Appellate Judges

Class Action Legal Ethics are Different Says Creative Eleventh Circuit And Relying On Old 5th Cir. Precedent

Experience teaches that it is counsel for the class representative and not the named parties, who direct and manage these actions. Every experienced federal judge knows that any statements to the contrary is sheer sophistry.

LIT COMMENTARY

The Eleventh Circuit panel get creative to try and rewrite legal ethics rules on the basis that a class action lawsuit is different from other civil cases. The district judge (sitting by designation) who authored the opinion goes off on a lengthy wordsmithed opinion for the panel. In order to try and make the square peg fit the round hole, the 11th Circuit rely on ole friends and precedent at the 5th Circuit, but the one cited ‘precedential’ case, Kincade v. General Tire Rubber Co., 635 F.2d 501 (5th Cir. 1981), falls apart when analyzed.

LIT’s Review

Upon reading Bergman, Class Action Lawyers: Fools for Clients 4 AM. Jur. Trial Advoc. 243, 262-63 (1980), p. 264+, “The Harms Becoming Class Counsel” addressing “Conflicts of Interest, Appearance of Professional Impropriety, Possibility of Forced Withdrawal”, etc., the panel at the 11th Circuit only references a general conflict of interest as opined in Sayler. However, the conflict runs way deeper than that, for example, the appearance of professional impropriety is not even considered nor mentioned in this courts’ opinion.

For way of background, below is an article and expressed opinion by Eric Troutman, a class action ‘Czar’ who explains this case scenario; where 3 law firms are greedily fighting for a huge cash windfall from the Buccaneers for spamming unauthorized faxes in a marketing blast which ultimately ends up with all the class actions imploding – and no-one receives a dime from the NFL company. The crux of the matter is the lawyer switching law firms, the results thereafter and the ethics questions raised.

Despite the class action and settlement failing, the 11th Circuit still issued this opinion – on a legal ethics appeal (fiduciary duty/conflict of interest).

LIT can only assume it was done for two reasons;

(i) in order to issue a warning to the true and injured parties because they filed the civil complaint in state court rather than federal court. That’s right, the opinion is used as a warning for filing a case in state court (described herein) rather than deeming it ‘moot’ and;

An Overview of Judicial Independence from Impeachments
to Court-Packing by Hon. R. David Proctor.

Proctor is not shy in his condemnatory view of State authority.

(ii) the warning was also seen as an opportunity for the 11th Circuit to lay the foundation for an incorrect legal standard in future similar ethics [class action] cases (as this case is published, it is now precedential).

It’s of grave concern when legal ethics and conflicts of interest is widely accepted and known to be an area controlled by the relevant state rules on professional conduct for lawyers, in this case Florida.

Certainly, as the Fifth Circuit opined in In re American Airlines, Inc., 972 F.2d 605 (5th Cir. 1992), federal laws always apply, but they also determined they are controlled by state ethics rules (which mirror ABA rules) and these are more than not embedded into the local rules as well. See, for example, S.D. Tex. Rules, Appendix A.

In summary, LIT contends Proctor has overstepped his mark and the 2 circuit judges on the panel are culpable as well, and here’s why:

Proctor’s wordsmithed opinion is best summarized by his colleagues from the 3rd Circuit, and maybe that’s why he’s a District Judge trying to do an Appellate Judge’s job, poorly;

“Experience teaches that it is counsel for the class representative and not the named parties, who direct and manage these actions. Every experienced federal judge knows that any statements to the contrary is sheer sophistry*.” Greenfield v. Villager Industries, Inc., 483 F.2d 824, 832 n.9 (3d Cir. 1973) – a distinguished opinion.

* A fallacious argument.

Richard H. Underwood, Legal Ethics and Class Actions: Problems, Tactics and Judicial Responses, 71 Ky.L.J. 787 (1983).

Bergman, Class Action Lawyers: Fools for Clients

4 AM. Jur. Trial Advoc. 243, 262-63 (1980).

“[Buccaneers’ counsel] is a settler”—Fascinating New COA Decision Sheds Light on the Secret Chatter and Tactics of TCPA Class Action Lawyers

I hadn’t planned to blog again today but when I started reading Med. & Chiropractic Clinic, Inc. v. Oppenheim, No. 18-137142020 U.S. App. LEXIS 37439 (11th Cir.  December 1, 2020) I had to move some things around.

In the case the Eleventh Circuit Court of Appeals considered a spat between two class action law firms, and it is just a remarkable tale and there is so much to learn from it here.

The fight started when a big shot partner at one of the firms left to join another firm (this never goes well–trust me.) Deciding to make the transition even harder than it needed to be, big shot decided to encourage new firm to settle a series of class actions involving faxes sent by the NFL’s Buccaneers franchise—don’t get me started on the faxball angle here— that his old firm had been pursuing, only for a lower price than his former firm had been willing to deal for.

That upset members of yet another firm that also had class action lawsuits pending against the Buccaneers for sending the faxes. The third firm—allegedly with funding from first firm—sued the big shot and the second firm for allegedly using confidential information obtained while big shot was at the first firm to help the second firm score the big settlement.

The Eleventh Circuit ultimately agreed that big shot did nothing wrong and second firm’s settlement was just fine–although the settlement itself ended up getting blown up anyway.

But that, somehow, is the boring part.

The fascinating part is all the gossip and secret stuff the decision unveils.

For instance, how often do you get a chance to peek inside high-stakes negotiations in a class action mediation? Well, I mean, I get to do it all the time. But how often do you get to?

Check out this paragraph:

[First firm partner] wanted a larger settlement than the Buccaneers were willing to pay. [First firm partner] refused to settle for less than a $99,000,000 “settlement fund” and a $24,750,000 attorney fee (25% of the settlement fund).  When talks stalled, [Mediator] suggested the parties negotiate the fund in a bracket between $10,000,000 and $50,000,000. [Firm firm partner] was less than enthusiastic and responded, “I am NOT going down to $50 million on this case.”

Not going “down” to $50MM. On a fax case. Against a storied and beloved Tampa Bay sports franchise. (Hey, I have an uncle who is a huge Bucs fan. “They’re big on defense” he still tells me with sincerity.)

Later in the decision former partner and his new pals at second law firm explain that this is all about ego. In his words:

Yeah. [first firm partner] wants to set a record above the Capital One $75 million settlement. The magistrate judge it’s in front of is squeamish and is giving the Defendants a broad shot at disproving [vicarious liability].”

Later, they comment: “[Buccaneers’ counsel] is a settler” suggesting that they have a “mark” in defense counsel and are hankering to exploit his/her tendencies.

So new firm and big shot partner think they have an easy mark of a defense lawyer and a good case with a former law firm that is just trying to hang a pelt on the wall with the biggest TCPA settlement in history. That’s a great recipe to step in and settle out from under the former firm right? (Pigs fat, hogs slaughtered, and all that).

Only one problem—they don’t have a client.

No problem, actually. New firm launches a direct mail campaign to find folks interested in bringing class action lawsuits.  They then cross reference phone numbers from individuals expressing interest in easy money (my characterization, not the court’s) against the list of phone numbers filed by expert Robert Biggerstaff in furtherance of certification of the earlier suit to find class members to bring a new suit.

Pause.

Read that sentence again.

The new law firm used the list of class member phone numbers filed with the expert report lodged by the first law firm to seek certification and used it to find class members to sue in a second suit.

This is why you must always oppose the production of data before class certification folks. I mean, along with all of the other reasons. If you don’t get what I’m saying call me and we can talk it through.

So then things get even better. First law firm finds out that second law firm has found a new plaintiff and filed a competing suit (in state court mind you) and goes ballistic making filings in both state and federal court designed to prevent the new suit from going forward.

Second law firm responds to these machination sin the best possible way—it dismisses its suit, but goes ahead and secretly mediates the case on a classwide basis with the Buccaneers anyway.

That’s just too good.

As you’d guess, second law firm undercuts the “I want biggest settlement in history” guy and with a deal reached, returns from the dead and re-files their dismissed case– immediately seeking preliminary approval of the secret settlement they had negotiated behind first law firm’s back.

In the meantime, third firm—you’ll recall this was a different firm that had also been suing the Buccaneers—decides to file a suit against big shot partner and second firm with first firm paying for the litigation. Apparently first firm was pissed that big shot had stolen the case and ponied up $500,000.00 to pursue litigation against the former partner.

Face, meet cut off nose.

Meanwhile, first and third law firm successfully intervened in the settlement second law firm had reached with the Buccaneers and managed to blow up the settlement after all. Essentially making the whole lawsuit against second firm and big shot partner meaningless. But the case proceeded to the Eleventh Circuit Court of Appeals anyway…

So, if you’re keeping score at home, we have now three plaintiff’s law firms fighting each other to the circuit court of appeals over a settlement that no longer exists. Unreal.

The Buccaneers, in the meantime, presumably cannot believe their luck—they went from a $50-100MM potential liability, to a smaller dollar settlement, to no settlement at all as all the class counsel sit around fighting with each other instead of pursuing their case. Yep, luckiest NFL franchise ever.

Getting back to the actual ruling of Oppenheim, the Eleventh Circuit essentially determines that big shot partner did nothing wrong because he owed duties to the class as a whole and not just to the named class representative or his former law firm. Stating it a little different, partner didn’t “steal a case” because he continued fighting for the class and does not owe any special duties to his prior law firm or the specific named class representative he represented before.

You can only imagine how upset first law firm must be after all of this– not only did big shot partner “get away” with stealing first law firm’s case, all that money spent pursuing the action ($500k) has seemingly gone to waste–and he didn’t get his “I have the biggest TCPA settlement ever” bragging rights.

Then again, first firm appears to have succeeded in a “if I can’t have you no one can” destruction of the Buccaneer’s settlement plans, so maybe the underlying litigation will continue anew.

All I know is that TCPAWorld remains the most fascinating place on Legal Earth from my perspective. Thanks for being along for the ride.

Eric Troutman – Class Action Attorney

Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance.

He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.

On September 16, 2018, TCPAland’s own Czar, Eric J. Troutman, and the “Kingmaker” Jeremy S. Gladstone, Assistant General Counsel and TCPA Subject Matter Expert at Capital One, spoke at the MBA’s Regulatory Compliance Conference in Washington, D.C.

It was a sight to behold.  In the presentation, Eric and Jeremy distilled the utter chaos of TCPAland into three important hot topics.  They discussed:

  • Whether predictive dialers and dialers that call from a list still covered by the TCPA post ACA Int’l?

Hint: There are at least five schools of thought on what to do with predictive dialers following the ACA Int’l decision (ACA Int’l v. FCC, No. 15-1211, 2018 U.S. App. LEXIS 6535 at *9 (D.C. Cir. Mar. 16, 2018)).  As attorneys, you should really read up on the district where your case is pending.  Things vary from state to state and you cannot rely on a single “trend” with respect to predictive dialers.  If you are in-house, you should tread carefully and act conservatively.

  • What is new with express consent and revocation these days?

Glad you asked.  A big focus here is the issue of scope of consent. For example, after the ruling in Benedetti v. Charter Communications, No.1:16-CV-2083 RLM-DLP, 2018 WL 2970998 (S.D. Ind. June 13, 2018) (Original Blog Post Here), companies need to worry about liability for violating secret limitations placed on consent.  Also, beware of dual purpose calls in the event that you have consent for one purpose but not the other.

For telemarketing, express written consent is needed.  Contractual consent is enforceable. However, in the absence of contractual consent or a revocation clause, consent can be revoked by any reasonable means.  ACA Int’l strongly suggests that a caller can “reasonably rely” on the consent of a former subscriber for some unspecified time frame. Case law has not addressed this issue yet.

ACA Int’l also notes that imaginative means to revoke consent are likely not “reasonable.” To opt-out, a person must “clearly and expressly” request messages to stop. Thus, Opt-out evaders – in other words, people who craft wordy opt-out responses that could be construed to revoke consent but that do not explicitly revoke it – have faced a tough road lately.  It is not clear what the FCC will do, if anything, to standardize revocation/opt-outs.

  • What is the future of the TCPA both in terms of new suits and likely changes to the law?

We see an uptick in class litigation concerning Do Not Call (“DNC”) violations. I discussed it in detail here and I encourage you to review it.  For quick reference remember: before making any calls, you must have a written DNC policy in place.  And, even if you have an existing business relationship with the consumer they can opt-out of calls. You have to honor the opt-out for at least 5 years and you have to keep an internal opt-out list.

Otherwise, be patient. Post ACA Int’l, the FCC sought comments on several TCPA issues.  Eric blogged about it right here.  As a result, the FCC is considering and will likely rule on issues such as what constitutes an automated telephone dialing system and how the FCC should handle reassigned telephone numbers.

There is also a “Stopping Bad Robocalls Act” on the Hill.  It is unclear if it will pass, but a red line version is available on TCPAland.com or by clicking here.

If you would like to learn more, here is a complete set of slides from Eric and Jeremy’s  MBA presentation – they are without the witty banter, but with important case cites and tips for best businesses practices as we await the FCC’s ruling.

Finally, no one who’s ever met Eric in real life would ever question his fervor for all things TCPAland.  To the rest of you, I leave you with this: In lieu of his name, Eric’s conference name tag said, “Hello my name is: Czar.”  If that isn’t dedication, I don’t know what is.

Medical & Chiropractic Clinic v. David Oppenheim, et al., case number 18-13714, in the U.S. Court of Appeals for the Eleventh Circuit.
proctordbw

PROCTOR, R. DAVID

WILSON, CHARLES R.

NEWSOM, KEVIN C.

An Overview of Judicial Independence from Impeachments to Court-Packing by Hon. R. David Proctor

Counsel Owes Same Duties To Class And Rep, 11th Circ. Says

The Eleventh Circuit on Tuesday affirmed that an attorney did not run afoul of a former client and named class representative when moving between law firms that were both separately pursuing settlements in a telefax advertisement class action against the Tampa Bay Buccaneers, saying a single representative isn’t owed different considerations over the class as a whole.

The three-judge panel upheld a 2018 summary judgment made by a Florida federal court shooting down claims that former Anderson & Wanca attorney David Oppenheim breached his duties of confidentiality and loyalty as counsel to a class representative, Medical & Chiropractic Clinic Inc., when he decamped with insider knowledge to Bock Law Firm LLC, which soon after filed a separate and similar class action against the Buccaneers with a new representative, Technology Training Associates.

The circuit found arguments that the company was against its former counsel assumed the relationship between attorney and client in an ordinary case was analogous to a class action.

“One 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,” the opinion said.

The panel cited a 1981 decision in the former Fifth Circuit, which the Eleventh Circuit adopted as binding precedent. The case, Kincade v. General Tire & Rubber Co., characterized the relationship between attorney and client in a class action as “unique” and having “different ethical duties to their clients than in ordinary cases.”

Medical & Chiropractic Clinic alleged Oppenheim not only shared confidential information in a separate class action, but that a preliminary settlement reached by the Buccaneers and Bock Law Firm damaged its own negotiating position in its case against the football team.

It further sought an injunction preventing Bock Law Firm from continuing its class action settlement.

Bock Law Firm countered that it had already started down the road of a new class action against the football team and that Oppenheim was screened from involvement in the proposed class.

Bock’s separate state class action, with Technology Training Associates as the named representative, was voluntarily dismissed after Medical & Chiropractic Clinic motioned to enjoin the suit from proceeding.

But Bock mediated separately with the Buccaneers and came to a preliminary settlement that was filed in federal court for approval.

The court denied Medical & Chiropractic Clinic’s motion to intervene in the settlement, but it won on appeal in the Eleventh Circuit.

While a judge initially certified the class and approved the preliminary settlement — $19.5 million fund and $4.9 million in attorneys fees — the decision was subsequently reversed following the intervention and the case was soon after closed.

In its ruling on the present dispute, the Eleventh Circuit additionally criticized the plaintiff’s decision to file its fiduciary duty complaint in Florida state court, with the suit later moving to federal court.

Noting the separate intervention, the panel called it “wholly inappropriate” to have filed the complaint in state court given the federal court overseeing the class action has full jurisdiction over the matter.

“We are troubled by that filing. We have no hesitation in calling it what it was: a thinly veiled attempt to derail the [Technology Training Associates] settlement,” Judge Proctor said.

Attorney Phillip Bock told Law360 that they are “pleased to review the Eleventh Circuit’s thoughtful opinion. This is a win for consumers and should hopefully discourage attorneys from engaging in such conduct going forward.”

U.S. Circuit Judges Charles R. Wilson and Kevin C. Newsom, and U.S. District Court Judge R. David Proctor sat on the panel.

Medical & Chiropractic Clinic, Inc. is represented by Lauren Michelle Loew, Adam R. Alaee, Jeffrey A. Soble, Patrick Joseph McMahon and James McKee of Foley & Lardner LLP.

David M. Oppenheim is represented by Barry Blonien of Boardman & Clark LLP; Phillip A. Bock of Bock Hatch Lewis & Oppenheim LLC, and himself.

Bock Law Firm, LLC are represented in-house by Phillip A. Bock, Christopher Stephen Polaszek, Jonathan B. Piper, David M. Oppenheim and Robert M. Hatch.

PROCTOR, District Judge:

In 1966, the modern version of the class action rule was born. See Fed. R. Civ. P. 23. The new rule was intended to make it easier for parties to litigate complex lawsuits involving many claimants. Under that new rule, when a defendant engaged in conduct that violated the rights of others, it could find itself defending against a single class action involving hundreds or thousands of class members instead of facing hundreds or thousands of individual suits. That was in 1966. Things have continued to evolve since then.

Now, over 50 years later, when a defendant engages in questionable business practices on a widespread basis, it may not only face one class action, but several. And, when there are multiple competing class actions against a defendant, there are usually multiple lawyers competing to be appointed as class counsel. That is what occurred in this case.

Buccaneers Limited Partnership (“the Buccaneers”) does business as the Tampa Bay Buccaneers. Well before it signed Tom Brady and Rob Gronkowski to play in the 2020 football season, it was sued in at least five class action complaints.1

Each one alleged that the Buccaneers sent telefax advertisements in violation of the Telephone Consumer Protection Act (“TCPA”). 47 U.S.C. § 227.

1 Cin-Q Autos., Inc. v. Buccaneers Ltd. P’ship, No. 8:13-cv-1592-AEP (M.D. Fla.); Technology Training Assocs., Inc. v. Buccaneers Ltd. P’ship, No. 8:16-cv-1622-AEP (M.D. Fla.) (originally filed but dismissed in state court); Accounting To You, Inc. v. Buccaneers Ltd. P’ship, No. 8:13-cv-2929-AEP (M.D. Fla.); Stein, D.D.S., M.S.D., P.A. v. Buccaneers Ltd. P’ship, No. 8:13-cv-2136-AEP (M.D. Fla.); and Cinque v. Buccaneers Ltd. P’ship, No. 09-CA-21839 (Fla. Circuit Ct., Hillsborough County).

Two of those class actions are relevant here.

In the first, lawyers at the firm of Anderson & Wanca (“the AW Firm”), who had previously filed suit on behalf of a different plaintiff, added another class action representative, Medical & Chiropractic Clinic, Inc. (“M&C”). A mediation was conducted but it was unsuccessful.

Shortly after it concluded, David Oppenheim, an attorney at the AW Firm who was principally involved in the mediation, jumped ship to join the Bock Law Firm, LLC (“the Bock Firm”).

Within a month of Oppenheim’s departure from the AW Firm, the Bock Firm filed a separate class action against the Buccaneers raising the same TCPA claims. And, within two months of filing the second class action, the Bock Firm reached a proposed settlement with the Buccaneers.

M&C and its attorneys were not happy.

Brian Wanca, a principal at the AW Firm, encouraged M&C to sue the Bock Firm in state court and allege they had breached fiduciary duties owed to it as a named class representative.

M&C and its counsel claimed Oppenheim gave attorneys at the Bock Firm confidential information about settlement negotiations in the AW Firm’s class action, which assisted the Bock Firm in settling their class action quickly and to the detriment of the class.

After the case was removed, the parties filed cross-motions for summary judgment.

The district court concluded that Oppenheim and the Bock Firm did not violate any fiduciary duty and, in any event, no damages resulted from any such breach. Therefore, the district court granted summary judgment in favor of Oppenheim and the Bock Firm.

This appeal followed.

M&C and Wanca argue the district court erred in granting summary judgment.

We disagree.

In explaining our decision, we are required to address a unique question:

Does class counsel owe a duty of loyalty and confidentiality to a named class representative that is distinct from the duty owed to the putative class?

We conclude, consistent with our precedent, that the duties owed to a class representative do not differ from the duties owed to a class.

We also take this opportunity to clarify the duties owed by class counsel in class actions generally and in the context of this case specifically.

And, we determine that in filing this action M&C and Wanca launched an impermissible collateral attack on the Bock Firm’s attempt to certify and settle a class action.

Their assertions should have been made only before the court that was exercising jurisdiction over the Rule 23 putative class action — the court in which the request to certify a settlement class and approve the settlement was made.

I.                  Background

Because, as we have noted above, the fiduciary duty claims in this case are intertwined with two previously-referenced class actions (and Oppenheim’s successive employment at the two of the law firms that worked on those actions), we begin our discussion with a more fulsome description of those cases and Oppenheim’s move from the AW Firm to the Bock Firm.

The Cin-Q Class Action

In June 2013, Cin-Q Autos, Inc. filed a putative class action against the Buccaneers for alleged TCPA violations.

Cin-Q Autos, Inc. v. Buccaneers Ltd. P’ship, No. 8:13-cv-1592-AEP (M.D. Fla), (Doc. # 1) (“Cin-Q”).

The original Cin- Q complaint was filed by Michael Addison of the Addison & Howard firm and Wanca and Ryan Kelly of the AW Firm.

M&C was not an original plaintiff in that class-action complaint but was later joined in the Cin-Q class action as one of several named class representatives.

Like other plaintiffs in Cin-Q, M&C is primarily represented by the AW Firm.

Although the AW Firm was a major player in litigating the Cin-Q class action, Oppenheim played a relatively minor role during much of that litigation.

But, that changed after the parties agreed to mediate. Addison and Wanca retained final authority over whether to accept any settlement offer, but the record indicates that Oppenheim took over the role of “closer.”2

2 The record is unclear as to whether Oppenheim took over an increased role when the parties began mediating or whether his larger role only occurred with regard to the mediation before Judge Anderson (there were several rounds of mediation).

However, the record is more clear on this point: during the course of those negotiations, Oppenheim never received any information that was proprietary, unique, or specific to M&C.

In fact, Oppenheim’s only Cin-Q-related communications with M&C occurred at dinner the night before the mediation and the next day during the mediation.

Mediating Cin-Q proved difficult because Wanca wanted a larger settlement than the Buccaneers were willing to pay.

Wanca refused to settle for less than a $99,000,000 “settlement fund” and a $24,750,000 attorney fee (25% of the settlement fund).3

When talks stalled, Addison suggested the parties negotiate the fund in a bracket between $10,000,000 and $50,000,000.

Wanca was less than enthusiastic and responded, “I am NOT going down to $50 million on this case.”

Mediation failed soon thereafter, and the Cin-Q plaintiffs moved for class certification.

That publicly-filed motion included an expert report by Robert Biggerstaff (“the Biggerstaff Report”), which listed the telephone numbers used by the Buccaneers in sending the fax advertisements. Cin-Q, No. 8:13-cv-1592-AEP, (Docs. # 207-5; 207-6).

B.                Oppenheim’s Move from the AW Firm to the Bock Firm

A week after the Cin-Q plaintiffs moved for class certification, Phillip Bock recruited Oppenheim to leave the AW Firm and join the Bock Firm.

Bock and Oppenheim met on April 3, 2016, to work out the details.

At that time, they did not discuss the Cin-Q case or any of the other class actions filed against the Buccaneers.

Four days after meeting with Bock, Oppenheim gave notice to the AW Firm that he had accepted employment with the Bock Firm.

3 The TCPA allows recovery of actual monetary loss or statutory damages of $500 per telefax, whichever is greater. 47 U.S.C. § 227(b)(3)(B).

The parties negotiated on the basis of a virtual “settlement fund” against which class members could make claims, with any unclaimed monies reverting to Buccaneers.

With approximately 343,000 faxes at issue, Buccaneers’ total estimated potential exposure was $170,000,000. But the parties estimated that the claims rate would be no more than ten per cent (10%) of the fund.

When Oppenheim left the AW Firm, he believed that he and Wanca would continue to work together amicably on cases jointly handled by the Bock Firm and the AW Firm.4 As it turns out, Oppenheim was wrong.

Oppenheim’s departure from the AW Firm was the catalyst that set the stage for this lawsuit. Before leaving, Oppenheim copied the hard drive on his AW Firm computer to the computer he planned to use at the Bock Firm. The hard drive contained briefs, pleadings, and other documents he had worked on at the Bock Firm along with a year’s worth of his e-mails.

But, most important to this appeal, Wanca complains that within weeks of beginning at the Bock Firm, Oppenheim shared inside knowledge of the Cin-Q litigation with Bock. Bock had e-mailed Oppenheim to ask why Wanca had rejected Judge Anderson’s proposal in another mediation involving the AW Firm and the Bock Firm. Oppenheim responded that Wanca likely rejected the proposal because he “doesn’t like how the Tampa Bay Bucs mediation process went and resents Andersen’s continued efforts [in that case].” Oppenheim later elaborated, “Yeah. [Wanca] wants to set a record above the Capital One $75 million settlement.

4 The Bock Firm and the AW Firm had previously appeared together in dozens of TCPA class actions.

Indeed, before 2009, Wanca and Bock, the two firms’ principals, agreed to prosecute all of their TCPA class actions jointly.

And, although Wanca decided to stop partnering with the Bock Firm with regard to new cases, the firms planned to remain co-counsel on previously-filed, pending cases.

The magistrate judge it’s in front of is squeamish and is giving the Defendants a broad shot at disproving [vicarious liability]. Sort of like Sarris.”5 At the end of this exchange, Bock remarked, “[Buccaneers’ counsel] is a settler.” Oppenheim replied, “That was Andersen’s read.”

C.               The TTA State and Federal Class Actions

Before hiring Oppenheim, the Bock Firm conducted several mail-marketing campaigns to identify potential plaintiffs for future TCPA class actions. Some of the recipients of those communications — including Technology Training Associates (“TTA”) — already had expressed interest in pursuing TCPA claims before Oppenheim moved to the Bock Firm. By cross-referencing those that responded to their marketing efforts with the names listed on the Biggerstaff Report, the Bock Firm was prepared to file a TCPA class action against the Buccaneers to compete with the AW Firm’s efforts in Cin-Q.

About a month after hiring Oppenheim and two weeks after Oppenheim’s email exchange with Bock, the Bock Firm filed a class action in a Florida state court against the Buccaneers. Technology Training Assocs., Inc. v. Buccaneers Ltd. P’ship, No. 16-CA-4333 (Fla. Cir. Ct.) (Doc. 1) (“the TTA state class action”).

5 Oppenheim was apparently referring to a TCPA case in which a district court granted summary judgment to defendants, in part, because of its determination that plaintiffs failed to establish liability under an agency theory.

See Palm Beach Golf Center-Boca, Inc. v. Sarris, 981 Supp. 2d 1239, 1253 (S.D. Fla. 2013).

A panel of this court later reversed and remanded.

See Palm Beach Golf Center-Boca, Inc. v. Sarris, 781 F.3d 1245, 1257-58 (11th Cir. 2015).

Like the Cin-Q class action, the TTA state class action alleged TCPA claims against the Buccaneers. Although the Bock Firm represented the named plaintiffs and putative class in the TTA state class action, the firm screened Oppenheim from any involvement.

Soon after the Bock Firm filed the TTA state class action, the Buccaneers filed a Notice of Pendency of Related Action in the Cin-Q case, which disclosed the existence of the TTA state class action to the Cin-Q plaintiffs. The turf war began. The Cin-Q plaintiffs moved to intervene in the TTA state class action and, in Cin-Q, filed a Motion to Enjoin Defendant from Proceeding in a Competing Case. The Bock Firm responded by voluntarily dismissing the TTA state class action. However, though the Bock Firm dismissed the TTA state class action, the firm began mediating with the Buccaneers. And, in June 2016, the Bock Firm reached a proposed settlement with the Buccaneers.6

The Bock Firm refiled this class action complaint in federal court and immediately sought preliminary approval of the class settlement. Technology Training Assocs., Inc. v. Buccaneers Ltd. P’ship, No. 8:16-cv-1622-AEP (M.D. Fla.) (Docs. # 1, 18). M&C and Cin-Q, both plaintiffs in the Cin-Q action, moved to intervene in the now federal TTA action. The district court denied the motion and granted preliminary approval of the class settlement.

6 Under the terms of the settlement agreement, the Buccaneers agreed to create a $19.5 million settlement fund and pay the Bock Law Firm $4,875,000 in attorneys’ fees.

On interlocutory appeal, however, this court reversed the district court’s decision on the motion to intervene before remanding the case for further proceedings. Tech. Training Assocs., Inc. v. Buccaneers Ltd. P’ship, 874 F.3d 692, 697 (11th Cir. 2017). That decision allowed M&C and Cin-Q to intervene in the federal TTA case to protect their interests.

D.      The Filing of this Case and the Subsequent Conclusion of the TTA

Federal Case

On June 1, 2016, less than two weeks before the Buccaneers filed for preliminary approval of the settlement in the federal TTA case, M&C filed this breach of fiduciary duty suit against Oppenheim and the Bock Firm in Florida state court.

M&C alleged that Oppenheim breached the fiduciary duties owed to it as a named class representative—specifically the duties of loyalty and confidentiality.

The complaint also asserted that the Bock Firm aided and abetted Oppenheim in the breach.

M&C sought money damages, attorney’s fees, and (quite oddly) an injunction preventing the Bock Firm from representing clients in the TTA action or reaching a settlement in any matter substantially related to the Cin-Q action.

To be clear, M&C agreed to pursue fiduciary breach litigation, but Wanca promised to pay all of their fees and expenses in doing so. He did so because he thought the Bock Firm and Oppenheim had stolen “his” case. The record indicates Wanca and the AW Firm have spent over $500,000 financing this action.

Oppenheim and the Bock Firm removed the case to the Middle District of Florida, and the parties filed cross motions for summary judgment.

The district court found (1) that Oppenheim did not owe an individual fiduciary duty to M&C, (2) that even assuming such a duty existed, M&C failed to show Oppenheim or the Bock Firm breached that duty, and (3) that, in any event, M&C failed to prove damages.

Consistent with these findings, the district court granted Oppenheim’s and the Bock Firm’s motion for summary judgment, denied M&C’s motion for summary judgment, and entered judgment in favor of Oppenheim and the Bock Firm. M&C appealed.

Soon after filing this appeal, the Cin-Q intervenors (including M&C) in the federal TTA action filed a renewed motion to decertify the settlement class. TTA, No. 8:16-cv-01622-AEP, (Doc. # 131).

The court in that action granted the motion and decertified the TTA class under Rule 23(a)(4), after finding that (1) class counsel in the federal TTA action may have undercut Cin-Q’s counsel’s negotiating position and (2) unlike the plaintiffs in Cin-Q, the TTA plaintiffs’ claims were potentially barred by the statute of limitations. Id., (Doc. # 169).

Although the federal TTA action is now decertified, this appeal remains.

II.               Standard of Review

We review a district court’s order granting summary judgment de novo. Jones v. UPS Ground Freight, 683 F.3d 1283, 1291 (11th Cir. 2012). Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). We “tak[e] all of the facts in the record and draw[] all reasonable inferences in the light most favorable to the non-moving party.” Peppers v. Cobb Cty., 835 F.3d 1289, 1295 (11th Cir. 2016) (citations omitted).

III.           Analysis

M&C asserts the district court erred in finding (1) Oppenheim did not owe an individual fiduciary duty to M&C separate from the duty owed to the class and M&C failed to prove damages resulting from Oppenheim’s breach.

We agree with the district court on both counts and take this opportunity to clarify class counsel’s fiduciary obligations in this unique context.

A federal court sitting in diversity jurisdiction applies the substantive law of the forum state (in this case, Florida) alongside federal procedural law. Global Quest, LLC v. Horizon Yachts, Inc., 849 F.3d 1022, 1027 (11th Cir. 2017).

M&C claims that Oppenheim violated a fiduciary duty owed to it and that the Bock Firm aided and abetted that violation.

So, we turn to Florida law to evaluate the merits of those claims. We note that to establish a breach of fiduciary duty under Florida law, a plaintiff must prove three elements: the existence of a fiduciary duty, a breach of that duty, and that the plaintiff’s damages were proximately caused by the breach. Gracey v. Eaker, 837 So.2d 348, 353 (Fla. 2002).

Further, to prove aiding and abetting a breach of fiduciary duty, a plaintiff must show: “(1) a fiduciary duty on the part of the primary wrongdoer, (2) a breach of this fiduciary duty, (3) knowledge of the breach by the alleged aider and abettor, and (4) the aider and abettor’s substantial assistance or encouragement of the wrongdoing.” AmeriFirst Bank v. Bomar, 757 F. Supp. 1365, 1380 (S.D. Fla. 1991).

We begin by examining the fiduciary obligations owed by counsel in class action litigation.

A.               Duty

The parties all agree that, as putative class counsel, Oppenheim owed fiduciary duties to the class as a whole. But, that is not the issue we must address. M&C does not argue (at least in this case) that Oppenheim violated a duty owed to the class.

Rather, M&C and Wanca assert that Oppenheim owed a heightened fiduciary duty to M&C as a putative class representative.

Therefore, in evaluating this claim, we must first determine whether class counsel owes a fiduciary duty to class representatives that is distinct from the fiduciary duty owed to the class. We conclude class counsel does not.

M&C offers a simple syllogism to explain why class counsel owes a separate and heightened fiduciary duty to class representatives: (1) if all attorney-client relationships create duties of loyalty and confidentiality and (2) if class counsel’s representation of class representatives (but of not the rest of the class) creates an attorney-client relationship, then it follows that (3) class counsel’s representation of class representatives creates duties of loyalty and confidentiality separate from the duties owed to the class. However, this syllogism breaks down under proper scrutiny.

As support for its assertion that all attorney-client relationships create duties of loyalty and confidentiality, M&C cites to Florida case law and the Florida Rules of Professional Conduct (“Florida Rules”).7

See Fla. Bar v. Padgett, 481 So.2d 919, 919 (Fla. 1986) (“Attorneys owe a fiduciary duty to their clients….”); Florida Rules 4-1.9(c) (stating that a lawyer who has formerly represented a client may not afterwards “reveal information relating to the representation except as these rules would permit or require with respect to a client”).

Of course, M&C is correct that Florida courts, interpreting the Florida Rules, have found that attorneys generally owe duties of confidentiality and loyalty to former clients.

See, e.g., Tambourine Comercio Int’l S.A. v. Solowsky, No. 06-20682-Civ, 2007 WL 689466, at *29 (S.D. Fla. Mar. 4, 2007) (“Florida courts have recognized that an attorney owes both a duty of confidentiality and a duty of loyalty to former clients with respect to matters that are substantially related.”).

For example, it is obviously impermissible for a lawyer to misuse a client’s funds or to represent adverse parties in substantially related matters.

See Fla. Bar v. Bailey, 803 So.2d 683, 694 (Fla. 2001) (“[Counsel]’s self-dealing constitutes a complete abdication of his duty of loyalty to his client.”); Estright v. Bay Point Improvement Ass’n, Inc., 921 So.2d 810, 811 (Fla. 1st DCA 2006) (concluding trial court correctly disqualified petitioners’ attorney because petitioners’ attorney represented adverse parties in substantially related matters).

M&C, however, fails to point to any class action-specific authority extending duties of loyalty or confidentiality to an attorney’s representation of a class representative in a class action.8

And this is where M&C’s syllogism breaks down. M&C relies heavily on rules and decisions from outside the class action context. But class actions, wherein lawyers represent absent parties, involve different considerations than cases in which counsel is actually retained by a client (or multiple clients).

7 The Preamble to the Florida Rules, however, states: “[The Florida Rules] are not designed to be a basis for civil liability.” R. Regulating Fla. Bar 4, Preamble.

8 M&C cites two district court cases for the proposition that an attorney-client relationship exists between class counsel and class representatives that is distinct from that between class counsel and the class.

However, we are not persuaded by either decision.

First, neither decision cited by M&C applies the Florida Rules. See In re Katrina Canal Breaches Consol. Litig., No. 05-4182, 2008 WL 4401970 (E.D. La. Sept. 22, 2008); Morisky v. Pub. Serv. Elec. & Gas Co., 191 F.R.D. 419 (D. N.J. 2000).

Second, both decisions addressed the narrow issue of whether class counsel could assert privileges with respect to absent class member before class certification—not the scope of class counsel’s duty to the class versus the named class representatives.

See In re Katrina Canal Breaches Consol. Litig., 2008 WL 4401970, at *2-3 (holding class counsel cannot prevent defendants from contacting absent class members before class certification);  Morisky, 191 F.R.D. at 424 (holding that the attorney-client privilege is inapplicable to communications with absent class members).

In Kincade v. General Tire & Rubber Co., 635 F.2d 501 (5th Cir. 1981), the former Fifth Circuit, in a decision still binding on us,9 dealt with the ethical quandaries specific to class actions.

The Kincade court determined that attorney- client relationships in class actions are “unique” because (1) “the ‘client’ in a class action consists of numerous unnamed class members as well as the class representatives” and (2) “the class itself often speaks in several voices.” Id. at 508 (quoting Pettway American Cast Iron Pipe Co., 576 F.2d 1157, 1216 (5th Cir. 1978)).

Because of this unique attorney-client relationship, the Kincade court determined counsel in class actions have different ethical duties to their clients than in ordinary cases. As an illustration of that difference, the Kincade court decided that cases “holding that an attorney cannot settle his individual client’s case without the authorization of the client are simply inapplicable” to class actions. Kincade, 635 F.2d at 508.

What, then, determines the scope of class counsel’s ethical duties?

One 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.10

Applying this rule, courts like Kincade have rejected attempts by class members to derail settlements beneficial to the class. See Kincade, 635 F.2d at 508.

9 In Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981), the en banc Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.

10 As one of our sister circuits has recognized, however, defining the outer parameters of these duties can be difficult. See Zimmer Paper Prod., Inc. v. Berger & Montague, P.C., 758 F.2d 86, 91 (3d Cir. 1985) (“The bounds of fiduciary duty are undoubtedly not easy to define.”). But, this case simply does not involve the outer parameters of the duties owed by class counsel to the class.

But, 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.

See Parker v. Anderson, 667 F.2d 1204, 1211 (5th Cir. 1982) (holding the duty of counsel in the class-action context “is to the entire class and is not dependent on the special desires of the named plaintiffs”).

To hold otherwise would threaten one of the defining purposes of class actions—the consolidation of claims into one suit where a class of plaintiffs may speak with one voice.

See Pettway, 576 F.2d at 1176 (“The interests of the named plaintiffs and those of other class members may diverge, and a core requirement for preventing abuse of the class action device is some means of ensuring that the interests and rights of each class member receive consideration by the court.”).

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.

And, in cases where the interests of the class representative diverge from the interests of class members, class counsel would be required to choose the interests of some class members over the rest of the class.

Such outcomes could splinter class actions, lead to costly litigation between class members, and encourage class members to opt-out.

By deciding that Oppenheim did not owe a heightened duty to M&C because of its status as a class representative, the district court faithfully followed the case law adopted by our circuit as set forth in Kincade.

Furthermore, the district court did not err when it rejected M&C’s request that it apply the Florida Rules to Oppenheim’s behavior.

The Florida Rules are intended to instruct attorneys in the representation of clients outside of the class action context and are “simply inapplicable” to this case. Kincade, 635 F.2d at 508.

The precedent of our circuit implicitly (if not explicitly) warned the district court not to apply such ethical rules to class counsel.

Pettway, 576 F.2d at 1176 (“Certainly it is inappropriate to import the traditional understanding of the attorney-client relationship into the class action context by simply substituting the named plaintiffs as the client.”).

The absence of a traditional attorney-client relationship between Oppenheim and M&C, the unique relationship between class counsel and class representatives, and application of our Kincade precedent all lead us to affirm the district court’s ruling.

However, we are obliged to make one additional observation. 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 TTA 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.

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.

We are aware that, separate and apart from filing this action, M&C and Wanca objected to the TTA settlement and attempted to intervene in the TTA action.11

And, although the TTA court preliminarily approved the settlement, ultimately that court reversed course and decertified the class.

But, that was not until well after M&C and Wanca filed this action in state court.

We are troubled by that filing. We have no hesitation in calling it what it was: a thinly-veiled attempt to derail the TTA settlement.12

That is clear because of certain aspects of the relief sought in this action.

11 The district court denied the Cin-Q plaintiff’s motion to intervene ruling that the “Cin- Q plaintiffs may assert [their] objections in the normal course of these proceedings, as anticipated by Rule 23.” TTA, No. 8:16-cv-01622-AEP (Docs. # 56).

It also preliminarily approved the settlement. A panel of this court reversed the decision to deny the intervention motion. Tech Training Assocs., Inc. v. Buccaneers Ltd. P’ship, 874 F.3d 692 (11th Cir. 2017).

And after remand, the objections asserted by the AW Firm proved successful as the TTA settlement failed after the district court granted a motion filed by the AW Firm (on behalf of the Cin-Q plaintiffs) to decertify the TTA settlement class. TTA, No. 8:16-cv-1622-AEP (Docs. # 131, 169).

12 To the extent that Wanca and the AW Firm protest that they filed this action to protect the interests of the class and M&C, we firmly remind them that a class’s interests are due to be protected in a manner consistent with Rule 23—that is, by filing an objection in the federal court where the class action resides and any class settlement is proposed.

M&C claimed not only money damages and attorneys’ fees, but it also requested an injunction preventing the Bock Firm from proceeding as class counsel in the TTA action or settling that action. So, in filing this suit, M&C and its counsel asked a state court judge to enjoin putative class counsel in a separate federal class action. As the saying goes, that won’t work. There is only one gatekeeper under Rule 23 and it was wholly inappropriate for M&C and its counsel to go to state court in an attempt to employ another one.

M&C and Wanca may contend that their substantive objections were valid.

After all, once M&C was permitted to intervene, the district court eventually decertified the class and rejected the settlement. But, that is precisely the point. It is emphatically the role of the district court to address those matters, for it is the only forum in which such a challenge should have been launched—certainly not a different court. So, regardless of the merits of the objections, M&C crossed a line by attempting to litigate them in another court.

For these reasons, we affirm the district court’s holding that M&C failed to prove the first element of both of its claims, i.e., that Oppenheim owed a fiduciary duty to M&C separate from the fiduciary duty he owed to the class.

B.      Damages

In the alternative, the district court determined that M&C failed to show it suffered damages as a result Oppenheim’s alleged fiduciary breach. We also agree with that ruling.

M&C argues that it was harmed by Oppenheim’s and the Bock Firm’s conduct. It contends that, “[b]ut for Oppenheim’s sharing of confidential and mediation privileged information with [the Bock Firm], [the Bock Firm] would not have filed the TTA State Court and Federal Actions.” As a result of the Bock Firm filing the TTA federal action, M&C claims it was injured by having its position as putative class representative usurped and by being “forced to expend time and other resources to prevent an improper settlement between [the Bock Firm] and the Buccaneers resulting from [the Bock Firm] and the Buccaneer’s aligned interests.” M&C asserts these injuries occurred only because the TTA federal action settled for an artificially and improperly low amount due to the Bock Firm’s rush to undercut the AW Firm’s settlement efforts in the Cin-Q action.13

But, M&C’s theory of damages in this case necessarily relies on it proving that the proposed TTA settlement was to the detriment of the class. As we noted above, the proper forum to raise that objection was in the federal TTA action.

13 This scenario is sometimes referred to as a “reverse auction.” See, e.g., Lipuma v. American Express Co., 406 F. Supp. 2d 1298, 1305 (S.D. Fla. 2005).

Our observations about M&C’s attempt to circumvent the TTA court’s handling of the class action before it are equally applicable here. Rule 23 provides class members and objectors like M&C with procedural mechanisms to file these types of challenges.

And, Rule 23 squarely places the responsibility for ruling on such challenges in the district court that has jurisdiction over the class action claims, not a state court.

Again, in accordance with Rule 23, it is the district court — and only the district court — that is tasked with making determinations about class certification, class counsel, and class settlements. See Reynolds v. Beneficial Nat. Bank, 288 F.3d 277, 280 (7th Cir. 2002) (stating that, in the context of approving or disapproving a class settlement, some courts “have gone so far as to term the district judge in the settlement phase of a class action suit a fiduciary of the class”).

Neither a lone putative class member, a competing putative class representative such as M&C,14 nor competing putative class counsel, such as Wanca and the AW Firm, may circumvent the district court’s Rule 23 role by launching a collateral attack in another court against class counsel.

For these reasons, any objections to the federal TTA settlement, or any claim that the TTA settlement somehow injured M&C, should have been raised before the court in the federal TTA case in accordance with Rule 23.

The district court did not permit M&C to circumvent the TTA judicial officer and the text of Rule 23. We will not either.

We find no error in the district court’s determination that M&C failed to establish that it was damaged by any alleged breach of a fiduciary duty owed to it by Oppenheim.

IV.            Conclusion

For all these reasons, we affirm the district court’s grant of summary judgment in favor of Oppenheim and Bock Law Firm.

AFFIRMED.

14 As part of its claim for monetary damages, M&C also sought to recover the loss of its incentive award in the Cin-Q class action.

However, a panel of this court recently concluded that such service awards are foreclosed by Supreme Court precedent.

See Johnson v. NPAS Solutions, LLC, 975 F.3d 1244, 1260 (11th Cir. 2020) (en banc petition pending).

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Laws In Texas is a blog about the Financial Crisis and how the banks and government are colluding against the citizens and homeowners of the State of Texas and relying on a system of #FakeDocs and post-crisis legal precedents, specially created by the Court of Appeals for the Fifth Circuit to foreclose on homeowners around this great State. We are not lawyers. We do not offer legal advice. We are citizens of the State of Texas who have spent a decade in the court system in Texas and have been party to during this period to the good, the bad and the very ugly.

Donate to LawsInTexas. Make a Difference.

Subscribe to Our Newsletter

We keep your data private and share your data only with third parties that make this service possible. See our Privacy Policy for more information.

© 2020-21 LawInTexas com is an online trading name which is wholly owned by Blogger Inc., a nonprofit 501(c)(3) registered in Delaware. | All Rights Reserved.

To Top