Jessica Karmasek Mar. 2, 2016, 9:42am


WASHINGTON (Legal Newsline) - A major plaintiffs law firm known for its prosecution of class action lawsuits wants the U.S. Supreme Court to weigh in on a federal appeals court’s decision to vacate a lower court’s denial of a motion for class certification in a malpractice lawsuit filed against the firm.

Attorneys for Milberg LLP and various other law firms and lawyers filed a petition for a writ of certiorari Dec. 4.

In a Jan. 21 letter filed with Judge Frank Zapata in the U.S. District Court for the District of Arizona, attorneys for the law firm explained that in exercising appellate jurisdiction over Lance Laber’s appeal, the U.S. Court of Appeals for the Ninth Circuit cited a prior Ninth Circuit panel decision in Baker v. Microsoft Corp.

In January, the Supreme Court granted certiorari to address the jurisdictional issue presented in Microsoft.

“Given this new development, the parties have agreed, subject to the Court’s approval, to extend the briefing schedule on Mr. Laber’s motion to intervene until after the Supreme Court rules on Milberg’s petition for certiorari,” attorneys for Milberg wrote in the two-page letter to Zapata.

Laber’s response, along with the firm’s reply, was filed with the nation’s highest court last month. According to the Supreme Court docket, the case is set for conference March 18.

“At that time, the parties will have a clearer sense as to the next steps in the appellate stage of this litigation, and have discussed the possibility of agreeing to a stay of further proceedings before this Court if certiorari is granted,” Milberg’s attorneys wrote. “While no agreement has been reached on these matters, the parties believe that awaiting the Supreme Court’s disposition of the certiorari petition will crystallize the parties’ respective positions.”

In September, the Ninth Circuit held that the district court erred in holding that the law of each class member’s home state governed his or her individual claim, rather than the law of Arizona where the alleged malpractice occurred.

Intervenor-plaintiff Laber appealed the district court’s denial of the motion for class certification brought by named plaintiffs Philip Bobbitt and John Sampson in their malpractice lawsuit against Milberg and the other law firms.

In 2001, Milberg, a national law firm specializing in class actions, filed a lawsuit in Arizona district court against Variable Annuity Life Insurance Company Inc., or VALIC, for alleged securities law violations.

In January 2004, the district court certified a class of plaintiffs.

But -- according to the Ninth Circuit’s opinion -- things went downhill for Milberg and the class.

Milberg failed to meet certain mandatory disclosure deadlines, and in August 2004, the district court struck the plaintiffs’ expert testimony and witness list as a sanction.

Milberg could not prove class-wide damages without witnesses, so the court vacated class certification.

And, because Milberg could not, without witnesses, establish causation and damages for the named plaintiffs, the court entered judgment for VALIC, ending the case.

Milberg did not alert any of the absent class members to the certification or decertification of the class or the dismissal of the action, nor did it otherwise attempt to preserve the class’ claims.

Plaintiffs in the appeal at issue then sued Milberg for malpractice for failing to meet the discovery requirements in the VALIC class action.

They named as defendants four law firms as well as various lawyers who worked for them. The firms are located in New York, Washington D.C., and Arizona. The lawyer defendants are residents of Florida, New York, Washington D.C., Virginia, New Jersey and Arizona.

The two lead plaintiffs are Texas residents.

After some litigation, the plaintiffs moved for class certification. The defendants opposed on various grounds, arguing the plaintiffs could not meet the requirements of Rule 23(a) and (b)(3).

The district court denied the motion for class certification, ruling that plaintiffs had failed to meet the predominance requirement of Rule 23(b)(3). The court held that individual questions predominated over common questions, because the law applicable to each unnamed class member’s claim was the law of that member’s domicile state.

Because the laws of up to 50 states were implicated and the plaintiffs had failed to meet their burden to show that conflicts between the 50 states’ laws did not defeat the predominance requirement, the court denied class certification.

Named appellants Bobbitt and Sampson moved for voluntary dismissal of their individual claims. The district court granted the motion on March 29, 2013, creating a final judgment.

Laber, an unnamed member of the putative class, then successfully moved to intervene for the limited purpose of bringing an appeal.

Circuit Judge John B. Owens said various factors supported application of Arizona law.

For one, he said, the unnamed class members were injured when Milberg failed to meet deadlines and make timely filings in the Arizona court.

“The result of that alleged negligence was vacatur of the class certification order, which also occurred in the Arizona court,” Owens wrote in the Ninth Circuit’s Sept. 10 opinion. “The unnamed class members lost the potential benefits of class certification in the Arizona litigation. This injury occurred in Arizona.”

The judge continued, “Indeed, most courts applying § 145 in analogous situations agree that negligent behavior in litigation injures the client in the forum state of the court, whether or not the client is physically present in the state.”

Owens said the Ninth Circuit’s inquiry focused not on the place where the victim feels the consequences of the injury, but on the location of the injury itself.

The judge said another factor -- the center of the relationship of the parties -- also supports application of Arizona law.

“The relationship between the unnamed Drnek class members and their lawyers existed only in Arizona,” he wrote in the 12-page opinion. “The district court discounted this factor, reasoning that Milberg had only a minimal relationship with the unnamed class members.

“Whether or not Milberg established a full attorney-client relationship with the unnamed class members, there was some relationship. Indeed, had the class remained certified and proceeded to a valid final judgment, the unnamed class members would likely have been bound by the final judgment. That relationship was centered in Arizona.”

The Ninth Circuit vacated the district court’s order and remanded the case for further proceedings.

Once returned to the district court, Laber filed a motion to intervene in November for the purpose of serving as a class representative.

Milberg, in a December memorandum, argued the continued prosecution of the matter as a class action is time barred; the former named plaintiffs Bobbitt and Sampson cannot remain as class representatives; and the claims of all other putative class members have expired -- including Laber’s.

In an order last week, Zapata said the defendants have until April 1 to file any response to Laber’s motion to intervene; Laber has until April 29 to file any reply.

The judge also ordered that the parties “jointly report” the status of the pending certiorari petition following the Supreme Court’s conference on or before March 22.

According to its website, Milberg was one of the first law firms to prosecute class actions in federal courts on behalf of investors and consumers.

“The firm pioneered this type of litigation and is widely recognized as a leader in defending the rights of victims of corporate and other large-scale wrongdoing,” its website states.

The firm’s practice focuses on the prosecution of class and complex actions in many fields, including securities, corporate fiduciary, consumer, insurance, antitrust, bankruptcy, mass tort, and human rights litigation.

It has offices in New York City, Los Angeles and Detroit.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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Organizations in this Story

U.S. Supreme Court
1 First St NE
Washington, DC 20543

United States Courts for the Ninth Circuit
U.S. Courts for the Ninth Circuit P.O. Box 193939 San Francisco, CA 94119
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Milberg LLP
1 Pennsylvania Plaza
New York, NY 10119

Microsoft
1 Microsoft Way
Redmond, WA 98052-6399

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