Presenting a live 90-minute webinar with interactive Q&A
"No Injury" and "Overbroad" Consumer
Class Actions: Strategies to Pursue
or Defend Class Certification
Navigating Complex Issues of Overbreadth and Damages in Consumer Product Cases
WEDNESDAY, OCTOBER 7, 2015
1pm Eastern
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12pm Central | 11am Mountain
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10am Pacific
Today’s faculty features:
Frederick S. Longer, Member, Levin Fishbein Sedran & Berman, Philadelphia
Jessica D. Miller, Partner, Skadden Arps Slate Meagher & Flom, Washington, D.C.
Geoffrey M. Wyatt, Counsel, Skadden Arps Slate Meagher & Flom, Washington, D.C.
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“No Injury” and “Overbroad”
Consumer Class Actions: Strategies
to Pursue or Defend Class
Certification
SPEAKERS:
FRED LONGER
[email protected]
JESSICA MILLER
[email protected]
GEOFFREY WYATT
[email protected]
OVERVIEW
– “No-Injury” Class Actions
– “Overbroad” Class Actions
– Supreme Court has granted review in two
cases – Spokeo v. Robins and Tyson Foods,
Inc. v. Bouaphakeo – that will present the
opportunity for the Court to address each issue
– Issues Classes
6
NO-INJURY CLASS ACTIONS
• Background
– The past few years have seen various federal courts
embrace overbroad, no-injury class actions
– Defendants have long argued that such class actions are
illegitimate because the plaintiffs are seeking damages for
a risk that has not materialized and may never
materialize
– For many years, courts agreed that no-injury class actions
are not viable
– Many cases were resolved at the motion-to-dismiss stage
because they were brought by plaintiffs who had
experienced no problem with the product, and thus could
not state a claim
7
NO-INJURY CLASS ACTIONS
• Background
– Many “no-injury” cases were resolved at the motion-to-dismiss stage
• Lee v. General Motors Corp., 950 F. Supp. 170 (S.D. Miss. 1996) (uninjured
plaintiffs sued General Motors, alleging that the detachable fiberglass roofs on
certain vehicles did not meet GM’s safety inspection standards; court dismissed the
claims, explaining that the vehicles in question operated without any problems or
difficulties for multiple years, making it impossible for plaintiffs to establish that
they had been injured by the alleged defect)
• Yost v. General Motors Corp., 651 F. Supp. 656 (D.N.J. 1986) (plaintiff alleged that
oil and water and/or coolant tended to mix in the crankcase in certain of defendant’s
engines and that defendant failed to disclose the defect; case was dismissed, and the
court noted that “[t]he basic problem in this case [was] that plaintiff Yost ha[d] not
alleged that he ha[d] suffered any damages. . . . All he [was] able to allege [was] that
the potential leak [was] ‘likely’ to cause damage and ‘may’ create potential safety
hazards”)
• Yu v. IBM, 732 N.E.2d 1173 (Ill. App. Ct. 2000) (plaintiff sued over computer
system he claimed was not Y2k compliant, even though he had taken advantage of a
free fix that rendered the computer not defective; court dismissed the case because
plaintiff had suffered no injury)
8
NO-INJURY CLASS ACTIONS
• Background
– Recently, courts have entertained an array of cases
that in prior years might have been rejected as
improper “no injury” class actions
9
NO-INJURY CLASS ACTIONS
• Examples of recent “no injury” class actions
– Lilly v. Jamba Juice Co., No. 13-cv-02998-JST, 2014 WL
4652283 (N.D. Cal. Sept. 18, 2014)
– Plaintiffs sought to certify a class of California purchasers of
Jamba Juice Smoothie Kit products that were allegedly
mislabeled as “All Natural”
– The plaintiffs did not allege that they experienced any
problems with the juice
– The named plaintiffs sometimes consumed other products that
contain the same allegedly unnatural ingredients
– When one of the named plaintiffs was asked during a
deposition if she thought she was harmed from purchasing and
consuming the smoothie kit, she answered “no”
– The court nonetheless certified the class for purposes of
determining liability
10
NO-INJURY CLASS ACTIONS
• Examples of recent “no injury” class actions
– McCrary v. Elations Co., LLC, 2014 WL 1779243, at *14
(C.D. Cal. Jan. 13, 2014)
– Certified a class of purchasers of joint health
supplements, despite defendant’s argument that some
members of the class were happy with the supplement
– “Defendant’s concern that some putative class members
were happy with Elations and thus were uninjured is
unpersuasive. The requirement of concrete injury is
satisfied when the Plaintiffs and class members ... suffer
an economic loss caused by the defendant, namely the
purchase of defendant’s product containing
misrepresentations.”
11
NO-INJURY CLASS ACTIONS
• Examples of recent “no injury” class actions
– Zeisel v. Diamond Foods, Inc., No. C 10-01192 JSW,
2011 U.S. Dist. LEXIS 60608 (N.D. Cal. June 7,
2011)
– Plaintiff brought a putative class action on behalf of
walnut purchasers who alleged that certain walnut
products were deceptively marketed as being good
for the heart
– The case was certified even though the named
plaintiff continued to purchase the walnuts after filing
suit and testified that he would continue to purchase
the walnuts, belying any claim of actual injury
12
NO-INJURY CLASS ACTIONS
• Examples of recent “no injury” class actions
– Rikos v. Procter & Gamble Co., --- F.3d ----, 2015 WL
4978712, at *5 (6th Cir. Aug. 20, 2015)
– Affirmed certification of multistate class of purchasers of
a particular brand of probiotics
– Defendant argued that some class members were clearly
not injured because they kept buying the probiotics
– Court disagreed: “[A]lthough P & G argues that some
class members were not injured because they kept buying
Align—a sign that Align works, says P & G—that is not
the right way to think about ‘injury’ in the falseadvertising context. The false-advertising laws at issue
punish companies that sell products using advertising that
misleads the reasonable consumer.”
13
NO-INJURY CLASS ACTIONS
• Examples of recent “no injury” class actions
– Remijas v. Neiman Marcus Group, LLC, 794 F.3d 688,
693 (7th Cir. 2015)
– 350,000 Neiman Credit Card holders had their accounts
pilfered but only 9,200 cards were known to have been
used fraudulently
– 7th Circuit reversed dismissal for lack of standing
– Held: customers should not have to wait until hackers
commit identity theft or credit-card fraud in order to give
the class standing, because there is an “objectively
reasonable likelihood” that “such an injury will occur.”
• Citing Clapper v. Amnesty Int’l USA, 133 S.Ct. 1138, 1147
(2013)
14
NO-INJURY CLASS ACTIONS
• Examples of recent “no injury” class actions
– Mabary v. Home Town Bank, N.A., 771 F.3d 820 (5th
Cir. 2014)
• Plaintiff brought suit against a bank, alleging that it failed
to post a placard about transaction fees in violation of the
federal Electronic Funds Transfer Act
• Defendant argued that plaintiff was aware of the fee and
thus had no injury
• Court disagreed, holding that the violation of the statute
was itself an injury
15
NO-INJURY CLASS ACTIONS
• Spokeo v. Robins, No. 13-1339
– One type of “no injury” case that has been certified in recent
years relates to alleged statutory violations that have not
harmed the proposed class members
– The Supreme Court has granted certiorari and will address this
issue in Spokeo v. Robins
– Spokeo arises from a claim under the Fair Credit Reporting
Act
– Spokeo operates a “people search engine” that aggregates
publicly available information about people, including, in
some instances, information relating to a person’s “wealth”
– Plaintiff argues that Spokeo’s disclosure of wealth information
made it a “consumer reporting agency” that issues “consumer
reports” in violation of the FCRA
16
NO-INJURY CLASS ACTIONS
• Spokeo
– The district court dismissed the suit against Spokeo on Article
III grounds
– Court concluded that the plaintiff had failed to identify any
actual or imminent concrete injury
– The Ninth Circuit reversed, finding that the FCRA’s provision
for statutory damages in cases involving willful violations of
the statute meant that the plaintiff was injured solely by
Spokeo’s alleged violation of the statute
– Spokeo sought certiorari, arguing that the courts of appeals
were split on the question at issue:
• Does violation of a statute by itself suffice to establish constitutional
standing, or must the plaintiff also show that he or she was injured in
some tangible sense?
17
NO-INJURY CLASS ACTIONS
• Defendants’ perspective
– The Court’s ruling will have broad implications for class
action practice
– A rule under which mere violation of a statute – or the
mere breach of any duty – automatically establishes
injury would improperly lower the bar to class treatment
– Requiring a plaintiff to show concrete injury to maintain
or participate in a class action would go a long way
toward reining in bloated settlements and potential
liability based on technical violations of law that produce
little or no actual harm
18
NO-INJURY CLASS ACTIONS
• Plaintiffs’ Perspective
– “Failure of proof” on the merits is not an obstacle to class certification. See Amgen
Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S.Ct. 1184, 1197 (U.S.
2013) (“Such a contention [regarding failure of proof] is properly addressed at trial
or in a ruling on a summary-judgment motion. The allegation should not be
resolved in deciding whether to certify a proposed class.”); Suchanek v. Sturm
Foods, Inc., 764 F.3d 750, 757, 758 (7th Cir. Aug. 22, 2014) (“If the court thought
that no class can be certified until proof exists that every member has been harmed,
it was wrong.” *** “If very few members of the class were harmed, that is an
argument not for refusing to certify the class but for certifying it and then entering a
judgment that would largely exonerate [the defendants].”).
– The Third Circuit is equally emphatic on this point. In Sullivan v. DB Investments,
Inc., 667 F.3d 273, 305 (3d Cir. 2011)(en banc), this Court rejected the defendants’
arguments that the plaintiffs had to prove that each class member had a “viable
claim or some colorable legal claim” as being “misdirected.” See also Hassine v.
Jeffes, 846 F.2d 169, 178 (3d Cir. 1988)(“The ability of a named plaintiff to succeed
on his or her individual claims has never been a prerequisite to certification of the
class.”); Byrd v. Aaron’s Inc., 784 F.3d 154, 168-69 (3d Cir. 2015) (overbreadth is
not a component of ascertainability).
19
OVERBROAD CLASS ACTIONS
• Two main types of cases
– Cases in which not all members of the proposed class
were injured
– Cases in which plaintiffs’ damages theory does not
match the class
20
OVERBROAD CLASS ACTIONS
• Origins of “overbroad” class actions
– With failure of no-injury class actions, more cases were filed
in which the named plaintiffs’ products actually manifested the
alleged defect at issue in the litigation
– Dismissal of such cases was less likely
– But at first most courts recognized that even if the named
plaintiffs may have suffered some injury, the overwhelming
majority of class members had not
– According to these courts, certification of these claims was not
appropriate, for a variety of reasons
– These decisions are best summed up in the Seventh Circuit’s
pronouncement in the Ford Explorer/Firestone tire litigation in
2002 that “[n]o injury, no tort, is an ingredient of every state’s
law”
• In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig., 288 F.3d
1012, 1017 (7th Cir. 2002)
21
OVERBROAD CLASS ACTIONS
• Examples of classes rejected as overbroad
• Burton v. Chrysler Group LLC, No. 8:10-00209-MGL, 2012
U.S. Dist. LEXIS 186720 (D.S.C. Dec. 21, 2012) (rejecting
proposed class of “[a]ll persons and entities who purchased a
new 2007-2009 Dodge Ram 2500 or 3500 truck in the United
States” because not all owners experienced the alleged problem
with their vehicles)
• Kachi v. Natrol, Inc., No. 13cv0412 JM(MDD), 2014 U.S. Dist.
LEXIS 90987 (S.D. Cal. June 19, 2014) (rejecting proposed
nationwide and California classes of purchasers of fitness
supplements because inefficacy claims did not apply to entire
class)
• Feinstein v. Firestone Tire & Rubber Co., 535 F. Supp. 595
(S.D.N.Y. 1982) (rejecting proposed class of purchasers of
allegedly defective tires because not all purchasers experienced
problems with their tires)
22
OVERBROAD CLASS ACTIONS
• Recent trends
– Over the last several years, a number of courts have departed
from the decisions rejecting no-injury class actions
– These courts are certifying such cases, even where it is clear
that many class members have never encountered any problem
with the subject product – and likely never will
• Wolin v. Jaguar Land Rover North America, LLC, 617 F.3d 1168 (9th
Cir. 2010) (alleged vehicle defect resulting in premature tire wear)
• Tait v. BSH Home Appliances Corp., 289 F.R.D. 466 (C.D. Cal. 2012),
cert. denied, 134 S. Ct. 1273 (2014) (alleged washing machine defect
resulting in mold growth/accumulation)
• In re Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604
(8th Cir. 2011) (allegedly defective brass plumbing fittings)
23
OVERBROAD CLASS ACTIONS
• Most attention in recent years was on the
washing machine cases, Glazer and Butler
– Whirlpool Corp. v. Glazer, 678 F.3d 409 (6th
Cir. 2012)
• Affirmed class certification of consumers alleging
mold in washing machines
• Most class members – 97 percent – never
complained about any problem with their washers
• “Even if some class members have not been injured
by the challenged practice, a class may
nevertheless be appropriate”
• Supreme Court vacated and remanded in light of
Comcast
24
OVERBROAD CLASS ACTIONS
• Glazer and Butler
– Butler v. Sears, Roebuck & Co., 702 F.3d 359 (7th
Cir. 2012)
• Another front-load washing machine class action
• “Predominance is a question of efficiency”
• According to Judge Posner, if Sears thinks the machines
are not defective, it can win on classwide basis
• In tension with Thorogood (not cited in Butler), where
Judge Posner rejected a dryer class action because:
– Consumers may have purchased dryers for reasons unrelated
to propensity to cause or prevent rust stains
– The risks of “costly error” inherent in allowing one jury to
decide liability as to all were too great
– It appeared that the rust problem did not affect most class
members
• Also vacated and remanded in light of Comcast
25
OVERBROAD CLASS ACTIONS
• Glazer and Butler
– Sixth Circuit stuck to its prior ruling on remand
– Claimed Glazer was “different” from Comcast
• Comcast concerned individualized damages issues
• Glazer only certified liability for class treatment
– The defendant argued that injuries were also varied
• Analogous to Comcast because class members without mold
or odor problems were not injured
• Thus, class device could expand potential recovery beyond
any valid liability theory
– Sixth Circuit sought to avoid injury problem based on
“premium price” theory
– Supreme Court denied certiorari
26
OVERBROAD CLASS ACTIONS
• Glazer and Butler
– Seventh Circuit followed the same course
• Comcast does not affect the prior ruling because
the case could proceed as an issues class: “[t]here
is a single, central, common issue of liability:
whether the Sears washing machine was defective,”
that could be resolved on a classwide basis
• All other, noncommon issues, including both injury
and damages, could be resolved separately in
individual trials
– See Butler v. Sears Roebuck & Co., 2013 WL 4478200
(7th Cir. Aug. 22, 2013)
• Supreme Court denied certiorari
27
OVERBROAD CLASS ACTIONS
• Cases limiting Glazer and Butler
– Felix v. Ganley Chevrolet, Inc., No. 2015-Ohio-3430, 2015 WL
5039233 (Aug. 27, 2015) (Ohio Supreme Court vacated a trial court's
order certifying a class of consumers who signed an automobile
purchase agreement containing an allegedly unconscionable
arbitration clause in a consumer protection class action, finding that,
to satisfy predominance, the plaintiffs must demonstrate that all class
members suffered actual damages as a result of the challenged
conduct)
– Pagliaroni v. Mastic Home Exteriors, Inc., No. 12-10164 (D. Mass.
Sept. 22, 2015) (rejecting proposed class of purchasers of decking
products because “some consumers received Oasis decks that are
alleged to be unfit for ordinary use, whereas others have had no
performance problems with their decks. In light of this record,
whether a particular Oasis deck fails ordinary expectations for use is
not a common question susceptible to classwide proof or
determination.”)
28
OVERBROAD CLASS ACTIONS
• Cases following Glazer and Butler
• In re IKO Roofing Shingle Products Liability Litigation, 757 F.3d 599
(7th Cir. 2014) (reversing denial of certification of class of purchasers
of organic asphalt roofing shingles who alleged defendant falsely told
customers that the shingles met industry standards; Seventh Circuit
ruled that it did not matter that certain class members’ roofing
shingles did not manifest the alleged defect)
• Suchanek v. Sturm Foods, Inc., No. 13-3843, 2014 U.S. App. LEXIS
16259 (7th Cir. Aug. 22, 2014) (reversing denial of certification of
class of purchasers of coffee pod products who alleged that defendant
falsely claimed the pods contained premium coffee; Seventh Circuit
ruled the lower court’s concern regarding “overbreadth” was
misguided in light of the record evidence, including affidavits from
the named plaintiffs, demonstrating that all of the plaintiffs received
low-quality instant coffee instead of the premium coffee they were
promised)
29
OVERBROAD CLASS ACTIONS
• Overbreadth as an issue of “standing”
– Neale v. Volvo Cars of North America, LLC, --- F.3d --, 2015 WL 4466919, at *2, *5 (3d Cir. July 22,
2015)
• Absent class member standing not required in Third
Circuit: “Volvo argues on appeal that: (1) putative members
of the class have not suffered an injury and therefore lack
Article III standing * * * We now squarely hold that
unnamed, putative class members need not establish Article
III standing”
• But acknowledges that courts of appeals are confused and
divided on the question, with the Second, Eighth, Ninth, an
D.C. Circuits all potentially requiring absent class member
standing
30
OVERBROAD CLASS ACTIONS
• Tyson Foods v. Bouaphakeo, No. 14-1146
– The Supreme Court could address some or all of
these issues in Tyson Foods
– The plaintiffs claim that they were not sufficiently
compensated for time spent donning and doffing
work-related attire and equipment
– They sought to represent co-workers in both a
collective action under the federal Fair Labor
Standards Act and as a class under an Iowa state
wage law
31
OVERBROAD CLASS ACTIONS
• Tyson Foods
– The district court allowed both claims to proceed on an aggregate basis
– Tyson argued that the evidence established that injury (if any) varied
widely within the class
– The district court ruled that the opinions of plaintiffs’ experts — who
determined an “average” injury allegedly sustained by each class member
based on a sampling of alleged uncompensated overtime worked by certain
class members — sufficed to remove individualized issues from the case
– The Eighth Circuit affirmed but was strongly divided over the injury issue
– In its cert. petition, Tyson argued that plaintiffs’ approach of proving
classwide injury on the basis of an “average” of alleged overtime hours by
a small sample of the entire class violated the Court’s prohibition on “Trial
By Formula” in Wal-Mart Stores v. Dukes
– The petition also invokes the case law on standing
32
OVERBROAD CLASS ACTIONS
• Defendants’ perspective
– The Court should take the opportunity to limit the ability to bring overbroad class actions
– One problem with overbroad class actions is that, because they are overbroad, they result in
settlements in which very few class members participate
– In Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014), for example, the plaintiffs asserted
various claims arising out of allegedly defective windows that caused leaking
– The Seventh Circuit recognized that many members of the class experienced no problems
with their windows, but nonetheless ruled that certification was proper
– The parties then entered into a settlement that the Seventh Circuit recently vacated as being
“inequitable – even scandalous”
– 225,000 notices had been sent to class members, but less than 1,300 claims had been filed
before the district court approved the settlement
– Those claims sought less than $1.5 million, “a long way from the $90 million that the district
judge thought the class members likely to receive were the suit to be litigated”
– One obvious reason for the low claims rate was that the certified class included large numbers
of consumers who were satisfied with the product at issue and therefore had zero motivation
to obtain compensation
33
OVERBROAD CLASS ACTIONS
• Defendants’ perspective
– Another problem with certification of overbroad classes is the assumption that it is even
possible to determine who is an injured class member and who is not
– In the Nexium litigation, for example, the plaintiffs alleged that AstraZeneca improperly paid
three generic manufacturers to delay entry into the market of generic equivalents to Nexium,
the manufacturer’s heartburn drug
– Defendants argued that the class was overbroad because it failed to account for “brand
loyalists” – in essence, patients who refuse to take generic drugs and therefore could not have
been injured
– The district court rejected this argument, certifying a class, and the First Circuit affirmed
– In its ruling, the Court of Appeals acknowledged that “a proper mechanism for exclusion of
brand-loyalist consumers has not yet been proposed,” but believed that absent class members
could “establish injury through testimony by the consumer that, given the choice, he or she
would have purchased the generic” and that such testimony could be provided “in the form of
an affidavit or declaration”
– In a strongly worded dissent, Judge William Kayatta expressed concern that the district court
and the majority had improperly “kicked the can down the road” by assuming that it would be
possible later in the litigation to determine who was injured and who was not
– Judge Kayatta also noted that class member affidavits would not be a proper way to establish
injury because the defendant would have no feasible means of refuting them.
•
In re Nexium Antitrust Litig., Nos. 14-1521 & 14-1522, 2015 WL 265548 (1st Cir. Jan. 21, 2015)
34
OVERBROAD CLASS ACTIONS
• Plaintiffs’ perspective
– As demonstrated by the prior discussion, injury-in-fact
is confused with damages.
– Because class actions must be defined objectively, most
courts will not permit a class definition to include the
phrase, “and were damaged thereby.” Therefore, most
class actions will include persons that have not yet had a
problem manifest. That does not mean that class
members are not exposed to the injury or lack standing,
e.g., a purchaser of a defective product that has yet to
manifest the defect. It simply means, apart from their
purchase damages, they are not yet traumatized by the
defect. See, e.g., Remijas, supra; McCrary, supra.
35
DAMAGES
• Supreme Court majority reversed class
certification in Comcast Corp v. Behrend, 133
S. Ct. 1426 (2013)
– Plaintiffs did not present classwide damages
theory that matched certified liability theory
– Plaintiffs’ damages model “failed to measure
damages resulting from the particular antitrust
injury on which [the defendants’] liability [was]
premised”
– Thus, “questions of individual damages
calculations [would] inevitably overwhelm
questions common to the class,” defeating
predominance and rendering classwide treatment
improper
36
DAMAGES
• First takeaway: under Comcast, classwide liability and
damages theories must match
– Plaintiffs’ view – this conclusion only applies to antitrust cases
• Harris v. Comscore Inc., 292 F.R.D. 579, 589 n.9 (N.D. Ill. 2013)
(“The Supreme Court’s holding came from its assumption, uncontested
by the parties, that Rule 23(b)(3) requires that damages must be
measurable based on a common methodology applicable to the entire
class in antitrust cases. That assumption, even assuming it is applicable
to privacy class actions in some way, is merely dicta and does not bind
this court.”)
– Defendants’ view – principle is broadly applicable
• Jacob v. Duane Reade, Inc., 293 F.R.D. 578 (S.D.N.Y. 2013) (noting
that courts have “grappled” with Comcast’s “interaction with nonantitrust class actions” and concluding that the no-mismatch rule
applies broadly in cases where plaintiffs attempt to rely on purportedly
common damages evidence)
37
DAMAGES
• Case study: In re Skelaxin Metaxalone Antitrust Litig.,
2014 U.S. Dist. LEXIS 11467 (E.D. Tenn. Jan. 30, 2014)
– Putative antitrust class action alleging defendants colluded to
delay market entry of generic alternative
– Plaintiffs sought the difference between the amount they paid
and the amount they would have paid for a theorized generic
– The court denied both the direct and indirect purchasers’
motions for class certification
• “[I]f Comcast is given its full breadth . . . the incongruity between End
Payors’ description of class membership and the entities included in its
impact and damages model might defeat this proposed class”
• “Given Comcast’s requirement that the damages model and the theory
of liability match, [the expert’s damages] model [was] problematic”
38
DAMAGES
• Case study: Cannon v. BP Prods. N. Am., 2013 U.S.
Dist. LEXIS 142934 (S.D. Tex. Sept. 30, 2013)
– Class action related to defendant’s chemical releases
and emissions
– Certification denied – plaintiffs could not prove
classwide causation or damages
– Expert’s “overarching theory of damages” could not
support plaintiffs’ certification bid – it was
“disconnected from Plaintiffs’ causes of action of
negligence, trespass, and nuisance which [were]
limited to a particular time period beginning in late
2008”
• One problem: expert advanced a real estate trend
analysis that was based on the “wrong class area”
39
DAMAGES
• Second takeaway: Rigorous scrutiny of experts at
class certification
– It appears certiorari originally granted to resolve the
applicability of Daubert at class certification
• But no Daubert issue was preserved
– Instead, the Court addressed the merits of the damages
evidence under the “rigorous analysis” requirement
– It rejected the notion that expert damages evidence need
not be scrutinized on the merits; “[u]nder that logic, . . .
any method of measurement is acceptable so long as it
can be applied classwide, no matter how arbitrary the
measurements may be,” which would “reduce Rule
23(b)(3)’s predominance requirement to a nullity”
40
DAMAGES
• Second takeaway: Rigorous scrutiny of experts
at class certification
– How rigorous?
• Plaintiffs’ perspective: “Merits questions may be
considered to the extent – but only to the extent – that they
are relevant to determining whether the Rule 23
prerequisites for class certification are satisfied”
– Amgen v. Connecticut Retirement Plans & Trust, 133 S. Ct. 1184,
1195 (2013)
• Defendants’ perspective: Because damages is clearly
relevant to predominance after Comcast, close scrutiny of
damages experts will be routine
41
DAMAGES
• How does this scrutiny relate to Daubert?:
– Cannon v. BP Prods. N. Am., 2013 U.S. Dist. LEXIS
142934 (S.D. Tex. Sept. 30, 2013)
• “[A] district court’s rigorous analysis may necessitate the evaluation of
expert testimony. Although courts are not to insist upon a battle of the
experts at the certification stage ..., [i]n many cases, it makes sense to
consider the admissibility of the testimony of an expert proferred to establish
one of the Rule 23 elements in the context of a motion to strike prior to
considering class certification.”
• The court scrutinized plaintiff’s expert’s damages opinion
• “[I]n one sense scrutiny of expert testimony being used to show that a case is
susceptible to class treatment seems less controversial than the normal
application of Daubert, because it does not intrude on the jury’s role given
that class certification is an issue for the court”
• The expert’s “overarching theory of damages” was “disconnected from
Plaintiffs’ causes of action of negligence, trespass, and nuisance which
[were] limited to a particular time period beginning in late 2008”
42
DAMAGES
– Courts of appeals have taken a variety of approaches
• Daubert applies: In re Blood Reagents Antitrust Litigation, 783 F.3d
183 (3d Cir. 2015) (Third Circuit vacated and remanded district court’s
certification of a class of individuals and entities who had purchased
blood products, finding that “a plaintiff cannot rely on challenged expert
testimony, when critical to class certification, to demonstrate conformity
with Rule 23 unless the plaintiff also demonstrates, and the trial court
finds, that the expert testimony satisfies the standard set out in Daubert”)
• Merits of expert’s theory should be scrutinized: In re Rail Freight Fuel
Surcharge Antitrust Litig., 725 F.3d 244 (D.C. Cir. 2013) (“It is now
indisputably the role of the district court to scrutinize the evidence
before granting certification, even when doing so ‘requires inquiry into
the merits of the claim’”)
• Precision not required as long as damages and liability theories match:
In re VHS of Michigan, Inc., No. 14-0107, 2015 WL 424486 (6th Cir.
Feb. 3, 2015) (denying permission to appeal certification order; agreeing
with district court that damages and liability theories matched; rejecting
defendant’s argument that the damages theory was improper because it
provided only an “approximate” classwide damages figure)
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DAMAGES
• Case study: In re Urethane Antitrust Litig., 2013
WL 2097346 (D. Kan. May 15, 2013), aff’d, 768
F.3d 1245 (10th Cir. 2014)
– Defendant’s motion to decertify class action where the
same expert as in Comcast had testified to antitrust impact
was rejected
• “There is no basis to strike Dr. McClave’s testimony or to
conclude that his methodology could not provide a causal link
between plaintiffs’ theory of liability and the class-wide impact”
– A petition for Supreme Court review in this case was
pending as of end of last Term
– Among other things, the petition argued that the damages
model was flawed because it included damages for
purchasers who did not sustain damages as a result of the
alleged price-fixing scheme because they negotiated away
price increases
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DAMAGES
• Beyond mismatches?
– Some decisions suggest that courts are paying more attention to
individualized issues posed by damages, even where mismatches
or flaws in expert evidence are not alleged:
• Bussey v. Macon Cnty. Greyhound Park, Inc., 562 F. App’x 782, 791 (11th
Cir. 2014) (holding in light of Comcast that district court abused its
discretion in certifying class of electronic bingo players where damages were
individualized)
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ISSUES CLASSES
• What do these developments mean for
issues classes?
– The lead dissent in Comcast suggested that
individualized damages issues can be
addressed through issues classes
• 133 S. Ct. 1426, 1437 & n.* (2013)
– The majority did not respond, leaving open the
possibility that it intended to require proof of
classwide damages in all cases
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ISSUES CLASSES
• Courts have gone different ways since Comcast
– Some have either applied or assumed a requirement of
classwide damages and have certified where the plaintiffs
provide common evidence of damages and denied
certification where they do not
– Some courts have “employ[ed] Rule 23(c)(4) and
maintain[ed] class certification as to liability only, leaving
damages for a separate, individualized determination”
• Jacob v. Duane Reade Holdings, 293 F.R.D. 578 (S.D.N.Y. 2013)
(summarizing these approaches)
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ISSUES CLASSES
• Some courts have relied on issues classes to avoid
difficulties with damages:
– In re Motor Fuel Temperature Sales Practices Litig., 292
F.R.D. 652 (D. Kan. 2013)
• Certified issues class on alleged non-disclosure of information regarding
gasoline
• “Determining each class members’ damages, if any, may require
individualized determinations, but ‘[t]he possibility that individual issues
may predominate the issue of damages . . . does not defeat class
certification by making [the liability] aspect of the case unmanageable’”
– Johnson v. Nextel Communs., Inc. 293 F.R.D. 660
(S.D.N.Y. 2013)
• Certified issues class on employment-discrimination claims
• “Comcast does not apply to certification of liability-only classes and
therefore is not relevant” to the court’s analysis under Rule 23(c)(4)
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ISSUES CLASSES
• Some courts have rejected issues classes as a solution because
they would simply postpone intractably individualized issues
and thus would not be “appropriate”:
– Rahman v. Mott’s LLP, No. 13-cv-03482-SI, 2014 WL 6815779,
at *9 (N.D. Cal. Dec. 3, 2014)
• “[A] district court is not bound to certify a liability class merely because
it is permissible to do so under Rule 23(b)(3). The language of Rule
23(c)(4) speaks of certifying as to particular issues ‘when appropriate,’
meaning that ‘[c]ourts should use Rule 23(c)(4) only where resolution of
the particular common issues would materially advance the disposition
of the litigation as a whole.’”
– Citing Jacob v. Duane Reade, Inc., 293 F.R.D. 578, 589 (S.D.N.Y. 2013) (internal
citations omitted).
• “Should Rahman prevail on the issue of liability, certifying a second
class on the issue of damages would in essence amount to prosecuting
two trials when one would have done just as well. Alternatively,
allowing myriad individual damages claims to go forward hardly seems
like a reasonable or efficient alternative, particularly in a case such as
this where the average class member is likely to have suffered less than a
hundred dollars in damages.”
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ISSUES CLASSES
• Defendants’ Perspective
– Issues classes pose serious threats for
defendants but they are also risky for plaintiffs
• Issues classes are not fair to defendants
– Have sometimes been used to relieve plaintiffs from
burden of proving injury and causation
– “Issues” verdicts can put tremendous pressure on
defendant
– Issues classes are in tension with Seventh Amendment
» “[T]he risk that a second jury would have to
reconsider the liability issues decided by the first
jury is too substantial to certify [an] issues class”
• In re ConAgra Peanut Butter Prods. Liab. Litig.,
251 F.R.D. 689, 698-99 (N.D. Ga. 2008)
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ISSUES CLASSES
• Plaintiffs’ Perspective
– Issues Classes serve a limited purpose – they
will advance discreet aspects of either fact or
law in a particular case.
– It’s like Potter Stewart’s definition of
pornography – whether a particular issue
progresses the litigation to the goal of res
judicata is a question best decided by counsel
and the court. They are the ones most
knowledgeable with the particular
circumstances presenting them at the
time. They will know it when they see it.
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