Class Cert Appeals & the Muddy Waters of the 9th Circuit

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In less than two weeks, the Supreme Court will hear oral argument on the following issue: Whether a federal court of appeals has jurisdiction to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.

The underlying decision, which we’ve written about previously, is the Ninth Circuit’s ruling in Baker v. Microsoft.  In Baker, the district court struck class allegations, Plaintiffs sought leave to appeal under Federal Rule of Civil Procedure 23(f), and leave was denied.  Plaintiffs then voluntarily dismissed their individual claims with prejudice and appealed.  The Ninth Circuit concluded it had jurisdiction because the dismissal – even though it came by stipulation – was “sufficiently adverse” to be an appealable final decision.

With the Supreme Court poised to rule in Baker, the Ninth Circuit recently issued a second published decision involving a similar issue. Bates v. Bankers Life & Casualty Co.  In Bates, as in Baker, the district court granted a motion to strike class allegations.  From there, the posture of the cases diverged.  Rather than voluntarily dismissing with prejudice (as in Baker), the Bates plaintiffs filed an unopposed motion for entry of final judgment pursuant to Federal Rule of Civil Procedure 54(b).… Read more

9th Circuit Affirms Class Certification in RICO Suit

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Last week, the Ninth Circuit affirmed certification of nationwide classes in a suit featuring RICO, contract, and other claims.  The published opinion dealt with a range of issues, including typicality, predominance, and superiority.

The case is Just Film, Inc. v. Buono.  No. 14-16132, 2017 WL 510452 (9th Cir. Feb. 7, 2017).  The full opinion is worth a read; a few highlights follow.

Typicality

One argument defendants raised was that the named plaintiffs’ injuries differed from the injuries suffered by other class members.  The Ninth Circuit held that the differing injuries did not defeat typicality:

The requirement of typicality is not primarily concerned with whether each person in a proposed class suffers the same type of damages; rather, it is sufficient for typicality if the plaintiff endured a course of conduct directed against the class. Although Campbell was able to fend off the attempted fraud before it reached into and diminished her bank account, there is no reason why she cannot prove the nature of the fraudulent scheme for benefit of all class members, whether or not their precise injuries are identical.

Predominance

Defendants challenged predominance on several grounds, including that damages would vary by class member and would require individualized evidence.  … Read more

Class Representatives Do Not Need to Be Eligible for Each Type of Damages

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In the post-Comcast climate, plaintiffs in consumer class actions often seek to prove damages classwide through damages models.  But what happens when the model would provide damages for many class members, but not for a class representative? Is that a bar to class certification?

Judge David O. Carter, of the Central District of California, has held that class representatives do not need to be eligible to recover all forms of economic damages sought on behalf of the class.  In Petersen v. Costco Wholesale Co., 2016 WL 6768911 (C.D. Cal. Nov. 15, 2016), defendants argued that none of the class representatives could establish all of the economic damages that the class is seeking as a whole—making them atypical class members. Judge Carter agreed with defendants’ premise: no class representative experienced all three injuries, and six of them experienced none of the identified harms.

Nevertheless, Judge Carter held that “the named Plaintiffs need not raise identical claims to all the possible claims in the class.” Judge Carter reasoned, “[t]he tests of typicality does not require identity of claims, and the named Plaintiffs claims need be only reasonably co-extensive with those of absent class members.”  He continued: “The same showing of liability that will entitle the named Plaintiffs to recover will also entitle absent class members to any economic damages they incurred.Read more

ND Cal. Refuses to Decertify Based on Spokeo, Supposed Over-Breadth of Class

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Magistrate Judge Laurel Beeler recently examined the Supreme Court’s Spokeo decision in the context of a claim brought under the Fair Credit Reporting Act.  The decision also provides new clarity on when over-breadth is a deal-breaker for class definitions.  The case is Patel v. Trans Union, LLC, No. 14-CV-00522, 2016 WL 6143191 (N.D. Cal. Oct. 21, 2016).

In Patel, the plaintiff alleges defendants disseminated a consumer-information report that wrongly described him as a terrorist and as having a criminal record. Plaintiff further alleged that when he asked defendants for their file on him, they failed to send him his complete file.

The court had previously certified classes; defendants sought decertification under Spokeo, arguing plaintiff had not suffered “concrete” harm.  Judge Beeler disagreed as to both aspects of the plaintiff’s case.

First, regarding the inaccurate information, the court reasoned:

The court sees little difficulty in concluding that the alleged inaccuracies — being wrongly branded a potential terrorist, or wrongly ascribed a criminal record — are themselves concrete harms. This is fully in line with Spokeo’s express analysis. There, in describing cases in which the violation of a statutory right “can be sufficient…to constitute injury in fact,” the Court analogized to torts for which the law has “long permitted recovery” — picking out, specifically, the torts of “libel” and “slander per se.” Spokeo, 134 S.
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California’s “Safety Requirement” Takes Another Hit

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Here is a noteworthy excerpt from Judge Whyte’s motion to dismiss and class certification ruling in the pending MDL class action involving Lenovo computers that came pre-installed with adware.  The excerpt below pertains to the California safety requirement in duty to disclose cases – a topic about which we have written several times.  (The excerpt is otherwise offered without commentary since Girard Gibbs LLP is court-appointed class counsel in the litigation.)

Lenovo argues that plaintiffs cannot allege a duty to disclose because a “manufacturer’s duty to consumers is limited to its warranty obligations absent either an affirmative misrepresentation or a safety issue.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1141 (9th Cir. 2012).
This court must apply California law. In Wilson, cited by Lenovo, the Ninth Circuit noted that California federal courts have generally interpreted Daugherty, a California Court of Appeal decision, as limiting a manufacturer’s duty to disclose “to its warranty obligations absent either an affirmative misrepresentation or a safety issue.” 668 F.3d at 1141 (citing Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824 (2006), as modified (Nov. 8, 2006)). In Norcia, cited by plaintiffs, the district court noted that “the California Court of Appeal itself has very recently clarified that this is a misreading of California law.
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11th Circuit: Comcast Doesn’t Require Classwide Proof of Damages

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Today, in Carriuolo v. General Motors Co., the Eleventh Circuit joined a group of circuits that includes at least the Second, Third, Seventh, and Ninth, holding that “individual damages calculations alone cannot defeat class certification.” The court rejected defendant’s argument that, after the Supreme Court’s Comcast v. Behrend decision, “damages must be capable of measurement on a classwide basis.”

The underlying case involves allegations that GM advertised that some of its vehicles had achieved safety ratings that they hadn’t really achieved.  Plaintiffs alleged this conduct violates Florida’s deceptive practices statute.  Based on that theory of liability, the Eleventh Circuit held that damages would be a common issue, since individual buying preferences would not alter the overall market price::

a manufacturer’s misrepresentation may allow it to command a price premium and to overcharge customers systematically. Even if an individual class member subjectively valued the vehicle equally with or without the accurate Monroney sticker, she could have suffered a loss in negotiating leverage if a vehicle with perfect safety ratings is worth more on the open market. … Obviously, prices are determined in substantial measure according to market demand. Thus, because a vehicle with three perfect safety ratings may be able to attract greater market demand than a vehicle with no safety ratings, the misleading sticker arguably was the direct cause of actual damages for the certified class even if members individually value safety ratings differently.

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Seventh Circuit Approves Class Settlement Over Objections

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Last month, the Seventh Circuit affirmed the final approval of a class settlement that provided both consumer and personal injury remedies.  The objector raised a host of issues and the full opinion is worth reading.  But two points in particular are likely to be informative for future consumer class settlements.

First, the court rejected the argument that variations among state law meant that certification was improper under Rule 23(b)(3).  The court began by reviewing Bridgestone/Firestone and Pella, and explained that it deemed this case to be more like Pella, where the court had found nationwide certification to be appropriate despite such variations.  The court continued:

but there is a stronger reason for supporting the district court’s decision here: the settlement agreement contained a choice‐of‐law clause, which specified the law of Illinois. Martin seems to have overlooked this point, when she asks in her brief, “will variations in claimants’ respective state laws be considered in determining the award?” The short answer is that those variations will not make a difference, because of the choice of a single law.

Second, the court also dealt with the fact that the settlement provided more money, and imposed greater claims burdens, for class members who alleged they had been injured:

As for the general claim that the procedures are too burdensome, we have no reason to disagree with the district court’s assessment to the contrary.

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Class Certification Granted in Automotive Defect Suit

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Judge Dean D. Pregerson certified the class under Rule 23(b)(3) in a suit alleging an undisclosed defect in certain Nissan vehicles.  The court certified California consumer protection and implied warranty claims, a Washington consumer protection claim, and a claim for common law fraud.  The case is Falco v. Nissan N. Am. Inc., 2016 WL 1327474 (C.D. Cal. Apr. 5, 2016).

Several times, the court relied on the ample Ninth Circuit precedent for certifying automotive defect cases:

The Court finds this case raises similar common questions of fact and law to the common questions alleged in another consumer automobile defect class certification case, Chamberlan v. Ford Motor Co., 402 F.3d 952, 962 (9th Cir. 2005). … In these consumer defect cases, commonality can be found in the very legal and factual question of the defect. See, e.g., id.; see also Wolin v. Jaguar Land Rover N. Am. LLC, 617 F.3d 1168, 1172 (9th Cir. 2010); Doyle v. Chrysler Grp. LLC, No. SACV 13-00620, 2014 WL 7690155, at *6-7 (C.D. Cal. Oct. 9, 2014); Parkinson v. Hyundai Motor Am., 258 F.R.D. 580, 595-96 (C.D. Cal. 2008).

The court also approved Plaintiffs’ two closely-related damages methodologies.  First, class members who already spent money on repairs and diagnoses can be provided restitution based on “the average cost of repair.”  Second, class members who had not already paid for repairs could still receive restitution based on the same figure because

the class would be getting the benefit of their bargain because they would be put in the same position they would have been had the car not been sold with the defective timing chain system — it is the cost necessary to make the vehicles conform to the value Plaintiffs thought they were getting in the price tendered.

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Does Tyson Foods Case Redefine Predominance?

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According to Justice Thomas, who (along with Justice Alito) dissented in Tyson Foods v. Bouaphakeo, 555 U.S. ___ (2016), the answer is ‘yes’:

The majority begins by redefining the predominance standard. According to the majority, if some “‘central issues’” present common questions, “ ‘the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.’ ” Ante, at 9 (quoting, 7AA C. Wright, A. Miller, & M. Kane, Federal Practice & Procedure §1778, pp. 123–124 (3d ed. 2005; footnotes omitted)). We recently—and correctly—held the opposite. In Comcast, we deemed the lack of a common methodology for proving damages fatal to predominance because “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.” 569 U. S., at ___ (slip op., at 7).

Slip op. at 8-9 (Thomas, J., dissenting). To drive this point home, Justice Thomas observes in a footnote that “[t]he majority relies on the same treatise citations that the Comcast dissent invoked to argue that individualized damages calculations should never defeat predominance. 569 U. S., at ___–___ (slip op., at 3–4) (opinion of Breyer, J.).” Id.… Read more

More Comcast Confusion

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Yesterday, we wrote about the ruling in Moore v. Ulta Salon, Cosmetics & Fragrance, in which Central District of California Judge Fernando M. Olguin  concluded (correctly) that “the [Comcast] Court did not hold that damages must be shown through classwide evidence for common liability issues to predominate.”  (emphasis added). Judge Olguin’s conclusion jives with several post-Comcast rulings by the Ninth Circuit.

Today, we note that another court in the same district reached the opposite conclusion, stating that “to certify a class under Federal Rule of Civil Procedure 23(b)(3)” plaintiffs must show that “damages are capable of measurement on a classwide basis.” In re NJOY, Inc. Consumer Class Action Litig., 2016 WL 787415 (C.D. Cal. Feb. 2, 2016). The continuing divergent results on this issue will likely require the Ninth Circuit to take up the issue yet again.

In the Seventh Circuit, on the other hand, there appears to be less uncertainty about interpreting Comcast. Judge Barabara B. Crabb of the Western District of Wisconsin issued a ruling quite similar in tone to Judge Olguin’s.  See Eggen v. Westconsin Credit Union, 2016 WL 797614 (W.D. Wisc. Feb. 26, 2016).  Like Judge Olguin, Judge Crabb was compelled to note that the defendant had ignored circuit court precedent on Comcast, instead arguing that certification was inappropriate due to individualized damages issues.  … Read more