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1.7.8.3 Some Risks of Omitting Claims

“Claim splitting” refers to the general requirement that all claims for relief arising from a single transaction or occurrence must be brought in one action.151 The general rule is that a subsequent suit, arising from the same transaction or events underlying a previous suit, would be barred under the doctrine of res judicata.152 However, a class action “is one of the recognized exceptions to the rule against claim-splitting.”153 For a discussion of res judicata and collateral estoppel effects of class actions, see Chapter 18, infra.

Defendants sometimes argue that failure to bring all possible claims demonstrates inadequate representation and is therefore a barrier to class certification. This argument generally should not succeed. For a discussion of this issue, see § 10.3.4.3, infra.

Practitioners in California should also be cautious of the impact of the decision in Janik v. Rudy, Exelrod & Zieff.154 That case involved a legal malpractice claim against a law firm alleging that the attorneys mishandled a prior class action for overtime compensation. The plaintiff claimed that bringing the overtime compensation case under the state Labor Code and not under the California Unfair Competition Law limited the recovery to the Labor Code’s three-year statute of limitation as opposed to the broader class that could have been certified under the Unfair Competition Law’s four-year statute of limitation. The appellate court rule that, “while the scope of the duty of class counsel must be determined with reference to the certification order … , the attorneys’ obligations may extend beyond the claims as certified to related claims arising out of the same facts that class members reasonably would expect to be asserted in conjunction with the certified claims.”155

The class counsel defendants in Janik, supported by numerous amici, sought a rehearing of the Court of Appeal’s decision and/or further appellate review by the California Supreme Court. Arguments raised included that the Janik rationale would undermine the vital public policies served by class actions by creating inevitable conflicts in the duties owed by class counsel to the class as a whole and to some absent class members; that the decision fails to provide adequate guidance for the discharge of class counsel’s duty because neither lawyers nor courts are furnished with any clear or workable standard of care; and that it would have a chilling effect on public interest class action litigation in the state. Rehearing and further appellate review were denied.

It is still unclear what the impact of the Janik decision will be on class action practice in California.156 As of this writing, only one reported case outside of California has cited it favorably, and only for the general point that attorneys have an obligation to perform research to identify relevant legal issues when providing advice to a client.157

Footnotes

  • 151 {143} Carr v. Tillery, 591 F.3d. 909 (7th Cir. 2010).

  • 152 {144} See Restatement (Second) of Judgments §§ 18–19, 24 (1982).

  • 153 {145} 18 James Wm. Moore et al., Moore’s Federal Practice ¶ 131.40(3)(e)(iii) (2002) (citing Restatement (Second) of Judgments § 26(1)(c) (1982)).

  • 154 {146} Janik v. Rudy, Exelrod & Zieff, 14 Cal. Rptr. 3d 751 (Cal. Ct. App. 2004). See generally The Pre-Employment Ethical Role of Lawyers: Are Lawyers Really Fiduciaries?, 49 Wm. & Mary L. Rev. 569, 641 n.131 (2007).

  • 155 {147} Janik v. Rudy, Exelrod & Zieff, 14 Cal. Rptr. 3d 751, 753 (Cal. Ct. App. 2004).

  • 156 {148} In Martorana v. Marlin & Saltzman, 96 Cal. Rptr. 3d 172, 180 (Cal. Ct. App. 2009), the California Court of Appeals acknowledged the unique circumstances presented in Janik and restated the general rule that a plaintiff is collaterally estopped from bringing a separate malpractice suit against former class counsel when the plaintiff had the opportunity to object to the settlement and to challenge counsel’s representation prior to the court’s approval of the settlement.

  • 157 {149} Clary v. Lite Machines Corp., 850 N.E.2d 423, 432 (Ind. Ct. App. 2006).