Class Counsel Blog

The Mischief Continues…Has Judge Posner Become More Influential Than the Supreme Court?

We have previously warned that the Supreme Court’s refusal to hear the cases of In re Whirlpool Corp. Front-Loading Washer Products Liab. Litig., 722 F.3d 838 (6th Cir. 2013), cert denied, 134 S.Ct. 1277 (U.S. 2014) ("Whirlpool"); Butler v. Sears, 702 F.3d 359 (7th Cir. 2012),cert. granted, judgment vacated, 133 S.Ct. 2768 (U.S. 2013) and judgment reinstated,727 F.3d 796 (7th Cir.2013) cert. denied, 134 S.Ct. 1277 (U.S. 2014) would lead to mischief as “one issue” class actions and in particular class actions based solely on product defect will continue to be certified.  A recent decision by a federal district court judge in Kansas certainly gives further evidence of such a trend.

In 2011, the Supreme Court decided Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011) (“Dukes”) and in 2013, Comcast Corporation v. Behrend, 133 S.Ct. 1426 (2013) (“Comcast”). Both cases suggested that the Court now expected a much more rigorous analysis of class certification motions and that certification based on the existence of a single “common issue” would at the very least be questionable.  In Dukes, the Supreme Court reiterated that class actions are the exception to the usual rule that a lawsuit is conducted by and on behalf of the individual named parties only. Dukes, 131 S.Ct. at 2550. Citing Professor Nagareda, “Class Certification in the Age of Aggregate Proof,” 84 N.Y.U. L. Rev. 97 (2009), the Court recognized the danger that any competently crafted class complaint could easily raise common questions. Id. at 2551. The Court noted, however, that commonality instead requires that the class members have suffered the same injury: “the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated all at once”. Id.  Perhaps most importantly, the Court ruled that the Rules Enabling Act forbade using Rule 23 to “abridge, enlarge or modify any substantive right.” 28 U.S.C. 2072 (b). Thus “a class cannot be certified on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims”. Id at 2561.

In Comcast, the Supreme Court reiterated these requirements and went so far as to suggest that the use of class certification was not appropriate without the careful and rigorous analysis of whether individual issues such as damages would overwhelm any common issues. According to the Court, the damages model offered by plaintiff must attribute the wrongful conduct to the damage suffered and the damages must be ascertainable.  Accordingly, the Supreme Court reversed the certification of an antitrust class on the grounds that the plaintiff’s damage theory was broader than the theory of liability in the case.  According to the Court, the damage theory propounded by plaintiffs would result in “individual damage calculations [that would] overwhelm questions common to the class.”  Dukes and Comcast thus stand for the proposition that a simplistic analysis that somehow identifies the existence of a single common issue and which ignores damage issues and distinctions should not a certification make.

Whirlpool and Sears both involved claims that washing machines manufactured by the defendants caused the development of mold in some, but not all washers. The lower Courts in both instances certified classes even though not all class members suffered damage and even though the named plaintiff failed to offer any damage model other than to suggest that the damage claims be dealt with on an individual basis.  Certification was sustained even though the certified classes included consumers with many different models of washers and whether mold would actually develop in any washer was heavily dependant on individual use. 

The appellate opinions of the Sixth Circuit and Judge Posner in the 7th Circuit sustaining the certifications were seemingly directly at odds with Dukes and Comcastsince both causation and damages questions raised substantial individual issues. Indeed, the Supreme Court initially sent both cases back to the Circuit Courts to revisit the cases consistent with Comcast.

In response, both Circuits found Comcast irrelevant and that it had no application where plaintiff proposed a class wide liability trial and individual damage trials.  The Courts held that predominance was satisfied since the liability issues relating to injury were susceptible to proof on a class wide basis and that predominance was in reality nothing more than a test of efficiency. It was anticipated that the Supreme Court would overturn these findings; instead, the Court refused to hear these cases. This gave credence to the lower courts’ certification theories and in turn, opened the door for trial courts to expand-- not contract-- the availability of class certification irrespective of Dukes and Comcast.

We first noted this expansion earlier this year in the certification in Lowell v. Summer Bay Management L.C., et al.,13-cv-229, 2014 WL 1092187 (E.D. Tenn. March 17, 2014) (“Lowell”). More recently, a federal district court in Kansas certified a class in Nieberding v. Barrette Outdoor Living, Inc. and Home Depot USA Inc. No.12-CV-2353, 2014 WL 4408928, (D. Kansas, 2014) (“Barrette”). In Barrette, plaintiffs sought certification of a class of all purchasers of outdoor railing products designed and sold by Barrette and Home Depot.  The plaintiffs’ claims were for breach of implied warranty of merchantability, willful omission of material fact which constituted a breach of the Kansas Consumer Protection Act (KCPA) and the commission of unconscionable acts in violation of KCPA. Interestingly, plaintiffs did not assert strict liability or traditional products liability claims although the Court was quick to note that all three claims which were asserted required the showing that the product in issue was defective. Plaintiffs sought class damages measured by the difference in what plaintiffs paid for the product versus what it was worth given the defect.

As set out below, the Court went to great lengths to certify the class despite law in Kansas that would suggest a class was not appropriate. Most importantly, however, the Court certified the class primarily because it identified a single issue—was the product defective—which it believed to be both common and predominant. In doing so, the Court paid lip service to the Comcast requirement that a close look be taken at whether damage calculations predominate over the common issue of defect. The Court in fact noted that the individual damages of each class member would depend in part on the price paid (and presumably also upon the use and recognized value). The Court also concluded that “damages will likely not be identical for every class member, and the damages inquiry presents some individual issues that must be resolved” and that “calculating damages for each class member may present complicated issues at trial”. Nevertheless, the Court quoted Judge Posner’s language in Butler to certify the class:

It would drive a stake through the heart of the class action device, in cases in which damages were sought…to require that every member of the class have identical damages.  If the issues of liability are genuinely common issues, and the damages of individual class members can be readily determined in individual hearings, in settlements negotiation, or by the creation of subclasses, the fact that damages are not identical across all class members should not preclude class certification.

Butler v. Sears, Roebuck and Co. 727 F.3d 796, 801 (7th Cir. 2013). Ironically, Judge Posner’s reasoning-- which most commentators thought would be rejected by the Supreme Court as being at odds with Dukes and certainly Comcast--appears to now have more legs and influence than that of both those opinions.

Clearly the Kansas Court was concerned that without a class vehicle there would be no available redress or remedy to correct what it must have believed to be a probable defect in the product. The Court went out of its way to find that manifestation of damage was not required to prosecute the action under Kansas law, that statutory notice requirements of a claim could be satisfied by the filing of the lawsuit on behalf of the class, that the defendants created a willful omission by failing to reveal to consumers that the product was defective and that despite the fact that the KCPA provided for recovery only to those who suffered a loss as a result of a violation, a showing of causation was not required of the individual class members.

At the end of the day, however, the most troubling aspect of the case is that it stands as yet another milepost in the continuing erosion of the Dukes and Comcast protections. It has traditionally been axiomatic that to have a valid claim product defect or, for that matter most any other claim, there must be an injury that is caused by the conduct in issue. These individualized issues of injury and causation have long protected defendants and guarded against certification.  The notion that a simple, single issue---such as product defect—is sufficient for certification irrespective of individual damage and causation now seems to be gaining more and more traction. Indeed, just as the lower courts sought to do in Dukes and Comcast, the unbundling of causes of action in such a way practically deprives a defendant of the fundamental right to present and litigate its individual defenses.

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Attorney Spotlight

Stephen E. Embry is a member of the Firm's class action, privacy and mass tort groups. He frequently defends participants in consumer class actions and mass tort litigation. Stephen is a national litigator and advisor who is experienced in developing solutions to complex litigation and corporate problems.

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