## Facts

- A federal securities class action alleged Midwestern United Life Insurance Company aided and abetted a securities dealer’s fraud in violation of Exchange Act § 10(b) and SEC Rule 10b-5.
- The plaintiff class included persons who purchased Midwestern stock from the dealer but never received delivery.
- Certain identifiable absent class members received notice of the pending class action, did not opt out, and did not enter appearances.
- The district court directed discovery to those class members under Federal Rules of Civil Procedure 33 and 34.
- After the class members failed to comply with court-ordered discovery, the district court dismissed their individual class claims with prejudice as a sanction.
- Following entry of final judgment in the class action, the dismissed class members moved for relief from the dismissal under Rule 60(b)(4) (void judgment) or Rule 60(b)(6) (other reasons justifying relief).
- The district court denied Rule 60(b) relief, and the dismissed class members appealed.

## Issues

1. Whether identifiable absent class members who received notice, remained in the class, and did not appear may be required to respond to discovery under Rules 33 and 34, subject to dismissal with prejudice for noncompliance.
2. Whether dismissal of those class members’ claims for discovery noncompliance was “void” under Rule 60(b)(4).
3. Whether the dismissed class members established grounds for relief under Rule 60(b)(6).

## Decision

- The Seventh Circuit affirmed the denial of Rule 60(b) relief.
- The court held that noticed, non-opting absent class members may be required to submit to discovery when appropriate to the fair conduct of the class action.
- The court held that dismissal with prejudice may be imposed as a sanction for failure to comply with properly issued and enforced discovery orders.
- The court concluded the dismissal was not void under Rule 60(b)(4) because the district court had authority over the class members and acted consistently with due process.
- The court found no extraordinary circumstances warranting relief under Rule 60(b)(6) and no abuse of discretion in denying the motion.

## Legal Principles

- In a Rule 23 class action, an identifiable class member who receives notice and does not opt out remains subject to court orders necessary to manage and fairly adjudicate the case, including discovery under Rules 33 and 34.
- A district court may impose Rule 37-type sanctions, including dismissal with prejudice of a class member’s claim, for repeated noncompliance with discovery orders.
- A judgment is “void” under Rule 60(b)(4) only for fundamental jurisdictional or due process defects; an alleged error in exercising discovery or sanction authority does not make the judgment void.
- Rule 60(b)(6) relief is reserved for extraordinary circumstances and is constrained by the policy favoring finality; denial is reviewed for abuse of discretion.

## Conclusion

The Seventh Circuit held that absent class members who receive notice and stay in the class may be compelled to respond to discovery and may have their claims dismissed with prejudice for noncompliance, and it upheld the district court’s refusal to reopen those dismissals under Rule 60(b)(4) or Rule 60(b)(6).


Brennan v. Midwestern United Life Ins. Co., 450 F.2d 999 (7th Cir. 1971)