Class-Action Defendants Get No Break in Daubert

By Robert Ambrogi Esq

Courts in recent years have struggled with determining the correct standard to apply to expert testimony pertaining to class certification. Is a full Daubert hearing required at this stage or something less? The question has divided the circuits and seemed headed for an answer from the Supreme Court until the court sidestepped the issue in its 2011 opinion, Wal-Mart Stores Inc. v. Dukes.

Now, the question gets a new spin, thanks to a recent decision of the 7th U.S. Circuit Court of Appeals, Messner v. Northshore University HealthSystem. Until now, all of the federal appellate opinions on this issue focused on the standard to be applied to experts presented by the plaintiffs in support of class-certification. In Messner, for the first time, the focus was on expert testimony presented by defendants in opposition to certification.

In the underlying antitrust action, the Illinois plaintiffs sought class-action certification to challenge the merger of Northshore University HealthSystem and Highland Park Hospital. A key issue for the plaintiffs would be to prove that the merger had an antitrust impact on them as a class, in the form of higher prices for health care.

Prior to the lower-court hearing on class certification, the plaintiffs sought to exclude the report of defendants’ expert, a private economist. Plaintiffs asserted that the expert’s economic analyses were “fundamentally defective.”

The trial judge declined to conduct a full Daubert analysis of the expert’s report, concluding that it was not necessary “at this procedural juncture.” The judge denied the motion to exclude the report, saying that the court would give it “the weight it believes it is due.”

No Need to Cut the American Honda Holding

As we have previously reported on this blog, the 7th Circuit first ruled in 2010, in American Honda Motor Company Inc. v. Allen, 600 F.3d 813, that a full Daubert review is required if the expert’s evidence is critical to class certification. Just two weeks later, in the Wal-Mart case that eventually made its way to the Supreme Court, the 9th Circuit ruled en banc that a full Daubert review is not required at the class certification stage.

In this appeal, the defendants argued to the 7th Circuit that American Honda should not apply to this case because the judge ultimately denied class certification, unlike American Honda, where certification was granted. Calling this argument “asymmetric,” the 7th Circuit rejected it.

“We did not suggest in American Honda that denials of class certification should be exempt from the strictures of Daubert and Rule 702,” the 7th Circuit panel explained. “We made clear that whenever an expert’s report or testimony is critical to a class certification decision, a district court must rule conclusively on a challenge to the expert’s qualifications or opinions before ruling on class certification, without regard to whether the district court ultimately grants or denies that motion.”

As an alternative argument, the defendants contended that American Honda should apply only to plaintiffs, and not to defendants, because only plaintiffs bear the burden of proving that they meet the requirements for class certification. Again, the 7th Circuit disagreed.

“The general point about the burden of proof is correct but has no bearing on Rule 702, which applies to plaintiffs and defendants alike, regardless of which side bears the burden of proof,” the court said. “The fact that a defendant is not required to present evidence to defeat class certification does not give the defendant license to offer irrelevant and unreliable evidence.”

In concluding its analysis of the Daubert issue, the court said: “We decline Northshore’s invitation to cut the holding of American Honda in half with a new exception for denials of class certification. The district court should have ruled definitively on plaintiffs’ Daubert motion and objections before ruling on their motion for class certification.”

The Messner opinion goes on to engage in a lengthy discussion of whether plaintiffs met the requirements of class certification. What is clear throughout that discussion is that the trial judge relied heavily on the defendants’ expert in denying class certification, despite her suggestion that she would give the expert’s report only limited weight.

In the end, the 7th Circuit disagreed with the trial judge, ruling that the plaintiffs had established sufficient facts to warrant their certification as a class. The 7th Circuit vacated the trial judge’s order and remanded the case to proceed as a class action.

Steven Messner, et al., v. Northshore University HealthSystem, No. 10-2514 (7th Cir. Jan. 13, 2012).


Robert Ambrogi Esq

We are proud to partner with an author of Bob’s caliber to provide exclusive articles for our legal clients and leading industry experts. Robert J. Ambrogi is a news media veteran and the only person ever to hold the top editorial positions at the two leading national U.S. legal newspapers, the National Law Journal and Lawyers Weekly USA. He is currently a Massachusetts lawyer who represents clients at the intersection of law, media and technology. He is also internationally known for his writing and blogging about the Internet and technology. Media and Technology Law Bob represents a range of businesses and individuals, concentrating in print and electronic media companies and the editorial, sales, marketing and technology professionals who work in them. He also counsels businesses and individuals in employment matters. Arbitration and Mediation An established professional in alternative dispute resolution, Bob has been an arbitrator since 1994, focusing on labor and employment and securities disputes. A mediator in a range of civil disputes, Bob completed the training required by Massachusetts law to protect confidentiality.

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