The California Supreme Court issued its long-awaited decision in Duran v. U.S. Bank National Association yesterday, addressing the use of statistical sampling as a way of evaluating aggregate liability and damages in a class action. Although Duran is a wage and hour case, its analysis is pertinent to the use of statistical evidence in a variety of other class action contexts.
In the opening line of his majority opinion, Justice Corrigan referred to Duran “an exceedingly rare beast” because it was a wage and hour class action that had proceeded all the way through trial to verdict. In the trial court, the plaintiff had presented testimony from statistician Richard Drogin, who had also notably served as an expert for the plaintiffs in Walmart Stores Inc. v. Dukes. Drogin proposed a random sampling analysis that purported to estimate the percentage of the defendant’s employees that had been misclassified for purposes of entitlement to overtime pay. The trial court did not rely on Drogin’s analysis but instead came up with its own sampling approach, which involved pulling the names of 20 class members, hearing testimony from these witnesses along with the named plaintiffs, and then extrapolating the court’s factual findings across the entire class in order to determine the defendant’s liability.
The supreme court affirmed a decision by the Court of Appeal holding that this sampling approach violated due process and was a manifest abuse of discretion. Generally, there were two independent reasons for the supreme court’s conclusion: 1) the use of random sampling deprived the defendant of the opportunity to present individualized evidence supporting its defenses to the claims; and 2) the sampling method adopted by the court was inherently flawed and unreliable.
Without categorically rejecting the use of statistics as a tool in managing class action litigation, the supreme court identified numerous conceptual limitations on its use. First, “[s]tatistical methods cannot entirely substitute for common proof . . . . There must be some glue that binds class members together apart from statistical evidence.” So, while statistics may serve as circumstantial evidence to support a common issue–such as the existence of centralized policy or practice, they may not be used as a substitute for establishing commonality or for avoiding individualized determination of individual issues–such as by generalizing effects of a given policy or practice on large groups of claimants where the effects vary in actuality.
Second, a trial court cannot utilize statistical evidence in a way that prevents the individual adjudication of individual defenses. Although courts are encouraged to develop innovative procedures in managing individual issues, a court cannot ignore individual issues altogether or prevent them from being decided on an individual basis.
Third, if statistical evidence is to be used as part of a litigation plan for managing complex class action, the methods to be employed should be presented, evaluated, and scrutinized at the class certification stage. The court should not simply assume that statistical methods will permit class treatment and certify the class based on this hypothetical possibility.
Fourth, the court must ensure that the statistical method to be employed has to be reliable, based on statistically valid data, and not prone to a high margin of error. In other words, junk science or ad hoc, rough justice are not enough.
The Duran opinion is worthy of careful study for anyone considering the use of statistics in class certification proceedings, both in the wage and hour context and in class actions more generally. It also provides a colorful illustration of the due process and manageability problems posed by the “trial by formula” approach to class actions that the United States Supreme Court criticized in Dukes.
Posted in Class Action Decisions, Class Action Trends | Tagged california, class action, class action trial, class certification, corrigan, dukes, individual issues, individualize, predominance, sampling, scalia, statistical evidence, statistics, Supreme Court, trial by formula, wage and hour, wal-mart | Leave a Comment »
Readers, don’t miss this exciting upcoming regional CLE program in San Francisco. It’s a great opportunity to network with judges, academics, in-house lawyers and private practitioners who share a passion for class actions and mass tort litigation. See below for a link to the registration page. Hope to see you there!
CLICK HERE FOR MORE INFORMATION AND TO REGISTER
Who’s in Charge Here?: The Role of Lawyers, Clients, Insurers, and Judges in Class Actions and Mass Tort Litigation
Presented by the Class Actions and Derivatives Suits, Consumer Litigation, and Mass Torts Committees
Date and Time: Thursday, June 19, 2014, 12:00pm – 7:00pm
Location: University of San Francisco Law School, San Francisco, CA
The Gulf Oil Spill, the 9-11 terrorist attacks, massive product recalls and credit card data breaches—these and other large-scale conflicts generate correspondingly massive litigation, requiring courts, parties, attorneys, and insurers to adapt to increasingly complex challenges. For this half-day CLE event, we have assembled a distinguished group of judges, academics, mediators, and counsel to discuss some of the most pressing issues facing the various stakeholders.
Our all-star panels will explore ethical and other standards for selecting and evaluating named class representatives; coverage and other current issues surrounding consumer data breach class actions; the balancing of individual plaintiffs’ interests in settlement of mass tort cases; and cutting-edge case management techniques gleaned for among the most tragic mass disasters of our time—the 9-11 attacks and the Gulf Oil Spill.
We are pleased to feature the Hon. Alvin Hellerstein, U.S. District Court for the S.D. of New York—who presided over the 9-11 cases; the Hon. Jon Tigar of the U.S. District Court for the N.D. of California; Tara Kelly, inside counsel at British Petroleum (Houston); Prof. Deborah Hensler of Stanford Law School; Assoc. Dean Joshua Davis of the University of San Francisco School of Law; and Jocelyn Larkin, Executive Director of the Impact Fund (Berkley), among our distinguished panelists. Lunch will be provided, and the program will be followed by a sponsored cocktail hour, providing ample opportunities for networking. Come join us for an enlightening afternoon.
- Whose Class Is It Anyway? –The Policy, Practice, and Ethics Behind the Search for Named Plaintiffs (Ethics CLE Credit Applied for)
- Recent Developments in Data Privacy Class Actions and Insurance Coverage
- It’s The Trees Not the Forest – Considering Individual Interests in Mass Torts Settlements
- Judicial Quasi-Class Actions – Managing MDL and mass tort litigation through judicial control over the appointment of lead counsel, attorneys’ fees, and cost-shifting
- Hon Alvin K. Hellerstein, U.S. District Court of the Southern District of New York
- Hon Jon S. Tigar, U.S. District Court for the Northern District of California
- Professor Joshua Davis, University of San Francisco Law School
- Professor Deborah Hensler, Stanford University Law School
- Tara Kelly, British Petroleum, Houston, Texas
- Thomas Kang, ACE North American Professional Risk, Los Angeles
- Catherine Yanni, JAMS, San Francisco
- Jocelyn Larkin, Impact Fund, San Francisco
- Sheila Birnbaum, Quinn Emanuel Urquhart & Sullivan, New York, New York
- Paul Karlsgodt, BakerHostetler, Denver, Colorado (Program Co-Chair)
- Linda D. Kornfeld, Kasowitz, Benson, Torres & Friedman LLP, Los Angeles
- Karen Menzies, Robinson Calcagnie Robinson Shapiro Davis, Newport Beach
- Andrew McGuinness, Ann Arbor, Michigan (Program Co-Chair)
- Rudy Perrino, Walsworth Franklin Bevins & McCall, Los Angeles
- Rosemarie Ring, Munger, Tolles & Olson LLP, San Francisco
- Christina Terplan, Clyde & Co., San Francisco
- Timothy Tomasik, Tomasik Kotin Kasserman, Chicago, Illinois
- Donna L. Wilson, Manatt, Phelps & Phillips, Los Angeles
Posted in CLE Programs | Tagged 9-11, 9/11, bp, class action, ethics, gulf oil spill, judicial quasi-class action, privacy | Leave a Comment »
After years of debate, France has finally passed its first “class action” law. Act No. 2014-344 of 17 March 2014 (relatif à la Consommation) went into effect on March 18. Chapter One of the new law introduces a new collective action procedure to adjudicate claims arising out of anti-competitive behavior and certain other consumer protection claims. Like the group action laws of many other civil law countries in Europe, the new procedure is very different from consumer class actions as they are known in the United States and other common law countries. The law creates a simplified opt-in collective action procedure that can only be enforced by an approved consumer association, not by individual litigants. However, it is a significant development for a jurisdiction that has long resisted implementing collective action procedures of any kind.
Here is a link to the google translation of the Act in English.
Thanks to friend of ClassActionBlawg Larissa Clare Pochmann da Silva for tipping us off to this new development.
For a more detailed summary of the various aspects of the new law, see this Lexology article authored by Jérôme Philippe, Maria Trabucchi, Stephane Benouville, Dimitri Lecat and Alexandra Szekely of Freshfields Bruckhaus Deringer LLP.
Posted in Class Action News, class action reform, International Class Action Law | Tagged action du groupe, class action, class action reform, collective action, français, france, french, french class action, french collective action, loi | Leave a Comment »
I’m pleased to announce that I’ll be co-chairing an ABA Regional CLE conference on June 19 in San Francisco. The program is being organized jointly by the Class Actions and Derivative Suits, Mass Torts, and Consumer Litigation Committees of the ABA’s litigation section. We’ve put together some top-notch panels on some very timely topics and we hope to see you there. See below for a program synopsis. Click here for more information and to register.
This half-day CLE event will explore selected key issues in consumer class action and mass tort litigation and the roles played by claimants, defendants, other stakeholders, and decision makers in bringing and resolving class actions and mass disputes. Our all-star panels will cover a variety of topics, all focused around this common theme, including legal ethics, data privacy, and cutting-edge case management and dispute resolution procedures. This program is a can’t-miss event for lawyers, judges, policymakers, and academics alike.
University of San Francisco Law School
2130 Fulton Street
San Francisco, CA 94117
Event Date & Time
June 19, 2014
12 p.m.–7 p.m.
Section of Litigation Members and Government Attorneys: $125
Non-Section Member: $185
Posted in CLE Programs | Tagged ABA, cads, class action, CLE program, judicial quasi-class actions, mass tort, san francisco | Leave a Comment »
Editor’s Note: One of my colleagues, bankruptcy attorney Lars Fuller, sent me the following note this afternoon about a recent Tenth Circuit decision Howard v. Ferrellgas Partners LP discussing class arbitration waivers, which he thought would be of interest to readers of this blog. Here are the insights that Lars had to offer about the decision (click the link on the case name above for a copy of the opinion):
Attached is an opinion written by 10th Circuit Judge Neil Gorsuch (easily the most entertaining writer on the 10th Circuit), and addresses an issue you likely encounter, i.e., mandatory arbitration arising out of an attempted class action. The 10th Circuit reverses the U.S. District Court (Kansas) after the district court summarily denied arbitration following over a year of discovery on the issue of whether mandatory arbitration applied pursuant to the terms of the governing contract. Judge Gorsuch is refreshingly frank in his critique of the U.S. District: “The [FAA] calls for a summary trial–not death by discovery.” He also summarizes the dispute as being plagued by “venue miseries.”
The contract analysis is very interesting, with potentially an oral contract, subsequently modified in writing, or not. Judging from the Tenth Circuit analysis, the facts would constitute a very challenging law school or bar exam question. Here’s the crux:
[C]ritical questions of fact still remain on the threshold question whether they agreed to arbitrate. We know Mr. Howard called Ferrellgas to order propane to heat his home. We know Ferrellgas agreed to sell him some. But much more than that remains unclear even now. Did the parties form a final and complete oral contract in that initial phone call governing all their propane dealings over the next few years? Or did their agreement cover only Mr. Howard’s propane tank rental and its initial fill, in this way perhaps leaving room for Ferrellgas’s later-delivered, arbitration-clause-containing form contract to govern the parties’ subsequent dealings, including the later propane purchases at issue in this case? Whether this case belongs in arbitration or litigation hinges on the answers to factual questions like these.
The subsequent analysis expands on the challenges these facts present to contract analysis. The opinion also addresses the apparently controversial “rolling theory of contract formation” (apparently “about as controversial an idea as exists today in the staid world of contract law”), along with the Byzantine choice of law arena.
Posted in Class Action Decisions, Class Arbitration Waivers | Tagged arbitration, class action, class arbitration, death by discovery, FAA, ferrellgas, howard, summary trial, tenth circuit | Leave a Comment »
Earlier today, the Supreme Court granted cert in Dart Cherokee Basin Operating Company, LLC v. Owens, No. 13-719, in which it will take up the contours of the standard for providing factual support in a notice of removal under the Class Action Fairness Act of 2005 (CAFA). Specifically, the issue presented is as follows:
Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required “short and plain statement of the grounds for removal” enough?
This is the third CAFA removal case that the Court has accepted in as many years. During the October 2012 term, the Court decided Standard Fire Ins. Co. v Knowles, 133 S. Ct. 1345 (2013), in which it held that a class representative may not avoid CAFA jurisdiction by stipulating to a recovery of damages of less than $5,000,000 on behalf of members of the proposed class. Earlier in the current term, the Court decided Mississippi ex rel. Jim Hood v. AU Optronics Corp., Case No. 12-1036 (U.S. Jan. 14, 2014), holding that a parens patriae action brought by a state attorney general on behalf of Mississippi residents was not a “mass action” subject to CAFA.
Posted in CAFA Requirements, Class Action Decisions, Class Action News, Supreme Court Decisions | Tagged au optronics, CAFA, CAFA removal, class action, Class Action Fairness Act, dart cherokee, diversity, federal jurisdiction, iqbal, knowles, owens, parens patriae, pleading standard, removal, scotus, standard fire, standard of review, Supreme Court, twombly | Leave a Comment »