To what extent must a court vet an expert witness under the Daubert standard prior to certification of a class action? The question arises regularly in federal class action litigation. But until last year, no federal appeals court had answered it.
That changed in April 2010, when two circuits, within weeks of each other, came down on opposite sides of the question, with one requiring a full Daubert review and one not. Now, thanks to dictum from the Supreme Court in June and a new opinion this month from the 8th U.S. Circuit Court of Appeals, the correct answer remains elusive.
The issue comes up when expert evidence is needed to establish the factual basis for allowing a case to proceed as a class action. In such a preliminary yet crucial stage, should the court conduct a full Daubert review or apply some less-rigorous standard?
On April 7, 2010, the 7th Circuit became the first federal appeals court to provide a definitive answer. In American Honda Motor Company Inc. v. Allen, 600 F.3d 813 (7th Cir. 2010), the court ruled that a full Daubert review is required if the expert’s evidence is critical to class certification. “The district court must perform a full Daubert analysis before certifying the class if the situation warrants,” the 7th Circuit said.
Less than a month later, on April 26, 2010, the 9th Circuit came to the opposite conclusion. In its en banc opinion in Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, the court held that a full Daubert review is not required. “At the class certification stage, it is enough that [the expert] presented scientifically reliable evidence tending to show that a common question of fact … exists with respect to all members of the class.”
When the Supreme Court granted review of the Wal-Mart case for its October 2010 term, many observers believed the court would put the question to rest. Unfortunately, in its decision issued June 20, Wal-Mart Stores Inc. v. Dukes, the court stepped gingerly around the issue, touching on it but not deciding it.
Even so, the five-justice majority dropped a nugget of dictum that suggested how they would rule if they were to decide the issue. “The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings,” Justice Antonin Scalia wrote. “We doubt that is so.”
8th Circuit Can’t Take A Hint?
Against this conflicted legal backdrop comes the latest opinion to confront the issue. In a July 6, 2011, 8th Circuit case, Cox v. Zurn Pex Inc., plaintiffs sought class certification of a products-liability action alleging that certain brass plumbing fittings were inherently defective.
In support of class certification, plaintiffs presented evidence from two experts, a metallurgical engineer and a statistician. The parties disagreed over whether Daubert should apply. The plaintiffs argued that the expert testimony should be excluded only if it was “so flawed it cannot provide any information as to whether the requisites of class certification have been met.” The defendant asserted that the court should conduct a full Daubert review.
The district court judge took what the 8th Circuit described as a “middle course” between the parties’ positions. Rather than conduct a full Daubert inquiry, the court conducted a more-focused Daubert inquiry limited to whether the experts’ opinions should be considered in deciding the issues related to class certification. Based on this, the court allowed the experts’ testimony and certified the class action.
On appeal, the 8th Circuit found that the trial judge was correct not to conduct a full Daubert review. Class certification, the court reasoned, “is inherently tentative.”
“The main purpose of Daubert exclusion is to protect juries from being swayed by dubious scientific testimony,” the court said. “That interest is not implicated at the class certification stage where the judge is the decision maker.”
All that is required at the certification stage is that the court scrutinize the expert testimony “in light of the criteria for class certification and the current state of the evidence,” the court held.
The opinion provoked a blistering dissent from Circuit Judge Raymond W. Gruender. Justice Scalia’s dictum in Wal-Mart sent a clear signal that a full Daubert review is required prior to class certification, Judge Gruender argued. The 7th Circuit got it right in its American Honda decision and the 8th Circuit should have followed its lead, he asserted.
District courts should “conduct a full Daubert analysis before certifying a class whenever an expert’s opinion is central to class certification and the reliability of that opinion is challenged,” Judge Gruender said.
One other federal appeals court, the 11th Circuit, recently weighed in on this issue, siding with the 7th Circuit and requiring a full Daubert hearing. However, the court designated that case, Sher v. Raytheon Co., decided March 9, as unpublished and non-precedential.
So the scorecard stacks up like this: The 7th and 9th Circuits are at odds, with the 7th Circuit requiring a full Daubert hearing and the 9th allowing something less. The 11th Circuit sides with the 7th, but in a decision that is not binding as precedent. The Supreme Court hints that the 7th Circuit got it right, but even in the face of that supreme hint, the 8th Circuit comes down somewhere in the middle.
That leaves many attorneys with no certain answer to a key legal question. If the circuits continue to split, it will be up to the Supreme Court to at some point provide the final answer.
Tell us: Do you believe that a full Daubert hearing is required at the class certification stage?