Skilstaf v. CVS Caremark Corp.

A class member is precluded from filing a second class action suit when the member was (1) a party to a prior settlement agreement containing an applicable covenant not sue, and (2) the class member had full notice and an opportunity to object or withdraw from the prior settlement agreement.

Skilstaf filed suit seeking to represent a nationwide class against CVS Caremark Corp. Skilstaf had previously been a member of a nationwide class in a related suit filed in Massachusetts Federal District Court. In the current case, the lower court dismissed Skilstaf’s claim because (1) the Massachusetts settlement agreement contained an enforceable covenant not to sue and (2) a new class representative could not be appointed, since no class had been certified. The Ninth Circuit noted that Skilstaf had challenged the Massachusetts settlement order, including the covenant not to sue. The Court noted further that, as a result of that challenge, Skilstaf had a second opportunity to withdraw from the settlement but “declined to opt out.” The Ninth Circuit also noted that unnamed members of the putative class Skilstaf sought to represent would not be bound by the dismissal of Skilstaf’s claim. The Ninth Circuit held that the settlement agreement from the Massachusetts case precluded Skilstaf from bringing suit on a claim barred by the covenant not to sue because (1) the covenant not to sue was unambiguous and (2) Skilstaf’s challenge to the settlement received due process. AFFIRMED.