Perhaps the most ominous prediction that accompanied the Supreme Court’s Wal-Mart v. Dukes decision was that a wave of decertifications would nullify many, if not most, already-certified actions.  Yet more than a year after Dukes, that prediction has not come to pass, a fact underscored by a recent decision from California’s Central District.  See Kingsbury v. U.S. Greenfiber, LLC, No. 08-CV-00151 (C.D. Cal. Jul. 2, 2012) (order denying motion to reconsider order granting class certification) (available here).  In Kingsbury, the plaintiff successfully moved for certification in May of 2011, a ruling that was upheld with the court’s denial of the defendant’s motion to reconsider.  Id.

The action was filed in 2008 by a group of homeowners whose homes contained allegedly defective insulation that was prone to water retention and mold contamination.  See Order at 1-2.  The plaintiffs claim that the defendant failed to inform them of the mold risk.  Id.  In attempting to reverse the 2011 class certification ruling, the defendant argued that decertification was required under both Dukes and the Supreme Court’s other much-discussed 2011 class action decision, AT&T v. Concepcion, and that Concepcion also supported the defendant’s contention that all disputes with the plaintiffs should be resolved in arbitration.  See Order at 2-3.  Judge A. Howard Matz rejected both arguments.  Id. at 10.

As to the Concepcion-based arbitration argument, Judge Matz found that the defendant had waived any entitlement to arbitration, “because even before [Concepcion] was decided, [the defendant] was well aware of its right to arbitrate.  By engaging in extensive litigation for almost four years, [the defendant] waived its arbitration rights.”  Order at 3.

Addressing the defendant’s argument that common questions of law or fact did not predominate in light of the new standard presented in Dukes, the court held that “Dukes does not alter the Court’s decision to certify a class,” because “there are numerous common contentions that are central to the resolution . . . of each class member’s claim.”  Order at 10.  Judge Matz went on to enumerate the predominant common questions, and in doing so provided useful guidance for plaintiffs and counsel who confront perhaps the most recurring of class action defenses where commonality is dispositive to certification.  The common questions included: whether the defendant’s purchase agreement is deceptive under California’s Unfair Competition Law; whether the at-issue insulation is prone to water retention and mold; whether a reasonable consumer would expect disclosure of these risks; whether the presence of the at-issue insulation affects home values; and whether the defendant concealed material information about the insulation.  Id. at 10.

Kingsbury is far from an outlier among cases where defendants have invoked Dukes in an attempt to decertify misrepresentation and non-disclosure claims.  See, e.g., Johnson v. General Mills, Inc., 276 F.R.D. 519 (C.D. Cal. 2011) (Carney, J.) (finding predominance of common questions, notwithstanding Dukes); Jermyn v. Best Buy Stores, Inc., 276 F.R.D. 167 (S.D.N.Y. 2011) (McMahon, J.) (same).  More notable are the instances where decertification motions were denied in Dukes-like employment discrimination cases or other circumstances with a similarly subjective, individualized element.  See, e.g., United States of America v. City of New York, 276 F.R.D. 22 (E.D.N.Y. 2011) (Garaufis, J.) (denying decertification motion in employment discrimination case, notwithstanding Dukes); DL v. District of Columbia, 277 F.R.D. 38 (D.D.C. 2011) (Lamberth, J.) (denying decertification motion in Individuals with Disabilities and Education Act action and distinguishing Dukes).  The latter cases further undermine the myth that few certifications would survive post-Dukes.

Some federal courts have insisted that, to certify a class, the plaintiff moving for certification must establish that the defendant’s at-issue unlawful conduct injured every single putative class member — a virtually insuperable standard.  In addition to being effectively impossible to satisfy, a leading class action scholar argues that the “classwide injury” criterion perpetuates fallacies that result in claims ideally suited for classwide adjudication being denied certification and, more often than not, the plaintiffs and prospective class members never obtaining relief.  See Sergio J. Campos, Proof of Classwide Injury, 37 BROOK. J. INT’L L., 750 (forthcoming 2012) (draft available here).

Professor Campos begins his paper with a compelling example: Suppose an individual protected by a statute akin to Title VII is seeking employment and finds a good fit in a help-wanted ad, but the ad clearly states that those of her ethnic background “need not apply.”  See Campos at 751-52.  Should this individual be precluded from bringing her suit as a class action unless she is able to establish, at the class certification stage, that “‘each person for whom [she] will ultimately seek relief was a victim of the employer’s discriminatory policy’”?  Campos at 752, quoting Int’l Bd. Of Teamsters v. United States, 431 U.S. 324, 336 (1977).

The Supreme Court’s reasoning in the Teamsters case excerpted by Professor Campos exemplifies the broad and troubling tendency whereby federal courts demand proof of classwide injury, effectively nullifying numerous archetype class actions, such as that set out in Professor Campos’ hypothetical.  He equates the hypothetical’s insistence on classwide injury with the U.S. Supreme Court’s predominance analysis in Dukes v. Wal-Mart, requiring that plaintiffs, to establish the predominance of common questions of law or fact, identify common questions capable of “generat[ing] common answers.”  See Campos at 755-56, quoting Dukes v. Wal-Mart, 131 S. Ct. 2541, 2551 (2011), quoting Nagareda, Richard A., Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 98-109 (2009).

As such, Professor Campos argues, the Supreme Court’s most recent and expansive articulation of class action jurisprudence, Dukes, is grounded in multiple fallacies, as are the numerous lower-court decisions that have required classwide injury.  The first fallacy that Campos identifies is the “All at Once Fallacy,” whereby courts believe that, in order to ensure that common questions predominate, a class action must be capable of resolving all issues “in one fell swoop.”  Campos at 756, 766.  Yet by, for instance, bifurcating liability and damages determinations, the initial liability determination is capable of giving way to a damages phase in which determinations are made as to each class member who has suffered injury.  Id. at 770.  The commonly adopted bifurcation procedure thus exemplifies that class actions need not necessarily entail adjudication in “one fell swoop.”

The second fallacy embodied in the classwide injury approach is that it treats the class action as an “extraordinary remedy,” similar to a preliminary injunction, which effectively forces plaintiffs to prove that they will succeed on the merits.  This runs contrary to the weight of extensive precedent strictly distinguishing the procedural, class certification phase from the post-certification merits determination.  Id. at 781.  Campos persuasively argues that imposing such an analysis at the class certification stage demonstrates a fundamental misunderstanding of the purpose of class actions, in particular the leveling effect whereby plaintiffs are able to “invest” in equal proportion to defendants; while defendants have the same incentive to invest in their defense whether facing an individual or class action, plaintiffs do not have parallel incentives.  See id. at 783-84.  Accordingly, “a merits determination prior to class certification defeats the purpose of the class action.  The class action is designed to permit the plaintiffs to invest in the merits on equal terms with the defendant.  Thus, a class action only works if it is available before a court decides the merits, not after.”  Id. at 785.

The third and final fallacy identified in the article, “The Individualist Fallacy,” is the idea that, absent proof of classwide injury, a class action will necessarily spawn a plethora of individual trials.  Id. at 785-86.  At the heart of this fallacy is the erroneous assumption that such individual trials are inherently more accurate that aggregate determinations.  Id. at 786.  A related fallacy manifests in the skepticism, expressed in Dukes, for sampling and statistical methods, and the underlying assumption that individualized analysis, by its very nature, yields more accurate outcomes.  Yet, as Campos suggests, all forms of reasoning entail aggregation and inference and, as such, the difference between an individual trial and a classwide adjudication is merely one of degree.  See id. at 787-88.  Moreover, rigorous sampling, survey, and data analysis methods will frequently produce analyses and conclusions that are more objectively accurate and reliable than the predominantly anecdotal alternative.

Professor Campos concludes that proof of classwide injury should not be a prerequisite to class certification, and that common questions, rather than common answers, should govern in determining whether certification is appropriate.  Id. at 800-801.  He goes on to reference the landmark Supreme Court case, Marbury v. Madison, stating, “it is . . . a principle of general application in U.S. law that ‘every right, when withheld, must have a remedy, and every injury its proper redress.’”  Campos at 805, citing Marbury v. Madison, 5 U.S. 137, 163 (1803).  Professor Campos’ implication is clear: should classwide injury be required of plaintiffs at the certification stage, many injuries will have no redress, since plaintiffs will not have an available, practical remedy.  In reaching into the foundational motivations and original intent behind class actions, Professor Campos has crafted a broadly attractive proposal, one that transcends apparent ideological divisions.

On a day of surprises at the U.S. Supreme Court, it was a terse ruling on Article III standing — the gateway that determines which plaintiffs may and may not be in federal court — that could have greater consequences than the widely-covered healthcare ruling.  Because many class actions that were formerly resolved in state courts are now channeled into federal courts by the Class Action Fairness Act, advocates for consumers and workers feared that the Court took up Edwards v. First American Corp. in order to craft an onerous Article III “actual injury” standard that would lead to a rash of dismissals in these cases, without further recourse for the plaintiffs.  A 5-4 majority opinion imposing such a rule would be consistent with recent decisions increasing the burden on plaintiffs in federal court.

The at-issue statute in Edwards was the Real Estate Settlement Procedures Act (RESPA), which prohibits “kickbacks” and other quid pro quo arrangements between title companies and other entities in connection with real estate closings.  See Edwards v. First Am. Corp., 610 F.3d 514 (9th Cir. 2010) (available here).  Under RESPA, a party to a real estate transaction is entitled to relief when such an arrangement occurs, even if the party suffers no financial loss or diminution of services as a result of the RESPA violation.  Denise Edwards did not allege financial or other loss from the kickback arrangement that First American, her title company, engaged in, but she nonetheless sued First American under RESPA, on behalf of herself and all others similarly situated.  See id. at 516-17.  The defendant argued that Edwards lacked standing to pursue a claim because she did not suffer any injury.  Id.  The Ninth Circuit rejected this argument, holding that Edwards had standing to sue First American because RESPA provided her a statutory right to do so.  Id. at 518.

What followed was a two-year legal odyssey: the granting of defendant’s writ of certiorari, months of anticipation, oral arguments, copious briefing as to a Ninth Circuit decision that many believed would be reversed, all culminating in the Supreme Court’s issuance of a two-sentence opinion, “The writ of certiorari is dismissed as improvidently granted.  It is so ordered.”  First Amer. v. Edwards, 567 U. S. ____ (2012) (available here).  With that, the appeal in Edwards was over, with a swiftness and simplicity that belied the concern the case had engendered.

The U.S. Supreme Court has decided to review a Third Circuit decision bearing on a key element of class certification jurisprudence. See Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011), cert. granted, 80 U.S.L.W. 3442 (U.S. June 25, 2012) (No. 11-864) (available here).

In its petition, Comcast asked the Court to address “whether a district court may certify a class action without resolving ‘merits arguments’ that bear on Rule 23’s prerequisites for certification, including whether purportedly common issues predominate over individual ones under Rule 23(b)(3).” Petition for Writ of Certiorari at i, Comcast Corp. v. Behrend, __ S. Ct. __ (2012) (No. 11-864), 2012 WL 105558 (available here). This seemed a ripe issue for the Court to take up, given the tension between the traditional doctrinal separation between class certification and “merits” analysis and recent decisions mandating “rigorous analysis” that seemingly implicates a merits-based inquiry. Compare, e.g., Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (“In determining whether to certify a class action, ‘the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met.’”) with Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982) (district courts must engage in “rigorous analysis” to ensure that the “party seeking class certification [can] affirmatively demonstrate his compliance” with Rule 23)).

However, in agreeing to review the case, the Supreme Court took the unusual step of reframing the core issue, narrowing the scope of its review to: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.” (emphasis added). This is likely a signal that the Court plans to resolve the debate sparked by its dicta in Dukes, where, in response to the conclusion of California Northern District Court Judge Jenkens that a full Daubert analysis is not appropriate at the certification stage, the Court stated: “We doubt that is so.” 131 S. Ct. 2541, 2554.

In an unusual procedural turn and exemplar of the virtue of persistence, this appeal was “relisted” seven times. Thus, on six prior occasions, the certiorari petition was scheduled for a vote, and each time, the vote was deferred and listed for a subsequent conference. The repeated delays likely resulted from proponents’ difficulty in securing the four votes necessary to grant a certiorari petition, which in turn could suggest that those proponents will have a similarly difficult time finding the five-vote majority necessary to promulgate their favored doctrine as to the proper expert analysis to be undertaken by courts attendant to Rule 23 class certification analysis.