Class Action's Brave New World

This year has been called the year of the class action because of the activity in this area by the U.S. Supreme Court. The future of class-action litigation was discussed at the American Bar Association's annual meeting in August in Toronto where a panel discussed the long-awaited decision in Wal-Mart v. Dukes, et al., 564 U.S., (2011).

In Wal-Mart, a majority of the court held that the gender discrimination case could not move forward as a class action. It comes on the heels of AT&T v. Concepcion, 563 U.S., (2011) where the court held that under California state contract law class-action waivers in arbitration agreements are pre-empted by the Federal Arbitration Act. This holding means that if a contractual arbitration clause precludes class actions, a cellphone user can be forced under certain circumstances to individually resolve his or her differences.

Despite the seemingly business-friendly tenor of the Supreme Court, the Wal-Mart case is not that much of a surprise to plaintiff personal-injury attorneys. A unanimous Supreme Court made it clear that in the area of employment litigation it would not be possible to handle the plaintiffs' individual monetary claims as a class action either under Fed. Rule Civ.Proc. 23(b)(2) or 23(b)(3). The court unanimously held that individual monetary claims were not appropriate for class certification because the lack of no-opt-out and notice provisions of Rule 23(b)(2) in Wal-Mart violated due process, which has been recognized in other mass tort cases.

An Illinois federal district judge recently faced a similar question in In re Yasmin and Yaz Products Liability Litigation. No. 3:09-md–2100-DRH-PMF (decided May 4, 2011). In that multidistrict litigation matter, an individual plaintiff's class allegations were dismissed on similar grounds of lack of commonality. That court upheld the notion that a plaintiff injured by a defective product must litigate as an individual and that class-action litigation does not properly resolve mass tort cases.

The attorney for Cindy Plaisance, 44, alleged she suffered deep vein thrombosis after taking the birth control product, Yaz. In related cases, lawyers have asserted claims of negligence, strict product liability, breach of express warranty, breach of implied warranty, fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, medical monitoring, fraud and deceit. Plaisance's lawyer sought class certification of a nationwide class of Yaz users or, in the alternative, proposed separate statewide classes.

Chief U.S. District Judge David R. Herndon of the Southern District of Illinois declined to certify such a class under Rule 23(b)(3) because it was "evident" to the court that individual questions of law and fact predominated, which made the cases unmanageable for a nationwide or statewide class action. The court held Rule 23(b)(3)'s predominance and manageability requirements also precluded any proposed issue certification under the rule.

To satisfy Rule 23(b)(3) certification requirements, a plaintiff must demonstrate that common questions of law or fact predominate over individual questions and that class treatment is superior to other available methods of adjudication. In looking at the substantive elements of the plaintiffs' Yaz claims as well as the proof necessary to establish these elements, the court found that her claim, as well as those consolidated with hers, would be best handled on an individual basis.

"Almost every element of the asserted claims will require highly individualized factual inquiries unique not only to each class member but also to each class member's prescribing physician. For example, — establishing causation will require 1) an examination of each class member's medical history, including pre-existing conditions and use of other medications; 2) an evaluation of potential alternate causes for the alleged injury; and 3) an assessment of individualized issues pertaining to each class member's prescriber … " Herndon wrote. I agree with the court's analysis. The decision was fair to all parties.

In the wake of Wal-Mart that scuttled a monetary damage claim in a Rule 23(b) employment context, the women in that case are left to pursue any back pay due as an individual matter, something that most lawyers would likely not pursue given the potential amount of each individual award. There also has been some discussion about reconfiguring the class into a smaller group. The Yaz plaintiffs, though, allegedly suffered physical injuries and even death from the medication. These cases will be treated individually as any other product liability claim.

What is clear is that plaintiffs who suffer physical damages in what is a mass tort will need to more closely examine their options. For the practitioner, it means when people have been injured by defective products, drugs or medical devices, class certification is not likely to be achieved. Although aggregating cases for pre-trial multidistrict litigation for discovery and Daubert purposes is feasible, monetary damages are likely to be determined on a more individualized basis. Plaintiffs will need to retain their own lawyers who will be required to expend money individually to prove each case. But as far as changing corporate policy through class actions, Rule 23 looks to be an unlikely vehicle to do that.