Eleventh Circuit's Opinion Increases the Burden on Those Seeking Class Certification
Brown is a "defense favorable" opinion that should be heavily relied upon when challenging class actions.
The Eleventh Circuit Court of Appeals recent opinion in Brown v. Electrolux Home Products, 2016 WL 1085517 (11th Cir. Mar. 21, 2016), just elevated the bar for parties seeking class action certification in the Eleventh Circuit. In Brown, the Court reversed a district court’s order granting class certification for violations of California and Texas consumer protection acts and breach of warranty claims.
fakeFCKRemoveIn doing so, the Court held:
- the district court articulated the incorrect standard for adjudicating a motion for class certification;
- the "causation" element of consumer protection claims required individual, not common, proof;
- the district court could not evaluate predominance for the breach of warranty claims without first answering preliminary questions of state law. The Court vacated the class certification for the consumer claims, and remanded the warranty claims back to the district court to resolve the preliminary questions of state law.
The Court’s opinion will have far-reaching consequences as it effectively overrules a large body of federal case law that favors plaintiffs and class certification by eliminating from the class-certification analysis the principal that plaintiffs’ allegations in a complaint are accepted as true and doubts are resolved in favor of class certification. Further, the ruling requires a much stricter application of existing prerequisites in Federal Rule of Civil Procedure 23.
The District Court Misstated the Standard for Evaluation of a Motion for Class Certification.
The Eleventh Circuit held that the district court relied on the incorrect standard for evaluating class certification. In reversing the district court, the Eleventh Circuit identified two misstatements of law. First, the district court stated that doubts related to class certification are resolved "in favor of the certifying class." Second, the district court stated all allegations in the complaint are "accepted as true" and that the Court "draws all inferences and presents all evidence in the light most favorable to the Plaintiffs."
Regarding the first misstatement, the Eleventh Circuit, citing to recent Supreme Court of the United States case law, held that "all else being equal, the presumption is against class certification because class actions are an exception to our constitutional tradition of individual litigation." As to the second misstatement, the Eleventh Circuit stressed that plaintiffs have the burden of proof, not pleading and must affirmatively demonstrate compliance with Fed. R. Civ. P. 23. Although a court cannot evaluate the merits of a claim, where questions of law or fact relevant to Fed. R. Civ. P. 23 exist, the court has a duty to answer those questions.
The Eleventh Circuit did not conduct a harmless error analysis of the district court’s misstatements because the Court was "going to remand anyway." This may cause some readers to overlook this portion of the opinion; however, this holding may have the most far-reaching consequences of all of the opinion because the standards articulated by the Court are contrary to standards utilized by federal courts throughout the country.
The District Court Erred in Finding Plaintiffs Could Prove Causation on a Class wide Basis for the Violations of California and Texas Consumer Protection Acts.
The Eleventh Circuit held that the district court abused its discretion in finding that Plaintiffs’ consumer protection claims satisfied the predominance requirement of Fed. R. Civ. Pro. 23(b)(3). The district court held that the consumer protection claims had common questions of law and fact and were, therefore, susceptible to class-wide proof. The Eleventh Circuit, however, reversed finding that claims were inappropriate for class certification because the California class was not exposed to a uniform misrepresentation and the Texas class needed to prove actual reliance on misrepresentations. As a result, the Eleventh Circuit held both classes could not prove causation on a class-wide basis and vacated the district court’s order granting class certification. In doing so, the Eleventh Circuit emphasized the district court’s obligation to evaluate the elements of a claim and predict how plaintiffs will prove their claims at trial.
The District Court’s Certification of the Breach of Warranty Claims was Premature Because the District Court Failed to Resolve Preliminary Questions of State Law Related to Predominance.
Lastly, the Eleventh Circuit held that the lower court erred in certifying the breach of warranty claims because the district court failed to first resolve preliminary questions of state law bearing on the predominance requirement of Fed. R. Civ. Pro. 23(b)(3). Specifically, the district court failed to determine whether California and Texas law require pre-suit notice, an opportunity to cure, and manifestation of the defect. The district court recognized these questions of state law as "common issues to the class." However, the district court’s analysis fell short when it failed to determine whether these questions would be answered by individual or common proof. Notably, the Eleventh Circuit stated it expressed no view on the answers to the preliminary questions of state law and whether the answers to those questions would defeat predominance, but stated the district court’s analysis of Fed. R. Civ. Pro. 23(b)(3) required answers to these questions.
In practice, the Eleventh Circuit’s opinion in Brown increases the burden on those seeking class certification three ways. First, the Court has eliminated any advantage previously afforded to Plaintiffs alleging class certification and articulated a stricter standard. Second, Brown mandated district courts conduct a rigorous analysis of the elements of a claim and determine whether those elements may be proven by individual or common proof. Although the "rigorous analysis" requirement existed prior to Brown, courts within the Eleventh Circuit will without a doubt be taking a much closer look at claims being submitted for class certification. Lastly, Brown requires district courts to answer all preliminary questions of state law relevant to the predominance requirement of Federal Rule of Civil Procedure 23(b) prior to approving class certification.