In Ali v. City of Chicago, —F.4th—, 2022 WL 1548176 (May 17, 2022), the Seventh Circuit Court of Appeals recently struck down one litigant’s attempt to employ a “stealth” class action.
In January 2019, plaintiff Khalid Ali brought a civil rights action against the City of Chicago, alleging that police officers violated his constitutional rights. Although Ali later amended his complaint twice, no version of the complaint included class allegations.
Two days before the deadline for fact discovery, Ali moved to certify a class without seeking to amend his complaint. After the district court granted the City’s motion to strike, Ali also moved for leave to amend his complaint to add class allegations. But the court denied Ali’s motion because it found that “the request came too late in the case.”
Soon after, Ali settled his suit against the City. However, on the same day that Ali stipulated to dismissal, appellant Glenn Miller moved to intervene under Federal Rule of Civil Procedure (“FRCP”) 24, arguing that he was a member of Ali’s proposed class.
The district court concluded that intervention was untimely because Ali never offered a complaint with a proposed class action, so Miller “did not reasonably rely on Ali’s case to pursue class certification.” As such, the district court denied the motion to intervene, and Miller appealed.
On appeal, the Seventh Circuit affirmed the denial of Miller’s motion to intervene. In its opinion, the Seventh Circuit distinguished cases relied upon by Miller because, unlike the intervenors in those cases, Miller “could not have been reasonably relying on any ‘named class representative’ to protect his interests because this case was not proceeding as a class action.”
Notably, the Seventh Circuit also specifically rejected the concept of “stealth” class actions. Specifically, Miller argued that his request to intervene should be granted because nothing in the FRCP requires a complaint to include class allegations. Thus, Miller’s position would allow plaintiffs to bring class actions (“and therefore give potential intervenors a right to assert the reliance interests of class members”) without including any class allegations in their complaints.
In response, the Seventh Circuit clarified that this “is not how the Federal Rules of Civil Procedure work.” FRCP 23 requires courts to determine whether to certify a class action “at an early practicable time.” The Seventh Circuit reasoned that a “district court cannot make that determination early in the case if the plaintiff is allowed to keep his class-action intentions hidden.” Fundamental to the FRCP is the concept that a pleading must provide a defendant with fair notice. Miller’s approach, the Seventh Circuit reasoned, “would contravene that purpose and the requirement that relief be demanded by allowing plaintiffs to spring ‘stealth’ class actions on defendants late in a case, without earlier warning.”
Ultimately, Ali is a favorable decision for potential class action defendants, who should remember to rely on the text and underlying rationale of the FRCP when arguing against stealth class actions.