May 9, 2019 / 8:15 PM / 2 months ago

Asarco tries to push retirees into 'unicorn' defendant class action

(Reuters) - Have you ever heard of a defendant class action – a case in which a plaintiff uses the federal class action rules to agglomerate defendants? Judges and scholars have come up with all kinds of descriptions for this seldom-seen device. In a ruling last month (2019 WL 1848525) the 4th U.S. Circuit Court of Appeals called defendant class actions “among the rarest of proceedings,” quoting a 2002 7th Circuit ruling in which Judge Richard Posner dubbed the cases “rare birds” and cited an academic paper describing them as “rare as unicorns.”

The copper mining company Asarco is trying to make defendant class actions a little bit less rare. On Monday, the company moved to certify a defendant class of about 740 retirees who receive health and prescription drug benefits from Asarco. The company sued its retirees and several unions representing former Asarco workers in federal court in Dallas, seeking a declaration that it can change their benefits conferred in a collective bargaining agreement. Asarco’s lawyers at Davis & Campbell contend that a defendant class action is the fairest and most efficient way to resolve the dispute – even though the company anticipates that the unions and retired workers it is proposing as class representatives want nothing to do with the class action.

The unions and retirees have not yet filed a brief opposing Asarco’s motion for class certification, but in a November motion to dismiss the declaratory judgment suit, their lawyers at Feinstein Doyle Payne & Kravec, Lubin & Enoch and Gillespie Sanford argued that their clients – and not Asarco – are the proper plaintiffs in litigation over the change in retiree benefits. They accuse Asarco of forum shopping for a friendly venue in Texas instead of litigating in federal court in Phoenix, where retirees have brought their own class action to block Asarco from cutting benefits.

Procedurally, this particular dispute is fiendishly complicated. Asarco has actually filed a second proposed defendant class action in Arizona, addressing benefits for former employees who retired before 2007, when the company reached an agreement with workers that covered retirement benefits. The unions and retired workers contend that the entire matter – benefits for both pre- and post-2007 retirees - should be heard in their Arizona class action.

But last month, U.S. District Judge Susan Bolton of Phoenix, who is overseeing both the Asarco workers’ class action and the company’s defendant class action for pre-2007 retirees, ruled that she’s going to halt those cases until U.S. District Judge David Godbey of Dallas decides whether to dismiss Asarco’s Texas defendant class action. Asarco is aggressively pushing forward in the Texas case, even though Judge Godbey hadn’t yet ruled on the dismissal motion by unions and retirees. In addition to Monday’s class certification motion, the company has also asked for leave to file an amended complaint that seems intended to bolster its assertion of jurisdiction in Dallas.

Putting aside the unique messiness of this case, the Dallas class action raises the very intriguing question of whether a company can force its former workers into a class action. The company argues in its class certification motion that the device has been used in previous cases to resolve disputes over employment benefits. It cited five instances in which companies certified classes of defendant employees and unions – in addition to Asarco’s own previous history. In the long-running litigation that led to Asarco’s 2007 settlement with its workers, there was a certified defendant class of unions and employees.

There is, however, a very significant caveat in all but one of the examples Asarco offered, including its own previous case: Workers either joined their companies’ class certification motions or stipulated to class certification. The exception was in 2008’s Maytag v. International Union (271 F.R.D. 504), in which a federal judge in Des Moines certified a defendant class after denying the union’s motion to dismiss or transfer Maytag’s case. In a more typical scenario, retirees from the Barnes Group joined with the company and unions to back certification of a defendant class in a 2017 declaratory judgment dispute over their benefits in federal court in Hartford, Connecticut (2017 WL 1407638).

Will the former Asarco workers accede to class certification as defendants in Asarco’s Dallas case? As I mentioned, they’ve so far concentrated on getting the case dismissed or transferred to Arizona, where they filed their own class action. If that effort fails, it’s hard to imagine the unions and retirees arguing that they don’t meet class certification standards, since they themselves brought a class action in Arizona against Asarco. Judge Bolton even said in her ruling to halt the Arizona litigation until Judge Godbey decides whether to dismiss the Dallas suit that the parties “have acknowledged that, assuming the Texas case remains in Texas, they could likely reach an agreement” on class certification.

On the other hand, it’s clear from their dismissal motion and their brief opposing Asarco’s motion to file an amended complaint that lawyers for the unions and former Asarco workers believe the company acted improperly when it allegedly ditched negotiations on the revised benefits package and rushed to file in Dallas, where a scant handful of affected retirees live.

I emailed lawyers for the unions and retirees - Pamina Ewing of Feinstein Doyle, Joseph Gillespie of Gillespie Sanford and Stanley Lubin of Lubin & Enoch – but didn’t hear back. Asarco counsel Richard Russo and David Lubben of Davis & Campbell also didn’t respond to my email.

Reporting by Alison Frankel

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