The Seventh Circuit, per Judge Richard Posner, has put the kibosh on an effort to kill a pair of class actions over moldy Kenmore washing machines. Butler v. Sears, Roebuck & Co., No. 11-8029 (7th Cir. Aug. 22, 2013). In doing so, the court gave the back of its hand to those who claim that Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), wrought a Sea Change in class action Law.
The Supreme Court had vacated the Seventh Circuit's affirmance of class certification in the case against Sears and remanded to the court of appeals for Further Thought in light of Comcast. Sears, Roebuck & Co. v. Butler, 133 S. Ct. 2768 (2013).
Sears urged on remand that Comcast "rejects the dissenting view that 'economies of time and expense' override rigorous compliance with the predominance requirement". Sears' Circuit Rule 54 Statement, Butler v. Sears, Roebuck & Co., No. 11-8029, Doc. No. 30, at 5 (7th Cir. July 29, 2013). The panel responded thus:
Sears argues that Comcast rejects the notion that efficiency is a proper basis for class certification, and thus rejects our statement that "predominance" of issues comon to the entire class, a requirement of a damages class action under Rule 23(b)(3), "is a question of efficiency." 702 F.3d at 362. But in support of its argument Sears cites only the statement in the dissenting opinion in Comcast that "economies of time and expense" favor class certification, 133 S. Ct. at 1436 -- a statement that the majority opinion does not contradict. Sears is wrong to think that anything a dissenting opinion approves of the majority must disapprove of.
Butler, slip op. at 6-7. The enemy-of-my-enemy idea -- a "triadic interaction" rule that never did have much logic behind it -- did not sway their honors.
The court went on to reject two broad readings, common in defense circles, of Comcast. The first dealt with Sears's claim that "permutations" in what caused the washers to stink and in the amount of class members' stink-damages meant common issues couldn't predominate under Rule 23(b)(3). Sears' Circuit Rule 54 Statement at 6. The panel replied that "it was not the existence of multiple theories in [the Comcast] case that precluded class certification; it was the plaintiffs' failure to base all the damages they sought on the antitrust impact -- the injury -- of which the plaintiffs were complaining."* Butler at 7. Complexity in the theory of harm thus does not doom class treatment so long as the class ties the harm to class damages.
The panel also held that a total absence of class-wide damages doesn't prevent certification of a class under Rule 23(b)(3). The thinking went like this:
Sears thinks that predominance is determined simply by counting noses: that is, determining whether there are more common issues or more individual issues, regardless of relative importance. That’s incorrect. An issue “central to the validity of each one of the claims” in a class action, if it can be resolved “in one stroke,” can justify class treatment. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. at 2551. That was said in the context of Rule 23(a)(2), the rule that provides that class actions are permissible only when there are issues common to the members of the class (as of course there are in this case). But predominance requires a qualitative assessment too; it is not bean counting. In Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, 133 S. Ct. at 1196, the Court said that the requirement of predominance is not satisfied if “individual questions…overwhelm questions common to the class,” and in Amchem Products, Inc. v. Windsor, 521 U.S. 591, 623 (1997), it said that the “predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” And in In re Inter-Op Hip Prosthesis Liability Litigation, 204 F.R.D. 330, 345 (N.D. Ohio 2001), we read that “common issues need only predominate, not outnumber individual issues.” Or as we put it in Messner v. Northshore University Health System, 669 F.3d 802, 819 (7th Cir. 2012), “Under the district court’s approach [which our decision in Messner rejected], Rule 23(b)(3) would require not only common evidence and methodology, but also common results for members of the class. That approach would come very close to requiring common proof of damages for class members, which is not required. To put it another way, the district court asked not for a showing of common questions, but for a showing of common answers to those questions. Rule 23(b)(3) does not impose such a heavy burden."
It would drive a stake through the heart of the class action device, in cases in which damages were sought rather than an injunction or a declaratory judgment, to require that every member of the class have identical damages. If the issues of liability are genuinely common issues, and the damages in individual hearings, in settlement negotiations, or by creation of subclasses, the fact that damages are not identical across all class members should not preclude class certification. Otherwise defendants would be able to escape liability for tortious harms of enormous aggregate magnitude but so widely distributed as not to be remediable in individual suits. As we noted in Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004), “the more claimants there are, the more likely a class action is to yield substantial economies in litigation. It would hardly be an improvement to have in lieu of this single class 17 million suits each seeking damages of $15 to $30…. The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30” (emphasis in original). The present case is less extreme: tens of thousands of class members, each seeking damages of a few hundred dollars. But few members of such a class, considering the costs and distraction of litigation, would think so meager a prospect made suing worthwhile.
There is a single, central, common issue of liability: whether the Sears washing machine was defective. Two separate defects are alleged, but remember that this class action is really two class actions. In one the defect alleged involves mold, in the other the control unit. Each defect is central to liability. Complications arise from the design changes and from separate state warranty laws, but can be handled by the creation of subclasses. See, e.g., Johnson v. Meriter Health Services Employee Retirement Plan, supra, 702 F.3d at 365 (10 sub-classes). These are matters for the district judge to consider in the first instance, and Sears will be able to present to her he evidence it’s obtained since the district judge ruled on certification almost two years ago.
Butler at 8-11.
To which we say -- amen!
*The evidence in Comcast in fact did tie the harm from Comcast's conduct to the class's damages. But the majority said it didn't. The Seventh Circuit implies that it agrees with Blawgletter on that point. See Butler at 8 (stating that "the class in Comcast was (in the view of the majority) seeking damages beyond those flowing from the theory of antitrust injury alleged by the plaintiffs") (emphasis added). Sadly, the ruling by the 5-4 majority in Comcast counts more than the views of Blawgletter, the district court, the majority on the Third Circuit, the four dissenting justices, and the Butler panel.