Class Action Trends in the Wake of 'Wal-Mart' and 'Comcast'

The U.S. Supreme Court dealt with issues of class action certification in two separate cases earlier this decade, Wal-Mart Stores v. Dukes¹ and Comcast v. Behrend.² The decisions left open certain questions, one of which the Supreme Court is due to address again in the case of Tyson Foods v. Bouaphakeo.³ There are other issues that are still open, including the level of scrutiny to be given to settlement classes and to expert opinions rendered in connection with class certification.

Settlement Classes

Since the 1997 Supreme Court decision in Amchem Products v. Windsor,⁴ it has been crystal clear that class action settlements must meet all of the requirements of Rule 23 except for one—manageability. In Amchem, the court was faced with the proposed settlement of claims brought against asbestos manufacturers. While certain named plaintiffs alleged they had already suffered physical injury, others did not allege physical injury, claiming that they had been exposed but had not yet manifested any signs of asbestosis or other complications from asbestos exposure. The U.S. Court of Appeals for the Third Circuit had vacated the district court’s conditional certification, holding that individual issues predominated over common issues. It also found that there were significant intraclass conflicts of interest, and thus the class representatives were not adequate. The Third Circuit also rejected the district court’s findings of typicality and superiority. The Supreme Court affirmed, cautioning that the requirements of Rule 23 of the Federal Rules of Civil Procedure, which were “designed to protect absentees by blocking unwarranted or overbroad class definitions … demand undiluted, even heightened, attention.”⁵ The court held that the only difference between settlement classes and litigation classes is the need to demonstrate manageability when the court is faced with a litigation class. Recent decisions in three circuit courts—the Second, Third and Fifth—have confirmed the vitality of the Amchem rule. In the case of Sullivan v. DB Invs., 667 F.3d 273, 302-03 (3d Cir. N.J. 2011) (en banc), cert. denied, 132 S. Ct. 1876 (2012), the circuit court reminded that the “concern for manageability that is a central tenet in the certification of a litigation class is removed from the equation.” In that case, the court rejected the objectors’ concerns and held that “in the settlement context, variations in state antitrust, consumer protection and unjust enrichment laws did not present “the types of insuperable obstacles” that could render class litigation unmanageable.” Thus, even where certain class members might not have cognizable antitrust claims, the Court upheld the certification of the class for settlement purposes. The Second Circuit wrestled with the same issue in the case of In re Am. Int’l Group Secs. Litig., 689 F.3d 229 (2d Cir. 2012). In vacating the district court’s denial of certification of a securities class that could not satisfy the fraud on the market presumption, the Circuit Court held that “a settlement class need not show that the fraud-on-the-market presumption applied to its claims in order to satisfy the predominance requirement,” of which manageability is one of the criteria. Similarly, the Fifth Circuit most recently held that, even the possibility that certain absent class members had not suffered injury would not prevent certification of a settlement class, and predominance requirement did not mandate a formula for classwide measurement of damages. In re Deepwater Horizon, 739 F.3d 790 (5th Cir. La. 2014).

‘Daubert’ and Class Certification