Bobbitt v. Milberg LLP

• Decision Date: 18 May 2021
• Docket Number: No. CV-09-00629-TUC-RCC,CV-09-00629-TUC-RCC
• Parties: Philip Bobbitt, et al., Plaintiffs, v. Milberg LLP, et al., Respondents.
• Court: U.S. District Court — District of Arizona

Philip Bobbitt, et al., Plaintiffs, v. Milberg LLP, et al., Respondents.

No. CV-09-00629-TUC-RCC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

May 18, 2021

ORDER

Pending before the Court are Plaintiff Philip Bobbitt's Motion for Reconsideration of, or, in the Alternative, Vacating of Order Denying Motion for Class Certification and Appointment of Class Counsel (Doc. 327) and Intervenor Lance Laber's Reiterated Motion to Intervene or, in the Alternative, Motion for Leave to Amend Complaint (Doc. 329). For the reasons stated herein, the Court grants Bobbitt's motion in part (Doc. 327), vacates the order denying class certification (Doc. 229), and grants Bobbitt's Motion for Class Certification and Appointment of Counsel (Doc. 186). Furthermore, the Court grants Lance Laber's motion to intervene (Doc. 329), and grants leave to file a fifth amended complaint adding Laber as a party.¹

I. Factual and Procedural History

This class action is based on underlying litigation in Drnek v. Variable Annuity Life Ins., No. CV-010242-TUC-WDB (D. Ariz. May 25, 2001), wherein two investors sued the Variable Annuity Life Insurance Company ("VALIC") on behalf of a class of similarly situated individuals, alleging that VALIC sold them tax sheltered annuities without warning them the investments were already in tax-sheltered accounts. These annuities made money for VALIC, but the investors paid more for the annuities and incurred unnecessary fees. District Judge William D. Browning certified the class without conducting the analysis required by Federal Rule of Civil Procedure 23. When the plaintiffs' attorneys missed the deadline for disclosing expert witnesses, the district court precluded the experts. In August 2005, the district court decertified the class and dismissed the class-action claims because the plaintiffs had no expert witnesses to testify about class-wide causation or damages. Plaintiffs' attorneys did not notify the putative plaintiffs of their failure to meet the deadlines or inform them of the decertification and dismissal order.

In 2009, Plaintiffs Philip Bobbitt and John Sampson brought the instant class action suit for negligence and breach of fiduciary duty against the Drnek litigation attorneys: Milberg LLP, Melvyn Weiss,² Michael Spencer, Janine Pollack, Lee Weiss, and Brian Kerr; Uitz & Associates and Ronald Uitz; the Lustigman Firm, Sheldon and Andrew Lustigman (collectively "Milberg" or "Defendants").³ Early in the litigation, Plaintiffs asked the district court to certify the same class of individuals that had previously been certified in the Drnek litigation. Applying the Restatement (Second) of Conflict of Laws, District Judge Frank R. Zapata found that class litigation would be unmanageable because the district court would need to apply the law of every state in which a putative plaintiff was domiciled. Bobbitt v. Milberg, LLP, 285 F.R.D. 424 (D. Ariz. 2012). Judge Zapata thus denied certification. Id.

Plaintiffs Bobbitt and Sampson then filed a motion to dismiss the suit with prejudice, stating that the denial of certification made litigation economically impractical.⁴ However, they noted that putative plaintiff Lance Laber would be seeking intervention for the purpose of appealing Judge Zapata's denial of class certification. Judge Zapata granted both the motion to dismiss and Laber's subsequently filed motion to intervene. Following his joinder in this lawsuit, Laber appealed.

On appeal, the Ninth Circuit held that the district court had misapplied the Restatement, in that it is Arizona law that governs the claims of all putative plaintiffs, not the law of each state in which a putative plaintiff is domiciled. Bobbitt v. Milberg LLP, 801 F.3d 1066, 1072 (9th Cir. 2015). So, the Ninth Circuit vacated the district court's order denying certification and remanded, indicating that it had no opinion as to whether class certification was ultimately appropriate. Id. at 1072 n.5. A week after Judge Zapata reopened the case upon remand, Laber filed a second motion to intervene to serve as class representative.

Before Laber's motion could be decided, Milberg filed a petition for a writ of certiorari in the Supreme Court, arguing the Ninth Circuit did not have jurisdiction over Laber's appeal. The Supreme Court stayed the case while it considered a similar issue in Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017). In Baker, the Supreme Court ruled that federal appellate courts lack jurisdiction to review an order denying class certification when the named plaintiffs voluntarily dismiss their claims with prejudice to obtain a final judgment. Id. at 1750-51. In light of Baker, the Supreme Court remanded this case back to the Ninth Circuit, and the Ninth Circuit dismissed its class certification decision for lack of jurisdiction.

Upon remand, Judge Zapata entered a judgment of dismissal. Thereafter, Bobbitt filed a motion to alter or amend the judgment under Fed. R. Civ. P. 60(b), arguing the court was required to follow the Ninth Circuit's now-vacated remand order addressing thechoice-of-law issue. The district court denied the motion ("Rule 60(b) Order"), concluding it did not have to change its class certification denial because the Ninth Circuit ultimately admitted it did not have jurisdiction to overturn that decision. The district court also concluded it did not need to alter the judgment and reopen the case because Bobbitt had voluntarily dismissed his claims, and the policy favoring finality of judgments weighed against the request for relief. Bobbitt and Laber appealed.

The Ninth Circuit reversed the Rule 60(b) Order and remanded, holding that the district court had not evaluated the appropriate factors for a Rule 60(b)(6) motion. As part of the remand, the Ninth Circuit ordered the district court to grant the Rule 60(b)(6) motion, vacate the two judgments denying relief and dismissing the case, permit Bobbitt to seek reconsideration of the order denying class certification, and allow Laber to file another motion to intervene. The Ninth Circuit clarified that the district court could reconsider the issue of what law of the case applied.

Upon remand, Judge Zapata reopened this case, vacated the judgments pertaining to Bobbitt's voluntary dismissal, and ordered Bobbitt to file a fourth amended complaint. Bobbitt filed (1) the amended complaint, and (2) a motion for reconsideration of the order denying motion for class certification, or, in the alternative, a motion to vacate the class certification denial and to appoint class counsel. Simultanously, Laber filed a second motion to intervene or, in the alternative, motion for leave to amend complaint. Defendants were advised that they did not have to answer the fourth amended complaint until these pending motions are resolved. The Court now addresses the motions.

II. Motion for Reconsideration or Motion to Vacate Class Certification Decision

a. Timeliness

Milberg argues that the second Motion for Reconsideration of Class Certification is untimely because it was filed two months after Judge Zapata vacated the judgments of dismissal and reopened the case. Moreover, Milberg argues Bobbitt should have filed a renewed motion for class certification, rather than a motion for reconsideration.

Bobbitt's motion is not timely under Local Rule of Civil Procedure 7.2(g), because it was filed more than 14 days after the original order (filed in September 2012), the NinthCircuit's decision (filed on April 14, 2020), and Judge Zapata's order vacating the judgments (filed on April 22, 2020). Regardless, the Court construes the motion as a timely Rule 60(b) motion for relief from an order. This rule permits the Court to "relieve a party . . . from a final judgment, order, or proceeding" that is "based on an earlier judgment that has been reversed or vacated," or where "applying it prospectively is no longer equitable." Fed. R. Civ. P. 60(b)(5). This sort of motion "must be made within a reasonable time" and "no more than a year after the entry" of the order at issue. Fed. R. Civ. P. 60(c)(1). "Irrespective of the grounds, in the end, [w]hether or not to grant reconsideration is committed to the sound discretion of the court." Teamsters Local 617 Pension & Welfare Funds v. Apollo Grp., Inc., 690 F. Supp. 2d 959, 962 (D. Ariz. 2010) (quoting In re Fowler, 394 F.3d 1208, 1214 (9th Cir. 2005)) (quotation marks omitted). The Court exercises its discretion pursuant to the foregoing authorities and finds the motion timely.

Milberg urges the Court to reassess the factors for class certification. Bobbitt argues that the Court should grant class certification for the reasons stated by the Ninth Circuit. However, the Ninth Circuit did not reach the issue whether certification is appropriate. Thus, the Court will grant Bobbitt's Motion for Reconsideration of the Class Certification Decision in part (Doc. 327), vacate the September 18, 2010 Order denying class certification (Doc. 229), and reconsider the Motion for Class Certification and Appointment of Class Counsel (Doc. 186).

III. Motion for Class Certification and Appointment of Class Counsel

a. Class Certification Standard

Federal Rule of Civil Procedure 23 provides:

(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interest of the class.

(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:

. . . .

(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available

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