Ninth Circuit Holds That Evidence Supporting Class Certification Need Not Be Admissible

by Seyfarth Shaw LLP
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Seyfarth Synopsis: In Sali v. Corona Regional Medical Center, No. 15-5640, 2018 U.S. App. LEXIS 11497 (9th Cir. May 3, 2018), a three judge panel of the U.S. Court of Appeals for the Ninth Circuit reversed a district court’s decision to deny class certification to a group of nurses.  The Ninth Circuit did so based on its holding that the district court should have considered evidence that would be inadmissible at trial under the Federal Rules of Evidence when it decided class certification.  This decision, which is at odds with precedent from the Fifth and Seventh Circuits, will make it more difficult for employers in the Ninth Circuit to resist class certification on evidentiary grounds. As a result, employers in the Ninth Circuit will need to emphasize other arguments in resisting class certification. Further, the plaintiffs’ class action bar is apt to press similar arguments in other circuits based on the holding in Sali.

Case Background

Plaintiffs Marlyn Sali and Deborah Spriggs (“Plaintiffs”) brought suit against their employer, Corona Regional Medical Center (“Corona”), alleging that Corona underpaid them and other nurses employed by Corona in violation of California law.  Most significant to the Ninth Circuit’s decision, Plaintiffs claimed that Corona improperly rounded the time of nurses employed by Corona, thereby resulting in lost wages.  Plaintiffs sought to certify seven classes, most of them derivative of Plaintiffs’ improper rounding claim.

In support of class certification, Plaintiffs submitted a declaration from a paralegal at the firm of Plaintiffs’ attorneys that attempted to show that Plaintiffs were injured by Corona’s rounding policy.  The paralegal “used Excel spreadsheets to compare [Plaintiffs’] rounded times with their actual clock-in and clock-out times using a random sampling of timesheets” and declared that, based on this comparison, Plaintiffs lost an average of between six and eight minutes per shift as a result of the rounding. Id. at *4.

The district court denied certification on multiple grounds.  The district court held that the typicality requirement of Rule 23(a) was not satisfied for any of the proposed classes because Plaintiffs failed to submit admissible evidence of their alleged injuries.  Specifically, the district court held that the declaration from the paralegal was inadmissible because: (i) the paralegal could not authenticate the documents he used to perform this analysis; (ii) the declaration was an inadmissible lay opinion; and (iii) the manipulation of the data done by the paralegal required an expert.

The district court also held that Spriggs was not an adequate class representative because she was not a member of any of the proposed classes.  It also held that Plaintiffs’ attorneys had not demonstrated that they could adequately serve as class counsel.  Finally, it concluded that Plaintiffs failed to meet the predominance requirement of Rule 26(b)(3) for four of their proposed classes.

Plaintiffs appealed the denial of class certification.

Ninth Circuit’s Decision

The Ninth Circuit reversed the district court’s denial of class certification.  The Ninth Circuit began its analysis by pointing out that, while class certification requires a “rigorous analysis,” it does not require “a mini-trial.”  Id. at *13-14.  It observed that “applying the formal strictures of trial to such an early stage of litigation makes little common sense” because “a class certification decision is far from a conclusive judgment on the merits of the case.”  Id. at *14.

The Ninth Circuit proceeded to hold that the district court abused its discretion when it concluded it could not consider inadmissible evidence at the class certification stage.  It came to this conclusion on two grounds.  First, the Ninth Circuit found that not allowing inadmissible evidence at the class certification stage would put plaintiffs at an unfair disadvantage because “the evidence needed to prove a class’s case often lies in a defendant’s possession and may be obtained only through discovery” and so “[l]imiting class-certification-stage proof to admissible evidence risks terminating actions before a putative class may gather crucial admissible evidence.”  Id. at *14-15.  Second, the Ninth Circuit concluded that “a court’s inquiry on a motion for class certification is tentative, preliminary, and limited” and thus that “there is bound to be some evidentiary uncertainty.”  Id. at *17.

The Ninth Circuit admitted that its decision conflicted with the Fifth Circuit’s decision in Unger v. Amedisys Inc., 401 F.3d 316, 319 (5th Cir. 2005), in which the Fifth Circuit held that a court’s “findings must be made based on adequate admissible evidence to justify class certification.”  Sali, 2018 U.S. App. LEXIS 11497, at *16.  The Ninth Circuit observed that its decision also may conflict with the Seventh Circuit’s decision in Messner v. Northshore Univ. Health Sys., 669 F.3d 802, 812 (7th Cir. 2012), and of the Third Circuit’s ruling of In Re Blood Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015), both of which suggest that class certification evidence must be admissible.  Sali, 2018 U.S. App. LEXIS 11497, at *16.  The Ninth Circuit pointed out that the Eighth Circuit, in contrast, agreed that district courts should consider inadmissible evidence in deciding class certification in In Re Zurn Pex Plumbing Prod. Liab. Litig., 644 F.3d 604, 613 (8th Cir. 2011).

While holding that district courts should not automatically exclude inadmissible evidence in deciding class certification, the Ninth Circuit stated that it was not “dispens[ing] with the standards of admissibility entirely” at the certification stage.  Id. at *19.  Rather, the Ninth Circuit stated that courts “may consider whether the plaintiff’s proof is, or will likely lead to, admissible evidence” in deciding “the weight that evidence is given at the class certification stage.”  Id. at *20.

The Ninth Circuit also reversed the district court’s other justifications for declining certification.  The Ninth Circuit agreed with the district court that Plaintiff Spriggs was not a part of the class and thus not an adequate class representative, but held that Plaintiff Sali was part of the class and was an adequate class representative.  Id. at *20-21.  It held that the district court erred in finding class counsel inadequate because Plaintiffs’ counsel had “incurred thousands of dollars in costs and invested significant time in th[e] matter.”  Id. at *23.  Finally, the Ninth Circuit determined that Plaintiffs had met the predominance requirement because they raised common questions capable of class-wide resolution.

Implications For Employers

This decision is important for employers in the Ninth Circuit, not only because it will make it easier for plaintiffs to achieve class certification, but also because employers faced with class certification will need to adjust their defenses to account for the decision.  While employers should still raise admissibility concerns in opposing class certification to attack the weight of a plaintiff’s evidence, they must not hang their entire opposition on the inadmissibility of evidence because, in light of this decision, courts cannot simply ignore inadmissible evidence at the class certification stage.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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