Federal Court Rejects Fraud Class Action

A federal court stayed a  rejected proposed class action pending the outcome of plaintiffs' petition for interlocutory appeal of the class certification denial.  See Wiedenbeck v. Cinergy Health Inc., No. 12-cv-508-wmc (W.D. Wis., 9/20 class decision; stay 10/15/13).

Readers may be interested in the logic of the denial. Plaintiffs alleged that defendants used false or misleading infomercials to induce the purchase of a medical benefit plan that was deceptively limited, and then acted in bad faith in denying coverage under the plan.  The plaintiffs sought class certification for their fraud claim for a class of for all Wisconsin residents who purchased an insurance policy since Jan. 1, 2007.

Before addressing the specific requirements for class certification, the court discussed various Seventh Circuit precedents, including Thorogood v. Sears, Roebuck & Co., 547 F.3d 742 (7th Cir. 2008), in which the Seventh Circuit reversed the district court‟s order certifying a class because common issues of law or fact did not predominate over issues particular to each putative class member's purchase of the defendant's dryer. Thorogood alleged that the words “stainless steel” imprinted on the dryer were deceptive because the dryer drum was not made entirely of stainless steel.  In rejecting plaintiff‟s motion, the Seventh Circuit concluded that a fraud claim necessarily would turn on each class member's understanding of the meaning of the “stainless steel” label, reasoning that at least some portion of the class -- and, based on the court‟s pointed query, “Does anyone believe this besides Mr. Thorogood?”, perhaps all -- would not share the plaintiff‟s understanding of this point-of-sale advertisement. 

The court concluded that this case was arguably even less suited for class treatment than Thorogood.  Plaintiffs relied on different television commercials with different language; moreover, the record demonstrated that given the dates they aired, some class members could not have seen the alleged uniform representations. Defendants used at least 10 different "call scripts" for telemarketing, and transcripts of calls showed each representative responding to specific, individual questions posed by or information received from the customer, meaning the content of actual consumer calls necessary would vary.  There was evidence some consumers received other, material information about the policy at issue, which may have impacted their individual purchase decisions. For example, it is undisputed that purchasers had ten days to cancel the policy from receipt of a member handbook provided post-purchase.  Thus, there was evidence of no common misrepresentation, and no evidence of a common understanding by class members. 

Readers will note the response to plaintiffs' argument that a fraud claim is subject to common proof because the reasonableness of a consumer's reliance (or whether the reliance is justified) is allegedly judged from an “objective” standard. Even if true, an intentional misrepresentation claim under Wisconsin law still requires a plaintiff to demonstrate that he or she actually relied on the false representation (i.e., was misled), which is separate from any inquiry as to whether the reliance was justified or reasonable. And for this element, plaintiffs provided no basis for proving reliance or causation on a class-wide basis.  The courts have repeatedly rejected attempts to certify a class where a fraud claim turns on an individual's understanding in order to demonstrate causation or reliance.  Accordingly, plaintiffs could not meet the commonality prong of Rule 23. 

Final point worth noting, the court also declined to certify a single issue class. There was no common representation, so there really was no single issue as asserted by plaintiffs.

 

State High Court Rejects Mold Expert Opinion

Here's an interesting expert analysis that arises in the less common Frye context.  In Chesson v. Montgomery Mut. Ins. Co., No. 97 (Md., 9/24/13), the Maryland high court affirmed the exclusion of an expert's methodology for linking alleged mold exposure and the plaintiffs' illness; among other things, the approach failed to take into account the level of mold exposure plaintiffs experienced.

The case at hand originated in workers’ compensation claims filed by six employees of the Baltimore Washington Conference of the United Methodist Church. The employees claimed that they had sustained physical injury, specifically neurocognitive and musculoskeletal symptoms, as a result of exposure to mold in the Baltimore Washington Conference’s office. To prove causation, the employees proffered Dr. Ritchie Shoemaker as their expert. Montgomery Mutual, however,
sought to exclude Dr. Shoemaker under Frye (called Reed in this state), arguing that his methodology to determine causation was not generally accepted in the relevant scientific community.

After some procedural events, the lower court eventually held a Frye-Reed hearing, in which the judge considered whether the relevant scientific community generally accepted as reliable and
valid Dr. Shoemaker’s methodologies and theory that identified mold exposure as the cause
for the neurocognitive and musculoskeletal symptoms allegedly suffered by the employees.  At the hearing, Dr. Shoemaker testified that the indoor air of a water-damaged building known to contain mold caused neurocognitive and muscuoloskeletal symptoms. He based his opinion on something he called his “Repetitive Exposure Protocol,” in which he would identify the presence of mold in the building, through visual identification of mold, detecting a musty smell, or lab testing of a sample, such as a piece of drywall. The individual at issue would then be removed from the subject building and, for two weeks, receive a treatment to relieve the symptoms allegedly related to mold exposure, and then be returned to the subject building for three days, during which, he
opined, the individual would report that the symptoms had redeveloped.

The trial court allowed the testimony but the Court of Appeals held that Dr. Shoemaker’s testimony was not admissible under Frye-Reed, reasoning that his methodology was flawed and not generally accepted because it failed to account for the levels of mold exposure. The Court, moreover, concluded that based on an examination of relevant scientific journal articles that the scientific community remained uncertain as to Dr. Shoemaker’s techniques and conclusions.  The plaintiffs appealed.

The high court noted that in Maryland when an expert opinion is offered to support the existence of new or novel scientific theory or methodology, “the basis of that opinion must be shown to be generally accepted as reliable within the expert’s particular scientific field.” Reed v. State, 283 Md. 374, 381, 391 A.2d 364, 368 (1978), citing Frye v. United States, 293 F. 1013, 1014 (1923). The general acceptance test imposes a significant gate-keeping role on the judge to determine whether a scientific theory or methodology should be admitted for consideration by jury.  Moreover, validity and reliability are the linchpins of  the scientific method: validity, having been defined as the extent to which something measures what it purports to measure, and reliability, characterized as the ability of a measure to produce the same result each time it is applied to the same thing.

The court stressed that on cross-examination, Dr. Shoemaker admitted that he did not test any of the buildings, either the Baltimore Washington Conference’s office or any others in which an
individual resided or worked who underwent his “Repetitive Exposure Protocol,” to determine the level of mold exposure that an individual working or residing therein would have experienced. According to Dr. Shoemaker, the mere "identification" of mold in a building, even by the presence of a musty smell alone, was sufficient to conclude that an individual residing or working in that building inhaled mold that caused neurocognitive and musculoskeletal symptoms, without any further assessment of not only the level of mold, but also what other chemicals the plaintiff may have been exposed to.

Defendants called a Dr. Cheung who testified that Dr. Shoemaker’s “Repetitive Exposure Protocol”
was not generally accepted as valid in the relevant scientific community, not only because it was experimental as well as controversial in its “second tier” of biological markers approach and use of treatment drugs in an off-label fashion, as well as in its failure to account for stress levels in individuals, but also primarily because it failed to measure the levels of mold exposures by individuals in the water-damaged buildings. Mold exposure can be low to medium to high, he testified, and should include consideration of the pathways that mold must travel to reach an individual, such as the building’s ventilation system, walls, or ceiling, as well as the pressure or air flow of the building.  Dr. Cheung also testified to a survey that he had commissioned relative to whether Dr. Shoemaker’s diagnosis was generally accepted and found it was not.  Most importantly, Dr. Cheung testified regarding the absence of any study utilizing the scientific method that confirmed the relationship of mold exposure to neurocognitive and musculoskeletal symptoms.

The court also noted that other jurisdictions have determined that Dr. Shoemaker’s theory, based on his “Repetitive Exposure Protocol,” is neither generally accepted nor reliable. See Young v. Burton, 567 F. Supp. 2d 121, 130-31 (D.D.C. 2008) (also listing Virginia, Florida, and Alabama as jurisdictions rejecting Dr. Shoemaker’s theory).

The Court of Appeals agreed with the intermediate appeals court, finding that the expert's failure to account for the level of mold exposure was a fundamental flaw in his methodology .Without an expert's admissible opinion on causation, plaintiffs were unable to prove that mold in the walls of their office building was the cause of their neurocognitive and musculoskeletal symptoms.

 

Denial of Class Certification Does Not Deprive Federal Court of CAFA Jurisdiction

Quick CAFA point for our readers.

Another federal court has ruled that the denial of a motion for class certification does not divest a federal district court of jurisdiction when the case has been properly removed under CAFA.  See Edwards v. Zenimax Media Inc., No. 1:12-cv-00411-WYD-KLM (D. Colo. 9/27/13).

Plaintiff brought a proposed class action alleging an animation defect in a video game.  I am not the video game maven that my kids are, but the allegation was that because of the defect a player must restart from square one with an entirely new character rather than being able to continue with open-ended game play. He brought claims under the Colorado Consumer Protection Act, as well as common law claims such as breach of the implied warranty of merchantability. The district court denied the motion for class certification and declined to allow plaintiff a second bite of that apple.  

In assessing further motion practice, the issue arose whether the federal court retained jurisdiction when the basis for the case being in federal court (the class claims) had arguably disappeared. This issue has not been decided by the Tenth Circuit, but the court noted that the Sixth, Seventh, Eighth, Ninth and Eleventh Circuits have held that a federal district court retains jurisdiction over a case removed pursuant to CAFA after class certification denial. See Metz v. Unizan Bank, 649 F.3d 492, 500-501 (6th Cir. 2011); Buetow v. A.L.S., Enters., Inc., 650 F.3d 1178, 1182 n. 2 (8th Cir. 2011); United Steel Workers Int’l Union v. Shell Oil Co., 602 F.3d 1087, 1092 (9th Cir. 2010); Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010); Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 n. 12 (11th Cir. 2009).


The court predicted the Tenth Circuit would follow other appeals courts that have considered this issue.


 

State Supreme Court Reaffirms Death of Single Fiber Theory

The Pennsylvania Supreme Court recently reaffirmed several important principles in toxic tort exposure, specifically asbestos, cases. See Howard, et al. v. A.W. Chesterton Co., et al., Nos. 48 EAP 2012, 49 EAP 2012 and 50 EAP 2012 (Pa. Sept. 26,2013).

Plaintiff alleged personal injury from exposure to dust from defendant's asbestos-containing products. The common pleas court awarded summary judgment in favor of defendants/appellants, reasoning that plaintiff's deposition testimony failed to establish that he breathed asbestos-containing dust from the products manufactured or distributed by appellants, and the court also found expert affidavits submitted by plaintiffs represented insufficient proof of actual exposure.  On appeal, the Superior Court reversed on the basis that dust may have been invisible to the naked eye, and the expert affidavits were sufficient to establish exposure to dust which was a substantial causal factor in plaintiff's injury.

The Supreme Court reversed the intermediate appeals court, and in so doing reaffirmed several key principles of state law:

--The theory that each and every exposure, no matter how small, is substantially causative of disease may not be relied upon as a basis to establish substantial-factor causation for diseases that are dose-responsive. See Betz v. Pneumo Abex, LLC, 44 A.3d 27, 55-58 (Pa. 2012). 

-- Relatedly, in cases involving dose-responsive diseases, expert witnesses may not ignore or refuse to consider dose as a factor in their opinions. See id.

-- Bare proof of some de minimus exposure to a defendant’s product is insufficient to establish substantial-factor causation for dose-responsive diseases. See Gregg v. V-J Auto Parts, Inc., 943 A.2d 216, 225-26 (Pa. 2007).

-- Relative to the testimony of an expert witness addressing substantial-factor causation in a dose-responsive disease case, some reasoned, individualized assessment of a plaintiff’s or decedent’s exposure history is necessary. See Betz, 44 A.3d at 55-58.

-- Summary judgment is an available vehicle to address cases in which only bare de minimus exposure can be demonstrated and where the basis for the experts testimony concerning substantial-factor causation is the any-exposure theory. See Betz, 44 A.3d at 55-58; Gregg, 943 A.2d at 227.

In an interesting procedural twist, during arguments before the Supreme Court, plaintiff conceded that the Superior Court had erred in its ruling -- an apparent attempt to have the Supreme Court not reiterate the points that some lower courts in the state inexplicably continued to not apply.  Nevertheless, in light of the intensely protracted nature of asbestos litigation, the Court decided to provide at least some limited guidance.  Indeed, as explained in detail in the unanimous decision in Betz, the any-exposure opinion is simply unsupportable both as a matter law and science.

 

(Note that my colleague Mark Behrens was involved in the amicus briefing on behalf of the Coalition for Litigation Justice.)