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

I've previously opined on this blog and elsewhere that global warming litigation -- at least cases in which individuals seek damages from companies that emit greenhouse gasses -- has no leg to stand on because causation is so attenuated and the issue is tied up with important political questions that are committed to the expertise of federal agencies like the EPA, as well as Congress.

My viewpoint was confirmed a few years ago in a case called Comer, in which a Mississippi federal court dismissed a class action filed by Hurricane Katrina victims who sought to blame their loss on various energy and mining companies.  The trial court had held that the chain of causation was too attenuated to confer constitutional standing on the plaintiffs, and it further held that the case should be dismissed under the political question doctrine because it required the federal court to decide policy questions about greenhouse gas emissions that were committed to the province of the political branches.

Comer had a curious subsequent history.  Plaintiffs appealed to the Fifth Circuit, where they won a partial victory, with the appellate court reversing the judgment on the state law claims of public and private nuisance, trespass, and negligence.  The defendants, however, petitioned for rehearing en banc, and the Fifth Circuit granted the petition and vacated the three-judge panel's decision.  Then, a Fifth Circuit judge was recused, resulting in the loss of a quorum for an en banc panel to act.  The Fifth Circuit thus dismissed the appeal and reinstated the District Court's opinion.  Plaintiffs did not petition the U.S. Supreme Court for certiorari, but instead petitioned for a writ of mandamus to require the Fifth Circuit to reinstate the appeal.  The Supreme Court denied plaintiffs' petition, and thus the District Court's opinion dismissing the lawsuit remained the law of the case.

In May 2011, Ned Comer and the other plaintiffs filed a virtually identical lawsuit in the same District Court asserting the causes of action the three-judge panel had said should have been remanded:  public and private nuisance, trespass, and negligence.  Plaintiffs sued the same defendants, and added a few more.  Feeling as if it was Groundhog's Day, the defendants once again moved to dismiss.

Yesterday the court issued an opinion unsurprisingly granting the defendants' motion to dismiss.  See Comer v. Murphy Oil USA, Inc., No. 1:11CV220-LG-RHW, Slip op. (S.D. Miss. Mar. 20, 2012).  The court's primary holding is that the suit is barred by the doctrines of res judicata and collateral estoppel.  The 11 plaintiffs in Comer I are the same plaintiffs who have brought Comer II.  The district court's order in Comer I was a final order dismissing the case for lack of jurisdiction, which is a decision on the merits for the purposes of res judicata.  Plaintiffs had a full and fair opportunity to argue the issue in the first suit.  The two suits involve the same "transaction," namely damages arising out of the occurrence of Hurricane Katrina.  Moreover, the admitted purpose of the second lawsuit is to convince the court that it was wrong in the first lawsuit.

The district court's res judicata holding should have ended the issue.  However the court, "out of an abundance of caution," went on to address the defendants' additional arguments.

The court held that plaintiffs lacked Article III standing to assert their state law claims.  The court focused on the causation element of the standing inquiry.  It noted that the U.S. Supreme Court found that a state had standing to bring a lawsuit to force the EPA to issue greenhouse gas regulations in Massachusetts v. EPA, 549 U.S. 497 (2007).  However, the Supreme Court gave special deference to a state  suing in its capacity as a quasi-sovereign, and expressly reserved the question of whether an individual would have standing to bring a global warming claim.  Moreover, the Supreme Court had acknowledged that causation regarding greenhouse gases emissions was a difficult global problem, and that any domestic reductions in emissions likely would be offset by increases in developing countries.

The district court also observed that in American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011), the Supreme Court was equally divided on the question whether states had standing to file lawsuits against corporations to reduce greenhouse gas emissions, and it expressly reserved the question whether individuals could assert such standing.

The plaintiffs in Comer II relied on authorities under the Clean Water Act finding standing where the defendants were merely alleged to have contributed to plaintiffs' injuries.  The district court distinguished their authorities, relying in part on Native Village of Kivalina v. Exxonmobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009), which had explained that CWA cases only find "contribution" standing where a presumption of standing arises as a result of a defendant's violation of federally-mandated pollution limits.  Where, as here, there is no such federally-mandated limit on greenhouse gases (and thus no such violation), no presumption can arise.  Moreover, even the CWA cases recognized that a point of discharge can be too remote from the plaintiff's injury to be legally recognized as a contributing cause.  See slip op. at 21-22 (citing Friends of the Earth, Inc. v. Crown Cent. Petrol. Corp., 95 F.3d 358 (5th Cir. 1996) (plaintiffs whose injury was 18 miles from discharge did not have standing to sue over the discharge)).

Ultimately, the Comer II court recognized, even plaintiffs admit that global warming is attributable to numerous natural and man-made causes that interact cumulatively over the period of centuries to create climate effects:

The plaintiffs cannot allege that the defendants' particular emissions led to their property damage.  At most, the plaintiffs can argue that the types of emissions released by the defendants, when combined with similar emissions released over an extended period of time by innumerable manmade and naturally-occurring sources encompassing the entire planet, may have contributed to global warming, which caused sea temperatures to rise, which in turn caused glaciers and icebergs to melt, which caused sea levels to rise, which may have strengthened Hurricane Katrina, which damaged the plaintiffs' property.

It is insufficient for the plaintiffs to allege that the defendants' emissions contributed to the kinds of injuries that they suffered.

Slip op. at 20-21.  The court concluded that such tenuous causation should not allow plaintiffs to send the defendants on a discovery odyssey "that will likely cost millions of dollars."

The district court in Comer II also held that plaintiffs' claims were non-justiciable under the political question doctrine as established in Baker v. Carr.  Plaintiffs argued that Massachusetts v. EPA had rejected that argument.  But the district court held that Massachusetts v. EPA was fundamentally different because it involved the proper construction of a congressional statute.  Here, the policy judgments regarding greenhouse gas emission levels were expressly committed to the EPA.  Indeed, the district court noted, the Supreme Court had stated "that it possessed neither the expertise nor the authority to evaluate the policy judgments that EPA offered as justification for refusing to regulate motor vehicle emissions, such as issues involving foreign relations."  Slip op. at 26.  The Comer II court concluded:

[T]he plaintiffs are asking the Court, or more specifically a jury, to determine without the benefit of legislative or administrative regulation, whether the defendants' emissions are "unreasonable."  Simply looking to the standards established by the Mississippi courts for analyzing nuisance, trespass, and negligence claims would not provide sufficient guidance to the Court or a jury. . . .

. . . The Supreme Court held that judgments concerning the reasonableness of greenhouse gas emissions are properly committed to the EPA, and if district courts were to make such judgments, those judgments would interfere and potentially conflict with the EPA's actions.

. . . The Court finds that the claims presented by the plaintiffs constitute non-justiciable political questions, because there are no judicially discoverable and manageable standards for resolving the issues presented, and because the case would require the Court to make initial policy determinations that have been entrusted to the EPA by Congress.

Slip op. at 28-29.

The district court in Comer II also concluded that plaintiffs' state law causes of action are preempted by the Clean Air Act and the EPA actions that it authorizes, relying primarily on American Electric Power Company v. Connecticut.  That case had held that the CAA preempted a federal common law right to seek abatement of carbon dioxide emissions from power plants.  The Comer II court reasoned that plaintiffs' state law claims here required the court to do the same thing the federal common law claim would have in Connecticut:  determine the reasonableness of the defendants' greenhouse gas emissions.  Accordingly, it held that the state law claims were similarly preempted.

The district court in Comer II also held that plaintiffs' claims were barred by Mississippi's three-year statute of limitations.  Katrina had hit in 2005, but the lawsuit was filed in 2011.  Plaintiffs argued that Mississippi's savings statute operated to toll the statute of limitations.  The savings statute gives a plaintiff a year to commence a new suit where the prior suit has been dismissed or abated because of a defect or other matter not affecting the merits.

The district court held the savings statute did not apply because there was a judgment of dismissal with prejudice entered in Comer I.  Plaintiffs could have asked the U.S. Supreme Court for a writ of certiorari, but they did not.  Accordingly, the judgment was final.

There is, however, a slim reed of hope for plaintiffs to file a Comer III.  In ruling on the statute of limitations, the court concluded that plaintiffs' allegations about their future risk for more severe storms and loss of property are not yet actionable, in part because plaintiffs did not seek injunctive relief.  "As a result, the Court finds that the only actionable claims filed by the plaintiffs are the claims concerning Hurricane Katrina, and those claims are barred by the statute of limitations."  Slip op. at 33.  Could another storm or another theory of injury produce a Comer III?  It shouldn't.  But with these Plaintiffs, who knows?

Finally, the district court granted the defendants' motion to dismiss regarding proximate cause, which is a required element of each of plaintiffs' state law claims.  Mississippi defines proximate cause as a cause "'which in natural and continuous sequence unbroken by any efficient intervening cause produces the injury and without which the result would not have occurred.'"  Slip op. at 34 (citation omitted).  The court held that plaintiffs' theory couldn't meet this standard as a matter of law:

The assertion that the defendants' emissions combined over a period of decades or centuries with other natural and man-made gases to cause or strengthen a hurricane and damage personal property is precisely the type of remote, improbable, and extraordinary occurrence that is excluded from liability.

Slip op. at 35.

Judge Louis Guirola's opinion in Comer II is a strong reminder of the many difficulties that private plaintiffs would have trying to impose legal liability on companies for the purported effects of global warming.  Although I do not expect plaintiffs' counsel to simply vacate the field in the wake of this opinion, the strength of the arguments against liability suggest why there has been no great rush of firms to file suits asserting these theories of liability.

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Have you ever tried to pound a square peg into a round hole?  See Wenger v. Cardo Windows, Inc., 2012 WL 280254 (N.J. Super. -- App. Div. Jan. 31, 2012).

In Wenger, plaintiffs received a postcard advertising the sale of replacement windows for their home.  They called and set up an appointment.  A salesman visited and, at the conclusion of his presentation, plaintiffs signed a Purchase agreement for 20 windows at $10,700.  They also signed a financing document to finance the cost over 60 months.  They also received a Notice of Cancellation, which would allow them to cancel the order.

Plaintiffs reflected on the deal and signed and submitted the Notice of Cancellation.  The seller wouldn't take "no" for an answer.  It reduced the price and had plaintiffs sign some more forms.  Plaintiffs then spoke to their roofing contractor, who said they needed single-unit bay windows that would be secured from the sides, not the top and bottom.  The defendant wouldn't do that.  So once again plaintiffs canceled the order. 

The defendants sued plaintiffs in small claims court for $3,000.  Plaintiffs brought a class action in New Jersey state court.  Initially, the trial court dismissed claims under New Jersey's Consumer Fraud Act, Contractor's Registration Act, and Home Improvement Practices regulations, and the appellate division affirmed.  But the appellate division had instructed the trial court to reconsider its dismissal of the claims under New Jersey's Door-to-Door Home Repairs Sales Act, Home Repair Financing Act, and Truth-in-Consumer Contract Warranty and Notice Act, as well as the FTC's "Cooling Off Rule."  On remand, the trial court granted class certification on those causes of action.  The appellate division refused to take the appeal, but the New Jersey Supremes instructed the court to do so.  And so the appellate division came to consider whether class certification was proper.

The defendant had numerous arguments for why there was no commonality or predominance, and why plaintiffs failed the typicality and adequacy of representation tests.  Simply put, plaintiffs were unlike most class members because they never paid any money or received any windows.  There were numerous oral interactions, in addition to the paperwork.  And there was the dispute on the type of windows plaintiffs needed.

The appellate division didn't care.  It kept claiming that the case was about the forms that were signed and whether or not those complied with the statutes.  The forms were the same, it reasoned, and thus the class could be certified.  The court never discussed the commonality standard of Wal-Mart v. Dukes.

The defendant argued that the class action was not superior, since there was no Consumer Fraud Act claim and no class member could recover any actual damages; rather, the most they could recover would be $100 statutory damages.  As such, the binding effect of the class judgment could harm class members with actual damages.  The appellate division swatted this concern away with the observation that class members with actual damages could opt out and the maxim that class actions provide a useful mechanism for the recovery of low-dollar claims.

Interestingly, no one appeared to challenge the class definition itself, which was:  "All person who . . . received a transaction document from Defendants the same or similar to the transaction documents given to Plaintiffs."

It will be interesting to see what, if anything, the New Jersey Supreme Court does with this case.

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As many of you recall, I've written a considerable amount about the anticipated opinion in Wal-Mart Stores, Inc. v. Dukes, No. 10-277 (U.S.).  See, e.g., here, and here.  Indeed, in a roundtable discussion over at Point of Law, I even included a wish list of what I wanted the Supremes to bring me from Wal-Mart.

Today, Justice Scalia delivered the opinion.  And it's like an 8-year-old's Christmas morning in my office! 

Dukes was an employment discrimination case in which the Ninth Circuit had affirmed certification of a class of roughly 1.5 million women who worked or had worked for Wal-Mart (in positions from management to custodian) in any of its roughly 3,400 stores across the U.S.  The allegation was that despite Wal-Mart's written non-discrimination policy, its managers (including women) discriminated against women in the exercise of their roughly unfettered individual discretion of whom to promote, demote and fire, as well as how they were compensated.  The class sought injunctive relief, as well as back pay for all class members.  (It disclaimed consequential damages.)

The majority opinion was written by Justice Scalia.  The opinion has a five-justice majority for some parts, and is unanimous in other parts.  Here is what Scalia Claus brought me this morning:

1.  A Unanimous Conclusion That Rule 23 Cannot Eviscerate Individual Defenses:  All nine justices joined in the part of the opinion holding that certification under Rule 23(b)(2) was improper because it included individualized claims for back pay.  A unanimous Supreme Court rejected a common attempt to impose statistical proof to cure the problem of individual defenses:

The Court of Appeals believed that it was possible to replace such proceedings with Trial by Formula.  A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master.  The percentage of claims determined to be valid would then be applied to the remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery -- without further individualized proceedings.  We disapprove that novel project.  Because the Rules Enabling Act forbids interpreting Rule 23 to "abridge, enlarge, or modify any substantive right," a class cannot be certified on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims.

Slip op. at 27 (emphasis added; citations omitted).  This means that third-party-payor claims and consumer fraud class actions will not be able to prove causation or reliance using statistical proof like that proposed and rejected in McLaughlin v. American Tobacco Co., 522 F.3d 215 (2d Cir. 2008) in order to facilitate class certification.  This is BIG NEWS!!!

2.  A Unanimous Conclusion that Individualized Monetary Damages Claims Cannot Be Included in a Rule 23(b)(2) Class:  The Supreme Court brushed aside the whole question of whether money damages are "incidental" to the claims or "predominate," instead instructing that if monetary damages require individualized determinations, they do not belong in a 23(b)(2) class, but instead require the opt-out and notice rights inherent in a Rule 23(b)(3) class.  Slip op. at 21-23.  It refused to decide "whether there are any forms of 'incidental' monetary relief that are consistent with the interpretation of Rule 23(b)(2) we have announced and that comply with the Due Process Clause."  Slip op. at 26.  But this holding will make it very difficult for plaintiffs to continue the practice of attempting to plead cases about money as cases for so-called "equitable relief" with incidental damages.  Indeed, the court made it plain that Rule 23(b)(2) talks about injunctions and declarations, not "equitable relief."  As such, attempts to couch "disgorgement" or other so-called equitable remedies involving money as 23(b)(2) classes should be rejected from this point forward.

3.  Unanimous Dicta on Claim Splitting and the Potential for Issue Preclusion:  In discussing why it was improper for individualized back pay claims to be included in a Rule 23(b)(2) class, the Court observed that doing so "created the possibility . . . that individual class members' compensatory-damage claims would be precluded by litigation they had no power to hold themselves apart from."  Slip op. at 24.  Such as if the class received a judgment that there was no discrimination.  This part of the Dukes opinion will provide strong support for attacking (b)(2) classes that may impact monetary claims as lacking due process protections, and should strengthen classic adequacy-of-representation arguments based on claim-splitting.

4.  A Reinvigorated Commonality Standard:  Many courts had pretty much read commonality out of the Rule 23(a) analysis, concluding that if any common questions existed, the commonality standard was met.  No more.  The Court adopted the late Professor Richard Nagareda's characterization of commonality as the capacity of the class proceeding to generate common answers.  Slip op. at 9.  The Court instructed:

Commonality requires the plaintiff to demonstrate that the class members 'have suffered the same injury.'  This does not mean merely that they have all suffered a violation of the same provision of law. . . .  Their claims must depend upon a common contention -- for example, the assertion of discriminatory bias on the part of the same supervisor.  That common contention, moreover, must be of such a nature that it is capable of classwide resolution -- which means that 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.

Id. (citation omitted).

5.  A Strong "Rigorous Analysis" Standard:  Stick a fork in Eisen v. Carlisle & Jacquelin.  It's done!  The majority once again declared that the class action proponent must actually prove each element of Rule 23, and embraced the Falcon "rigorous analysis" standard that courts must use to evaluate that proof.  Moreover, the Court explained:  "[f]requently that 'rigorous analysis' will entail some overlap with the merits of the plaintiff's underlying claim.  That cannot be helped."  Slip op. at 10.  Finally, the Court interred the long-dead (but often resurrected) canard that Eisen somehow precludes a look beyond the pleadings when deciding whether certification is proper.  Id. at n.6.

6.  A Strong Hint That Daubert Applies at the Class Certification Stage:  Plaintiffs had proffered testimony from a "corporate culture" expert who opined that there was a general policy of discrimination at Wal-Mart, although "he could not calculate whether 0.5 percent or 95 percent of [its] employment decisions . . . might be determined by stereotyped thinking."  Slip op.at 13.  As the Court observed, the "District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings."  Slip op. at 14.  The Court opined:  "We doubt that this is so."  But it did not need to reach the question because the testimony, even if fully credited, was "worlds away from 'significant proof' that Wal-Mart 'operated under a general policy of discrimination.'"  Id.  Below, the Ninth Circuit had refused to apply Daubert to expert testimony on class certification.  It seems unlikely that a court can ignore Daubert principles at class certification now.

So let's see what I had listed at Point of Law prior to the issuance of the Dukes opinion.  It looks like Scalia Claus brought me a majority of what was on my initial list.  Everything that is in Dukes from the original list is marked with an asterisk:

*1. District courts must give rigorous scrutiny to whether the class action prerequisites are met.

*2. Rule 23 is a procedural rule that cannot alter the substantive claims or defenses.

*3. You can’t use a mandatory class to elude the prerequisites for an opt-out class.

4. Money is not an available remedy under Rule 23(b)(2).

5. The canard that the need for individualized damages determinations cannot preclude class certification should be shot.

6. Intra-class conflicts fail the adequacy of representation requirement.

*7. Expert testimony merits particularly close scrutiny at the class certification stage. 

*8. Although courts should not reach to judge the merits at the class certification stage, they must decide merits issues where necessary to determine whether the class action prerequisites are met.

All in all, this was an extraordinarily useful opinion for class action defense counsel -- beyond even employment discrimination lawyers.

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Where a defendant defeats certification of a class in an MDL proceeding, should it have to re-litigate the issue of class certification again and again in state courts around the country?  Most reasonable people would agree that it should not.  The devil, however, is in the details of how you get to that result.

Today the SCOTUS held that the Anti-Injunction Act prevents a federal court that has denied class certification -- even an MDL transferee -- from enjoining absent class members from pursuing class certification in state courts where the issues may differ.  See Smith v. Bayer Corp., No. 09-1205 (U.S. June 16, 2011). Justice Kagan wrote the opinion, which was unanimous except for certain parts that Justice Thomas did not join.

In Smith, two Baycol consumer fraud class actions were filed in West Virginia state court prior to adoption of the federal Class Action Fairness Act.  One was removed to federal court and transferred to the MDL; the other had non-diverse defendants and thus was forced to remain in state court.  The federal MDL court reached the issue of class certification first, concluding that because each absent class member would have to prove an "actual injury" that was caused by the challenged behavior, Rule 23(b)(3)'s predominance requirement was not met.

Bayer then asked the MDL transferee for an injunction against the pending state court action, reasoning that the state court action sought to certify the same class on the same legal theories, and the plaintiffs in the state suit were absent members of the class that had been denied by the MDL transferee, and thus their interests were aligned with the federal plaintiffs who had lost class certification.  The district court granted injunctive relief, and the 8th Circuit had affirmed.

Justice Kagan's opinion rejects this approach, holding that the injunctive relief was prevented by the Anti-Injunction Act, which provides that "[a] court of the United States may not grant an injunction to stay proceedings in a State court except . . . to protect or effectuate its judgments."  28 U.S.C. sec. 2283.  This is known as the "relitigation exception" and has its roots in issue preclusion.  The AIA is to be interpreted broadly to protect state courts, and doubts are to be resolved against the application of an exception to the AIA.  Slip op. at 6.

For the relitigation exception to apply, the issue presented in the federal decision must be the same as the one presented in the state court action, and the parties in both actions must be the same or must fall into one of the "few discrete exceptions to the general rule against binding non-parties."  Id. at 7.

The SCOTUS held that neither prong of the two-part analysis was met.  The issues were not the same because West Virginia requires a balancing of issues to determine predominance, while the federal court had not balanced issues, but summarily concluded that the need for individual proof on the causation and injury predominated.  Id. at 8-12.  And the parties to the state action were not parties in the federal action, and thus could not be bound.

As many commentators had predicted, the Court harkened back to Taylor v. Sturgell, 553 U.S. 880 (2008), in which it had held that a non-party to a FOIA request could not be bound to the result of a prior party's FOIA request using the doctrine of "virtual representation."  Rather, due process required notice and opt-out rights on the order of what is written into Rule 23.  The Court in Smith reiterated its rejection of any sort of common law class action:  "We could hardly have been more clear that a 'properly conducted class action,' with binding effect on nonparties, can come about in federal courts in just one way--through the procedure set out in Rule 23."  Slip op. at 15.

Justice Kagan wrote that "Bayer's strongest argument comes not from established principles of preclusion, but instead from policy concerns relating to the use of the class action device." Id. at 16.  But she concluded that it "flies in the face of the rule against nonparty preclusion."  Id.  Moreover, she explained, Congress effectively solved many relitigation problems by including in the Class Action Fairness Act an ability to remove state court class actions with minimal diversity.  Id. at 17.

Notably, the Court included a footnote indicating that the Smith opinion does not foreclose statutory adjustment of preclusion principles if Congress determines "that CAFA does not sufficiently prevent relitigation of class certification motions," nor does the opinion "address the permissibility of a change in the Federal Rules of Civil Procedure pertaining to this question."  Id. at n.12.

Notably, Smith addresses relitigation of the class certification issue in state court.  It does not address what remedies might be available to a federal court to enjoin the relitigation of class certification in federal court.

Moreover, Smith is expressly premised on the fact that the enjoined litigants were unaware of the pendency of the federal class action.  See id. at 2, 4.  As such, Smith does not address a problem more frequently complained of:  class counsel who seek a second (or third or fourth) bite at the apple where they lost on the certification issue the first time.  The issue of serial class action filings recently was raised in a certiorari petition in Thorogood v. Sears, Roebuck & Co., No. 10-1087 (U.S. pet. for cert. filed Mar. 2, 2011).  The tortured history of that case has been the subject of substantial commentary, including here, here, and here.

Interestingly, the losing plaintiff in Thorogood filed an amicus brief in Smith in support of the petitioners there.  But because Thorogood involved a subsequently-filed federal court class action filed by the same lawyer, it remains to be seen whether Smith -- which is premised on the federalism concerns of the Anti-Injunction Act -- will control the outcome of Thorogood.  And certainly Smith did not address a federal court's authority to enjoin a lawyer appearing before it from using other federal courts to serially relitigate an issue to the point of harassing a defendant.

More remains to be written on the subject of enjoining serial class action filings.

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A recent decision denying class certification in two putative class actions brought over a coal ash spill reminds us that numerosity is not a throw-away element of class certification and it cannot be satisfied merely by spouting a number of claimants who "may" be affected by the challenged conduct.  The decision was first reported by Law 360 (subscription required).

In Mays v. Tennessee Valley Authority, No. 3:09-CV-06 (Varlan/Guyton) (E.D. Tenn. May 10, 2011), the plaintiffs asserted a number of causes of action against the defendants because the defendant's dike failed and allowed coal ash to spill into rivers and allegedly harm properties downstream.  The cases were consolidated before a single judge.  One of the classes was defined as all people who owned property on the adjoining the TVA's property or downstream from the plant on the Emory or Clinch rivers on Dec. 22, 2008.  It asserted a private nuisance claim only.  The other class actions originally had asserted claims for personal injury, medical monitoring and property damage, although the class certification motion only sought certification of property damage claims.  The motion originally had been heard by a magistrate judge who issued a report and recommendation against class certification.  The District Court adopted the report and recommendation.

Interestingly, the court stressed that it was required to give "rigorous analysis" to class certification motions and look beyond the pleadings to the merits of the case, if necessary.  Slip op. at 29-30.  Of course, the rigorous analysis standard -- which rejects the misreading of Eisen that some courts have used to justify turning a blind eye to anything related to the merits of the case -- came into play in the Wal-Mart v. Dukes case and may receive further explanation by the Supreme Court in the next six weeks.

The Mays court began its class certification analysis with the numerosity requirement.  As I have lamented in this space before, too many people (courts, lawyers, litigants) treat numerosity as a throw-away requirement.  If there are potentially more than some magic number of claimants (often 40 or 100), some treat numerosity as "established" and can get very upset if a defendant won't concede it.

A word of advice:  don't.

As the Mays court explained, numerosity requires much more than simply counting how many people might have claims.  Rather, the proponent of class certification has the burden of establishing the actual impracticability of joinder.  Slip op. at 11 (citation omitted).  Thus, the court can consider a number of factors, including the ease of identifying and locating class members, their geographical dispersion, and ease of service if they were joined.  As the court explained:

. . . The joinder inquiry, like that required for the entire class certification inquiry, requires a fact-specific analysis that turns on the unique circumstances of each case and not on a single factor, such as the number of potential claimants. . . .

Plaintiffs argue . . . that there are a number of properties within the proposed class definitions where coal ash may be present and that these property owners may want to bring claims against TVA.  However, beyond providing the Court with estimates of the number of potential claimants, plaintiffs have not shown what make joinder impracticable given the large number of individual cases that have been filed and are proceeding to trial, the relatively small geographic area in which potential claimants reside or are located, the publicity surrounding the coal ash spill and this litigation, the close proximity of this Court to the location of the potential claimants, the number of attorneys willing to take these cases, the Court's familiarity with this litigation, the Court's ability to resolve broad legal questions and pre-trial discovery issues, and the procedures put in place for moving these cases forward and toward trial.

Slip op. at 12-13 (citations omitted).  The court also rejected the plaintiffs' argument that some claimants may not be able to afford bringing suit, reasoning that such speculation "is not specific evidence showing or indicating that there are indeed barriers to filing suit that would weigh towards a finding of class certification."  Id. at 13.

The Mays court concluded that although plaintiffs had identified a large number of people who might have been affected by the coal ash spill, they had not met their burden to prove "that joinder of these potential claimants is impracticable, or that potential claimants could not bring suit on their own."  Id. at 14.

The court also found that the plaintiffs were inadequate class representatives because they did not seek certification of (and thus risked losing, through res judicata and issue preclusion) personal injury and medical monitoring claims like the ones they had asserted on behalf of many of the named plaintiffs in their complaints.  The Mays court concluded that claim-splitting matters:

. . . [T]he Court finds that it cannot conclusively determine the res judicata effect of a decision yet to be handed down by this Court.  Such a decision is for the forum presented with the issue if and when it arises.  The Court believes that it can, however, assess the risks of such a determination and weigh it in the Court's consideration of class certification.  Accordingly, given the potential effect of res judicata, the application of which may preclude subsequent litigation under certain conditions, along with the application of the single injury rule, which Tennessee courts appear to follow, the Court finds that whether putative class members could bring these claims in a subsequent suit is, at best, undeterminable. 

Id. at 16-17 (citations omitted).  Because claims that had once been asserted by the putative class representatives have now been abandoned without any indication that the absent class members have willingly abandoned those claims, the court concluded that plaintiffs failed to adequately represent the class under Rule 23(a)(4).

The Mays court also determined that the commonality and typicality requirements were not satisfied because "the ultimate determination of each plaintiff's claim will turn primarily on individualized inquiries into how the coal ash affected each plaintiff's specific property interest.  Given the unique location of each plaintiff's individual property, and the unique situation of each plaintiff and his or her use and enjoyment of the property, individualized inquiries will apply to both the property damage and nuisance claims."  Id. at 22-23.

For similar reasons, the court concluded that the proposed class failed the predominance inquiry of Rule 23(b)(3):

[T]he Court agrees with Judge Guyton that these individualized inquiries, such as whether coal ash is or was present on a specific property, the proximate causation inquiry as to whether nondiscretionary conduct for which TVA can be sued caused coal ash to be present on a specific property, how each plaintiff's property interest and use and enjoyment of property has been impacted by the coal ash, and the extent of each plaintiff's damages, will predominate.

Id. at 26.

The Mays opinion is a strong, workmanlike analysis of each element of the class certification inquiry and what issues will have to be tried.  It is notable because -- even though it arose out of a common incident (a coal ash spill) -- the court recognized that the individual issues involved in establishing liability and damages would make the case unmanageable to be tried as a class action.

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Yesterday the National Law Journal published my column on the preclusive effect of decisions denying class certification.  The article also addressed the Eleventh Circuit's recent punt on the preclusive effect of the phase one findings of the class action trial of the Engle case, which was decertified by the Florida Supreme Court.

Being a believer in recycling, I encourage you to read the column here.

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Monday, it was technical problems at the LexBlog network that prevented me from posting.

Yesterday, it was presenting at and attending ACI's Asbestos Litigation Conference in Philadelphia.

But today -- finally -- I get to share with you the California Supreme Court's opinion in Boeken v. Philip Morris USA, Inc., S162029, Slip op. (Cal. May 13, 2010), which presents a fascinating little question of whether a common law claim for loss of consortium is sufficiently like a statutory wrongful death claim to be barred by res judicata. 

The facts in Boeken are simple enough.  After smoking for 42 years, plaintiff's husband was diagnosed with lung cancer.  He filed suit against the defendant in March 2000.  In October 2000, plaintiff filed her own separate common law action against the defendant for loss of consortium.  (Her husband was still alive at the time.)  She alleged that as a result of his lung cancer, her husband was "unable to perform the necessary duties as a spouse" and she was "permanently deprived" of her husband's consortium, including "the loss of love, affection, society, companionship, sexual relations, and support."  In February 2001, plaintiff voluntarily dismissed her suit with prejudice.  There is no explanation in the record as to why.  Her husband was still alive at the time.

After a jury trial, her husband was awarded $5,539,127 in compensatory damages and $3 billion in punitive damages.  Plaintiff's husband died in January 2002, while the appeal was pending.  The Court of Appeal reduced the punitive award to $50 million, but otherwise affirmed the judgment.  And in March 2006, plaintiff received over $80 million in satisfaction of that judgment.

But while the appeal was pending (and after her husband had died), plaintiff had filed another action on behalf of herself.  This second action was a statutory wrongful death action seeking compensation for the loss of the husband's companionship and affection.  Plaintiff alleged that she had suffered "loss of love, companionship, comfort, affection, society, solace, and moral support."

The trial court held that plaintiff's second lawsuit was barred by the prior dismissal with prejudice of her first action.  A divided panel of the Court of Appeal affirmed.  In Boeken, a divided California Supreme Court affirmed:  "The doctrine of res judicata prohibits a second suit between the same parties on the same cause of action. . . . We conclude that plaintiff's wrongful death action involves the same primary right and breach as her former loss of consortium claim, and that therefore the doctrine of res judicata bars plaintiff's wrongful death action."  Slip op. at 1-2.

The California Supremes explained that when California became a state in 1850, the spouse of a person who was injured by a tort had no cause of action for loss of support, regardless of whether that person was wrongfully killed or merely non-fatally injured.  In short, there was no loss of consortium at common law.  In 1862, however, the Legislature passed a statute allowing spouses and close relatives to sue for pecuniary harm arising from a tort victim's death.  That statutory right was later broadened to include "non-economic" harm, including loss of society and comfort.  Slip. op. at 7.

But it wasn't until 1974 that the California Supreme Court changed the common law to provide a cause of action for "loss of consortium" for spouses of tort victims who were not fatally injured.  As the court described it, wrongful death was a creature of statute, and loss of consortium was now a common law cause of action. 

Res judicata has two aspects.  It bars subsequent claims on the same cause of action, and, as "collateral estoppel," it operates as a conclusive adjudication of issue in the second action that were actually litigated and determined in the first action.  Res judicata has three prerequisites:  (1) the issue raised in the present action must be identical to the issue litigated in the prior proceeding, (2) the prior proceeding must have resulted in a final judgment on the merits, and (3) the party against whom the doctrine is asserted must have been a party in the prior proceeding (or in privity with one).

In determining whether prong one was met, the court invoked what it called the "primary rights" theory:

The cause of action is the right to obtain redress for a harm suffered, regardless of the specific remedy sought or the legal theory (common law or statutory) advanced.  "[T]he 'cause of action' is based upon the harm suffered, as opposed to the particular theory asserted by the litigant.  Even where there are multiple legal theories upon which recovery might be predicated, only one injury gives rise to only one claim for relief.  'Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different legal ground for relief."  Thus, under the primary rights theory, the determinative factor is the harm suffered.

Slip op at 10 (citations omitted).

The court determined that the primary right asserted by plaintiff was the right not to be wrongfully deprived of spousal companionship and affection, and the defendant's alleged corresponding duty was the duty not to wrongfully deprive her of such companionship and affection by inducing her husband to smoke cigarettes.  Looking at the prior complaint -- which had alleged that she had been "permanently deprived" of her husband's companionship and affection -- and her present complaint, which effectively alleges the same thing, the court concluded that the present suit was barred by res judicata.

Plaintiff argued that she could not have obtained damages in her first action for post death loss of consortium, only loss of consortium up to the time of her husband's death.  As such, she argued, the primary right asserted in her current wrongful death claim was different from that asserted in her first lawsuit.  The court disagreed, holding that when a spouse sues for loss of consortium regarding a living spouse, they are able to pursue future damages that are reasonably certain to occur.  And the measure of these anticipated damages takes into account the life expectancy of the spouse as well as the injured tort victim.  So the damage award on a loss of consortium claim can reflect the anticipated loss of consortium through the life expectancy of the couple if the tort had not occurred.  Slip op. at 13-14.

A rule limiting a loss of consortium claim to the lifetime of the injured spouse, and requiring a separate wrongful death claim for post-death loss of consortium, "would often lead, in the case of a life-curtailing injury, to multiple proceedings and the possibility of a double recovery or an inadequate recovery.  Id. at 18.

Accordingly, the court held that plaintiff's prior dismissal with prejudice of her first action for loss of consortium barred her subsequent lawsuit for wrongful death.

Three justices dissented.  First, they argued that a wrongful death claim includes many types of damages that a loss of consortium claim does not (including funeral expenses).  Second, they argued that if loss of consortium were truly the same as wrongful death, then the triggering of the statute of limitations on a loss of consortium claim would trigger the statute of limitations on a wrongful death claim -- even where the injured spouse had not yet died.  "But in fact it is indisputable that the statute of limitations on a wrongful death claim does not begin to run until the death of the spouse or other relative at the earliest, regardless of the timing of any predeath injuries."  Dissent at 4.

Moreover, the dissenting justices disputed whether a voluntary dismissal with prejudice can qualify for res judicata treatment since the issues have not been "actually litigated" for collateral estoppel purposes.  Dissent at 8.  They argued that where there is a corresponding settlement agreement reflecting an intention to resolve certain issues with finality, res judicata can apply, but that without such an agreement, there can be no "actual litigation" and no finality.

The decision in Boeken highlights the importance of dismissals with prejudice.  By studying the dissent, defense lawyers can identify ways in which to strengthen settlements and other agreements whereby litigants agree to drop claims with prejudice.

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As someone who has drafted his fair share of class action settlements, I can tell you that I always get a little nervous when I start reading a case in which a court is required to construe the language and effect of a prior class action settlement.  I had that same trepidation when I picked up Lester Building Systems v. Louisiana-Pacific Corp., 2009 WL 537501 (Minn. March 5, 2009).

The plaintiff, Lester Building Systems ("Lester"), makes hog barns, which it sells directly to farmers and indirectly through a network of independent builder-dealers.  In the early 1990s, Lester stopped using plywood in favor of an external siding product called "Inner-Seal," which was made by Louisiana-Pacific.  Around that same time, Louisiana-Pacific started receiving complaints from around the country about its Inner-Seal product swelling and deteriorating.  Eventually, Louisiana-Pacific ended up settling a nationwide class action in federal court that resolved all potential Inner-Seal claims.  The opt-out settlement did not require Louisiana-Pacific to fund the settlement all at once; rather, it was to make annual payments.  The claims ended up far out-pacing Louisiana-Pacific's contributions, and many class members were forced to either accept immediately-reduced payouts on their claims, or wait until such time as Louisiana Pacific could make a full payment.

Lester had bought around $3.4 million of Inner-Seal and used it to make some 2,600 hog barns.  Many of its customers were not happy.  Lester estimated that to repair its customers' barns would cost $13.2 million.  Many of Lester's customers, however, chose an early payout from the settlement fund of only $640,000.

In negotiating the settlement, Louisiana-Pacific -- like many product manufacturers -- had tried to protect not only itself, but also the intermediate sellers of its products by including within the settlement a complete release of liability for them:  "To the extent claims may be asserted against persons or entities in the chain of distribution, installation or finishing of the Exterior Inner-Seal siding, the Releasing Party shall be deemed to and does hereby release and forever discharge those persons or entities from claims based solely on distribution, handling, installation, specification, or use of the Exterior Inner-Seal Siding."  2009 WL 537501 at *5 (quoting the settlement).

Lester was far from grateful for such protection, however.  In fact, it sued Louisiana Pacific in Minnesota state court, asserting theories of breach of contract, breach of implied and express warranties, and fraud.  Lester won at trial handily:  the jury awarded Lester $3.4 million for Lester's purchase price for the Inner-Seal products, $10.2 million for lost profits up through 2002, $2.8 million for the cost of restoring goodwill, and $13.2 million for the estimated cost of repairing its customers' barns.

Louisiana Pacific argued that the cost of repairing Lester's customer's barns was not a proper element of damages because Lester had no legal obligation to conduct such repairs, since it had received a full and complete release from the federal settlement.  Lester countered that even if it did not have a legal obligation to make such repairs, it had a practical business obligation to do so, and Louisiana-Pacific should pay for it. 

The Minnesota Supreme Court examined the language of the federal settlement and held that it clearly and unambiguously released all entities in the chain of distribution -- including Lester -- from liability to repair the farmers' barns.  Moreover, the court held, Lester already had received from the jury awards for lost profits and loss of goodwill, and thus no "practical business obligation" could exist to support the so-called consequential repair costs.  Without Lester having a legal obligation to repair its customers' barns, Lester could not force Louisiana-Pacific to pay for it.

Lester Building Systems is another good decision for my class action settlements file that squarely considers the language of an intermediary release provision and gives it full force and effect.  The irony, of course, is that the release ultimately operated to the detriment of the intermediate seller, who instead wanted to extract money from the manufacturer to pay for repairs to its customers' barns. 

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