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John Stockdale, Jr. Successfully Objects to $10 Million, Class Action, Proof of Claim

October, 2014

John Stockdale, Jr., for the debtor, successfully objected to a class action plaintiff’s purported class proof of claim, which substantially reduced the claim pool by approximately $10 million.  Prior to the chapter 11 debtor petition date, it was involved in class action litigation in California where the class action plaintiff alleged the debtor violated California Invasion of Privacy Statute by, among other things, recording cell phone conversations.  However, the class action plaintiff did not have its class certified prior to the petition date nor did it seek class certification in the bankruptcy case after the petition date.  Despite that failure, the class action plaintiff filed a $10 million proof of claim ostensibly on behalf of the purported class.  The debtor then objected to the class proof of claim on the basis that the class action plaintiff had not complied with the procedural requirements requiring class certification in the bankruptcy court prior to filing a proof of claim on behalf of a purported class.  The Bankruptcy Court sustained the debtor’s objection to the class proof of claim in a written opinion.  See In re Associated Community Services, Inc., 2014 Bankr. LEXIS 4542 (Bankr. E.D. Mich. Oct. 30, 2014).