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

GM Ignition and the “Benefit of the Bargain” Theory

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Last week, Judge Jesse M. Furman issued a 103-page ruling disposing of New GM’s partial motion to dismiss.  At the crux of the opinion were plaintiffs’ two damages theories.

First, as the court put it, plaintiffs “pursue an unprecedented theory of damages, one that turns not on whether the vehicles at issue were sold with known, latent defects … but rather on the alleged reduction in resale value of the vehicles due to damage to New GM’s reputation and brand.”  Not surprisingly, given the court’s tone in characterizing the theory, the court ruled the first theory was “unsound.”

Second, plaintiffs also seek damages based on a much more well-established methodology: the benefit of the bargain theory.  As the court described that theory:

The gravamen of the benefit-of-the-bargain defect theory is that Plaintiffs who purchased defective cars were injured when they purchased for x dollars a New GM car that contained a latent defect; had they known about the defect, they would have paid fewer than x dollars for the car (or not bought the car at all), because a car with a safety defect is worth less than a car without a safety defect.

Although New GM argued that this theory too failed “across the board” and that it “always requires a plaintiff to prove manifestation of the alleged defect,” the court held that while different jurisdictions have reached different conclusions, in many jurisdictions the damages theory is viable:

New GM is wrong in arguing that the benefit-of-the-bargain defect theory must fail because New GM did not warrant that its cars would have a particular resale value in the future.  

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