By Rebecca Bjork and Gerald L. Maatman, Jr.
To reach a decision it issued on August 22, 2013, the U.S. Court of Appeals for the Seventh Circuit was required to read some serious Supreme Court tea leaves and we found the results to be pretty interesting. In Butler v. Sears, Roebuck and Co., No. 11-8029 (7th Cir. Aug. 22, 2013), the Seventh Circuit reinstated its earlier order allowing certification of a class action involving allegations that consumers bought washing machines that collected mold and suddenly broke down. It did so after the SCOTUS ordered it to reconsider that decision in light of its decision against class certification in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). And it ruled primarily on the basis of its own case law encouraging courts to approve classes even where individual damages hearings may be required. As a result, the Seventh Circuit’s opinion may very well influence how other courts read and interpret Comcast – and probably in a way that will limit its impact – making it worthy of consideration for employers involved in workplace class action litigation.
We have written about Comcast before (here, here, and here). In that decision, the majority emphasized that a court’s duty to conduct a rigorous analysis of the class action requirements means that it must scrutinize the methodology offered by the plaintiffs’ statistical expert to calculate damages suffered by the class as a result of the legal claims alleged, to make sure the methodology does so on a class-wide basis. The Supreme Court noted in Comcast that the plaintiffs’ model there “cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of [the predominance requirement of] Rule 23(b)(3)[.]” It did not even attempt to do so, being limited to different legal theories of how a person might have been injured under the antitrust laws than the one the district court had certified. Comcast, 133 S. Ct. at 1433.
In Butler, however, the Seventh Circuit found the Comcast discussion about the need for damages models to calculate damages in one fell swoop to be pretty much beside the point. The Seventh Circuit noted that in Comcast, “[n]one of the parties had even challenged the district court’s ruling that class certification required that . . . damages . . . were measurable” in that way. Butler, at 6. By contrast, in Butler “the district court . . . neither was asked to decide nor did decide whether to determine damages on a class-wide basis.” Id. at 7. Thus, the appeals court found “there is no possibility” that some damages could be attributed to something unrelated to the plaintiffs’ class theory because, essentially, all class members bought the washing machines the plaintiffs contend are defective. Id. at 7 (“any buyer of a Kenmore washing machine who experienced a mold problem was harmed by a breach of warranty alleged in the complaint”).
The Seventh Circuit then noted that under its prior case law, “separate hearings to determine . . . the damages of individual class members . . . is permitted by Rule 23(c)(4) and will often be the sensible way to proceed.” Butler, at 7. It also explained that “[c]omplications arise [in the Butler class trial] from the design changes [that the manufacturer made over time, making the mold and breakdown problems variable from class member to class member] . . . but can be handled by the creation of subclasses.” Butler, at 10.
Implications For Employers
Much like it did in Ross v. RBS Citizens Bank in the wake of the Supreme Court’s Wal-Mart Stores, Inc. v. Dukes decision, the Seventh Circuit is expressing some hostility to the High Court’s directive that class certification is becoming more difficult for plaintiffs to achieve. The Seventh Circuit’s Ross decision, however, was vacated and remanded by the Supreme Court in light of Comcast. This provides some indication of the Supreme Court’s view of the Seventh Circuit’s recent Rule 23 jurisprudence and could be repeated in Butler. In the meantime, employers should expect the plaintiffs’ bar to urge district courts both inside and outside the Seventh Circuit to follow Butler in all kinds of workplace class actions. Outside of the Seventh Circuit, employers will have strong arguments that Butler is not faithful to the Comcast decision and that courts should reject class certification when common issues on liability do not predominate over individualized questions on damages. Inside the Seventh Circuit, employers may need to distinguish Butler on the basis that, among other things, the damages to the class members in Butler could only be attributed to the acts of the defendants. In many discrimination cases, however, that is not the case. For example, in a claim that members of the class were not hired or promoted or were fired because of an alleged policy or practice of race discrimination, class members’ injuries could be due to any number of legitimate reasons other than discrimination. Comcast, not Butler should apply to workplace class actions like those.