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Keywords

contractlawsuitbreach of contractplaintiffdefendanttrialclass actionbad faith
contractlawsuitbreach of contractplaintiffdefendantlitigationattorneytrialclass action

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Kleiner v. First Nat. Bank of Atlanta, 751 F.2d 1193, 53 USLW 2394, 40 Fed.R.Serv.2d 1390

Facts

The lawsuit was initiated by Jackie Kleiner against the First National Bank of Atlanta, alleging fraud, RICO violations, and breach of contract. After the court certified a class of approximately 8,600 members, the Bank's counsel, Richard M. Kirby, advised the Bank to solicit exclusion requests from class members. This campaign was conducted secretly, leading to over 2,800 members opting out before receiving the court-approved notice. The district court later found these actions to be in violation of its orders and imposed sanctions.

The lawsuit, sounding in fraud, RICO and breach of contract, charged the Bank with reneging on its promise to peg the interest it charged smaller customers to the prime rate by undercutting the announced prime rate for the Bank's best commercial customers. Richard M. Kirby, a partner in the Atlanta law firm of Hansell & Post and an attorney experienced at class action litigation, undertook the Bank's defense.

Issue

Whether the First Amendment bars sanctions against a defendant and counsel for secretly soliciting exclusion requests from potential members of a Rule 23(b)(3) plaintiff class.

We consider whether the first amendment rationale of Bernard v. Gulf Oil Co. bars sanctions against a defendant and counsel for secretly soliciting exclusion requests from potential members of a Rule 23(b)(3) plaintiff class.

Rule

The court applied the principles of Rule 23 regarding class actions, which require that class members receive adequate notice and that their rights to participate in the class action are protected from coercive tactics by defendants.

The dualistic design of the 23(b)(3) class action underscores the tension between individual autonomy and the search for consistency and truth.

Analysis

The court determined that the Bank's solicitation campaign constituted a violation of the protective and class notice orders. The court emphasized that the unilateral communications with class members undermined the integrity of the class action process and could lead to coercion, particularly given the Bank's ongoing business relationships with the class members. The court found that the actions taken by the Bank and its counsel were in bad faith and warranted sanctions.

The court determined that the Bank's solicitation campaign constituted a violation of the protective and class notice orders. The court emphasized that the unilateral communications with class members undermined the integrity of the class action process and could lead to coercion, particularly given the Bank's ongoing business relationships with the class members.

Conclusion

The court upheld the sanctions imposed on the Bank and its counsel, including a $50,000 fine and disqualification of lead trial counsel, affirming that the Bank's actions obstructed the judicial process and violated court orders.

The court upheld the sanctions imposed on the Bank and its counsel, including a $50,000 fine and disqualification of lead trial counsel, affirming that the Bank's actions obstructed the judicial process and violated court orders.

Who won?

The plaintiffs prevailed in the case as the court upheld the sanctions against the Bank and its counsel for their misconduct, emphasizing the importance of protecting class members' rights.

The plaintiffs prevailed in the case as the court upheld the sanctions against the Bank and its counsel for their misconduct, emphasizing the importance of protecting class members' rights.

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