While the ripples from the United States Supreme Court’s 2011 decision in Wal-Mart v. Dukes are still being felt, the Court may make further class action waves this term with its pending decision in Comcast v. Behrend. This paper focuses on what cases like Wal-Mart and Comcast may have in store for the class certification stage on issues such as burden of proof and expert testimony.
I. Consideration of the Merits and the Burden of Proof at Class Certification
A. Can a Court Consider the Merits When Evaluating Rule 23?
The Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), reinforces and makes clear that a “rigorous analysis” of Rule 23’s requirements is the standard for getting a class certified and this “rigorous analysis” “frequently…will entail some overlap with the merits of the plaintiff’s underlying claim.” Id. at 2551. The Court cleared up any confusion from its language in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974), that some have contended means any pretrial consideration of the merits is prohibited. The Court described that statement as “the purest dictum,” 131 S.Ct. at 2552 n.6, and the Wal-Mart decision unequivocally holds there is no such prohibition to the extent there is overlap between the merits and the factual and legal issues applicable to any Rule 23 element. Indeed, the Court wrote: “In this case, proof of commonality necessarily overlaps with respondents’ merits contention that Wal-Mart engages in a pattern or practice of discrimination.” Id. at 2552. Still, the Court has not yet endorsed any broader shift towards pretrial evaluation of the merits at class certification, and furthermore in Erica P. John Fund v. Halliburton, 131 S. Ct. 2179 (2011), the Court made clear that when there is no overlap between the merits and Rule 23’s requirements, the lower court should not stray into the merits of the action at class certification.
B. What is the Burden of Proof at Class Certification?
The Wal-Mart Court did not specifically address the required burden of proof for plaintiffs’ contentions at class certification. It did state, however, that the plaintiff “must be prepared to prove that” the requirements of Rule 23(a) were satisfied. Id. at 2551. Since the issue is proving something in a civil proceeding, the Court’s directive logically suggests a preponderance of the evidence standard.
The Circuits are split on this question. On the burden of proof at class certification, the Second, Third, Fifth and, most recently, the Seventh Circuits have clearly placed that burden on the plaintiff and adopted a preponderance of the evidence standard. See In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 320 (Dec. 30, 2008) (rejecting “threshold showing” and requiring the resolution of all factual issues by a preponderance of the evidence standard): Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, Inc., 546 F.3d 467, 476 (2d Cir. 2010); Messner v. Northshore University HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012).[1] Other Circuits, however, namely the First, Sixth, and Ninth, have refused to adopt the preponderance standard and have relied on the failure of Wal-Mart to expressly to adopt such a standard to justify their refusal. Thus, last year, in Gooch v. Life Investors Ins. Co. of Am. 672 F.3d 402, 418 (6th Cir. 2012), the Sixth Circuit expressly declined to adopt the preponderance standard, explained that it instead used a “rigorous analysis” standard with regard to Rule 23’s requirements, and added: “We see no reason to superimpose a more specific standard than the Supreme Court . . ” Id. at 418.
In those Circuits endorsing the preponderance standard, the standard’s principal effect is to “frontload” issues (such as damage theories or market efficiency) that once would have only been contested at trial, shifting them up front to the class certification stage. This frontloading benefits defendants who were traditionally reluctant to go to trial in a large class action and so often lost the ability to litigate these issues effectively. For example, complex defenses regarding damages may be over the heads of a typical jury (and may not be sufficiently clear- cut to merit summary judgment), but now defendants may be able to contest these issues at class certification and insist that plaintiffs bear the burden of proof. If this is not yet clearly the law, as discussed below, Comcast could make it so.
II. Will a Daubert Analysis Be Required at Class Certification?
The stage is also set for a battle of experts at class certification. Even Circuits that have not yet endorsed the preponderance standard have required that challenges to a critical expert’s competence be resolved at class certification and have granted appeals under Rule 23(f) to do so. See American Honda Motor Co. v. Allen, 600 F.3d 813 (7th Cir. 2010). Comcast may present the occasion on which the Supreme Court finds that Daubert v. Merrell Dow Pharmaceuticals, Inc. applies to the class certification stage and requires the district court to resolve any challenge to expert testimony relied upon to establish a necessary finding at that stage.[2] The Court may have provided a glimpse into its position on this issue in a passing comment in W...
