court’s order can be undone. The court declined to address class certification. View "Conway v. Portfolio Recovery Associates, LLC" on Justia Law

Cole, a Memphis police officer, was arrested after leaving a Beale Street nightclub. He filed a class action, alleging that Memphis’s routine practice of sweeping Beale Street at 3 a.m. on weekend nights violated his constitutional right to intrastate travel. The jury found that the city implemented its street-sweeping policy without consideration of whether conditions in the area posed an existing, imminent, or immediate threat to public safety. Based on those findings, the court found the policy unconstitutional under strict scrutiny, entered an injunction, and ordered other equitable relief. The Sixth Circuit affirmed, rejecting arguments that the court erred in subjecting the Sweep to strict scrutiny and in certifying a class when the precise members of the class were not ascertainable. The primary purpose of the Sweep was to impede travel; it resulted in the broad denial of access to a popular, two-block area of a public roadway and sidewalk. The Sweep was more than an incidental inconvenience. Under either strict or intermediate scrutiny, the city bore the burden of justifying the Sweep to its stated goal of public safety. The jury found that the timing and execution of the Sweep was arbitrary. The precise identity of each class member need not be ascertained for Rule 23(b)(2) class certification, in a case seeking only injunctive and declaratory relief. View "Cole v. City of Memphis" on Justia Law

The Michigan office of Alix, an international company, administers payroll and benefits for U.S. employees and is directly involved in U.S. hiring. In 2013, Alix hired Brewington, a Texas resident, for its Dallas Corporate Services team. The employment agreement provides that it “will be construed and interpreted in accordance with the laws of the State of Michigan” and states, “any dispute arising out of or in connection with any aspect of this Agreement and/or any termination of employment . . ., shall be exclusively subject to binding arbitration under the . . . American Arbitration Association . . . decision of the arbitrator shall be final and binding as to both parties.” In 2014, Brewington was terminated. He filed a demand for arbitration, asserting claims under Title VII, 42 U.S.C. 2000e, on behalf of himself and a purported nationwide class of current, former, and potential Alix employees. The Michigan district court ruled that Brewington was precluded from pursuing arbitration claims on behalf of any purported class. The Sixth Circuit affirmed that court’s refusal to dismiss, finding that Brewington had sufficient contacts with Michigan to establish personal jurisdiction, and upheld summary judgment in favor of Alix. An agreement must expressly include the possibility of classwide arbitration to indicate that the parties agreed to it. This clause is silent on the issue and is limited to claims concerning “this Agreement,” as opposed to other agreements. It refers to “both parties.” View "AlixPartners, LLP v. Brewington" on Justia Law

Blue Cross controls more than 60% of the Michigan commercial health insurance market; its patients are more profitable for hospitals than are patients insured by Medicare or Medicaid. BC enjoys “extraordinary market power.” The Justice Department (DOJ) claimed that BC used that power to require MFN agreements: BC would raise its reimbursement rates for services, if a hospital agreed to charge other commercial insurers rates at least as high as charged to BC. BC obtained MFN agreements with 40 hospitals and MFN-plus agreements with 22 hospital systems. Under MFN-plus, the greater the spread between BC's rates and the minimum rates for other insurers, the higher the rates that BC would pay. Class actions, (consolidated) followed the government’s complaint, alleging damages of more than $13.7 billion, and seeking treble damages under the Sherman Act, 15 U.S.C 15. In 2013, Michigan banned MFN clauses; DOJ dismissed its suit. During discovery in the private actions, plaintiffs hired an antitrust expert, Leitzinger. BC moved to exclude Leitzinger’s report and testimony. Materials relating to that motion and to class certification were filed under seal, although the report does not discuss patient information. BC agreed to pay $30 million, about one-quarter of Leitzinger's estimate, into a settlement fund and not to oppose requests for fees, costs, and named-plaintiff “incentive awards,” within specified limits. After these deductions, $14,661,560 would be allocated among three-to-seven-million class members. Class members who sought to examine the court record or the bases for the settlement found that most key documents were heavily redacted or sealed. The court approved the settlement and denied the objecting class members’ motion to intervene. The Seventh Circuit vacated, stating that the court compounded its error in sealing the documents when it approved the settlement without meaningful scrutiny of its fairness to unnamed class members . View "Shane Group, Inc. v. Blue Cross Blue Shield of Mich." on Justia Law

Montgomery bought a Tassimo, a single-cup coffee brewer manufactured by Kraft Foods, expecting it to brew Starbucks coffee. After the purchase she struggled to find Starbucks T-Discs—single-cup coffee pods compatible with the brewer. The Starbucks T-Disc supply eventually disappeared as Kraft’s business relationship with Starbucks soured. Montgomery sued Kraft and Starbucks on behalf of a class for violations of various Michigan laws. After dismissing several claims and denying class certification on the rest, the district court entered judgment in Montgomery’s favor when she accepted defendants’ joint offer of judgment under FRCP 68. Montgomery appealed the dismissal of her breach of express and implied warranty claims, the denial of class certification on her consumer-protection claims, and the attorney’s fees awarded as part of the Rule 68 settlement (about 3% of what she had requested). The Sixth Circuit affirmed, noting that Montgomery did not purchase the item directly from defendants, for purposes of express warranty, and did not allege that the coffee maker was unfit for its ordinary purpose. View "Montgomery v. Kraft Foods Global, Inc." on Justia Law

Consumer class actions against Global, on behalf of individuals who purchased gym memberships, alleged improper fees, unfair sales practices, lack of disclosures, improper bank account deductions, and improper handling of contract cancellations. The cases claimed breach of contract, unjust enrichment, fraud, and violation of state consumer protection laws. Objectors challenged a settlement, claiming it was unfair under FRCP 23(e); that class counsel’s fees were disproportionate to claims paid; that the settlement unnecessarily required a claims process; and that the settlement contained a “clear-sailing” agreement from Global not to oppose any application for $2.39 million for costs and fees or less and a “kicker” clause, providing that if the court awarded less than $2.39 million, that amount would constitute full satisfaction of Global’s obligation for costs and fees. Some further argued that the settlement failed to provide adequate compensation for Kentucky state-law claims and for plaintiffs who had signed an early, more favorable version of the contract. The district court approved the settlement based on a magistrate judge’s 80-page Report and Recommendation, which addressed each objection. The Sixth Circuit affirmed. Though some courts disfavor clear sailing agreements and kicker clauses, their inclusion alone does not show that the court abused its discretion in approving the settlement. View "Gascho v. Global Fitness Holdings, LLC" on Justia Law