Imagine that you represent a manufacturer who is being sued in a putative class action alleging that one of your client’s products is defective. Although some consumers who used the product were injured as a result of the defect, the class action complaint does not make any claims for personal injury. Instead, the complaint asserts claims for economic damages only (eg, refunds of the purchase price of the product). Conventional wisdom would say that you should be thankful. Economic damages usually pale in comparison to personal injury damages, so if putative class counsel has chosen to forego a potentially larger verdict, so be it. Unconventional wisdom, on the other hand, would recognize that the class plaintiffs are “splitting” their claims, and claim splitting presents a number of unique issues for defense counsel.
The rule against claim splitting derives from the related doctrines of merger, bar, and res judicata. Under the Restatement (Second) of Judgments �24, a final judgment extinguishes “all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.” Section 24 applies to bar a second action against the defendant, even though the plaintiff is prepared in the second action to “present evidence or grounds or theories of the case not presented in the first action” or “seek remedies or forms of relief not demanded in the first action.” See Restatement (Second) of Judgment �25. A party is therefore barred from re-litigating in a second action claims that were actually litigated, or could have been litigated, in the first. Courts generally agree (subject to the exceptions discussed below) that once a class is certified, all members of the class who do not opt out are bound by the judgment for res judicata purposes regardless of the outcome. See, eg, Rector v. City and County of Denver, 348 F.2d 935, 949 (10th Cir. 2003) (the “usual principles of both claim and issue preclusion apply in class actions”). In other words, win or lose, members of our hypothetical class who do not opt out should be barred from asserting their personal injury claims in subsequent individual actions.
