Tort/Negligence – Products Liability Suit Enjoined After Opt-Out Deadline Missed

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Abella Owners’ Ass’n v. MI Windows & Doors Inc. (Lawyers Weekly No. 001-140-17, 17 pp.) (Niemeyer, J.) No. 16-1146, June 20, 2017; USDC at Charleston, S.C. (Norton, J.) 4th Cir.

Holding: An owners’ association that did not opt out of multidistrict litigation in the District of South Carolina against a manufacturer of allegedly defective windows was properly enjoined from pursuing its separate suit in the wake of settlement of the multidistrict litigation; the 4th Circuit affirms the district court order enjoining the association from proceeding with its state court claims against the manufacturer.

The association argued that the district court lacked authority to enjoin its prosecution of the state action by reason of the Anti-Injunction Act, 28 U.S.C. § 2283, and that, in any event, it should not be bound by the class action judgment because of the excusable neglect of its counsel in overlooking the opt-out deadline. We conclude the injunction was justified by the “relitigation exception” of the Anti-Injunction Act and the district court did not abuse its discretion in concluding that counsel’s neglect was not excusable.

Appellant’s counsel received notice on April 8, 2015, of the class action settlement and opt-out date of May 28, 2015. When counsel received the notice, he was on a family vacation, and someone in his office date-stamped the notice and placed it in his case file. Counsel asserted that following his return from vacation, he began a jury trial and because of his busy schedule, did not become aware of the class settlement notice until several months after the May 28, 2015, opt-out date.

On Oct. 15, 2015 – almost three months after the district court entered its final judgment approving the class action settlement – the manufacturer moved to enjoin the California state court action. The court granted the motion.

We conclude the Anti-Injunction Act is not a bar to the court’s subsequent injunction because the Act expressly limits its prohibition and allows a court to grant injunctive relief as to state proceedings to protect or effectuate its judgments – a limitation known as the “relitigation exception.” The district court’s final judgment approving the class action settlement was claim preclusive with respect to appellant’s California claims against the manufacturer. We join several courts of appeals that have approved similar injunctions.

Finally, the court weighed the factors governing a finding of excusable neglect – prejudice, length of and reason for counsel’s delay, and good faith – and did not abuse its discretion in ruling against the association.

Judgment affirmed.