DEFEATING CERTIFICATION OF A CLASS
Class certification is most often defeated where there is no “community of interest”, and most often for failure of commonality, or “predominance” grounds, rather than on the grounds of typicality, adequacy, ascertainability, and numerosity.
The ‘community of interest’ requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.
In opposing class certification defense has to show plaintiff would not be able to establish liability on the merits, i.e., there is no substance to the allegations complained of. Thus there is no commonality or predominance of class issues. There may be individualized issues but the common issues do not predominate.
Following is a synopsis of California law as it pertains to class certification:
In 2011, the United States Supreme Court raised the bar for plaintiffs seeking class certification by requiring lower courts to conduct a “rigorous analysis” to determine whether the prerequisites for certification are met. Wal-Mart, 131 S. Ct. at 2551 (reversing the grant of class certification due to a lack of commonality under Fed. R. Civ. P. 23(a)(2)). This “rigorous analysis,” the Court explained, often will “entail some overlap with the merits of the plaintiff’s underlying claim.” Id. In the words of the Court, a merits-entwined inquiry for purposes of class certification “cannot be helped.” Id. at 2551-52 (collecting cases).
Two years later, the Supreme Court doubled-down on its “rigorous analysis” requirement for class certification, applying the teachings of Wal-Mart to prospective Rule 23(b)(3) classes as well. See Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013) (reversing the grant of class certification due to a lack of predominance under Fed. R. Civ. P. 23(b)(3)). In Comcast, the Court criticized the lower court’s “refus[al] to entertain arguments against respondents’ damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination.” Id. at 1432-33. Rather, the Court’s precedents “flatly” require a determination that Rule 23 is satisfied, “even when that requires inquiry into the merits of the claim.” Id. at 1433.
The third installment in the Supreme Court’s class-action trilogy came in 2014 in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014). There, the Supreme Court opened the door even further to merits-based defenses at the class-certification stage—this time in the context of securities class actions. In Halliburton, the Court held that securities defendants can rebut the presumption of reliance under a fraud-on-the-market theory not only during the merits phase but also during class certification. Id. at 2414-15. Securities defendants, moreover, can rebut this presumption through the use of direct and indirect evidence alike. Id. at 2417.
The Wal-Mart/Comcast/Halliburton triumvirate marked big wins for class-action defendants, enabling them to raise merits-based defenses that might otherwise never be presented to a court. That is so because many class cases are settled following certification, given the high stakes of merit-stage proceedings. Now, those merits issues are ripe for consideration at the class stage, to the extent they inform the certification analysis.
Other courts have also followed these decisions discussed above. To the extent the propriety of certification depends upon disputed threshold legal or factual questions, a court may, and indeed must, resolve them”); Bartold v. Glendale Fed. Bank, 81 Cal. App. 4th 816, 829 (2000) (“when the merits of the claim are enmeshed with class action requirements, the trial court must consider evidence bearing on the factual elements necessary to determine whether to certify the class”). Wal-mart Stores, Inc. v. Dukes , 131 S. Ct. 2541, 2551-52 (2011) (citing Gen. Telephone Co. of S.W. v. Falcon, 457 U.S. 147, 102 S. Ct. 2364, 72 L. Ed. 2d 740 (1982)); see also Ellis v. Costco Wholesale Corp., 657 F.3d 970, 984 (9th Cir. 2011) (holding the district court erred by failing to conduct a “rigorous analysis” of the merits to determine whether the plaintiffs had established commonality under Rule 23); In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 318 (3d Cir. 2008) (class certification requires “thorough examination” of factual and legal allegations; “rigorous analysis may include a preliminary inquiry into the merits” and consideration of “the substantive elements of the plaintiffs’ case in chief).
To be fair however, many courts in California are reluctant to quickly dismiss a class certification effort. The abuse of class action lawsuits however, has caused many California courts to direct more attention to the actual facts underlying Plaintiffs’ claims in a class action, to determine whether Plaintiff can produce any substantive claim, prior to a lengthy and costly class action lawsuit.