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Class Actions in a State of Undress

Published on: April 4, 2013

Almost no litigation grabs attention and headlines more than a high-profile class action. The Louisiana Supreme Court's recent class action ruling was no exception in a case involving salacious conduct and a violation of privacy.

The plaintiff in Jane Doe v. Southern Gyms, LLC, 2012-1566 (La. 3/19/13) was an unnamed victim of a "peeping tom." She contended that an employee of a popular gym placed a pen camera in the women's bathroom where he would tape unsuspecting women in various states of undress. The pen camera could hold only 1-2 hours of film. The perpetrator testified that, after viewing, he would immediately delete the footage. The images of only four women were seen on the footage when it was discovered. After the employee was arrested, one of the victims filed the class action lawsuit. At issue before the Louisiana Supreme Court was whether the class action was properly certified by the Trial Court.

Class action is a nontraditional litigation procedure that was introduced into Louisiana civil procedure in 1961. Louisiana class action procedure is modeled after the original federal rule and has been extensively revised since its inception. Louisiana Code of Civil Procedure Article 591 provides the elements that must be met before a class action can be certified. Failure to meet one of the threshold requirements of Article 591 precludes class action treatment. Once of these threshold requirements is numerosity, i.e. a class of potential plaintiffs "so numerous that joinder of all members is impractical." La. C.C.P. art. 591(a)(1). The requirement of numerosity was at issue in Jane Doe.

In its analysis, the Supreme Court stressed that courts must perform a rigorous analysis to determine whether the proposed class action meets the requirements of Article 591. Simply pleading a class action is insufficient. Instead, the plaintiff "must be prepared to prove in fact" that the Article 591 requirements are met. Id. at p. 9. To establish the "numerosity" requirement, the class representative cannot simply allege that several persons were affected by the defendant's bad acts. She must be able to offer some proof of a definable group of aggrieved persons so numerous that joinder is impractical.

In Jane Doe, the Supreme Court held that the plaintiff did not satisfy numerosity. The employee's testimony revealed that he may have recorded approximately 20 women. However, because the footage was deleted, most of the potential class members could not show that their privacy had been violated. Only nine women had positive knowledge that they were on video. According to the Jane Doe Court, nine class members did not meet the numerosity requirement and the class was decertified. While the Court did not reveal a "magic number" to meet numerosity, we now know it may be higher than nine.

There is an old adage that "bad facts make bad law." In Jane Doe, the Louisiana Supreme Court did not let the egregious nature of the conduct impact its view that the requirements of Article 591 must be met in every circumstance.

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To Err is Human, To Rescind-Declined

The Louisiana Supreme Court recently addressed the impact of contractual "errors" in Cynthia Fry Perionnet and Elizabeth Fry Franklin v. Matador Resources Company, 2012-2292, 2012-2377, -- So. 3d --.

The Perionnet case involved a dispute over the intent of a contract to extend a mineral lease. The property owners believed that the lease was extended as to only 168.95 acres of nonproducing land. The defendant/lessors argued that the contract contemplated that the lease would extend to the entire 1850.34 acres to include producing wells. Plaintiffs/property owners argued that their unilateral error regarding the terms of the contract was ground for rescission. The jury ruled in favor of the defendant/lessors. The Court of Appeal reversed. The Supreme Court granted writs.

The Perionnet Court began its opinion with an overview of basic tenets of contract law. The Louisiana Civil Code defines a contract as "an agreement by two or more parties whereby obligations are created, modified, or extinguished." La. C.C. art. 1906. Contracts are formed through offer and acceptance. La. C.C. art. 1927. Once formed, contracts have "the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law." La. C.C. art. 1983. One such "ground" under Louisiana law is "error." La. C.C. art. 1948.

The Louisiana Civil Code recognizes two forms of error: mutual error (both parties are mistaken) or unilateral error (only one party is mistaken). However, for either error to cause the dissolution of a contract, the error (1) must effect the cause of the obligation and (2) the other party must have known that the matter impacted by the error was the reason for the contract. La. C.C. art. 1949. In a case of mutual error, the court can reform the contract. Either partial or full rescission is the only remedy available for unilateral error. La. CC. art. 1952.

A party challenging a contract for unilateral error must also prove that the error was excusable. "Louisiana jurisprudence is sprinkled with cases which deny relief to the parties who claim an agreement should be invalidated because of unilateral error which is caused, in large part, by the complaining party's inexcusable ignorance, neglect or want of care." Id. p. 25.

The Perionnet Court found that the plaintiffs' alleged mistake was inexcusable. The defendants demonstrated that: 1) plaintiffs could show no excuse for failing to read and understand the contract; 2) plaintiffs' agents who negotiated and reviewed the contract were self-proclaimed experts in oil and gas; and 3) the original lease was on the plaintiffs' agent's own forms. The Court found a "sea of flags" in the written agreement that should have notified the experienced plaintiffs that the agreement extended to the entire property. Therefore, the Court found that the mistake was easily detectable and could have been rectified by a minimal amount of care, i.e. "by simply reading the document and/or requesting simple changes to the written offer before acceptance." Id. at 30.

The Supreme Court's Perionnet decision serves as a healthy reminder of a basic concept - read your contracts. Although to err may be human, it can affect your bottom line.

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Supreme Court Abrogates Louisiana’s “Professional Rescuer’s Doctrine”

Historically, Louisiana law provided that a professional rescuer injured in the performance of his or her duties “assumes the risk” of an injury and is not entitled to damages. See Worley v. Winston, 550 So.2d 694, 696 (La. App. 2 Cir.), writ denied, 551 So.2d 1342 (La. 1989). This is known as the Professional Rescuer’s Doctrine and applied as a defense to claims raised by firefighters, policeman, and others. The doctrine prevented recovery because the professional rescuer “assumed the risk” of injury. Recently, the Louisiana Supreme Court in Doe v. McKesson, 2021-00929 (La. 3/25/22) rejected the doctrine as a bar to suit by the professional rescuer.

In Doe, the Supreme Court of Louisiana accepted a certified question from the Fifth Circuit of the United States Court of Appeals as to the viability of the doctrine. In response, the Supreme Court held that the Professional Rescuer’s Doctrine has been abrogated in Louisiana both legislatively under La. C.C. art. 2323 and jurisprudentially in Murray v. Ramada Inns, Inc., 521 So.2d 1123, 1132 (La. 1988).

The Court cited La. C.C. art. 2323(A), which provides that the fault of “all persons […] shall be determined” in a civil action. Subsection (B) of the article provides this rule applies “to any claim for recovery of damages for injury, death, or loss asserted under any law or legal doctrine or theory of liability, regardless of the basis of liability.”

In Murray, the Supreme Court previously held that the doctrine of assumption of risk no longer had a place in Louisiana tort law following the adoption of comparative fault. Nevertheless, the Murray Court identified two exceptions:

Cases “where the plaintiff, by oral or written agreement, expressly waives or releases a future right to recover damages from the defendant,” if “no public policy concerns would invalidate such a waiver, the plaintiff's right to recover damages may be barred on a release theory;” and

“[I]n the sports spectator or amusement park cases (common law’s “implied primary” assumption of risk cases).”

Murray, 521 So.2d at 1134. (internal citations omitted).

The Doe court observed that Murray provided no exception relative to professional rescuers. The Court further observed that, while the legislature had enacted statutes that bar plaintiff recovery in other settings, no such statute had been passed to codify the Professional Rescuer’s Doctrine.

Although professional rescuers injured in the performance of their duties may still be found at fault, the is no longer an automatic bar to suit.

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Louisiana Supreme Court Rules on Bond an Insurer Must Post for Suspensive Appeal

A Louisiana litigant has a right to appeal a judgment rendered against it at trial and has two options to appeal the judgment. The litigant can take a suspensive appeal, which suspends the execution of the judgment pending the outcome of the appeal, or it can take a devolutive appeal, which does not. La. C.C.P. art. 2124 provides that when the judgment if for a sum of money, a party seeking a suspensive appeal must post security, or a bond, “equal to the amount of the judgment,” including interest.

What happens when a monetary judgment is cast against an insurer (and its insureds) and the amount of the judgment exceeds the limits of the insurer’s policy? Can the insurer be required to post bond in excess of its policy limits to suspensively appeal the judgment? The Louisiana Supreme Court recently addressed this issue and ruled an insurer is required to post a security bond covering only its policy limits.

In Martinez v. Am. Transp. Grp. Risk Retention Grp., Inc., a jury cast judgment against a transportation group, its driver, and its insurer for damages the plaintiff sustained in a motor vehicle accident. The trial court rendered a judgment in the amount of $2,802,054.66, which was in excess of the $1,000,000 limits of the insurer’s policy. The insurer moved for a suspensive appeal and requested a reduced bond because its insured was no longer in existence and could not post a bond. Nevertheless, the trial court set the appeal bond at $2,802,054.66, plus interest. The insurer posted a bond in the amount of its policy limits plus interest and costs and sought appellate review of the trial court’s appeal bond order.

The Supreme Court observed that the contracts clauses of the federal and state constitutions prohibit the enactment of any law “impairing the obligation of contracts.” Therefore, the Court found that to require an insurer to post a bond for suspensive appeal in excess of its policy limits would render meaningless, and therefore impair, the terms of the insurance contract setting the policy’s limits. Thus, the Martinez court should have set security to allow the insurer to suspensively appeal the portion of the judgment up to its policy limit.

However, the Court refused to reduce the suspensive appeal bond for all the defendants cast in judgment. Instead, the Court ruled the insurer could suspensively appeal the judgment up to the amount of its policy limits, stay execution of that portion of the judgment, and devolutively appeal the remainder of the case for its insureds.

References:

Martinez v. Am. Transp. Grp. Risk Retention Grp., Inc., 2023-01716 (La. 10/25/24) 2024 WL 4579047.