Imagine you are the parent of a high school junior. The school announces that rather than having each college-bound student take the SAT, the school is going to select a “typical” junior to take
the SAT, and that student’s test score will be used by all students applying to colleges.
This is a wonderful idea, the school tells you, because most students will no longer have the burden and expense of preparing for and taking the SAT. This efficiency will benefit everyone. Moreover, the plan is expected to increase college applications from lower income students, whose families will benefit from cost savings. And you should not worry about how the representative student will do on the SAT test; after all, the representative will be a “typical” student who has gotten the same education at the same school as your child.
Would you like that plan? Would colleges? And what does any of this have to do with class certification?
Well, nothing specifically. But the idea of a representative SAT test-taker for high school students is roughly analogous to the representative litigation allowed for by Rule 23 of the Federal Rules of Civil Procedure.
Rule 23 allows claims to be litigated by representatives to avoid the expense and wastefulness of litigating what are essentially the same claims over and over. In that way, class actions are intended to enhance efficiency and help ensure that small claims, which would be too expensive to litigate individually, do not go unremedied.
At the same time, however, representative litigation must comply with the due process rights of plaintiffs and defendants. Finding the right balance between these goals is not obvious, and recent Supreme Court opinions suggest lower courts may have overweighted the policies favoring representative litigation.
For example, in Wal-Mart Stores, Inc. v. Dukes 131 S.Ct. 2541, 2558, 2560-61 (2011), the court holds that class actions strictly conform to the requirements of Rule 23 in order to avoid harming
defendants’ ability to litigate substantive defenses.
Justice Clarence Thomas’ dissent in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S.Ct. 1184, 1206, 1212 n.9 (2013), expressed this concern directly, cautioning that the in terrorem effect of class certification may force defendants to give up meritorious defenses through settlement.
By contrast, other members of the court continue to emphasize the importance of Rule 23 in ensuring that small claimants have an effective means of redress. Justice Elena Kagan, in a dissent in American Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304, 2319-20 (2013), complained that the court’s decisions go too far in burdening Rule 23.
“To a hammer, everything looks like a nail,” she wrote. “And to a Court bent on diminishing the usefulness of Rule 23, everything looks like a class action, ready to be dismantled.”
Lower court opinions reflect a similar divide. While divergent lower court opinions undoubtedly reflect differences in the facts of the cases before them, they also suggest differing views on the
proper balancing of the policies underlying Rule 23.
For example, the D.C. Circuit recently rejected class certification, explaining that plaintiffs not only had to demonstrate that the class’ evidence was common to the class, but that the evidence
actually (not just plausibly) was capable of proving each class member’s claims. (See Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d 244, 252 (D.C. Cir. 2013)).
The court found that plaintiffs’ proposed evidence of injury — a statistical model from an economist — was not reliable evidence because it found injury for some class members where none could exist. The D.C. Circuit found that recent Supreme Court decisions required this type of rigorous evidentiary analysis, and rejected certification.
By contrast, the Ninth Circuit granted certification in an employment wage-and-hour class action despite the district court’s determination that the class members suffered different types and amounts of harm from varied law violations. (See Leyva v. Medline Indus., Inc., 716 F.3d 510 (9th Cir. 2013)). Stating that a class action was likely “the only feasible means for [class members] to adjudicate their claims,” the Ninth Circuit rejected the lower court’s manageability concerns as pertaining only to damages. The Ninth Circuit explained that if individualized damage calculations were enough to defeat class certification, most classes could not be certified.
Ultimately, of course, class certification decisions are based on facts. Two recent decisions from the Seventh Circuit — both by Judge Richard Posner — demonstrate this point. In Butler v. Sears, Roebuck and Co., 727 F.3d 796 (7th Cir. 2013), the Seventh Circuit upheld certification of two product liability classes concerning alleged defects in washing machines. The court had no
trouble finding that whether the washers suffered a design flaw was a common question, and that every customer who bought a defective washer was injured.
Although damage calculations would be individualized, Posner explained that determining whether common issues predominated over individualized ones was both a qualitative and a quantitative assessment. Emphasizing the central role of the common liability questions in that case, as well as the importance of class actions in promoting efficiency and ensuring that small claims do not go unremedied, the court found class certification appropriate.
Six months later, Posner denied certification in Parko v. Shell Oil Co., 739 F.3d 1083 (7th Cir. 2014), an environmental class action concerning alleged groundwater contamination. The evidence showed that different class members could have suffered different levels of contamination over long periods of time, and that class members’ alleged injuries could vary significantly.
Posner again explained that predominance was both a qualitative and quantitative inquiry, but noted that “If resolving a common issue will not greatly simplify the litigation to judgment or settlement of claims of hundreds or thousands of claimants, the complications, the unwieldiness, the delay, and the danger that class treatment would expose the defendant or defendants to settlement- forcing risk are not costs worth incurring.”
Thus, while policy views play an important role in class certification decisions, facts ultimately matter most. Counsel therefore must be careful to develop a strong factual basis either in favor, or against, class certification.