Two pending cert petitions are attracting significant interest from the business community and the plaintiffs’ bar. The petitions, which seek review of class certification decisions from the 6th and 7th Circuit, are important because they call on the Court to reign in circuit courts that have appeared to depart from the seminal Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Behrend decisions.
These cases involve allegations that plaintiffs’ front-loading washing machines are susceptible to mold. But the key issue is whether a product defect case can proceed as a class action even if a majority of class member purchasers have not experienced any problem. The 6th and 7th Circuit’s decisions suggest that they can.
If the cert petitions filed last month are granted, it would mean a second appearance for Whirlpool Corp. v. Glazer (6th Cir.) and Butler v. Sears, Roebuck and Co. (7th Cir.) in the nation’s highest court. In their first round last spring, the Supreme Court vacated the appellate court opinions and remanded the cases for further consideration in light of Comcast. Now that both the 6th and 7th Circuit panels reaffirmed their class certification rulings, the Supreme Court that decided Wal-Mart and Comcast is poised for a third watershed interpretation of Rule 23. Omne trium perfectum.
The underlying complaints in Whirlpool and Butler allege that the front-loading washing machines at issue were defectively designed and do not adequately clean themselves, promoting the development of mold inside the machines impervious to household cleaning products, and producing pungent, foul odors as a result. Each case includes more than 20 models of front-loading washers sold since 2001. It is undisputed that most of the washers at issue never developed any odor problem. Defendants argued that the range of models at issue, the number of design modifications that occurred during the class period, the impact of individual laundry habits, and the inclusion of vast numbers of uninjured consumers within the class definitions, among other issues, should defeat certification under Rule 23; according to defendants, numerous liability issues would require individualized proof.
Despite these arguments, and the Wal-Mart-Comcast line of precedent suggesting that class certification should be denied in these situations, the 6th and 7th Circuit courts held that the moldy-washer cases could proceed on a class basis. For the 6th Circuit, this represented an affirmance of the lower court’s decision based on an abuse-of-discretion standard; for the 7th Circuit, it constituted a reversal of the district court’s decision that common questions of fact concerning the mold problem and its consequences did not predominate over individualized issues. The two circuit courts agreed that the basic question of whether the washers were defective in permitting mold accumulation was common to the entire class. Both courts stressed the efficiency of resolving the cases on a class-wide basis and posited that individual cases were unlikely to be brought because no single consumer’s damages would be high enough to justify an individual lawsuit. The courts deferred individualized damages issues to another day, advising that if plaintiffs were to succeed on liability, subclasses could separate class members who owned different types of washing machines or divide members between those who experienced mold problems from those who did not. The appeals courts even anticipated that some class members who had not experienced odor problems from mold could still obtain damages based on the purported latent defect.
Defendants filed petitions for certiorari in September 2012 and February 2013, and while these petitions were pending, the Supreme Court decided Comcast. In Comcast, plaintiffs attempted to litigate on behalf of a class of millions of Comcast subscribers alleging antitrust violations. The Supreme Court refused to allow the case to proceed on a class-wide basis. Narrowly interpreted, the Court’s ruling was based on a discrepancy between the damages methodology plaintiffs’ expert advanced and the liability theory on which the class was certified. But viewed through a broader lens, Comcast represented an extension of the rationale advanced in Wal-Mart, that courts must conduct a rigorous analysis under Rule 23 that includes resolution of any overlapping merits issues when determining whether certification is permissible.
Rather than granting the Whirlpool and Butler defendants’ petitions for certiorari and setting a briefing schedule for the merits of the appeals, the Supreme Court issued three-sentence GVR orders, granting the cert petitions but vacating the underlying decisions and remanding to the appeals courts for consideration in light of Comcast.
Despite the Supreme Court’s vacatur and remand with express instructions to reconsider the decisions in light of Comcast, neither court of appeals reversed its class certification ruling or underlying rationale. Indeed, both the 6th and 7th Circuit decisions went so far as to state that the defendants “should welcome” litigation of the cases as class actions because proof that most class members had not experienced mold problems would lead to a favorable liability ruling binding on all class members who did not opt out. Both the 6th and 7th Circuits concluded that Comcast had little relevance to the washer cases. The 6th Circuit stated that Comcast had only “limited application” to the litigation proceeding against Whirlpool, and the 7th Circuit explicitly “reinstated” its pre-Comcast decision in the Sears case, with Judge Posner wondering aloud: “So, how does the Supreme Court’s Comcast decision bear on the rulings . . . in our first decision?” The appellate decisions would limit the impact of Comcast to the basic requirement that plaintiffs’ damages theory correspond to the class’s certified liability theory in order for the case to proceed on a class basis.
In their cert petitions, defendants argue that the appeals courts failed to appreciate the import of Comcast for the interpretation of Rule 23(b)(3) as requiring affirmative proof of predominance. They note that the Supreme Court rejected the Comcast class because damages were not susceptible to class-wide determination, and individualized issues predominated over any common issues. Moreover, defendants allege that the circuit court decisions strayed from the standards articulated in Wal-Mart that not only common questions but common answers are necessary for certification, and class members must “have suffered the same injury.” In the washer cases, record evidence suggested that less than 1 to 5 percent of washers experienced the odor problem alleged. As a result, defendants argued, neither liability nor damages could be determined on a class-wide basis using common evidence. Injury was not experienced by every class member, and even those who experienced mold odors would have to prove causation, as there are many possible alternative causes of odor issues. Moreover, specific defenses would inject individualized issues into the case, as not all class members followed the use instructions provided with the washers, and such instructions changed over time. In summary, defendants contend that the appeals courts did not engage in the rigorous analysis of the Rule 23 factors that Supreme Court precedent mandates.
Whirlpool and Butler already have attracted a roster of high-profile amici. In their Supreme Court debut, the U.S. Chamber of Commerce, Pacific Legal Foundation, Voice of the Defense Bar, and Product Liability Advisory Council were among the groups weighing in to warn of the deluge of products litigation that would ensue if such “no injury” class actions were allowed to proceed. Earlier this month, when these four organizations filed amicus briefs again, urging the Supreme Court to grant cert., the Retail Litigation Center, Technology Association of America, and Association of Home Appliance Manufacturers, among others, joined the effort.
By any metric, the stakes are high. The certification decision in Whirlpool encompasses a 200,000-member class of Ohio washer buyers, but the cases proceeding alongside it in the multidistrict litigation collectively include more than 4 million purchasers; Butler encompasses purchasers from six different states. Beyond that, copycat class actions pending against every major washer manufacturer, implicating tens of millions of purchasers, may be directly impacted by the outcome of the Supreme Court’s decision.
But the magnitude of a Supreme Court decision in the washer cases is much greater. The 6th and 7th Circuit’s decisions on appeal address an issue of Rule 23 interpretation that is fundamental for the future of products liability litigation: whether a class action is a viable way to litigate a design defect case when only a small minority of class members have experienced the alleged defect. Whirlpool and Sears contend that upholding certification would put all manufacturers of mass-produced products in jeopardy — even if the vast majority of their products never experience a problem — and transfer windfalls to uninjured plaintiffs and their lawyers, with consumers left to pick up the tab in the form of higher prices. Class action proponents forecast that similarly apocalyptic implications would follow from a defense victory. If defendants succeed in obtaining reversal of the class certification decisions based on the difference in damages sustained by the class members, Judge Posner presaged that “[i]t would drive a stake through the heart of the class action device.” With responses to the cert petitions due December 6, Whirlpool and Butler promise to be the source of much attention in the months to come.