Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

In December I posted about Price v. Martin, in which the Louisiana Supreme Court expressly adopted the U.S. Supreme Court's analysis in Wal-Mart v. Dukes to reverse certification of a class of property owners who alleged that they were exposed to certain chemicals by a neighboring wood treatment facility.  In Price, the court recognized that there was no real commonality because establishing damages and causation would require individualized analysis.

Just last week, the Louisiana Supreme Court issued a per curiam opinion demonstrating that Price was not an anomaly.  In Alexander v. Norfolk Southern Corp., No. 11-C-2793, Slip op. (La. Mar. 9, 2012), the putative class action arose out of a chemical spill from a train in New Orleans in 2001.  The Fire Department investigation had established that ethyl acrylic fumes leaked from valves in two cars that were parked for less than an hour waiting for another train.  The firefighters tightened the valves, which solved the problem, and sent the trains on their way.  No evacuation was called.  Twenty people were treated at the scene for exposure and released.  Hundreds of other people complained of eye/nose/throat irritation and a noxious smell.  Naturally this spawned a class action, which was certified by the trial court and affirmed by the intermediate court of appeal.

The Louisiana Supreme Court, citing Price, reiterated that class certification requires a rigorous analysis and that there must be significant proof of a common question, the determination of which will "'resolve an issue that central to the validity of each one of the claims in one stroke.'"  Slip op. (quoting Price quoting Dukes).

The court ultimately premised its reversal on the lack of predominance of common issues, and the need for individual trials:

[T]he district court failed to take into account undisputed evidence in the record demonstrating that any determination of damages will be dependent upon proof of facts individual to each putative class member.  In particular, . . . plaintiffs' toxicologist testified that only those individuals with a unique susceptibility to ethyl acrylate would exhibit physical symptoms at the extremely low concentrations involved in the release, that this susceptibility would manifest itself in less than .1 percent of any given population, and determining whether any particular person was within this microcosm of the population would require an entirely individualized understanding of each person's health, medical history, records, and other variables impacting exposure.  In addition, [he] testified that the dose of exposure would be impacted by important individual variables, such as the specific location of the plaintiff at the time of exposure, and whether the plaintiff moved from location to location during the exposure.  Similarly, the defense toxicologist, . . . testified the symptoms complained of by the plaintiffs, such as irritation of the eyes and nose, respiratory irritation, coughing, nausea, and vomiting, are not specific or unique to ethyl acrylate exposure, but are common symptoms with a myriad of causes.

Given this testimony, it is clear that each member of the proposed class will necessarily have to offer different facts to establish liability and damages. . . . [T]he class would degenerate into a series of individual trials.

Slip op.

The decision in Alexander is a strong reminder that even in state court class actions, expert proof at the class certification stage is important because it can frame how the issues must be tried at trial.

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My colleague, John Beisner, is involved in this case, so I'll merely report the decision here.

This morning the Kentucky Court of Appeals reversed a trial court's certification of a class of Vioxx users who asserted a diminished value theory of recovery under various consumer fraud causes of action.  See Merck & Co. v. Ratliff, No. 2011-CA-000234-MR, Slip op. (Ky. App. Feb. 10, 2012).

The court embraced the "rigorous analysis" standard and cited Dukes.

The court held that the fraudulent misrepresentation and negligent misrepresentation causes of action presented too many individual issues that predominated over any common issues, making class certification reversible error.

Plaintiffs also had asserted a fraud-on-the-market theory.  The court observed that such a theory has been employed by other courts in the securities context to create a presumption that class members relied on the defendant's alleged misrepresentations.  But the court refused to import such a concept into Kentucky law, particularly in a consumer products case:

In the present case we have a corporate defendant that has allegedly disseminated false, fraudulent, or misrepresentative information into the marketplace.  However, while we have sympathy for the users of Vioxx whose physicians may have relied upon such false or incomplete information, the "fraud-on-the-market" approach has never been recognized in this jurisdiction for a fraud or misrepresentation case.  Further, every other jurisdiction we found which has been confronted with the theory has rejected it outside the securities litigation context. . . .

For this reason, we decline to recognize a similar theory here.  Causation, reliance, and damages are required to be shown on an individual basis.  Thus, if the action were tried as a class, after the common questions of Merck's representations in its marketing campaign were decided, the case would essentially fragment into a series of amalgamated "mini-trials" on each of these individualized questions. . . .

Thus, we find that common questions do not predominate.  Further, because these individualized questions would substantially overtake the litigation, and would override any common questions of law or fact concerning Merck's conduct, we find that a class action is not the superior mechanism by which to try these cases. . . .

Slip op. at 15-16 (citations omitted).

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So you've read Wal-Mart v. Dukes, right?  Then riddle me this, Batman:  Does Daubert apply at the class certification stage?  Or not?

The Dukes opinion -- with less than optimal sentence structure -- "doubted" that Daubert did not apply at the class certification stage of the proceedings.  131 S. Ct. at 2554.  (I guess that means that the majority did not doubt that Daubert DOES apply at the class cert stage, right?)

As has been widely reported, the Eighth Circuit and the Third Circuit have been less than enthusiastic, however, about applying that dictum.  In In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 613 (8th Cir. 2011), the Eighth Circuit nonetheless held that an "exhaustive and conclusive Daubert inquiry before the completion of merits discovery" was inappropriate because of the "inherently preliminary nature of pretrial evidentiary and class certification rulings."  Similarly, the Third Circuit in Behrend v. Comcast Corp., 655 F.3d 182, 204 n.13 (3d Cir. 2011) suggested that the Dukes dictum merely required "a district court to evaluate whether an expert is presenting a model which could evolve to become admissible evidence," and did not require it "to determine if a model is perfect at the certification stage."

Yesterday Law360 reported that just last week, U.S. District Court Judge Christina Snyder of the Central District of California was faced with the question of what kind of scrutiny to give proposed expert testimony at the class certification stage.  Looking at Dukes, Zurn, and Behrend, she concluded that Zurn embodied the proper analysis for expert testimony at the class certification stage.  But having done so, she excluded the plaintiff's expert testimony and denied class certification.  Bruce v. Harley-Davidson Motor Co., No. CV-09-6588 CAS (RZx), Slip op. (C.D. Cal. Jan. 26, 2012).  

In Bruce, plaintiffs sued on behalf of a multistate and a California statewide class under a variety of consumer protection statutes and warranty theories.  They alleged that Harley-Davidson's touring motorcycles have an excessively flexible chassis that allows for severe wobbling and instability at speeds above 55 miles per hour.  Various third parties had created aftermarket stabilizer kits that fixed the problem for an average price of $400 -- but the installation of these third-party kits allegedly voided Harley-Davidson's warranty.

Plaintiffs put forward an expert who opined that the product defect that was common to the entire class was that the motorcycle did not damp out oscillations to one-half of their original amplitude within two seconds across the motorcycle's operational capacity. 

Judge Snyder concluded that the expert's opinion should be evaluated under Zurn's standard.  Discovery in the case had been bifurcated, with so-called "class discovery" occurring first, and merits discovery to occur after class certification had been decided.  As such, Judge Snyder reasoned, the expert's opinions must be assessed in light of the currently available evidence.  If there were gaps in the analysis that could be filled in using merits discovery, the court should not attempt to exclude the testimony at the class certification stage.  Bruce, Slip op. at 9.  

Despite using this standard -- which is clearly more liberal than an ordinary Daubert standard -- the court held that the plaintiff's expert's opinion must be excluded.  The reason was simple:  the gaps in his opinion had nothing to do with unavailable merits discovery.  Rather, they were the result of him simply not having yet done the work to establish the scientific veracity of his core opinion:  "Dr. Limebeer has not adequately explained the scientific basis for his proposed standard, which has not been accepted in the field of motorcycle dynamics."  Id.  Indeed, the court observed that Harley-Davidson itself used a four-second standard, while the authors that plaintiff's expert cited used a 2.78-second standard.  Establishing the reliability of his two-second standard was something that was within the expert's control and did not hinge on the results of any merits discovery.  Accordingly, the court saw no reason to hold off on applying the Daubert criteria.

The court rejected plaintiffs' argument that the expert's opinion had been accepted in state court without objection.  "[T]his fact does not compel the admission of testimony in federal court," the court observed.  Moreover, the court was clearly bothered that the expert's opinion had been formed exclusively for litigation purposes, and had not been published in a peer-reviewed journal.  Id. at 10 (quoting Daubert).

Finally, the court held that an independent basis for excluding the expert's testimony was his failure to test for and eliminate other possible causes of instability.  Slip op. at 11.

Because the plaintiffs' expert testimony was inadmissible, plaintiffs failed to establish that common questions of fact and law predominated over individual inquiries.  Id. at 12 ("plaintiffs have failed to show that they have the ability to use common evidence by which they can demonstrate the defective nature of the Class Vehicles.").  As such, no class could be certified.

Surprisingly, the court both granted the motion to exclude the expert's testimony and denied the plaintiffs' motion for class certification without prejudice.  Ordinarily, plaintiffs get only one opportunity to move for class certification; they are not afforded multiple bites at the apple.  Thus, absence of any explanation for the court's "without prejudice" rulings -- which would seem to allow the plaintiffs to try yet again -- is strange indeed.

Ultimately, however, Bruce is an excellent example of the fact that even where a court uses a "less stringent" (i.e., Zurn) standard for evaluating the admissibility of expert testimony on class certification, expert opinions that fail to establish the basic indicia of scientific reliability should be stricken where that failure cannot be blamed on the unavailability of certain merits discovery.  At the class certification stage, experts are still expected to give a fully-justified opinion based on what is available at that time.

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As a kid, I was a huge fan of Carnac the Magnificent on Johnny Carson's Tonight Show.  In this first post of the new year, I thought I would channel my inner Carnac to make some predictions about what we can expect in the field of consumer class actions and mass torts in 2012.

1.  Wal-Mart v. Dukes will have tremendous impact on consumer class actions and mass torts.  Despite plaintiffs' attempts to limit the opinion solely to employment discrimination cases, the actual holdings in Dukes go to the fundamental core of class actions.  A unanimous Court said you can't deprive a defendant of its substantive right to challenge the elements of individual class members' claims just to make it easier to have a class.  Similarly, a unanimous Court strongly suggested -- even if the 8th Circuit didn't get it -- that Daubert rules matter at the class cert stage.  And a unanimous Court rejected the use of "trial by formula" rather than proof of actual damages.  These holdings are just as important -- if not moreso -- as the Court's articulation of the commonality standard, and you will begin to see the impact of these Dukes holdings in consumer class action cases this year.

2.  So many courts -- primarily in California -- have struggled to get around the clear preemption analysis in AT&T Mobility v. Concepcion that the U.S. Supreme Court is going to have to take up the issue of class arbitration waivers again.  It may not happen by the end of 2012, but too many courts have shot the bird to the Supremes since Concepcion.  Some argue that the decision does not apply to a particular cause of action under a state statute.  Others just find the whole arbitration provision containing a class action waiver void as against public policy.  But the simple fact is that it is nearly impossible to square these opinions with the very clear preemption analysis in Concepcion, and in the right case, the Court is going to have to issue certiorari to say that it really meant what it said.

3.  Courts may struggle for the right standard by which to judge personal jurisdiction, but plain ole stream-of-commerce theory is dead.  A majority of justices made that much plain in J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011).  They just couldn't agree on a new standard.  But we know there must be some purposeful availment in addition to mere awareness that the product might reach the forum.  I believe most courts that find jurisdiction will rely on web presence in the forum as the "plus" factor that shows purposeful availment of the forum's laws.

4.  Prescription medicine plaintiffs will continue to cast their plain old failure to warn claims as "design defect" claims to try to get around the clear bar of the learned intermediary doctrine.  Hopefully, most courts will continue to recognize that medicines are unavoidably unsafe products for which you cannot have a design defect claim.  Indeed, you can't even propose a feasible alternative design, because to do so is to change the product into something else!

5.  Global warming lawsuits seeking to foist on certain industries humanity's collective responsibility for climate change will continue, but the defenses of standing, remoteness, proximate cause and the political question doctrine will continue to be strong defenses.  Because the Supremes dealt only with federal law issues in American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011), courts will still have to work these issues out as matters of state law.  We can expect plaintiffs to win at least one of these cases at a trial court level.  But the sheer magnitude of how far they are attempting to stretch state law should cause appellate courts to be more circumspect.

6.  Product sellers from tobacco to telephones will continue to vigorously defend their commercial speech rights under the First Amendment.  Appellate courts will grapple with these sellers' rights to not be forced to convey government messages about their products where there are other, less intrusive means of achieving the government's purpose.

7.  Plaintiffs will attempt to circumvent the federal preemption for generic medicines recognized in Pliva, Inc. v. Mensing, 131 S. Ct. 2567 (2011), by trying to describe various claims -- such as express warranty claims -- as enforcing voluntarily adopted standards, rather than imposing state law requirements that conflict with federal law.  Plaintiffs will be hard-pressed to succeed on such dubious claims for at least two reasons.  First, the statements they point to will be consistent with what FDA has approved for the label, making plaintiffs' claims conflict with federal law.  And second, it will be very difficult to find statements that were actually material and became part of the basis of the bargain.

8.  The food and beverage industries are going to continue to be a primary target for consumer fraud claims.  Often these suits are fueled by health claims in advertising or on the label.  But increasingly such suits are being brought based on an ingredient in the product.  Although FDA has balked at issuing regulations that fully define when products may be labeled "natural," it has begun enforcement actions against products that use the term and contain synthetic preservatives or other synthetic ingredients.  Expect more of such consumer fraud class actions in 2012.

9.  Although class action suits over head injuries in professional football players may capture the imagination of sports writers and the public, the fact remains that class actions for personal injuries are almost never certified because the individualized issues regarding each class member's alleged injury, causation, and damages predominate over any common issues.  Don't expect 2012 to bring a big class action payday for professional footballers who allege concussion-related harm.

10.  The U.S. Supreme Court's majority and dissenting opinions in Kiobel v. Royal Dutch Petroleum, No. 10-1491, are going to be fascinating reading.  Kiobel, of course, raises the issue of whether legally fictitious entities -- corporations, rather than individuals or Nation-States -- can be sued under the Alien Tort Statute, which dates back to 1789.  The Second Circuit -- looking around the globe to foreign legal precedents -- held that corporations were not subject to ATS suits.  One may imagine that certain Justices who might concur in that result might bristle at relying on foreign legal precedents to get there.  While I'm willing to bet that the result in Kiobel is affirmed, I'll honestly admit that I can't predict what the opinion(s) will look like in reaching that result.

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Still need proof that the U.S. Supreme Court's decision is going to have far-reaching effects in the world of mass torts and consumer class actions?  Look no further than Price v. Martin, No. 2011-C-0853, Slip op. (La. Dec. 6, 2011).

Price was a class action that had been certified by the trial court and affirmed on appeal.  It alleged that the various owners of a wood treatment facility ran it in such a way as to pollute the neighborhood's air, soil and water -- including plaintiffs' properties -- with various chemicals, including dioxin.  The class of over 3,000 people alleged that it had suffered property damage, diminished property values, and increased risk of disease.  It asserted theories of nuisance and negligence.  The class was defined as all people or entities who, from 1944 to the present, owned or were present on property in a defined area who claim property damage and diminished property value.

The Louisiana Supreme Court began its analysis by indicated that it had granted certiorari "to examine whether [the lower] courts engaged in the rigorous analysis required to determine whether this action meets the requirements imposed by law for class action certification."  Slip op. at 5.  The court concluded that they had not, and therefore reversed and remanded the case.

The court explained that Louisiana's class action rules were extensively revised in 1997 to essentially adopt Federal Rule of Civil Procedure 23.  Citing Dukes, the court explained that a class action is an "exception to the rule that litigation be conducted by and on behalf of individual named parties only."  Slip op. at 6 (citation omitted).  That is why there is a rigorous analysis standard on whether the requirements for class certification are met.  And that rigorous analysis, the court explained, often will overlap with the underlying merits of the claim.  Id. at 7 (citing Dukes).

The court bought in to the Dukes formulation of the commonality requirement completely:

The mere existence of common questions, however, will not satisfy the commonality requirement.  Commonality requires a party seeking certification to demonstrate the class members' claims depend on a common contention, and that common contention must be one capable of class-wide resolution--one where the 'determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.' Wal-Mart Stores, Inc., 131 S. Ct. at 2551. . . .

In the context of mass tort litigation, this court has further refined the commonality requirement, stating that, in such cases, 'in order to meet the common cause requirement, each member of the class must be able to prove individual causation based on the same set of operative facts and law that would be used by any other class member to prove causation.'

Id. at 10-11 (citations omitted).  The court, citing Dukes, reiterated that not only must there be a common question that is suitable for classwide resolution, but the proof of commonality must be significant.  Id. at 13.

This class failed the commonality requirement for a variety of reasons.  The facility's owners -- and its operations -- changed significantly over the 66-year period of emissions.  Depending on the date and the nature of the emission, different owners could be responsible.  Moreover, even the legal standards applying to the discharge of the chemicals changed over time, such that "[c]lass members who owned property damaged by emissions in the 1950s will not be able to rely on the same environmental standards invoked by those who own property damaged by emissions in the 1980s."  Id. at 14.  Thus, the "issue of breach will thus turn on different conduct, by different defendants, at different times, under different legal standards."

Citing Dukes, the court also noted that plaintiffs could not prove common causation, i.e., that the facility was the source of dioxin in area attics.  Id. at 15.  The court explained:

Given the multitude of alternate sources of PAHs and dioxins proven to exist in the area in question and the inability of plaintiffs to link those contaminants solely to emissions from the Dura-Wood facility, it is clear that plaintiffs have failed to offer significant proof that causation for each class member will be determined by a common nucleus of operative facts.

Id. at 18.  The court concluded that:

Plaintiffs do not in fact allege that damage has been caused by only one defendant; they allege damage emanated from one facility, but that facility was operated successively and independently by more than one owner over a period of 66 years, providing more than one source of emissions from multiple operations performed according to varying standards of conduct.  [A prior Louisiana case] instructs that, unlike the present case, only mass torts 'arising from a common cause or disaster' are appropriate for class certification. 

Id. at 21.

The court also held that plaintiffs failed to meet the predominance requirement for largely the same reason as why they had failed the commonality requirement.  It also held that the district court erred in finding a class action superior to other methods of adjudication.  But the reasoning seems to implicated adequacy of representation concerns as much as anything.  The court reasoned that by defining the class to include such a long period covering property owners, there were conflicts of interest between present and prior property owners.   The court also found that the need for individual adjudication of so many issues meant the class was not superior because it could not vindicate the public policies underlying class actions.  Id. at 26.

Louisiana thus falls squarely in the camp of states aligned with the U.S. Supreme Court on the rigorous analysis required for class actions, as well as the reinvigorated commonality standard.  And it applies the rule in tort cases -- not just in the employment discrimination context that was at issue in Dukes.  Look for more state court decisions adopting the Dukes approach.

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As many of you know, I participated in a symposium over at SCOTUSblog on the future of class actions in light of the Supreme Court's many class action decisions this term.  There were a number of participants, including Professor Scott Dodson from my alma mater, William & Mary's Marshall-Wythe School of Law.  Professor Dodson's position was that it was unfortunate that the Supreme Court had been so restrictive in its class action decisions; this was contrary to salutary purpose of class actions (to help society and advance public policy) and was, in essence, a form of judicial activism.  Amendments to Rule 23, Professor Dodson suggested, would better be made by the Civil Rules Advisory Committee, not courts.

This argument -- which I've heard before -- rings hollow for me given the history of Rule 23.  Nobody who was actually on the 1966 Advisory Committee that amended Rule 23 to give us the (b)(3) class action could have predicted the explosion of class action litigation that has occurred in the last 45 years.  They believed that class actions were rarely certifiable, but imminently useful where appropriate.  The prerequisites that they built into Rule 23 were designed to restrict certification to only those cases that really warranted certification.  Far from being activist, the Supreme Court's insistence on the application of Rule 23's prerequisites is advancing the goals of the 1966 Advisory Committee.

So, I took the folks at SCOTUSblog up on their offer to respond to a panelist's post.  You can find that response here.   

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