Defendants are (properly) accustomed to opposing class certification by attempting to show that there are many individualized issues—for example, as to causation of the alleged injuries or reliance on alleged misrepresentations—that common issues do not predominate and/or that a classwide trial would be unmanageable. The plaintiffs’ bar has responded by arguing that certain individualized issues need not be proven for all class members—in effect, redefining a cause of action to eliminate its traditional elements and thereby avoid individualized questions. But that shortcut to class certification raises serious constitutional concerns because it may violate a defendant’s due process right to present every available defense as to individual class members’ claims.
A case that illustrates the potential for these arguments is Philip Morris v. Scott. In Scott, plaintiffs sought to bring a class action on behalf of all Louisiana smokers alleging that a number of tobacco companies had defrauded class members about the addictive effects of nicotine. The class sought, and ultimately received after a trial, a judgment requiring the companies to pay more than $250 million to fund a 10-year smoking cessation program. Ordinarily, as a matter of Louisiana law, any individual who brings a fraud claim must prove that he or she “detrimentally relied on the defendant’s misrepresentations.” If that element were applied to each class member, it would be virtually impossible to certify a class because the issue of detrimental reliance would have to be addressed for each of millions of class members. But the Louisiana Court of Appeal dispensed with that requirement in Scott, instead holding “that this element need not be proved insofar as the class seeks payment into a fund that will benefit individual plaintiffs, since,” in the court’s view, “the defendants are guilty of a ‘distort[ion of] the entire body of public knowledge’ on which the ‘class as a whole’ has relied.” By assuming classwide reliance, the court of appeal not only “eliminated any need of plaintiffs to prove” but also denied any opportunity for” the defendants “to contest” at trial “that any particular plaintiff who benefits from the judgment (much less all of them) believed” the companies’ alleged “distortions and continued to smoke as a result.” The tobacco companies sought review by the U.S. Supreme Court, arguing that the lower court’s holding “violate[d] their due-process right to ‘an opportunity to present every available defense.’”
All of this is to say that defendants should consider making similar due process arguments when facing state court class actions where plaintiffs seek to paper over elements of their claims that require individualized inquiries. The requirement that a party be permitted to present all available defenses is well supported by Supreme Court precedent.
And these arguments may draw further persuasive support from cases interpreting the Rules Enabling Act, which prohibits the use of the Federal Rules of Civil Procedure, including Rule 23, to “abridge, enlarge or modify any substantive right.” Defendants can and should consider arguing that the Act’s prohibition of the alteration of substantive rights is rooted in due process concerns. As the Eleventh Circuit has explained, “[t]he Rules Enabling Act . . .—and due process—prevents the use of class actions from abridging the substantive rights of any party.”