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

Once Again, Comcast Does Not Require Classwide Proof of Damages

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In previous posts, we’ve noted that some district courts have continued to grapple with Comcast v. Behrend, even though the Ninth Circuit has repeatedly clarified that Rule 23(b)(3) does not require classwide proof of damage.  Given the inconsistent district court holdings, it is not surprising that defendants sometimes avoid mentioning the Ninth Circuit’s holdings.  But in a recent opinion, Judge Fernando M. Olguin dealt with the failure harshly, writing that defense counsel had “misstate[d] the standard set forth in Comcast.” See Moore v. Ulta Salon, Cosmetics & Fragrance, 311 F.R.D. 590 (C.D. Cal. 2015).

In Moore, defendant argued that regardless of whether common questions predominate in the liability context, plaintiff cannot satisfy the predominance requirement unless she also “show[s] that damages can be proven on a class-wide basis.”  Judge Olguin began by noting that the argument hinged on a “failure to address applicable Ninth Circuit precedent.”  Id. at 607.  He continued:

defendant misstates the standard set forth in Comcast. …  The [Comcast] Court did not hold that damages must be shown through classwide evidence for common liability issues to predominate.… Here, if the class prevails on its liability claims … only then will the court determine how many hours of pay each plaintiff is entitled to, how many meal and/or rest breaks each plaintiff was denied, and the resulting penalties that defendant must pay.

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Court Rules It Has Authority To Decide Whether Class Cert. Is “Logically Antecedent” to Standing Inquiries

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In consumer class actions, it is not uncommon for named plaintiffs to assert state-law claims arising under the laws of states in which no named plaintiff resides. After all, many consumer suits concern products sold nationwide, and there often may be close parity between the laws of states in which named plaintiffs and unnamed plaintiffs reside.

When faced with a class action complaint structured in this way, defendants typically argue, at the pleadings stage, that named plaintiffs lack Article III standing to assert claims based on these other state laws. This is a threshold issue, according to defendants, which must be decided at the outset of the case. Plaintiffs often respond that differences between a named plaintiff’s claims and unnamed class members’ claims should be treated as an issue of adequacy and typicality under Federal Rule of Civil Procedure 23, and should be resolved at the class certification stage.

District courts in the Ninth Circuit have issued conflicting rulings on this question. Some hold that standing analysis must precede class certification, while others hold that class certification may be decided before standing is addressed. Compare Los Gatos Mercantile, 2014 WL 4774611, *4 (adopting the former approach), with Jepson v. Ticor Title Ins.Read more

C.D. Cal.’s “90-Day Rule” — On Its Way Out?

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Yesterday, in Balser v. Hain Celestial Group, Inc., No. 14-55074, the Ninth Circuit issued a memorandum opinion that may spell the beginning of the end for the Central District of California Local Rule 23-3.  Rule 23-3 states:

Within 90 days after service of a pleading purporting to commence a class action other than an action subject to the Private Securities Litigation Reform Act of 1995, P.L. 104-67, 15 U.S.C. § 77z-1 et seq., the proponent of the class shall file a motion for certification that the action is maintainable as a class action, unless otherwise ordered by the Court.

(emphasis added).  The Local Rule dates back to a time when Fed. R. Civ. P. 23(c)(1)(A) required class certification to be decided “as soon as practicable,” rather than the current “at an early practicable time.”

In the Balser decision, the Ninth Circuit casts serious doubt as to whether the 90-day rule remains viable:

the schedule contemplated by Central District of California Local Rule 23-3, when considered alongside federal rules regarding status conferences and the timing of discovery, is quite unrealistic in light of recent case law regarding the need to establish a sufficient factual record at the class certification stage. See Wal-Mart Stores, Inc.

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23(c)(4) Certification Granted in Costco Hepatitis A Lawsuit

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Judge David O. Carter of the Central District of California recently certified a liability-only class in a case alleging defendants’ conduct created a “risk of exposure to the hepatitis A virus” through the sale of defective food products. See Petersen v. Costco Wholesale Co., 2016 WL 304299 (C.D. Cal. Jan. 25, 2016).

Ruling on the existence and predominance of common questions, the court explained:

Given that Plaintiffs allege that a single product sold only at Costco was defective, there is a common core of salient facts. See Valentino v. Carter-Wallace, Inc., 97 F. 3d 1227, 1229 (9th Cir. 1996).

Thus, the court overruled defendants’ arguments that proving the existence of a defect on a classwide basis would be impossible:

The Ninth Circuit, however, has made clear that “proof of the manifestation of a defect is not a prerequisite to class certification.”  Baker v. Microsoft Corp., 797 F.3d 607, 611 (9th Cir. 2015) (citation omitted).

Indeed, there are several significant common issues here, including Plaintiffs’ contention that a single, specific lot of allegedly defective organic pomegranate seed has given rise to Plaintiffs’ claims. … Put differently, determining whether Defendants sold a defective product in this case will not require a searching individualized inquiry; rather, there will be significant common proof at issue in resolving Defendants’ liability.

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Superiority Not Defeated Just Because More Money Was Theoretically Available in Non-Class Proceedings

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In Corvello v. Wells Fargo Bank, N.A., No. 10-cv-5072 (N.D. Cal.), the defendant contested class certification by arguing that class treatment would not be the superior form of adjudication.

Wells Fargo argued that whereas the FDCPA sets a $500,000 limit on statutory damages in class actions, class members could obtain up to $1,000 each in statutory damages if they proceeded individually.  In other words, absent class members would be better off without the class action device — they should file individual cases and claim their thousand dollars.

Judge Chhabria rejected the argument.  First, he noted that the statutory damages were not the sole source of damages available; class members may also be able to recover actual damages or restitution.  He went on to debunk the assumption that affected individuals would do better without the class device:

Moreover, even with respect to statutory damages, Wells Fargo appears to assume that every borrower who pursued [his or her] claim would be able to recover the maximum amount of statutory damages (namely, $1,000).  But the maximum statutory damages award of $1,000 is not automatic.  Instead, the amount of statutory damages (if any) depends on a court’s analysis of many factors.  Individual class members would not be sacrificing an automatic higher award of statutory damages, but the opportunity to argue for one on a case-by-case basis.

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Court Certifies Liability-Only Class in Costco Frozen Berry Class Action

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Three years after Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), lower courts continue to certify classes for liability purposes only, thereby reserving consideration of damages for individual determination during subsequent phases of litigation. These courts reason that Comcast’s predominance and superiority concerns are “largely irrelevant” to this approach, which is permitted by Rule 23(c)(4). E.g., In re Deepwater Horizon, 739 F.3d 790, 817 (5th Cir. 2014); Butler v. Sears, Roebuck and Co., 727 F.3d 796, 800 (7th Cir. 2013).

A recent order granting class certification in Peterson v. Costco Wholesale Co., Inc., 2016 WL 304299 (C.D. Cal. Jan. 26, 2016), exemplifies the trend. Following a Hepatitis A outbreak in the western United States “linked to the consumption of Townsend berry mix sold to consumers at various Costco locations in early 2013,” id. at *1, individuals from nine different states filed a class action in California state court, seeking damages in part on strict liability theories. The case was then removed to federal district court, where it was assigned to Judge David O. Carter.

At the class certification stage, the Court inquired whether the use of subclasses can account for variations in state law, and whether individual inquiries, such as differences in emotional distress damages, impact the Court’s predominance inquiry.… Read more

U.S. Supreme Court to Consider Appellate Jurisdiction to Review Denial of Class Cert After Named Plaintiffs Voluntarily Dismiss Suit With Prejudice

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In an earlier post, we flagged a cert petition filed in the U.S. Supreme Court by Microsoft Corporation, asking whether federal courts of appeals have jurisdiction to review a denial of class certification after the named plaintiff voluntarily dismisses his individual claims with prejudice. The issue arises in long-running litigation brought by consumers who purchased Xbox consoles which allegedly damage discs during use.

The Supreme Court has now granted review. Interestingly, it has rewritten the question presented, presumably to make clear that it wants argument on whether there is Article III jurisdiction and statutory jurisdiction under 28 U.S.C. § 1291. As rephrased by the Court, the question now is: “Whether a federal court of appeals has jurisdiction under both Article III and 28 U. S. C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.”

Now that the Court has taken this case, it is worth observing that any victory by Microsoft would be pyrrhic. Because a class was not certified by the district court, but should have been according to the Ninth Circuit; and because the voluntary dismissal with prejudice binds only the named individuals in the Baker case, other consumers could simply file another class action seeking redress for the same consumer harm.… Read more

N.D. Cal. Certification of UCC Warranty Claim Against Hewlett-Packard

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On December 18, 2015, Judge Phyllis Hamilton of the Northern District of California issued a ruling certifying a California-only class in a case brought by HP customers who alleged their computers were not equipped with the promised wireless cards. See generally Karim v. Hewlett-Packard Co., No. 12-CV-5240, 2015 WL 9258100 (N.D. Cal. Dec. 18, 2015).

The ruling, along with Judge Hamilton’s previous certification-related opinion in the same case, provide useful guidance on the question of what the of exposure class members need to show in connection for an affirmation that is alleged to form part of the basis of the bargain for an express warranty.

HP had cited a number of cases for the proposition that plaintiff would not be able to show through common proof that the challenged statement formed a basis for each class member’s bargain.  HP had previously cast a similar argument on reliance grounds, but Judge Hamilton ruled that a long line of cases requiring reliance (based on Williams v. Beechnut Nutrition, 185 Cal.App.3d 135 (1986)), had been abrogated by the enactment of section 2313.  This time, HP recast its argument as one of “exposure.”

Judge Hamilton, relying on the analysis in Weinstat v. Dentsply Int’l, Inc., 180 Cal.App.4th 1213 (2010), held that while exposure is relevant, it does not require that the buyers must prove that they actually read the statement; instead … “it is sufficient for plaintiff to show that the statement was made available to them.”  Because the plaintiff had limited the class to those who purchased computers (i) while the relevant language was on the website, (ii) using a customization feature available on the website, plaintiff “met its burden” of limiting the class to “purchasers to whom the representation was made available.”… Read more