18th Annual Workplace Class Action Report - 2022 Edition

586 Annual Workplace Class Action Litigation Report: 2022 Edition committed violations of the ERISA that caused losses to the Plan and individual accounts. Hundreds of the Plan participants signed an arbitration agreement with their employer, agreeing to resolve through arbitration all employment-related disputes not explicitly excluded from the agreement. Plaintiffs in the Canfield and Mendon actions and the Plan’s Advisory Committee were represented initially by The Klamann Law Firm and Kent, Beatty & Gordon, LLP. Because Plaintiffs sued the Advisory Committee and its individual members, the Court found a concurrent conflict of interest and disqualified the Klamann group from the Canfield and Mendon actions. Id . at *4. Defendants subsequently filed a motion for disqualification in the arbitration proceedings, which the Court denied. The Court opined that it did not compel the arbitrations into which Defendants requested, and therefore the disqualification of arbitration counsel was a question more appropriately left to the Court which compelled the arbitration. The Court reasoned that only Plan Participants who opted-out of the arbitration agreement had claims before the Court. Accordingly, the Court denied the motion to disqualify the Klamann group from the arbitration proceedings. Gordon, et al. v. Robinhood Financial LLC, 2021 U.S. Dist. LEXIS 140005 (E.D. Wash. July 27, 2021). Plaintiffs filed a class action alleging that Defendant’s Refer a Friend" ("RAF") marketing feature from its online investment brokerage application violated the Washington Consumer Protection Act ("CPA") by way of the Washington Commercial Electronic Mail Act ("CEMA"). The Court previously had granted Plaintiffs’ motion for class certification pursuant to Rule 23. Defendant thereafter raised allegations that the lawsuit was orchestrated by the transmittal of a text message by class co-counsel’s brother John Cameron and his son’s friend. Plaintiff thereafter revealed that John Cameron sent the allegedly offending text message, that he met John Cameron in early January 2019 at a wine bar and restaurant that Plaintiff owned in downtown Spokane, that Plaintiff met John Cameron several times during regular business hours at his wine bar, that Plaintiff played fantasy role- playing games and card games with John Cameron on several occasions between March 2019 and August 2019, that he has socialized with him thereafter, and that Plaintiff provided his phone number to John Cameron. Id . at *4. On that basis, Defendant filed a motion to disqualify class counsel from representing the class. Defendant contended that there were four reasons for disqualification without specifying which counsel was directly responsible, including: (i) class counsel’s misrepresentations and role in manufacturing Plaintiff’s claim; (ii) class counsel’s status as material fact witnesses; (iii) class counsel’s conflicts with the class and each other; and (iv) class counsel’s untenable working relationship. Id . at *6. The Court denied the motion for disqualification. The Court reasoned that without a full evidentiary record with which to make adequate findings, it was hesitant to disqualify counsel. In Re Suboxone Antitrust Litigation, 2021 U.S. Dist. LEXIS 11005 (E.D. Penn. Jan. 20, 2021). In this multi- district antitrust litigation, a group of direct purchaser Plaintiffs (“DPPs”) brought a class action against Defendant, the manufacturer of Suboxone, a drug commonly used to combat opioid addiction, after it switched the drug from tablet to sublingual film citing safety concerns. Plaintiffs claimed that this switch was anticompetitive and solely designed to maintain Defendant’s market exclusivity, a scheme known as a “product hop.” Id. at *4. Defendant sought disqualification of one of Plaintiffs’’ named class representatives and its counsel on the basis that they were inadequate. The Court denied Defendant’s motion to disqualify and granted the motion to approve the class notice. Defendant sought to disqualify Plaintiff Rochester Drug Co-Operative ("Rochester") as a class representative based, in part, upon Rochester’s initiation of Chapter 11 bankruptcy proceedings. Defendant also requested disqualification of Rochester’s counsel as class counsel because the firm would no longer be retained by any named class representative. Defendant relied heavily on Dechert v. Cadle Co. , 333 F.3d 801 (7th Cir. 2003), which Defendant asserted stood for the proposition that a class representative’s bankruptcy, especially one where Defendant was a creditor, created an intractable conflict of interest between the representative’s fiduciary duties to its creditors and its duties to absent class members. The Court disagreed with Defendant’s interpretation of the holding in Dechert . It pointed out that Dechert declined to lay down a flat rule that a trustee in bankruptcy can never be a class representative. Specifically the Court noted that case law authorities had reached different conclusions on this issue depending on the specific circumstances. In short, while the Court recognized that Rochester’s precarious financial situation was not ideal for a class representative, it determined that Rochester’s established history of prosecuting antitrust class actions, its strong interest – both as a debtor-in-possession and as class representative – in pursuing the antitrust claims, the involvement of other class representatives, and the relatively minimal conflict resulting from Rochester’s unsecured debt to Defendant all weighed against disqualification of Rochester as a class