Thorogood v. SEARS, ROEBUCK AND CO.
2012 WL 1508226, 678 F.3d 546, 2012 U.S. App. LEXIS 8811 (2012)
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Rule of Law:
A court's denial of class certification in a lawsuit does not have a preclusive effect on an unnamed, non-party member of that proposed class. Such an individual is not bound by the decertification ruling and remains free to file a subsequent, similar class action.
Facts:
- Steven Thorogood bought a clothes dryer from Sears, Roebuck & Co. that was advertised with the words 'stainless steel' imprinted on it.
- Thorogood, an engineer, interpreted this to mean the entire dryer drum was stainless steel.
- In fact, a small, inconspicuous part of the front of the drum was made of ceramic-coated 'mild' steel, which is not stainless steel.
- Thorogood alleged this mild steel portion rusted and stained his clothes.
- Martin Murray, who was a potential member of Thorogood's proposed class, also purchased a similar dryer from Sears.
- Murray, represented by Thorogood's former counsel, later filed a nearly identical class action lawsuit against Sears.
- During the brief period Thorogood's class was certified, the unnamed class members, including Murray, were never notified or given an opportunity to opt out of the litigation.
Procedural Posture:
- Steven Thorogood filed a class action suit against Sears, Roebuck & Co. in a federal district court.
- The district court certified the class.
- On appeal by Sears, the U.S. Court of Appeals for the Seventh Circuit ordered the class decertified.
- The district court subsequently dismissed Thorogood's remaining individual suit as moot.
- Martin Murray, a member of the decertified class, filed a copycat class action against Sears in a California state court, which Sears then removed to a federal district court in California.
- Sears filed a motion in the original federal district court to enjoin Murray's class action.
- The district court denied Sears' motion for an injunction.
- Sears appealed the denial to the Seventh Circuit, which reversed the district court and ordered it to issue the injunction against Murray's suit.
- Thorogood petitioned the U.S. Supreme Court for a writ of certiorari.
- The Supreme Court granted certiorari, vacated the Seventh Circuit's judgment, and remanded the case for reconsideration in light of its decision in Smith v. Bayer Corp.
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Issue:
Does a federal court's decision to deny class certification in a lawsuit bind an unnamed member of that proposed class, thereby allowing a court to enjoin that member from filing a subsequent, similar class action under the All Writs Act?
Opinions:
Majority - Posner, Circuit Judge.
No. A federal court's denial of class certification does not bind an unnamed member of the proposed class, and therefore the court cannot enjoin that member from pursuing a separate, similar class action. Applying the Supreme Court's decision in Smith v. Bayer Corp., the court reasoned that the principle against non-party preclusion is paramount. An individual who was an unnamed member of a proposed but ultimately decertified class was never a 'party' to the original action. Because Murray was not a party, he cannot be bound by the prior judgment decertifying Thorogood's class. The court further emphasized that Murray was never given notice or the opportunity to opt out of the Thorogood suit, a due process requirement for binding absent class members under Phillips Petroleum Co. v. Shutts. While acknowledging Sears' policy concerns about abusive, copycat litigation, the court held that such concerns cannot override the established rule against non-party preclusion.
Analysis:
This decision significantly clarifies the limited preclusive effect of a denial of class certification, reinforcing the principles from the Supreme Court's ruling in Smith v. Bayer Corp. It establishes that defendants cannot use an early procedural victory, like defeating class certification, to permanently shield themselves from similar class actions brought by different plaintiffs. The ruling forces defendants to combat serial class action litigation through other means, such as relying on stare decisis or seeking consolidation through the Panel on Multidistrict Litigation, rather than obtaining an injunction. This strengthens the due process rights of absent class members but also potentially increases litigation costs for defendants facing repetitive suits.
