December 17, 2014
What you are about to read is the result of a forensic investigation into the electronic Court Files of a class action settlement. A Federal Court approved it and its Order and Final Judgment are now on appeal. Even before the Order and Judgment, the very fact of settlement negotiations without more has caused Courts to stay other class actions and to put the burden of proof on plaintiffs that their cases are not precluded by the class action settlement.
The Order was written by the same defendants who initially opposed class action certification. The plaintiffs’ motion for certification and the defendants’ opposition in that case were not adjudicated. The defendants settled the case before the Court ruled.
They were against it before they were for it.
The defendants in a Federal class action case in Florida, Fladell, et al., Plaintiffs v. Wells Fargo Bank, N.A., et al., Defendants (S.D. Fla. Case No. 13-cv-60721), argued against class certification of the lender force-placed insurance (“LFPI”) claims alleged against them and against certification of any of the classes urged by the plaintiffs in that case. Two months later the defendants settled the Fladell case and urged the Federal Judge presiding over that case to approve more claims and more classes than the plaintiffs themselves sought to certify, which he eventually did.
Even before their settlement agreement was judicially approved, the same defendants successfully raised the very fact of settlement negotiations as a bar to other LFPI claims in other States, or as a way to shift the burden of proof to the plaintiffs in those cases to prove that their cases are not included in the settlement in Florida. See, e.g., Keller v. Wells Fargo Bank, N.A., 2014 WL 6684895 *2-*3 (W.D. Wash. November 25, 2014)(granting “limited injunction” against defendants foreclosing on plaintiffs’ home so as to allow the plaintiffs to prove that their case is not included in the Fladell settlement); Ali v. Wells Fargo Bank, N.A., 2014 WL 819385 *2 (W.D. Okla. March 3, 2014)(granting defendants’ motion to stay LFPI claims of plaintiffs who were not parties in the Florida case, unless those plaintiffs could prove that their claims were not settled in Fladell); Ursomano v. Wells Fargo Bank, N.A., 2014 WL 644340 *1-*2 (N.D. Cal. February 19, 2014)(granting defendants’ motion to stay LFPI claims alleged by people who were not parties to the Florida case because the Fladell settlement might bar them).
The Federal Court in Florida never considered let alone adjudicated any of the issues raised by the plaintiffs’ motion for preliminary certification of a class in Fladell.
The Court never addressed any of the defendants’ objections, either. What follows is taken mainly from the defendants’ own Response in Opposition to Plaintiff’s’ Motion for Class Certification in Fladell, which the defendants filed in December 2013. That was less than two months before the defendants changed tack and began the process of obtaining the Federal Judge’s approval of a much larger class of LFPI claims and plaintiffs than the Fladell plaintiffs ever contemplated when they filed their motion to certify a class in the Florida case.
The switch in positions by the defendants in Fladell, resulting in the same defendants raising the settlement in Fladell as a reason to preclude LFPI claims and classes in other States, raises a fundamental question about res judicata and due process in the U.S. judicial system:
Can a party purchase the right to raise res judicata in other cases by settling an alleged class action for more claims and more classes than the plaintiffs in that case alleged, and then obtaining a Court’s approval of that class action settlement, particularly where that same party previously objected to certifying claims and classes in opposition to the plaintiffs’ motion for certification in that case, a case which the defendants settled before the Court ruled on the plaintiffs’ motion and the defendants’ opposition?