Sep 2 2009
Extendicare Real Estate Investment Trust ("Extendicare REIT") (TSX:EXE.UN) announced that a judge in Milwaukee County Circuit Court ruled that a class action lawsuit brought against Extendicare Health Services, Inc., Extendicare Homes, Inc. and other related entities (collectively "Extendicare"), wholly owned U.S. based subsidiaries of Extendicare REIT, was improper and ordered the case dismissed in its entirety.
The lawsuit was originally filed on November 14, 2008 in Milwaukee County Circuit Court as a copy cat lawsuit to two other lawsuits that were similarly dismissed by federal courts in Washington and Minnesota. Like those, the suit asserted a claim under a state consumer protection statute and was premised upon an allegation that Extendicare had misrepresented the quality of its services to the residents of its Wisconsin skilled nursing facilities. The plaintiff brought the action on behalf of all current and former residents for the period 2005 through 2008.
The Honorable Dennis Moroney rejected the class action claim, and like the federal court in Minnesota, held that that the plaintiffs' allegations were too general and unspecific to serve as the basis for a claim. Judge Moroney further prohibited the plaintiffs' attorneys from attempting to re-file the lawsuit with amended allegations because, given the weakness of the claim, it would be futile.
Like the other suits filed against it asserting similar theories, Extendicare viewed this suit as an attempt by creative plaintiffs' lawyers to use costly, but ultimately baseless, litigation strategies as a means of forcing settlement and driving up attorneys' fees. Judge Moroney's ruling appears to vindicate Extendicare's position.