First the Digitek MDL gave us a new weapon – the “Digitek Order” – to ensure plaintiffs’ counsel comply with their Rule 11 obligations to actually investigate their clients’ claims before filing thousands of cases. Novel concept, right? And now we have another helpful opinion – a new decision out of the MDL denying class certification. See In re Digitek Prods. Liab. Litig., 2010 WL 2102330 (S.D. W. Va. May 25, 2010).
There were a number of putative consumer class actions lurking in the MDL, all of them (essentially) seeking “economic damages:” items like refund of co-pays and money for doctors’ check-ups following the recall of Digitek. See In re Digitek, 2010 WL 2102330, at *2. The putative classes disavowed any request for personal injury or medical monitoring damages in the class actions, although there were some bizarre damage claims lurking in the class (New glasses? Toll charges? Insurance premiums? The cost of two enemas? This is an example of not wanting to pick up that class action rock to see what funky individual issues are living underneath.) Id. at *2 n.2, 18.
The plaintiffs sought certification of nationwide classes to pursue consumer fraud, warranty, and unjust enrichment claims – the typical passel of “economic damage” claims that we’re accustomed to seeing in these class actions. The first issue the court tackled, of course, is a biggie in class certification: choice of law. If 50 different states’ laws apply, it is a lot harder to get a class certified. So of course, the plaintiffs argued that all class members could and should proceed under New Jersey law; in the alternative, the Digitek plaintiffs were graciously willing to proceed with individual state classes. Id. at *5.
The plaintiffs’ choice-of-law workaround didn’t fly with the court. To its credit, the court spent a lot of time looking at the issue, analyzing and applying the choice-of-law rules of four transferor jurisdictions (the four jurisdictions from whence the putative class actions came – and no, Tartarus was not one of those jurisdictions). See generally id. at *8-12. That analysis, in turn, revealed:
(1) There are conflicts in the various state laws governing consumer fraud, warranty, and unjust enrichment. Id. at *8-9. No surprise there, although plaintiffs always argue to the contrary.
(2) Under the choice-of-law rules of Kansas, Kentucky, New Jersey, and West Virginia, the states of injury – i.e., the class members’ home states – was a significant factor suggesting those states’ laws should apply. See id. at *9-12.
Having decided that the laws of all 50 states applied, the court could have just ruled that individual issues predominated over class issues and called it a day. Instead, however, the court went on to analyze in more detail the individual problems plaguing these putative class actions. Typicality was the first significant speedbump. The court framed the typicality question helpfully; “plaintiff’s claim cannot be so different from the claims of absent class members that their claims will not be advanced by plaintiff’s proof of his own individual claim.” Id. at *14. Putting aside the obvious legal differences in the class claims that arose from the court’s choice-of-law analysis, there were also factual differences that troubled the court, particularly those weird damage claims we mentioned earlier. Id. at *15. Both the legal and factual differences doomed the plaintiffs’ attempt to establish typicality. Id.
The court also took several shots at the plaintiffs’ predominance arguments. The plaintiffs listed a litany of supposed “common issues” that predominated over any individual issues – or so the plaintiffs thought. Id. at *15-16. The court systematically critiqued and dismantled these “common issues,” observing that many of the identified issues were “drawn too broadly” or “not issues at all.” Id. at *15. For example, the question of whether the defendants violated any consumer fraud acts was not a “common” question; rather, it required the court to consider whether each putative class member suffered an “ascertainable loss” and if so, whether there was a “causal relationship” between the loss and the defendants’ conduct. Id. at *16. Those are really central questions in any consumer fraud case, and it is nice to see a court getting after it at the class cert stage, instead of just sweeping those individual questions under the rug or kicking them down the road for later resolution. This is a fine example of the rigorous analysis that every court should undertake at the class certification stage:
“[T]he representatives must concede that a number of their fellow class members used nearly all of their Digitek supply just prior to the recall. After doing so, they experienced a physical benefit far outweighing any minimal economic loss associated with discarding the remaining dose or few doses they had left…Additionally, those class members who visited their doctors following the recall might have been experiencing generalized symptoms that would have prompted the visit anyway. The highly individualized inquiry associated with separating the wheat from the chaff in just these two areas alone diminishes much of the hoped-for benefit from using the class device.”
Id. at *16.
Gotta love that quote. Other individual issues disguised as common issues? You bet. How about the defendants’ conduct in designing, manufacturing, and selling Digitek? The court concluded this was a “counterfeit” common issue “not at all divorced from the particular claim being analyzed.” Id. at *17. In other words, double-dipping. How about product ID? Also not common, given some “lingering” factual issues arising from the depositions of class representatives. Id. Instead, the court envisioned a nightmare of “individualized investigative work as to each class member” to determine who actually took Digitek. Id. What about damage to the putative class? Again, an individual issue because of the “vast array of individualized damages the representative or their predecessors seek,” the need to sort out putative class members who were already fully compensated via a refund, and the need to analyze on an individual basis whether any third-party actors were “independent cause[s] of economic damages suffered.” Id. at *18. You know, intervening actors like doctors and pharmacists, nobody too important in these kinds of cases…
Finally, having found no typicality and no predominance, the court didn’t waste a lot of ink on the lack of superiority. The court mentioned briefly that a class action would derail a carefully managed MDL and coordinated state proceedings that have been moving towards bellwether trials, so we mention it too, but at this point in the opinion, it was pretty clear which way the wind was blowing – no class. Id. at *18-19. Of course, the plaintiffs haven’t been sitting tight; they recently filed a motion for reconsideration, urging the court (again) to just adopt New Jersey law wholesale to the class claims, or else certify individual state classes, and not worry about those pesky individual issues because they can all be addressed by that magical “claims administrator.” Good luck with that, plaintiffs. We’re not holding our breath.