Court Opinion

ID: 2912839
Source: CourtListenerOpinion
Date Created: 2015-09-10 17:01:01.668796+00
Date Added: 2024-06-11T15:21:26.349512
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

PHILIP BOBBITT, individually and on        No. 13-15812
behalf of all others similarly
situated; JOHN J. SAMPSON; JOHN               D.C. No.
HALL; BRENDA HALL,                         4:09-cv-00629-
                             Plaintiffs,        FRZ

                  and
                                             OPINION
LANCE LABER,
    Intervenor-Plaintiff–Appellant,

                  v.

MILBERG LLP; MELVYN I. WEISS;
MICHAEL C. SPENCER; JANINE LEE
POLLACK; LEE A. WEISS; BRIAN C.
KER; UITZ & ASSOCIATES; RONALD
A. UITZ; LUSTIGMAN FIRM;
SHELDON S. LUSTIGMAN; ANDRE B.
LUSTIGMAN; GABROY ROLLMAN &
BOSSE PC; JOHN GABROY; RONALD
M. LEHMAN,
              Defendants-Appellees.

      Appeal from the United States District Court
               for the District of Arizona
    Frank R. Zapata, Senior District Judge, Presiding
2                   BOBBITT V. MILBERG LLP

                     Argued and Submitted
           June 25, 2015—San Francisco, California

                    Filed September 10, 2015

 Before: Sidney R. Thomas, Chief Judge, John B. Owens,
 Circuit Judge, and Anthony J. Battaglia,* District Judge.

                     Opinion by Judge Owens

                           SUMMARY**

             Class Certification / Choice of Law

    The panel vacated the district court’s order denying the
motion for class certification brought by named plaintiffs
Philip Bobbitt and John Sampson in their malpractice lawsuit
against Milberg LLP and various other law firms and lawyers.

    The panel held that the district court properly applied the
choice-of-law rules of the forum state Arizona. The panel
noted that Arizona courts apply the Restatement (Second) of
Conflict of Laws (1971) to determine the controlling law for
multistate torts.

    *
     The Honorable Anthony J. Battaglia, District Judge for the U.S.
District Court for the Southern District of California, sitting by
designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                  BOBBITT V. MILBERG LLP                       3

    The panel held that the district court erred in holding that
the law of each class member’s home state governed his or
her individual claim, rather than the law of Arizona where the
alleged malpractice occurred. The panel held that the district
court abused its discretion by basing its class certification
decision on an erroneous view of the proper choice of law,
and remanded for further proceedings.

                         COUNSEL

Lawrence A. Kasten (argued), Robert H. McKirgan, and
William G. Voit, Lewis Roca Rothberber LLP, Phoenix,
Arizona; Guy M. Hohmann and Ryan T. Shelton, Hohmann,
Taube & Summers LLP, Austin, Texas; R. James George, Jr.
and Gary L. Lewis, George, Brothers, Kincaid & Horton,
LLP, Austin, Texas, for Intervenor-Plaintiff-Appellant.

Douglas J. Pepe (argued), Gregory P. Joseph, Honey L.
Kober, and Jeffrey H. Zaiger, Joseph Hage Aaronson LLC,
New York, New York; Peter Akmajian, Ed Moomjian II, and
Michele G. Thompson, Udall Law Firm LLP, Tucson,
Arizona, for Defendants-Appellees.

                          OPINION

OWENS, Circuit Judge:

    Intervenor-plaintiff-appellant Lance Laber appeals from
the district court’s denial of the motion for class certification
brought by named plaintiffs Philip Bobbitt and John Sampson
in their malpractice lawsuit against defendant-appellee
Milberg LLP and various other law firms and lawyers
4                    BOBBITT V. MILBERG LLP

(collectively “Milberg”). Because the district court erred in
holding that the law of each class member’s home state
governed his or her individual claim, rather than the law of
Arizona where the alleged malpractice occurred, we vacate
the district court’s order and remand this case for further
proceedings.

I. FACTS

        A. The VALIC litigation

    In 2001, Milberg, a national law firm specializing in class
actions, filed a lawsuit in Arizona district court against
Variable Annuity Life Insurance Company, Inc. (“VALIC”),
for alleged securities law violations. In January 2004, the
district court certified a class of plaintiffs, a significant
accomplishment in any class action litigation.1

    But things went downhill for Milberg and the class.
Milberg failed to meet certain mandatory disclosure
deadlines, and in August 2004, the district court struck the
plaintiffs’ expert testimony and witness list as a sanction.
Milberg could not prove class-wide damages without
witnesses, so the court vacated class certification. And,
because Milberg could not, without witnesses, establish
causation and damages for the named plaintiffs, the court
entered judgment for VALIC, ending the case. Milberg did
not alert any of the absent class members to the certification

    1
    Although not relevant to this appeal, Milberg argues that the class was
never “certified in accordance with the strictures of Rule 23” because the
district court entered no findings of fact related to class certification. We
express no opinion on the validity of the certification in the VALIC
litigation.
                    BOBBITT V. MILBERG LLP                              5

or decertification of the class or the dismissal of the action,
nor did it otherwise attempt to preserve the class’s claims.2

     B. The Milberg Litigation

     Plaintiffs in this appeal sued Milberg for malpractice for
failing to meet the discovery requirements in the VALIC class
action. Plaintiffs named as defendants four law firms as well
as various lawyers who worked for them. The firms are
located in New York, Washington, D.C., and Arizona. The
lawyer defendants are residents of Florida, New York,
Washington, D.C., Virginia, New Jersey, and Arizona. The
two lead plaintiffs are Texas residents.

    After some litigation, the plaintiffs moved for class
certification. Defendants opposed on various grounds,
arguing the plaintiffs could not meet the requirements of Rule
23(a) and (b)(3). The district court denied the motion for
class certification, ruling that plaintiffs had failed to meet the
predominance requirement of Rule 23(b)(3). The court held
that individual questions predominated over common
questions, because the law applicable to each unnamed class
member’s claim was the law of that member’s domicile state.
Because the laws of up to fifty states were implicated and
plaintiffs had failed to meet their burden to show that
conflicts between the fifty states’ laws did not defeat the
predominance requirement, the court denied class
certification.

 2
   On appeal, this court affirmed, holding that Milberg’s “failure to meet
the deadlines was neither substantially justified nor harmless.” Drnek v.
VALIC, 261 F. App’x 50, 51 (9th Cir. 2007).
6                 BOBBITT V. MILBERG LLP

    Named appellants Bobbitt and Sampson moved for
voluntary dismissal of their individual claims. The court
granted the motion on March 29, 2013, creating a final
judgment. Laber, an unnamed member of the putative class,
successfully moved to intervene for the limited purpose of
bringing this appeal.

II. ANALYSIS

    A. Jurisdiction

    We have jurisdiction over this appeal pursuant to Baker
v. Microsoft Corp., — F.3d —, 2015 WL 4393964, at *4 &
n.4 (9th Cir. July 20, 2015), and Berger v. Home Depot USA,
Inc., 741 F.3d 1061, 1065–66 (9th Cir. 2014).

    B. Standard of Review

     We review the denial of class certification for an abuse of
discretion. Stearns v. Ticketmaster Corp., 655 F.3d 1013,
1018 (9th Cir. 2011). A district court abuses its discretion
when it makes an error of law, or when it reaches a result that
is illogical, implausible, or without support in inferences that
may be drawn from the record. United States v. Hinkson,
585 F.3d 1247, 1261, 1263 (9th Cir. 2009) (en banc). Choice
of law questions are reviewed de novo. Coneff v. AT&T
Corp., 673 F.3d 1155, 1157 (9th Cir. 2012).

    C. Class Certification

    Under Federal Rule of Civil Procedure 23, a class may be
certified if it meets all four class action prerequisites set forth
in Rule 23(a) and satisfies the requirements of at least one of
the three types of class actions of Rule 23(b)(1) to (3).
                  BOBBITT V. MILBERG LLP                       7

Plaintiffs here sought certification as a Rule 23(b)(3) class,
and the district court denied class certification because, in its
view, the law applicable to each individual class member’s
claim is the law of that member’s domicile state. The court
thus held that common questions of law did not predominate
as required under Rule 23(b)(3).

    D. Choice of Law

    The district court properly applied the choice-of-law rules
of the forum state, Arizona. Nelson v. Int’l Paint Co.,
716 F.2d 640, 643 (9th Cir. 1983). Arizona courts apply the
Restatement (Second) of Conflict of Laws (1971) (hereinafter
“Restatement”) to determine the controlling law for multistate
torts. Bates v. Superior Court, 749 P.2d 1367, 1369–70
(Ariz. 1988). The Restatement instructs courts to look to the
state that has “the most significant relationship to the
occurrence and the parties” of any tort claim. Restatement
§ 145(1). The “especially relevant contacts” to be considered
include:

        1. The place where the injury occurred;

        2. The place where the conduct causing the
        injury occurred;

        3. The domicile, residence, nationality, place
        of incorporation and place of business of the
        parties;

        4. The place where the relationship, if any,
        between the parties is centered.
8                 BOBBITT V. MILBERG LLP

Bates, 749 P.2d at 1370 (quoting Restatement § 145(2)).
“The inquiry is qualitative, not quantitative. The court must
evaluate the contacts ‘according to their relative importance
with respect to the particular issue.’” Id. (citation omitted)
(quoting Restatement § 145(2)).

    The first § 145 factor, the place of injury, supports
application of Arizona law. The unnamed class members
were injured when Milberg failed to meet deadlines and make
timely filings in the Arizona court. The result of that alleged
negligence was vacatur of the class certification order, which
also occurred in the Arizona court. The unnamed class
members lost the potential benefits of class certification in the
Arizona litigation. This injury occurred in Arizona.

     Indeed, most courts applying § 145 in analogous
situations agree that negligent behavior in litigation injures
the client in the forum state of the court, whether or not the
client is physically present in the state. See Patton v. Cox,
276 F.3d 493, 497 (9th Cir. 2002) (considering the location of
a quasi-judicial proceeding as the “most persuasive” factor in
choice-of-law analysis); ACE Am. Ins. Co. v. Sandberg,
Phoenix & Von Gontard, PC, 900 F. Supp. 2d 887, 896 (S.D.
Ill. 2012) (place of litigation controlled because “[t]he gist of
this action is that [defendant] bungled the defense of the . . .
case”); Foulke v. Dugan, 187 F. Supp. 2d 253, 257 (E.D. Pa.
2002) (injury resulting from legal malpractice was having
case dismissed, and that injury occurred where litigation was
pending); In re Kaiser Grp. Int’l, Inc., Adversary No. 09-
52317-MFW, 2010 WL 3271198, at *5 (Bankr. D. Del. Aug.
17, 2010) (“Because the bankruptcy case, and the actions
giving rise to the alleged attorney malpractice, occurred in
Delaware, the Court concludes that Delaware is the place of
injury.”); see also David B. Lilly Co., Inc. v. Fisher, 18 F.3d
                  BOBBITT V. MILBERG LLP                        9

1112, 1119–20 (3d Cir. 1994) (injury occurred where, “[a]s
a practical matter, . . . [legal] services were rendered”).

    The district court appeared to assume that any economic
injury necessarily occurs in the victim’s domicile state.
While this general principle may apply in many cases, certain
economic interests may be held—and may be injured—out of
state. Our inquiry focuses not on the place where the victim
feels the consequences of the injury, but on the location of
injury itself. Cf. Fields v. Legacy Health Sys., 413 F.3d 943,
952–53 (9th Cir. 2005) (in wrongful death case, the injury
occurred where the decedent was harmed, not where she
died). The interest here is not the right to recover on the
underlying claim, since the unnamed class members’
underlying claims remained intact after the decertification of
the class. Rather, the interest at issue is the potential recovery
in Arizona litigation. That interest was held in Arizona, and
thus the place of injury is Arizona.

    Milberg cites Johnson v. Nextel Commc’ns Inc., 780 F.3d
128 (2d Cir. 2015), in which the Second Circuit applied § 145
to the claims of unnamed class members in a class action
alleging attorney malpractice. Johnson is distinguishable
because the defendants in that case actually developed an
attorney-client relationship with the unnamed class members
in their respective home states. Id. at 132. The plaintiffs
alleged that the legal services they received in their home
states were marred by a conflict of interest. Id. at 133. In
contrast to the present case, the allegedly defective legal
services resulted in the final resolution of the plaintiffs’
underlying claims. Id. Under those circumstances, the
plaintiffs were injured in their home states, not the state
where their claims happened to be resolved. Johnson does
10                BOBBITT V. MILBERG LLP

not aid Milberg here, where all critical actions leading to
injury and the injury itself occurred in Arizona.

    Similarly, the second § 145 factor—where the conduct
causing the injury occurred—favors application of Arizona
law. Although the district court correctly concluded that the
various defendant law firms and attorneys performed legal
services across several states, the critical conduct causing the
injury was the failure to meet court deadlines in Arizona.
Arizona has a strong interest in regulating attorney conduct
in courts within its borders. See Patton, 276 F.3d at 497;
Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d
1523, 1536 (10th Cir. 1996); Restatement § 145(2) cmt. e
(“[W]hen the primary purpose of the tort rule involved is to
deter or punish misconduct, the place where the conduct
occurred has peculiar significance.”).

    The fourth § 145 factor—the center of the relationship of
the parties—also supports application of Arizona law. The
relationship between the unnamed Drnek class members and
their lawyers existed only in Arizona. The district court
discounted this factor, reasoning that Milberg had only a
minimal relationship with the unnamed class members. The
choice-of-law test, however, looks for the state with the most
significant relationship to the claim; the test thus focuses not
on the magnitude of the relationship between the parties, but
on the state where the relevant relationship existed and that
state’s interest in the claim. See Bryant v. Silverman,
703 P.2d 1190, 1195 (Ariz. 1985). Whether or not Milberg
established a full attorney-client relationship with the
unnamed class members, there was some relationship.
Indeed, had the class remained certified and proceeded to a
valid final judgment, the unnamed class members would
                     BOBBITT V. MILBERG LLP                               11

likely have been bound by the final judgment.                           That
relationship was centered in Arizona.

     The three factors discussed above weigh strongly in favor
of application of Arizona law, and when the place of injury
and the conduct causing the injury coincide, “that state will
usually be the state of the applicable law[,] . . . particularly
. . . with respect to issues involving standards of conduct.”
Restatement § 145(2) cmt. e. The district court rested its
contrary conclusion largely on the third § 145 factor: the
domicile of the parties. The court reasoned that the domiciles
of the millions of plaintiffs scattered throughout the fifty
states weighed strongly in favor of application of the laws of
all fifty states. The Rule 23(b)(3) predominance question,
however, asks whether common questions of law related to
each class member’s individual claim predominate. To
answer that question, we must determine the applicable law
individually, rather than collectively. Each class member’s
claim has one plaintiff, not millions of plaintiffs.

    Defendants are domiciled in Florida, New York,
Washington, D.C., Virginia, New Jersey, and Arizona. The
unnamed class members reside in all fifty states. Because
there is no single state where a number of parties are
“grouped,” this factor is entitled to little weight. See
Restatement § 145(2) cmt. e.3

  3
    Although some Arizona cases placed extreme weight on the domicile
of the plaintiff, reasoning that the state of domicile is the only state with
an interest in ensuring the plaintiff’s recovery, Baroldy v. Ortho Pharm.
Corp., 760 P.2d 574, 579 (Ariz. Ct. App. 1988); Ambrose ex rel. Ambrose
v. Ill.-Cal. Express, 729 P.2d 331, 334 (Ariz. Ct. App. 1986) (citing
Bryant, 703 P.2d 1190), recent Arizona Supreme Court authority confirms
that under the § 145 test, the domicile of the plaintiff is entitled to little
weight when it bears little relation to the injury. Pounders v. Enserch
12                  BOBBITT V. MILBERG LLP

    Each of the § 145 factors either supports application of
Arizona law or is neutral. Arizona has the most significant
relationship to these plaintiffs’ claims of attorney malpractice
occurring in an Arizona court, and thus Arizona law applies
to each individual class member’s claim. The district court
abused its discretion by basing its class certification decision
on an erroneous view of the proper choice of law. See
Hinkson, 585 F.3d at 1261.4

    The order denying class certification is VACATED, and
the matter is REMANDED for further proceedings. The
parties shall bear their own respective costs on appeal.5

E&C, Inc., 306 P.3d 9, 14 (Ariz. 2013); see also Garcia v. Gen. Motors
Corp., 990 P.2d 1069, 1076 (Ariz. Ct. App. 1999) (clarifying that the
victim’s domicile is important in personal injury cases).
 4
  Because we conclude that Arizona law applies to each individual class
member’s claim, we need not resolve Laber’s alternative contention that
Milberg is judicially estopped from denying that Arizona law applies.
 5
   We express no opinion on whether the other requirements of the Rule
23 test are satisfied.