Gentry v. Siegel

Summarized by Brooke Schumm , Daneker, McIntire, Schumm, et al.
14 years 3 weeks ago

Citation:

Gentry v. Siegel (In re Circuit City Stores, Inc.) Slip Opinion (for publication), Case No. 10-2418 (4th Cir. 2012)

Tag(s):

Ruling:

A class proof of claim may be filed by a claimant, and a class may be certified pursuant to Rule 7023 under Rule 9014 subsequent to the filing of the putative class claim and at any time subsequent to the bar date. The B.R. 9014 motion was timely, and if granted, the class proof of claim on behalf of unnamed class members is also timely. Certification is within the sound discretion of the lower court; in this case, the lower court properly exercised its discretion not to certify the class because the banruptcy court claims resolution mechanism was better. The bankruptcy court, affirmed by the district court, did not utilize correct reasoning in rejecting the procedural mechanism the putative class plaintiffs had utilized. Notice to any employees employed within three years prior to the petition, and in the Wall Street Journal and a local leading newspaper was adequate notice of the bar date.

Procedural context:

Plaintiff employees, whose long-pending California class action suit was halted by the bankruptcy petition, had filed timely proofs of claim for themselves and putative unnamed class members. The Bankruptcy Court held that the class had to be certified prior to filing the class proofs of claim, held that a claim on behalf of the unnamed class members was untimely, as was the certification motion, and held that the class action process would be inferior to the claims resolution process established by the court and would complicate the administration of the bankruptcy estate. Arguments as to inadequate notice of the claims bar date were rejected. The District Court affirmed.

Facts:

Former employees had commenced a number of class actions relating to failure to pay overtime wages in violation of California state law starting in 2002 and continuing until December 2008. The last complaint was filed after the bankrutpcy petition. Timely proofs of claim were filed on behalf of the named class action plaintiffs and those similarly situated (unnamed plaintiffs and putative class members), and the state court complaints were attached to the proofs of claim. The Trustee objected that the state court lead plaintiffs could not file class proofs of claim, that the certification motion under Rule 9014 was untimely, and that the class action process would be inferior to the claims resolution process established by the court and would complicate the administration of the bankruptcy estate. The notice given to 370,00o persons including all employees in the prior three years and by publication in the Wall Street Journal and a local leading newspaper was held adequate as to all class plaintiffs and unnamed class members.

Judge(s):

Niemeyer, Shedd, Davis.

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