The Fourth Circuit recently reinstated a wrongful death suit against a defendant, holding that the release in a settlement of consumer class actions against the defendant did not preclude plaintiff’s personal injury suit against that same defendant. See In re Lumber Liquidators Chinese-Manufactured Flooring Prod. Mktg., Sales Pracs. & Prod. Liab. Litig., — F. 4th —, 2024 WL 174363 (4th Cir. Jan. 17, 2024). The Fourth Circuit’s decision is notable given that class members—including plaintiff—explicitly agreed to release all personal injury claims against the defendant, yet the Fourth Circuit held that the plain language of the release was limited by the “identical factual predicate” doctrine and allowed the class member to raise this challenge in a subsequent lawsuit.
Starting in 2015, several lawsuits were filed against Lumber Liquidators. These actions alleged that the company misrepresented the levels of formaldehyde in its laminate flooring and further misrepresented the durability and longevity of its laminate flooring products. These suits were consolidated into two MDLs in the Eastern District of Virginia. The class plaintiffs in these MDLs did not bring claims or seek damages for personal injury or wrongful death.
In 2018, the parties agreed to a class action settlement. The classwide release covered “any and all claims . . . including but not limited to any . . . personal injury claim” related to Lumber Liquidator’s Chinese-manufactured laminate flooring sold from 2009 to 2015. Id. at *2.
The plaintiff in this case brought wrongful death claims against Lumber Liquidators on behalf of her deceased husband, who purchased and used Lumber Liquidators’ laminate flooring in 2014 and 2015. The plaintiff alleged that the decedent’s liver and pancreatic cancer was caused by formaldehyde in Lumber Liquidator’s products. Although the decedent received notice of the class action settlement, neither he nor his wife opted him out of the settlement agreement. The district court dismissed plaintiff’s case, holding that, among other things, the settlement agreement’s release barred plaintiff’s wrongful death claim.
The Fourth Circuit disagreed. The court emphasized that the settlement class representatives “made clear that they were not pursuing personal injury claims on a class-wide basis.” Id. at *8. Because the class actions pertained only to the alleged quality and deceptive marketing of Lumber Liquidator’s flooring, not any alleged injuries or death caused by the flooring, the court found that the settlement agreement “did not settle claims premised on bodily injury or wrongful death.” See id. at *7. In particular, because the class action’s consumer protection claims “are not likely to depend upon the very same set of facts as personal injury or wrongful death claims,” the settlement agreement did not have an “identical factual predicate” for plaintiff’s personal injury claims and thus did not bar such claims. Id. at *6–8. Accordingly, even though the decedent was a member of the settlement class, and even though the decedent had agreed to release any personal injury claims against Lumber Liquidators, the Fourth Circuit held that plaintiff’s lawsuit was not precluded by the settlement agreement.
In a concurring opinion, Judge Wilkinson warned that “restrict[ing] releases unduly risks undermining the utility of an important tool in class action litigation.” Id. at *8. Judge Wilkinson therefore explained that he did not “understand the majority to say that releases cannot bar claims that have not been brought or fully litigated, but only those claims that lie distinctly outside the ambit of the class action proper,” and that he also did not understand the majority opinion as “announc[ing] a per se rule that a release in every products liability suit necessarily allows subsequent actions for injuries arising from the product itself.” Id. As Judge Wilkinson noted, “[r]ules that broad could well drain all meaning from the release.” Id.
The Fourth Circuit’s decision should remind companies who are negotiating settlement agreements in consumer class actions that a classwide release of claims may not preclude personal injury claims related to the same products at issue in the class action, no matter how carefully the release is drafted. Companies should keep this in mind when valuing such settlements, which may not necessarily “buy peace” for all actions—particularly personal injury claims—related to the same products as the underlying class action. And, to the extent parties in a consumer class action agree to release all personal injury claims, the Fourth Circuit’s decision may open the door for collateral attacks on such a settlement. Defendants should carefully police such efforts to ensure Judge Wilkinson’s warning about a per se rule barring personal injury releases in class action settlements does not become a reality.