No preclusive effect: Settlement doesn’t bar wrongful death suit

A wrongful death lawsuit filed against the manufacturer of allegedly defective flooring is not barred by a previously reached class action settlement that resolved various consumer protection claims, the 4th U.S. Circuit Court of Appeals has held.

U.S. Circuit Judge Robert B. King said “the scope of the class claims and the facts underlying the class complaints conclusively show that the settlement agreement did not settle claims premised on bodily injury or wrongful death.”

U.S. Circuit Judge Toby J. Heytens joined King’s opinion in Kappel v. LL Flooring Inc. (VLW 024-2-027).

U.S. Circuit Judge J. Harvie Wilkinson III authored a brief concurring opinion.

“I do not understand the majority to say that releases cannot bar claims that have not been brought or fully litigated, but only those claims that lie distinctly outside the ambit of the class action proper,” he wrote.

Chicago attorney Kenneth Gordon Anspach represented the plaintiff, while Atlanta attorney Halli D. Cohn represented the defendant. Neither could be reached for comment by deadline.

Background

In December 2014, Ozan Tarabus purchased laminate flooring from LL Flooring, which he installed himself in his residence. Shortly thereafter, Tarabus “experienced serious health problems,” including breathing issues necessitating a CPAP machine.

Tarabus was diagnosed with inoperable liver and pancreatic cancer in 2017. His doctors ceased chemotherapy treatments in June 2018, citing their ineffectiveness, and Tarabus entered hospice care.

Two days after he entered hospice, LL Flooring sent an email notice to Tarabus advising him of a settlement agreement of which he was a class member. The settlement stemmed from a series of civil actions filed against LL Flooring related to the sale and marketing of the company’s laminate flooring. Multiple plaintiffs in the class alleged that the “laminate flooring emits illegal and unsafe levels of formaldehyde, a known carcinogen.”

A $36 million class action settlement agreement had been reached between the class representatives and LL Flooring in March 2018, resolving all class action claims.

Tarabus did not seek to opt out in the 19 days after he received notice before his death in July 2018 at the age of 48. No one had opted him out of the settlement agreement before or after his death.

His ex-wife, Carla Kappel, as mother and next friend of Tarabus’ children, filed a wrongful death complaint against LL Flooring in July 2020. The suit alleged that the laminate flooring contained formaldehyde, a known carcinogen, resulting in Tarabus’ death.

The suit was transferred to the Eastern District of Virginia, where LL Flooring moved to dismiss the wrongful death suit. The district court granted the dismissal order. Since Tarabus was subject to the settlement agreement, his claims had been settled, “including any claims involving bodily injury or death caused by the subject flooring.”

Kappel appealed.

Settlement

The key issue to resolve is whether the preclusive effect of the settlement agreement applies to Kappel’s wrongful death lawsuit, King noted.

Kappel claimed her wrongful death lawsuit was not barred by the settlement because “no class representative of the settlement classes had ever pursued personal injury or wrongful death claims on a class basis.”

The judge turned to the “identical factual predicate,” which he said was rooted in National Super Spuds, Inc. v. New York Mercantile Exchange, a 1981 2nd U.S. Circuit Court of Appeals decision.

“Rejecting an overbroad settlement release, Judge Friendly therein recognized that, ‘[i]f a judgment after trial cannot extinguish claims not asserted in the class action complaint, a judgment approving a settlement in such an action ordinarily should not be able to do so either,” King wrote. “A footnote of this influential opinion elaborated, recognizing that the factual predicate for the settlement controls the scope of the claims it settles. Important here, the Super Spuds decision explicitly acknowledged that a release can be circumscribed by its factual predicate.”

He added that the identical factual predicate doctrine has since spread to other circuits, including the Fourth Circuit.

Kappel argued the claims for bodily injury and death were “materially distinct” from the claims ultimately covered by the settlement agreement. LL Flooring, meanwhile, contended that the preclusive effect of the agreement barred Kappel’s lawsuit.

King agreed with Kappel.

“Here, the scope of the class claims and the facts underlying the class complaints conclusively show that the Settlement Agreement did not settle claims premised on bodily injury or wrongful death,” he explained. “The class claims included allegations focused on the quality of the subject flooring and on LL Flooring’s deception in its sales and marketing.”

Tarabus, as a class member who did not opt out of the agreement, had consumer claims that could have been resolved on his behalf resolved by the settlement.

“But the issue before us is not about claims related to deceptive sales or marketing,” King wrote. “Our question is whether the preclusive effect of the Settlement Agreement reaches Kappel’s Illinois wrongful death claim on behalf of the two children.”

The class representatives in this case did not allege that any member of the class had experienced bodily harm or death, with representatives “at least twice [making] clear that they were not pursuing personal injury claims on a class-wide basis.”

“Because the class representatives to the Settlement Agreement in these proceedings failed to allege that the laminate flooring produced and sold by LL Flooring caused personal injuries or deaths, Kappel’s wrongful death claim … could not ‘depend upon the very same set of facts’ as the settled class claims,” King wrote. “Thus, the preclusive effect of the Settlement Agreement does not reach Kappel’s wrongful death lawsuit.”

The court vacated the dismissal order and remanded the case for further proceedings.

Concurrence

Wilkinson said he was “persuaded that [the majority opinion] does no serious damage to the basic utility of class action releases” in a brief concurrence.

“I do not understand the majority to say that releases cannot bar claims that have not been brought or fully litigated, but only those claims that lie distinctly outside the ambit of the class action proper,” he wrote. “I likewise do not understand the majority to announce a per se rule that a release in every products liability suit necessarily allows subsequent actions for injuries arising from the product itself.”

He added that rules that expansive could remove all meaning from the release.

“I trust that the ‘identical factual predicate’ doctrine will be applied with the facts of the particular litigation foremost in mind and with due respect for the lubricative role that releases play in beneficial class action settlements,” he concluded.