In Shannon v. Mayo Clinic Health System (2020AP1186), the District III Court of Appeals held that the circuit court erred in its refusal to amend the class definition in a class action lawsuit.

Facts

In a lawsuit filed on behalf of herself and a putative class, Shannon alleged that she was improperly charged for the costs of obtaining medical records by a nonprofit corporation, Mayo Clinic Health System-Red Cedar, which had since merged into a separate nonprofit corporation, Mayo Clinic Health System-Northwest Wisconsin Region. Shannon’s lawsuit named Red Cedar and Northwest as separate parties to the suit. Given the merger, Northwest moved to dismiss Red Cedar, acknowledging that Northwest would assume any of Red Cedar’s liabilities. The circuit court granted the motion to dismiss Red Cedar and denied a separate motion to dismiss Northwest.

When Shannon moved to certify the class action, Northwest did not oppose, but moved to amend the class definition to specify that only the alleged conduct of Red Cedar, and not the post-merger entity Northwest, defined the scope of the class. Shannon argued that this amendment to the class definition was not necessary because of the merger, also arguing that Northwest should be judicially estopped from making this argument because it had taken a position inconsistent with its earlier motion to dismiss Red Cedar from the lawsuit.

The circuit court referred to Northwest’s argument as “kind of like splitting hairs,” denying Northwest’s motion to amend the class definition and finding that it was an improper attempt to remove Northwest from the case. Northwest appealed.

Discussion

The appellate court held that the circuit court erred in its refusal to amend the class definition because, as certified, the class incorrectly defined who could claim damages as those charged for medical records by Northwest, rather than Red Cedar specifically. The court of appeals also held “that Northwest is not judicially estopped from seeking to correctly define the class action members.” The appellate court reversed the circuit court’s class certification order and remanded the matter with instructions to amend the class definition to substitute Red Cedar for Northwest.

This opinion was recommended for publication in the official reports.