As many readers of this blog know by now, last week the Supreme Court issued yet another anti-class certification decision in Comcast Corp. v. Behrend (“Comcast”). While the full scope and meaning of the Court’s holding is subject to interpretation by the lower courts, a central holding is that a district court errs if it certifies a class for purposes of liability and damages where the plaintiff lacks collective proof capable of calculating damages to the class consistent with Plaintiff’s theory of liability.
Furthermore, Justice Scalia’s decision repeatedly invoked Wal-Mart Stores, Inc. v. Dukes (“Dukes”) and, at least as a matter of tone, appeared to admonish lower courts to be more hesitant in granting class certification than they have been under past precedent. Indeed, Justice Scalia announced that the “predominance” analysis under Rule 23(b)(3) is even more rigorous than the strict Rule 23(a) “commonality” analysis announced in Dukes.
As explained below, the Court’s subsequent orders issued this week that summarily reversed and remanded class certification decisions in two other cases cast serious doubt on the arguments from the plaintiff’s bar that Comcast was limited to its facts and that Comcast will have no impact on class certification jurisprudence.
I am a frequent reader of the blog, UCL Practitioner, run by plaintiff’s lawyer, Kimberly Kralowec, both because Ms. Kralowec posts often and because she is a thoughtful advocate for the plaintiff's class action bar. Following the Comcast decision, she posted on her blog that the Comcast decision was actually of no importance because counsel for the plaintiff class had purportedly conceded a key point that they should have disputed:
“For unknown reasons, the plaintiffs in Comcast chose to concede (or at least not contest) that to obtain class certification, they would have to show that they could establish and measure the damages through common proof. As a result, the Court did not consider, let alone overturn, the long-established rule for the mine run of cases in which no such concession was made.”
As I understand Ms. Kralowec's argument, the supposed failure to contest this point means that lower courts remain free to certify classes both as to liability and damages even where the plaintiffs are wholly unable to establish damages for the defined class through common proof. This reading of Comcast continues Ms. Kralowec’s trend of reading decisions that are popularly viewed as defeats for the plaintiff’s bar as either non-events or even plaintiff victories.
For example, while many (including me) interpreted Brinker Restaurant Corp. v. Superior Court as establishing a rule that makes certification exceedingly difficult to obtain in the great majority of meal period class actions, Ms. Kralowec interpreted it as a victory for the plaintiff’s bar that reaffirmed the vitality of meal period class actions. To her credit, she successfully advocated to have three subsequent appellate decisions that rejected her view of Brinker depublished (although her work is not yet done, as similar, new appellate decisions continue to be issued, such as here and here).
Similarly, while the vast majority of plaintiff’s counsel gnashed their teeth and rended their clothes over Dukes and its apparent holding that it is a violation of constitutional due process for a court to conduct a class trial by sampling for liability and damages through “trial by formula,” Ms. Kralowec argued that the decision actually is limited only to massive Title VII cases. In fact, even when the Ninth Circuit rejected this view last month in Wang v. Chinese Daily News and held that the prohibition of “trial by formula” applies to routine wage and hour cases, Ms. Kralowec retorted that the Seventh Circuit had advanced a narrower reading of Dukes in RBS Citizens NA v. Ross that is more consistent with her interpretation of Dukes.
With that in mind, I am curious to read Ms. Kralowec’s eventual post on the Supreme Court’s post-Comcast orders. In the wake of the supposedly insignificant Comcast decision, the Court issued two summary reversals of decisions in which appellate courts had affirmed class certification orders: Whirlpool Corp. v. Glazer (a consumer class action decision) and RBS Citizens NA v. Ross (the wage/hour case that Ms. Kralowec argued preserved trial by formula for wage/hour cases). The Court did not explain why these certification orders were defective but it reversed certification and remanded the cases to the courts of appeal for further consideration in light of Comcast. This at least strongly implies that the Court believed that Comcast provided meaningful guidance on these two decisions—neither of which arises under antitrust law or Title VII.
Whirlpool involved certification of a large, multidistrict consumer class action involving purchasers of Whirlpool Duet washers that allegedly were defectively designed so as to lead to the growth of mold. The defendant argued that class certification was inappropriate because most people who purchased Duets never experienced any injury as their machines never developed a mold problem. Furthermore, individuals may have experienced a mold problem not proximately caused by the alleged design defect (e.g., if they regularly overloaded it with liquid detergent).
The Sixth Circuit had nonetheless affirmed class certification on the basis that there were predominant common issues concerning whether a common design defect existed that had the propensity to cause the mold problems and whether Whirlpool issued adequate warnings to consumers. The Sixth Circuit declined to decide whether the expert’s theory or methodology could properly determine classwide damages, holding that issue to be immaterial to the certification decision.
RBS Citizens is a fairly routine wage and hour case. The Seventh Circuit had affirmed a class certification in a wage-hour case alleging an exempt misclassification manager subclass and an hourly employee forced off-the-clock subclass. The two subclasses totaled 1,129 people and RBS Citizens argued that, under Dukes, commonality could not be established because its policies were lawful on their face and it would be entitled to call each witness to address such individualized issues as whether the hourly employees in fact worked off the clock, whether the way a manager performed the job rendered the manager exempt, and whether any particular class member actually worked overtime. To support this view, RBS submitted declarations of employees that indicated that, at least in their cases, there was no liability.
The Seventh Circuit held those individualized issues did not preclude certification and distinguished Dukes on the ground that it involved a massive Title VII class that was not similar to a wage/hour class. The only response to the defendants’ argument about individualized issues was to point out that the plaintiffs had supported their theories with 96 non-exempt employee declarations and 24 exempt employee declarations that supported the plaintiffs’ theory that there was an unofficial policy to require the managers to perform mostly non-exempt work and the non-exempt employees to work off the clock. The Seventh Circuit found this to be a sufficient basis to support Rule 23 commonality because “this unofficial policy is the common answer that potentially drives the resolution of this litigation.”
The common element of these cases is that both courts waved away arguments that individual issues existed that led to a sizable portion of the class not being injured and which required individualized testimony to sort out. In Whirlpool, a class was certified without taking into account those class members who purchased a Duet and happily used it without suffering any mold issue or who misused the Duet in a way that would generate mold in any machine. In RBS Citizens, the court certified a class without taking into account the existence of employees who performed their job in a way that qualified them as exempt, who never worked off the clock, or who never worked overtime at all. The lower courts simply sidestepped these issues by limiting their focus to the existence of other common issues—such as the common “design defect” in the Duet washing machines or the possible existence of an “unofficial practice” contrary to the written policy to discourage the reporting of overtime.
Comcast seems to disapprove of shortcuts that ignore these individualized issues in Rule 23(b)(3) certification decisions. Justice Scalia admonished that class actions are “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only,” and that certification is proper in cases seeking class damages under Rule 23(b)(3) only where predominance is established under standards “even more demanding than [the] Rule 23(a)” standards the Court announced last year in Dukes.
Ms. Kralowec presumably interprets such language as boilerplate that does not change anything. But the Court's subsequent orders in the wake of Comcast suggest that the majority of the Supreme Court feels otherwise. A court cannot simply wave away the existence of individualized causation and injury issues by pointing to other common issues that have classwide significance. A court cannot deprive a defendant of its right to establish defenses as to individual class members merely by pointing out that the plaintiffs have submitted a sizable number of declarations in which they argue the individuals were subject to an unwritten unlawful practice. The defendant’s rights to raise individualized defenses cannot be circumvented by taking a small sample of the class and extrapolating liability and damages to the class through trial by formula.
While it remains to be seen exactly how the appellate courts will interpret Comcast following the remand of Whirlpool and RBS Citizens, the message emanating from the Supreme Court is hard to miss. While I fully expect Ms. Kralowec to continue her advocacy for a liberal interpretation of Rule 23 requirements, the plaintiffs bar is truly whistling past the graveyard if it believes that the steady march of decisions from this Supreme Court reversing class certifications signals anything other than an attempt to greatly narrow the universe of cases where a class can be certified.