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Creative Montessori Learning Ctrs. v. Ashford Gear LLC - 662 F.3d 913 (7th Cir. 2011)

Rule:

Misconduct by class counsel that creates a serious doubt that counsel will represent the class loyally requires denial of class certification.

Facts:

The Telephone Consumer Protection Act imposed statutory damages of $500 per fax on anyone who sends an unsolicited fax advertisement, which can be trebled if the court finds that the violation was willful or knowing. A class action was filed against defendant under the Telephone Consumer Protection Act. The district court issued certification of the class suit.

Issue:

Was the certification of a class suit proper?

Answer:

No.

Conclusion:

The court vacated the certification of the class and the case was remanded with directions that the district court, applying the Culver standard rather than the "egregious misconduct" standard, re-evaluate the gravity of class counsel's misconduct and its implications for the likelihood that class counsel would adequately represent the class. It noted that certification as a class action could coerce a defendant into settling on highly disadvantageous terms, regardless of the merits of the suit, and in this case was highly likely to because of the magnitude of the potential damages. The court determined that class counsel had demonstrated a lack of integrity that casted serious doubt on their trustworthiness as representatives of the class; class counsel had obtained material from a fax broadcaster's files on the basis of a promise of confidentiality that concealed the purpose of obtaining the material (a purpose inconsistent with maintaining confidentiality and likely to destroy the broadcaster's business), and had implied in the letter to one of the plaintiffs that there already was a certified class to which the plaintiff belonged. There was no basis for confidence that class counsel would prosecute the case in the interest of the class, of which they were the fiduciaries, rather than just in their interest as lawyers who if successful would obtain a share of any judgment or settlement as compensation for their efforts. The certification of the class was vacated and the case was remanded with directions that the district court, applying the Culver standard rather than the "egregious misconduct" standard, re-evaluate the gravity of class counsel's misconduct and its implications for the likelihood that class counsel would adequately represent the class.

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