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Archive for October, 2014

Whirlpool Corporation made headlines yesterday when a Ohio federal court jury issued a verdict finding that the manufacturer’s washers did not have a defect that caused them to develop mold.  The verdict comes in the first of the “moldy washer” cases to reach a trial, following the Sixth Circuit Court of Appeals’ decision in 2013 that the case should be certified as a class action despite the inability to resolve the question of damages on a class wide basis.  Along with the Seventh Circuit’s decision in Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030 (7th Cir., Aug. 22, 2013), the Sixth Circuit’s decision in  In re Whirlpool Corp. Front‐Loading Washer Products Liability Litigation, No. 10-4188 (6th Cir. July 18, 2013) have come to epitomize the concept of “issue certification,” where a class is certified for the purpose of resolving some, but not all, of the issues in the a case.  Both the Sixth and Seventh Circuits held that classes should be certified to decide the question whether the washers had a defect, despite strong objection from the defendants, who presented evidence showing that a vast majority of washing machine purchasers had never complained about any mold problems.  Last year, the Supreme Court declined certiorari review in both cases.

The Whirlpool jury’s decision that the washers were not, in fact, defective is seemingly a huge win for the defense bar, but the verdict also provides fodder for courts to justify granting class certification on isolated issues in other cases where it is clear that individual damages trials would be necessary.  As Judge Posner rationalized in reaffirming the original decision in Butler following remand by the Supreme Court to reconsider in light of the Court’s Comcast decision:

Sears argued that most members of the plaintiff class had not experienced any mold problem. But if so, we pointed out, that was an argument not for refusing to certify the class but for certifying it and then entering a judgment that would largely exonerate Sears—a course it should welcome, as all class members who did not opt out of the class action would be bound by the judgment.

Butler, slip op. at 4.  Certainly, that is the scenario that has played out for Whirlpool, at least as to a class of Ohio purchasers (with more trials of other state-wide class claims to come).

But at what cost?  Before the litigation sees any final resolution, Whirlpool will have paid its legion of outside attorneys to defend it in MDL proceedings, motions to dismiss, class certification discovery,  class certification proceedings, two trips to the Seventh Circuit, two trips to the Supreme Court, trial preparation, trial, post-trial motions, and inevitably more appeals, all to achieve “exoneration” in the face of allegations that a small number of their customers experienced mold in their washing machines.  The plaintiffs’ attorneys will have spent a similar amount of time and efforts on their side of all of these proceedings.  And, with the plaintiffs’ attorneys vowing to press ahead with more statewide class trials, the parties are still no closer to having any clear process for resolving the dispute on a global basis.  It doesn’t take a law and economics expert to spot the inefficiencies in this process.

Although the Whirlpool verdict arguably illustrates Judge Posner’s point that the defendant could very well win on the class issue and bind the entire class, that is small consolation for other defendants facing the prospect of expensive class trial proceedings for the purpose of giving a shot at redress to a tiny fraction of its customers who may claim some small injury from a product defect, data breach, misleading label, or any other general business practice.  As much as it serves to “largely exonerate” Whirlpool, the jury’s rejection of the claimed defect calls into question the wisdom of allowing the product defect issue go forward on a class wide basis in the first place rather than requiring the individual claimants to press forward with their claims individually.

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Anyone still checking this site will have noticed a complete lack of new content lately, which is mostly the result of pure laziness on my part but partially due to the demands of several other writing projects I’ve been working on.  I’m pleased to announce that one of these articles it out, and the folks at Practical Law the Journal have graciously given permission for me to post a reprint here.  Click the following link to view the article, entitled Key Issues in Data Breach Litigation, which is featured in the October 2014 issue.  Please be sure to visit the Practical Law website to learn how to subscribe to more great content on timely legal topics.

Also, speaking of data privacy litigation, I’ll be part of a panel presenting on the topic at the ABA Institute on Class Actions next week in Chicago.  It’s not too late to register.

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