Thorogood Tried 1 Bourbon, 1 Scotch, 1 Beer, and Got Slammed

Thorogood v. Sears, Roebuck and Co., No. 10-2407, 2010 WL 4286367 (7th Cir. (Ill.) Nov. 02, 2010).

Wanna tell you a story,

About the house-man blues

This story of house-main blues is about a dryer instead of being able to pay the rent.

The plaintiff, Steven Thorogood (Editors’ Note: we have no idea if he is related to George, but wouldn’t that be cool?), a buyer, brought a class action against the defendant, a seller of dryers and all sorts of other stuff, alleging that the defendant deceptively advertised that its dryer had stainless steel drums whereas part of the drum was made of ceramic-coated mild steel in violation of the consumer laws of 28 states.

The plaintiff originally filed this suit in a state court but the defendant removed it to the federal district court under CAFA.

After the District Court certified the class, the Seventh Circuit decertified the class styling the case as “a notably weak candidate for class treatment.” Editors’ Note: See the CAFA Law Blog analysis of the Seventh Circuit’s opinion posted on April 1, 2010 when Judge Posner said to Thorogood:

You talk too much, you talk too much.I can’t believe the things that you say everyday.If you keep on talking, baby,You know you’re bound to drive me away.

Thus, the case left only the plaintiff’s individual claim under Tennessee’s consumer protection statute.

The defendant then made an offer of judgment inclusive of attorney’s fees. Accordingly, the district court dismissed the suit as moot because the defendant’s offer exceeded the amount in controversy (the “Thorogood’s suit”).

The plaintiff’s counsel subsequently filed a virtually identical class action suit on behalf of Martin Murray (whose name is not as cool as Thorogood’s name) against the defendant in the district court in California (the “Murray’s suit”).

The defendant then filed a motion under the All Writs Act, seeking to enjoin the Murray’s suit. Because Thorogood’s class was decertified, the defendant argued that, the plaintiff’s counsel, by filing a nearly identical suit, had defied that judgment.

The district court denied the defendant’s motion and ruled that the defendant could obtain adequate relief against being harassed by repetitive litigation by pleading collateral estoppel in Murray’s suit.

Thus, the defendant pleaded collateral estoppel in Murray’s suit because the Murray claims were identical to Thorogood’s suit as they challenged the same advertising for the same models of clothes dryer.

Move it on overRock it on overMove over nice dogA big fat dog is movin’ in

The Murray Court accordingly ruled that Murray was collaterally estopped to bring the suit as a class action.

Murray, however, amended the complaint to allege additional facts in an effort to show that he had a different case. Specifically, the amendment alleged that the defendant advertised that “Durable Drum eliminates rusting and chipping for long lasting performance” and “Keeps your clothes looking great: an exclusive, all stainless steel drum provides lasting durability”. On the basis of the amendment, the Murray Court reversed its earlier ruling, rejected the defendant’s defense of collateral estoppel and allowed discovery to proceed.

Who do you love?Who do you love?

Thus, the defendant appealed from the district court’s ruling in Thorogood which denied its motion pursuant to All Writs Act to enjoin a virtually identical class action suit, and the Seventh Circuit reversed the District Court’s order.

She threw me out just as pretty as she pleasedPretty soon I’ve been scratchin’ fleas

The Seventh Circuit found that there was nothing new in Murray’s complaint that could allow an escape from the bar of collateral estoppel. The Seventh Circuit noted that because the case involved class action litigation, the specific tactics employed by the plaintiff’s counsel included something close to settlement extortion. The Seventh Circuit observed that the defendant, wanting to minimize the sum of the damages it would pay the class and the fees it would pay the class counsel, was willing to trade small damages for high attorneys’ fees and thus was under great pressure to settle even if the merits of the case were slight.

The Seventh Circuit noted that Murray’s suit was a duplicate of Thorogood’s suit, with just enough differences to confuse the Murray Court about the defendant’s defense of collateral estoppel and if the refusal to enjoin Murray’s suit was permitted, there was nothing standing in the way of the plaintiff’s counsel filing carbon-copy class actions against the defendant in other states as well.

The Seventh Circuit found that the harm caused to the defendant by rejecting the injunction was irreparable and its remedy at law against settlement extortion nonexistent because the order rejecting the defense of collateral estoppel and letting discovery proceed was an unappealable interlocutory order.

The Seventh Circuit further opined that the defendant’s action under the All Writs Act was its only means of avoiding being drowned in the discovery bog. The Seventh Circuit thus held that the defendant was entitled to an injunction, wherein the defendant sought to enjoin all members of the class that was decertified pursuant to Thorogood’s suit plus their lawyers.

The Seventh Circuit, however, found that the defendant’s proposed injunction suffered from defects both of under- and of overinclusion. The Seventh Circuit noted that an injunction against class action suits based on the same allegations as Thorogood’s suit would not bar Murray’s suit because Murray’s suit had additional allegations.

The Seventh Circuit also noted that, (i) Thorogood’s class consisted of hundreds of thousands of persons scattered across the country, and there was no feasible means of notifying them of the injunction, (ii) no one could be enjoined from filing an individual suit as distinct from a class action suit on the basis of a finding relating only to class certification, and (iii) there was an additional defendant in Murray’s suit—the manufacturer of the defendant’s dryer who was not a party to the proceeding under the All Writs Act or to the instant appeal and was therefore entitled to no relief.

Therefore, the Seventh Circuit held that the injunction should reflect these findings and it should be clear in the ruling of injunction that the earlier class decertification ruling based on the absence of issues common to all the class members did not preclude the class members from filing individual suits. The Seventh Circuit also pointed that the injunction should state that no unnamed class member could be punished for contempt until and unless a copy of the injunction was served on the members and the injunction should be made applicable to further copycat suits in state as well as in federal courts.