Posts belonging to Category Certification Rulings



Class Certification Order in In re: Dial Complete Marketing Provides a Lesson in Economics

In product labeling class actions, consumer plaintiffs must provide a damages methodology that is both admissible under Fed. R. Evid. 702 (i.e. survives a challenge under Daubert v. Merrell Dow Pharms. Inc., 509 U.S. 579 (1973)) and satisfies the requirements of Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1433 (2013) (“a model purporting to serve as evidence of damages in [a] class action must measure only those damages attributable to that theory”).

In In re: Dial Complete Marketing and Sales Practices Litigation, MDL Case No. 11-md-2263-SM, 2017 DNH 051 (D.N.H. March 27, 2017) (“In re: Dial”) (slip op. available here), the court found that the plaintiffs met both aspects of this challenge. In re: Dial was a consolidated, multi-district class action brought by consumers in multiple states, including California, Florida, and Illinois, against Dial based on alleged misrepresentations of the antibacterial properties of its “Dial Complete” soap. Slip op. at 3. The court denied Dial’s motion to strike the testimony of the plaintiffs’ expert, Stefan Boedeker, and held that the expert’s damages model based on conjoint analysis methodology “satisfies the requirements of Comcast and Rule 23.” Id. at 30. However, what sets apart In re: Dial from previous cases discussing conjoint analysis is its in-depth discussion of the economic principles of the methodology.

The plaintiffs in In re: Dial alleged that the label on “Dial Complete” soap contained a number of statements that were false and misleading, including claims that the product “Kills 99.99% of Germs,” that it is “#1 Doctor Recommended,” and that Dial Complete “Kills more germs than any other liquid hand soap.” Slip op. at 3. The expert’s task was to isolate a “measurable monetary portion” of the price of the soap attributable to the falsely-claimed product features. Id. at 19. The court began by noting that the expert’s conjoint analysis methodology “consists of three steps: data collection, data analysis and damages calculation” and then described in detail how the expert-designed “Choice Based Conjoint” consumer survey worked. Id. at 6-10. Then, observing that “conjoint analysis is a well-accepted economic methodology,” the court had no problem dismissing Dial’s criticisms of the expert’s survey as “going to the weight, not the admissibility,” of the expert’s testimony. Id. at 13-17.

The court’s decision had, in certain respects, an academic depth to its analysis, explaining economic concepts like demand curves (“a visual depiction of the relationship between a product’s price and quantity demanded”) and marginal consumers (“the last consumer willing to pay for a product at a given price and, consequently, the first to leave if the price is increased”), and how those concepts and research data combined to permit an expert to perform a “calculation [that] will yield the price premium associated with the ‘Kills 99.99% of Germs’ claim.” Slip op. at 25-27. Finally, the court rejected Dial’s expert’s critique of the damages model that it is “unconnected to supply side market forces” with a cogent explanation of why a “traditional” supply and demand approach was problematic and why the plaintiffs’ expert’s model, holding the number of products actually sold constant on the supply/demand graph, actually “captured the full measure of damages suffered by consumers who actually bought the allegedly misrepresented product.” Id. at 28.

The court’s illuminating discussion of surveys, economics, and conjoint analysis should be required reading for any litigator planning to develop a damages model for class certification.

Authored By:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

9th Cir. Weighs in on Ascertainability Debate with ConAgra Ruling, Challenging Circuit Split

Earlier this year, the Ninth Circuit joined the Sixth, Seventh, and Eighth Circuits in declining to add “administrative feasibility” to Rule 23’s class certification requirements. Briseno v. ConAgra Foods, Inc., No. 15-55727 (9th Cir. Jan. 3, 2017) (slip op. available here). The ConAgra decision has been widely considered a victory for plaintiffs’ attorneys, as the Ninth Circuit refused to expand the requirements that plaintiffs must show for class certification and provided in-depth rebuttals to arguments made by the Third Circuit in requiring an additional showing of administrative feasibility to satisfy Rule 23.

In ConAgra, the Ninth Circuit upheld U.S. District Judge Margaret Morrow’s decision granting class certification to consumers in 11 states who allege that they were misled by the “all natural” claims on ConAgra’s Wesson cooking oil. Plaintiff Briseno, on behalf of himself and the class of consumers, alleged that ConAgra’s Wesson-brand cooking oil claims to be “all natural” but, in fact, contains genetically modified organisms (GMOs) and that Plaintiff Briseno and other consumers, to their detriment, relied on ConAgra’s misleading “all natural” claims when purchasing the cooking oil.

ConAgra opposed the district court’s certification decision on appeal, arguing that the Ninth Circuit should join the Third Circuit and reverse certification because the plaintiff failed to provide an “administratively feasible” plan to determine ascertainability. See Byrd v. Aaron’s Inc., 784 F.3d 154, 162-63 (3d Cir. 2015); Carrera v. Bayer Corp., 727 F.3d 300, 306-08 (3d Cir. 2013) (imposing “administrative feasibility” as a prerequisite to class certification). However, Circuit Judge Michelle T. Friedland, writing for the court, sharply disagreed with ConAgra’s stance stating, “ . . . Rule 23’s enumerated criteria already address the policy concerns that have motivated some courts to adopt a separate administrative feasibility requirement, and do so without undermining the balance of interests struck by the Supreme Court, Congress, and the other contributors to the Rule.” Slip op. at 4.

Rule 23 specifies four distinct requirements that parties seeking certification must satisfy: numerosity, commonality, typicality, and adequacy. The Third Circuit previously voiced concerns, which ConAgra relied upon in its appeal, over the potential for fraudulent claims and defendant’s due process rights if administrative feasibility was not an additional pre-requisite for class certification. Slip op. 15-23. In this context, “administrative feasibility” would have meant that the plaintiffs would also be required to proffer a reliable method of identifying members of the certified class. However, Judge Friedland pointed to several means by which Rule 23 already addresses those concerns, most notably via the claims administration process, and found the enumerated list to be exhaustive. Id.

In March, the Ninth Circuit agreed to postpone making official its decision to stay issuance of the mandate in light of ConAgra’s request for Supreme Court review. The ConAgra decision further serves to defend and strengthen the role that class actions play in today’s jurisprudence, as Judge Friedland consistently expressed that small dollar consumer class actions exemplify the necessity of class actions and that imposing additional hurdles on consumers is inconsistent with the legislative intent of Rule 23.

Authored by: 
Trisha Monesi, Associate
CAPSTONE LAW APC

Lubin v. Wackenhut: Decertification Order Based on Dukes Reversed by Cal. Ct. of Appeal

On November 21, 2016, the California Court of Appeal for the Second Appellate District reversed the decertification of a class of over 10,000 employees. The Court of Appeal held that the trial court should examine the plaintiffs’ theory of recovery when evaluating class certification, rather than the frequency of violations resulting from that theory. Lubin v. The Wackenhut Corporation, No. B244383, __ Cal. App. 4th __ (2nd Dist. Div. 4 Nov. 21, 2016) (slip op. available here). This is welcome news for the plaintiffs’ class action bar, as it narrows the ways in which a trial court may peek at the merits of the plaintiff’s claims at the class certification stage.

The Lubin class of security officers, employed by Wackenhut, was initially certified for Labor Code claims on the basis of on-duty meal period waivers that the security officers had signed. Following certification, the parties agreed to a statistical sampling of records to determine the merits of the class claims—specifically, to determine how many class members had signed on-duty meal waivers that did not include required revocation language. Then, the United States Supreme Court issued its ruling on Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), in which the high court cast doubt on the acceptability of using statistical sampling to prove liability in an employment class action. The defendant in Lubin moved for decertification based on Dukes, on the grounds that the agreed-upon sampling of meal break waivers would violate Dukes’ proscription of “trial by formula.” The trial court took further briefing in light of Brinker Rest. Corp. v. Superior Court, 53 Cal. 4th 1004 (2012), and then decertified the class. The Lubin plaintiffs appealed.

The Court of Appeal, citing Brinker, held that the answer to the “ultimate question” for class certification “hinges on ‘whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.’” Slip op. at 8 (internal citations omitted). In pushing against the trial court’s application of Dukes, the Court of Appeal pointed to the clarification in Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1048 (2016) (stating that Dukes does not “stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability”). Slip op. at 12. Further, the Court of Appeal criticized the trial court for examining, in its class certification analysis, the damages issue of whether employees actually experienced meal period violations. Notably, the Court of Appeal held that the trial court’s “standard requiring plaintiffs to ‘conclusively establish’ that Wackenhut had a policy that violated wage and hour laws is improper because plaintiffs’ burden at class certification is to produce substantial evidence.” Id. at 41 (emphasis in original).

With Lubin, the impact of Dukes has been reduced, and class action plaintiffs in California can now more easily certify claims based on solid theories of liability, even if the actual impact of those theories does not necessarily result in widespread damages. However, defendants may see this as a dilution of what it means to have a certified class, given that the bar has, in a sense, been lowered.

Authored by: 
Jonathan Lee, Associate
CAPSTONE LAW APC

Vaquero v. Ashley Furniture: 9th Cir. Ruling Clarifies, Eases Class Certification Requirements

In June, the Ninth Circuit Court of Appeals issued a ruling that could provide a significant boon to class action plaintiffs. In Vaquero v. Ashley Furniture Industries, Inc., et al. (9th Cir. June 8, 2016) (slip op. available here), the appellate panel affirmed a district court order granting certification in a wage and hour class action. In doing so, the court considered the applicability of several United States Supreme Court opinions from recent years, finding in favor of the Vaquero plaintiffs in each instance.

The Vaquero plaintiffs were commission-only salespeople who alleged that they were required to perform additional, non-sales work without being paid the requisite minimum wage for these tasks. The lower court certified the class, and the defendant-employer appealed, citing landmark U.S. Supreme Court cases Wal-Mart Stores, Inc. v. Dukes (564 U.S. 338 (2011)) and Comcast Corp. v. Behrend (133 S. Ct. 1426 (2013)), neither of which involved wage and hour issues.

Examining the commonality requirement, which requires that plaintiffs’ claims be capable of classwide resolution, the Ninth Circuit rejected the defendants’ reliance on Dukes. The appeals court distinguished Dukes from Vaquero, pointing out that the former was a Title VII discrimination case involving millions of employees and innumerable managerial decisions across thousands of store locations, while the present case has a proposed class of 600 employees who perform the same work, and whose injury is focused and objective as compared to Dukes. Thus, the Ninth Circuit in Vaquero limited the impact of Dukes on wage and hour commonality analyses.

As for the predominance requirement (that issues of law and fact predominate over individual issues), the court again shot down the defendants’ reasoning, this time with regard to Comcast, a consumer antitrust class action where the Supreme Court found a lack of predominance because the plaintiffs used a faulty damages model and were unable to demonstrate that their damages could be determined on a classwide basis. The panel concluded that the defendants’ interpretation of Comcast—that predominance cannot be found unless damages can be determined on a classwide basis—was too broad, and instead held that the plaintiffs need only “prove that damages resulted from the defendant’s conduct” in order to prevail. Slip op. at 8. Here, there was no doubt that the class members’ injuries had been caused by the employer’s conduct, unlike in the much more attenuated context of an antitrust action in Comcast. Id. at 9.

Finally, Vaquero references the recent Supreme Court decision in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016) (finding that representative evidence can be used to show both damages and liability) (previously covered on the ILJ here), noting that: “[t]he Supreme Court has not disturbed our precedent” and “the need for individual damages calculations does not, alone, defeat class certification.” Slip op. at 10. The Vaquero ruling not only paves the way for certification of this class of 600 Ashley Furniture employees, but will no doubt be helpful to many more California employees in the future.

Authored by: 
Robin Hall, Associate
CAPSTONE LAW APC