Cert Granted in Interesting Class Action Appeal

The Supreme Court has granted cert in an important case raising the issue whether a federal court of appeals has jurisdiction under both Article III and 28 U. S. C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice. See MICROSOFT CORPORATION, Petitioner, v. SETH BAKER, ET AL., No. 15-457 (U.S., petition granted 1/15/16).

A first group of plaintiffs appealed a denial of class certification, seeking interlocutory review under Fed. R. Civ. P. 23(f). Rule 23(f) gives federal courts of appeals “unfettered discretion” to “permit an appeal from an order granting or denying class-action certification.” Fed. R. Civ. P. 23(f); Fed. R. Civ. P. 23(f) advisory committee’s note to 1998 amendment. They argued the class-certification denial “constitute[d] the ‘death knell’ for this litigation” because the individual claims about their game consoles were too small to justify litigating on their own to final judgment. The Ninth Circuit denied the petition, and the plaintiffs eventually resolved their individual claims by an agreement with Microsoft.

A few years later, the same lawyers as in the original consolidated litigation filed a new lawsuit—again in the U.S. District Court for the Western District of Washington—on behalf of respondents, a handful of Xbox 360 owners who allegedly did not sue in the prior case. Respondents pressed the same claims as their predecessors and they likewise requested certification of a nationwide console class. They argued the Ninth Circuit’s intervening decision in Wolin v. Jaguar Land Rover North America, LLC, 617 F.3d 1168 (9th Cir. 2010) now allowed certification of their proposed classes.  (A careful reading shows that case did not  did not change the law relevant to this case.) As a result, the district court struck respondents’ class allegations. It found the reasoning in the first denial of class certification (by a different judge) persuasive and that nothing in Wolin undermined the previous analysis.  Baker v. Microsoft Corp., 851 F. Supp. 2d 1274, 1280 (W.D. Wash. 2012). Invoking Fed. R. Civ. P. 23(f), respondents sought immediately to appeal the district court’s order striking their class allegations. As in the previous case, respondents’ counsel asserted that “the district court’s order effectively kills this case.” The Ninth Circuit denied the petition, and remanded the case back to the district court.  

Instead of pressing their individual claims, respondents tried an end run, as they moved on remand to dismiss their claims with prejudice. Respondents explained that they wanted such an order so as to appeal the class decision, despite defendant's observation that plaintiffs would have no right to appeal the order striking class allegations after entry of their requested dismissal.  The district court granted the dismissal with prejudice.

The Ninth Circuit assumed jurisdiction over respondents’ appeal, holding that in the absence of a
settlement, a stipulation that leads to a dismissal with prejudice does not destroy the adversity in that judgment necessary to support an appeal of a class certification denial. That ruling seemed to conflict with Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), and the rule plaintiffs may not manufacture an immediate appeal by dismissing and thereby showing that a class certification denial has in fact sounded the “death knell” of their claims.

On the merits, the Ninth Circuit thought the district court had misread Wolin, and remanded for further proceedings. 

As our readers may know, courts disagree on whether plaintiffs seeking to represent a class “may appeal from a judgment entered after a voluntary dismissal with prejudice.” TASHIMA & WAGSTAFFE, FEDERAL CIVIL PROCEDURE BEFORE TRIAL § 16:396 (2015); see also 6 CYCLOPEDIA OF FEDERAL PROCEDURE §23.46 (3d ed. 2015) (explaining that while some courts allow such appeals of de-certification orders, “other courts consider this result untenable, because it allows the putative class representative to evade the policy against piecemeal review by waiving his or her individual claims”). Five circuits have held that a court of appeals lacks jurisdiction to review a denial of class  certification where the plaintiffs have voluntarily dismissed their claims with prejudice. E.g.,  Bowe v. First of Denver Mortg. Investors, 613 F.2d 798, 801 (10th Cir. 1980). The Third, Fourth, and Seventh Circuits have since adopted the same view. Reviewing a case in which the plaintiffs voluntarily dismissed all of their claims to manufacture finality, the Third Circuit held that such a “procedural sleight-of-hand” does not create appellate jurisdiction. Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d 239, 245-47 (3d Cir. 2013). The Fourth Circuit likewise has held that when a putative class plaintiff voluntarily dismisses the individual claims underlying a request for class certification, a court of appeals lacks jurisdiction to decide the issue whether the district court abused its discretion in denying the plaintiff's request for class certification. Rhodes v. E.I. DuPont de Nemours & Co., 636 F.3d 88, 100 (4th Cir.), cert. denied, 132 S. Ct. 499 (2011); see also Himler v. Comprehensive Care Corp., 993 F.2d 1537 (4th Cir. 1993) (unpublished opinion) (same). And the Seventh Circuit has held that it will not review the district court’s refusal to certify a class when the plaintiffs requested and were granted a voluntary dismissal of their claims. Chavez v. Illinois State Police, 251 F.3d 612, 629 (7th Cir. 2001). 

The Eleventh Circuit has gone even further, holding that it has no jurisdiction whenever a plaintiff appeals from a final judgment that resulted from a voluntary dismissal with prejudice.  See Druhan v. Am. Mut. Life, 166 F.3d 1324, 1325-26 (11th Cir. 1999). It does not matter whether the dismissal with prejudice was requested only as a means of establishing finality in the case such that the plaintiff could appeal an interlocutory order—an order that the plaintiff believes effectively disposed of her case. Id. at 1326. Nor does it matter whether the interlocutory order did, in fact, eliminate the plaintiff’s claim. Id. at 1327 n.7. In either case, neither 28 U.S.C. § 1291 nor Article III permits the
appeal. Id. at 1326-27. Druhan was not a class action, but courts have since confirmed that its 
categorical holding applies equally to class actions. See Woodard v. STP Corp., 170 F.3d 1043, 1044 (11th Cir. 1999); Kay v. Online Vacation Ctr. Holdings Corp., 539 F. Supp. 2d 1372, 1373-75 (S.D. Fla. 2008).

Only two circuits now hold that a named plaintiff’s voluntary dismissal with prejudice creates a sufficiently adverse—and thus appealable—final decision for the plaintiff to obtain review of a class-certification denial. Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1065 (9th Cir. 2014); Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 178-79 (2d Cir. 1990), cert. denied, 498 U.S. 1025 (1991).

 The Supreme Court now looks poised to resolve this split.

Hon. Arlin M. Adams- A brief tribute

Upon graduating from law school, I had the great privilege of serving as a law clerk to the Hon. Arlin M. Adams, who sat on the Third Circuit for nearly two decades.  Judge Adams passed away last week at the age of 94.

The last opportunity I had to see the Judge was at a special exhibit earlier this year at the University of Pennsylvania Library, which reunited two of the few remaining copies of the Emancipation Proclamation that were autographed by Abraham Lincoln.  History buffs may recall that in 1864, a few specially printed copies of the Emancipation Proclamation, autographed by Lincoln, were put on sale at the Great Central Fair in Philadelphia’s Logan Square (visible from your humble blogger's office). And the occasion, merging history, Penn, Philadelphia, and an extraordinary legal document, was a perfect setting for an appearance by Judge Adams.

To the bench, Judge Adams brought an all too rare combination of brilliance, wisdom, civility, and insight. To his clerks, he was an invaluable mentor and teacher.  There was arguably no better way to be introduced to the legal world than mine, as I walked each morning through the courtyard of Independence Hall where the Constitution was crafted, to work in the chambers of Judge Adams in the federal court house a block away.  He was truly a scholar of substantive law and legal procedure.

His private practice and public service roles alone would mark him as a giant in the legal community. But it was his ability to be conservative and compassionate, a firm believer in the democratic process and a staunch defender of civil rights, in particular the freedom of religion, that marked his stature.

Susquehanna University has created the Arlin M. Adams Center for Law and Society at Susquehanna, and our alma mater Penn Law School established the Arlin M. Adams Chair on Constitutional Law in his honor in 2005. But his legacy may be found in more modest events. For example, appellate advocates can recount numerous examples of oral arguments in which young, new, or struggling advocates would find Judge Adams gently questioning them so their essential argument made it into the record -- not because he agreed with them necessarily, but because their clients deserved to at least be heard.

Simple, modest, honest, Judge Adams was a child of the Depression, served in the Navy in WWII, and went on to become a great judge.  While many of the articles on his passing will undoubtedly talk about the three times he was on the short list for the Supreme Court and not selected, to emphasize that would be to ignore the enormous influence he had on a generation of lawyers and the tremendous role model he should continue to be for future generations of lawyers and judges.

 

Amicus Brief Applies Comcast in Ninth Circuit Appeal

The U.S. Chamber of Commerce recently weighed in with an amicus brief in an interesting class action appeal in the Ninth Circuit.  See Brazil v. Dole Packaged Foods LLC, No. 14-17480 (9th Cir., brief filed 6/3/15).  The issue in the case, which we posted on before, centered on whether a proposed class plaintiff had shown a reliable model for establishing class-wide damages.  

Readers will recall that under Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), a class action should not be certified under Fed. R. Civ. P. 23(b) unless the proposed plaintiffs can present a damages model that isolates the harm attributable to the alleged misconduct.   We have posted about this important requirement before.

In this case, plaintiff pleaded two relevant class claims alleging misrepresentation: a claim under California Business and Professions Code section 17200 (the Unfair Competition Law, hereinafter “UCL”) and one claim under the common law for unjust enrichment. He contended the proposed class should be entitled to restitution for the UCL claim and to disgorgement of defendant's profits under the unjust enrichment claim.

The district court rejected both claims, granting summary judgment, correctly (per the brief) determining that plaintiff failed to meet the Comcast requirement for his UCL claim because his “damages model” did not isolate the price premium he alleged the class paid (what the class might be entitled to as restitution) as the result of the alleged mislabeling (the theory of liability). Because this damages model failed, the court dismissed the UCL claim for insufficient evidence. The district court then further found that the same damages analysis applied to the unjust enrichment claim, making the unjust enrichment claim duplicative of the UCL claim and dooming it on the merits for the same reason. 

The Chamber took issue with plaintiff’s argument on appeal that the unjust enrichment claim provided a different measure of damages; both claims measure the same quantum of damages.  Thus, a mislabeling plaintiff’s claim for unjust enrichment cannot salvage a damages model for restitution that otherwise fails under Comcast.  In any event, the class cannot recover both the price premium it paid as a result of the allegedly misleading label and the profits Dole derived from the allegedly misleading label. That would amount to double recovery which is unavailable by law and would raise serious due process concerns for the businesses targeted in these mislabeling lawsuits. That same price premium can be recovered only once (at most) assuming that there is an appropriate model that passes muster under Comcast.  Although unjust enrichment starts from a different premise, the measure of recovery for unjust enrichment—at least in a food mislabeling case—is necessarily the same as the measure for restitution: the premium (if any) the business charged for the food as a result of the allegedly misleading claim on the label.

Plaintiff appeared to argue in his opening brief that the burden should shift to the defendant to provide a damages model for plaintiff’s unjust enrichment claim. This is contrary to the customary burden of proof for any plaintiff. Indeed, the authority cited by plaintiff all starts with the plaintiff producing evidence permitting at least a reasonable approximation of the amount of the wrongful gain.  Plaintiff simply cannot, argued the amicus, circumvent Comcast by pleading an unjust enrichment claim in an effort to shift to the defendant the burden of coming up with a damages model. And disgorging more profits from businesses than they made as a result of an allegedly
misleading statement on a label would raise those serious due process issues.

State Supreme Court Reinstates Defense Jury Verdict in Silica Litigation

The Mississippi Supreme Court confirmed last week that the jury could have properly determined that plaintiff's evidence failed to prove in a silica case that he was exposed to harmful quantities of a particular supply company's sand product.  See Dependable Abrasives v. Pierce,  No. 2013-IA-01162-SCT (Miss., 1/29/15).  "Product id", as it is often called, is really part of cause-in-fact, and part of plaintiff's causation burden in a toxic tort case.

Plaintiff sued a number of defendants, alleging their sand products were responsible for his diagnosis of silicosis. According to Pierce's trial testimony, his job involved a work week of five to seven days, depending on weather, and workdays of eight to ten hours, operating a sandblasting machine.  It would shoot out sand at a high rate of speed through a nozzle, which was wielded by the machine's user, in order to clean surfaces for painting. Pierce testified that the sand proceeds from the nozzle at a rate of 500 miles per hour and that, when sand hits metal, it ricochets back in the direction of the machine's user. Plaintiff's expert testified that the warning on defendants' sand products were grossly inadequate, because it failed to inform the user of the product of the latent, danger of respirable silica.

At trial, the parties disagreed about whether the plaintiff was actually exposed to this defendant's sand. Pierce claimed he remembered the bag and could identify the logo.  He recalled there was a warning on the bag, but when asked the color of the sand he used from Dependable, he was certain it was white sand.  Dependable Abrasives had bought the sand, processed it, and at the relevant time mostly sold it in tanker trucks.  It was "in the beginning mostly probably around 90 percent bulk sand; 10 percent bag sand." Dependable offered evidence that while its competitors sold white sand, defendant sold brown sand "mined out of the red clay hills of Wiggins, Mississippi."

The jury returned a defense verdict, but the appellate court entered an order granting the plaintiff a new trial after that court found the verdict to be "against the overwhelming weight of the evidence presented at trial."

The Supreme Court noted that the fact of product exposure is a threshold question in products liability cases: "[I]t is incumbent upon the plaintiff in any products liability action to show that the defendant's product was the cause of the plaintiff's injuries." Banks ex rel. Banks v. Sherwin-Williams Co., 134 So. 3d 706, 710 (Miss. 2014). Even accepting as true Pierce's allegation that the warnings on the Diamond Blast sand were "grossly inadequate," as posited by his expert, there could be no recovery if Pierce failed to prove that the Defendant's sand "caused the damage for which recovery is sought."

Dependable contended that the evidence showed that there were only narrow time periods during which Pierce could possibly claim exposure, and that Pierce could not recall where or when he used or was exposed to Defendant's brand of sand. While Pierce was able to identify the Dependable Abrasives bag, he could not correctly identify the sand itself. He testified that the sand was white, but there was un-contradicted testimony that this company's sand was distinctly brown in color, due to its extraction from the red clay hills in or near Wiggins, Mississippi. There was testimony that defendant never sold sand, directly at least, to any of the companies for which Pierce had worked.

The Supreme Court decided that the circuit court had failed to analyze whether the jury's determination of causation truly was against the overwhelming weight of the evidence. Even though evidence was presented regarding the extent of Pierce's exposure to respirable silica, with respect to Dependable Abrasives, the evidence on product identification was mixed.  Pierce remembered the bag and the warning label, but could not accurately recall the color of the sand, the very product that he alleged had caused his injuries. If he was exposed at all, the time frame in which Pierce could have worked with Defendant's sand was minimal. Indeed, said the court, the evidence in this case was more favorable to the defense than to the plaintiff.  So, under the facts presented, this jury's  conclusion cannot be said to have been "against the overwhelming weight of the trial evidence.  The jury should have been permitted to pass upon the question of fact raised by this conflicting evidence, and it did so.  No new trial.

Expert Engineering Testimony Improperly Admitted

A case from last week reminds us of the importance of appellate review of expert witness admissibility decisions, and the potential impact of junk science on a jury. See Hyundai Motor Co. v. Duncan, No. 140216 (Va. 1/8/15).

Defendant appealed from a judgment entered on a jury verdict in favor of plaintiffs, and argued that the trial court erred in admitting the opinion testimony of the plaintiffs' designated expert witness. The expert testified that the location of the side airbag sensor in the 2008 Hyundai Tiburon being driven by plaintiff in a single-vehicle accident rendered the Tiburon unreasonably dangerous. The state supreme court agreed and reversed the judgment of the circuit court.

Plaintiffs alleged a design defect. and to support their claim, they designated one Geoffrey Mahon, a mechanical engineer, as an expert in airbag design. Mahon expressed the opinion (just a few details) that if the defendant had located the sensor for the side airbag system on the B-pillar of the vehicle (the pillar where the front door closes), approximately 4 to 6 inches from the floor, instead of on the cross-member underneath the driver's seat, the side airbag would have deployed in this accident. Therefore, according to Mahon, the location of the side airbag sensor on the cross-member allegedly rendered the 2008 Tiburon unreasonably dangerous,

Prior to trial, Hyundai moved to exclude Mahon's opinions as having an insufficient foundation because the witness did not conduct any analysis to determine whether the side airbag truly would have deployed if the sensor had been located where Mahon proposed. When deposed, Mahon had testified that in reaching his opinion, he relied upon a computer-aided engineering study conducted by Hyundai which had analyzed 14 potential locations for the side airbag sensor, but he did not adopt any of the 14 locations analyzed by Hyundai for his placement of the side airbag sensor. He admitted he would have to run more tests to verify his location.  And while Mahon believed the best location for the sensor was at the B-pillar, he testified he did no such testing of his own to determine if the side airbag would have actually deployed in the accident had the sensor been placed at any other location. He was nonetheless permitted to express his opinions at trial, over Hyundai's objections.

The court noted that Mahon's initial impression of the airbag system was that “the airbag should have gone off,” but upon further investigation, he concluded that the system was acting as designed -- a design he said was defective. At trial, Mahon agreed that the 2008 Tiburon, with the existing side airbag system, complied with the federal regulatory standard specifically related to side impact protection. He further acknowledged that the 2008 Tiburon “did reasonably well” when Hyundai conducted 22 crash tests in which it ran the vehicle into different types of barriers, at different speeds and angles. As noted, in Mahon's view, the 2008 Tiburon was nevertheless defectively designed and unreasonably dangerous because the sensor for the side airbag system was not located on the B-pillar. 

Consistent with his deposition testimony, Mahon testified at trial that he did not perform an analysis to determine whether the side airbag in the vehicle would actually have deployed if the sensor was in a different location. Mahon conceded that he had no real data demonstrating the real-world performance of a sensor located on the B-pillar that certain distance from the floor. He further agreed that because the airbag system must work quickly, that is the sensor system must decide within 15 milliseconds of a crash event whether an airbag is required and then inflate the airbag in 15 to 50 milliseconds, the location of the sensor is important to the overall crash sensing system such that inches, and even increments smaller than inches, really matter in the determination of the location of the sensor.

The state Supreme Court noted that expert opinion must be premised upon assumptions that have a sufficient factual basis and take into account all relevant variables. Expert testimony founded upon assumptions that have no basis in fact is not merely subject to refutation by cross-examination or by counter-experts; it is inadmissible. Failure of the trial court to strike such testimony upon a motion timely made is error subject to reversal on appeal. Furthermore, expert testimony is inadmissible if the expert fails to consider all the variables that bear upon the inferences to be deduced from the facts observed. See CNH America LLC v. Smith, 281 Va. 60, 67, 704 S.E.2d 372, 375 (2011).

In short, concluded the court, Mahon's opinion that the 2008 Tiburon was unreasonably dangerous was without sufficient evidentiary support because it was premised upon his mere assumption that the side airbag would have deployed here if the sensor was at his proposed location—an assumption that clearly lacked a sufficient factual basis and disregarded the variables he himself acknowledged as bearing upon the sensor location determination. Although experts may extrapolate opinions from existing data, a trial court should not admit expert opinion which is connected to existing data only by the ipse dixit of the expert. General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997) (decided under the version of Fed.R.Evid. 702 which the General Assembly adopted, verbatim, in current Va. Code § 8.01–401.3(A)). The expert's opinion that the vehicle was unreasonably dangerous was based on his ipse dixit assumption that the side airbag would have deployed in the crash if the sensor had been located on the B-pillar. But the “analytical gap” between the data Mahon relied upon from Hyundai's location study and the opinion he proffered at trail was simply too great. Therefore, Mahon's opinion was inadmissible, and the trial court abused its discretion in admitting it.

The plaintiffs relied upon Mahon's opinion that the 2008 Tiburon was unreasonably dangerous to satisfy their burden of proving that Hyundai breached its implied warranty of merchantability. Because Mahon's opinion supplied the only support for the claim that the vehicle was unreasonably dangerous, the inadmissibility of Mahon's opinion was as a matter of law fatal to the claim and entitled Hyundai to judgment as a matter of law.

 

En Banc Appeals Court Interprets CAFA Mass Action Requirement

The Ninth Circuit has weighed in on an interesting CAFA issue, holding that personal injury claims relating to prescription pain relief drugs belong in federal court when the plaintiffs sought coordination of the claims in state court. See Corber v. Xanodyne Pharm. Inc., et al., 771 F.3d 1218 (9th Cir. en banc, 11/18/14).

The issue was whether removal is proper under the “mass action” provision of the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(11)(B)(i), when plaintiffs in several actions moved for coordination in the state trial court pursuant to California Code of Civil Procedure section 404.  It was significant that plaintiffs moved for coordination  “for all purposes” and justified their request in part by asserting a need to avoid inconsistent judgments.  As our readers know, CAFA extends federal removal jurisdiction for certain class actions and for mass actions in which “monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i).

Here, the petitions asked the California Judicial Council to establish a coordinated proceeding for all California propoxyphene actions under section 404 of the California Code of Civil Procedure. The standards for coordination list that coordination of civil actions sharing a common question of fact or law is appropriate if one judge hearing all of the actions for all purposes in a selected site or sites will promote the ends of justice taking into account whether the common question of fact or law is predominating and significant to the litigation; the convenience of parties, witnesses, and counsel; the relative development of the actions and the work product of counsel; the efficient utilization of judicial facilities and manpower; the calendar of the courts; the disadvantages of duplicative and inconsistent rulings, orders, or judgments; and, the likelihood of settlement of the actions without further litigation should coordination be denied.

Plaintiffs asked for coordination of their lawsuits for reasons consistent with these factors, including concerns that there could be potential “duplicate and inconsistent rulings, orders, or judgments,” and that without coordination, “two or more separate courts ... may render different rulings on liability and other issues.” Plaintiffs argued in their petitions and the supporting memoranda that the cases should be coordinated before one judge “hearing all of the actions for all purposes,” to address “the same or substantially similar” causes of action, issues of law, and issues of material fact.

The central CAFA issue in dispute was whether plaintiffs’ petitions for coordination constituted proposals for the cases “to be tried jointly” under CAFA.  The mass action provision allows for federal jurisdiction when the monetary relief claims of 100 or more persons are “proposed to be tried jointly” on the ground that the plaintiffs' claims involve common questions of law or fact, 28 U.S.C. § 1332(d)(11)(B)(i). The district court held that it lacked jurisdiction under CAFA because plaintiffs’ petitions for coordination were not explicit proposals to try the cases jointly, and it thus remanded the cases back to state court.

Congress enacted CAFA in 2005 to “curb perceived abuses of the class action device which, in the view of Congress, had often been used to litigate multi-state or even national class actions in state courts.” Tanoh v. Dow Chem. Co., 561 F.3d 945, 952 (9th Cir.2009). CAFA further extends federal jurisdiction over “mass action” cases when several requirements are met, although only the “proposed to be tried jointly” requirement was at issue here. See 28 U.S.C. § 1332(d)(2), (6), (11)(A).

The case eventually made it to the Ninth Circuit en banc, which noted that while plaintiffs are the masters of their complaints, they are also the masters of their petitions for coordination. Stated another way, when the court assesses whether there has been a proposal for joint trial, the court must hold plaintiffs responsible for what they have said and done. Plaintiffs voluntarily asked for coordination under section 404, and they submitted memoranda in support of their petitions for coordination. The court thus carefully assessed the language of the petitions for coordination to see whether, in language or substance, they had proposed a joint trial.

The en banc court concluded that plaintiffs’ petitions for coordination were in essence proposals for joint trial. First, the petitions said that plaintiffs sought coordination “for all purposes.” “All purposes” must include the purposes of trial. So reading the petitions literally, plaintiffs, who in total number far more than 100, were seeking a joint trial. Second, the specific reasons given for coordination also supported the conclusion that a joint trial was requested. For example, plaintiffs listed potential issues in support of their petitions that would be addressed only through some form of joint trial, such as the danger of inconsistent judgments and conflicting determinations of liability.  A "proposal for a joint trial can be implicit." See also Atwell v. Bos. Scientific Corp., 740 F.3d 1160, 1163 (8th Cir.2013) (holding that proposals for joint trial may be made implicitly).

This issue of when and whether plaintiffs propose that cases be tried jointly for CAFA purposes has now been addressed by several courts. See Atwell v. Bos. Scientific Corp., 740 F.3d 1160 (8th Cir. 2013);  In re Abbott Labs. Inc, 698 F.3d 568 (7th Cir. 2012).  But see Parson v. Johnson & Johnson, 749 F.3d 879 (10th Cir. 2014).

 

Lone Pine Issue Moving to State Supreme Court

Readers know we have posted before about the important case management tool known as the "Lone PIne" order. These “Lone Pine” orders take their name from a 1986 New Jersey Superior Court case involving toxic tort claims; they refer to case management orders that require the plaintiffs to make a showing regarding causation, injury, and/or damages to demonstrate, typically at an early stage, some minimal level of evidentiary support for the key components of their claims which will be in dispute.

A Colorado trial court had dismissed a claim, relying on a Lone Pine order, 2012 WL 1932470, that arose from the drilling and completing of three natural gas wells in Silt, Colorado.   The central issue was whether defendants caused plaintiffs’ alleged injuries, which plaintiffs vaguely described as “health injuries” from exposure to air and water contaminated by defendants with “hazardous gases, chemicals and industrial wastes." Plaintiffs also alleged that defendants had caused loss of use and enjoyment of their property, diminution in value of property, loss of quality of life, and other damages.  The court required plaintiffs, before opening full two-way discovery, to make a prima facie showing of exposure and causation.  The court further determined that the prima facie showing requirement should not prejudice plaintiffs because they needed a good faith basis for their complaint, and ultimately they would need to come forward with this data and expert opinion on exposure and causation in order to establish their claims anyway.

Plaintiffs were given 105 days to comply with the CMO. After that time, all plaintiff's expert could opine was that “sufficient environmental and health information exists to merit further substantive discovery.” Significantly, the expert offered no opinion as to whether exposure was a contributing factor to plaintiffs’ alleged injuries or illness. And the requested march towards further discovery
without some adequate proof of causation of injury is precisely what the CMO was meant to
curtail. The expert suggested, at best, a very weak circumstantial causal connection between the Wells and plaintiffs’ injuries. 

The expert did not opine on whether any and each of the substances present in the air and water samples (taken after plaintiffs had moved out of the area) can cause the type(s) of disease or illness that plaintiffs claimed (general causation). Finally, and perhaps most significantly,the expert did not even attempt to draw a conclusion that plaintiffs’ alleged injuries or illnesses were in fact caused by such exposure (specific causation).

The Colorado Court of Appeals ruled in 2013 that the state civil procedure rules did not allow trial courts to require plaintiffs to present prima facie evidence supporting their claims after initial disclosures, but before other discovery commenced.  This view was outside the mainstream of cases discussing the broad discretion necessarily given trial courts to manage their dockets and administer discovery. 

The state supreme court has now agreed to review the decision.  See Antero Res. Corp. v. Strudley,, No. 2013SC576 (Colo. cert. granted 4/7/14).  The review will focus on two issues. First, whether the trial court is barred under the state rules from entering a modified case management order requiring plaintiffs to produce limited evidence essential to their claims after initial disclosures but before further discovery.  The second issue is whether the district court in this case acted within its discretion in entering and enforcing such an order.

It will be interesting to see if Colorado moves back into the mainstream in allowing these sensible case management tools.

Ninth Circuit En Banc Decision on Daubert Errors

Readers may recall we posted about a Ninth Circuit case involving a worker at a paper mill who claimed asbestos exposure from various products used there.  The trial court admitted testimony from three experts over defendants’ objections, without conducting an adequate Daubert review, resulting in a trial verdict of $10.2 million. The Ninth Circuit reversed the trial verdict, and the panel remanded the case to the trial judge for a new hearing and trial. See Henry Barabin. et al. v. AstenJohnson Inc., No. 10-36142 (9th Cir.) The Ninth Circuit then agreed to hear the case en banc, and our guess was that the court was thinking more about the fact that the panel remanded the case for a new trial in light of the court’s 2003 decision in Mukhtar v. California State University, 299 F.3d 1053 (9th Cir. 2002), amended by 319 F.3d 1073 (9th Cir. 2003).

The court has now issued its en banc opinion, upholding the reversal of the verdict; agreeing with the original panel that the trial court had conducted an improper Daubert review; and rejecting two key arguments that plaintiffs made in trying to save the case. Plaintiffs, first, wanted a remand for purposes of the Daubert hearing only. They argued that an appeals court did not have the authority to exclude the experts on its own (even after the inadequate job by the trial judge) and must remand that decision. The en banc court disagreed, said that it did have such authority, although here the record was insufficient to allow the panel to make that decision. The en banc court thus held that a reviewing court has the authority to make Daubert findings based on the record established by the district court, and overruled Mukhtar v.California State University, 299 F.3d 1053, 1066 n.12 (9th
Cir. 2002), amended by 319 F.3d 1073 (9th Cir. 2003), to the extent that it required that Daubert findings always be made by the district court.

Second, plaintiffs argued that on remand the trial judge should get another shot at a Daubert decision without necessarily holding a complete new trial. But, the court held that if expert admissibility error occurred and was prejudicial, the only recourse was an entire new trial. Thus, the plaintiffs now have to first get past a real Daubert analysis, and if they do, then win an entire new trial in front of a new jury.

We have argued here that to remand for an evidentiary hearing post-jury verdict undermines Daubert's requirement that a reliability determination must be made by the trial court before the jury is permitted to hear the evidence. Otherwise, instead of fulfilling its mandatory role as a gatekeeper, the district court clouds its duty to ensure that only reliable evidence is presented. A post-verdict analysis does not protect the purity of the trial, but instead creates an undue risk of post-hoc rationalization. This is hardly the gatekeeping role the Supreme Court envisioned in Daubert and its progeny. The rule recognized here gives trial courts a real and important incentive to be proper, active gatekeepers.

(Note that my partner Mark Behrens was asked to submit an amicus brief on behalf of the Coalition For Litigation Justice, Inc., Chamber Of Commerce Of The United States Of America, NFIB Small Business Legal Center, American Insurance Association, Property Casualty Insurers Association Of America, American Chemistry Council, And National Association Of Manufacturers.)

 

Voluntary Dismissal Not A Route To Appellate Review of Class Issue

Getting an appeals court to focus on class decisions- certification, refusal to certify, and decertification - can be crucial to litigants on both sides of proposed class actions. The Third Circuit recently addressed one tactic in this field, finding that putative class members cannot appeal a district court’s class decertification order after having voluntarily dropped their individual claims in the same court.  The court thus dismissed two appeals brought by employees making wage and hour claims against the University of Pittsburgh Medical Center and West Penn Allegheny Health System. See Karen Camesi et al. v. University of Pittsburgh Medical Center et al., No. 12-1446, and Andrew Kuznyetsov et al. v. West Penn Allegheny Health System Inc. et al., No. 12-1903 (3rd Cir. Sept. 4, 2013).

The complaints similarly alleged that proposed class members were not compensated for work performed during meal breaks in violation of the FLSA.  The district court eventually decertifed the collective action. The named plaintiffs did not ask the District Court to certify its interlocutory order for appeal, but, instead, moved under Federal Rule of Civil Procedure 41(a) for “voluntary dismissal of their claims with prejudice in order to secure a final judgment for purposes of appeal.” The district court granted the unopposed motion on January 30, 2012, stating that “Plaintiffs’ remaining claim are hereby dismissed with prejudice in order to allow Plaintiffs to seek appellate review.”

The court of appeals began by considering whether appellants’ voluntary dismissal of their claims with prejudice under Rule 41(a) left them with a final order appealable under 28 U.S.C. § 1291. This question of first impression required the panel to consider the scope of two strands of Third Circuit authority: Sullivan v. Pacific Indemnity Co., 566 F.2d 444 (3d Cir. 1977), in which the court held that a plaintiff may not obtain appellate review after incurring a dismissal for failure to prosecute for the purpose of seeking to appeal an interlocutory class-certification order, and Fassett v. Delta Kappa Epsilon, 807 F.2d 1150 (3d Cir. 1986), in which the court ostensibly permitted plaintiffs to voluntarily dismiss a portion of their case in order to appeal an order of the district court terminating the remainder of their case. In considering the significance of these cases, the court seemed impacted most by the fact that appellants here sought review of only the orders decertifying their collective actions, and did not complain of the “final” orders that dismissed their cases.

Generally, a dismissal with prejudice constitutes an appealable final order under § 1291. See, e.g., In re Merck & Co. Sec., Derivative & ERISA Litig., 493 F.3d 393, 399 (3d Cir. 2007). Furthermore, “[u]nder the ‘merger rule,’ prior interlocutory orders [such as class-certification decisions] merge with the final judgment in a case, and the interlocutory orders (to the extent that they affect the final judgment) may be reviewed on appeal from the final order.” In re Westinghouse Sec. Litig., 90 F.3d 696, 706 (3d Cir. 1996).

But here defendants argued that appellants’ voluntary dismissals of their claims constituted impermissible attempts to manufacture finality, and the Third Circuit agreed.  In Sullivan, the court had noted that a class certification decision, per se, is not an appealable final order under 28 U.S.C. § 1291, but rather is an interlocutory order. Dismissal for failure to prosecute, as an attempt to avoid the court's firm position against interlocutory appeals of class certification determinations, was an impermissible strategy there, because if a litigant could refuse to proceed whenever a trial judge ruled against him, simply wait for the court to enter a dismissal for failure to prosecute, and then obtain review of the judge’s interlocutory decision, the policy against piecemeal litigation and review would be severely weakened. Allowing such a practice would risk inundating appellate dockets with requests for review of interlocutory orders and undermine the ability of trial judges to achieve the orderly and expeditious disposition of cases.

Appellants here had attempted to short-circuit the procedure for appealing an interlocutory district court order that is separate from, and unrelated to, the merits of their case. Appellants could have obtained appellate review of the decertification order by proceeding to final judgment on the merits of their individual claims. Or, appellants could have asked the District Courts to certify their interlocutory orders for appeal. But appellants instead sought to convert an interlocutory order into a final appealable order by obtaining dismissal under Rule 41. If the courts were to allow such a "procedural sleight-of-hand" to bring about finality here, said the court of appeals, there was nothing to prevent litigants from employing such a tactic to obtain review of discovery orders, evidentiary rulings, or any of the myriad decisions a district court makes before it reaches the merits of an action. This would greatly undermine the policy against piecemeal litigation embodied by § 1291, concluded the panel.

Both appeals dismissed for failure of jurisdiction.

D.C. Circuit Applies Comcast Guidance to Class Certification

Readers will recall our posts about Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), and the majority's ruing that Rule 23 requires proof that damages and injury are amenable to class treatment, and not overrun with individual issues, before a class properly can be certified.

A district court considering class certification must look at how damages will be tried and managed if a class is certified. Is it a mere mathematical exercise, or are there factual issues that vary by class members? And the district court must conduct a rigorous analysis of the class plaintiff's proposed method for computing damages allegedly on a class-wide basis (which often will require a Daubert analysis in many cases).

While it is unusual for a dissenting justice to read the dissent from the bench, in this case two justices did so. One wonders whether that emphasis on the intensity of the dissent is inconsistent with the content of the dissent, which tried to argue that the decision could be limited to its facts, nothing big happened here, nothing to look at, keep moving...  The plaintiffs’ bar has been desperate to convince the lower courts to adopt the dissenting view, but with limited success as district courts continue to rely on Comcast to deny class certification. E.g., Torres v. Nutrisystem Inc., 2013 U.S. Dist. LEXIS 66444 (C.D. Cal. Apr. 8, 2013).

Earlier this month the D.C. Circuit relied on the precedent in In re: Rail Freight Fuel Surcharge Antitrust Litigation – MDL No. 1869, No. 12-7085, 2013 U.S. App. LEXIS 16500 (D.C. Cir. Aug. 9, 2013), to confirm that plaintiffs must have a way to establish class-wide proof of damages and injury.

In In re: Rail Freight Fuel Surcharge, plaintiffs allegedly shipped products via rail and were required to pay rate-based fuel surcharges by several major freight railroads. The heyday of the rate-based fuel surcharge did not last. Eventually, the Surface Transportation Board (STB) put an end to the practice with respect to common carrier traffic within its regulatory authority. But plaintiffs alleged collusion and price fixing among the defendants in the meantime.  The district court granted class certification.

The plaintiffs’ case for certification hinged on two regression models prepared by their expert. The first of these, the “common factor model,” attempted to isolate the common determinants of the prices shippers paid to the defendants. The expert also constructed a “damages model,” which sought to quantify, in percentage terms, the overcharge due to conspiratorial conduct at various intervals over the class period.

On appeal, after a discussion on interlocutory appeal standards, the D. C. Circuit held that meeting the predominance requirement demanded more than common evidence the defendants colluded to raise fuel surcharge rates. The plaintiffs must also show that they can prove, through common evidence, that all class members were in fact injured by the alleged conspiracy.  On the damages prong, defendants argued that the expert's model purported to quantify the injury in fact to all class members attributable to the defendants’ collusive conduct. But the same methodology also detected injury where none could exist.  In Comcast, the Court held that indisputably the role of the district court is scrutinize such evidence before granting certification, even when doing so “requires inquiry into the merits of the claim.” 133 S. Ct. at 1433. If the proposed damages model cannot withstand this scrutiny then, that is not just a merits issue. Here, the expert's model was essential to the plaintiffs’ claim that they could offer common evidence of class-wide injury. See Fuel Surcharge II, 287 F.R.D. at 66. No damages model, no predominance, no class certification.

Moreover, the court of appeals noted that it is not enough to submit a questionable model whose unsubstantiated claims cannot be completely refuted through a priori analysis. Otherwise, “at the class-certification stage any method of measurement is acceptable so long as it can be applied class-wide, no matter how arbitrary the measurements may be.” Comcast, 133 S. Ct. at 1433.

Before Comcast v. Behrend, the case law was far more accommodating to class certification under Rule 23(b)(3), said the court of appeals. It is now clear, however, that Rule 23 not only authorizes a hard look at the soundness of statistical models that purport to show predominance—the rule commands it.  Mindful that the district court neither considered the damages model’s flaw in its certification decision nor had the benefit  of Comcast’s guidance, the court decided to vacate class certification and remand the case to the district court to afford it an opportunity to consider these issues in the first instance..

The case is useful beyond the antitrust world in its recognition that Comcast did make a difference in how lower courts are to treat the issue of predominance with respect to an analysis of injury and damages. Certification of a class without class-wide proof of both injury and damages is subject to reversal on the prong of predominance.

Court of Appeals Reverses Daubert Decision

A tip of the hat to our DRI colleague Mike Weston for alerting us to an interesting 10th Circuit opinion from a couple weeks ago, Hoffman v. Ford Motor Co., 2012 WL 3518997 (10th Cir. Aug. 16, 2012).

Plaintiff was injured in a rollover car accident, and sued the car manufacturer alleging that a defect in the seat belt buckle caused it to release during the accident and allow her to be ejected from the vehicle.  In support of this theory, plaintiff presented the opinion of Dr. Good, a mechanical engineer, who theorized that the buckle most probably inertially unlatched during the accident due to an alleged design defect.  He ran a series of tests on buckles allegedly similar to the one in the accident, but ran into issues when he needed to make a comparison of the data from his lab tests to data from crash rollover tests to determine if the situation measured in the lab could actually occur in the real world.  Specifically, there was an absence of available data from relevant rollover crash tests (which present dynamic, multi-dimensional forces working on the component), and so he compared his results to data from planar crash data -- ones focused on only the horizontal plane (for example, a frontal car crash).

Ford moved to exclude the opinions as unreliable under Daubert, but the district court  (without a hearing) denied the motion, concluding Ford had failed to prove that the differences between the lab test results and the real world rollover accidents were significant.  Defendant appealed. (Note, whether she was even wearing her seat belt at all was hotly contested at trial. For purposes of the Daubert issue, the court assumed she was.) 

The court of appeals concluded that in permitting the testimony, the district court had not been "a sufficiently exacting gatekeeper; Daubert requires more precision."  Plaintiff failed to present a sufficient scientific connection between the accelerations and forces the expert found necessary to unlatch the buckles in the lab, and the acceleration and forces that would have occurred in the actual accident on the street. 

Specifically, the court of appeals held that the trial court should NOT have chastised the defendant for failing to show how the deficiency mattered, the failure to use rollover crash data. And the trial court should not have deemed it "unfair" for Ford to criticize the plaintiff because of the limited amount of rollover crash data available to the expert.  The state of the science is what it is.  And Ford did more than point out a deficiency in the method; it also explained why the deficiency rendered the testing and comparison suspect.  More importantly for our readers, "it was not Ford's burden to show Good's inertial unlatch opinion was unreliable and irrelevant.  Rather, it was plaintiff's burden to show reliability and relevancy."

It was undisputed engineering science that once a component is tested, the results must be applied to the whole vehicle setting; the lab results must be compared to data from the real world. Merely showing that similar buckles can be made to unlatch under certain lab conditions is irrelevant to whether the buckle at issue unlatched in the accident absent proof that the lab conditions were present and can be adequately and accurately related to the actual rollover-type accident.  Plaintiff's expert failed to explain adequately how the acceleration and forces present in the planar crash tests were similar enough to those present in a rollover accident. Nowhere did he show how his comparison was scientifically valid. Thus, his opinion was based on mere speculation, or on the assumption, that the levels of forces he found necessary to unlatch buckles in the lab were substantially similar to those that occurred in the subject accident.

Absent such evidence, plaintiff could not meet her burden.  Since plaintiff had a full and fair opportunity to present the case, and made no attempt to add or substitute other evidence, the court of appeals remanded with instruction for the district court to enter judgment as a matter of law for defendant.

 

 

State Supreme Court Reverses Dangerous Expansion of Product Liability

The California Supreme Court held last week that the law does not impose liability on manufacturers of equipment used in conjunction with asbestos-containing parts made by others.  See O'Neil v. Crane Co., Cal., No. S177401 (Cal. 1/12/12).
 
Readers may recall that we posted on this case before. The Restatement of Torts (Third): Products Liability says that in the context of a final, finished product that injures a user and which is made up of components from different manufacturers, if a given component is itself defective and the defect causes the harm, then the supplier of that component is of course liable. In addition, the supplier can be liable even if the component by itself is not defective, but only if the seller substantially participates in the integration of the component into the design of the product (and the defect causes the harm). See Restatement 3d, Section 5. In essence, the doctrine holds that an entity supplying a non-defective raw material or a non-defective component part is not strictly liable for defects in the final product over which it had no control. In this respect, the Third Restatement of Torts simply codified the doctrine of various states’ common law.
 
Nevertheless, a split had existed among the lower courts in California about whether to
extend liability for asbestos-related disease beyond the manufacturers of the asbestos insulation, gaskets, and packing to which many ship workers were exposed (and which makers are now bankrupt) to the makers of the products the asbestos was used with (to find a solvent target).  So the state supreme court confronted the limits of a manufacturer’s duty to prevent foreseeable harm related to its product: When is a product manufacturer liable for injuries caused by adjacent products or replacement parts that were made by others and used in conjunction with the defendant’s product?   It held that a product manufacturer may not be held liable in strict liability or negligence for harm caused by another manufacturer’s product unless the defendant’s own product contributed substantially to the harm, or the defendant participated substantially in creating a harmful combined use of the products.
 
Defendants made valves and pumps used in Navy warships. They were sued here for a wrongful death allegedly caused by asbestos released from external insulation and internal gaskets and packing, all of which were made by third parties and added to the pumps and valves post-sale. It is undisputed that defendants never manufactured or sold any of the asbestos-containing materials to which plaintiffs’ decedent was exposed. That is, no evidence was presented that any of the asbestos-containing dust came from a product made by defendants. Neither company manufactured or sold the external insulation or flange gaskets that the repairmen like plaintiff removed. Although the valves and pumps contained internal asbestos-containing gaskets and packing, these original components had been replaced long before plaintiff encountered them years later. There was no evidence that any of these replacement parts were made by defendants.  The Court of Appeal asserted defendants’ products were defectively designed “because they required asbestos packing and insulation.” But this factual assertion was unsupported by the record. The evidence established that the requirement for asbestos derived from military specifications, not from any inherent aspect of defendants’ pump and valve designs

Nevertheless, plaintiff claimed that defendants should be held strictly liable and found negligent because it was foreseeable that workers would be exposed to and harmed by the asbestos in replacement parts and products used in conjunction with their pumps and valves. The Court of Appeals held that the component parts defense applied only to manufacturers of “multi-use or fungible products” designed to be altered and incorporated into another product. It then concluded defendants’ products did not meet these requirements. The Court of Appeal also rejected defendants’ argument that they could not be found strictly liable because they did not manufacture or supply the asbestos-containing products that caused plaintiffs' disease. The lower court announced a broad definition of strict products liability: a manufacturer is liable in strict liability for the dangerous components of its products, and for dangerous products with which its product will necessarily be used. Even though it was replacement gaskets and packing that allegedly caused disease, the lower appeals court concluded these replacement parts were “no different” from the asbestos-containing components originally included in defendants’ products.
 

Plaintiff's claims would represent an unprecedented expansion of strict products liability, which the supreme court declined to do.  California law, like most states, has long provided that manufacturers, distributors, and retailers have a duty to see to the safety of their products, and will be held strictly liable for injuries caused by a defect in their products. Yet, the state has never held that these responsibilities extend to preventing injuries caused by other products that might foreseeably be used in conjunction with a defendant’s product. Nor has the state's high court ever held that manufacturers must warn about potential hazards in replacement parts made by others when, as here, the dangerous feature of these parts was not integral to the product’s design.  From the outset, strict products liability in California has always been premised on harm caused by deficiencies in the defendant’s own product.  The reach of strict liability is not limitless; strict liability does not extend to harm from entirely distinct products that the consumer can be expected to use with, or in, the defendant’s non-defective product. Instead, the courts require proof that the plaintiff suffered injury caused by a defect in the defendant’s own product.
 
In this case, it was undisputed that plaintiff was exposed to no asbestos from a product made by the defendants. Although he was allegedly exposed to potentially high levels of asbestos dust released from insulation the Navy had applied to the exterior of the pumps and valves, defendants did not manufacture or sell this external insulation. They did not mandate or advise that it be used with their products. It is fundamental that the imposition of liability requires a showing that the plaintiff’s injuries were caused by an act of the defendant or an instrumentality under the defendant’s control.
 
Generally speaking, manufacturers have a duty to warn consumers about the hazards inherent in their products. The requirement’s purpose is to inform consumers about a product’s hazards and faults of which they are unaware, so that they can refrain from using the product altogether or evade the danger by careful use. Typically, under California law, manufacturers are strictly liable for injuries caused by their failure to warn of dangers that were known to the scientific community at the time they manufactured and distributed their product. The supreme court has never held that a manufacturer’s duty to warn extends to hazards arising exclusively from other manufacturers’ products. Plaintiff's alleged exposure to asbestos came from replacement gaskets and packing and external insulation added to defendants’ products long after their installation; there was no dispute that these external and replacement products were made by other manufacturers.
 
So the supreme court reaffirmed that a product manufacturer generally may not be held strictly liable for harm caused by another manufacturer’s product. The only exceptions to this rule arise when the defendant bears some direct responsibility for the harm, either because the defendant’s own product contributed substantially to the harm or because the defendant participated substantially in creating a harmful combined use of the products.   Plaintiffs sought to expand these exceptions to make manufacturers strictly liable when it is foreseeable that their products will be used in conjunction with defective products or even replacement parts made or sold by someone else. However, the mere foreseeability of harm, standing alone, is not a sufficient basis for imposing strict liability on the manufacturer of a non-defective product, or one whose arguably defective product does not actually cause harm.
 
The decision was supported by common sense. A manufacturer cannot be expected to exert pressure on other manufacturers to make their products safe and is not able to share the costs of ensuring product safety with these other manufacturers. It would be unfair to require  manufacturers of non-defective products to shoulder a burden of liability when they derived no economic benefit from the sale of the products that injured the plaintiff.  And a contrary rule would require manufacturers to investigate the potential risks of all other products and replacement parts that might foreseeably be used with their own product and warn about all of these risks. Such a duty would impose an excessive and unrealistic burden on manufacturers. Such an expanded duty could also undermine consumer safety by inundating users with excessive warnings. “To warn of all potential dangers would warn of nothing.”
 
 
 
 

 

Ninth Circuit Decertifies Consumer Fraud Class

The Ninth Circuit last week reversed the certification of a nationwide class raising consumer fraud claims against an auto maker. See Mazza, et al. v. American Honda Motor Co., No. 09-55376 (9th Circuit). 

Honda appealed the district court’s decision to certify a nationwide class of all consumers who purchased or leased Acura RL's equipped with a Collision Mitigation Braking System (“CMBS”). The plaintiffs alleged that certain advertisements misrepresented the characteristics of the CMBS and supposedly omitted material information on its limitations. The complaint stated four claims under California Law, specifically the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq., False Advertising Law (FAL), Cal. Bus. & Prof. Code § 17500 et seq., the Consumer Legal Remedies Act (CLRA), Cal. Civil Code § 1750 et seq., and a claim for unjust enrichment.  Readers know those are the typical claims in a consumer fraud case in the popular forum of California.

The Ninth Circuit held that the district court erred because it erroneously concluded that California law could be applied to the entire nationwide class, and because it erroneously concluded that all consumers who purchased or leased the relevant Acura RL can be presumed to have relied on defendant’s advertisements, which allegedly were misleading and omitted material information.

In 2007, plaintiffs bought Acura RL's from authorized Acura dealerships, and the vehicles were equipped with the CMB System. In December 2007, they filed a class action complaint alleging
that Honda misrepresented and concealed material information in connection with the marketing and sale of Acura RL vehicles equipped with the CMBS. According to Plaintiffs, Honda did not warn consumers (1) that its CMB collision avoidance system’s three separate stages may "overlap,"  (2) that the system may not warn drivers in time to avoid an accident, and (3) that it allegedly shuts off in bad weather.

The district court certified a nationwide class of people in the United States who, between August 17, 2005 and the date of class certification, purchased or leased new or used Acura RL vehicles
equipped with the CMBS. The district court concluded that California law could be applied to all class members because Honda did not show how the differences in the laws of the various states were material, how other states might have an interest in applying their laws in this case, and how these interests were implicated in this litigation. It also held that class members were entitled to an
inference of reliance under California law.

Before certifying a class, the trial court must conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Rule 23.  The party seeking class certification has the burden of affirmatively demonstrating that the class meets the requirements
of Federal Rule of Civil Procedure 23. And, under Rule 23(b)(3), a plaintiff must demonstrate the
superiority of maintaining a class action and show that the questions of law or fact common to class members predominate over any questions affecting only individual members.  Here, Honda contended that common issues of law did not predominate because California’s consumer protection statutes may not be applied to a nationwide class with members in 44 jurisdictions.
It further contended that common issues of fact did not predominate because the court  impermissibly relied on presumptions that all class members were exposed to the allegedly
misleading advertising, that they relied on misleading information in making their purchasing decision, and that they were damaged as a result.

First, choice of law. Under California’s choice of law rules, the class action proponent bears the initial burden to show that California has significant contact to the claims of each class member. Also, California law may only be used on a class-wide basis if the interests of other states are not found to outweigh California’s interest in having its law applied.  Honda argued that the district court misapplied the three-step governmental interest test.  The Ninth Circuit agreed. The district court abused its discretion in certifying a class under California law that contained class members
who purchased or leased their car in different jurisdictions with materially different consumer protection laws.  For example, some state consumer fraud laws have no scienter requirement, whereas many other states’ consumer protection statutes do require scienter. See, e.g., Colo.
Rev. Stat. 6-1-105(1)(e), (g), (u) (knowingly); N.J. Stat. Ann. § 56:8-2 (knowledge and intent for omissions); Debbs v. Chrysler Corp., 810 A.2d 137, 155 (Pa. Super. 2002) (knowledge
or reckless disregard).  Some states require named class plaintiffs to demonstrate reliance, while some other states’ consumer protection statutes do not.  These differences are "not trivial or wholly immaterial."  

The court of appeals reminds us that consumer protection laws are a creature of the state in which they are fashioned. They may impose or not impose liability depending on policy choices made by state legislatures. Each state has an interest in setting the appropriate level of liability for companies conducting business within its territory.  Maximizing consumer and business welfare, and achieving the correct balance for society, does not inexorably favor greater consumer protection; instead, setting a baseline of corporate liability for consumer harm requires balancing these competing interests.  Getting the optimal balance between protecting consumers and attracting foreign businesses, with resulting increase in commerce and jobs, is not so much a policy decision committed to a federal appellate court, or to particular district courts where a plaintiff may sue, as it is a decision properly to be made by the legislatures and courts of each state. More expansive consumer protection measures may mean more or greater commercial liability, which in turn may result in higher prices for consumers or a decrease in product availability.  Here, the district court did not adequately recognize that each foreign state has an interest in applying its law to transactions within its borders and that, if California law were applied to the entire class, foreign states would be impaired in their ability to calibrate liability to foster commerce.

The court of appeals also found that the district court abused its discretion in finding that common issues of fact predominated, because the scale of the advertising campaign here did not support a presumption of reliance, even if one were legally available.  It was likely that many class members were never exposed to the allegedly misleading advertisements, insofar as advertising of the challenged system was very limited. And it was not dispositive that Honda’s advertisements were allegedly misleading because of the information they omitted, rather than the information they claimed.  For everyone in the class to have been exposed to the omissions, it was necessary for everyone in the class to have viewed the allegedly misleading advertising. Here the limited scope of that advertising makes it unreasonable to assume that all class members viewed it.
Honda’s product brochures and TV commercials fell short of the extensive and long-term fraudulent advertising campaign that might support a presumption in the eyes of some courts.  Even if Honda allegedly might have been more elaborate and diligent in disclosing the limitations of the CMB system, its advertising materials did not deny that limitations exist. A presumption of reliance does not arise when class members were exposed to quite disparate information from various representatives of the defendant.  California courts have not allowed a consumer who was never exposed to an alleged false or misleading advertising campaign to recover damages under California’s UCL.  

Fifth Circuit Given Opportunity to Clarify Impact of Nicastro

Another federal appeals court will have an opportunity to assess the reach of the U.S. Supreme Court's decision in J. McIntyre Machinery Ltd. v. Nicastro. In Ainsworth v. Cargotec USA Inc., No. 2:10-cv-00236 (S.D. Miss., 12/15/11), the district court certified for interlocutory appeal its opinion finding personal jurisdiction over a foreign defendant in a forklift case.

Readers will recall that Nicastro resulted in a 6-3 decision with a plurality opinion by Justice Anthony Kennedy. Justices Breyer and Alito concurring in the judgment; and Justices Ginsburg, Sotomayor and Kagan dissenting. Justice Kennedy addressed the stream of commerce notion, stating that no “stream-of-commerce” doctrine can displace that general rule of purposeful availment, even for products liability cases. He acknowledged that the standards for determining state jurisdiction over an absent party have been a bit unclear because of decades-old questions left open in Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102 (1987).  This imprecision arising from Asahi, for the most part, resulted from its statement of the relation between jurisdiction and the notion of placing a product in the “stream of commerce.” That concept, like other metaphors, has its "deficiencies as well as its utilities." A defendant’s placement of goods into commerce “with the expectation that they will be purchased by consumers within the forum State” may sometimes indicate purposeful availment. But that does not swallow the general rule of personal jurisdiction. The principal inquiry in cases of this sort is still whether the defendant’s activities manifest an intention to submit to the power of a sovereign. Justice Breyer, joined by Justice Alito, agreed in the result, but concluded that because this case did not present the new and special issues arising from recent changes in commerce and communication, it was unnecessary to get into full analysis of the steam of commerce issue as it might be applied to 21st century marketing.

Since then, lower courts have continued to grapple with the meaning of the decision, with most recognizing that merely depositing goods in the stream of commerce, with knowledge that some will end up in the forum state, is not enough to satisfy the minimum contacts standard for personal jurisdiction.

Here, plaintiffs were the survivors of a Mississippi resident who was struck and killed by a forklift designed and manufactured by defendant Moffett Engineering, an Irish corporation, with its principal place of business is in Dundalk, County Louth, Ireland. (This is a "wee county" steeped in myth and legend, named for a Celtic pagan god.)  Moffett has never maintained a physical presence in Mississippi. It does not own, possess, or use any property in Mississippi. It has never had any officers, employees, or agents stationed in Mississippi, and it has never sent any of its employees to Mississippi for business purposes. It has never directly shipped or sold any of its products to customers there, and it has never directly solicited business from any company located in Mississippi. Moffett sold all of its products to defendant Cargotec, which had the exclusive right to market and sell Moffett’s products pursuant to a contract which specifically defines the U.S. as Cargotec’s sales territory. Cargotec sells or markets Moffett products in all fifty states. Moffett does not attempt to limit the territory in which Cargotec sells its products. Further, Moffett does not communicate with the end-purchasers of its products in any fashion, and it is not aware of their identities or locations. Cargotec sold 203 of those forklifts to customers in Mississippi, about 1.55% of Moffett’s United States sales.

The district court previously denied Moffett’s Motion to Dismiss for lack of personal jurisdiction.
Ainsworth v. Cargotec USA, Inc., 2011 U.S. Dist. LEXIS 49665, at *21 (S.D. Miss. May 9, 2011). After that decision, the Supreme Court issued its opinion in J. McIntyre Machinery, Ltd. v. Robert Nicastro, 131 S. Ct. 2780 (2011). Moffett filed a Motion for Reconsideration, arguing that decision controlled this dispute.

The district court denied the motion again, and concluded that Justice Breyer’s Nicastro opinion was only applicable to cases presenting the same factual scenario as that case.

But the court did agree the decision involves a controlling question of law as to which there is substantial ground for difference of opinion (noting at least one decision employing the stricter analysis from Justice Kennedy’s plurality opinion, Keranos, LLC v. Analog Devices, Inc., 2011 U.S. Dist. LEXIS 102618, at *29-*30 (E.D. Tex. Sept. 12, 2011)).  Review would materially advance the litigation, concluded the court, certifying it to the Fifth Circuit.  A case to keep our eye on.

 


 

Defense Verdict in Chemical Case Affirmed

The Eleventh Circuit last week affirmed a jury verdict for chemical defendant E. I. DuPont de Nemours & Co. in a personal injury claim arising out of the use of the agricultural product Benlate. Ramirez v. E.I. DuPont de Nemours & Co., No. 11-10035 (11th Cir. 12/13/11).
 
The plaintiff/appellant alleged in his complaint that he used Benlate in conjunction with his farming
operations. Ramirez asserted that Benlate was a defective product because it contained an allegedly known carcinogen, atrazine. He also contended that the use of Benlate caused him to contract cancer. The case was tried to a jury which returned a verdict favorable to DuPont.  Specifically, although the jury found that Benlate was a defective product, it did not find that the Benlate was the cause of Ramirez’s cancer.
 
On appeal, Ramirez argued that the verdict in the case was inconsistent because the jury determined that the product was defective, but was not the cause of Ramirez’s injuries. The court agreed with DuPont's argument that defect and causation are separate elements of the strict liability cause of action, and a jury is free to go different directions on each.
 
The record showed that the jury was presented with numerous plausible reasons for determining that Benlate did not cause Ramirez’s cancer. For example, the jury heard that when Ramirez sprayed his crops, he rode inside an enclosed tractor cab, wore protective clothing, including goggles, a mask, a jumpsuit, gloves and boots, and thus had minimal exposure.  The jury also heard evidence demonstrating that Ramirez had numerous risk factors for cancer, including a family history of cancer and a history of smoking cigarettes.
 
Finally, plaintiff attacked DuPont’s expert, Dr. Cohen, contending that the testimony of Dr. Cohen should have been stricken pursuant to Daubert.  The court of appeals disagreed, finding Cohen was one of the world’s leading experts in cancer and chemical causation; clearly, he considered the type of scientific and factual information that experts in his field would reasonably rely upon in opining on causation.
 

Ninth Circuit Hears Oral Argument in Climate Change Case

The Ninth Circuit recently heard oral argument in a potentially significant case raising climate change issues.  See Kivalina v. Exxon Mobil Corp., No. 09-17490 (9th Cir.)(oral argument  11/28/11).

We have posted on this case before, in which the village of about 400 people alleged that, as a result of global warming, the Arctic sea ice that protects the Kivalina coast from storms has been diminished, and that resulting erosion requires relocation of the residents to another village. (The town of Kivalina is located at the tip of a six-mile-long barrier reef, about 70 miles north of the Arctic Circle on Alaska's northwest coast.) Plaintiffs sought damages under federal common law nuisance, state nuisance, and civil conspiracy theories. They alleged that defendants were a major part of the cause of excessive emissions of carbon dioxide and other greenhouse gases, which plaintiffs claimed are causing the global warming.

The defendants properly noted that many of the questions raised by the plaintiffs in this suit were inherently political; there are no traditional judicial standards available to adjudicate such political issues. They also argued that plaintiffs lacked standing under Article III because the injury to the plaintiffs was not “fairly traceable” to the conduct of the defendants.

After the District Court dismissed the case, 663 F. Supp. 2d 863 (N.D. Cal. 2009), the U.S. Supreme Court rejected a global warming case brought by a number of states and land trusts that sought injunctive relief against utilities under the Clean Air Act.  See American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011).  The Kivalina case is potentially significant as one of the first to apply and interpret the Supreme Court decision limiting climate change lawsuits under federal common law.
 

The plaintiffs in Kivalina argue that the AEP decision focused exclusively on injunctive relief and did not address damage claims under federal common law. Kivalina does not seek to set emissions caps. It seeks damages, they argued.  But that reading of the decision may overstate the importance of that fact; the Court focused on the issue of injunctive relief arguably because that was what was being sought by the states and land trusts.  Defendants argued that displacement of the federal common law applies to both injunctive and damages remedies.  When Congress crafted the regulatory framework establishing the Clean Air Act, it did not provide for any compensatory relief to an allegedly injured private party. Accordingly, a damages remedy should also be displaced.  Recognizing the nuisance theory in this context would enable a federal judge to substitute a different balancing of interests from the one made by the EPA, to which Congress assigned this function.


 

Cameras in the Supreme Court?

While we at MassTortDefense usually focus on the results of appellate advocacy, earlier this  week saw an interesting debate about a process issue: whether the  U.S. Supreme Court  should be required to televise oral arguments.

Attorneys and judges with strong views on putting cameras in the high court  testified at a hearing before the U.S. Senate Judiciary Committee on Tuesday.  Speakers included The Honorable Mark Cady, Chief Justice of the Iowa Supreme Court, and The Honorable Anthony Scirica, Chief Judge
United States Court of Appeals for the Third Circuit.

Judge Scirica is not in favor of the Cameras in the Courtroom Act, which was introduced by Sens. Dick Durbin, D-Ill., and Chuck Grassley, R-Iowa.  He addressed three concepts that merit consideration in this discussion—transparency, accessibility, and the respect among the branches that allows each to govern its own deliberations.  He argued that the Court is sufficiently transparent: it explains its decisions in detail. Traditionally this was done through the printed word; now it is done through the electronic word as well, with opinions available on-line as soon as the decision is announced. These opinions constitute are binding precedent on questions of federal law.  Dissenting and concurring opinions by other Justices highlight for the public precisely, and at times quite forcefully, where the members of the Court disagree. Even before a final disposition, where certiorari has been granted, its website links to the lawyers’ briefs so the public may read and download them. Of course, all Court sessions have always been open to the public. But the Court now provides same-day transcripts of oral arguments on its website.

Judge Scirica noted how some lower court judges feel that televisions in the court disrupt courtroom proceedings at least to some extent, while others believe it makes lawyers more theatrical (is that possible?).  Others suggested it may cause judges to alter their questioning during arguments. Many district court judges have also expressed concern over cameras’ effect on witnesses and jurors.

Bottom line, he suggested that the complexities of this issue underscore the considerable latitude that should be afforded the Supreme Court in determining its own internal procedures. Determining whether to televise proceedings goes to the heart of how the Court deliberates and conducts its proceedings.

Senator Leahy, however, stated that the time has come for the Supreme Court to voluntarily open their proceedings to the American people. The high court's upcoming review of the Affordable Care Act, is a significant moment in our nation's history and our understanding of our fundamental charter. This decision will affect every one of us in this country. "The American people deserve to know what is being said as it is being said," he urged.  

The publisher of the outstanding SCOTUSblog wryly noted that the Justices are among the few people in Washington not trying to get on television.  He suggested that televising proceedings would ultimately be good for the Supreme Court, but favored the approach of the Sunshine in the Courtroom Act of 2011, a bill he said demonstrates critical respect for the separation of powers by respecting the judiciary’s autonomy in choosing whether to implement cameras for use.

Appeals Court Unhappy With Plaintiffs' Advocacy

Today we note an opinion that, in its opening words, is about "two appeals that raise concerns about appellate advocacy." Both are appeals from grants of forum non conveniens in multidistrict litigation. See Gonzalez-Servin et al. v. Ford Motor Co. et al., No. 11-1665; Kerman et al. v. Bayer Corp. et al., No. 08-2792 (7th Cir. 2011).

The Ford case was an appeal from an order to transfer a case from the U.S. District Court for the Southern District of Indiana to the courts of Mexico, and was one of many offshoots of litigation arising out of vehicular accidents allegedly caused by defects in Bridgestone/Firestone tires installed on Ford vehicles.  All these cases have been consolidated in an MDL.

The 7th Circuit found the lower court's careful and thorough analysis demonstrated that it was acting well within its discretion in deciding that the Mexican courts would be a more appropriate forum for the adjudication of this lawsuit by Mexican citizens arising from the death of another Mexican citizen in an accident in Mexico.

What seemed to bother the panel is that plaintiffs did not cite an FNC case seemingly on all fours with the appeal in their opening brief, though the district court’s decision in their case was issued in 2011—long after the prior case.  In their response the defendants cited the case repeatedly and asserted that its circumstances were “nearly identical” to those of the present case. Yet, in their reply brief the appellants still didn't mention it, let alone try to distinguish it, said the panel.

The second case involved litigation against manufacturers of blood products used by hemophiliacs, which turned out to be contaminated by HIV.  This particular suit was brought by Israeli citizens allegedly infected by the blood products in Israel. The defendants, invoking forum non conveniens, moved to transfer the case to Israel.  There were two prior appellate decisions on point, said the panel, including Chang v. Baxter Healthcare Corp., 599 F.3d 728 (7th Cir. 2010), which arose from the same multidistrict litigation.  The court said that these plaintiffs' short treatment of the prior cases "left much to be desired." 

Overall, said the court, the plaintiffs' "advocacy is unacceptable." The panel then invoked a well-known symbol: "The ostrich is a noble animal, but not a proper model for an appellate  advocate."  The “ostrich-like tactic of pretending that potentially dispositive authority against a litigant’s contention does not exist" is "pointless,” said the court.

The opinion closes with pictures of an ostrich burying his head in the sand, and of a man in a suit doing the same.  The reminder here is, when there is apparently dispositive precedent, an appellant may urge its overruling, or distinguish it, or reserve a challenge to it for a petition for certiorari, but may not ignore it. 

 

Amicus Urges Supreme Court to Reverse Causation Junk Science Decision

DRI (the Defense Research Institute) last week submitted an amicus brief urging the Supreme Court to review a federal appeals court decision that threatens to undermine the gatekeeper role of the trial courts on expert testimony. United States Steel Corp. v. Milward v. Acuity Specialty Products Group Inc., No. 11-316 ( U.S., amicus petition filed 10/12/2011).

Most of our readers know that DRI is an international organization that includes more than 23,000 attorneys involved in the defense of civil litigation.  DRI has long been a voice in the ongoing effort to make the civil justice system more fair, efficient, and—where national issues are involved—consistent. (Your humble blogger is a member.)

In this case, the plaintiff alleged that he contracted a rare form of cancer, acute promyelocytic leukemia (APL), through exposure to benzene or benzene contaminants. The plaintiff’s expert acknowledged that science has not determined what causes or can cause APL, but opined that, based on his own "judgment," the "weight of evidence" supported a conclusion that APL could be caused by benzene exposure. After a four-day hearing, the district court excluded the expert testimony as unreliable under Daubert, and Gen. Elec. Co. v. Joiner, 522 U.S. 136 (1997)(district courts need to exclude proof that is connected to the data only by the ipse dixit of an expert), finding that it amounted to no more than a plausible hypothesis. The U.S. Court of Appeals for the First Circuit reversed and reinstated the case, holding that it was an abuse discretion to exclude this evidence as to possible causation.

The First Circuit in this case appeared to think that district courts not only may but must admit speculative expert testimony that rests on nothing more than the expert’s subjective judgment that an untested hypothesis is supported by the “weight of the evidence.”  That decision conflicts with Supreme Court guidance and with the decisions of other circuits holding that expert testimony is admissible only when it rests on a reliable scientific foundation, and that a district court is not required to accept an expert’s ipse dixit but must instead carefully examine the methods and data underlying the expert’s opinion to ensure that the expert has reliably applied valid scientific principles. Without such an inquiry, the “gatekeeper” function the Federal Rules of Evidence envision for the district court judge becomes meaningless.

DRI correctly points out that the weight-of-the-evidence methodology the court of appeals endorsed does not satisfy the criteria Daubert adopted for assessing the reliability of expert testimony. It is neither testable nor falsifiable; it is not governed by any objective standards; and it has not been generally accepted by the scientific community as a means to assess medical causation absent an observed association between the substance and disease at issue. The fact that some regulatory agencies use an arguably similar, lower bar, methodology to assess risks to public health based on the available data does not mean that it yields “scientific knowledge” admissible under the very different standards governing a court proceeding.

Moreover, the district court’s essential gate-keeping role is particularly important on the issue of medical causation. That issue is often dispositive in toxic tort and product liability cases, which can involve enormous stakes not only for the parties, but also for the national economy. The lay jurors who decide these complicated issues are likely to be greatly influenced by testimony that appears to be scientific in nature coming from a witness whom the court has admitted as an "expert." The decision by the First Circuit undermines the critical screening function district courts perform to prevent juries from being misled by speculation masquerading as scientific knowledge.

 

Class Member Lacks Standing to Appeal Fees to Class Counsel

Last week, the First Circuit dismissed for lack of standing a class member's challenge to the significant fee award to class counsel in the Volkswagen AG/Audi AG MDL. In re Volkswagen and Audi Warranty Extension Litigation, MDL No. 1790.
 

The MDL included litigation over alleged oil sludge buildup in engines in the vehicles, and involved about 480,000 cars. The parties reached a settlement under which the automakers had agreed to cover the sludge-related maintenance costs for owners or lessees of Audi A4s from certain model years and Volkswagen Passats from specific model years, if the owners could document required oil changes.

The court also approved an award of $30 million in fees to the firms representing the plaintiffs, which drew the fire of class member Ashley Birkeland.  Her appeal of this issue was rejected last week, however, by the 1st Circuit, which dismissed for lack of standing. The court concluded that appellant suffered no redressable injury from the fee award. She did not allege, for example, that class counsel sold the class short as part of a collusive fee agreement. See Glasser v.  Volkswagen of America, Inc., 645 F.3d 1084, 1088-89 (9th Cir. 2011). Nor did she allege any improper supplemental agreement between plaintiffs counsel and defendant. Cf. In re Cendant Corp. PRIDES Litig., 243 F.3d 722, 726 & n.4 (3d Cir. 2001).

The court held that Fed. R. Civ. P. 23(h)(2) does not effectively confer standing to appeal on such appellants. "The district court's jurisdiction to review fee applications with the input of objectors is one thing; our appellate jurisdiction is another."

The court's reasoning seemed to reflect the view that the defendants, Volkswagen and Audi, and not class members, would be paying class counsel's fees -- implicitly rejecting the notion that such settlements are a zero-sum game based on a total that a defendant is willing to pay (and calculates it will have to pay in total), so every dollar in fees is a dollar less to the class members. 

 

Tort Reform Advances In Tennessee

Readers know that tort reform is an important issue we have posted on before, at the federal and state level.  Latest update: Tennessee recently enacted reform legislation that will, among other things, limit the amount of non-economic damages that plaintiffs can recover in civil lawsuits.

Specifically, the Tennessee Civil Justice Act of 2011 was signed into law by Gov. Bill Haslam earlier this month. 

The new law limits venue to the county where the events constituting the cause of action occurred, where the business has its principal office, or where its registered agent of record is located.

Prior law included punitive damages in calculating the bond amount, set a maximum appeal bond at $75 million, and did not address the possibility that obtaining the bond could render an appellant bankrupt or insolvent. The amended law facilitates the appeal of a trial court verdict by lowering the maximum amount of a bond from $75 million to the greater of (i) $25 million or (ii) 125% of the judgment amount. In determining the bond amount, the court will now not consider or include punitive damages, unless there is evidence of the appellee dissipating assets. The law also gives the court discretion to take other actions or set other terms, if obtaining the bond would render the appellant insolvent or bankrupt.

Prior state law had no cap on non-economic damages. The new law places a cap of $750,000 on the non-economic damages incurred by an injured plaintiff, damages like pain and suffering.  A few exceptions are provided, such as no cap in intentional torts, or when the defendant was under the influence of alcohol or illegal drugs and his or her judgment was substantially impaired, or when a defendant intentionally falsified, destroyed or concealed records to avoid liability.

Prior state law did not have caps on punitive damages. Under the new act, punitive damages must be proven by clear and convincing evidence and are capped at 2x compensatory damages or $500,000, whichever is greater. There are limited instances when the defendant's liability is not limited by the caps: (i) if the defendant intended to injure the plaintiff, (ii) if the defendant was under the influence of alcohol or illegal drugs and his or her judgment was substantially impaired, and (iii) if the defendant intentionally falsified, destroyed or concealed records to avoid liability.  Moreover, no punitive damages may be assessed against the manufacturer of a drug or device who was in compliance with applicable laws and regulations, unless the manufacturer withheld material information from regulators or misrepresented that information to the regulators.

The new law provides additional protections for non-manufacturer product sellers. No product liability action may be commenced or maintained against any seller, other than the manufacturer, unless the seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the alleged harm for which recovery of damages is sought, or the seller altered or modified the product, and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought; or the seller gave an express warranty which was breached.

Also, the seller of a product other than the manufacturer would not be liable for punitive damages, unless the seller exercised substantial control over that aspect of the design, testing, manufacture, packaging or labeling of the product that caused the harm for which recovery of damages is sought; the seller altered or modified the product and the alteration or modification was a substantial factor in causing the harm for which recovery of damages is sought; or the seller had actual knowledge of the defective condition of the product at the time he supplied the same.

Under the new Act, the state court of appeals would hear appeals from orders of trial courts granting or denying class action certification if a notice of appeal is filed within 10 days after entry of the order. All proceedings in the trial court would be automatically stayed pending the appeal of the class certification ruling.

Climate Change Litigation Update

Latest round in the "global warming" litigation -- Coming as no surprise, a group of property owners asked the U.S. Supreme Court last week to address issues arising in the appeal of their climate change tort lawsuit.  The suit seeks to hold a group of energy companies liable for alleged hurricane damage to their properties.  See In re: Comer, No. 10-294 (U.S. petition for writ of mandamus filed 8/26/10). The causation allegation in this particular case is arguably even more attenuated than the long, convoluted causation chain in many other global warming cases; plaintiffs asserted that defendants' greenhouse gases didn't cause but contributed to global warming, which made the waters in the Gulf of Mexico warmer, which didn't create but made Hurricane Katrina more intense, which then caused their alleged property damage to be worse. That stands as perhaps the most attenuated, least supportable, causal link in tort history. 

The procedural history is fascinating.  The U.S. District Court for the Southern District of Mississippi dismissed the complaint in August, 2007 for lack of standing and as a non-justiciable political question. See Comer v. Murphy Oil USA, Inc., 2007 WL 6942285 (S.D.Miss. 2007). The district court correctly held that tort suits against electric power companies and other alleged large greenhouse gas emitters should not proceed in federal court because, among many reasons,  climate change, and tort claims based on alleged climate change, is fraught with national political and policy considerations.

Plaintiffs appealed, and a three-judge panel of the 5th Circuit reversed that decision in October, 2009.  But the defendants petitioned for a rehearing en banc, and the Circuit ordered en banc rehearing of the case. Comer et al. v. Murphy Oil USA et al., No. 07-60756 (5th Cir.). That vacated the panel opinion.

Then came a letter from the clerk noting the cancellation of en banc oral arguments. Apparently, since the en banc court was constituted, new circumstances had arisen that made it necessary for various judges to recuse, leaving only eight members of the court able to participate in the case. Consequently, said the clerk, the en banc court had lost its quorum. (Several members of the court had previously recused themselves from the case.)  The court then asked for supplemental briefing on what should happen next.

Following the briefing, in an opinion of the majority of the remaining judges, the 5th Circuit held that it could not give the climate-related lawsuit full court review because of the recusal issues. See Comer v. Murphy Oil USA, 607 F.3d 1049 (5th Cir. 2010).  As a result, the court let stand the lower court's dismissal of the lawsuit.

The plaintiffs in this case have now filed a petition seeking a writ of mandamus that would overturn the dismissal of their appeal. They raise not the merits of their convoluted causation theory, but the procedural questions about when an en banc court loses its quorum after granting rehearing but before hearing argument en banc, what happens to the appeal? And when an en banc court loses its quorum before deciding an appeal on rehearing en banc, does the original panel somehow still maintain control over the case?

Thus, the case is not positioned like the Second Circuit appeal in which the federal government (Acting Solicitor General Neal Katyal on behalf of the Tennessee Valley Authority, a government-owned company), recently urged the Supreme Court to overturn a court of appeals decision that allowed Connecticut and several other states to move forward in their suit seeking greenhouse gas emissions reductions under a federal common law nuisance theory. American Electric Power Co. v. Connecticut, No. 10-174 (U.S., brief filed 8/24/10).

Readers know that writs of mandamus are rarely granted by the Supreme Court,  and the rule has traditionally been that once a court of appeals takes a case for en banc decision, the original panel decision is vacated, null and void, regardless of whatever happens next.  The 5th Circuit cannot legally reinstate a decision that no longer has any legal effect.  But stay tuned.

 

Third Circuit Rejects Medical Monitoring in Device Case

The Third Circuit has properly recognized that a claim for medical monitoring claim does not lie against the manufacturer of a medical device product. See M.G. v. A.I. DuPont Hospital for Children, No. 09-1426 (3d Cir., 8/24/10).

Readers may recall the post about this appeal last year.  Doctors at the A.I. duPont Hospital for Children in Wilmington, Delaware, had implanted a Cheatham Platinum stent (“CP stent”) in plaintiffs, who alleged that they had been injured or were at risk of injury from the use of the CP stent. After discovery, the trial court granted summary judgment to defendants on a number of the claims, but summary judgment was denied on Count VI, the medical monitoring claim. The trial court predicted that the Delaware Supreme Court would recognize a medical monitoring cause of action if presented with the facts of these cases.

The trial court recognized that there were substantial grounds for disagreement over whether Delaware will actually recognize a cause of action for medical monitoring. Even if the Delaware Supreme Court were to recognize a medical monitoring claim, there were substantial grounds for disagreement over whether plaintiffs here could state a claim. Plaintiffs' specific theory that medical devices can be the basis for a medical monitoring claim is novel, at best (and has been rejected in many states: Drugs and devices do not present the same policy issues as involuntary exposure to environmental toxins). The trial court was satisfied that plaintiff's novel theory here was one in which certification of an interlocutory order for appeal was appropriate.

The Third Circuit noted that plaintiff’s claim entitled “Medical Monitoring” contended that “[a]s a direct result of defendants’ acts, omissions, and conduct, plaintiffs . . . who have received NuMED CP stent have been exposed to a hazardous procedure and product, and suffered a significantly increased risk of the side effects caused by this device. This increased risk makes periodic diagnostic and medical examinations reasonable and necessary.”

While the district court predicted that the Delaware Supreme Court would recognize a medical monitoring cause of action, the appeals court didn't have to reach that broader question because it concluded that plaintiffs were unable to establish the elements necessary to state a claim for medical monitoring.

Defendants contended on appeal  that the trial court erred in extending Delaware law beyond the bounds of the recognized medical monitoring claim (in those minority of states that accept it) in which a plaintiff alleges long-term involuntary exposure to a proven toxic substance with known tendencies to produce serious future medical injuries. The Third Circuit agreed, finding no persuasive cases anywhere in which a free-standing medical monitoring claim has been allowed to proceed although the plaintiff has not demonstrated significant exposure to a toxic (poisonous) or proven hazardous substance. The lower court’s prediction that the Delaware Supreme Court would permit a claim for medical monitoring on this record thus requires several “leaps” from the current state of the law, generally, let alone Delaware law.

Specifically, here, there was no toxic or hazardous substance, as such. While unapproved devices are termed “adulterated”, they are not necessarily harmful, and certainly not toxic. Moreover, the risk here is not a risk of  “contracting a serious latent disease.” Rather, it is a risk of the need for further care. Further examinations are not to “monitor” the risk of disease, but to perform routine
oversight of the device. Thus, even if the Delaware Supreme Court would recognize a “standard” medical monitoring claim --one which requires a plaintiff to demonstrate that a defendant’s
negligence caused the plaintiff to be exposed to a proven hazardous substance that resulted in a significantly increased risk of contracting a serious latent disease -- the plaintiff here could not demonstrate that she had been exposed to a proven hazardous substance, nor could she prove that such exposure resulted in a significantly increased risk of contracting a serious latent disease.

Accordingly, the court found that plaintiff was unable to establish the elements necessary to make out a claim for medical monitoring.  Summary judgment should have been granted.

On a personal note, also on the winning brief was my former partner, the late R. Nicholas Gimbel, Esq., an outstanding advocate, in one of his last cases.  On the amicus brief for PLAC was my colleague James M. Beck, Esq.
 

Update on "Climate Change" Litigation -- Vanishing Quorum

Readers may recall my post about the Fifth Circuit granting the petition for rehearing en banc in Comer v. Murphy Oil.  The case involves a lawsuit by property owners against some three dozen oil, coal, and chemical companies, alleging that the defendants' activities contributed to climate change and magnified the effects of Hurricane Katrina, and thus exacerbated the damage from the storm. The trial court dismissed the suit on political question and standing grounds.  On appeal, a panel of the 5th Circuit reversed last Fall, finding that the plaintiffs did have standing and that the political question doctrine did not apply.

The defendants filed a petition for rehearing en banc, which was granted, and set the case for oral argument next week.  But, the clerk recently sent a letter noting the cancellation of en banc oral arguments.  Apparently, since the en banc court was constituted, new circumstances have arisen that make it necessary for another judge to recuse, leaving only eight members of the court able to participate in the case. Consequently, said the clerk, the en banc court has lost its quorum. Seven members of the court had previously recused themselves from the case.

Several defendants have filed a motion arguing for a different reading of the rule regarding a quorum, and/or raising the argument that the district court's opinion ought to remain the controlling law of the case, rather than the panel's decision which was vacated by the en banc decision. The court has responded by asking for supplemental briefing on these issues. Specifically, the order invited the parties to address the matter “as they think appropriate” but specifically directed them to analyze the interplay between the following rules and statute in resolving the disposition of the appeal: Fed. R. App. P. 35(a), 28 U.S.C. §46 (c) and (d), Fed. R. App. P. 41 (a) and (d) (1), 5th Cir. Local Rule 41.3, and Fed. R. App. P. 2. The court also instructed the parties that they may consider the rulings of Chrysler Corp. v. United States, 314 U.S. 583 (1941) and North American Co. v. Securities & Exchange Comm’n, 320 U.S. 708 (1943) and the Rule of Necessity.

Presumably, three outcomes are possible:the court decides it actually does have a quorum and thus oral argument is rescheduled; the panel decision is reinstated by default (with an ensuing cert petition to the Supreme Court); or, the district court is affirmed without opinion.

Many observers had predicted that the en banc decision by the 5th Circuit would create a circuit split  with the 2d Circuit decision in Connecticut v. American Electric Power. There, a two-judge panel reversed the lower court dismissing the case on political question grounds, and finding the plaintiffs had standing to assert nuisance claims (with a similar attenuated causation theory).  This presumably would have paved the way for Supreme Court cert review.  Of course, Justice Alito has recused himself in cases involving ExxonMobil due to his ownership of its stock, and  Justice Breyer has recused himself from cases involving BP.  Perhaps Justice Sotomayor would also recuse herself due to her participation in the Connecticut v. American Electric Power case when she was on the Second Circuit.  So any possible Supreme Court review may be complicated also by the recusal and quorum issues.

Stay tuned.  This one is getting even more interesting, if thatis possible.

 

Seventh Circuit Issues Forum Non Conveniens Ruling

The Seventh Circuit has affirmed a district court's ruling which dismissed Taiwanese plaintiffs' claims against blood product manufacturers on statute of limitations and forum non conveniens grounds. Chang v. Baxter Healthcare Corp., 2010 WL 1136521 (7th Cir. 3/26/10).

Because my colleague Dave Walk was part of the winning defense team, just the facts here without alot of commentary. 

The case was filed originally in California by residents of Taiwan but transferred by the multidistrict panel to the district court in Illinois with the other suits in the clotting-factor mass tort for pretrial proceedings.  The main tort claim was that the defendants acquired blood from "high-risk" donors, processed it improperly in California where they manufactured clotting factors, and after discovering that the factors were contaminated by HIV nevertheless continued to distribute the product in foreign countries (while withdrawing them from distribution in the United States). Thus, plaintiffs in this case, or the hemophiliac decedents whom they represented, in fact resided, and obtained and injected the clotting factor, in a foreign country.

The court addressed first the claims that were dismissed as untimely. The critical issue so far as these dismissals on the merits were concerned, said the court, was choice of law. When a diversity case is transferred by the multidistrict litigation panel, the law applied is that of the jurisdiction from which the case was transferred, in this case California. The California statutes of limitations don't begin to run until the plaintiff discovers, or should in the exercise of reasonable diligence have discovered, that he has a claim against the defendant.  But this discovery rule, even if applicable, would not save the plaintiffs' tort claims from dismissal for untimeliness. Plaintiffs argued that they didn't have enough information on which to base a suit until a New York Times article about the contamination of clotting factors with HIV was published on May 22, 2003, and therefore that their suit, filed in 2004, was timely.  But as the district court found, the plaintiffs had a reasonable basis to suspect that they had a cause of action more than five years before the article appeared, when their counsel actually had begun negotiations with two of the defendants to settle negligence claims arising from the alleged contamination of the defendants' clotting factors with HIV. (These negotiations culminated in the settlement in 1998 on which the plaintiffs' breach of contract claim was based.)

The plaintiffs argued that the limitations period should have been tolled by defendants' “fraudulent concealment” because when entering into the settlement agreement they claimed that they had done nothing wrong and that they were offering financial aid purely as a humanitarian gesture. The plaintiffs were mistaken in this. Denial of liability when negotiating a settlement agreement is the norm; it is not evidence of fraudulent concealment of anything.

The district court was also correct in ruling in the alternative that a California court would apply the Taiwanese 10-year statute of repose, because the plaintiffs' tort claims arose under Taiwanese law. The hemophiliacs whom the plaintiffs represented were infected in the 1980s, more than a decade before these suits were brought. If the plaintiffs' tort claims arose in Taiwan, California law makes the Taiwanese statute of repose applicable to those claims. The reason is California's “borrowing” statute, which is sensibly designed to discourage forum shopping, would bar the action in California if it would have been barred in Taiwan. The plaintiffs tried to argue that their claims arose in California, not Taiwan, because it was in California that the defendants allegedly failed to process their clotting factors in a way that would prevent contamination by HIV. But generally there is no tort without an injury. That is the rule in California.  And the injury alleged occurred in Taiwan.

Turning to the claims that the district court dismissed not as untimely but on the basis, rather, of forum non conveniens, the court noted that the contract was negotiated and signed in Taiwan.  The key language at issue, the so-called scale-up clause, was ambiguous.  Evidence beyond the language of the settlement agreement would be necessary to "disambiguate the clause," said the court, and it seemed that most of the persons who are in a position to give such evidence live in Taiwan, including the plaintiffs' Taiwanese counsel who negotiated the settlement, a Taiwanese patient representative, members of the Taiwanese department of health, defendants' Taiwanese outside counsel, and an employee of defendants in Taiwan.

Taiwanese law makes it difficult to gather evidence for use in a trial in a foreign country because Taiwan is not a party to the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters; the alternative method of obtaining evidence in a foreign country, sending a letter rogatory to the foreign court, seemed to not be a very satisfactory means of obtaining evidence.  So this important factor pointed to Taiwan. The only circumstance that would favor holding the trial in California rather than in Taiwan would be the greater convenience for the defendants, since they are American companies. But as they didn't want the case to be tried in California, or indeed anywhere else in the United States, really there was nothing in favor of the American forum, said the court. When application of the doctrine of forum non conveniens would send the plaintiffs to their home court, the presumption in favor of giving plaintiffs their choice of court is little more than a tie breaker.  But, said the panel, "there is no tie here."

 

Latest Round in Lipstick Wars Goes to Defendants

We previously posted about a case in which a federal judge threw out  a purported class action against L’Oreal USA Inc. and Procter & Gamble Distributing LLC that accused the companies of selling Cover Girl and Maybelline lipsticks containing lead. Koronthaly v. L’Oreal USA, Inc., et al., No. 07-5588 (D.N.J. July 29, 2008).

The U.S. Court of Appeals for the Third Circuit has affirmed the decision. Koronthaly v. L'Oreal USA,  No. 08-4625 (3d Cir. 3/26/10).

Koronthaly purchased lipstick products manufactured, marketed, and distributed by appellees L’Oreal. and P&G. She alleged these lipstick products contained lead. The FDA does not regulate the presence of lead in lipstick, but Koronthaly asserted that the lipstick contained lead in greater amounts than permitted in candy by the FDA. Koronthaly alleged that she did not know when she purchased the products that they contained any lead, and when she learned of the lead content she immediately stopped using them. Moreover, had she known of the lead she claims she would not have purchased the products.

To prove constitutional standing, said the court of appeals, a plaintiff must demonstrate (1) an injury-in fact that is actual or imminent and concrete and particularized, not conjectural or hypothetical, (2) that is fairly traceable to the defendant’s challenged conduct, and (3) is likely to be redressed by a favorable judicial decision. Summers v. Earth Island Inst., 129 S. Ct. 1142, 1149 (2009). In this case, standing foundered on the first requirement, injury-in-fact, said the court.

Koronthaly’s argument that she was misled into purchasing unsafe lipstick products was belied by an FDA report finding that the lead levels in the defendants’ lipsticks were not dangerous and therefore did not require warnings. Moreover, Koronthaly conceded that she has suffered no adverse health effects from using the lipsticks. Koronthaly therefore had to fall back on only a subjective allegation -- that the trace amounts of lead in the lipsticks were unacceptable to her, not an injury-in-fact sufficient to confer Article III standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 564 (1992)(injury-in-fact must be accompanied by “continuing, present adverse effects”); Georgine v. Amchem Prods., Inc., 83 F.3d 610, 636 (3d Cir. 1996) (Wellford, J., concurring) (“Fear and apprehension about a possible future physical or medical consequence . . . is not enough to establish an injury in fact.”).

Furthermore, to the extent that Koronthaly contended that the injury-in-fact was the loss of her “benefit of the bargain,” she mistakenly relied on contract law, said the court. See Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 319-21 (5th Cir. 2002) (plaintiff, whose only claim was that she “would like her money back” for having purchased a product that failed to make certain disclosures and allegedly was defective, did not have an injury-in-fact sufficient to create standing). Her lipstick purchases were not made pursuant to a contract involving lead levels, and therefore she could not have been denied the benefit of any bargain. Absent any allegation that she received a product that failed to work for its intended purpose or was worth objectively less than what one could reasonably expect, Koronthaly had not demonstrated a concrete injury-in-fact.

The dismissal was affirmed. In the lipstick wars, attention now will focus on Stella v. LVMH Perfumes and Cosmetics USA Inc., N.D. Ill., No. 1:07-cv-06509, dismissed 4/3/09; which is currently on appeal before the Seventh Circuit.
 

 

District Courts May Need to Conduct Full Daubert Inquiry Before Class Certification Decision

The Seventh Circuit issued a very interesting opinion on the interplay of class certification and Daubert issues. American Honda Motor Co., Inc. v. Allen, 2010 WL 1332781 (7th Cir., April 7, 2010).  Specifically, the defendant asked the court to resolve whether the district court  must conclusively rule on the admissibility of an expert opinion prior to class certification when that opinion is essential to the certification decision. Since this is the type of question that Rule 23(f) was designed to address, the court of appeals took the appeal -- and agreed with Honda. 

Plaintiffs were purchasers of Honda's Gold Wing GL1800 motorcycle; they alleged that the motorcycle has a design defect that prevents the adequate dampening of “wobble,” that is, side-to-side oscillation of the front steering assembly. Plaintiffs moved for class certification pursuant to Rule 23(b)(3). To demonstrate the predominance of common issues, they relied heavily on a report prepared by a motorcycle engineering expert, who opined about a "reasonable wobble decay" standard. Honda moved to strike the report pursuant to Daubert, arguing that this wobble decay standard was unreliable because it was not supported by empirical testing, was not developed through a recognized standard-setting procedure, was not generally accepted in the relevant scientific, technical, or professional community, and was not the product of independent research.

The district court said that it had "definite reservations" about the reliability of the expert's wobble decay standard. Nevertheless, the court declined to exclude the report in its entirety "at this early stage of the proceedings.”  The trial court denied Honda's motion to exclude “without prejudice,”  and granted plaintiffs' motion for class certification.

The 7th Circuit has already noted that a district judge may not duck hard questions by observing that each side has some support. Tough questions must be faced and squarely decided, if necessary by holding evidentiary hearings and choosing between competing perspectives. But the court had not yet specifically addressed whether a district court must resolve a Daubert challenge prior to ruling on class certification if the testimony challenged is integral to the plaintiffs' satisfaction of Rule 23' s requirements.  Here, it did hold that when an expert's report or testimony is critical to class certification, as it was in this case, a district court must conclusively rule on any challenge to the expert's qualifications or submissions prior to ruling on a class certification motion. That is, the district court must perform a full Daubert analysis before certifying the class if the situation warrants. If the challenge is to an individual's qualifications, a court must make that determination by comparing the area in which the witness has superior knowledge, skill, experience, or education with the subject matter of the witness's testimony. The court must also resolve any challenge to the reliability of information provided by an expert if that information is relevant to establishing any of the Rule 23 requirements for class certification.

Here, while the trial court began to ask the right questions, it never finished. The court's effective statement of admissibility left open the questions of what portions of the expert's testimony it may have decided (or will decide) to exclude, whether the expert reliably applied the standard to the facts of the case, and, ultimately, whether plaintiffs had actually satisfied Rule 23(b)(3)'s predominance requirement -- because they relied on the expert opinions. As a result, the district court never actually reached a conclusion about whether the expert report was reliable enough to support plaintiffs' class certification request.  This was not sufficient. Indeed, it was an abuse of discretion, according to the court of appeals.

The court went on to examine the record, which revealed to it that exclusion was the inescapable result when the Daubert analysis is carried to its conclusion. The expert originally developed the standard for use in a lawsuit in which he testified as an expert against Honda; despite its publication in one journal, there is no indication that this wobble decay standard had been generally accepted, or indeed, accepted by anyone other than this author. The expert never conducted any rider confidence studies to determine when motorcycle riders perceive wobble, or performed any tests to determine the minimal wobble amplitude at which riders detect oscillation.  He did test a single, used 2006 GL1800, ridden by a single test rider, but then extrapolated his conclusions to the entire fleet of GL1800s produced from 2001 to 2008 -- arguably too small a sample size from which reliable extrapolations can be made. 

The court therefore granted Honda's petition for leave to appeal, vacated the district court's denial of Honda's motion to strike and its order certifying a class, and remanded for proceedings consistent with this opinion.

 

Federal Court Approves Class Action Settlement in Toxic Tort Case

The Sixth Circuit has approved a class action settlement in an interesting toxic tort case. Moulton v. U.S. Steel Corp., 2009 WL 2997921 (6th Cir., 9/22/09).

This class action was filed in 2004 by neighbors of a steel mill operated by defendant U.S. Steel, and alleged various claims arising from “metal-like dust and flakes” allegedly falling on plaintiffs' property. The district court in Michigan certified the class in 2006, and the parties eventually agreed on a settlement for $4.45 million in 2008.

As is not unheard of, some class members and at least one plaintiffs' lawyer objected to the settlement. They argued that the settlement agreement was not “fair, reasonable, and adequate” under Fed.R.Civ.P. 23(e)(2).  Specifically, they argued (1) that the agreement dis-serves the “public interest” due to the broad scope of the release, (2) that alleged “collusion” between Class Counsel and U.S. Steel tarnished the agreement and (3) that the agreement improperly prioritizes the distribution of the settlement proceeds. The district court rejected all such objections, and the court of appeals reviewed the district court's conclusions for abuse of discretion.

To determine whether a settlement agreement satisfies Rule 23's fairness standard,  courts consider:  (1) the risk of fraud or collusion;  (2) the complexity, expense and likely duration of the litigation;  (3) the amount of discovery engaged in by the parties;  (4) the likelihood of success on the merits;  (5) the opinions of class counsel and class representatives;  (6) the reaction of absent class members; and (7) the public interest. UAW v. Gen. Motors Corp., 497 F.3d 615, 631 (6th Cir.2007). 

On the issue of the scope of the release, the release of the continuing nuisance claims was held not unfair, because, contrary to the objections, it did not go“well beyond the claims plead in the complaint."  Since 2005, every version of the plaintiffs' complaint included a claim for “continuing private nuisance.”  As class members, the objectors are the last individuals in a position to claim lack of notice that this claim was on the table at the settlement talks. And the bar on future continuing nuisance claims applies only to claims arising out of conditions that existed prior to the settlement. It does not preclude future continuing nuisance claims based on emissions from new equipment installed after the date of settlement. Nor does it bar future claims based on old equipment, so long as the continuing nuisance is a “new” one.

Neither did the objectors make the case that the agreement was a product of collusion. See Williams v. Vukovich, 720 F.2d 909, 921 (6th Cir.1983). The duration and complexity of the litigation undermined the objectors' suspicions. The parties litigated for almost four years before reaching a settlement agreement. The court fielded numerous contested pretrial motions. Class Counsel pursued multiple avenues to gather evidence; and the agreement itself was a product of months of supervised negotiations, two facilitated mediations and a settlement conference with the court.

Third, there was the challenge to the $4.45 million settlement, which the agreement distributed as follows: $300 to each covered member of the class, limited to one award per household; $10,000 to the seven class representatives; and $1.335 million in attorney's fees (30%) and $622,279.86 in costs to class counsel. Any residual goes to local public schools. Because class counsel received 4,026 class-member claims, roughly $1.21 million will go to the claimants and roughly $1.28 million will go to the schools. The appeals court noted that the district court should have been more expansive in its explanation of the approval of the award as reasonable.  However, that claimants will in the aggregate receive less than Class Counsel does not automatically invalidate the agreement. That the public schools will receive $1.28 million in unclaimed funds does not reflect on the settlement's fairness.

Finally, a plaintiffs' lawyer purporting to represent multiple class members insisted that the court improperly shut him out of the case. In what the appeals court called a “sideshow” to the main case, the attorney reportedly contacted an unknown number of class members after the class certification advising them to opt out because those who opt out “always get a much higher settlement than … the general population.”  The 6th Circuit found that the district court also did not err by corralling the extent of this counsel's involvement in the case. Rule 23 gives the district court broad discretion in handling class actions, authorizing orders that impose conditions on the representative parties or on intervenors. Fed.R.Civ.P. 23(d)(1)(C).  In view of the questionable communications with litigants, unannounced solicitation of opt outs, and apparent guarantee to individuals who opted out, the district court appropriately exercised its discretion, said the Circuit.

Medical Monitoring Decision Set For Interlocutory Appeal

Readers of MassTortDefense interested in the issues surrounding medical monitoring will want to keep their eyes on Hess v. A.I. DuPont Hosp. For Children, 2009 WL 2776606 (E.D.Pa., August 28, 2009).  The court recently granted Defendants' Petition for Certification of Immediate Appeal (to the Third Circuit).

Doctors at the A.I. duPont Hospital for Children in Wilmington, Delaware, implanted a Cheatham Platinum stent (“CP stent”) in plaintiffs, who alleged that they had been injured or were at risk of injury from the use of the CP stent. After discovery, the trial court granted summary judgment to defendants on a number of the claims, but summary judgment was denied on Count VI, the medical monitoring claim. The trial court predicted that the Delaware Supreme Court would recognize a medical monitoring cause of action if presented with the facts of these cases.

The trial court recognized that there are substantial grounds for disagreement over whether Delaware will actually recognize a cause of action for medical monitoring. While Delaware courts, including the Delaware Supreme Court, have had medical monitoring claims before them on several occasions and have not totally disavowed medical monitoring as a legally cognizable cause of action, neither have they formally recognized the tort as a legally cognizable cause of action.  (In some jurisdictions it is a remedy, not a cause of action.)

Even if the Delaware Supreme Court were to recognize a medical monitoring tort, there are substantial grounds for disagreement over whether plaintiffs here could state a claim. Plaintiffs' theory that medical devices can be the basis for a medical monitoring claim is novel, at best  (and has been rejected in many states: Drugs and devices do not present the same policy issues as involuntary exposure to environmental toxins).   Indeed, there appear to be no cases precisely like this one in which a plaintiff has alleged and a court has recognized a medical monitoring claim where the plaintiff has had a Class III medical device implanted that did not have FDA premarket approval and where the plaintiff did not offer evidence that the device was defective. The court was satisfied that plaintiff's novel theory here is one in which certification of an interlocutory order for appeal is appropriate.