Thursday, May 18, 2006

Seventh Circuit Holds that It Is Within the District Court’s Discretion to Require Exhaustion Only of the Named Plaintiff in an ERISA Class Action

Per In re Household Int’l Tax Reduction, 441 F.3d 500 (7th Cir. Mar. 20, 2006):

. . . If the complaint or subsequent filings adequately identify the class members' claims and demonstrate that they are indeed very similar to those of the named plaintiff, the defendant knows what he is facing and can make efforts to settle the full array of claims. In such a case, requiring exhaustion by the individual class members would merely produce an avalanche of duplicative proceedings and accidental forfeitures, and so is not required.

This is emphatically the case when dealing with class actions under [Employee Retirement Income Security Act (ERISA)], where, there being no statutory requirement of exhaustion, the district court has discretion to require no exhaustion by anyone. Powell v. A.T. & T. Communications, Inc., 938 F.2d 823, 825 (7th Cir.1991); Gallegos v. Mount Sinai Medical Center, supra, 210 F.3d at 808. The district judge in this case did not abuse her discretion by requiring only the named plaintiff to exhaust, given the similarity of the plaintiff's claim to the claims of the unnamed class members; both he and they are complaining about the termination of their rights under Household's pension plan. . . .


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