Presenting a live 90-minute webinar with interactive Q&A - - PowerPoint PPT Presentation

"No Injury" and "Overbroad" Class Actions After Comcast, Glazer and Butler: Implications for Certification

Navigating Complex Issues of Overbreadth and Damages in Consumer Product Cases

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

• speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

TUESDAY, APRIL 1, 2014

Presenting a live 90-minute webinar with interactive Q&A Frederick S. Longer, Member, Levin Fishbein Sedran & Berman, Philadelphia Jessica D. Miller, Partner, Skadden Arps Slate Meagher & Flom, Washington, D.C. Geoffrey M. Wyatt, Counsel, Skadden Arps Slate Meagher & Flom, Washington, D.C.

Sound Quality If you are listening via your computer speakers, please note that the quality

• f your sound will vary depending on the speed and quality of your internet

connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-570-7602 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.

FOR LIVE EVENT ONLY

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• In the chat box, type (1) your company name and (2) the number of

attendees at your location

• Click the SEND button beside the box

If you have purchased Strafford CLE processing services, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form). You may obtain your CLE form by going to the program page and selecting the appropriate form in the PROGRAM MATERIALS box at the top right corner. If you'd like to purchase CLE credit processing, it is available for a fee. For additional information about CLE credit processing, go to our website or call us at 1-800-926-7926 ext. 35.

FOR LIVE EVENT ONLY

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the ^ symbol next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.
• Print the slides by clicking on the printer icon.

FOR LIVE EVENT ONLY

“No Injury” & “Overbroad” Class Actions After Comcast, Butler & Glazer: Implications for Certification

SPEAKERS: FRED LONGER JESSICA MILLER GEOFFREY WYATT

OVERVIEW – Significance of Comcast Corp. v. Behrend – Glazer & Butler: what they mean for products cases – Standing: is it a viable basis to challenge

• verbroad classes?

6

SIGNIFICANCE OF COMCAST

– Comcast Corp v. Behrend, 133 S. Ct. 1426 (2013)

• Class of two million cable subscribers asserted antitrust

claims against Comcast

• Claimed Comcast increased its share of Philadelphia

cable market and engaged in anticompetitive conduct

• Initially had four theories of antitrust impact
• Court certified one theory
• Plaintiffs sought to prove classwide damages using an

expert opinion that presumed viability of all four theories

• Court of appeals affirmed certification
• Supreme Court held that class had to be decertified

because the damages and liability theories did not match

7

COMCAST – NO MISMATCHES

• Supreme Court majority reversed class

certification

– Plaintiffs did not present classwide damages theory that matched certified liability theory – Plaintiffs’ damages model “failed to measure damages resulting from the particular antitrust injury on which [the defendants’] liability [was] premised” – Thus, “questions of individual damages calculations [would] inevitably overwhelm questions common to the class,” defeating predominance and rendering classwide treatment improper

8

SIGNIFICANCE OF COMCAST

• Plaintiffs’ view

– Certiorari limited to one question: 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 – Dissent: what happened to the question on which certiorari was granted?

• “The Court’s ruling is good for this day and case
• nly”

9

COMCAST – NO MISMATCHES

• First takeaway: classwide liability and damages theories

must match

– Plaintiffs’ view – this conclusion only applies to antitrust cases

• Harris v. Comscore Inc., 292 F.R.D. 579, 589 n.9 (N.D. Ill. 2013)

(“The Supreme Court’s holding came from its assumption, uncontested by the parties, that Rule 23(b)(3) requires that damages must be measurable based on a common methodology applicable to the entire class in antitrust cases. That assumption, even assuming it is applicable to privacy class actions in some way, is merely dicta and does not bind this court.”)

– Defendants’ view – principle is broadly applicable

• Jacob v. Duane Reade, Inc., 293 F.R.D. 578 (S.D.N.Y. 2013) (noting

that courts have “grappled” with Comcast’s “interaction with non- antitrust class actions” and concluding that the no-mismatch rule applies broadly in cases where plaintiffs attempt to rely on purportedly common damages evidence)

10

COMCAST – NO MISMATCHES

• Case study: In re Skelaxin Metaxalone Antitrust Litig.,

2014 U.S. Dist. LEXIS 11467 (E.D. Tenn. Jan. 30, 2014)

– Putative antitrust class action alleging defendants colluded to delay market entry of generic alternative – Plaintiffs sought the difference between the amount they paid and the amount they would have paid for a theorized generic – The court denied both the direct and indirect purchasers’ motions for class certification

• “[I]f Comcast is given its full breadth . . . the incongruity between End

Payors’ description of class membership and the entities included in its impact and damages model might defeat this proposed class”

• “Given Comcast’s requirement that the damages model and the theory
• f liability match, [the expert’s damages] model [was] problematic”

11

COMCAST – NO MISMATCHES

• Case study: Cannon v. BP Prods. N. Am., 2013 U.S.
• Dist. LEXIS 142934 (S.D. Tex. Sept. 30, 2013)

– Class action related to defendant’s chemical releases and emissions – Certification denied – plaintiffs could not prove classwide causation or damages – Expert’s “overarching theory of damages” could not support plaintiffs’ certification bid – it was “disconnected from Plaintiffs’ causes of action of negligence, trespass, and nuisance which [were] limited to a particular time period beginning in late 2008”

• One problem: expert advanced a real estate trend

analysis that was based on the “wrong class area”

12

COMCAST – SCRUTINY OF EXPERTS

• Second takeaway:

– Defendants’ view: courts must rigorously analyze expert evidence at class certification stage

• It appears certiorari originally granted to resolve the

applicability of Daubert at class certification

– But no Daubert issue was preserved

• Instead, the Court addressed the merits of the damages evidence

under the “rigorous analysis” requirement

• It rejected the notion that expert damages evidence need not be

scrutinized on the merits; “[u]nder that logic, . . . any method of measurement is acceptable so long as it can be applied classwide, no matter how arbitrary the measurements may be,” which would “reduce Rule 23(b)(3)’s predominance requirement to a nullity”

13

COMCAST – SCRUTINY OF EXPERTS

• Second takeaway:

– Plaintiffs’ view: “Merits questions may be considered to the extent – but only to the extent – that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied”

• Amgen v. Connecticut Retirement Plans & Trust, 133 S. Ct. 1184, 1195

(2013)

14

COMCAST – SCRUTINY OF EXPERTS

• Case study: In re Rail Freight Fuel Surcharge

Antitrust Litig., 725 F.3d 244 (D.C. Cir. 2013)

– “It is now indisputably the role of the district court to scrutinize the evidence before granting certification, even when doing so ‘requires inquiry into the merits of the claim’” – “It is now clear [ ] that Rule 23 not only authorizes a hard look at the soundness of statistical models that purport to show predominance – the rule commands it” – “If the damages model cannot withstand this scrutiny then, that is not just a merits issue” – “No damages model, no predominance, no class certification”

15

COMCAST – SCRUTINY OF EXPERTS

• Case study: In re Urethane Antitrust Litig., 2013

WL 2097346 (D. Kan. May 15, 2013)

– Defendant’s motion to decertify class action where the same expert as in Comcast had testified to antitrust impact was rejected

• “There is no basis to strike Dr. McClave’s testimony or to

conclude that his methodology could not provide a causal link between plaintiffs’ theory of liability and the class-wide impact”

16

COMCAST – SCRUTINY OF EXPERTS

• How does this scrutiny relate to Daubert?: Cannon v.

BP Prods. N. Am., 2013 U.S. Dist. LEXIS 142934 (S.D.

• Tex. Sept. 30, 2013)

– “[A] district court’s rigorous analysis may necessitate the evaluation

• f expert testimony. Although courts are not to insist upon a battle of

the experts at the certification stage ..., [i]n many cases, it makes sense to consider the admissibility of the testimony of an expert proferred to establish one of the Rule 23 elements in the context of a motion to strike prior to considering class certification.” – The court scrutinized plaintiff’s expert’s damages opinion – “[I]n one sense scrutiny of expert testimony being used to show that a case is susceptible to class treatment seems less controversial than the normal application of Daubert, because it does not intrude on the jury’s role given that class certification is an issue for the court” – The expert’s “overarching theory of damages” was “disconnected from Plaintiffs’ causes of action of negligence, trespass, and nuisance which [were] limited to a particular time period beginning in late 2008”

17

COMCAST – SCRUTINY OF EXPERTS

• Is it another basis to challenge beyond

Daubert?

– It seems so:

• In Rail Freight Fuel Surcharge Antitrust Litigation, the D.C.

Circuit did not even mention Daubert; instead, it focused on the “merits” of the damages model

• See also, e.g., Vaccarino v. Midland Nat’l Life Ins. Co., 2014

U.S. Dist. LEXIS 18601 (C.D. Cal. Feb. 3, 2014) (treating the Comcast inquiry as distinct from a Daubert challenge because it goes to the merits of the evidence)

– Or not:

• See In re Skelaxin Metaxalone Antitrust Litig., 2014 U.S.
• Dist. LEXIS 11467 (E.D. Tenn. Jan. 30, 2014)

18

COMCAST – DAMAGES AT CLASS CERT

• Third takeaway: damages will play a

bigger role at class certification

– Plaintiffs who attempt to proffer classwide damages evidence will face a higher hurdle – Defendants will likely rely increasingly on damages-based arguments in opposition to certification, even outside the mismatch context

19

COMCAST – DAMAGES AT CLASS CERT

• Higher hurdle for plaintiffs:

– “Before Behrend, the case law was far more accommodating to class certification under Rule 23(b)(3)”

• In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244 (D.C.
• Cir. 2013)

– “The Court agrees with Defendants that Comcast signals a significant shift in the scrutiny required for class certification. Prior to Comcast, the Court may have been satisfied that Plaintiffs’ invocation of the event study methodology alone showed the predominance of common issues. . . . Following Comcast, circuit and district courts have rigorously examined proposed damages methodologies in putative class action cases for disconnects between damages and liability. . . . Plaintiffs cannot avoid this hard look by refusing to provide the specifics of their proposed methodology.”

• In re BP P.L.C. Secs. Litig., 2013 U.S. Dist. LEXIS 173303, at *73-75

(S.D. Tex. Dec. 6, 2013)

20

COMCAST – DAMAGES AT CLASS CERT

• Defendants will raise damages more often, but not always

successfully: In re Nexium Esomeprazole Antitrust Litig., 296 F.R.D. 47 (D. Mass. 2013)

– Putative class action alleging federal antitrust violations – Defendants argued damages could not be proven on a classwide basis under Comcast – Defendants challenged the methodology of one of plaintiffs’ experts, who did not account for “actual brand prices, but-for generic prices, purchases by brand loyalists, and generic and

• ther-drug conversion rates”

– Defendants argued that “[t]hese variations . . . [were] ignored by the use of averages calculations . . . and without individualized inquiries, will result in the unlawful recovery of damages by uninjured direct purchasers” – Court was not persuaded

21

COMCAST – DAMAGES AT CLASS CERT

• In re Nexium Esomeprazole Antitrust Litig., 296 F.R.D.

47 (D. Mass. 2013)

– Court acknowledged that “variation in actual price paid among the direct purchasers may preclude some class members from recovery if it is shown that various rebates, discounts, or buying practices did not result in net positive damages” – However, such variation did not defeat class certification because the plaintiffs “advance[d] a single, class-wide theory

• f harm: Defendants’ unlawful conduct delayed the entry of

lower-priced generic Nexium” – The court found that this “clearly differentiat[ed] th[e] case from the facts in Comcast, which rejected a damages model because it failed solely to incorporate the court’s accepted theory of liability”

22

COMCAST: LIMITED BY GLAZER & BUTLER?

• Do Glazer and Butler limit application of

Comcast with regard to overbroad classes?

– Whirlpool Corp. v. Glazer, 678 F.3d 409 (6th

• Cir. 2012)
• Affirmed class certification of consumers alleging

mold in washing machines

• Most class members – 97 percent – never

complained about any problem with their washers

• “Even if some class members have not been injured

by the challenged practice, a class may nevertheless be appropriate”

• Supreme Court vacated and remanded in light of

Comcast

23

COMCAST: LIMITED BY GLAZER & BUTLER?

• Do Glazer and Butler limit application of

Comcast with regard to overbroad classes?

– Butler v. Sears, Roebuck & Co., 702 F.3d 359 (7th

• Cir. 2012)
• Another front-load washing machine class action
• “Predominance is a question of efficiency”
• According to Judge Posner, if Sears thinks the machines

are not defective, it can win on classwide basis

• In tension with Thorogood (not cited in Butler), where

Judge Posner rejected a dryer class action because:

– Consumers may have purchased dryers for reasons unrelated to propensity to cause or prevent rust stains – The risks of “costly error” inherent in allowing one jury to decide liability as to all were too great – It appeared that the rust problem did not affect most class members

• Also vacated and remanded in light of Comcast

24

COMCAST: LIMITED BY GLAZER & BUTLER?

• Do Glazer and Butler limit application of Comcast

with regard to overbroad classes?

– Sixth Circuit stuck to its prior ruling on remand – Claimed Glazer was “different” from Comcast

• Comcast concerned individualized damages issues
• Glazer only certified liability for class treatment

– The defendant argued that injuries were also varied

• Analogous to Comcast because class members without mold
• r odor problems were not injured
• Thus, class device could expand potential recovery beyond

any valid liability theory

– Sixth Circuit sought to avoid injury problem based on “premium price” theory – Supreme Court denied certiorari

25

COMCAST: LIMITED BY GLAZER & BUTLER?

• Do Glazer and Butler limit application of

Comcast with regard to overbroad classes?

– Seventh Circuit followed the same course

• Comcast does not affect the prior ruling because the

case could proceed as an issues class: “[t]here is a single, central, common issue of liability: whether the Sears washing machine was defective,” that could be resolved on a classwide basis

• All other, noncommon issues, including both injury and

damages, could be resolved separately in individual trials

– See Butler v. Sears Roebuck & Co., 2013 WL 4478200 (7th

• Cir. Aug. 22, 2013)
• Supreme Court denied certiorari

26

IMPACT OF GLAZER & BUTLER

• Cases limiting Glazer and Butler

– Ginsburg v. Comcast Cable Communs. Mgmt. LLC, 2013 U.S.

• Dist. LEXIS 139873, at *5-6 (W.D. Wash. Sept. 24, 2013)

(distinguishing Butler because the plaintiffs’ “inability to prove liability on a classwide basis [was] inextricably intertwined with their inability to prove damages”) – In re Principal U.S. Prop. Account Erisa Litig., 2013 U.S. Dist. LEXIS 185665, at *107-09 (S.D. Iowa Sept. 30, 2013) (distinguishing Glazer because the damages inquiry was “so tied to the liability question that individualized analyses permeate[d] th[e] case”)

27

IMPACT OF GLAZER & BUTLER

• Cases following Glazer and Butler
• Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1083 (7th Cir.

2013) (following Butler and reversing class certification after holding that even though actual damages were “bound to vary across class members,” “‘a class action limited to determining liability on a class-wide basis, with separate hearings to determine—if liability is established—the damages of individual class members, or homogeneous groups of class members, is permitted by Rule 23(c)(4)’”) (quoting Butler)

• Jacob v. Duane Reade, Inc., 293 F.R.D. 578, 588-89 (S.D.N.Y.

2013) (following Glazer and maintaining class certification as to liability, but decertifying as to damages in light of the need for individualized proof)

28

MORE ISSUES CLASSES?

• What do Comcast, Butler and Glazer mean

for issues classes?

– The lead dissent in Comcast suggested that individualized damages issues can be addressed through issues classes

• 133 S. Ct. 1426, 1437 & n.* (2013)

– The majority did not respond, leaving open the possibility that it intended to require proof of classwide damages in all cases

29

MORE ISSUES CLASSES?

• Courts have gone different ways since Comcast

– Some have either applied or assumed a requirement of classwide damages and have certified where the plaintiffs provide common evidence of damages and denied certification where they do not – Some courts have “employ[ed] Rule 23(c)(4) and maintain[ed] class certification as to liability only, leaving damages for a separate, individualized determination”

• Jacob v. Duane Reade Holdings, 293 F.R.D. 578 (S.D.N.Y. 2013)

(summarizing these approaches)

30

MORE ISSUES CLASSES?

• In re Motor Fuel Temperature Sales Practices Litig.,

292 F.R.D. 652 (D. Kan. 2013)

– Certified issues class on alleged non-disclosure of information regarding gasoline – “Determining each class members’ damages, if any, may require individualized determinations, but ‘[t]he possibility that individual issues may predominate the issue of damages . . . does not defeat class certification by making [the liability] aspect of the case unmanageable’”

• Johnson v. Nextel Communs., Inc. 293 F.R.D. 660

(S.D.N.Y. 2013)

– Certified issues class on employment-discrimination claims – “Comcast does not apply to certification of liability-only classes and therefore is not relevant” to the court’s analysis under Rule 23(c)(4)

31

MORE ISSUES CLASSES?

• Defendants’ Perspective

– Issues classes pose serious threats for defendants but they are also risky for plaintiffs

• Issues classes are not fair to defendants

– Have sometimes been used to relieve plaintiffs from burden of proving injury and causation – “Issues” verdicts can put tremendous pressure on defendant – Issues classes are in tension with Seventh Amendment » “[T]he risk that a second jury would have to reconsider the liability issues decided by the first jury is too substantial to certify [an] issues class”

• In re ConAgra Peanut Butter Prods. Liab. Litig.,

251 F.R.D. 689, 698-99 (N.D. Ga. 2008)

32

MORE ISSUES CLASSES?

• Plaintiffs’ Perspective

– Butler v. Sears Roebuck & Co., 727 F.3d 796 (7th Cir. 2013)

• Endorses Rule 23(c)(4) issues-oriented class

actions

• Individual damages are not an impediment to class

certification

– “If the issues of liability are genuinely common issues, and the damages of individual class members can be readily determined in individual hearings, and settlement negotiations, or by creation of subclasses, the fact that damages are not identical across all class members should not preclude class certification”

33

MORE ISSUES CLASSES?

• Plaintiffs’ Perspective

– In re: Whirlpool, 722 F. 3d 838 (6th Cir. 2013)

• Inquiry into the merits of the plaintiffs’ claims at

the class certification stage is limited

• District Court may not turn the class certification

proceedings into a dress rehearsal for trial on the merits

• “The remedy for class members who purchased

Duets at a premium price but have not experienced a mold problem can be resolved through the individual determination of damages…”

• Endorses Rule 23(c)(4) liability-oriented issues

classes

• Limits Comcast to existing jurisprudence

34

MORE ISSUES CLASSES?

• Plaintiffs’ Perspective

– Harris v. Comscore Inc., 292 F.R.D. 579, 589 n.9 (N.D. Ill. 2013)

– “The Supreme Court recently reversed a grant of class certification where ‘[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class’” – “The Supreme Court’s holding came from its assumption, uncontested by the parties, that Rule 23(b)(3) requires that damages must be measurable based on a common methodology applicable to the entire class in antitrust cases” – “That assumption, even assuming it is applicable to privacy class actions in some way, is merely dicta and does not bind this court” » Quoting and citing Ginsburg and Breyer, JJ., dissenting in Comcast (“[T]he decision should not be read to require, as a prerequisite to certification, that damages attributable to a classwide injury be measurable on a class-wide basis”)

35

STANDING –A VIABLE CHALLENGE?

• Can defendants use lack of standing to

challenge overbroad classes?

– Defendants’ perspective:

• In re Deepwater Horizon, 732 F.3d 326 (5th Cir. 2013),

suggests perhaps so:

– BP entered class settlement in 2012 agreeing to make payments to cover economic losses arising from the Deepwater Horizon oil spill – BP complained that the settlement administrator’s methods for evaluating claims allowed uninjured class members to recover – Fifth Circuit ordered District Judge Barbier to evaluate legitimacy

• f claims and cease payments for claims that did not meet stricter

standards – At least in the Fifth Circuit, classes cannot encompass members who are uninjured and therefore lack legitimate claims – not even settlement classes – “Unless a claimant can colorably assert a loss, it lacks standing”

36

STANDING –A VIABLE CHALLENGE?

• Can defendants use lack of standing to

challenge overbroad classes?

– Plaintiffs’ perspective:

• Subsequent Fifth Circuit decisions vacated the

injunction entered in 2013, concluded that class members had standing, and reserved the definition

• f the proper test for class member standing for

another day

– In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014) (affirming district court decision finding standing) – In re Deepwater Horizon, 2014 WL 841313 (5th Cir. Mar. 3, 2014) (vacating injunction entered in 2013 decision)

37

Frederick Longer Levin Fishbein Sedran & Berman flonger@lfsblaw.com Jessica Miller Skadden Arps Slate Meagher & Flom jessica.miller@skadden.com Geoffrey Wyatt Skadden Arps Slate Meagher & Flom geoffrey.wyatt@skadden.com

38