As I’ve noted in several previous posts, (see here, and here, and here), the new term at the U.S. Supreme Court is shaping up as a major one for class action litigation. Today I preview Whirlpool Corp. v. Glazer, a case still in the petition stage which the Court will likely consider in a December conference. Review is urgently needed in Glazer. The Court should grant the petition for certiorari.
The named plaintiffs in Glazer seek to represent all persons who have purchased Whirlpool front-loading automatic washing machines in Ohio since 2001. The plaintiffs allege that all such machines accumulate excessive mold and mildew, or biofilm, as to emit offensive odors.
But here’s the thing: this so-called “defect” isn’t just uncommon; it’s vanishingly rare. Consumer Union’s annual reliability surveys report that less than 1% of all owners report the biofilm problem. Data from customer call centers puts the incidence of the “defect” at two tenths of one percent during the one-year warranty period. According to Whirlpool’s cert petition, at least ninety-seven percent of all buyers, including buyers who have used their washers for more than a decade, have never experienced the “defect.”
So it’s an easy case, right? Federal Rule 23 isn’t supposed to be a magic wand that conjures up vast class actions out of nothing. The rationale of having the rule is that there are significant numbers of people with real, live claims – claims that would pass Article III muster – that can’t be brought individually either because too little money is at stake, or individual suits would overwhelm the courts, or both. One would think that if a bare minimum of ninety-seven percent of all class members have no claim in the Article III sense, class certification should necessarily have been denied, at least under the plaintiffs' vastly overbroad class definition.
But wait, it gets far worse. Twenty-one different washer models are involved in Glazer. They’re built on two different platforms which share only a few common components. The model designs changed markedly over what is now an eleven-year class period. The defendant’s knowledge and disclosure regarding any potential for odors changed materially over the period (despite the extreme rarity of the issue, a team was deployed to analyze it and recommend design, manufacturing and product literature changes to reduce the rate even further). Buyers’ compliance with use and care instructions was all over the board, creating a wealth of causation and product misuse defenses, each and every one of which required individualized fact finding.
Nevertheless, the district court certified a class on plaintiffs’ claims for tortious breach of warranty, negligent design, and negligent failure to warn under Rule 23(a) and 23(b)(3). The Sixth Circuit affirmed. The court brushed aside the problem of individual wash habits (upon which each claim depends) and the fact that the vast majority of the class members had never actually experienced any problem at all, commenting that the class members who had never experienced the alleged odor problem might have been injured by paying too much for the washing machine – a theory never argued by the plaintiffs or briefed on appeal, and apparently not recognized in Ohio where this case is pending.
The questions raised by the Sixth Circuit’s decision in Glazer are of enormous importance. Although the plaintiff seeks to represent “only” 200,000 Ohio consumers, it’s estimated that multiple class actions already filed against several manufacturers of front-loading washing machines across the country potentially involve millions of class members. Already, the Glazer opinion is influencing other courts, with the Seventh Circuit endorsing the Sixth Circuit’s view in a similar case against Sears only a few days ago [pdf].
The lead question proposed by Whirlpool’s cert petition is whether a class may be certified under Federal Rule 23(b)(3) when most class members could not sue on their own behalf. Whirlpool points out two principal reasons why the answer is an emphatic “no”: (1) allowing such classes violates the Wal-Mart v. Dukes requirement that named plaintiffs and absent class members share a common injury; and (2) certifying a class including a significant number of uninjured parties violates Article III, the Rules Enabling Act and Rule 23 itself. The petition points out that the Circuits are split on this issue: the Second and Eighth bar classes with any uninjured members, the Third, Sixth and Ninth Circuits view the issue as irrelevant to class certification, and the Seventh Circuit takes an intermediate view. It is worth noting that the recent Seventh Circuit opinion does not make reference to Wal-Mart v. Dukes, a startling omission that underscores the danger of Glazer becoming a de facto "alternative" to Dukes.
The petition also criticizes the Court of Appeals’ decision for failing to take seriously the searching inquiry under Rule 23 required by the Dukes Court. The Court of Appeals virtually disregarded Whirlpool’s substantial factual showing regarding individualized and disputed factual issues, making no effort to resolve conflicts bearing directly on the requirements of Rule 23. The petition also points out that the Sixth Circuit limited its discussion of predominance to a single sentence – far short of the convincing proof of compliance with Rule 23 required to justify certification.
Not surprisingly given the serious threat to the business community posed by “no injury” class actions, Whirlpool’s cert petition has attracted heavyweight amicus support. The Pacific Legal Foundation writes that permitting class members to proceed without Article III standing “will flood the federal courts with ‘lawyers’ lawsuits.’” Given that the vast majority of class actions settle once they’re certified, the PLF writes that such “no injury” suits are ripe for abuse. According to the Product Liability Advisory Council’s brief, allowing such class actions “presage[s] a toxic litigation environment for manufacturers doing business in the United States,” since even a defect experienced by only a single consumer of a mass-produced product might, in theory, become the basis for an enormous class action. PLAC adds a compelling economic argument, pointing out that while traditional class actions in effect spread the cost of compensating a few injured consumers to all users of a product, a “no injury” class settlement would amount to little more than a tax on the product. In a joint amicus brief, the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers argue that allowing the Sixth Circuit’s decision to stand would amount to a significant step away from the rigorous analysis and enforcement of Rule 23 required by the Court in Dukes. The Wall Street Journal’s editorial board has urged the Court to grant cert as well.
On October 9, the Court requested a response to the cert petition – a hopeful sign that the Court is taking a hard look at the case. The Seventh Circuit’s endorsement of Glazer may raise the odds of a grant even further. The plaintiff’s reply is currently due November 30.