936 N.W.2d 552
N.D.2019Background
- In 2003 the Palmers installed Gentek "Driftwood" steel siding covered by a lifetime limited warranty; paint began peeling in 2011 and they submitted a warranty claim in January 2012.
- Thousands of similar claims prompted a federal class action (Eliason) resulting in a 2013 final order approving a class settlement that broadly released warranty claims and stated due process/notice requirements were satisfied.
- The Palmers did not receive individual notice and filed a separate state-court action in North Dakota in October 2014 alleging breach of warranty and seeking damages, costs, and attorney fees under the Magnuson-Moss Warranty Act.
- The district court denied Gentek’s summary judgment defense that Eliason precluded the Palmers, granted partial summary judgment to the Palmers on liability, and after a jury awarded $10,791 (plus interest) the court awarded $80,379 in attorney fees and taxed certain costs.
- On appeal the North Dakota Supreme Court adopted a limited-collateral-review standard for foreign class judgments, held the Eliason safeguards were in place but were not applied to the Palmers (individual notice conceded not provided), affirmed the damages award, but reversed and remanded the attorney-fee and costs awards for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Palmers are bound by the Eliason class settlement (preclusion/personal jurisdiction) | Palmers: not bound because they did not receive constitutionally required individual notice and thus Eliason lacked jurisdiction over them | Gentek: Palmers are class members; Eliason provided adequate notice and precludes their suit | Court: Adopted limited collateral review; Eliason had safeguards, but those safeguards were not applied to the Palmers (individual notice not provided), so Palmers are not bound |
| Proper scope of collateral review of foreign class-action judgments | Palmers: may challenge adequacy of notice as to them | Gentek: court should defer to Eliason findings; limited review only | Court: Adopts "limited review" — ask (1) were safeguards in place, and (2) were they applied; do not re-litigate merits |
| Whether the district court properly awarded attorney fees under Magnuson-Moss and in what amount | Palmers: prevailed and are entitled to fees; attorneys’ billing reasonable | Gentek: Magnuson-Moss may allow fees but award is excessive; lower court failed to compute lodestar and address duplicative/unnecessary hours | Court: Magnuson-Moss permits fees, but district court abused discretion by not calculating a presumptively correct lodestar and failing to exclude excessive/duplicative hours; reverse and remand for recalculation |
| Whether taxation of costs/disbursements (including expert fees) was properly resolved | Palmers: costs are taxable | Gentek: objected, sought hearing and argued expert fees were unreasonable/unnecessary | Court: Reversed and remanded for the district court to address Gentek’s objection (Rule 54(e)(2)) and explain reasonableness of taxed costs |
Key Cases Cited
- Shutts v. Phillips Petroleum Co., 472 U.S. 797 (U.S. 1985) (due process requires notice, opportunity to be heard, and opt-out for Rule 23(b)(3) absent class members)
- Kremer v. Chemical Construction Corp., 456 U.S. 461 (U.S. 1982) (state courts need not give preclusive effect to constitutionally infirm judgments)
- Hansberry v. Lee, 311 U.S. 32 (U.S. 1940) (limitations on binding absent class members where due process not afforded)
- Fode v. Capital RV Ctr., Inc., 575 N.W.2d 682 (N.D. 1998) (North Dakota standard for awarding attorney fees under federal fee-shifting statutes; lodestar methodology)
- Duchscherer v. W.W. Wallwork, Inc., 534 N.W.2d 13 (N.D. 1995) (trial court discretion on fees; must exclude excessive, redundant, or unnecessary hours)
- Lamarque v. Fairbanks Capital Corp., 927 A.2d 753 (R.I. 2007) (discussion of collateral attack on class-action judgments and review approaches)
- Gooch v. Life Investors Ins. Co., 672 F.3d 402 (6th Cir. 2012) (illustrates courts’ differing approaches to scope of collateral review)