Earlier this week, The U.S. Court of Appeals for The Second Circuit issued an opinion that considered for the first time whether Comcast Corp. v. Behrend (a decision issued by the Supreme Court in 2013) required class certification to be denied in cases where damages can only be ascertained on an individualized basis. The Second Circuit has long held that the ability to measure damages on a class-wide basis is not a prerequisite for certifying a class action, and in this opinion joined the First, Fifth, Sixth, Seventh, Ninth, and Tenth Circuits in holding that this rule is consistent with Comcast.
The case – Roach v. T.L. Cannon Corp – involved claims brought by a purported class of employees against a restaurant chain for violations of New York Labor Law, seeking damages for hours worked that were allegedly not compensated properly. The district court denied class certification, holding that under Comcast the individualized nature of the damages prohibited a finding that common issues predominated over issues that must be decided on an individual basis. On appeal, the Second Circuit reversed, holding that Comcast did not in fact overrule Second Circuit precedent that issues common to the class may predominate irrespective of the need to individually quantify damages.
The Second Circuit explained that while the trial court decision appealed from in Comcast had required a showing that damages were measurable on a class-wide basis, the Third Circuit held to the contrary on appeal that certification could be warranted so long as measuring damages would “not require labyrinthine calculations,” and by the time the case reached the Supreme Court, the question of whether it was necessary for damages to be capable of class-wide calculations in order to prove predominance was no longer before the Court, as neither party had contested the district court’s ruling on this matter. According to the Second Circuit, the Supreme Court in Comcast held simply that a model of determining damages which is relied upon for class certification must align with the class’s asserted theory of injury.
This opinion is of interest because it not only moves toward a Circuit-wide consensus on an important issue pertaining to the ability of a purported class to become certified, but also because it sheds light on how complicated it can be for lower courts and litigants to parse Supreme Court judgments for what is and is not a new rule of law. Particularly when it comes to issues like class certification procedure, issues are often addressed on a piecemeal basis and it can take a long time for there to be a consistent understanding of exactly how the law will come down. Questions will continue to make their way up from the lower courts to the courts of appeals and we will continue to monitor new developments.