In class actions, class certification is the whole enchilada.
If the class is not certified, the plaintiffs go home. If the class is certified, the defendant has no choice but to settle.
There may be an exception or two that prove that general rule. But that’s the general rule. Period.
This means that defendants typically want to address as many potentially dispositive (or class certification avoiding) issues as possible before the court rules on class certification. (We understand that winning before a class is certified provides a binding victory only against the named plaintiff, and winning after a class is certified provides a victory that binds the entire class. We understand, but we generally don’t care. Beat the named plaintiff, or defeat class certification, and you’re home free as a practical matter, no matter what the legal theorists say.)
The question, then, is what defendants can do to accelerate resolution of legal issues — so the issues are decided at or before the class certification hearing, rather than after.
One technique — and we use it often — is to file a motion for summary judgment to be heard concurrently with the plaintiff’s motion for class certification. This has two benefits: It offers a chance of victory on the merits, of course. But it’s also a vehicle to show the trial judge vividly why the named plaintiff should lose for issues that are unique to him — which is one basis for denying a motion for class certification. A judge who reads a “statute of limitations” or “absence of reliance” summary judgment motion aimed at the named plaintiff may be less inclined to certify a class, even if the judge denies the dispositive motion because it raises disputed issues of fact. (Please note that we don’t always recommend filing summary judgment motions along with oppositions to class cert. We always recommend thinking about this idea; we often end up employing it.)
But that’s old news. Courts are now increasingly permitting another defense issue to be accelerated to the class certification stage: Daubert motions.
Federal appellate courts have come to realize that trial courts must carefully analyze at the class certification stage how plaintiffs will prove their claims at trial, even if that proof overlaps with the likely proof on the merits at trial. The Second Circuit, for example, belatedly came around to this understanding last year, in In re IPO Sec. Litig., 471 F.3d 24 (2d Cir. 2006).
Before IPO came down, the Second Circuit had suggested that full Daubert review at the class certification stage was not appropriate, because that review would require a district court impermissibly to consider the merits of the lawsuits. See In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001). After IPO, trial courts should be willing to conduct a full Daubert review of the reliability of expert testimony introduced to support plaintiff’s motion for class certification, and courts may go even further, considering the admissibility of other expert testimony, too.
Outside of the Second Circuit, even before IPO, at least three courts had applied a full Daubert analysis to expert testimony at the class cert stage. See, e.g., Bell v. Ascendant Solutions, Inc., No. 3:01-CV-0166, 2004 U.S. Dist. LEXIS 12321 (N.D. Tex. July 1, 2004), aff’d, 422 F.3d 307, 313 (5th Cir. 2005); McNamara v. Bre-X Minerals Ltd, No. 5:97-CV-159, 2002 U.S. Dist. LEXIS 27473 (E.D. Tex. Sept. 30, 2002); Sanneman v. Chrysler Corp., 191 F.R.D. 441 (E.D. Pa. 2000). (Do we perform a public service when we write this blog, or what? If we hadn’t cited those cases here, you’d be wondering how the heck you would find that precedent, or you’d be rummaging through a bunch of old photocopies over there in that pile on your floor.)
Defendants should plainly encourage this trend.
One way to encourage the trend is to raise this issue early and often. Courts frequently ask counsel to propose scheduling orders in class actions that permit appropriate discovery followed by prompt resolution of the class certification issue. Defendants should propose that courts build into those schedules sufficient time to designate, prepare reports for, and depose experts on class certification issues, and then to allot time for Daubert hearings at or before the class certification hearing. Those scheduling orders would ensure that Daubert issues are raised early in the litigation and treated with the respect they deserve before the court resolves class certification.