The Seventh Circuit Court of Appeals has granted a Sears, Roebuck & Co. request to enjoin the filing of class actions involving its dryers with stainless steel drums and raising the same consumer fraud claims alleged in a putative class action that the Seventh Circuit refused to certify because individual issues predominated over common ones. Thorogood v. Sears, Roebuck & Co., No. 10-2407 (7th Cir., decided November 2, 2010).
Further details about the court’s previous ruling on class certification appear in the November 13, 2008, issue of this Report.
The company sought relief under the All Writs Act after “a virtually identical class action” (Murray) was filed in a California federal court by the same attorney who had represented the plaintiff in Thorogood. The district court (sitting in Illinois), which had entered the order decertifying the Thorogood class, refused to enjoin the California action, saying that Sears could “obtain adequate relief against being harassed by repetitive litigation by pleading collateral estoppel” in subsequent litigation. The Seventh Circuit disagreed, noting that while such relief would ordinarily protect against harassment by repetitive litigation, “this case is unusual both because it involves class action litigation and because of the specific tactics employed by class counsel, which include, as we’ll see, something close to settlement extortion.”
The California court refused to accept Sears’ collateral estoppel defense because plaintiffs’ counsel altered the pleadings “with just enough differences to confuse the district judge,” according to the appeals court. The California court also allowed discovery to proceed against Sears. Because this ruling was unappealable, the Seventh Circuit ruled that the All Writs Act was the company’s “only means, other than submitting to lawyer Boling’s demands, of avoiding being drowned in the discovery bog.” The court emphasized, “There is nothing new in [the California] complaint that would allow an escape from the bar of collateral estoppel. The critical issue was and is what consumers would understand by representations that the Kenmore dryer has a stainless steel drum.… These questions can’t be answered on a class-wide basis, and so there would be no economies from allowing the suit to proceed as a class action.”
The court remanded the case for the district court to fashion an appropriate injunctive order, but indicated that it could not preclude individual lawsuits, could not involve lawsuits filed against other defendants and could not “forbid class action suits challenging representations materially different from those in Thorogood’s and Murray’s cases, or representation concerning a dryer that contains a different amount of stainless steel.” The court also indicated that the order could preclude copycat litigation brought in state courts, but must be subject to whatever the U.S. Supreme Court decides in pending appeals asking whether “a district court that previously denied class certification nonetheless has personal jurisdiction over the absent putative class members such that it may enjoin them from seeking class certification in state court.”