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September 2011

Joe Hardy Defeats Class Certification and Court Dismisses All Claims Against Client

Las Vegas partner Joe Hardy defeated a motion to certify a potential class of over 500 plaintiffs, and subsequently obtained a complete dismissal of all claims against the firm’s client.

The case concerned the development and sale of luxury condominiums located just off the Las Vegas Strip.  The firm’s client originally constructed the condominiums as an apartment complex and, after selling them, became the property management company for the condominium HOA.  Following purchase, most of the condo units were leased back to the seller who rented them to others. Later, the leaseback operation converted into a hotel-type operation. Unfortunately, the owners and the property were not licensed as a hotel.  The county government investigated the situation and enjoined the leaseback program.

The case began in September 2008 and revolved around sixteen named plaintiffs with a potential class of over 500 additional members. After class action allegations were added, the case was removed to federal court. The plaintiffs subsequently amended the complaint to add nearly 50 additional plaintiffs and more than 200 defendants with claims of fraud, securities violations, conversion and conspiracy among others. Defendants' motions to dismiss were denied, but the Court required the plaintiffs to amend. In their third amended complaint the plaintiffs dropped most of the new plaintiffs and defendants, but the third amended complaint remained more than 200 pages long. At the same time, the plaintiffs filed a motion to certify the class.

Joe filed an opposition to the motion to certify as well as another motion to dismiss. The court allowed the defendants to conduct pre-certification discovery and requested a new round of briefs on the certification issue.

Despite finding that the commonality and numerosity requirements were met, the Court denied class certification. The court ruled that the claims of the proposed class representatives were not typical of the class. The court also based its decision on the fact that the proposed class counsel could not adequately protect the interests of the class. The Court’s order borrowed heavily from Joe's opposition and supplemental briefs for both of those points.

Shortly thereafter, the Court granted the defendants’ motions to dismiss. Again, the Court relied heavily on the arguments raised in Joe’s briefs. Although it took almost three years, the client was able to escape a potential multi-million dollar class action lawsuit without even filing an answer.