Around the Blogosphere – Judge in Circuit City Bankruptcy Denies Class Treatment of Proofs of Claim, Questions Whether Proofs of Claim Can Ever Be Filed on Account of Class of Creditors

We at the CAFA Law Blog have an interest in class actions in the bankruptcy courts and the wide variation on what the bankruptcy judges themselves think about their power to certify classes in and beyond their courts. Those of you who follow the issue know that different judges are all over the roadmap – from “I can certify anything anywhere” to “I can certify anything in my district” to “I don’t think I can certify a class, period.” Here’s an update on the Circuit City bankruptcy in which Eastern District of Virginia Bankruptcy Judge Kevin R. Huennekens observes "[c]onsiderable question persists as to whether class claims are ever permissible in bankruptcy . . .” and declines to answer the question. Take a look at the post, courtesy of the Corporate Restructuring & Bankruptcy Blog.

Judge in Circuit City Bankruptcy Denies Class Treatment of Proofs of Claim, Questions Whether Proofs of Claim Can Ever Be Filed on Account of Class of Creditors

Last week, Judge Kevin R. Huennekens of the United States Bankruptcy Court of the Eastern District of Virginia entered an opinion refusing to apply Bankruptcy Rule 7023 to proofs of claim asserting claims against Circuit City Stores, Inc. and its affiliates on behalf of alleged classes of former employees. The four class action complaints, all filed in California state courts between 2002 and 2009, seek (1) "damages for conversion and for violations of the California Labor Code and Business and Professions Code" approaching $150 million and (2) injunctive relief against Circuit City on account of the alleged labor violations." A class has not been certified in any of the suits. Nonetheless, the proofs of claim filed by the named plaintiffs in the four suits seek to assert claims on account of the entire class of potential plaintiffs, including unnamed plaintiffs. As such, the named class claimants sought application of Bankruptcy Rule 7023, which provides for the application of Federal Rule of Civil Procedure 23 (which sets forth the requirements for filing a class action lawsuit in federal court), to the claims filing and objection process as it relates to their proofs of claim. [Here’s the rest of the post.]