Posts belonging to Category Certification Rulings

While many predicted that 2012 would be the year in which interpretations of the U.S. Supreme Court’s ruling in Dukes v. Wal-Mart (131 S. Ct. 2541 (2011)) would effectively spell the end of class actions, this year has instead produced numerous pro-class judicial decisions, despite the more rigorous standards imposed by Dukes.

At the year’s outset, the Seventh Circuit affirmed class certification of wage and hour claims in a decision that provided considerable guidance as to the Dukes commonality requirement. In Ross v. Charter One, No. 10-3848 (7th Cir. Jan. 27, 2012), the Seventh Circuit found that Dukes did not require reversal of class certification, because the plaintiffs had shown sufficient evidence of classwide employment policies relating to unpaid overtime. Also in January, in Winfield v. Citibank, No. 10-7304 (S.D.N.Y. Jan. 27, 2012), the court granted conditional certification. In so ruling, New York’s Southern District rejected the application of Dukes v. Wal-Mart to motions for conditional certification under the FLSA. Similarly, in Myles v. Prosperity Mortgage Co., No. 11-01234 (D. Md. May 31, 2012), conditional FLSA certification was granted in an action alleging misclassification, with the express holding that Dukes is inapplicable at the certification stage of an FLSA action.

In addition to finding the post-Dukes defeat of class certification more difficult than expected, defendants also found themselves frequently rebuffed when attempting to decertify a previously certified class in light of Dukes. For instance, in Driver v. AppleIllinois, No. 06-6149 (N.D. Ill. Mar. 2, 2012), although the defendant argued that Dukes required the decertification of a wage and hour class, the court distinguished Dukes because class treatment in Dukes would have required the assessment of numerous subjective employment decisions, whereas class treatment in Driver was found to solely entail “strictly objective” issues of law and fact. Likewise, in Lyons v. Citizens Fin. Grp., No. 11-11187 (D. Mass. Nov. 9, 2012), the trial court responded to the First Circuit’s request that its certification ruling be revisited in light of Dukes by affirming its earlier certification of a class alleging misclassification and non-payment of overtime. And in California’s Northern District, in Ellis v. Costco, No. 04-3341 (N.D. Cal. Sept. 25, 2012), the court certified a class and meticulously distinguished the Title VII claims in that case from the far larger class that had been proposed in Dukes. This broader, plaintiff-friendly trend continued, as California’s Southern District narrowly interpreted Dukes by granting certification in Johns v. Bayer Corp., 09-1935 (S.D. Cal. Feb. 3, 2012).

Even the putatively conservative Seventh Circuit, in the person of Judge Richard Posner, participated in this trend. Early in 2012, in McReynolds v. Merrill Lynch, 672 F.3d 482 (7th Cir. 2012), Posner cautioned trial court judges to apply the same analytical rigor required by Dukes in denying class certification motions as they do to granting them. Later, in Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030 (7th Cir. Nov. 13, 2012), Posner set out to “clarify the concept of ‘predominance’ in class action litigation” in light of Dukes, and in so doing established analysis that, while more rigorous than in the pre-Dukes era, is hardly insurmountable for plaintiffs. And within the influential Second Circuit, in Chen-Oster v. Goldman Sachs, No. 10-6950 (S.D.N.Y. Jul. 17, 2012), the court rebuffed the defendant’s motion to strike class allegations, largely rejecting the defendant’s Dukes-based analysis.

Finally, in the ultimate testament to the post-Dukes vitality of class actions, Dukes itself was re-filed, with a streamlined class definition, in late 2011. Throughout 2012, Wal-Mart pursued a motion to dismiss, which was denied by Judge Charles Breyer in September. Dukes v. Wal-Mart, No. 01-2252, Dkt. No. 812 (N.D. Cal. Sept., 21, 2012) (Order Denying Motion to Dismiss). Thus, Dukes v. Wal-Mart, filed more than a decade ago, remains pending in California’s Northern District, having survived its own landmark U.S. Supreme Court ruling.

A federal judge has certified a nationwide class of consumers who allege that pizza giant Papa John’s sent unsolicited text messages to them. See Agne v. Papa John’s International, Inc., No. 10-1139 (W.D. Wash. Nov. 9, 2012) (order granting class certification). The plaintiffs named several defendants in the suit, including Papa John’s, its franchisees, and the marketing company hired to send the text messages. U.S. District Judge John C. Coughenour found the case for certification so clear that he granted the class certification motion without oral argument. Order at 1.

Because the content of the at-issue text messages was identical across the class, Papa John’s did not have a viable challenge as to the predominance of common legal or factual issues, a frequent battleground in class certification disputes. Moreover, in that the claims of the nationwide class arose under the federal Telephone Consumer Protection Act (TCPA), there was no choice of law dispute burdening the plaintiffs’ argument for certification. Id. at 2. A subclass of Washington State residents, who alleged that they received text messages on their cell phones in violation of the Washington Consumer Protection Act, was also certified. Id.

Rather than focusing on predominance, therefore, the defendants chiefly attacked the plaintiffs’ Article III standing. Judge Coughenour made quick work of these arguments, however. See id. at 7-8. Notably, the opinion declined to adopt the defendants’ contention, relying on Mazza v. Amer. Honda Motor Co. (666 F.3d 581), that where even one prospective class member lacks standing, a class cannot be certified. Id. at 8.

In an attempt to challenge the commonality requirement, Papa John’s argued that individual questions existed as to whether particular class members consented to receive the text messages and as to whether individual text messages were actually received. Id. at 19. In response, the court concluded that “consent appears to the Court to be a non-issue,” and situated the resolution of any issues of consent squarely with Papa John’s, stating: “Papa John’s is in the best position to come forward with evidence of individual consent and will not be precluded from presenting admissible evidence of individual consent if and when individual class members are permitted to present claims.” Id.

The defendants also argued that the superiority requirement had not been met, because determining the actual recipients of the text messages in such a large class would be too burdensome, thus rendering the class unmanageable. Id. at 21. However, the court countered that the identity of the text message recipients could easily be determined by examining the business records of the marketing company and the cell phone providers, and noted that if defendants present persuasive evidence that certain class members did not receive the text messages, those individuals could be stricken from the class list. Id.

Wal-Mart v. Dukes increasingly looks more like a source of heightened, though manageable, class certification criteria than the “death knell” for class actions that was predicted when it was issued. More evidence to support this trend has come with a federal judge’s supplemental analysis of his earlier grant of class certification to a class of Assistant Branch Managers who alleged that they were misclassified as exempt from receiving overtime pay. See Lyons v. Citizens Fin. Grp., No. 11-11187 (D. Mass. Nov. 9, 2012) (memorandum re class certification analysis). The court granted class certification on July 9, 2012, and issued this memorandum in response to the appellate court’s request for a “supplemental memorandum reflecting a more detailed and ‘rigorous’ Fed. R. Civ. P. 23 analysis of the sort contemplated in Wal-Mart Stores, Inc. v. Dukes 131 S. Ct.” Lyons v. Citizens Fin. Grp., No. 12-8028 (1st Cir. Oct. 1, 2012) (order requesting supplemental analysis).

As directed by the First Circuit, Judge George A. O’Toole, Jr. applied Massachusetts substantive law governing the proper exemption from overtime pay, and Federal Rule 23 as expounded in Dukes, in his response to the defendant’s Rule 23(f) appeal, and in doing so, substantiated his earlier certification ruling with the rigor mandated by Dukes. Judge O’Toole’s supplemental memorandum affirms his earlier certification ruling, addressing and rejecting a common argument posited by defendants in exemption-based overtime cases. He notes that affidavits proffered by both sides “may prove that an ABM’s work at one branch is not identical to another ABM’s work at another branch, but they do not show that the primary duties are dissimilar.” Memo at 4. Indeed, Judge O’Toole’s disposition of this frequently raised defense to certifying wage-and-hour classes would make for a concise response in many reply briefs supporting a class certification motion.

The Seventh Circuit’s conservative reputation, like that of its most famous judge, Richard Posner, continues to be called into doubt, particularly as to class actions. Earlier this year, in McReynolds v. Merrill Lynch, Judge Posner distinguished the Supreme Court’s Wal-Mart v. Dukes decision, essentially demanding that judges apply the same analytical rigor to denying class certification motions as they do to granting them. See 672 F.3d 482 (7th Cir. 2012). Now, in Butler v. Sears, Posner has set out to “clarify the concept of ‘predominance’ in class action litigation”—the criterion that perhaps most often determines whether or not a class certification motion will be granted. See Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030, slip op. at 2 (7th Cir. Nov. 13, 2012).

In one of the underlying actions, the trial court denied certification as to a class of consumers alleging that various models of Whirlpool front-loading washing machines, purchased from Sears, grew mold in their washer drums. In the other, the court granted certification to a class alleging that a central control unit defect caused the washing machines to suddenly stop working. The Posner opinion reversed the certification denial and upheld the ruling granting certification.

In clarifying the predominance standard, which despite being much litigated has few clearly stated maxims or formal frameworks, Posner draws from his law and economics background and states that “[p]redominance is a question of efficiency.” Butler at 4.  He notes that, while members of the mold class purchased as many as 27 different models of the washing machines, a central question unites the entire class: “[W]ere the machines defective in permitting mold to accumulate and generate noxious odors?” Id.  Posner treats the predominance inquiry as a straightforward cost-benefit analysis, with a succinctly stated conclusion: “A class action is the more efficient procedure for determining liability and damages in a case such as this involving a defect that may have imposed costs on tens of thousands of consumers, yet not a cost to any one of them large enough to justify the expense of an individual suit.” Id. With that—essentially the mission statement for all class actions—the Seventh Circuit reversed the trial court’s certification denial.

Similarly compact is the analysis upholding the granting of certification as to the class alleging the defective control unit: “The principal issue is whether the control unit was indeed defective. The only individual issues—issues found in virtually every class action in which damages are sought—concern the amount of harm to particular class members.” Id. at 8. 

Posner opinions tend to be frequently cited, and Butler should be no exception.  Although this decision is extremely concise at less than 2,000 words, the consumer plaintiffs’ bar will likely be eager to use it to support class certification motions and appellate challenges to denials of certification.