California Court of Appeal Grants Mandamus on Public Nuisance Class for Lack of Predominance
A recent appellate decision from California is an excellent example of how common issues can fail to predominate even in property-based public nuisance claims.
In Department of Fish and Game v. Superior Court, No. CO66158 (Cal. Ct. App. -- Third Dist. Aug. 2, 2011), various real property and business owners brought a putative class action against the California Department of Fish and Game for its application of poison to Lake Davis to eradicate an invasive species of fish, the northern pike. The Department allegedly widely publicized its plan to poison the pike, closed all roads providing access to the lake, and posted blinking signs about the lake's closing on Highway 70. The lake was closed from September 2007 through January 2008, and it was not re-certified as a source of drinking water until May 2008. By statute, area residents could present claims to a victim compensation claims board for damages.
Plaintiffs sought certification of three subclasses: (1) all businesses in the area whose timely claims were rejected by the Department's claims board, (2) all real property owners whose timely claims for the decrease in real property values were rejected by the Department's claims board, and (3) all persons or entities whose timely claims for lost tax revenues or lost economic growth were rejected by the Department's claims board.
The Court of Appeal granted mandamus against the trial court's certification of the classes.
The court first analyzed whether common issues actually predominated. In concluding that they did not, the court rejected the plaintiffs' proffer of expert testimony purporting to support the use of a classwide economic model or formula to calculate the class members' damages. Instead, it found that every member of the class would be required to litigate a number of substantial questions about his or her right to recover, even after a judgment on the so-called "common" issues pertaining to all class members.
In determining that the issues of liability and damages could not be determined on a collective basis, the court determined that the different situations of the various putative class members caused individual issues to predominate:
[T]he impact of the 2007 poisoning . . . may be different depending on the particular characteristics and location of each individual parcel. And, in light of the claims asserted byplaintiffs, these differences are more than just a matter of damages, but go to the fundamental issues of liability.
Slip op. at 17.
The trial court had applied the wrong standard for looking at the expert proof in the action, the Court of Appeal explained. It had looked at the plaintiffs' experts' reports, concluded that they met the plaintiff's burden of establishing predominance, and then shifted the burden to the defendant's experts to disprove predominance. But the burden at all times should rest with the plaintiff, the Court of Appeal instructed, and a fear of reaching the "merits" should not prevent the trial court from weighing the expert testimony to determine how the case will have to be tried.
In this instance, as the defendants' expert had explained, an across-the-board formula for damages would not properly take into account individual differences among class members:
'The reasons for this conclusion include the varied nature of the industries within the business community of the Lake Davis Area, the different economic pressures and influence felt by different industries, the differing levels of bookkeeping sophistication and record keeping methodologies used by different businesses and individuals, changes in local economic influences specific to individual businesses but unrelated to the treatment of Lake Davis including changes in contractual relationships, competition, and the labor force among others. Finally, tourism obviously affects businesses differently and reduced tourism would not have a common impact on all businesses owned by proposed class members.'
Slip op. at 40 (quoting defendant's expert).
The court of appeals then went through each cause of action, identifying the necessary elements of proof and whether those elements could be proven with common evidence or individual evidence. It noted that "it is not enough simply to prove there was an average loss per parcel of property" because "[a]ll parcels are, more or less, different," and one "must look at the characteristics of each parcel, the reasonable expectations of the owner and the actual loss." Slip op. at 49. the court concluded that the issues of duty, causation, and the amount of damages must be determined on an individual basis.
Particularly in light of the US Supreme Court's recent treatment of commonality and expert testimony in Wal-Mart Inc. v. Dukes -- which is not cited in this opinion -- the California court's decision in Department of Fish and Game is a strong example of a state court focusing on how the case actually would be tried and scrutinizing expert testimony about statistical modeling.
