Last week, after the U.S. Supreme Court issued its deeply divided 5-to-4 ruling in Comcast v. Behrend, the antitrust class action bar breathed a sigh of relief. Lawyers had been worried the court would rule broadly that in order to be certified, classes must show that they are “susceptible to awarding damages on a classwide basis,” which was the question the Supreme Court had asked Comcast counsel to address. The majority, in an opinion written by Justice Antonin Scalia, seemed to answer the somewhat different question of whether trial and appellate courts may delve into the merits of the plaintiffs’ damages theory before certifying the class. Antitrust plaintiffs’ lawyers told my Reuters colleague Andrew Longstreth that the Comcast decision would have little impact on class certification because they could tailor damages allegations to match their theories of liability.
But yesterday the Supreme Court signaled that, at the very least, class action lawyers – and not just those in the antitrust bar – will have to address the Comcast opinion if they’re going to win certification rulings. In two different cases, one involving consumer product defect claims against Whirlpool, the other over alleged wage-and-hour violations by Charter One bank, the justices granted certioriari, vacated class certification rulings by the federal circuits and sent the cases back to the appellate courts for reconsideration in light of Comcast. The dissent in Comcast, written jointly by Justices Ruth Ginsburg and Stephen Breyer, said that the majority’s holding “should not be read to require, as a prerequisite to certification, that damages attributable to a classwide injury be measurable ‘on a class-wide basis,’ (since) recognition that individual damages calculations do not preclude class certification under Rule 23(b)(3) is well nigh universal.” Nevertheless, it’s now going to be up to the federal circuits to confirm the Comcast dissenters’ reading of the majority opinion.
The Whirlpool case, which comes out of the 6th Circuit Court of Appeals, is precisely the sort of class action the dissent was concerned about. The trial court, and then the appeals court, certified a statewide class of about 200,000 Ohio consumers who purchased front-loading Whirlpool washing machines that are allegedly prone to develop mold or emit a moldy smell. (The litigation is part of a much broader consumer offensive against makers and sellers of supposedly defective washing machines, as Whirlpool discusses in its petition requesting Supreme Court review.) The class contains some members who claim that their machines developed mold or a moldy smell and others whose machines are still fine, so obviously there are disparities in the damages class members may ultimately be entitled to. The trial judge dealt with that issue by certifying the class only for the purpose of determining whether Whirlpool’s machines are defective. Damages, he said, would be determined individually after any finding of Whirlpool’s classwide liability. The class affirmed by the 6th Circuit, in other words, is a liability-only class, though the appeals court said that all Whirlpool buyers could show injury, and thus standing to sue, if they paid a premium price for a defect-prone product.
Whirlpool’s lawyers at Mayer Brown and Wheeler Trigg O’Donnell argued in the company’s cert petition that the class was wrongly certified since plaintiffs who have not suffered any injury do not have standing. And in a supplemental brief submitted after the Supreme Court’s ruling in Comcast, the company said that the 6th Circuit, like the 3rd Circuit in the Comcast case, erred because it did not require plaintiffs to show that common evidence would resolve questions of injury and damages. Whirlpool urged the justices to grant review in order to extend Comcast’s reasoning on damages to their theory of standing.
Class counsel at Lieff Cabraser Heimann & Bernstein, along with Supreme Court counsel of record Samuel Issacharoff of New York University Law School, countered in their opposition brief that Whirlpool washing machine buyers were injured even if their machines didn’t develop mold because they didn’t get what they paid for, a routine interpretation of standing, according to the class. Nor is there anything unusual, according to the brief, in the certification of a liability class that includes members with different damages. The class’s supplemental brief on Comcast argued that damages calculations weren’t part of the record at the 6th Circuit, though class counsel also said that the 6th Circuit plainly believes all class members have been damaged if they’ve purchased a defective washing machine.