As Judge Posner remarked, “only a lunatic or a fanatic sues for $30,” Carnegie v. Household Int’l, Inc., 376 F.3d 656 (7th Cir. 2004), and that’s because it costs money to seek civil justice. For all the complaints by corporate defendants about the “rising costs of litigation,” those costs are just as frequently — perhaps more frequently — borne by plaintiffs. I’ve had individual wrongful death cases that required hundreds of thousands of dollars in litigation expenses alone, not including attorney and paralegal time.
Here in Philadelphia, the tallest building by far is the Comcast Center, built in part by the enormous profits reaped by way of Comcast’s monopoly power over cable-television services in the area, causing Philadelphia-area consumers to be overcharged by over $875 million from 1998 to 2007, as alleged by the Behrend lawsuit. I was a Comcast customer in that timeframe, and you know how much my individual antitrust claim is worth? Zero. I was personally overcharged no more than $500; the $350 filing fee for my complaint will eat up most of what I could recover, and certainly the remaining $150 in potential damages won’t justify the millions of dollars in litigation expenses and tens of thousands of hours of attorney time I’ll need to invest in the case.
This problem was solved nearly fifty years ago, when Federal Rule of Civil Procedure 23 was amended to create a streamlined procedure for these types of cases. “The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997)(internal quotation omitted).
The actual requirements of Fed.R.Civ.P. 23 are not particularly strict. A plaintiff initially needs to show the four requirements of Rule 23(a) are met:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Then, the plaintiff needs to show that either Rule 23(b)(1), (b)(2), or (b)(3) is met. Usually the issue is just (b)(2) or (b)(3), so they’re all I quote here:
(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.
As an analytical matter, it is not hard to see, for example, how a nationwide employer that refuses to control rampant discrimination by store managers has “acted or refused to act on grounds that apply generally to the class.” It is similarly not hard to see how, in a case alleging a telecommunications monopoly imposed above-market prices in a particular metropolitan area, the questions of that monopoly’s antitrust liability “predominate over” individual questions relating to consumers within the metropolitan area.
But ever since Amchem Prods. and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) — both of which were unique nationwide asbestos settlements, and thus not really appropriate cases for re-interpreting class action law in general — Rule 23 has been increasingly interpreted by a slim majority of the Supreme Court in the manner most disadvantageous to plaintiffs, people like you and me.
In Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), a slim majority of the Supreme Court tried to rewrite Rule 23(a)(2), the “commonality” requirement, but it did so in a curious way that, on its face, only applied to the particular case they were reviewing. For the Rule 23(a)(2) question, the majority admitted that “for purposes of Rule 23(a)(2) even a single common question will do,” but “concluded that [these plaintiffs] have not established the existence of any common question.” Given the extraordinary breadth of the Dukes case, and the novel theory, it’s no stretch to say that the Court’s Rule 23(a)(2) holding was limited to that case and highly similar cases. (The Dukes opinion also held that Rule 23(b)(2) doesn’t permit “claims for monetary relief … at least where (as here) the monetary relief is not incidental to the injunctive or declaratory relief,” but that just means monetary claims need to be brought under Rule 23(b)(3)).
The problem is, when a slim majority of the Supreme Court bungles its way through the analysis of a single unprecedented case, it leaves behind a trail of ambiguity that lower courts have to sort out. In the wake of Dukes, for example, the Fifth Circuit interpreted it to impose a whole new means by which courts assess the “commonality” requirement, MD ex rel. Stukenberg v. Perry, 675 F. 3d 832 (5th Cir. 2012), whereas the Seventh Circuit considered Dukes to be an example of a class action that was simply too big and disparate, as “the Court found that there was no unifying motive theory holding together ‘literally millions of employment decisions,’” that commonality “does not mean merely that they have all suffered a violation of the same provision of law,” (quoting Dukes), and that “to satisfy the commonality element, it is enough for plaintiffs to present just one common claim.” Ross v. RBS CITIZENS, NA, 667 F. 3d 900 (7th Cir. 2012)(strangely vacated and remanded, without opinion, in light of Behrend).
The past two months have produced two new opinions on class action certification, one of which (joined by 6 justices) reaffirms the liberal text of the rule, and the other of which (joined by 5 justices) produces yet another “one off” opinion that gives lower courts no useful guidance.
On February 27, 2013, a six-member majority of the Supreme Court (Justices Ginsburg, Roberts, Breyer, Alito, Sotomayor, and Kagan) confirmed in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 133 S. Ct. 1184 (2013) how easily the requirements of Rule 23(b)(3) are met:
Rule 23(b)(3), however, does not require a plaintiff seeking class certification to prove that each “elemen[t] of [her] claim [is] susceptible to classwide proof.” Post, at 7. What the rule does require is that common questions “predominate over any questions affecting only individual [class] members.” Fed. Rule Civ. Proc. 23(b)(3) (emphasis added). …
Because the question of materiality is common to the class, and because a failure of proof on that issue would not result in questions “affecting only individual members” predominating, Fed. Rule Civ. Proc.23(b)(3), Connecticut Retirement was not required to prove the materiality of Amgen’s alleged misrepresentations and omissions at the class-certification stage. This is not a case in which the asserted problem — i.e., that the plaintiff class cannot prove materiality — “exhibits some fatal dissimilarity” among class members that would make use of the class-action device inefficient or unfair. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N. Y. U. L. Rev. 97, 107 (2009). Instead, what Amgen alleges is “a fatal similarity — [an alleged] failure of proof as to an element of the plaintiffs’ cause of action.” Ibid. Such a contention is properly addressed at trial or in a ruling on a summary-judgment motion. The allegation should not be resolved in deciding whether to certify a proposed class. Ibid.
That “fatal similarity” language was music to plaintiff’s lawyers ears: six Justices of the Supreme Court agreed that, if the defendant had one argument it felt could be used to dismiss all of the class members claims, then, as a logical matter, “the questions of law or fact common to class members predominate over any questions affecting only individual members.” Thus, under Amgen, if the defendant says its own defenses would apply to all class members’ claims — which defendants typically do say, to dismiss as many cases as possible — then those same defenses provide grounds for the certification of a class action. Indeed, the more numerous the defense arguments, and the stronger the defendant claims those arguments are, the better the argument for certification.
Then came the baffling opinion in Comcast Corp. v. Behrend, No. 11-864, 2013 BL 80435 (U.S. Mar. 27, 2013). Behrend is the antitrust case I referenced in the beginning of this post, brought by my blogging buddy Barry Barnett at Susman Godfrey. The case is plainly right for class action treatment, given the modest damages to each consumer and the fact that the issues relating to the class as a whole will obviously “predominate” over individual issues: in terms of an antitrust case against Comcast, the differences between me, someone who lived in Chester, Pennsylvania, someone who lived in Cherry Hill, New Jersey, and everybody else who cheers for the Eagles, Sixers, and Flyers are trivial compared to the larger issue of whether Comcast violated antitrust laws in building and exercising its monopoly control of the Philadelphia area.
Yet, a slim majority of the Supreme Court ended up decertifying the Behrend class-action, through tortuous reasoning and a hopelessly botched procedure. Comcast petitioned for certiorari on a question involving the merits of the claim, the Supreme Court granted certiorari on a made-up question relating to the admissibility of expert testimony, held oral argument on that question, and then, when it came time to decide the case, realized that Comcast had already waived the expert testimony issue, and so the Supreme Court rewrote the question again to talk about damages. The Supreme Court then held — in a manner that would impress Joseph Heller — that, because of the complicated appellate path, the plaintiffs had conceded a damages argument that required the class be decertified and remanded for further consideration. It’s almost as if the appeal never happened at all; the Supreme Court decided a phantom issue that no one had raised, argued, or decided until after the argument at the Supreme Court on an entirely different issue.
As Justice Ginsburg wrote in her dissent, “The Court’s ruling is good for this day and case only.” The case should have simply been dismissed from the Supreme Court — as Justice Scalia himself wrote a mere two weeks later (here, on the last page), “The Court thus has no business deploying against petitioner an argument that was neither preserved, see Baldwin v. Reese, 541 U.S. 27, 34 (2004), nor fairly included within the question presented, see Yee v. Escondido, 503 U.S. 519, 535 (1992).”
Now, the inevitable has happened, just as it happened after Wal-Mart Stores, Inc. v. Dukes: District Courts have already misinterpreted the contorted, fact-and-procedure-specific opinion in Behrend to have rewritten Rule 23(b)(3). The good folks at Public Citizen jumped in to help out in one such case in New York. In that case, a wage and hour class action against Applebee’s, the District Court essentially held that employees could never file a wage and hour claims as a class action because each employee would have distinct damages arising from the same illegal conduct.
Unsurprisingly, I agree with everything Public Citizen argues in their brief (e.g., “the Supreme Court did not suggest, and in fact had no occasion to suggest, that a classwide theory of damages was a new threshold prerequisite for certification under Rule 23(b)(3) generally”), but I would also add the Amgen case to the mix. Though one cynical interpretation of Amgen would be to conclude that the Supreme Court approves of class actions that benefit shareholders (Amgen) but not class actions that benefit consumers (Behrend) or employees (Dukes), the Supreme Court certainly didn’t own up to that interpretation.
What the Supreme Court actually held in Amgen was: “Rule 23(b)(3), however, does not require a plaintiff seeking class certification to prove that each element of her claim is susceptible to classwide proof.” (Emphasis in original.) Indeed, Amgen held that “predominance” can be shown either through the plaintiff’s proof of “similarity” or through the defendant raising a “similar” defense as to all plaintiffs.
That, to me, seals the deal. Unless you want to take the purely cynical interpretation of Amgen, Behrend, and Dukes, then Behrend didn’t actually change Rule 23(b)(3). It was, as Justice Ginsburg argued, a ruling good for that day and case only. We can only hope the lower courts correctly interpret it that way.