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6th Circuit Discount Card Case Could Have Legs

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A panel at the 6th U.S. Circuit Court of Appeals may have given a boost to companies and other organizations fighting purported class-action lawsuits.

Lawyers at Ballard Spahr L.L.P., Philadelphia, make that observation in an analysis of a ruling the 6th Circuit panel issued in response to Daniel Pilgrim et al. vs. Universal Health Care LLC et al. (Number 10-3211 and Number 10-3745).

The plaintiffs in the case are consumers who bought health care discount cards from a program developed by Coverdell & Company Inc., Chicago, and advertised and sold by Universal Health Card L.L.C., Massillon, Ohio.

The consumers have argued that the cards were worthless because the providers who were supposed to be in the card program network had not heard of the program and refused to give card holders the advertised discounts.

The 6th Circuit panel refused to grant the plaintiffs national class-action status.

The panel agreed with Universal Health that the case would involve a detailed analysis of the laws in each state and ought to be tried in state court, in part to avoid encouraging companies to base their operations in the states with the weakest consumer protection laws.

Representatives for Coverdell declined to comment on the ruling.

Representatives for Universal Health Card and the card buyers did not return telephone calls seeking their comments.

Ballard Spahr analysts say the case suggests how appellate courts will look at efforts to strike class claims early in the pleading stage in the wake of Wal-Mart Stores Inc. vs. Dukes, a U.S. Supreme Court case that addresses the grounds plaintiffs can use to seek class-action status.

In the Dukes ruling, the Supreme Court has told lower courts to review requests for class-action status carefully to see how much the plaintiffs really have in common.

Defense lawyers want to try to knock out any effort to make a lawsuit a class action as early as possible, to avoid the high costs involved with responding to class-action lawsuits, the analysts say.

The Pilgrim vs. Universal Health Card case is the first example of a federal appellate court addressing efforts to make a suit a class action since the Supreme Court issued the Dukes decision and discussed “commonality” requirements, the analysts say.

“The appellate court rejected the plaintiffs’ argument that ruling on the propriety of class certification at the pleading stage without first allowing class discovery was ‘reversibly premature,’” the analysts say. “Instead, the 6th Circuit fully endorsed the defense tactic, saying ‘a defendant may freely move for resolution of the class-certification question whenever it wishes’ and that the district court may properly rule on such a motion provided it engages in the requisite ‘rigorous analysis.’”

The court found that early resolution is appropriate in cases in which the class certification issues are a “largely legal determination,” the analysts say.


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