Consumer Class Actions and Mass Torts

Once again, my friend Andrew Trask has beaten me to the punch with a post -- this time about Judge Richard Posner's decision in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 2012 WL 592745 (7th Cir. 2012). In McReynolds, the court held that, in a class of 700 people, an issues class could have been certified on the question whether two facially-benign company-wide policies nevertheless had a discriminatory effect in practice.

You've gotta get up early in the morning to put up a post before Andrew.  Given that he has described the opinion already, I won't say much here, other than offer a few thoughts.

First, the Seventh Circuit is one of the few circuits to hold that an issues class may be certified under Rule 23(c)(4) without a prior determination that certification is appropriate under some subdivision of Rule 23(b).

Second, the McReynolds court was not deciding that a class could be certified that would provide monetary relief to the plaintiffs.  Rather, the court expressly recognized that "the only issue of relief at present is whether to allow the plaintiffs to seek class-wide injunctive relief."  Id. at *9.  That is why the court reversed the denial of certification under Rule 23(c)(4) and 23(b)(2).

Third, the court understood that the claims for monetary damages could not be tried as a class action:

Obviously a single proceeding, while it might result in an injunction, could not resolve class members' claims.  Each class member would have to prove that his compensation had been adversely affected by the corporate policies, and by how much.  So should the claim of disparate impact prevail in the class-wide proceeding, hundreds of separate trials may be necessary to determine which class members were actually adversely affected by one or both of the practices and if so what loss he sustained--and remember that the class has 700 members.

Id. at *8.

Fourth, and what I view as particularly important, the court invoked the decisions in Rhone Poulenc and Bridgestone/Firestone outside of a negligence -- or even a tort -- context to recognize that using a class action to achieve "consistency" of judgments on a particular issue may be unfair, and that -- particularly in the context of multiple claims for monetary damages -- it may be better for a series of trials to occur before different triers of fact so that some sort of pattern or consensus of judgments may emerge.  As the court explained:

The Mejdrech decision, and Bridgestone/Firestone and Rhone-Poulenc more fully, discuss the danger that resolving an issue common to hundreds of different claimants in a single proceeding may make too much turn on the decision of a single fallible judge or jury.  The alternative is multiple proceedings before different triers of fact, from which a consensus might emerge; a larger sample provides a more robust basis for an inference.  But that is an argument for separate trials on pecuniary relief . . .

Id. at *9.  In the mass tort context, we have the concept of what Francis McGovern has labeled "immature" and "mature" mass torts.  "Immature" mass torts are those where few, if any, trials have occurred.  "Mature" mass torts are those where scores of trials have played out in different geographic locations over enough time that plaintiffs and defendants have had the opportunity to adjust their claims and defenses, such that patterns have emerged and some predictability is inherent in the trial process.  

McReynolds does not abandon the notion that, in cases for monetary damages -- which can bankrupt a company in an all-or-nothing class action trial -- a "larger sample" of smaller judgments (even those that conflict) is necessary to build a "more robust basis" for a conclusion.