Legal Opinions - U.S. District Court, Maryland: May 5, 2008

The court concluded that a court order narrowing the class definition after class certification can end tolling without providing actual notice to the parties it excludes. Accordingly, the Friedman court's May 12, 2003 order ended tolling in the instant case, notwithstanding the fact that it did not give actual notice to the government entities, such as Daisy, which it excluded from the Friedman class.

Ganousis explained why actual notice is not required to end the tolling of the statute of limitations for individuals who have been excluded from a putative class: It must be remembered that the courts are dealing in fictions here -- that the concepts on both sides involve constructive and not actual notice.

In fairness, such doctrines must be employed consistently, both when they are amiable fictions that benefit a plaintiff and when they rise up to bite the same plaintiff. 803 F. Supp. at 156.

In other words, the "evenly-applied fiction" is that just as a class member of a putative class receives the benefit of tolling because he is assumed to have knowledge of the pending class action, he also suffers the harm of termination of tolling because he is assumed to have knowledge of class counsel's or the court's decision to exclude him from the proposed class.

Unlike in Ganousis, however, the Friedman class had already been certified when the court altered the membership of the class in its May 12, 2003 order.

Several other courts have likewise held that notice of a change in class action status is not required where absent class members did not receive notice of the earlier certification. See Hervey v. City of Little Rock, 787 F.2d 1223, 1230 (8th Cir. 1986).

Accordingly, only if Daisy had been notified of class certification would it have had a due process right to notification of decertification. Because Daisy concedes that it was not notified of the Friedman court's November 2000 class certification, it did not have a right to notice of the court's May 2003 order granting the plaintiffs' motion to certify classes as amended.

COMMENTARY: In In re Microsoft Corp. Antitrust Litigation I, 274 F. Supp. 2d 743, 745 (D. Md. 2003), the court granted Microsoft's summary judgment motion because it was persuaded that the essential facilities doctrine should not be applied in a case involving technological innovations or information. The court explained that "to require one company to provide its intellectual property to a competitor would significantly chill innovation." Id.

Furthermore, "because the software development industry is dynamic and involves continuous innovation, a requirement that Microsoft disclose significant information to its competitors would be unworkable ... Delay and confusion would be inevitable, and the software development process would be strangulated." Id.

The court reached the same conclusion in the instant case. It recognized that the 4th Circuit has accepted the essential facilities doctrine where tangible assets were at issue. See Advanced Health-Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d 139, 150-51 (4th Cir. 1990).