Reviving judicial gatekeeping of aggregation: Scrutinizing the merits on class certification

George Washington Law Review

Volumn 79, Issue 2, 2011, Pages 324-373

  Marcus, Richard ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

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EID: 79956094803     PISSN: 00168076     EISSN: None     Source Type: Journal    
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References (377)

1. By "gatekeeper," I do not mean to limit my focus to judicial decisions at the outset of a lawsuit. Rather, I focus more broadly on judicial decisions regulating the litigation process, including joinder decisions (like class certification) and other decisions about what lawyers can do in the conduct of a lawsuit, such as presentation of evidence, attorney's fee awards, etc. In each of these situations, a judge ultimately must act as a gatekeeper by making a decision on whether the lawyers will be permitted to do what they want to do. often, these decisions move far beyond the traditional task of "applying law to facts." See, e.g., Robin J. Effron, the Plaintiff Neutrality Principle: Pleading Complex Litigation in the Era of Twombly and Iqbal, 51 WM. & MARY L. REV. 1997, 2043 (2010) (asserting that the "class certification procedure does provide a second gatekeeping point for evaluating the concerns that drive many critics to label class actions as costly or difficult").
2. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993).
3. Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (applying the gatekeeping requirement to experience-based proposed testimony about the cause of a tire failure).
4. Gen. Elec. Co. v. Joiner, 522 U.S. 136 (1997) (holding that an abuse of discretion standard should be used in reviewing district court rulings on admissibility of expert opinion evidence).
5. Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311, 1316 (9th Cir. 1995).
6. PRINCIPLES OF THE LAW OF AGGREGATE LITIG. (2010). A catalogue of all the places where the Principles call for judicial gatekeeping would be too difficult, but a sampler seems worthwhile.
7. id. $ 2.02(d)
8. the court should adopt a plan for "controlled discovery" to inform its aggregation decision);
9. id. $ 2.06(a)
10. the court must decide all questions upon which class certification depends);
11. id. $ 2.12(b)
12. the court must resolve any pertinent dispute);
13. id. $ 3.01
14. the court may approve proposed class action settlements only if it finds them fair);
15. id. $ 3.02(b)
16. court approval required for settlement of individual claims of proposed class representatives);
17. id. $ 3.05(a)
18. the court must make findings regarding a proposed settlement);
19. id. $ 3.08
20. the court sets fees for attorneys, including objectors' attorneys);
21. id. $ 3.13
22. general authority of the court over attorney's fee awards).
23. ARTHUR R. MILLER, AN OVERVIEW OF FEDERAL CLASS ACTIONS: PAST, PRESENT, AND FUTURE (1977), which explains as follows: In terms of the dynamics and economics of class actions, and most particularly in a Rule 23(b)(3) damage case, the lawyers believe that whether the case will be certified as a class action under Rule 23(c)(1) is the single most important issue in the case. All the lawyers' weapons and all the litigants' resources tend to be mobilized to deal with that question. Defense lawyers believe that their ability to settle the case advantageously or to convince the plaintiff to abandon the case depends on blocking certification. Conversely, plaintiffs' lawyers believe that their ability to obtain a large settlement turns on securing certification.
24. Id. at 12
25. Developments in the Law-Class Actions, 89 HARV. L. REV. 1318, 1423 (1976) (describing class certification as potentially a "cataclysmic, all-or-nothing event").
26. In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1298-300 (7th Cir. 1995) (Pos In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1298-300 (7th Cir. 1995) (Pos ner, C.J.) (arguing that class certification converted this products liability litigation from being a case involving significant exposure to being a "bet the company" case).
27. In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124, 145 (2d Cir. 2001) (Sotomayor, J.) ("the effect of certification on parties' leverage in settlement negotiations is a fact of life for class action litigants. While the sheer size of the class in this case may enhance this effect, this alone cannot defeat an otherwise proper certification.") For a thorough critique of the view that class certification results in overkill,
28. Charles Silver, "We're Scared to Death": Class Certification and Blackmail, 78 N.Y.U. L. REV. 1357 (2003).
29. Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974).
30. Richard J. Arsenault & John Randall Whaley, Will Daubert Challenge Your Class Certification?, TRIAL, July 2009, at 38 (discussing scrutiny of expert opinions during class certification).
31. For another examination of this development, stressing the way in which increased scrutiny of class certification can focus on difficult issues raised by the underlying substantive law, see Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. REV. 97 (2008).
32. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir. 2008). This case is discussed infra text accompanying notes 157-84.
33. Linda Mullenix, Class Certification, NAT'L L.J., Jan. 26, 2009, at 9 (describing Hydrogen Peroxide, and referring to Amchem Products Inc., v. Windsor, 521 U.S. 591 (1997)).
34. Michael J. Kaufman & John M. Wunderlich, the Unjustified Judicial Creation of Class Certification Merits Trials in Securities Fraud Actions, 43 U. MICH. J.L. REFORM 323 (2010);
35. Steig D. Olson, "Chipping Away": The Misguided Trend Toward Resolving Merits Disputes as Part of the Class Certification Calculus, 43 U.S.F. L. REV. 935, 939 (2009) (arguing that recent developments are "making class certification a more onerous and less efficient process for litigants and the court");
36. Joshua P. Davis & Eric L. Cramer, of Vulnerable Monopolists?: Questionable Innovation in the Standard for Class Certification in Antitrust Cases, 41 RUTGERS L.J. (forthcoming 2011), available at http://ssrn.com/ abstract=1542143.
37. Jonathan T. Molot, An Old Judicial Role for a New Litigation Era, 113 YALE L.J. 27, 46-58 (2003).
38. FED. R. CIV. P. 18.
39. id. 20(a).
40. generally Richard L. Marcus, Cure-All for an Era of Dispersed Litigation? Toward a Maximalist Use of the Multidistrict Litigation Panel's Transfer Power, 82 TUL. L. REV. 2245, 2250-58 (2008) (examining policy tensions presented by aggregation decisions).
41. FED. R. CIV. P. 13(h).
42. Id. 14(a).
43. id. 20(b)
44. permitting the court to separate claims even though they have been properly joined under Rule 20(a)).
45. Daniel J. Meador, Inherent Judicial Authority in the Conduct of Civil Litigation, 73 TEX. L. REV. 1805, 1807 (1995).
46. Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-97 (1933).
47. John G. Heyburn II, A View from the Panel: Part of the Solution, 82 TUL. L. REV. 2225, 2227 n.12 (2008) (noting that the Panel refers to its efforts as leading to centralization of litigation).
48. Consider, for example, In re Aviation Prods. Liab. Litig., 347 F. Supp. 1401, 1402 (J.P.M.L. 1972) (combining suits involving claims about malperformance of two different makes of helicopters because they both use the same sort of engine and the cases raise issues of the "general condition and airworthiness" of this helicopter engine), and In re Asbestos Prods. Liab. Litig. (No. VI), 771 F. Supp. 415, 424, 425 (J.P.M.L. 1991) (combining over 26,000 personal injury asbestos claims from across the country). For discussions of the aggressive use of the combination power in these cases
49. Marcus, supra note 18, at 2269, 2271-72.
50. Marcus, supra note 18, at 2284-87.
51. Acuna v. Brown & Root, Inc., 200 F.3d 335, 337 (5th Cir. 2000) (suit brought on behalf of more than 1000 plaintiffs against mining companies alleging personal injury from defendants' uranium mining activities).
52. FED. R. CIV. P. 23(f) (authorizing an immediate appeal "from an order granting or denying class action certification").
53. Sosna v. Iowa, 419 U.S. 393, 414 (1975).
54. Harriss v. Pan Am. World Airways, Inc., 74 F.R.D. 24, 36 n.3 (N.D. Cal. 1977).
55. Robert G. Bone, Personal and Impersonal Litigative Forms: Reconceiving the History of Adjudicative Representation, 70 B.U. L. REV. 213, 284 (1990).
56. Hansberry v. Lee, 311 U.S. 32 (1940).
57. Id. at 45.
58. Jay Tidmarsh, the Story of Hansberry: The Rise of the Modern Class Action, in CIVIL PROCEDURE STORIES 252-53 (Kevin M. Clermont ed., 2d ed. 2008).
59. William Wirt Blume, the "Common Questions" Principle in the Code Provision for Representative Suits, 30 MICH. L. REV. 878 (1932) (analyzing how courts decided if a case should be regarded as a proper representative action);
60. James William Moore & Marcus Cohn, Federal Class Actions, 32 ILL. L. REV. 307, 308-14 (1938) (reporting that English chancellors and American courts before 1938 would address the question whether suits were properly maintainable as class actions);
61. Developments in the Law-Multiparty Litigation in the Federal Courts, 71 HARV. L. REV. 874, 934-39 (1958) (describing the issues critical to making a class action decree binding).
62. Smith v. Swormstedt, 57 U.S. (16 How.) 288, 303 (1853).
63. Thus the Court explained its ruling upholding class treatment: The case in hand illustrates the propriety and fitness of the rule [regarding representative suits]. there are some fifteen hundred persons represented by the complainants, and over double that number by the defendants. It is manifest that to require all the parties to be brought upon the record, as is required in a suit at law, would amount to a denial of justice.
64. Id.
65. Id.
66. AM. BAR ASS'N, PROCEEDINGS OF THE INSTITUTE ON FEDERAL RULES, CLEVELAND, OHIO 263 (William W. Dawson ed., 1938). At page 264, Clark cites Moore & Cohn, supra note 35.
67. Benjamin Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of the Federal Rules of Civil Procedure (I), 81 HARV. L. REV. 356, 379 (1967).
68. infra text accompanying notes 112-44 for discussion of the 2003 changes.
69. John K. Rabiej, the Making of Class Action Rule 23-What Were We Thinking?, 24 MISS. C. L. REV. 323, 336-39 (2005).
70. For discussion of the due process need for the opt-out right, see 7AA CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE $$ 1789-1789.1 (3d ed. 2005).
71. FED. R. CIV. P. 23(c)(1), 308 U.S. 689 (1939) (amended 1966). This sequencing imperative could be contrasted with the rule that a court may not reach the merits until it decides whether it has jurisdiction.
72. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998) (holding that the court may not address the merits of a suit before resolving disputes about its subject matter jurisdiction).
73. FED. R. CIV. P. 23(c)(1) advisory committee's note, reprinted in 39 F.R.D. 95, 104 (1966): FED. R. CIV. P. 23(c)(1) advisory committee's note, reprinted in 39 F.R.D. 95, 104 (1966): An order embodying a determination can be conditional; the court may rule, for example, that a class action may be maintained only if the representation is improved through intervention of additional parties of a stated type. A determination once made can be altered or amended before the decision on the merits if, upon fuller development of the facts, the original determination appears unsound.
74. Id.
75. Eisen v. Carlisle & Jacquelin, 41 F.R.D. 147, 148 (S.D.N.Y. 1966).
76. Id. at 149.
77. Id.
78. Id. at 151.
79. Id. at 151 n.2.
80. Id. at 152.
81. Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 560 (2d Cir. 1968) ("While the new concepts incorporated in the rule have not as yet been passed upon by any federal Court of Appeals, they have received somewhat less than an enthusiastic reception in the District Courts.").
82. Id. at 562.
83. Id. at 563.
84. Id.
85. Id. at 566.
86. Id. at 570.
87. id. at 570-72 (Lumbard, C.J., dissenting).
88. Jonathan M. Landers, of Legalized Blackmail and Legalized theft: Consumer Class Actions and the Substance-Procedure Dilemma, 47 S. CAL. L. REV. 842, 842 (1974).
89. Eisen v. Carlisle & Jacquelin, 50 F.R.D. 471, 472 (S.D.N.Y. 1970).
90. id. at 472-73.
91. Eisen v. Carlisle & Jacquelin, 52 F.R.D. 253, 256 (S.D.N.Y. 1971).
92. Id. at 256-69.
93. Dolgow v. anderson, 43 F.R.D. 472, 501 (E.D.N.Y. 1968).
94. Eisen, 52 F.R.D. at 272.
95. Id. at 271
96. "I have also determined that a preliminary hearing is superior to other possible procedures. One such alternative would be to allow the action to proceed to a determination on the merits before assessing the costs of notice and send notice only if plaintiff is successful."). the Judge rejected this idea because it "is at least theoretically contrary to the language of Rule 23 calling for an early determination of the class action question."
97. Id.
98. Eisen v. Carlisle & Jacquelin, 54 F.R.D. 565, 567 (S.D.N.Y. 1972).
99. Id. at 567.
100. the Judge noted that plaintiffs contended that the case was ripe for summary judgment, but said that he would not "treat this case on the merits at this juncture."
101. Id. at 567 n.1.
102. Id. at 570-73.
103. Eisen v. Carlisle & Jacquelin, 479 F.2d 1005, 1018 (2d Cir. 1973).
104. For many judges, initial enthusiasm for class actions after the 1966 amendments gave way to judicial skepticism about them by the mid-1970s. the Eisen Second Circuit panel may have been ahead of the curve on this subject. For discussion of this development, see Arthur R. Miller, of Frankenstein Monsters and Shining Knights: Myth, Reality, and the "Class Action Problem," 92 HARV. L. REV. 664 (1979), describing what Professor Miller called the "first phase" of judicial experience under amended Rule 23:
105. Cases often were certified as class actions on the basis of rather conclusory assertions of compliance with rule 23(a) and (b). Settlements were sometimes approved without an in-depth analysis of the underlying merits of the claim, the economics of the litigation, or the feasibility of distributing the funds to class members. In addition, fee petitions were not scrutinized as carefully as experience now suggests they should have been. Enthusiasm for the class action fed upon itself, and the procedure fell victim to overuse by its champions and misuse by some who sought to exploit it for reasons external to the merits of the case. Mistakes, in most cases honest mistakes of faith, were made. By the end of the first phase, class action practice had been given a very black eye.
106. Id. at 678.
107. Eisen, 479 F.2d at 1018.
108. Id. at 1019.
109. Id. at 1016.
110. Id. at 1017.
111. id. at 1020
112. Kaufman, J.) ("I vote against en banc, not because I believe this case is unimportant, but because the case is of such extraordinary consequence that I am confident the Supreme Court will take this matter under its certiorari jurisdiction.").
113. Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974).
114. Id. at 177-78 (alterations in original).
115. Id. at 178.
116. Jonathan R. Macey & Geoffrey P. Miller, the Plaintiffs' Attorney's Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 U. CHI. L. REV. 1, 27-28 (1991). Professors Macey and Miller assert:
117. there is little to recommend the Eisen rule from the standpoint of economic analysis. the pecuniary costs of notice in large class actions can run well over half a million dollars. In addition, the costs of identifying absent class members and preparing the notice, as well as the opportunity costs to class members of interpreting the notice, can be substantial. these costs would be justifiable if they were outweighed by compensating benefits that might exist in a case with substantial individual claims. In the large-scale, small-claim class action, however, the benefits of notice appear minimal at best. It is doubtful whether notice has any social utility other than that of informing the class members of the claim. Most plaintiffs are unlikely to place any significant value on such information.
118. Id.
119. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331-32 (1979) (directing that nonmutual offensive use of collateral estoppel be permitted for those who are not "wait and see" plaintiffs unless unfair to defendant);
120. Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350 (1971) (authorizing defensive use of nonmutual collateral estoppel).
121. Developments in the Law, supra note 7, at 1421 (describing post-Eisen lower court decisions and observing that "[t]he rationale of these recent cases, if carried to its logical extreme, would require certification to precede even motions made under rule 12(b)(6)").
122. Geoffrey C. Hazard, Jr., Class Certification Based on Merits of the Claims, 69 TENN. L. REV. 1, 3 (2001) (reporting that "merits discovery in class suits usually is postponed until after certification").
123. "Clockwork orange" is an old Cockney expression alluding to a force that overcomes humans' exercise of free will through something like Pavlovian conditioning. In 1962, Anthony Burgess borrowed the phrase for the title of his dystopian novella, A Clockwork Orange, and in 1971 Stanley Kubrick made a movie of the novella, released under the same name.
124. Katz v. Carte Blanche Corp., 496 F.2d 747 (3d Cir. 1974).
125. Id. at 750.
126. Id. at 751.
127. Id.
128. Id. at 757 n.6.
129. Id. at 757.
130. Id. at 757-58
131. FED. R. CIV. P. 13(a) (requiring counterclaims arising out of the same transaction as that sued upon by plaintiff). Whether the transaction involved would really be the same is debatable, as is the question whether Rule 13(a) should apply to claims against unnamed members of a class.
132. Joan Steinman, the Party Status of Absent Plaintiff Class Members: Vulnerability to Counterclaims, 69 GEO. L.J. 1171 (1981) (discussing these issues).
133. Katz, 496 F.2d at 752.
134. Id. at 758.
135. Id. at 759.
136. Id. at 760.
137. Id. at 764
138. Seitz, C.J., dissenting);
139. id at 769
140. Aldisert, J., dissenting);
141. id. at 773
142. Adams, J., dissenting). Chief Judge Seitz argued in his dissent that the majority was guilty of "judicial emasculation of Rule 23."
143. Id. at 764
144. Seitz, C.J., dissenting). He thought that the Supreme Court's retreat from the mutuality of estoppel "does not appear to have killed mutuality outright," and therefore saw no reason for the majority to conclude that the Rule's "as soon as practicable" directive "no longer performs a useful function."
145. Id. at 766.
146. Huff v. N.D. Cass Co. of Ala., 485 F.2d 710, 714 (5th Cir. 1973).
147. Miller v. Mackey Int'l, Inc., 452 F.2d 424, 428-29 (5th Cir. 1971) ("Purely vexatious litigation could be halted by a Rule 12 motion to dismiss or a Rule 56 motion for summary judgment.").
148. Note, the Rule 23(b)(3) Class Action: An Empirical Study, 62 GEO. L.J. 1123, 1143 (1974) ("Scrutiny of the cases under study indicates that theory and practice differ on the question whether consideration of the merits of a case should precede or follow consideration of class certification."); see also id. at 1144 (reporting on a survey in which plaintiffs attorneys said they thought it essential to present a strong case on the merits to obtain certification).
149. Wright v. Schock, 742 F.2d 541, 542 (9th Cir. 1984) (permitting defendant to move for summary judgment before class certification);
150. Stewart v. Winter, 669 F.2d 328, 331 (5th Cir. 1982) ("[W]e think it imperative that the district court be permitted to limit pre-certification discovery to evidence that, in its sound judgment, would be 'necessary or helpful' to the certification decision." (footnote omitted)).
151. Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978)
152. quoting Mercantile Nat'l Bank v. Langdeau, 371 U.S. 555, 558 (1963)).
153. Gen. Tel. Co. v. Falcon, 457 U.S. 147, 155-60 (1982).
154. Judith Resnik, Managerial Judges, 96 HARV. L. REV. 374 (1982).
155. Abram Chayes, the Role of the Judge in Public Law Litigation, 89 HARV. L. REV. 1281, 1284 (1976).
156. Indeed, the whole question of how to delineate "public law litigation" may have seemed simple in the mid-1970s, but it is open to considerable debate.
157. Richard L. Marcus, Public Law Litigation and Legal Scholarship, 21 U. MICH. J.L. REFORM 647, 668-75 (1988) (discussing the uneasy dividing line between "public" and "private" law litigation, and suggesting that mass tort cases could be regarded as "public law litigation").
158. Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 809 (1985) (internal quotation marks omitted).
159. Benjamin Kaplan, A Prefatory Note, 10 B.C. INDUS. & COM. L. REV. 497, 500 (1969).
160. FED. R. CIV. P. 16(b) (requiring a scheduling order in all civil cases except categories exempted by local rule).
161. Civil Justice Reform Act, Pub. L. No. 101-650, 104 Stat. 5089 (1990) (codified as amended at 28 U.S.C. $$ 471-482 (2006)). the Senate Report that accompanied this legislation invoked the "benefits of enhanced case management," which it took to mean "that greater and earlier judicial control over civil cases yields faster rates of disposition." S. REP. NO. 101-416, at 16 (1990), reprinted in 1990 U.S.C.C.A.N. 6819.
162. Edward Brunet, Questioning the Quality of Alternative Dispute Resolution, 62 TUL. L. REV. 1, 50 (1987) (arguing that the judicial management movement "seems to have created an attitude that a trial represents judicial failure").
163. Molot, supra note 15, at 31-32.
164. FED. R. CIV. P. 23(g).
165. Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 247 (3d Cir. 1975) (holding that Rule 23(a)(4) calls for the district judge to assess the proposed class representative by looking to whether (1) plaintiff has no interests which are antagonistic to other members of the class, and (2) plaintiff's attorney is capable of prosecuting the instant claim with some degree of expertise).
166. MacAlister v. Guterma, 263 F.2d 65, 68-69 (2d Cir. 1958) (upholding an order appointing lead counsel in stockholders' consolidated derivative actions); MANUAL FOR COMPLEX LITIGATION (FOURTH) $ 40.22 (2004) (providing a sample order enumerating the duties of lead counsel).
167. Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737 (codified as amended in scattered sections of 15 U.S.C.).
168. 15 U.S.C. $ 17u-4(a)(3) (2006).
169. In re Cavanaugh, 306 F.3d 726, 732 (9th Cir. 2002).
170. Id. at 734.
171. Jill E. Fisch, Lawyers on the Auction Block: Evaluating the Selection of Class Counsel by Auction, 102 COLUM. L. REV. 650, 722 (2002). Professor Fisch concludes that the "empowered plaintiff" model could be expanded to other situations in which certain criteria were satisfied: First, the class must include members with a sufficient financial stake in the litigation. Only if the empowered lead plaintiff has a sufficient interest in the case will it incur the costs of identifying, negotiating with, and monitoring class counsel. Second, the potential lead plaintiffs must be sufficiently representative of the interests of other class members⋯ . Third, the size of a class member's interest should be correlated with its sophistication and ability to handle the selection, negotiation, and monitoring processes.
172. Id.
173. In re Oracle Sec. Litig., 131 F.R.D. 688, 689-90 (N.D. Cal. 1990);
174. Laural L. Hooper & Marie Leary, Auctioning the Role of Class Counsel, 209 F.R.D. 519 (2001).
175. Report, Third Circuit Task Force Report on Selection of Class Counsel, 74 TEMP. L. REV. 689, 740-41 (2001) (evaluating the auction method and finding that it would work only in limited and very rare circumstances).
176. MANUAL FOR COMPLEX LITIGATION (FOURTH) $ 10.224 (2004).
177. In re J.P. Morgan Chase Cash Balance Litig., 242 F.R.D. 265, 277 (S.D.N.Y. 2007).
178. Molot, supra note 15, at 47-48 (emphasis added).
179. In re Cardinal Health, Inc. ERISA Litig., 225 F.R.D. 552, 554 (S.D. Ohio 2005).
180. Id. at 556.
181. id. at 557 & n.6.
182. Nowak v. Ford Motor Co., 240 F.R.D. 355, 366-67 (E.D. Mich. 2006) (rejecting theconclusion that the firm not appointed in Cardinal Health, 225 F.R.D. 552, had a conflict).
183. the court explained: The Cardinal Health opinion also cites DR 5-105 and EC 5-14 which prohibited joint representation where there was an "appearance of divided loyalties of counsel." Having taught a course on legal ethics for many years, it was my understanding that decades ago when Ohio and nearly all states abandoned the ABA Code of Professional Responsibility and its Disciplinary Rule and adopted versions of ABA Model Rules of Professional Conduct, the new rules abandoned this "appearance of divided loyalty" standard and drafted more precise conflict guidelines. For various reasons, while recognizing the importance of the conflicts issues raised in Cardinal Health, that opinion does not demonstrate a sufficient factual basis to find that [the law firm] was acting inappropriately.
184. Id.
185. For discussion of these two fee-calculation methods, see MANUAL FOR COMPLEX LITIGATION (FOURTH) $$ 14.1-.2 (2004).
186. FED. R. CIV. P. 23(h).
187. In re Activision Sec. Litig., 723 F. Supp. 1373, 1374 (N.D. Cal. 1989).
188. City of Burlington v. Dague, 505 U.S. 557, 562 (1992) (declaring that the lodestar measure is "the guiding light of our fee-shifting jurisprudence").
189. John C. Coffee, Jr., Understanding the Plaintiff's Attorney: The Implications of Economic theory for Private Enforcement of Law Through Class and Derivative Actions, 86 COLUM. L. REV. 669, 725 (1986).
190. In re Cont'l Ill. Sec. Litig., 962 F.2d 566, 568 (7th Cir. 1992).
191. In re Superior Beverage/Glass Container Consol. Pretrial, 133 F.R.D. 119, 124 (N.D. Ill. 1990).
192. id. at 128-33.
193. DEBORAH R. HENSLER ET AL., RAND INST. FOR CIVIL JUSTICE, CLASS ACTION DILEMMAS: PURSUING PUBLIC GOALS FOR PRIVATE GAIN: EXECUTIVE SUMMARY 24 (1999), available at http://www.rand.org/pubs/monograph-reports/2005/MR969.1.pdf (stating that "what judges do [in class actions] is the key to determining the benefit-cost ratio," and that salutary results followed when judges "took responsibility for determining attorney's fees").
194. FED. R. CIV. P. 23(c), 308 U.S. 689 (1939) (amended 1966).
195. FED. R. CIV. P. 23(e).
196. supra text accompanying note 40 (quoting Professor Kaplan's comment about the absence of details on the "procedural management" of class actions in the original Rule 23).
197. supra text accompanying notes 59-69.
198. Parker v. anderson, 667 F.2d 1204, 1212 n.9 (5th Cir. 1982) (quoting a letter from class counsel to lead plaintiffs emphasizing the risks of proceeding to trial).
199. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 621 (1997) (explaining further that the Court was referring to "class certifications dependent upon the court's gestalt judgment or overarching impression of the settlement's fairness").
200. In re Prudential Ins. Co. Sales Practices Litig., 148 F.3d 283 (3d Cir. 1998) (undertaking extensive and painstaking evaluation of an elaborate settlement with a multitrack claims procedure and changes in sales practices in order to determine whether it was a good deal for class members).
201. Molot, supra note 15, at 53-55 (reviewing various proposals).
202. Hillary A. Sale, Judicial Gatekeepers (working paper) (on file with author) (offering many tips for judges on how to assess and probe proposed settlements in securities fraud cases).
203. Professor Gibson compares the task of judges in bankruptcy proceedings with that confronting judges evaluating class action settlements. She points out that, in the bankruptcy setting, judges "have the advantage of having specific statutory standards for the confirmation of the reorganization plan," something class action judges do not have. S. ELIZABETH GIBSON, CASE STUDIES OF MASS TORT LIMITED FUND CLASS ACTION SETTLEMENTS & BANKRUPTCY REORGANIZATIONS 5-6 (2000).
204. For an analysis of the judicial treatment of preliminary injunction motions, see generally John Leubsdorf, the Standard for Preliminary Injunctions, 91 HARV. L. REV. 525 (1978).
205. Geoffrey P. Miller, Preliminary Judgments, 2010 U. ILL. L. REV. 165, 203.
206. ABA Section of Litig., Report and Recommendations of the Special Committee on Class Action Improvements, 110 F.R.D. 195, 206-09 (1986) (urging "precertification decision of a merits motion");
207. Stephen Berry, Ending Substance's Indenture to Procedure: The Imperative for Comprehensive Revision of the Class Damage Action, 80 COLUM. L. REV. 299, 312-14 (1980) (citing a "pervasive sentiment favoring some sort of preliminary hearing on the merits");
208. Bartlett H. McGuire, the Death Knell for Eisen: Why the Class Action Analysis Should Include an Assessment of the Merits, 168 F.R.D. 366, 368, 396-99 (1997) (stating that Eisen continues to be cited as authoritative in forbidding assessment of the merits, but adding that this directive is also "circumvented with increasing boldness by the lower courts," and urging adoption of a "substantial probability of success" standard for assessing plaintiffs' cases).
209. Shook v. Bd. of Cnty. Comm'rs, 543 F.3d 597, 612 (10th Cir. 2008) ("[A] district court may not evaluate the strength of a cause of action at the class certification stage.").
210. 15 U.S.C. $ 78u-4(b)(3)(B) (2006) (staying discovery while a motion to dismiss is decided).
211. Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th Cir. 2001) (observing that "if some of the considerations under Rule 23(b)(3) ⋯ overlap the merits-as they do in this case ⋯ -then the judge must make a preliminary inquiry into the merits").
212. In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124, 135 (2d Cir. 2001) (Sotomayor, J.). the court explained that, in ruling on class certification, the district judge "must ensure that the basis of the expert opinion is not so flawed that it would be inadmissible as a matter of law." Id. In this case, despite defendants' manifold objections to the testimony of plaintiffs' expert, "the district court's finding that [the expert's] methodology was not fatally flawed, and therefore[ ] was sufficiently reliable for class certification purposes, does not constitute an abuse of its discretion."
213. Id.
214. the Seventh Circuit has recently held that failure to perform a full Daubert analysis of plaintiffs' expert theory before certifying a class is error: We hold that when an expert's report or testimony is critical to class certification, as it is here, a district court must conclusively rule on any challenge to the expert's qualifications or submissions prior to ruling on a class certification motion. That is, the district court must perform a full Daubert analysis before certifying the class if the situation warrants.
215. Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010) (citation omitted).
216. In re Initial Pub. offerings Sec. Litig. (IPO), 471 F.3d 24, 40-41 (2d Cir. 2006).
217. This opinion represents a remarkable confession of error by Judge Newman, the author of Caridad v. Metro-North Commuter Railroad, 191 F.3d 283 (2d Cir. 1999),
218. the leading Second Circuit case for the proposition that merits scrutiny is not permitted, and then-Judge Sotomayor, who had so declared in 2001 in reliance on Judge Newman's earlier decision in Caridad,
219. Visa Check, 280 F.3d at 135. the court carefully chronicled the emergence of the view that scrutiny of the merits is permissible.
220. IPO, 471 F.3d at 32-42.
221. DTD Enterprises, Inc. v. Wells, 130 S. Ct. 7, 7-8 (2009), in which the Court denied certiorari in a case in which defendant claimed that the state court below required it to pay the cost of notice in a class action because
222. id. at 8
223. Kennedy, J., dissenting) (emphasis added).
224. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir. 2008).
225. id. at 308
226. describing investigations by the United States Department of Justice and the European Commission of possible antitrust violations in the hydrogen peroxide industry).
227. Id. at 307-08.
228. id. at 310-12
229. reporting that defendants did not contest the district judge's conclusion that the requisites of Rule 23(a) were satisfied).
230. In a sense, the impact question resembles the question of reliance in securities fraud cases, where the common liability question whether defendants were guilty of inadequate or misleading statements is not regarded as sufficient to outweigh the question of reliance if that must be examined on an individual basis. the solution in securities fraud class actions has been the "fraud on the market" theory.
231. Basic, Inc. v. Levinson, 485 U.S. 224, 246-47 (1988) (adopting fraud-on-the-market theory);
232. Donald C. Langevoort, Basic at Twenty: Rethinking Fraud on the Market, 2009 WIS. L. REV. 151, 179 (asserting that "Basic was a boon to plaintiffs, leading to a rapid increase in the number of fraud-on-the-market suits after 1988-the number of filings had tripled by 1991, and continued to rise dramatically over the next fifteen years").
233. Hydrogen Peroxide, 552 F.3d at 313.
234. Alabama v. Blue Bird Body Co., 573 F.2d 309, 321-28 (5th Cir. 1978) (rejecting class certification of a nationwide class in relation to an alleged conspiracy to fix the price of school buses, which were made to suit the specifications of the purchasing school district);
235. In re Screws Antitrust Litig., 91 F.R.D. 52, 57-58 (D. Mass. 1981) (certifying a class despite the "product diversity" of wood screws shown by defendants, on the notion that "[s]crews are not inherently diverse, and distinctions offered are likely to be 'surface distinctions' which should not deter class certification").
236. Hydrogen Peroxide, 552 F.3d at 312-13.
237. Id. at 313.
238. Id.
239. Id. at 314.
240. Id. at 313.
241. Id. at 314.
242. Id. at 314-15 & n.13.
243. Id. at 322
244. quoting In re Hydrogen Peroxide Antitrust Litig., 240 F.R.D. 163, 171 (E.D. Pa. 2007)).
245. Id. at 316.
246. Id. at 317.
247. id. at 308 n.3
248. "Defendants assert, and plaintiffs do not dispute, that they provided to plaintiffs all available sales transactions and other market data relevant to how hydrogen peroxide and persalts were bought and sold during the class period.").
249. id. at 318-19.
250. At the time these amendments were adopted, Chief Judge Scirica was chair of the Judicial Conference's Standing Committee on Rules of Practice and Procedure.
251. Id. at 320.
252. Id. at 322-24.
253. Id. at 325.
254. Consider Professor Silver's 2003 description: [A 1996 Federal Judicial Center study] conveys a picture of the law in action that diverges markedly from the law on the books. Formally, judges are supposed to decide certification motions "[a]s soon as practicable" after the start of litigation without peeking at the merits. In fact, judges usually decide dispositive motions before certification. they refuse to certify until they are persuaded that plaintiff's allegations have merit. Precertification rulings are common even in the Northern District of Illinois, which operates under case law disapproving the practice.
255. Silver, supra note 8, at 1395.
256. Geoffrey P. Miller, Review of the Merits in Class Action Certification, 33 HOFSTRA L. REV. 51, 51 (2004).
257. L. Elizabeth Chamblee, Comment, Between "Merit Inquiry" and "Rigorous Analysis": Using Daubert to Navigate the Gray Areas of Federal Class Action Certification, 31 FLA. ST. U. L. REV. 1041, 1068-74 (2004) (reporting that courts were unwilling to use Daubert during class certification, mainly to avoid addressing the substantive merits).
258. McDonough v. Toys "R" Us, Inc., 638 F. Supp. 2d 461, 467 (E.D. Pa. 2009).
259. supra note 14 and accompanying text.
260. Robert G. Bone & David S. Evans, Class Certification and the Substantive Merits, 51 DUKE L.J. 1251, 1331 (2002) (urging courts to evaluate the merits of plaintiffs' case before certifying in order to ensure that the settlement-inducing power of certification is not available unless it appears that plaintiffs will win); Hazard, supra note 83, at 3-4.
261. Eisen v. Carlisle & Jacquelin, 52 F.R.D. 253, 272 (S.D.N.Y. 1971).
262. In re New Motor Vehicles Canadian Exp. Antitrust Litig., 229 F.R.D. 35, 40 (D. Me. 2005) (refusing to entertain a summary judgment motion because the litigation schedule called for addressing class certification first).
263. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 310 (3d Cir. 2008) ("the trial court, well-positioned to decide which facts and legal arguments are most important to each Rule 23 requirement, possesses broad discretion to control proceedings and frame issues for consideration under Rule 23.");
264. IPO, 471 F.3d 24, 41 (2d Cir. 2006) ("To avoid the risk that a Rule 23 hearing will extend into a protracted mini-trial of substantial portions of the underlying litigation, a district judge must be accorded considerable discretion to limit both discovery and the extent of the hearing on Rule 23 requirements.").
265. for example, Oplchenski v. Parfums Givenchy, Inc., 254 F.R.D. 489, 497 n.6 (N.D. Ill. 2008), in which the court rejected plaintiffs' argument that the reports from defendants' expert should be stricken in relation to the class certification decision because the reports were not disclosed in advance. the court held that Rule 26(a)(2)(B) (regarding disclosure of expert reports) did not apply because "[t]he opinions of the experts pertain to issues to be addressed regarding class certification, not the merits of the underlying claims."
266. Id.
267. for example, In re Rail Freight Fuel Surcharge Antitrust Litigation, 258 F.R.D. 167, 176 (D.D.C. 2009), in which the court denied defendants' motion for bifurcated discovery, with the first phase limited to "class" discovery.
268. the judge explained: [D]efendants have to concede that they are asking plaintiffs (and therefore the Court) to accept their formulation of the certification question and their determination of what pertains to it. But, the whole purpose of discovery is to find not only those documents that defendants wish for plaintiffs to see but all documents that pertain to the certification issue that plaintiffs believe will advance their position. To limit plaintiffs to what defendants will give them is to, in effect, begin and end discovery with defendants' voluntary disclosures. But, unlike continental systems where discovery consists of what the parties voluntarily exchange, the American system expressly authorizes each party to independently demand relevant evidence from its opponent. While bifurcated discovery may have much to recommend it, defendants' assertions about the ease with which they can find responsive documents only apply if I limit plaintiffs to what defendants will give them. That approach in effect amends the Federal Rules of Civil Procedure to create a unique form of discovery for class actions.
269. Id. at 173.
270. Kingsberry v. Chi. Title Ins. Co., 258 F.R.D. 668, 670-71 (W.D. Wash. 2009) (permitting discovery that would likely produce substantiation of consumers' class allegations).
271. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007)
272. referring to "the common lament that the success of judicial supervision in checking discovery abuse has been on the modest side").
273. Compare the views of Justice Breyer, dissenting in Ashcroft v. Iqbal, 126 S. Ct. 1937, 1961-62 (2009) (Breyer, J., dissenting), and affirming the utility of judicial supervision in containing overdiscovery. It is perhaps worth noting that Justice Breyer's brother is a district judge.
274. Betty C. Bullock, Note, Discovery of Plaintiffs' Financial Situation in Federal Class Actions: Heading 'Em off at the Passbook, 30 HASTINGS L.J. 449, 450 (1978).
275. Eggleston v. Chi. Journeymen Plumbers' Local Union No. 130, 657 F.2d 890, 904 (7th Cir. 1981).
276. Stock v. Integrated Health Plan, Inc., 241 F.R.D. 618, 620-21 (S.D. Ill. 2007).
277. FED. R. CIV. P. 23(g)(1) (directing the court to consider counsel's expertise and resources in evaluating counsel's adequacy).
278. Stock, 241 F.R.D. at 621 & n.1.
279. Id. at 625.
280. Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 939-40 (9th Cir. 2009). the court noted further that "district courts throughout the nation have considered defendants' 'preemptive' motions to deny certification."
281. Id. at 940.
282. For example, a recent article quoted Diane Sullivan, a defense-side lawyer at the Philadelphia firm Dechert LLP, as saying that mass tort filings are down, and added: "Sullivan also asserts that plaintiffs attorneys 'have been more willing to settle at lower dollar amounts,' although she declined to cite specific examples because of confidentiality agreements. 'they're choosing cash now over investing in prolonged litigation,' she says."
283. Claire Zillman, Developments: Cash-Flow Woes, LITIG. 2009, Fall 2009, at 13. Plaintiff-side lawyers reportedly disputed these sorts of assertions.
284. Id.
285. Professor Cox noted the same sort of thing in relation to the effect of the PSLRA on securities class actions because it enhanced the scrutiny that occurred on a motion to dismiss: Though lax pleading requirements made the nuisance value of a suit much more difficult to address through pretrial motions, it must also be understood that the Reform Act's heightened pleading standard credentials suits that survive pretrial motions so that [they] will have greater settlement value than such suits had on average before the Reform Act⋯ . [C]ounsel should feel more confident in the case after satisfying the new pleading requirements than the counsel who previously had to know less and plead less to withstand a challenge to the pleadings.
286. James D. Cox, Making Securities Fraud Class Actions Virtuous, 39 ARIZ. L. REV. 497, 520 (1997).
287. Davis & Cramer, supra note 14, at 13 (using the terms "false negatives" and "false positives" to describe the Hydrogen Peroxide approach).
288. Consider the following reactions from a leading plaintiff lawyer: What had once been considered to be procedural motions are turning into a very early litigation of the merits of the claims. That's kind of a mixed bag. If the plaintiffs prevail on these issues on a less-developed record fairly early in the case, it puts defendants in a much more difficult position than they would be otherwise ⋯ . A decision like Hydrogen Peroxide can carry some mixed blessings.
289. Antitrust Update, CAL. LAW., Sept. 2009, at 45 (quoting Joseph R. Saveri, Esq.).
290. United Steel Workers Int'l Union v. ConocoPhillips Co., 593 F.3d 802, 804 (9th Cir. 2010).
291. Id. at 805.
292. Id. at 809.
293. In Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir.) (en banc), cert. granted, 79 U.S.L.W. 3128 (U.S. Dec. 6, 2010) (No. 10-277), the court, by a 6-5 en banc decision, affirmed class certification in a mammoth employment discrimination case, id. at 628, but affirmed in Part II of its opinion that it embraces demanding scrutiny of class certification,
294. id. at 581.
295. Thomas E. Willging & Shannon R. Wheatman, Attorney Choice of Forum in Class Action Litigation: What Difference Does It Make?, 81 NOTRE DAME L. REV. 591, 606 (2006)
296. reporting approximately a one-third decline in frequency of certification of class actions terminated in 1999-2002 compared with the rate in an earlier study focusing on federal-court class actions terminated in 1992-1994);
297. Thomas E. Willging & Emery G. Lee III, From Class Actions to Multidistrict Consolidations: Aggregate Mass-Tort Litigation After Ortiz, 58 U. KAN. L. REV. 775, 789-90 (2010) (discussing the declining frequency of class certification motions).
298. ADMIN. OFFICE OF THE COURTS, CLASS CERTIFICATION IN CALIFORNIA: SECOND INTERIM REPORT FROM THE STUDY OF CALIFORNIA CLASS ACTION LITIGATION 6 (2010) (reporting that the percentage of cases in which the class was certified decreased by more than fifty percent from 2000 to 2005). the report observes that the decreasing certification trend corresponds to what has been experienced in the federal system, and suggests that one possible explanation is that "evolving California and federal case law has narrowed the standards for a class certification."
299. Id. at 10-11.
300. Landers, supra note 59, at 843 (citations omitted).
301. Bone & Evans, supra note 184, at 1278-80.
302. id. at 1292-96.
303. Silver, supra note 8, at 1399-408.
304. In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124, 145 (2d Cir. 2001).
305. supra text accompanying notes 85-96 (discussing Katz v. Carte Blanche, 496 F.2d 747 (3d Cir. 1974)).
306. Ratner v. Chem. Bank N.Y. Trust Co., 54 F.R.D. 412 (S.D.N.Y. 1972).
307. Id. at 413-14.
308. Id. at 416.
309. Kenneth W. Dam, Class Actions: Efficiency, Compensation, Deterrence, and Conflict of Interest, 4 J. LEGAL STUD. 47, 61 (1975) (arguing that class actions may invite enforcers of certain rules to pursue remedies to the point of "inefficient overenforcement").
310. Act of Oct. 28, 1974, Pub. L. No. 93-495, $ 408(a), 88 Stat. 1500, 1518 (codified as amended at 15 U.S.C. $ 1640(a) (2006)) (setting a ceiling of $100,000 or 1% of the creditor's net worth for awards in class actions). In 1976, the maximum amount was increased to $500,000. See Consumer Leasing Act of 1976, Pub. L. No. 94-240, $ 4(3), 90 Stat. 257, 260 (codified at 15 U.S.C. $ 1640(a)). For discussion, see 7B CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE $ 1804 (3d ed. 2005).
311. Leysoto v. Mama Mia I., Inc., 255 F.R.D. 693, 698 (S.D. Fla. 2009) (refusing to certify a class in a suit for alleged infractions of the Fair and Accurate Credit Transactions Act due to the failure to guard against disclosure of the customer's entire credit card number in light of the "potentially annihilating" consequences of liability for the statutory minimum remedy).
312. For a case raising the issue whether a federal court should enforce such a limitation when presented with a request under Rule 23 to certify a class in a suit based on a state law, see Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010).
313. For discussion, see Linda S. Mullenix, Federal Class Actions: A Near-Death Experience in a Shady Grove, 79 GEO. WASH. L. REV. 448 (2011).
314. Dolgow v. anderson, 43 F.R.D. 472, 501 (E.D.N.Y. 1968). As the court noted: [T]he notice provisions themselves may prove harmful to defendants since the attendant publicity and its official source may inflate the apparent importance of the action. So much of the stock market depends upon faith and reputation that the Court should be reluctant to lend its weight to any unnecessary publicity in connection with a pending lawsuit.
315. Id. (citation omitted).
316. Id.
317. As Judge Moore outlined in dissent from the eventual reversal in Dolgow v. anderson, 438 F.2d 825 (2d Cir. 1971): "[P]laintiffs had availed themselves of discovery procedures including some twelve sets of interrogatories and had obtained from defendants over 7,600 pages of documents. In addition, they had taken the depositions of the President and a Vice-President of Monsanto [the company whose stock was involved] (some 1,500 pages)."
318. Id. at 830-31
319. Moore, J., dissenting).
320. As detailed by Judge Moore later, in his dissent from the Second Circuit's reversal: "Evidentiary hearings were held on December 18, 19, and 20, 1968. All materials previously submitted was [sic] made part of the record and eight witnesses were subjected to direct and cross-examination. the record before us consists of 10 volumes."
321. Id. at 831.
322. id. at 830
323. quoting Doehler Metal Furniture Co. v. United States, 149 F.2d 130 (2d Cir. 1945), the Judge Frank opinion that introduced the "slightest doubt" standard). A year later, the Second Circuit rejected this attitude toward summary judgment.
324. Beal v. Lindsay, 468 F.2d 287, 291 (2d Cir. 1972);
325. Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319 (2d Cir. 1975).
326. Kaufman & Wunderlich, supra note 14, at 357 (arguing that "this mini-trial on a motion for class certification intrudes on plaintiffs' right to trial by jury");
327. Olson, supra note 14, at 938 (arguing that, because certain issues Hydrogen Peroxide requires the court to resolve on class certification are issues plaintiffs must prove at trial, plaintiffs have a constitutional right to a jury decision of those issues).
328. In Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), the Court asserted that "certification of a mandatory class followed by settlement of its action for money damages obviously implicates the Seventh Amendment jury trial rights of absent class members."
329. Id. at 845-46.
330. It is extremely difficult to determine what the Seventh Amendment problem would be.
331. Richard L. Marcus, Benign Neglect Reconsidered, 148 U. PA. L. REV. 2009, 2031 n.112 (2000)
332. puzzling over how a settlement could implicate the Seventh Amendment). In any event, at least it could be said in that case that the absent class members would, if bound by a settlement, no longer have a right to present their cases to a jury. That concern does not arise if class certification is denied. Surely the "right" to have one's case decided by a jury does not carry with it the right to have a class in which one is a putative member certified so that a class action trial can be the vehicle for such a jury decision.
333. for example, Alaska Electrical Pension Fund v. Flowserve Corp., 572 F.3d 221, 228-29 (5th Cir. 2009), in which the named plaintiff argued that his showing of "loss causation" was sufficient and that a Rule 23 "finding" to the contrary at the class certification stage was tantamount to granting summary judgment even though plaintiff had enough evidence to get to the jury. the court explained that "[t]his argument fails because it conflates the issue of loss causation for purposes of establishing predominance under Rule 23 with the issue of loss causation on the merits."
334. Id. at 229
335. But as the court pointed out, "[t]he denial of class certification does not prevent a plaintiff from proceeding individually. and 'the court's determination for class certification purposes may be revised (or wholly rejected) by the ultimate factfinder.'"
336. Id.
337. quoting Unger v. Amedisys, Inc., 401 F.3d 316, 323 (5th Cir. 2005))
338. see also Fener v. Operating Eng'rs Constr. Indus., 579 F.3d 401, 407 (5th Cir. 2009) ("the proof needed for loss causation at the pleadings stage should not be conflated with the requirements needed at the class certification stage.").
339. Gariety v. Grant Thornton, LLP, 368 F.3d 356 (4th Cir. 2004).
340. As the court explained there: The jury or factfinder can be given free hand to find all of the facts required to render a verdict on the merits, and if its finding on any fact differs from a finding made in connection with class action certification, the ultimate factfinder's finding on the merits will govern the judgment. A model for this process can be observed in the context of the preliminary injunction practice. Courts make factual findings in determining whether a preliminary injunction should issue, but those findings do not bind the jury adjudging the merits, and the jury's findings on the merits govern the judgment to be entered in the case.
341. Id. at 366.
342. Hydrogen Peroxide made the same point: "Although the district court's findings for the purpose of class certification are conclusive on that topic, they do not bind the fact-finder on the merits." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 318 (3d Cir. 2008);
343. In re New Motor Vehicles Canadian Exp. Litig., 522 F.3d 6, 24 (1st Cir. 2008) ("the judge's consideration of merits issues at the class certification stage pertains only to that stage; the ultimate factfinder, whether judge or jury, must still reach its own determination on these issues.").
344. Heerwagen v. Clear Channel Commc'ns, 435 F.3d 219, 232 (2d Cir. 2006) (citation omitted).
345. In re Ethylene Propylene Diene Monomer (EPDM) Antitrust Litig., 256 F.R.D. 82, 102 n.11 (D. Conn. 2009).
346. Id. (emphasis added).
347. Hydrogen Peroxide, 552 F.3d at 323-35.
348. Cooper v. Fed. Reserve Bank, 467 U.S. 867, 880 (1984) (holding that, in a Title VII action, judgment against the class on a "class claim" of pattern or practice of discrimination does not foreclose later individual claims by class members based on a showing of actual discrimination against them).
349. Allan Erbsen, From "Predominance" to "Resolvability": A New Approach to Regulating Class Actions, 58 VAND. L. REV. 995 (2005)
350. [the predominance requirement] requires elaborate efforts to answer a question that is not worth asking⋯ . [S]imilarity among claims is an unhelpful concept when one thinks about the practical consequences of certifying a class and the procedural principles (such as finality, fidelity, and feasibility) to which class adjudication should conform⋯ . the predominance concept conflates the similarity and dissimilarity inquiries into a single balancing test, thus obscuring the practical and theoretical importance of dissimilarity standing alone⋯ . the ensuing weighing process is analogous to asking a starving person to balance the nutritional value of vitamins in his only potential food source against the negative effects of poison in the same food. Any sort of balancing would be pointless. A huge nutritional value would be irrelevant if the poison is fatal, and if the poison is not fatal then any amount of nutrition would justify consumption absent a superior alternative food source.
351. Id. at 1005.
352. PRINCIPLES OF THE LAW OF AGGREGATE LITIG. $ 2.02(a)(1) (2010).
353. Thus, even while announcing a demanding standard for review of class certification motions in IPO, Judge Newman also observed:
354. the Rule 23 requirements differ from other threshold issues in that, once a district court has ruled, the standard for appellate review is whether discretion has been exceeded (or abused). This standard of review implies that a district judge has some leeway as to Rule 23 requirements, and, unlike rulings as to jurisdiction, may be affirmed in some circumstances for ruling either that a particular Rule 23 requirement is met or is not met.
355. IPO, 471 F.3d 24, 40 (2d Cir. 2006).
356. Abrams v. Interco, Inc., 719 F.2d 23, 28 (2d Cir. 1983). For somewhat contemporary musings by Judge Friendly about discretionary rulings,
357. Henry J. Friendly, Indiscretion About Discretion, 31 EMORY L.J. 747 (1982).
358. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010).
359. Id. at 1437-38.
360. Id. at 1437.
361. Id.
362. Id. at 1438.
363. In re Corrugated Container Antitrust Litig., 643 F.2d 195, 211 (5th Cir. 1981).
364. supra text accompanying note 83
365. Beach v. Healthways, Inc., 264 F.R.D. 360, 363 (M.D. Tenn. 2010) (denying defendants' motion to postpone "merits discovery" until after class certification).
366. In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 269 (3d Cir. 2009) (citations omitted).
367. In Amchem, the Court emphasized that the proposed settlement failed the predominance test.
368. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 622-25 (1997). But this discussion may be off point, since it was about the "cohesiveness" of the class there, and meant to emphasize that "[n]o settlement class called to our attention is as sprawling as this one."
369. Id. at 624.
370. It may be that the function of predominance in that case was to underscore the class conflicts that mainly concerned the Court, and that a relaxed view of predominance in other cases could be justified in the settlement context where it would not suffice for a litigation class that had to show how to try the case. the Court did note as well that "[p]redominance is a test readily met in certain cases alleging consumer or securities fraud or violations of the antitrust laws."
371. Id. at 625.
372. Edward F. Sherman, the MDL Model for Resolving Complex Litigation if a Class Action Is Not Possible, 82 TUL. L. REV. 2205, 2223 (2008).
373. George Rutherglen, Title VII Class Actions, 47 U. CHI. L. REV. 688, 731-32 (1980) (speculating that in Eisen the Court was not generally opposed to merits scrutiny, and would welcome merits scrutiny that "would protect defendants from unwarranted certification of class actions").
374. Molot, supra note 15, at 74.
375. A possible example is the high-profile review by Judge Rakoff (of the Southern District of New York) of a proposed settlement of an SEC action against Bank of America, which the judge reluctantly approved after first rejecting a different settlement. See Louise Story, Bank's Deal with S.E.C. Is Approved, N.Y. TIMES, Feb. 23, 2010, at B1.
376. supra text accompanying notes 138-46 (discussing judicial review of class action settlements).
377. Judith Resnik, Tiers, 57 S. CAL. L. REV. 837, 1030 (1984).