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Johnson v. Nextel Communs. Inc.

United States Court of Appeals, Second Circuit

March 4, 2015

MICHAEL S. JOHNSON, individually and on behalf of the class, PATRICIA LONG CORREA, individually and on behalf of the class, DONNA DYMKOWSKI, individually and on behalf of the class, ANTONIO SAMUEL, individually and on behalf of the class, ANGELETTE WATERS, individually and on behalf of the class, VINCENT HALL, individually and on behalf of the class, Plaintiffs-Appellees,
v.
NEXTEL COMMUNICATIONS INC., a Delaware Corporation, Defendant-Cross Claimant-Cross Defendant-Appellant, LEEDS, MORELLI & BROWN PC, LENARD LEEDS, STEVEN A. MORELLI, JEFFREY K. BROWN, JAMES VAGNINI, FEDERIC DAVID OSTROVE, BRYAN MAZOLLA, JOHN DOE, 1-10, a fictitious designation for presently unknown Defendants, SUSAN FITZGERALD, JANE DOE, 1-10, a fictitious designation for presently unknown Defendants, Defendants-Cross Claimants-Cross Defendants

Argued December 9, 2014

Page 129

[Copyrighted Material Omitted]

Page 130

The law firm of Leeds, Morelli & Brown PC, representing 587 plaintiffs with discrimination claims against their employer, defendant-appellant Nextel Communications, Inc., agreed with Nextel to set up a dispute resolution process whereby all of the plaintiffs' claims against Nextel would be resolved without litigation. After most of the cases were settled through the dispute resolution process, a group of Nextel employees brought suit on behalf of the entire class of the firm's Nextel clients against both the law firm and Nextel, alleging, inter alia, breach of fiduciary duty, legal malpractice, and breach of contract. A prior panel of this Court vacated a decision dismissing the case, and the district court (George B. Daniels, Judge) subsequently certified a class pursuant to Federal Rule of Civil Procedure 23(b)(3). In granting plaintiffs' motion for class certification, the district court applied New York law to all of the class members' claims, even though the class members hailed from twenty-seven different states, and held that common issues predominated over any individual issues, even though prior litigation in state court indicated that for class members from Colorado, individual waivers of the law firm's conflict of interest could have vitiated defendants' liability. We conclude that the district court erred in its choice-of-law analysis, and that a proper analysis makes clear that the individual issues in this case will overwhelm common issues. Plaintiffs therefore fail to meet the criteria for a class action under Rule 23(b)(3) .

VACATED and REMANDED.

JENNIFER F. CONNOLLY (Steve W. Berman and Kenneth S. Thyne on the brief), Hagens Berman Sobol Shapiro, LLP, Washington, D.C., for Plaintiffs-Appellees.

MARK D. HARRIS (Lawrence R. Sandack and John E. Roberts on the brief), Proskauer Rose LLP, New York, NY, for Nextel Communications, Inc.

Before: WESLEY, HALL, and LYNCH, Circuit Judges.

OPINION

Page 131

GERARD E. LYNCH, Circuit Judge.

This case arises from a novel approach to aggregate litigation that continues to provoke debate among experts in legal ethics.[1] The law firm of Leeds, Morelli & Brown PC (" LMB" or " the firm" ), representing 587 employees with discrimination claims against their employer, Nextel Communications, Inc. (" Nextel" ), agreed with Nextel to set up a dispute resolution process whereby the employees' claims would be resolved with Nextel without litigation. After most of the cases were settled through the dispute resolution process, a group of Nextel employees brought this suit, putatively on behalf of a class comprising all of the Nextel employees

Page 132

represented by LMB, against both LMB and Nextel, alleging, inter alia, breach of fiduciary duty, legal malpractice, and breach of contract. In an earlier appeal, we vacated a decision dismissing the complaint and remanded the case. Johnson v. Nextel Communs., ...


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