Wellmark, Inc. D/B/A Wellmark Blue Cross and Blue Shield of Iowa, an Iowa Corporation, and Wellmark Health Plan of Iowa, Inc., an Iowa Corporation v. Iowa District Court for Polk County , 890 N.W.2d 636 ( 2017 )

IN THE SUPREME COURT OF IOWA
No. 15–1922
Filed February 17, 2017
WELLMARK, INC. d/b/a WELLMARK BLUE CROSS AND BLUE
SHIELD OF IOWA, an Iowa Corporation, and WELLMARK HEALTH
PLAN OF IOWA, INC., an Iowa Corporation,
Plaintiffs,
vs.
IOWA DISTRICT COURT FOR POLK COUNTY,
Defendant.
Certiorari to the Iowa District Court for Polk County, Arthur E.
Gamble, Chief Judge.
Defendant health insurer petitioned for writ of certiorari
challenging district court rulings allowing chiropractors to proceed with
an antitrust rule-of-reason claim after procedendo issued from decision
affirming summary judgment dismissing this civil action with prejudice.
WRIT SUSTAINED.
Ryan G. Koopmans, Hayward L. Draper, and John T. Clendenin
(until withdrawal) of Nyemaster Goode, P.C., Des Moines, for plaintiffs.
Glenn L. Norris of Hawkins & Norris, P.C., Des Moines, Steven P.
Wandro of Wandro & Associates, P.C., Des Moines, and Harley C. Erbe of
Erbe Law Firm, Des Moines, for defendant.
2
WATERMAN, Justice.
When is a case over? We have decided two prior appeals in this
civil action: Mueller v. Wellmark, Inc., 818 N.W.2d 244, 267 (Iowa 2012)
(reversing summary judgment in part) (Mueller I), and Mueller v.
Wellmark, Inc., 861 N.W.2d 563, 575 (Iowa 2015) (affirming summary
judgment dismissing the fourth amended petition) (Mueller II). After
procedendo issued in Mueller II, the plaintiffs persuaded the district court
to proceed with an antitrust claim they had previously stipulated was not
included in their fourth amended petition. We granted the defendant’s
petition for a writ of certiorari and now clarify what we thought was clear
before—that Mueller II ended this civil action.
I. Background Facts and Proceedings.
A. Procedural History Through Mueller II. This civil action
commenced in December 2007 when Steven A. Mueller, a doctor of
chiropractic, filed a breach-of-contract claim against Wellmark over a
$17,376 billing dispute. Mueller I, 818 N.W.2d at 247–48. In May 2008,
Mueller, joined by Bradley J. Brown, D.C.; Mark A. Kruse, D.C.; Kevin D.
Miller, D.C.; and Larry E. Phipps, D.C., filed an amended petition
asserting claims on behalf of a putative “class of Iowa-licensed doctors of
chiropractic” who “have billed for services provided to patients enrolled in
Wellmark health insurance plans.” Id. at 248. Plaintiffs alleged
Wellmark discriminatorily fixed prices for services performed by
chiropractors at rates lower than those paid to medical doctors and
doctors of osteopathic medicine. Id. at 247. Their amended petition
alleged violations of Iowa insurance regulatory statutes, the Iowa
Competition Law (Iowa Code chapter 553), and a national class-action
settlement. See id. at 249–50. The district court, without certifying this
3
case as a class action, granted Wellmark’s motions to dismiss and for
summary judgment. Id. at 250, 252.
Plaintiffs appealed. Id. at 253. We affirmed the dismissal of claims
brought under the insurance statutes, holding they created no private
right to sue. Id. at 258. We also affirmed summary judgment dismissing
claims that Wellmark breached the national settlement in Love v.
Blue Cross Blue Shield Ass’n, No. 03–21296–CIV (S.D. Fla. Apr. 19,
2008). Id. at 264–65. But we reversed the district court’s summary
judgment dismissing antitrust claims against Wellmark based on the
state-action exemption in Iowa Code section 553.6(4) (2009). Id. at 263–
64. We remanded the case for further proceedings on plaintiffs’ claims
under the Iowa Competition Act. Id. at 264, 267. Meanwhile, plaintiffs,
joined by other doctors of chiropractic, commenced an administrative
action in the Iowa Insurance Division to litigate the violations of the
insurance regulatory statutes. 1
District court proceedings resumed in this civil action after our
remand in Mueller I. See Mueller II, 861 N.W.2d at 566. On
December 31, 2012, Wellmark moved to dismiss or stay this civil action
pending the insurance commissioner’s decision in the related
administrative action. Wellmark argued the commissioner had primary
jurisdiction because the regulator was better suited to analyze the
complex antitrust allegations and effects on insurance markets.
Wellmark contended the commissioner’s decision may “moot” or “narrow”
the issues. Plaintiffs resisted, arguing there was no need to await the
1The insurance commissioner ultimately decided that case in Wellmark’s favor,
and the district court affirmed on the plaintiffs’ petition for judicial review. Abbas v.
Iowa Ins. Div., No. CVCV048885 (Iowa Dist. Ct. for Polk Cty. June 24, 2015). Plaintiffs’
appeal was submitted to our court on January 18, 2017. Abbas v. Iowa Ins. Div.,
No. 15–1248 (Iowa filed Jan. 18, 2017).
4
commissioner’s decision because their amended petition alleged “per se”
violations of the Iowa Competition Act that did not require the regulator’s
expert analysis of the Iowa health insurance market.
Under a per se violation, an agreement is “so plainly
anticompetitive that no elaborate study of the industry is needed to
establish . . . illegality.” Id. at 568 (quoting Texaco Inc. v. Dagher, 547
U.S. 1, 5, 126 S. Ct. 1276, 1279, 164 L. Ed. 2d 1, 7 (2006)). By contrast,
a rule-of-reason claim “requires plaintiffs to demonstrate that a
particular arrangement ‘is in fact unreasonable and anticompetitive
before it will be found unlawful.’ ” Id. (quoting Dagher, 547 U.S. at 5,
126 S. Ct. at 1279, 164 L. Ed. 2d at 7). In a rule-of-reason analysis,
the finder of fact must decide whether the questioned
practice imposes an unreasonable restraint on competition,
taking into account a variety of factors, including specific
information about the relevant business, its condition before
and after the restraint was imposed, and the restraint’s
history, nature, and effect [on the market.]
State Oil Co. v. Khan, 522 U.S. 3, 10, 118 S. Ct. 275, 279, 139 L. Ed. 2d
199, 206 (1997). Plaintiffs specifically argued that because their
amended petition alleged per se violations, the commissioner was not
better suited to resolve the dispute.
Wellmark responded by inviting plaintiffs to stipulate that their
pleadings included no rule-of-reason claim:
If Plaintiffs will indeed stipulate that their case be strictly
limited to a claim of per se price fixing, that might indeed
moot out this motion and we could go right to summary
judgment. But the allegations contained in Plaintiffs’ Fourth
Amended and Substituted Petition . . . are not so limited,
and that’s the pleading now before this Court . . . .
Wellmark sought a stipulation stating,
a. Plaintiffs hereby dismiss, with prejudice, all claims
except any price-fixing claims that rise to a per se violation of
the Iowa Competition Act; and
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b. Wellmark, in turn, withdraws its pending motion to
dismiss or stay.
At the hearing on Wellmark’s motion, the district court expressed an
inclination to stay the proceedings. Plaintiffs rejected Wellmark’s
proposed stipulation but, to avoid the stay, agreed to limit their petition
to per se violations. They stipulated accordingly,
Pursuant to discussions with the Court and Defendants’
counsel during the telephone hearing held on February 22,
2013, on Defendant’s Motion to Dismiss or Stay and
Defendants’ Supplement to Motion to Dismiss, Plaintiffs
hereby agree and stipulate that the only violation of Iowa
Code § 553.4 alleged in the Fourth Amended and
Substituted Petition for Damages . . . constitute per se
violations of the Iowa Competition Act. Plaintiffs’ allegations
exclude a contention that a rule of reason analysis is
applicable to the violation of Iowa Code § 553.4 alleged in the
Fourth Amended and Substituted Petition.
(Emphasis added.) No party asked the court to notify putative class
members of this stipulation. No class had been certified, and no motion
for class certification had been filed. On March 4, the district court
noted that based on plaintiffs’ stipulation, “Defendants have advised the
Court . . . the motions to dismiss or stay do not need a ruling” and “the
Court considers the motions withdrawn without prejudice.”
Wellmark moved for summary judgment on plaintiffs’ “remaining
claims.” Plaintiffs resisted based in part on rule-of-reason arguments.
At the hearing on the motion for summary judgment, the district court
sought clarification whether the rule-of-reason claim was in or out of this
case:
THE COURT: Mr. Norris, the one thing I wanted to ask
you about is: In your resistance you’ve got a fairly long
section that talks about rule of reason. I don’t understand
that with the stipulation.
MR. NORRIS: All right. I was talking about the idea
that this disposes of the entire case. All I was showing is
that we could establish the elements of a rule of reason.
6
THE COURT: But you stipulated that this is not a rule
of reason case.
MR. NORRIS: Well, but I can certainly ask to amend.
THE COURT: Well, I don’t think you can after your
stipulation. That was the whole point of the stipulation and
why we didn’t rule on the motion to dismiss.
....
MR. NORRIS: By the stipulation I made was that we
believed that what we were talking about was a per se
violation of the antitrust laws.
THE COURT: And that’s the only claim that I have at
this point.
MR. NORRIS: Well, yeah.
Plaintiffs did not move to amend the petition, and no other party moved
to intervene.
On November 5, the district court ruled that Wellmark committed
no per se violation of the antitrust laws. The order concluded, “[T]he
defendants’ Motion for Summary Judgement is GRANTED.” The order
further provided,
While the plaintiffs stipulated they are not asserting the rule
of reason here, they argue Wellmark’s price-fixing violates
the Iowa Competition Law under a rule of reason analysis.
Because the plaintiffs stipulated Wellmark only committed a
per se antitrust violation, this Court does not consider the
rule of reason here. This court offers no opinion on any
potential future claim that Wellmark’s actions violate Iowa
Competition Law under a rule of reason analysis.
Plaintiffs filed a notice of appeal “on behalf of themselves and those like
situated . . . from the final order entered in this case on November 5,
2013 and from all adverse rulings and orders therein.”
We unanimously affirmed the district court’s ruling granting
summary judgment. Mueller II, 861 N.W.2d at 575. We carefully limited
the breadth of our holding for purposes of stare decisis:
We are not today foreclosing a rule of reason claim
against Wellmark if it were shown that the anticompetitive
consequences of its practices exceeded their procompetitive
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benefits. We simply uphold the district court’s ruling that
Wellmark’s arrangements with self-insured employers and
out-of-state BCBS licensees are not subject to the per se
rule. Because the plaintiffs by stipulation limited themselves
to a per se claim, we affirm the district court’s grant of
summary judgment.
Id. at 574–75 (footnote omitted). We meant that we were not foreclosing
such a rule-of-reason claim by other plaintiffs in a new lawsuit. 2 We did
not remand this civil action for any purpose. Procedendo issued on
April 22, 2015.
B. Procedural History After Mueller II. On June 19, plaintiffs
asked the district court to set a “pretrial scheduling conference to
establish” whether “additional Iowa chiropractors who are or would be
members of the proposed class . . . can or should be added” and “a
schedule for determining Plaintiff’s Motion for Leave to File a Fifth
Amended and Substituted Petition for Damages.” Wellmark resisted,
asserting the summary judgment affirmed by our court “was the end of
the case.” Wellmark argued, “Just as a plaintiff could not amend their
pleading after a jury found against them and the Iowa Supreme Court
affirmed that judgment, plaintiffs cannot file an amended complaint after
the grant and affirmance of summary judgment.” On November 6, the
district court, with a different judge presiding, granted plaintiffs’ request
for a scheduling conference, ruling that “this case is not over.” The
district court stated,
Both the district court’s summary judgment and the
Supreme Court’s opinion preserved the plaintiffs’ rule-of-
2On October 5, 2015, another civil action was filed by these plaintiffs together
with other Iowa chiropractors alleging rule-of-reason antitrust claims against Wellmark.
Chicoine v. Wellmark, Inc., No. CVCV050638 (Iowa Dist. Ct. for Polk Cty. filed Oct. 5,
2015). The district court stayed that case based on overlapping claims in pending
federal multidistrict litigation, and the plaintiffs’ appeal of that stay (No. 16–0364) was
submitted to our court on January 19, 2017.
8
reason claim. Neither court ordered that plaintiffs’ rule-of-
reason claim could not be filed as an amendment to their
petition in this class action lawsuit. Neither court ordered
that plaintiffs’ rule-of-reason claim had to be filed in a new
action with a lookback period under the statute of
limitations. The district court’s summary judgment, which
was affirmed by the Supreme Court, simply stated the Court
offers no opinion on any potential future claim under the
rule-of reason analysis.
The district court opined plaintiffs had not “dismissed” their rule-of-
reason analysis, they had
deferred filing their rule-of-reason claim due to the pendency
of a contested case proceeding before the Insurance
Commissioner. Plaintiffs merely stipulated that their Fourth
Amended Petition only stated a per se claim so that the case
could move forward.
The district court found both that plaintiffs’ stipulation was not binding
on the class and that the district court had not followed the class-action
rules governing dismissals. This civil action, however, had never been
certified as a class action.
On November 16, Wellmark filed a petition for a writ of certiorari.
Meanwhile, the district court issued an order requiring plaintiffs to
“immediately file their Motion for Leave to File a Fifth Amended and
Substituted petition for damages.” On December 9, plaintiffs filed their
motion for leave to file the fifth amended petition. The same day, we
granted certiorari and stayed further proceedings at the district court.
II. Standard of Review.
Under a writ of certiorari, we review a district court’s order for
correction of errors at law. State Pub. Def. v. Iowa Dist. Ct., 886 N.W.2d
595, 598 (Iowa 2016). A writ of certiorari lies when a lower court “has
exceeded its jurisdiction or otherwise has acted illegally.” Id. (quoting
State Pub. Def. v. Iowa Dist. Ct., 747 N.W.2d 218, 220 (Iowa 2008)).
“Illegality exists when the court’s findings lack substantial evidentiary
9
support, or when the court has not properly applied the law.” Id.
(quoting State Pub. Def., 747 N.W.2d at 220).
III. Analysis.
We must decide whether the district court’s summary judgment,
and our subsequent decision affirming that judgment, ended this civil
action such that a rule-of-reason claim against Wellmark can only be
pursued in a separate lawsuit. These chiropractors argue, and the
district court agreed, that a rule-of-reason analysis survived summary
judgment and may now be litigated in this action. They point to
language in the summary judgment ruling and Mueller II disclaiming
adjudication of a rule-of-reason claim, and rely on restrictions for
dismissing a class action without notice to putative class members. See
Iowa R. Civ. P. 1.271. We hold no precertification notice to putative class
members was required for plaintiffs to stipulate that their fourth
amended petition omitted a rule-of-reason claim, and the summary
judgment affirmed on appeal ended this civil action. Accordingly, the
district court erred by allowing this case to proceed.
A basic rule of finality is dispositive here: “In the absence of a
remand or procedendo directing further proceedings in the trial court,
the jurisdiction of the district court terminates both as to the parties and
the subject matter when a district court judgment has been affirmed.”
Franzen v. Deere & Co., 409 N.W.2d 672, 674 (Iowa 1987). Eligius
Franzen filed a product-liability action against Deere & Company for
personal injuries he suffered while using a forage wagon it
manufactured. Id. at 673. The district court granted Deere’s motion to
dismiss based on the statute of limitations. Id. We reversed and
remanded the case to allow the Franzens to litigate the discovery rule
exception. Id. Following remand and discovery, the district court
10
granted Deere’s motion for summary judgment, and we affirmed. Id.
More than a month later, Deere filed an application for attorney fees. Id.
In the third appeal, we concluded the district court was “without
authority to consider the application, because it lost jurisdiction of this
particular case once the final judgment had been affirmed without
remand in Franzen II.” Id. We explained,
Ordinarily the authority of the district court to decide
substantive issues in a particular case terminates when a
final judgment is entered and postjudgment motions have
been resolved. A final judgment, one that conclusively
determines the rights of the parties and finally decides the
controversy, creates a right of appeal and also removes from
the district court the power or authority to return the parties
to their original positions.
Id. at 674.
Although the district court “retains jurisdiction during and after
appeal from its final judgment to enforce the judgment itself,” it “does not
have the authority to revisit and decide differently issues already
concluded by that judgment.” Id.; see also Reis v. Iowa Dist. Ct., 787
N.W.2d 61, 66 (Iowa 2010) (noting the general rule that “a district court’s
jurisdiction ends with dismissal of the pending case” except to enforce
orders remaining in effect); Shedlock v. Iowa Dist. Ct., 534 N.W.2d 656,
658 (Iowa 1995) (“[O]ur rules of appellate procedure provide for
restoration of jurisdiction to the district court in only two circumstances:
upon the . . . dismissal [of the appeal] or upon the appellate court’s order
for limited remand.”); Hearity v. Bd. of Supervisors, 437 N.W.2d 907,
908–09 (1989) (“[O]nce an appellate court had rendered its decision and
docketed its mandate affirming the district court’s judgment the district
court is without jurisdiction to consider motions for sanctions . . . .”);
Dunton v. McCook, 120 Iowa 444, 447 94 N.W. 942, 943 (1903)
(“[Judgment] was affirmed in this court . . . , and petition for rehearing
11
denied . . . . That ended the suit. Thereafter it was pending in neither
court.”). As we have long recognized, this rule of finality avoids endless
litigation:
The judgment of the lower court had been entered of record,
and, when affirmed, was in full force and effect, without
further action thereon. Not a thing remained for the trial
court to do; nor was he directed to take further action in the
matter. The original action was, therefore, at an end, so far,
at least, as the district court was concerned, and the
defendants had no right to then file a cross petition. If the
position contended for by appellants were tenable, there
would be no end to a cause of action. If a cross petition may
be filed and new parties brought in one week after final
determination by decree, it might, under some
circumstances, be permitted one, two, or three years
thereafter.
Steel v. Long, 84 N.W. 677, 678 (Iowa 1900) (emphasis added).
In Mueller II, we affirmed the district court’s summary judgment
without any remand. 861 N.W.2d at 575. That summary judgment
dismissed plaintiffs’ fourth amended petition with prejudice. See id.
After procedendo issued, the district court lacked the power to consider
plaintiffs’ motion to set a pretrial conference or to allow the fifth amended
petition. Our statement in Mueller II declining to foreclose the possibility
of a rule-of-reason claim merely defined the breadth of our holding for
purposes of stare decisis as to claims filed by different plaintiffs in a
separate lawsuit. See id. at 574–75. Neither the district court nor our
court effectively reserved the rule-of-reason analysis for further litigation
by these plaintiffs within this civil action.
Our class-action rules do not permit these chiropractors to evade
the finality of the summary judgment in Mueller II. This civil action was
filed as a putative class action but had not been certified. See Iowa R.
Civ. P. 1.262(1) (directing court to “determine whether or not the action
is to be maintained as a class action and by order certify or refuse to
12
certify it as a class action”). It is well-settled that a summary judgment
dismissing the claims of the named plaintiffs terminates the civil action
and renders moot the question whether to certify the case as a class
action. See Barnhill v. Iowa Dist. Ct., 765 N.W.2d 267, 278 n.5 (Iowa
2009) (noting that if the district court had entered summary judgment
“before class certification proceedings,” the defendants “would have been
out of th[e] case before [incurring] the cost of the class certification
proceedings”); Neb. Innkeepers, Inc. v. Pittsburgh-Des Moines Corp., 345
N.W.2d 124, 130–31 (Iowa 1984) (affirming summary judgment on claims
by named plaintiffs without class certification); see also William B.
Rubenstein, Newberg on Class Actions § 7:10 (5th ed.), Westlaw
(database updated Dec. 2016) (“If the defendant prevails on the summary
judgment motion, in most circumstances, the court will be relieved of the
need to rule on the issue of class certification.”); cf. Hammond v. Fla.
Asset Fin. Corp., 695 N.W.2d 1, 8 (Iowa 2005) (affirming dismissal of
defendant for lack of personal jurisdiction and rejecting named plaintiffs’
argument jurisdiction was supported by claims of putative class
members, noting “there has been no determination that a class exists or
that the action may proceed as a class action”). 3
3Because of similarities between the Iowa and federal class-action rules, we may
look to federal decisions for guidance. See Lucas v. Pioneer, Inc., 256 N.W.2d 167, 172
(Iowa 1977). It is well established under federal law that the district court may grant a
dispositive motion against the named plaintiffs without deciding class certification. See,
e.g., J & R Mktg., SEP v. Gen. Motors Corp., 549 F.3d 384, 390 (6th Cir. 2008) (“If it is
found, prior to class certification, that the named plaintiffs’ individual claims are
without merit, then dismissal is proper.”); Greenlee County v. United States, 487 F.3d
871, 880 (Fed. Cir. 2007) (“[W]e have repeatedly found on appeal that issues related to
class certification were moot in light of our resolution against the plaintiff of a motion to
dismiss or for summary judgment.”); McNulty v. Fed. Hous. Fin. Agency, 954
F. Supp. 2d 294, 303 (M.D. Pa. 2013) (“The court’s finding that the plaintiff’s complaint
fails to state a claim upon which [relief] can be granted . . . effectively moots the
question of whether to certify the action as a class action.”); Coal. to Defend Affirmative
Action v. Regents of Univ. of Mich., 539 F. Supp. 2d 960, 974 (E.D. Mich. 2008) (stating
13
Because no class had been certified, Wellmark acknowledges
putative class members in this civil action are not bound by the
summary judgment under principles of res judicata. See Neb.
Innkeepers, Inc., 345 N.W.2d at 130–31 (“Our holding, however, only
applies to the named plaintiffs because the record does not show the
court had yet certified this as a class action . . . .”). 4
Plaintiffs, represented by experienced counsel, stipulated they were
only pursuing a per se action. “Stipulations must be binding.” Standard
Fire Ins. Co. v. Knowles, 568 U.S. ___, ___, 133 S. Ct. 1345, 1348, 185
L. Ed. 2d 439, 443 (2013). 5 A named plaintiff’s stipulation made before
class certification, however, does not “speak for those he purports to
represent.” Id. at ___, 133 S. Ct. at 1349, 185 L. Ed. 2d at 444. In
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summary judgment had effect of mooting class certification), rev’d on other grounds
sub nom. Schuette v. Coal. to Defend Affirmative Action, 572 U.S. ___, 134 S. Ct. 1623,
188 L. Ed. 2d 613 (2014.
4See also Schwarzschild v. Tse, 69 F.3d 293, 297 (9th Cir. 1995) (holding that
when defendants moved for summary judgment prior to certification, they “waived their
right to have [class] notice given and to obtain a judgment that was binding upon the
class”); Postow v. OBA Fed. Sav. & Loan Ass’n, 627 F.2d 1370, 1382 (D.C. Cir. 1980)
(noting when defendants move for summary judgment prior to certification they
“assume the risk that a judgment in their favor will not protect them from subsequent
suits by other potential class members” (quoting Haas v. Pittsburgh Nat’l Bank, 381
F. Supp. 801, 806 (W.D. Pa. 1974), aff’d in part and rev’d in part, 526 F.2d 1083 (3d
Cir. 1975)).
5Plaintiffs’ stipulation that their pleadings included no rule-of-reason claim had
its intended effect of inducing Wellmark to withdraw its motion to stay, thereby allowing
plaintiffs to avoid a possible stay order. We will not second-guess that strategic
decision by experienced lawyers. But it would be unfair to allow plaintiffs to retract
their stipulation after they got what they wanted from it. And it would prejudice
Wellmark to allow plaintiffs to prolong this case by belatedly adding the rule-of-reason
claim they stipulated out of the case. We have applied the doctrine of judicial estoppel
to prevent a party from taking inconsistent positions in litigation. See Winnebago
Indus., Inc. v. Haverly, 727 N.W.2d 567, 573–75 (Iowa 2006) (concluding employer
estopped from denying liability in workers’ compensation claim when it admitted
liability in a prior proceeding to control the care provided); Wilson v. Liberty Mut. Grp.,
666 N.W.2d 163, 167 (Iowa 2003) (employee who alleged “a bona fide dispute” to obtain
approval of workers’ compensation claim was estopped from pursing bad-faith claim
against insurer).
14
Knowles, the named plaintiff, to keep his claim in state court by avoiding
federal subject matter jurisdiction under the Class Action Fairness Act,
stipulated before class certification that he, and the class he sought to
represent, would not seek aggregate damages exceeding $5 million. Id. at
___, 133 S. Ct. at 1347, 185 L. Ed. 2d at 442. The Court concluded his
stipulation did not bind putative class members because “a plaintiff who
files a proposed class action cannot legally bind members of the proposed
class before the class is certified.” Id. at ___, 133 S. Ct. at 1349, 185
L. Ed. 2d at 444; see also Smith v. Bayer Corp., 564 U.S. 299, 315, 131
S. Ct. 2368, 2380, 180 L. Ed. 2d 341, 354 (2011) (“Neither a proposed
class action nor a rejected class action may bind nonparties.”). A
“nonnamed class member is [not] a party to the class-action litigation
before the class is certified.” Smith, 564 U.S. at 313, 131 S. Ct. at 2379,
180 L. Ed. 2d at 353 (emphasis added). The Knowles Court held,
“Because his precertification stipulation does not bind anyone but
himself, Knowles has not reduced the value of the putative class
members’ claims.” Knowles, 568 U.S. at ___, 133 S. Ct. at 1349, 185
L. Ed. 2d at 444 (emphasis added).
Similarly, the precertification stipulation by the named-plaintiff
chiropractors withdrawing their rule-of-reason claim did not bind anyone
but themselves. See id. The district court properly relied on the
stipulation in granting summary judgment dismissing the named
plaintiffs’ civil action. The stipulation was not binding on putative class
members who could and did file a separate lawsuit to pursue a rule-of-
reason claim.
We conclude the district court could properly enter summary
judgment without notifying putative class members. Our governing rule
provides,
15
1.271(1) Unless certification has been refused under
rule 1.262, a class action, without the approval of the court
after hearing, may not be:
a. Dismissed voluntarily.
b. Dismissed involuntarily without an adjudication on
the merits.
c. Compromised.
1.271(2) If the court has certified the action under
rule 1.262, notice of hearing on the proposed dismissal or
compromise shall be given to all members of the class in a
manner the court directs. If the court has not ruled on
certification, notice of hearing on the proposed dismissal or
compromise may be ordered by the court which shall specify
the persons to be notified and the manner in which notice is
to be given.
Iowa R. Civ. P. 1.271(1)–(2) (emphasis added). Rule 1.271(2) makes clear
that precertification notice was not required here—rather, the court
“may” give notice. Id. The word “may” is permissive when juxtaposed
with the directory word “shall” in the immediately preceding sentence.
See State v. Klawonn, 609 N.W.2d 515, 521 (Iowa 2000) (stating “may”
can be interpreted as “shall” only when context evinces that intent).
Under the circumstances of this case, we hold that the district court had
no obligation to notify putative class members of the pending motion for
summary judgment or the named plaintiffs’ stipulation abandoning a
rule-of-reason claim. Neither due process nor rule 1.271(2) required
notice to other chiropractors who are not bound by the summary
judgment. The district court erred in concluding otherwise. 6
6Our conclusion is consistent with federal class-action law. “Federal rule of civil
procedure 23(e) concerning approval of class action settlements is somewhat analogous
to Iowa rule of civil procedure [1.271].” City of Dubuque v. Iowa Trust, 587 N.W.2d 216,
221 (Iowa 1998). We have looked to federal authority for guidance in the dismissal and
settlement of certified class actions. Id. at 220, 222 (approving settlement of certified
class action). Federal rule 23(e) was amended in 2003 to limit mandatory notice of
dismissals to certified class actions:
(e) Settlement, Voluntary Dismissal, or Compromise. The
claims, issues, or defenses of a certified class may be settled, voluntarily
16
This case is over. Litigation between Iowa chiropractors and
Wellmark continues in other civil actions. We express no opinion on the
merits of the other cases.
IV. Disposition.
For the reasons explained above, the district court had no power to
proceed with a rule-of-reason claim after procedendo issued in Mueller II.
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dismissed, or compromised only with the court’s approval. The following
procedures apply to a proposed settlement, voluntary dismissal, or
compromise:
(1) The court must direct notice in a reasonable manner
to all class members who would be bound by the proposal.
Fed. R. Civ. P. 23(e)(1) (emphasis added). As the drafters explained, the purpose of the
2003 amendment was to remove the requirement of precertification notice to putative
class members:
Rule 23(e)(1)(A) resolves the ambiguity in former Rule 23(e)’s
reference to dismissal or compromise of “a class action.” That language
could be—and at times was—read to require court approval of
settlements with putative class representatives that resolved only
individual claims. See Manual for Complex Litigation Third, § 30.41.
The new rule requires approval only if the claims, issues, or defenses of a
certified class are resolved by a settlement, voluntary dismissal, or
compromise.
Fed. R. Civ. P. 23(e)(1) advisory committee’s note to 2003 amendments. Some federal
courts have continued to favor notifying putative class members of proposed dismissals
without class certification under circumstances not presented here. “Case law
addressing pre-certification notice generally takes a flexible approach framed by two
guiding principles: (1) the lack of collusion or bad faith, and (2) the existence of any
reasonable reliance [of] putative class members.” Griffith v. Javitch, Block & Rathbone,
LLP, 241 F.R.D. 600, 602 (S.D. Ohio 2007); see also In re Conagra Foods, Inc.,
CV 11–05379 MMM (AGRx), 2014 WL 12579572, *6 (C.D. Cal. 2014) (allowing voluntary
dismissal without notice to putative class members and stating, “[a]bsent any indication
that these plaintiffs actually appended class allegations in an attempt to get favorable
individual settlements, there is no reason to require notice . . . as a deterrent to
hypothetical abusive plaintiffs” (emphasis omitted) (quoting Diaz v. Trust Territory of
Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989))). Plaintiffs’ counsel vigorously
litigated this case without any settlement or hint of collusion with Wellmark. And any
concern that putative class members relied on this civil action is ameliorated by the fact
the same plaintiffs’ counsel have already filed Chicoine, another pending putative class
action of Iowa chiropractors asserting rule-of-reason claims against Wellmark. See
Iowa R. Civ. P. 1.277 (“The statute of limitations is tolled for all class members upon the
commencement of an action asserting a class action.”). Any dispute over tolling or res
judicata would be addressed in that case.
17
This civil action between the named parties had ended. Accordingly, we
sustain the writ of certiorari.
WRIT SUSTAINED.
All justices concur except Appel, J., who takes no part.