Johnson v. Nextel Communications, Inc.
2013 U.S. Dist. LEXIS 141445
S.D.N.Y.2013Background
- DRSA negotiated in 2000 between LMB and Nextel to govern a DRP resolving 587 employment-discrimination claims against Nextel.
- DRSA included $5.5 million in attorney fees to LMB and a $2 million consulting fee for two years, with a 45-week target to resolve all claims; failure risk reduced fees.
- LMB disclosed conflicts of interest to clients via waivers, but the Second Circuit held such conflicts were not consentable.
- Two related state actions—Foster v. Leeds, Morelli & Brown and McNeil v. Leeds Morelli & Brown—settled and/or adjudicated similar issues; Foster settled for $1.2 million with many opt-outs.
- Plaintiffs seek certification of a liability class against Nextel for common issues related to the DRSA, and a subclass against LMB; court granted class liability against Nextel and denied subclass against LMB.
- Court applied New Jersey choice-of-law rules, found New York law predominates for common issues, and held certain predominance and manageability principles satisfied for liability issues against Nextel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether common issues against Nextel can be certified under Rule 23(c)(4). | Johnson seeks liability issues applicable to all class members due to DRSA conduct. | Nextel contends variations in state laws and defenses defeat predominance. | Yes; common liability issues certified against Nextel. |
| Whether the proposed LMB subclass is permissible. | Subclass of Foster opt-outs seeks certification on subset of issues. | Subclass reopens settled issues and is duplicative of Foster; not allowed. | Denied. |
| Whether the class is ascertainable and numerosity is satisfied. | 587 identified individuals render ascertainability and numerosity met. | Challenges to ascertainability due to opt-outs and prior settlements. | Ascertainability and numerosity satisfied. |
| Whether commonality, typicality, and adequacy requirements are met for Nextel class. | All class members were affected by the DRSA; typicality and adequacy satisfied; commonality present. | Questions exist about individual defenses and variations in state law. | All three requirements met for Nextel class. |
| What choice-of-law governs the common issues and does it defeat predominance. | New York law applies to DRSA issues under New Jersey conflicts analysis; limited conflicts, no material defeats. | State-law variations could prevent unified proof. | New York law applies to common issues; predominance preserved. |
Key Cases Cited
- Ansoumana v. Gristede’s Operating Corp., 201 F.R.D. 81 (S.D.N.Y.2001) (opt-out must preserve individual claims; class claims cannot be resurrected)
- Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (U.S. 1974) (due process requires notice and opt-out options from class action)
- Johnson v. Nextel Commc’ns, Inc., 660 F.3d 131 (2d Cir.2011) (conflicts of interest and consentability under fiduciary duty context (Second Circuit))
- In re Nassau Cnty. Strip Search Cases, 461 F.3d 219 (2d Cir.2006) (certification of liability for common issues under 23(c)(4))
- Duane Reade, Inc. v. Gliedman, 293 F.R.D. 578 (S.D.N.Y.2013) (Duane Reade II; certification of liability class under 23(c)(4) after predominance analysis)