United States Supreme Court Extends Class Certification “Rigorous Analysis” to Damages Evidence

The Supreme Court recently applied its “rigorous analysis” standard to class-wide damages evidence and reversed class certification. See Comcast Corp. v. Behrend, No. 11-864 (Mar. 27, 2013) (slip opinion). The “rigorous analysis” standard has been entrenched in federal class certification jurisprudence since General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 160-61 (1982). The analysis frequently requires courts to “probe behind the pleadings” and may entail some “overlap with the merits of the plaintiff’s underlying claim.” Behrend, slip op. at 6 (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ___ (2011)).

In Behrend, a 5-4 majority applied the rigorous analysis to reverse certification of a class asserting antitrust claims. The specific issue in Behrend was whether the lower courts properly relied on expert evidence regarding common damages to class members as satisfying the predominance requirement of Rule 23(b). The majority found that the rigorous analysis must be applied to the predominance requirement, including consideration of merits evidence to the extent it overlapped with the class certification question. The majority concluded that the expert’s damages modeling was insufficient to show predominance because it was not isolated to the single theory of liability the lower court allowed to go forward.

A few days later, on April 1, 2013, the Court summarily vacated the judgments and remanded two other certified classes for further consideration in light of Behrend in RBS Citizens, N.A. v. Ross, 2013 U.S. LEXIS 2640, 2013 WL 1285303 (Apr. 1, 2013) (involving wage and hour claims) and Whirlpool v. Glazer, 2013 U.S. LEXIS 2695, 2013 WL 1285305 (Apr. 1, 2013) (alleged products liability claims).

In Ross, the Seventh Circuit had affirmed the district court’s pre-Dukes certification of a class of hourly bank employees who alleged wage and hour claims. See Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012). The Seventh Circuit found that the Supreme Court’s discussion of the Rule 23(a)(2) commonality standard in Dukes, a gender discrimination class action, did not change the commonality analysis in the context of the claims asserted in Ross. The Seventh Circuit specifically noted that the individualized inquiries as to the proof that plaintiffs were required to offer, which precluded a finding of commonality in Dukes, did not exist in Ross. Unlike in Dukes, the Seventh Circuit held that the commonality requirement was satisfied because defendant had an unofficial employment policy that was the common answer that potentially drove the litigation in Ross.

In Glazer, the Sixth Circuit had affirmed certification of a class of consumers who had purchased washing machines. See Glazer v. Whirlpool Corp. (In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig.), 678 F.3d 409 (6th Cir. 2012). The suit alleged that the washing machines were defective in design, causing mold to grow in the machines. The district court had found that common issues predominated as to whether there was a common design defect at fault. The court had rejected Whirlpool’s argument that class certification was inappropriate because most people who purchased the model at issue never experienced any injury (i.e., mold growth). The court had also rejected Whirlpool’s argument that individual issues of the consumer’s own contribution to mold growth precluded a finding of predominance.

The Supreme Court’s reversal of class certification in the above cases strongly suggests that the rigorous analysis standard applies to all facets of the Rule 23 class certification analysis, including evidence of class-wide damages. Nevertheless, vigorous dissents were written in both Dukes and Behrend, so the proper scope and application of the analysis is likely to remain a hotly contested issue in future class action cases.