On January 8, 2020, the U.S. District Court for the Central District of California reinstated its June 2014 class certification order, holding that the named plaintiff’s full refund damages model was consistent with his theory of liability and did not present individualized questions that would violate Rule 23. The court’s ruling is procedurally unique, as it relied upon the “binding” Ninth Circuit precedent created by the plaintiff’s interlocutory appeal—an appeal the Supreme Court ruled last year had been untimely filed.

• Plaintiff Troy Lambert filed the lawsuit in August 2013, claiming that Nutraceutical Corporation’s advertising campaign concerning “Cobra Sexual Energy,” which Nutraceutical marketed as capable of improving men’s virility, ran afoul of California consumer protection laws.
• The case has a lengthy and complicated procedural history.
  • In June 2014, the court granted class certification. After the case was transferred to a different district judge, the case was decertified in February 2015 based on the court’s conclusion that common issues did not predominate because Lambert failed to provide key evidence in support of his damages model.
  • After granting Lambert’s Rule 23(f) petition, the Ninth Circuit held in September 2017 that the district court abused its discretion in decertifying the class because Lambert’s damages model was supportable by evidence that could be admitted at trial. Specifically, the Ninth Circuit held that “[u]ncertainty regarding class members’ damages does not prevent certification of a class as long as a valid method has been proposed for calculating those damages.”
  • Yet, the Supreme Court subsequently held that Lambert’s Rule 23(f) petition was untimely because the 14-day deadline was not subject to equitable tolling—a decision we reported on in our April 2019 edition.
• Now back at the district court, Nutraceutical argued that, because Lambert’s Rule 23(f) petition was untimely, his appeal “should have never been filed and ha[d] zero legal effect.” Lambert countered that the Ninth Circuit’s decision still carried binding, precedential effect, since the predominance holding was not addressed by the Supreme Court and thus remained the law of the case. He further noted that the Ninth Circuit had since cited its decision as good law.
• The district court agreed with Lambert and rescinded its prior decertification order, explaining that it could not “ignore controlling, published Ninth Circuit precedent finding that its articulated basis for decertification—that individualized damages defeated certification—was incorrect.”
• In an added wrinkle, the district court also rejected Nutraceutical’s argument that the putative class members’ claims were barred by the four-year statute of limitations because American Pipe tolling ended on February 20, 2015—the date the district court issued its decertification order.
  • Under American Pipe & Construction Company v. Utah, 414 U.S. 528 (1974), the commencement of a class action arising under federal law generally suspends the applicable statute of limitations for class members—but “only during the pendency of the motion to strip the suit of its class action character.” Id. at 561. Tolling for absent members of the putative class typically ends in any subsequently filed case once class certification is denied because it is no longer presumptively reasonable for an absent class member to rely on the pendency of a putative class action in refraining to file his or her individual claim once class certification has been denied. California has adopted American Pipe tolling.
  • Although the Lambert court generally agreed with the defendant that the order decertifying the class ended tolling for class members who may have sought to file individual claims in separate litigation, the court disagreed that the decertification order had this effect on putative class claims still in the case. On the contrary, the court found that those claims were preserved throughout the pendency of the action while Lambert represented the putative class on appeal. The court agreed with Lambert that it was not even accurate “to speak of ‘tolling’ within a single case.”
• The case is Lambert v. Nutraceutical Corp. Read more here.