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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

In re Zurn Pex – Daubert and Class Certification

Posted in Certification

One of the key issues that many (including me) assumed would be resolve in Wal-Mart v. Dukes was the question of what kind of Daubert inquiry would be necessary at the class certification stage.

The 1993 case Daubert v Merrell Dow Pharmaceuticals, Inc., involved a challenge to the longstanding "general acceptance" test for scientific evidence articulated by the D.C. Circuit Court of Appeals in Frye v. United States. The litigation in Daubert concerned infants suffering from birth defects that allegedly resulting from their mothers’ use of the anti nausea drug Bendectin. After extensive pretrial discovery, Merrell Dow moved for summary judgment because no evidence existed demonstrating Bendectin to be a human teratogen (that is, a substance that causes birth defects). Merrell Dow attached an affidavit by a toxicology expert stating that the scientific literature on Bendectin showed no teratogenic effects. The plaintiffs countered Merrell Dow’s expert testimony with expert testimony of their own. Despite the conflicting testimony, the trial court granted summary judgment for Merrell Dow because the methods the plaintiffs’ expert employed were not sufficiently established to receive general acceptance; the Ninth Circuit affirmed on appeal.

The Supreme Court held that the enactment of the "more liberal" Federal Rules of Evidence superseded the Frye "general acceptance test," and remanded the case. However, the Daubert Court offered the District Court further guidance. It ventured several "observations" to consider in determining the admissibility of scientific evidence that later courts have adopted as required, namely:

  1. whether the methodology can be proven wrong (its falsifiability);
  2. whether the method has undergone publication and peer review;
  3. the method’s known or potential rate of error; and even
  4. whether the method enjoys general acceptance.

(Courts are also supposed to determine how well the evidence "fits" the subject matter, but they often enforce this prong less rigorously.)

Heading into the Supreme Court’s opinion, there was a clear circuit split as to whether to engage in a full Daubert inquiry during class certification. The Fourth and Ninth Circuits (in Brown v. Nucor Corp. and Dukes) had held that a Daubert inquiry was premature at class certification. The Second, Third, and Seventh Circuits had held that a court should check the qualifications of any experts, including anything up to a full Daubert inquiry.

The Supreme Court declined to address the issue directly. But the majority opinion did strongly hint at how the issue should be resolved:

The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so.

(Internal citation omitted.)

Now, the Eighth Circuit has become the first appellate court to weigh in post-Dukes. And it has decided that the Supreme Court’s hint was only a hint.

In re Zurn-Plex Plumbing Products Liability Litigation involved allegedly defective plumbing systems. (The brass fittings used to join pipes were allegedly ""doomed to leak within warranty" because of a phenomenon known as stress corrosion cracking.) The plaintiffs sued for breach of warranty, negligence, and violation of consumer fraud statutes. During the course of the pretrial litigation, the defendants moved to strike the testimony of two plaintiffs’ experts. The trial court denied the motions, and then, based in part on those experts’ testimony, it certified a Minnesota-only class for the negligence and breach-of-warranty claims.

The defendants appealed, but to no avail. The Eighth Circuit treated the Court’s hint as dicta, and decided there was no reason to conduct at full Daubert inquiry at the certification stage. Instead, it held that the trial court’s "focused inquiry" was sufficient:

The district court charted a middle course between the positions urged by the parties. After reviewing the evidence that had been produced, the court concluded that a full and conclusive Daubert inquiry would not be necessary or productive at this stage of the litigation, particularly since the expert opinions could change during continued discovery. The court instead conducted a focused Daubert inquiry to assess whether the opinions of Dr. Staehle and Dr. Blischke, based on their areas of expertise and the reliability of their analyses of the available evidence, should be considered in deciding the issues relating to class certification.

What does this mean for defense counsel? It means that the applicability of Daubert to certification proceedings is still a live issue. And that means that we are likely to see more expert evidence of questionable validity used to support certification motions. After all, in a class action, settlement–not trial–is plaintiffs’ preferred endgame. And certified classes create "hydraulic pressure" to settle even questionable claims. So long as courts decline to test plaintiffs’ expert testimony before certifying a class (particularly where it relates to the common issues in the class), plaintiffs will continue to use questionable testimony to buttress questionable claims.

(Hat tip to Jessie Kamens of BNA for drawing this case to my attention.)