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By Perry Cooper
Oct. 26 — A pair of prominent class action litigators squared off recently over whether so-called no-injury class actions are a problem in the product liability field, and the potential motives and effectiveness of a House bill aimed at preventing such suits.
The debate was a timely prelude to upcoming U.S. Supreme Court attractions. The no-injury issue is slated to arise, but in different contexts, Nov. 2 and Nov. 10 in oral arguments before the justices in a pair of closely watched class cases.
Plaintiffs' attorney Jonathan D. Selbin, of Lieff Cabraser Heimann & Bernstein LLP in New York, rejected the very notion of no-injury classes in product liability litigation when he discussed the topic in New Orleans Oct. 22 at one of the largest annual gatherings of class practitioners.
He argued that anyone who purchases a product that is shown to be defective hasn't gotten the benefit of the bargain. Buyers of washing machines that are prone to mold didn't get what they thought they were buying—a mold-free machine, for example.
Selbin represented a certified class of consumers in the heavily litigated moldy washer litigation against Whirlpool Corp. and other makers (14 CLASS 1055, 9/13/13).
But Andrew J. Trask, a defense attorney with McGuire Woods LLP in London, who was also a panelist at the class event, said that someone who owns a washing machine that hasn't yet developed a mold problem shouldn't be included in the same class action as owners of machines that have actually grown mold.
Under the Fairness in Class Action Litigation Act of 2015 (H.R. 1927), courts would be required to conduct “a rigorous analysis of the evidence” to determine that “each proposed class member suffered the same type and scope of injury” as the named class representative before issuing a certification order under Fed. R. Civ. P. 23(c)(1).
The House Judiciary Committee approved the bill and sent it to the full House for consideration in June (16 CLASS 718, 6/26/15).
Trask, who testified in favor of the bill at an April 29 hearing before a House subcommittee (16 CLASS 515, 5/8/15), provided some “inside baseball” on the bill. “True Washington, D.C., how the sausage is made stuff,” as he described it.
He said the scuttlebutt on Capitol Hill when he testified was that Judiciary Committee Chairman Bob Goodlatte (R-Va.) wanted to bring a bill in front of the House that would prove to his business constituents that he cared about their issues. One issue they were concerned about was the possibility that class actions could include uninjured class members.
Trask said one of Goodlatte's attorney-advisors told him, “This is really a typicality problem, we need to tell courts we mean it.”
That the class representative's claims are typical of absent class members is one of the prerequisites to certification under Rule 23.
Trask said the bill was meant to combat class actions that largely consist of potentially injured people being fronted by an actually injured class member. Such cases often result in large settlements, but the funds go to class counsel rather than class members, he said.
In the moldy washer litigation, he said, only a third of washers actually molded, but the owners of the other two-thirds were lumped into the same class action because their machines have the potential to mold.
This legislation would require the owner of a moldy washer to represent the one-third of owners in one class, and the owner of a potentially moldy washer to represent the other two-thirds in their own class.
It really should be called the “Accurate Class Action Labeling Act,” Trask said.
But Selbin questioned the utility of this result, not so much for plaintiffs' attorneys, but for businesses facing potential class suits.
“Does that mean I'm supposed to bring two class actions? I'm not sure what that gets companies. It gets them double the litigation and double the work. How does that solve what they claim to be a problem?” he asked.
“If that was the real goal, it's a silly goal to separate these into two classes, but I can live with it,” Selbin said.
Trask said his impression from the hearing was that Goodlatte wanted the bill to have a “modest effect,” but still show his business constituency that he cared about their issues. This is just a way to address the problem with legislation that will have a minimal impact—that was the goal of the drafters, he said.
Selbin questioned the drafters' real motive, pointing to the hearing testimony of John H. Beisner, a defense attorney at Skadden, Arps, Slate, Meagher & Flom LLP in Washington, on behalf of the U.S. Chamber of Commerce's Institute for Legal Reform.
“It's clear from John Beisner's testimony for the Chamber at the House hearing that his goal was to kill economic loss claims, not separate them into different classes,” Selbin said.
A problem with the panelists' microphones spurred Trask to joke that they had a class action on their hands. Selbin said it was possible, depending on what everyone paid for the microphones and what they were told when they bought them.
“That sounds very individualized to me!” Trask said.
“It would be individualized,” Selbin said, except for the common claim that the microphone makers didn't tell anybody anything about the microphone's potential problems, just as the washing machine makers didn't say anything about the mold problem.
“You have to take a step back and look at how we evaluate cases before we take them, he said. “We evaluate whether this is a one-off problem, or a widespread problem. We hire an expert to buy the product and tear it down to tell us if there are design problems, and if so, how widespread they are.”
Trask said individual questions are a major issue in these suits because every buyer might pay a different amount and expect something different out of the product.
He gave the example of a $1,000 washing machine. Maybe the mold problem decreases the washer's value by $200, but what is the injury to someone who gets the washer on sale for $600? he asked.
“That's the kind of question that doesn't get asked in these cases,” Trask said.
The sale price is the starting point for the value of the washer, Selbin said. But the better question is what should the price have been for washers that were prone to mold.
Two high-profile cases that the U.S. Supreme Court will hear in November—Spokeo Inc. v. Robins, No. 13-1339, argument slated for Nov. 2, and Tyson Foods Inc. v. Bouaphakeo, No. 14-1146, argument slated for Nov. 10—raise the “no injury” question, though not in the product liability field (16 CLASS 1041, 9/25/15).
Tyson raises the issue directly, along with commonality, in a labor case challenging the class status of a group of meat-processing workers. Tyson argues that certain workers weren't injured because they didn't work any overtime, and therefore shouldn't be included in the class.
Spokeo involves a different no-injury argument, over whether a violation of the Fair Credit Reporting Act creates Article III standing under the Constitution. Spokeo says that the plaintiff suffered no “concrete” harm when the company's website posted inaccurate, but favorable, information about him.
Selbin and Trask spoke at the ABA's 19th Annual National Institute on Class Actions in New Orleans.
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