To what admissibility standard should expert witness testimony comport in order to certify a class?
This seemingly straightforward question has sharply divided federal courts and has never been fully addressed by the U.S. Supreme Court - until perhaps now.
On June 25, 2012, the U.S. Supreme Court granted defendants’ petition for a writ of certiorari in the case of Comcast Corp. v. Behrend.
As if sensing it was time to clear the air regarding the extent of admissibility required of expert witness testimony at the class certification stage, the Court granted certiorari to consider a narrow question which will likely have far-reaching implications in class action proceedings:
Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.”
Of particular focus will likely be whether expert testimony, which is often a necesessary part of the proceedings to establish class-wide damages in order to obtain class certification under the requirements of Federal Rule of Civil Procedure 23, will be required to comport with the requirements of admissibility set forth in Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc..
Wal-Mart Stores, Inc. – a Preview?
In the Wal-Mart Stores, Inc. v. Dukes opinion last year, the Justices focused on a different (but overlapping) aspect of class action litigation, and the Court gave a sneak preview of how it might decide the expert witness testimony issue at hand.
In commenting on the lower court, Justice Scalia observed, "The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings.”
He then carefully added, “We doubt that is so.”
Thanks in part to an August 23, 2011 decision from the 3rd Circuit U.S. Court of Appeals (notably filed just two months after Justice Scalia’s dictum in the Wal-Mart Stores, Inc. opinion) the U.S. Supreme Court now seems ready to squarely tackle the question.
The Case That Broke the Camel’s Back
Behrend v. Comcast Corp., the case which broke the camel’s back, (or perhaps more appropriately, finally prompted the Supreme Court to undertake definitive review of the question), involved an August 23, 2011 opinion issued by the 3rd Circuit regarding standards that a district court should apply in determining whether damages could be calculated on a class-wide basis for purposes of class certification under Federal Rule of Civil Procedure 23.
At issue in the appeal was the testimony of plaintiffs’ damages expert, Dr. McClave. Allowing certification of the class, the lower court concluded, and the 3rd Circuit affirmed, that Dr. McClave provided a damages model “based on a common methodology available to measure and quantify damages on a class-wide basis.”
For the class certification stage, noted the 3rd Circuit, “[W]e address only whether Plaintiffs have provided a method to measure and quantify damages on a class-wide basis. We have not reached the stage of determining on the merits whether the methodology is a just and reasonable inference or speculative.”
In finding Dr. McClave’s testimony sufficient for class certification, the appellate court curtly determined that “attacks on the merits of the methodology … have no place in the class certification inquiry.”
However, in a stinging dissent, Circuit Judge Jordan took a contrary view to the majority panel, stating that Dr. McClave's damages testimony was irrelevant and should be inadmissible at trial under the requirements of Daubert and Federal Rule of Evidence 702.
Since Dr. McClave’s testimony would be inadmissible at trial, argued the dissent, it cannot constitute common evidence of damages for purposes of certification of a class.
In other words, a court can (and impliedly should) properly exclude expert testimony at the class certification stage that fails the standards articulated in Daubert and Federal Rule of Evidence 702.
Better Late Than Never
Perhaps the Supreme Court became weary of the continued post-Wal-Mart Stores, Inc. courtroom quarrelling. Or perhaps, as noted author Robert Ambrogi wrote in a post last year, the Supreme Court decided that certain Circuit Courts, (now including the 3rd Circuit), just couldn’t take the hint gratuitously offered in the Wal-Mart Stores, Inc. opinion.
Maybe it just took a nine-year-running class action antitrust suit involving over a million putative class members and a rift among the 3rd Circuit panel of Judges to sufficiently ripen the issue.
Whatever the reason, the Supreme Court is finally ready to address the question, hopefully providing some concrete answers (although admittedly, predicting what the Justices will do is not for the faint of heart).
A Decision to Watch
It will likely take the Supreme Court months to issue its decision (it was distributed for conference no less than eight times before the Justices granted the petition for certiorari). However, the decision is one to watch – it will almost certainly affect how and to what extent expert testimony is used at the class certification stage and what standards of admissibility should apply.
The Supreme Court's decision is sure to impact plaintiff’s ability to certify class actions – which can involve thousands if not millions of potential plaintiffs and often places enormous pressure on defendants to settle.
Requiring plaintiffs to strictly adhere to admissibility requirements of Daubert and Federal Rule of Evidence 702 at the certification stage will likely be welcomed by defendants named in class actions - who are often overwhelmed by the onerous burdens and costs associated with the prospect of defending such a suit. Making plaintiffs show their hand with respect to evidence of common damages at the class certification phase can perhaps help weed out cases that ought not to have been brought in the first place.
Tell us what you think:
To what admissibility standard do you think expert witness testimony should adhere in order to certify a class?
Must expert witness testimony meet full trial admissibility requirements – satisfying Federal Rule of Evidence 702 and Daubert - in order to be used at the class certification stage?
Or should something less be required?