U.S. Supreme Court to Weigh In on Two Important Consumer Law Issues

The U.S. Supreme Court has granted certiorari in two important consumer law cases. First is Comcast v. Behrend, Case No. 11-864, which addresses a class representative’s burden to show damages on a class-wide basis when seeking class certification. Argument has been scheduled for November 5, 2012. The issue certified is as follows:

"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.”

This case will likely further define the burden faced by a plaintiff in attempting to certify a class post-Wal-Mart Stores, Inc. v. Dukes. In Behrend, defendant corporation was alleged to have engaged in “anticompetitive clustering” in violation of the Sherman Act antitrust laws. In arguing against class certification, the corporation asserted that plaintiff customers’ theory as to how individuals were injured could not be established through classwide proof. The U.S. Court of Appeals for the Third Circuit declined to determine “on the merits” whether the damages methodology offered by the customers was “a just and reasonable inference or speculative.” It further held that the corporation’s attacks on the “merits of the methodology” “have no place in the class certification inquiry.” Thus, the court held that the customers had met their burden under Fed. R. Civ. P. 23 and certified the class. The corporation’s petition for certiorari sought review of a much larger issue concerning whether a district court must resolve all “merits arguments” directly relevant to class certification prior to certifying a class. The U.S. Supreme Court certified a narrower question. This case has the potential to greatly expand upon or minimize Dukes and will likely further define the evidentiary burdens applicable to class certification motions in the future in federal courts.

Second, the Supreme Court granted certiorari in Genesis Healthcare Corp. v. Symczyk, Case No. 11-1059, which should clarify whether a maximum settlement offer to the named plaintiff moots a collective action. The issue certified is as follows:

“Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims.”

This case involves an action brought under the Fair Labor Standards Act (FLSA), Section 219(b), which allows for collective actions. Defendants made what was conceded to be a maximum offer to the individual plaintiff before plaintiff moved for conditional certification and before any other individuals had joined the action. Plaintiff never responded to the offer. Therefore, defendants moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), arguing that the offer had deprived plaintiff of any ongoing personal stake in the litigation. The district court granted the motion. The U.S. Court of Appeals for the Third Circuit reversed. Relying heavily upon cases involving class actions, the Third Circuit held that the case had not yet become moot on the theory that the certification of a class “relates back” to the filing of the complaint and therefore plaintiff could still proceed with the action. It thus ordered the case to proceed. After this decision, the U.S. Court of Appeals for the Seventh Circuit rejected the relation back theory in Damasco v. Clearwire in a similar situation. The Seventh Circuit in Damasco specifically stated that it disagreed with the Third, Fifth, Ninth and Tenth circuits on the relevant issue.

While collective actions under the FLSA differ from most class actions in that plaintiffs only may join by affirmative acts of consent, it is very possible that the Supreme Court will use this case as an opportunity to clarify the law in a manner that also directly affects Fed. R. Civ. P. 23 class actions. From a practical standpoint, the result of Damasco is that to avoid mooting, plaintiffs now usually file their motions for class certification at the same time they file their complaint. This case may expand that practice nationwide or eliminate it.