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Keywords

lawsuitsettlementplaintiffdefendantliabilitymotionleaseclass actioncivil procedure

settlementplaintiffdefendantliabilitymotionwill

Related Cases

Simon v. KPMG LLP, Not Reported in F.Supp.2d, 2006 WL 1541048, 97 A.F.T.R.2d 2006-2806

Facts

On June 24, 2005, Plaintiffs filed a class action against Defendants, alleging that they engaged in a scheme to defraud taxpayers by promoting abusive tax shelter strategies, including FLIPS, OPIS, BLIPS, and SOS. Plaintiffs claimed that the Defendants misrepresented these strategies as legitimate means to reduce tax liability, knowing they would not withstand IRS scrutiny. The class includes taxpayers who consulted with the Defendants and implemented these strategies from January 1, 1996, to September 14, 2005, and excludes certain parties who released claims against the Defendants.

In the Amended Complaint, Plaintiffs allege that Defendants and certain other parties engaged in a scheme to defraud Plaintiffs and others similarly situated in connection with certain Tax Strategies by fraudulently misrepresenting that the Tax Strategies would reduce tax liability and were “more likely than not” to be approved by the Internal Revenue Service (“IRS”) when in fact Defendants knew that the Tax Strategies were abusive tax shelters that would not pass IRS scrutiny.

Issue

The main legal issues include whether the class should be certified for settlement purposes and whether the proposed settlement is fair, adequate, and reasonable.

Rule

The court applied Federal Rule of Civil Procedure 23, which requires that a class action must meet the requirements of numerosity, commonality, typicality, and adequacy of representation, as well as satisfy one of the subsections of Rule 23(b) for certification.

Pursuant to Rule 23, a plaintiff must show: (1) the class is so numerous that joinder of all members is impracticable (“numerosity”); (2) common questions of law and fact exist as to the whole class (“commonality”); (3) the claims of representative parties are typical of the claims of the class as a whole (“typicality”); and (4) representative parties will fairly and adequately protect the interests of the class (“adequacy of representation”).

Analysis

The court found that the Plaintiffs met all four requirements of Rule 23(a) and satisfied the predominance and superiority requirements of Rule 23(b)(3). The class was deemed sufficiently numerous, with common questions of law and fact predominating over individual issues. The court also noted that a class action was superior to individual lawsuits, as it would efficiently resolve the claims arising from the same operative facts and legal theories.

The party seeking class certification carries the burden of showing the requirements of Rule 23 are met. Here, Plaintiff carries this burden and satisfies all four prongs of 23(a) and subsection (3) of Rule 23(b). The Court will address each requirement of 23(a) in turn.

Conclusion

The court granted the motion for final certification of the class for settlement purposes and approved the settlement agreement, determining it to be fair, adequate, and reasonable.

Therefore, Plaintiffs' motion for final certification of the class for settlement purposes is granted.

Who won?

The Representative Plaintiffs prevailed in the case, as the court approved their motion for final class certification and the settlement agreement, which provided substantial recovery for the class members.

The Court finds that the reaction of the class to the settlement weighs in favor of settlement approval.

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