In a victory for McGuireWoods client NRG Energy (NYSE: NRG) that could have broad industry implications, the legal firm said Jan. 30 that a federal judge in Pennsylvania has dismissed a class action filed by lawyers representing a putative class of 1,500 residents who live near NRG’s coal-fired Cheswick Generating Station in Springdale, Pa.
McGuireWoods said the outcome is noteworthy because Judge Cathy Bissoon of the U.S. District Court for the Western District of Pennsylvania granted NRG Energy’s motion to strike the class allegations prior to the completion of costly discovery proceedings and before the plaintiffs filed a motion for class certification. The Jan. 28 ruling established precedent in the Third Circuit Court of Appeals and continues an emerging trend toward pre-discovery determinations in putative class actions.
“Class action allegations are often designed to intimidate businesses into settling as an alternative to the high cost of electronic and paper discovery required to get to a dispositive certification hearing,” said McGuireWoods partner Scott Oostdyk, lead counsel for NRG Energy. “This ruling proves courts are increasingly willing to force plaintiffs to precisely define their target class before they can pressure industry into expensive discovery.”
The lawsuit was filed in 2012 on behalf of residents who live within a mile of the power plant, which is about 15 miles northeast of Pittsburgh. The plaintiffs alleged that the coal-fired plant’s emissions were a nuisance, even though the plant meets federal Clean Air Act requirements. The district court initially dismissed the case, holding that the federal law preempted the plaintiffs’ complaints about the plant’s emissions. The U.S. Court of Appeals for the Third Circuit reversed the ruling in 2013 and remanded the case back to the district court.
Judge Bissoon ruled that the plaintiffs could not prevail in certifying their proposed class because it was pled as a “fail-safe” class, with proposed members described as those incurring “similar” damages, the law firm noted. Fail-safe classes have been barred because they impermissibly draw the court into damage determinations at the class certification phase. As Judge Bissoon wrote: “When a class definition involves an ultimate issue of liability, the court must conduct mini-hearings in order to determine who belongs within the class and who does not, rendering the process administratively infeasible and therefore unascertainable.”
Judge Bissoon gave the plaintiffs until Feb. 5 to amend their complaint and attempt to properly define a putative class.
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