By Michael Hoenig - New York Law
Journal - December 12, 2012
articles I suggested that the explosive growth of consumer class
actions in recent years amounted to a "class actionization" of
America. Some lawyers skillfully convert ordinary breach of
warranty or Lemon Law or consumer fraud act claims into putative
class actions of mega-proportions by naming one or two
plaintiffs as "representatives" of a mass of faceless, nameless
purchasers of the same or similar products. By a twist of the
pleader's pen—"Presto Remco!"—the laments of the named
plaintiffs in one or two scenarios morph into becoming the
putative complaints of perhaps hundreds of thousands, maybe even
millions, of other consumers who may have experienced no
malfunctions or harms and who have absolutely no interest in
being part of the lawsuit now carried in their name.
quite another plausible assumption can be made. Perhaps more
likely, the class of unidentified mass consumers wants nothing
to do with lawyers they don't know, with whom they never spoke
or whom they never retained. Indeed, they likely don't want the
so-called named "class representatives" speaking for them in a
lawsuit that impugns the reputation (or value) of products they
own or enjoy. Nor, if informed, would most absent class members
favor such behemoth lawsuits. After all, they could, eventually,
drive up product prices or divert company funds that otherwise
could be used for research and development of improved products.
Additionally, such suits may hurt a company's shareholders, many
of whom are ordinary individuals and pensioners, or they might
adversely impact employees who depend upon the defendant firm's
success in the marketplace.
Wal-Mart Stores v. Dukes,1 an employment
discrimination class suit on behalf of some 1.5 million Wal-Mart
employees, the U.S. Supreme Court, in a 5-4 decision, stated
that the class action is "an exception to the usual rule that
litigation is conducted by and on behalf of the individual named
parties only." In order to justify a departure from that rule, a
class representative must be part of the class and "possess the
same interest" and "suffer the same injury" as the class
members. The "commonality" requirement of Federal Civil
Procedure Rule 23 requires the plaintiff "to demonstrate that
the class members 'have suffered the same injury.'" The class
members must not only have a "common contention." It must be of
such a nature that it is capable of class-wide resolution. This
means that determination of its truth or falsity "will resolve
an issue that is central to the validity of each one of the
claims in one stroke."2
Wal-Mart teaches that Rule 23 does not set forth a mere
pleading standard. A party seeking class certification "must
affirmatively demonstrate" his compliance with the rule. The
trial court may need to "probe behind the pleadings," to conduct
a "rigorous analysis" that class action requirements have been
met. Frequently, that "rigorous analysis" will entail some
overlap with the merits of the plaintiff's underlying claim.3
Supreme Court, in Whirlpool v. Glazer, No. 12-322, will
soon decide whether to accept review of the Sixth Circuit's May
2012 consumer class action decision inIn
re: Whirlpool Front-Loading Washer Products Liability Litigation.4
That circuit ruling upheld an Ohio federal district judge's
certification of a class of some 200,000 Ohio residents who
purchased certain models of Whirlpool washing machines. The
named plaintiffs complained that their machines experienced mold
or moldy odors.
of the case extends far beyond the certified Ohio class because
the Ohio lawsuit is the bellwether action for eight similar
cases filed against Whirlpool involving more than 1.5 million
purchasers. This makes it one of the largest class proceedings
in federal court. Additionally, numerous other lawsuits alleging
nearly identical mold problems have been commenced against other
washing machine manufacturers and sellers of front-loading
washers including Samsung, General Electric, Electrolux, Sears,
Miele and others.
significant than the numbers, however, is the presence of truly
momentous class action issues nicely teed up for the Supreme
Court's consideration by an excellent petition for certiorari
and opposition, both crafted by experienced counsel. In many
respects the universe of consumer class actions is now at a
pivotal crossroads. Will it be a regime dominated by artful
class pleadings in which gargantuan classes are speculatively
hypothesized on the basis of the experiences of one or two named
plaintiffs? Or will courts conduct "rigorous analyses" to limit
classes to those who truly suffered actual injury or harm and
weed out class suits for buyers who did not?
petition observes that at least 97 percent of all washer buyers
have never experienced a problem with mold or moldy odors and
therefore cannot show any cognizable injury under Ohio tort law.
Nevertheless, the U.S. Court of Appeals for the Sixth Circuit
certified those "non-injury" purchasers to be members of the
"liability" class it approved. This ruling, Whirlpool argues,
contravenes a pivotal holding in the Supreme Court's Wal-Mart
decision that named class members as well as absent class
members must suffer "the same injury."5
questions are raised. May a court certify a class action even
though most class members have not been harmed? Further, if
factual disputes exist that bear directly upon the requirements
of Rule 23, must the court resolve them before certifying the
class? And, what happens when factual dissimilarities among
putative class members raise loads of individualized issues?
Does that cause the individual issues to predominate over the
common issues making class certification inappropriate?
opposition, the plaintiffs in Glazer argue that the
percentage of washer buyers experiencing mold and odors was
greater than the 3 percent claimed by Whirlpool. More
importantly, they argue that class claims are and should be
permitted on behalf of individuals exposed to harm who have not
yet proved entitlement to damages. Plaintiffs argue that
certification of a class action is an issue separate from a
claimant's right to recover damages. Therefore, class
certification is permissible even though a plaintiff may
eventually not recover. They say that when a class member
receives a defective product, a "concrete and particularized"
injury occurs then and there because "every class member paid
money for a non-defective product."
they claim that a purchaser is entitled to
"benefit-of-the-bargain" damages for breach of warranty, i.e.,
the difference at the time and place of acceptance between the
value of the goods accepted and the value they would have had if
they had been as warranted. A variant of this theory of harm
seems to have been adopted by the Sixth Circuit as a rationale
for class certification: "Additionally, the class plaintiffs may
be able to show that each class member was injured at the point
of sale upon paying a premium price for the [washer] as
in legal parlance, concerns what is called Article III
"standing." In order to constitutionally be able to sue,
plaintiffs must establish an "actual" and "concrete" injury in
fact that is particularized to them.7 Many courts
have held that in product defect cases "no injury" plaintiffs
who suffer only a risk that an alleged defect may someday
materialize lack Article III standing.8
standing to sue requires a plaintiff to demonstrate that the
purported defect has actually manifested itself in his or her
product or, at least, inevitably will. Plaintiffs' class counsel
posit that the Sixth Circuit's "premium price" theory or what
they call the "benefit of bargain" damages or what some others
label as a product's "diminution of value" confers
constitutional standing. Defendants' class counsel say "no."
Such hypotheses are a pleader's fiction. Rather, all class
plaintiffs must have suffered actual or inevitable injury or
harm from the alleged defect.
opinion of this writer, a buyer of a product who has not, in
fact, himself suffered an accident, mishap or adverse event or
an actual harm has not established standing to sue in tort or
breach of warranty. A pleading merely alleging that a product
defect, breach of warranty or some deficiency exists and some
other persons may have been harmed does not confer standing to
sue. As long as the buyer continues to use the product without
actual manifestation of the alleged defect, the allegation of an
injury is purely hypothetical. Further, if the buyer has not
attempted to sell the allegedly defective product to concretize
and validate that some economic harm attributable to the
purported defect actually occurred, the alleged economic loss is
purely hypothetical. The "injury," so to speak, rests in the
air, inchoate, a sheer figment of the pleader's creative
This can be
seen well when considering automobiles, for example. Apart from
actual damage or harm that may have been sustained by a named
plaintiff and specified in the pleading, class generalizations
about existence of the same defect in vehicles owned by putative
class members who have not actually suffered harm and who
continue to use their cars amount to nothing more than
speculative conclusions. No one can know whether an unnamed
class member's vehicle has diminished in value until that owner
sells the car (or tries to).
is well known, the value of a used car at a given point in time
depends on numerous variables then in existence. Among those is
supply and demand. So, for example, in a bad economy used cars
may fetch a premium price because buyers cannot afford to
purchase expensive new cars. Conversely, when fuel is expensive,
the used car's resale price may go down if it is a gas guzzler
and gets poor mileage. Until a sale actually occurs and the
applicable facts materialize, we cannot know that the defect
claimed in the complaint would have anything to do with any
diminution of the car's value. Thus, the claim of a class harm
rests on rank speculation and the alleged damage has not
occurred sufficiently to confer "standing" to sue in tort or
the Supreme Court is desirable because such significant
crossroads issues will fester. Already just weeks ago, the U.S.
Court of Appeals for the Seventh Circuit, in
Butler v. Sears, Roebuck & Co.,9 reversed a
trial court's denial of class certification regarding claims
that mold growth occurred in certain washing machines. Suit was
based on the warranty laws of six states. The appellate court in
Butler said that it accepted the interlocutory appeal "to
clarify the concept of 'predominance' in class action
litigation." That concerns how much the individualized issues
might overwhelm the common issues so that class certification
would be inappropriate.
Butler court did not confront the issue of "standing." It
did not even mention the question. Further, although the
Butler court says that it agreed with the Sixth Circuit's
decision in Glazer, it also stated that to uphold the
denial of class certification below "would be to create an
intercircuit conflict." Yet, as the Glazer petition for
certiorari and the opposition now before the Supreme Court
reflect, the question of an intercircuit conflict on important
class issues is already before the court.
the Seventh Circuit identifies the "common question" regarding
the entire mold class to be whether the machines were defective
in permitting mold to accumulate but, then, the court concedes
that the answer "may vary with the differences in design."
However, if the answer may vary depending on the design
differences, how can this present a good common issue for class
purposes? In Wal-Mart v. Dukes, the court held that the
"common contention" must be of such a nature that it is capable
of class-wide resolution of an issue that is central to the
validity of each claim "in one stroke."10 An answer
that varies with the design differences does not offer a
resolution of each claim in one stroke and, therefore, Butler
conflicts with Wal-Mart.
Butler decision adopts a "certify-first" approach based
on a "common" contention and then, only later, would take care
of individualized competing issues. But that is not what Rule 23
or a "rigorous analysis" requires. It is the weighing of the
burdens of the individualized conflicts against the perceived
efficiency of the common issue that is necessary. A
simply favors knee-jerk approval of giant class actions. That
would create huge litigation costs, unduly burden the courts and
force large settlements under the duress of mega-exposures.
is a member of Herzfeld & Rubin.
1. 131 S.
Ct. 2541, 2011 U.S. LEXIS 4567 (2011).
2. 131 S.
Ct. at 2550-2551.
3. Id. at
4. 678 F.3d
409 (6th Cir. 2012), pet. for cert. and opposition filed in
Whirlpool v. Glazer, No. 12-322 (2012). Coincidentally, the
December 2012 issue of the ABA Journal, at pp. 15-16, presents
an article reporting that the Sixth Circuit has surpassed the
Ninth as the "most reversed" appeals court.
Wal-Mart Stores v. Dukes, 131 S. Ct. 2541, 2551 (2011).
6. 678 F.3d
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560,
Birdsong v, Apple, 590 F.3d 955, 961 (9th Cir. 2009);
Briehl v. General Motors, 172 F.3d 623, 628-629 (8th
DaimlerChrysler v. Inman, 252 S.W.3d 299, 306 (Texas
9. 2012 U.S.
App. LEXIS 23284 (7th Cir. Nov. 13, 2012).
10. 131 S.
Ct. at 2551.
Printer Friendly Version
Back to Archive
125 Broad Street, New York, New York, 10004 - Phone: 212-471-8500 - Fax: 212-344-3333©2004 -2014 Herzfeld & Rubin, P.C.