Can clients who opt out of class action settlements sue their attorneys for malpractice? Bennett v. Jones, Waldo, Holbrook & McDonough Explained

Background and Facts

David Bennett sued Gen-Probe in federal court seeking to enjoin a proposed acquisition, alleging the purchase price was inadequate. Jones Waldo agreed to serve as lead counsel under a retainer agreement that gave them broad discretionary authority over litigation decisions. When the case was transferred to California federal court, Post Kirby joined as co-counsel. Bennett opposed the proposed class action settlement, claiming it was inadequate and that counsel failed to fully investigate the claims. Bennett opted out of the settlement on August 13, 1992, which terminated Jones Waldo’s representation. Bennett later sued both law firms alleging legal malpractice, breach of contract, abuse of process, intentional infliction of emotional distress, and statutory deceit.

Key Legal Issues

The central issue was whether Bennett could state valid claims for legal malpractice and other torts when he had opted out of the class action settlement. The court also addressed whether the defendants’ pursuit of a bar order from the California federal court to protect the settlement constituted abuse of process or intentional infliction of emotional distress.

Court’s Analysis and Holding

The Utah Supreme Court affirmed dismissal of all claims. For the malpractice and breach of contract claims, the court held that Bennett could not demonstrate damages because opting out preserved his individual claims entirely. Under Federal Rule 23(c), the opt-out procedure protects individual interests by allowing class members to pursue their own litigation rather than participate in the class action. Bennett’s decision placed him “in the same legal position with the same legal claims that he would have been in had his relationship with the Jones Waldo defendants never existed.”

The court also rejected Bennett’s abuse of process claim, finding that defendants used the bar order litigation for its intended purpose—protecting the class action settlement from collateral attack. For the intentional infliction of emotional distress claim, the court concluded that defendants’ conduct during litigation did not rise to the level of being “outrageous and intolerable” under Utah law. The judicial proceeding privilege barred claims based on conduct during the bar order litigation.

Practice Implications

This decision establishes important limitations on malpractice claims in the class action context. Attorneys should understand that when clients opt out of settlements, they preserve their individual legal positions, making it difficult to prove damages from alleged malpractice during the class representation period. The decision also reinforces that legitimate use of legal processes, even when motivated by self-interest, does not constitute abuse of process if the process serves its intended function.