The Sixth Circuit yesterday handed down two class action decisions of interest, one involving dismissal of a complaint (Dudenhoefer v. Fifth Third Bancorp) and the other concerning certification issues (Young v. Nationwide Mutual Ins. Co.). Judge Stranch authored both opinions.
Dudenhoefer arises against the Sixth Circuit’s recent backdrop of insisting on detail in complaints in line with Twombly/Iqbal (as we’ve previously reported). The plaintiffs alleged that they were participants of an ERISA plan that invested in Fifth Third stock, and they sued after a decline in that stock. The district court had dismissed the case at the pleading stage, but the Sixth Circuit reversed in light of intervening Sixth Circuit precedent clarifying that prior Circuit authority regarding certain diversification presumptions did not apply at the pleading stage. (This result appears to conflict with some authority from other circuits, as the Court acknowledged). Measured against the governing pleading standards, the Court found that the complaint stated a claim. It also addressed a question not previously considered at the circuit level – whether the express incorporation of SEC filings into an ERISA mandated SPD is a fiduciary communication. Siding with a number of district court decisions from within the Circuit, the Court held that it did.
Young involves a series of cases brought by insureds against insurance companies operating in Kentucky, alleging that the insurance companies passed along certain taxes to the insureds that allegedly were not owed or the tax amount was less that the amount charged. The district court ultimately certified a class by subdividing plaintiffs into ten subclasses and severing those cases. The Court began its certification analysis by citing its recent decision in Whirlpool (that we reported on here) as well as the Supreme Court’s Wal-Mart decision. It then rejected a number of arguments advanced by defendants, including the need for individualized inquiry. The Court also approved the definition of the class even though it included both individuals entitled to relief and those who are not. Applying the deferential abuse of discretion standard, the Court upheld the district court’s certification order.