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Should courts front-load the damages inquiry in products liability class actions?

Should courts front-load the damages inquiry in products liability class actions?

A look at products liability transactions in the wake of the Supreme Court’s 2013 Comcast Corp. v. Behrend decision

In this series, we have previously written about the Supreme Court’s 2013 decision in Comcast Corp. v. Behrend, in which the Court held that plaintiffs seeking class certification must show that the damages sought are the result of the class-wide injury alleged in the suit. In Comcast, plaintiffs submitted an expert report on damages that assumed the validity of four separate theories of antitrust liability, but only one of those theories was ultimately accepted by the district court. Because plaintiffs’ damages model did not specify the damages attributable solely to the surviving liability theory, the Supreme Court ruled that plaintiffs “cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3),” and the Court held that class certification was therefore improper.

Some commentators and courts have read the Comcast decision very broadly to mean that class certification in Rule 23(b)(3) cases is only appropriate if damages can be calculated on a class-wide basis. Other authorities have read Comcast more narrowly as standing for the common sense proposition that if a plaintiff submits a class-wide damages model in a purported class action, that model must track the same theory of liability that provided the basis for class certification. The latter interpretation could, of course, leave open the possibility of certifying a liability-only class and permitting individualized damages calculations to be made outside the class action mechanism where appropriate.

Last month, the Supreme Court denied certiorari in two products liability lawsuits — Whirlpool Corp. v. Glazer (6th Cir.) and Butler v. Sears Roebuck & Co. (7th Cir.) — that directly posed the question of whether cases requiring individual damages inquiries could proceed as class actions after Comcast. Both courts of appeals had adopted a narrow reading of the Supreme Court’s decision and answered the question in the affirmative.

Whirlpool and Butler involved front-loading washing machines. The plaintiffs claimed that design defects rendered the machines conducive to the development of mold and, in the case of Butler, that the machines had a design defect that caused them to stop at inopportune times. Only in a limited number of the machines did mold actually accumulate. Nevertheless, the plaintiffs asked the district courts to certify classes of purchasers of the washing machines regardless of whether the machine purchased by any particular member of the class developed mold.

In Whirlpool, the district court certified a class, and the 6th Circuit affirmed that decision. In Butler, the district court denied the class certification motion on the mold claim, but the 7th Circuit reversed the denial of class certification (both the district court and the 7th Circuit approved class certification with respect to second claim in that case). Thus, both the 6th and 7th Circuits ruled that the cases should proceed as class actions.

In both cases, the Supreme Court vacated the circuit court judgments granting class certification and remanded the cases, asking the 6th and 7th Circuits to reconsider their decisions in light of Comcast.

And both the 6th and 7th Circuits proceeded to issue new opinions that essentially reaffirmed their original holdings and approved class certification. The 7th Circuit took Comcast to mean that “a damages suit cannot be certified to proceed as a class action unless the damages sought are the result of the class-wide injury that the suit alleges” (emphasis in original) — and found that a class-wide injury had been alleged, and that variations in damages among class members could be handled with individual damages hearings after a determination of liability. The 6th Circuit took Comcast to “reject certification of a liability and damages class because plaintiffs failed to establish that damages could be measured on a classwide basis,” but noted that the district court in Whirlpool had certified a class only as to liability, while reserving damages issues for individual determination — and opined that where liability and damages are bifurcated, Comcast “has limited application.”

In the aftermath of the latest decisions from the 6th and 7th Circuits, Whirlpool and Sears again filed petitions with the Supreme Court seeking writs of certiorari. By denying certiorari in both cases, the Supreme Court has now declined to address whether the revised decisions in Whirlpool and Butler are in fact consistent with Comcast. (On the same day, the Supreme Court also denied certiorari in a third case involving front-loading washing machines with an alleged propensity to develop mold: Cobb v. BSH Home Appliances Corp., in which the 9th Circuit had summarily denied leave to appeal from the district court’s granting of class certification.) As is typical, the Supreme Court did not explain its denials of certiorari in these three cases.

In their unsuccessful petitions for certiorari, the defendants in both Whirlpool and Butler noted a conflict among courts of appeals as to whether a class should be certified when only some of the class members were injured by the alleged defect in the product. For example, in 2012 in Walewski v. Zenimax Media, Inc., the 11th Circuit affirmed the district court’s denial of class certification where the class would have included all persons who purchased a particular videogame regardless of whether a particular purchaser experienced the alleged animation defect in the game. Similarly, in 2007 in Cole v. Gen. Motors Corp., the 5th Circuit reversed the district court’s certification of a class where “[t]he vast majority of the members of th[e] class never experienced any manifestation of the alleged defect” in the automobiles that they purchased. The holdings of the 6th and 7th Circuits in Whirlpool and Butler would seem to be in tension with these cases, although the 7th Circuit’s suggestion in Butler that the district court use subclasses to handle differences among the various models of washing machine arguably reduces this tension and addresses the issues of typicality and adequacy of representation that are lurking in the 5th and 11th Circuit decisions.

The ultimate meaning of Comcast as applied to products class actions remains unresolved, and the Supreme Court may feel compelled to address it eventually. While some members of the plaintiffs’ bar have viewed the Supreme Court’s denial of certiorari in Whirlpool and Butler as tacit approval of the 6th and 7th Circuit decisions, it is always difficult to divine the reasons that led the Court to decide not to review particular cases. It is possible that the Supreme Court is simply waiting for more circuit courts to weigh in on the meaning of Comcast before issuing a clarifying decision. Lawyers on both sides of class action litigation will have to wait as well.

Contributing Author

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Lawrence T. Gresser

Lawrence T. Gresser is a co-founder and the managing partner of Cohen & Gresser LLP and a member of the firm’s Litigation and Arbitration practice...

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Contributing Author

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Harvey B. Silikovitz

Harvey Silikovitz is an associate in Cohen & Gresser’s Litigation and Arbitration practice group.

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