Litigation

Issues: Class action lawsuits; Procedures for certifying a class action; MCR 3.501(B); Hill v. City of Warren; "Plaintiff"; MCR 2.201(A) & (B); Statutory construction; Badeen v. PAR, Inc.; Henry v. Dow Chem. Co.; Different meanings of "the" and "a"; Robinson v. City of Lansing; Barrow v. Detroit Election Comm'n; Duties of unnamed class members; Cowles v. Bank W.; Exceptions that can bind a non-party; Smith v. Bayer Corp.; Taylor v. Sturgell; Alternative grounds for affirmance; Middlebrooks v. Wayne Cnty.

Court: Michigan Court of Appeals (Published)

Case Name: Hanton v. Hantz Fin. Servs. Inc.

e-Journal Number: 58157

Judge(s): Fort Hood, Hoekstra, and Wilder

 

Holding that the trial court erred in denying the plaintiff-trustee's motion for class certification, striking class allegations from her amended complaint, and allowing her action to proceed only as an individual action, the court reversed and remanded. She sued the defendants-financial service providers to recover investment losses arising from their sale of promissory notes issued by two companies that she claimed were engaged in a Ponzi scheme. Meanwhile, she discovered that another action arising out of the same occurrence had been filed in another circuit court, which was ultimately dismissed. Plaintiff later filed a motion for class certification, and the judge transferred the case to the other circuit court, where the case was assigned to the same judge who dismissed the other action. On appeal, the court agreed with plaintiff that the trial court erroneously determined that her class action was barred because the other plaintiff failed to comply with MCR 3.501(B)(1)(a), or because of any order entered in that case. First, it held that "the plain language of MCR 3.501 does not support a holding that" the other plaintiff's failure to comply with MCR 3.501(B)(1) should apply to plaintiff, "who was an unnamed putative class member" in the other case. It noted that, as applied to the other case, MCR 3.501(B) applied to the other plaintiff, "who was the named plaintiff who commenced the civil action. We do not agree that that the plain language of MCR 3.501(B) applies to all unnamed putative class members, such as plaintiff." Second, it rejected any assertion that the other plaintiff "was acting as a class representative at the time he commenced the action." It noted that "the requirements for class certification had not been established or considered. Therefore, the class did not exist, and unnamed class members had no duty or obligation in relation to the suit." Third, the court held that additional provisions in the court rule lend further support to its interpretation that unnamed putative class members were not bound by the other case, and that the U.S. Supreme Court's discussion in Smith supported its holding "that plaintiff, as an unnamed putative class member in" the other case "is not bound by orders and decisions from" that case. Finally, the court rejected defendants' remaining arguments. It found that plaintiff retaining the same attorney from the other case to file her class action was not dispositive, that the purpose of MCR 3.501(B) is not "rendered meaningless by allowing more than one complaint" containing similar class allegations, that plaintiff could not have intervened in the other case, and that the merits of plaintiff's claim for class action certification were not properly before it.

 

Full Text Opinion

This summary also appears under Constitutional Law

 

Issues: "Personal jurisdiction" in a diversity case; U.S. Const. amend. XIV; CompuServe, Inc. v. Patterson; International Shoe Co. v. Washington; Michigan's "long-arm statute"; MCL 600.715; Oberlies v. Searchmont Resort, Inc.; Neogen Corp. v. Neo Gen Screening, Inc.; Theunissen v. Matthews; Southern Mach. Co. v. Mohasco Indus., Inc.; "Purposeful availment"; Fortis Corporate Ins. v. Viken Ship Mgmt.; Whether the cause of action arose from defendant-Wataniya's activities in Michigan; Burger King Corp. v. Rudzewicz; Dean v. Motel 6 Operating L.P.; O'Connor v. Sandy Lane Hotel Co., Ltd. (3rd Cir.); Nowak v. Tak How Invs., Ltd. (1st Cir.); Calphalon Corp. v. Rowlette; Whether exercising jurisdiction was "unreasonable"; Asahi Metal Indus. Co. v. Superior Court of CA

Court: U.S. Court of Appeals Sixth Circuit

Case Name: Beydoun v. Wataniya Rests. Holding, Q.S.C.

e-Journal Number: 58154

Judge(s): Griffin, Cook, and Rice

 

[This appeal was from the ED-MI.] Because the plaintiffs failed to establish that their alleged causes of action arising from the plaintiff-former CEO's employment with defendant-Wataniya Restaurants Holding proximately resulted from the defendants' contacts with Michigan, the district court correctly ruled that it lacked personal jurisdiction over each defendant in this case. "Michigan's long-arm statute is satisfied as to Wataniya. Michigan's long-arm statute is not satisfied, however, as to the remaining non-Wataniya defendants, none of whom had any contact with Michigan whatsoever." It was "plaintiffs' burden to establish personal jurisdiction as to each defendant." Even though Michigan's long-arm statute authorized personal jurisdiction over Wataniya, "'a court in Michigan cannot exercise its personal jurisdiction in violation of [Wataniya's] constitutional right to due process.'" The court applied the three-prong minimum-contacts analysis in Southern Machine, and concluded that it was "not clear" whether Wataniya's Michigan contacts were "sufficient to satisfy the 'purposeful availment' requirement . . . ." However, assuming that plaintiffs satisfied this prong, they "failed to satisfy the other two prongs." They did not show that the cause of action "arose from" Wataniya's activities in Michigan because they failed to establish "a causal nexus between the defendant's contacts with the forum state and the plaintiff's alleged cause of action." Plaintiffs' alleged causes of action "all occurred in Qatar, years after Wataniya recruited Beydoun in Michigan. Plaintiffs do not argue that Wataniya's financial collapse - which led to the dispute in Qatar that caused Wataniya to detain Beydoun - was the result of any of Beydoun's business trips to Michigan or his equipment purchases in Michigan, each of which was done on Wataniya's behalf." As for the "third prong of the Southern Machine test, the district court correctly ruled that it would be unreasonable to exercise jurisdiction over Wataniya." All of "'the relevant underlying events occurred in Qatar,' Wataniya is a Qatari corporation, and 'most of the discovery will necessarily involve the exhaustive production of Qatari legal papers and deposing Qatari legal experts.'" Further, plaintiffs made "no argument whatsoever that in this particular case Michigan has an interest in exercising its jurisdiction." Thus, the court concluded that "it would be unreasonable to find personal jurisdiction in Michigan." Affirmed.

 

Full Text Opinion
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