Judgment Not Binding on Class Members Without Prior Notice

AuthorLaura W. Givens
Pages23-23
Published in Litigation News Volume 47, Number 1, Fall 2021. © 2021 by the Ameri can Bar Association. Re produced with per mission. All rights re served. This info rmation or any porti on thereof may not be c opied or disseminated in any f orm or
by any means or stored in an el ectronic database or r etrieval system w ithout the expre ss written cons ent of the American Bar A ssociation.
Published in Litigation News Volume 47, Number 1, Fall 2021. © 2021 by the Ameri can Bar Association. Re produced with per mission. All rights re served. This info rmation or any porti on thereof may not be c opied or disseminated in any f orm or
by any means or stored in an el ectronic database or r etrieval system w ithout the expre ss written cons ent of the American Bar A ssociation.
n a case that could have a sig nif‌icant impact on class
action litigatio n, the U.S. Court of Ap peals for the Sixth
Circuit in Faber v. Ciox Health, LLC, held t hat an order
granting the defe ndant’s summary judg ment after class
certif‌ication, but before absentee class members had
been notif‌ied , binds only the named plain tis and not the
class. Expe rts suggest that the moving pa rty in class actions
should consid er asking for modif‌ication of sc heduling orders
to avoid a ruling that is not bi nding on the class.
In Faber, the plainti s brought a putative class action
case against C iox Health, LLC, alleging Ciox overch arged
them for copies of th eir medical records. Ciox is a me d-
ical-record s provider that contracts with hospit als to
help patients a ccess their medical records . The Health
Insurance Por tability and Accountabilit y Act of 1996
(HIPAA) prohibits charging patients more than reasonable
fees for their reco rds. The plaintis style d their HIPAA-
based claims as co mmon-law claims becaus e HIPAA does
not provide a private righ t of action.
Three months bef ore the district court certif‌i ed the
class, the dist rict court granted summar y judgment for
Ciox. The Sixth Ci rcuit armed that dismissal, s tating that
under Tennessee co mmon law, no duty existed for Ciox to
not overcharge the pl aintis.
The plaintis a lso asserted claims under th e Tennessee
Medical Reco rds Act of 1974 (TMRA). The Sixth Circuit
held that, while th e TMRA provides a private right of ac tion
against hospi tals, it does not provide a claim aga inst a
third-part y records provider such as Ciox. Accord ingly, the
Sixth Circuit also a rmed the district court ’s dismissal of
the plaintis ’ TMRA claims.
The district cou rt had dismissed the commo n-law claims
after certif ying the class, but before noti ce could be sent
to the absentee clas s members. The district c ourt held
that under Fede ral Rule of Civil Procedure 23 an d the Due
Process Clause , parties are not bound to class a ction judg-
ments until given a f ull and fair opportunit y to litigate.
Therefore, the cl ass members were not bound by th e ruling.
On appeal, Ci ox argued that the Sixth Circuit shou ld
remand the cas e for the purpose of issuing opt-out noti ces
to the class at the plai ntis’ expense. The plainti s argued
that the district c ourt’s ruling should bind o nly the named
plaintis. T he Sixth Circuit relied on Federa l Rule of Civil
Procedure 23(b)(3), wh ich requires that all class memb ers
receive notice, and h eld that the summary judgm ent order
bound only the n amed plaintis. The Sixth C ircuit stated
that post-judgmen t notice to class members would only
invite class membe rs to enter a f‌ight they had already lost
and would presen t no meaningful opportu nity for class
members to make their case.
The Sixth Circuit li mited its ruling to the situation pre-
sented. It distin guished a D.C. Circuit case , which allowed
post-judgment certif‌ication and notice because the plain-
tis had succee ded on summary judgmen t. It also dis-
tinguished a Th ird Circuit case in which the court h eld
that the defenda nt could postpone class certi f‌ication
and notice until af ter the plaintis had proved a violatio n,
because such p ostponement would only work to be n-
ef‌it the absentee class members. There, the defendant
accepted the risk of a la rger class.
“The court ’s ruling reinforces the genera l rule that if the
defendant win s summary judgment prior to th e class being
properly notif‌i ed, the defendant waives the right to h ave
notice sent to the class , and the judgment only bind s the
named plainti s,” explains Adam E. Polk, S an Francisco,
CA, cochai r of the ABA Litigation Section’s Class Ac tions &
Derivative Suits Committee.
“The appell ate court armed summar y judgment on
the merits, so it s eems unlikely that the defenda nt would
face the same cla ims again by absent class membe rs
or that those indiv iduals would prevail on the merits in
another suit,” op ines Lindsay D. Breedlove, Phila delphia,
PA, cochair of the Litig ation Section’s Class Actions &
Derivative Suits Committee.
While the defen dant would have benef‌ited from having
the class certi f‌ied before summary judgm ent, Breedlove
does not believe thi s ruling was a meaningful loss . The
Sixth Circuit also co mmented that Ciox “has still obtai ned
something valu able here—a judgment in its f avor on the
merits that has b een armed on appeal.” Th e appellate
court furth er states that principles of sta re decisis, and
possibly preclusion, may be “valuable assets” to Ciox if
absent class me mbers were to bring similar claim s.
“The ‘movant bewa re’ rule that the Sixth Circuit
endorsed tra cks Rule 23’s text and logic.However, it could
present a practi cal conundrum for defenda nts facing a
looming dispo sitive motion deadline. If that dea dline falls
before a class has b een certif‌ied, or soon the reafter, the
defendant may wis h to seek a modif‌ication of the sched -
uling order, depen ding on other dynamics in the c ase,”
advises B reedlove.
RESOURCES
Andr ew J. Kennedy, “Appeals Cour t Embraces An ‘Issue s Class,’”
Litigation News (M ar. 15, 2019).
Antho ny R. McClure, “Ni nth Circuit Splits from Ot hers in Tolling
Deadline fo r Class Action Appeal s,” Litigation News (Jan. 3, 2018 ).
Judgment Not Binding on Class
Members Without Prior Notice
By Laura W. Givens, Litigatio n News Contributing Editor
AMERICA N BAR ASSOCIATION FALL 2021 • VOL. 47 N O. 1 | 23

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