We left off last Monday in the middle of something — the Seventh Circuit’s latest proof of its leadership in the law of class actions.
My talk of the Seventh Circuit surge followed a segment on The outsize influence of Justice Scalia.
Now let’s finish up with the surge before turning to the third and final reason class actions will rebound: Politics.
Seventh Circuit surge, part 2
At the end of the last post, we watched Chief Judge Diane Wood of the Seventh Circuit dispatch, in Kleen Products LLC v. Int’l Paper Co., No. 15-2385 (7th Cir. Aug. 4, 2016), defense complaints about evidence showing a “common impact” from the container board cartel’s price-fixing on all members of the direct-purchaser class.
Wal-Mart and Comcast
Now we come to Chief Judge Wood’s handling of two Supreme Court opinions in which Justice Scalia had written the 5-4 majority opinions reversing class certifications, Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).
She did so thus:
Defendants also argue that Dwyer’s approach is the same kind of “trial-by-formula” that the Supreme Court rejected in Wal-Mart. But in that case the Court disapproved the plaintiff’s attempt to take a sample of the class members, who alleged employment discrimination, to determine what percentage of that sample had actually experienced discrimination, and then to extrapolate that percentage for the whole class. The Purchasers here are doing nothing of the sort: they assert that every person or entity in North America paid the overcharges that resulted from Defendants’ collusive practices. Even for transactions where prices were negotiated individually or a longer term contract existed, the district court found, reasonably, that the “starting point for those negotiations would be higher if the market price for the product was artificially inflated.”
We have already discussed the Purchasers’ common proof of damages, but we add a few more words here to respond to the Defendants’ Comcast arguments. Defendants understand Comcast to hold that “individualized damages do foreclose predominance if plaintiffs present no classwide method to ad- judicate damages tethered to their theory of antitrust violations and if resolving those individualized damages issues would ‘overwhelm questions common to the class.’” Brief for Appellants at 36 (quoting 133 S. Ct. at 1433). We agree with Defendants that Comcast insists that the damages theory must correspond to the theory of liability, but that is all Comcast said that is pertinent to our case.
Kleen Products, slip op. at 16-17.
The last topic from Kleen Products involved damages in class actions. Chief Judge Wood wrote:
Defendants complain that it is wrong to calculate aggregate rather than individual damages for the class. The district court rejected that position as a matter of law, as do we. We held in Loeb Indus., Inc. v. Sumitomo Corp., 306 F.3d 469 (7th Cir. 2002), that plaintiffs are permitted to use estimates and analysis to calculate a reasonable approximation of their damages. Id. at 493. And we already have confirmed that at the class certification stage, plaintiffs are not obliged to drill down and estimate each individual class member’s damages. The determination of the aggregate classwide damages is something that can be handled most efficiently as a class action, and the allocation of that total sum among the class members can be managed individually, should the case ever reach that point. If in the end the Defendants win on the merits, this entire matter will be over in “one fell swoop.”* (See WILLIAM SHAKESPEARE, MACBETH, act 4, sc. 3, l. 220 (David Bevington ed., Pearson Longman 6th ed. 2009.) If Purchasers prevail on the common issues, both liability and aggregate damages will be resolved. The district court did not commit reversible error when it concluded that the class issues predominated.
Kleen Products, slip op. at 18.
Inertia and politics
Reason number three for the rebound of class actions combines inertia and politics.
If the Senate’s confirmatory torpor persists through January 2017, the preponderance of appellate judges who look more favorably on class actions will persist. President Obama has named two Supreme Court justices and 55 court of appeals judges. Since his first inauguration, eight of the 13 courts of appeals have flipped from majority Republican appointees to majority Democratic appointees. “And they really are diverse; 43 percent of Obama’s judges have been women, shattering the old record of 29 percent under Bill Clinton, and 36 percent have been non-white, surpassing Clinton’s record of 24 percent. Obama has appointed 11 openly gay judges, when before him there was only one.” Michael Grunwald, “Did Obama win the judicial wars?“, Aug. 18, 2016, Politico.
The preponderance will grow if the Democratic nominee does not blow the lead she currently has. Although nobody knows what will happen in November, FiveThirtyEight puts her chances at 89.2 percent.
A switch to a Democratic majority in the Senate — currently about a 50-50 bet — would make confirming the judicial nominees of a President Hillary Clinton faster. It also could affect the liberalness of her nominees.
What if Chief Judge Merrick Garland, President Obama’s choice to replace Justice Scalia, winds up joining the Court? Will a Justice Garland help a renaissance in class actions?
We don’t know of what he will do, but we do know that he and two of his D. C. Circuit colleagues vacated class certification in a high-profile antitrust case, In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244 (D.C. Cir. 2013). See “D.C. Circuit Derails Fuel Surcharge Class“, The Contingency, Aug. 9, 2013.
In Rail Freight, the panel (with Judge Janice Rogers Brown writing the opinion) took an “expansive” view of Comcast, holding “that any indicia of individualized damages in a Rule 23(b)(3) class action — which is a near certainty — dooms certification.” Alex Parkinson, Comcast Corp. v. Behrend and Chaos on the Ground, 81 U. Chi. L. Rev. 1213, 1226 & 1227 (2014). That sounds a potentially sour note in an otherwise pro-class forecast.
* * * *
Class actions will rebound in the near term for three reasons:
- Justice Scalia’s death removed their most effective opponent,
- the Seventh Circuit’s pro-class leadership accentuates the positives of class treatment and shows the way forward for other circuits, and
- current electoral trends signal consolidation of, and probable growth in, the preponderance of Democratic appointees to the federal appellate bench.
* The “fell” in “fell swoop” means “fierce, cruel, ruthless”. https://stancarey.wordpress.com/2012/05/24/explaining-fell-in-one-fell-swoop/.