On July 23, the Ninth Circuit vacated the district court’s judgment in favor of the plaintiff in Bahamas Surgery Center LLC v. Kimberly-Clark Corporation, a class action that was tried to a $454 million verdict in April 2017. The Ninth Circuit held that the plaintiff lacked standing to sue one of the defendants and that the class had been improperly certified. Among other things, the opinion rejected the argument that a narrow—and largely disfavored—judicial doctrine arising out of Rule 23 can be extended to permit absent class members’ standing to be imputed to the named plaintiff.

• Bahamas brought various fraud and consumer protection claims against Kimberly-Clark Corporation and Halyard Health, Inc., alleging that it overpaid for surgical gowns that were first manufactured by Kimberly-Clark and later manufactured by Halyard. Bahamas’s overpayment theory rested on the contention that the gowns did not comply with the “AAMI Level 4” standard, the highest level of liquid barrier protection.
• The district court denied Bahamas’s motion for class certification as to the fraudulent misrepresentation claims because not all purchasers were exposed to the same information about the product, including the “AAMI Level 4” representation at issue. But the court certified a class as to the fraudulent concealment claims, finding that the defendants had failed to disclose certain test results that Bahamas claimed showed the gowns did not comply with that standard and that such testing failures were uniformly material to the class.
• At the end of the trial, Halyard moved for judgment as a matter of law, arguing—among other things—that Bahamas lacked standing to sue Halyard because it was undisputed that Bahamas stopped purchasing the gowns before Halyard began manufacturing them. The district court rejected this argument, concluding that Bahamas had standing to pursue its claims against Halyard under the “juridical link” doctrine because its alleged injuries stemmed from a “conspiracy or concerted schemes” between Kimberly-Clark and Halyard, such that it would be “expeditious” to combine them in the same action.
  • The juridical link doctrine arose out of a 1973 case called La Mar v. H & B Novelty & Loan Co., in which the Ninth Circuit suggested in dicta that the typicality and adequacy-of-representation prongs of Rule 23 may be satisfied in limited contexts, even though the named plaintiff has not been harmed by a particular defendant, if “all defendants are juridically related in a manner that suggests a single resolution of the dispute would be expeditious.”
• On appeal, the Ninth Circuit reversed and vacated the judgment entered against Halyard, holding that Bahamas had “no claim against Halyard because it purchased no gowns from [Halyard], and any injuries it has are not traceable to Halyard’s conduct.” The fact that certain class members had purchased gowns from Halyard was of no consequence, because “[w]ithout a claim of its own, [a named plaintiff] cannot seek relief on behalf of [itself] or any other member of the class.” In so holding, the Ninth Circuit expressly rejected the argument that the juridical link doctrine could confer Article III standing, dismissing the doctrine as “irrelevant” to that issue.
• The Ninth Circuit also held that the district court abused its discretion by declining to decertify the class, as individualized issues predominated with respect to the materiality of the purported omissions. Specifically, because the evidence at trial showed that a majority of class members purchased the gowns without viewing any representations about the gowns’ “AAMI Level 4” rating, “there [was] no evidence that a reasonable person would attach importance to AAMI test failures” in such transactions.
• The Ninth Circuit’s opinion makes clear that, whatever continued viability the juridical link doctrine might have under Rule 23, a federal procedural rule cannot alter constitutional requirements under Article III. Moreover, by decertifying the class, the court reinforced the conclusion that evidence purporting to show that an alleged omission was material to a named plaintiff’s purchasing decision cannot serve as class-wide evidence of materiality in the absence of uniform exposure/reliance. Finally, the case illustrates that plaintiffs who succeed in certifying a class may not rest on the evidentiary showing they presented in support of the pretrial class certification decision. On the contrary, they must prove again at trial the factual predicate for class certification, including evidence sufficient to support any class-wide presumptions of materiality or reliance ungirding the class certification decision.
• Read the Ninth Circuit’s opinion here. [Disclosure: King & Spalding represents Defendants in this litigation.]