In late 2007 and early 2008, the Hannaford Brothers Grocery stores suffered a security breach: thieves stole the debit and credit card data of thousands of customers. As one might imagine, a number of lawsuits followed, including a number that were consolidated into litigation in the District of Maine. After extensive pretrial litigation in various courts, the trial court was faced with the question of whether to certify a class action that sought damages for card replacement fees and purchases of data protection products.
In the resulting opinion, In re Hannaford Bros. Customer Data Security Breach Litig., No. 2:08-MD-1954-DBH, 2013 U.S. Dist. LEXIS 39055 (D. Me. Mar. 20, 2013), the court denied certification on predominance grounds.
Before doing so, however, the court considered one argument that the defendant had made about the efficacy of class actions in general. (For technical reasons, the defendant argued this as a reason the class lacked numerosity; it would have worked equally well as a superiority argument.)
I am certainly concerned that if this case proceeds as a class action, few class members will ultimately be interested in taking the time to file the paperwork necessary to obtain the very small amount of money that may be available if there is a recovery. I also note that the recovery of generous fees for plaintiffs’ attorneys and large cy pres awards with little money going to actual class members call into question the integrity of the class action process for resolving lawsuits. Nevertheless, those are policy issues for Congress or for the Federal Rules drafters.
(Emphasis added.) That said, the court did hold that individual issues predominated over any common issues presented by the litigation. In particular, the court recognized that the debate over whether individualized damages issues precludes certification is one that often turns on rhetoric rather than analysis:
"On the one hand, the First Circuit has said that variations in damages do not prevent class certification and has reversed a court that said they did. See Smilow v. Southwestern Bell Mobile Sys., Inc., 323 F.3d 32, 40 (1st Cir. 2003) ("The individuation of damages in consumer class actions is rarely determinative under Rule 23(b)(3). Where, as here, common questions predominate regarding liability, then courts generally find the predominance requirement to be satisfied even if individual damages issues remain."). Other circuits and authorities often say the same thing. On the other hand, if the issue is phrased as causation (of damages), the courts demand common proof.
(Emphasis added.) Despite spotting this issue, the court sidestepped it. In this case, the largest problem was that the plaintiffs would need expert testimony to establish damages, and they had no expert.
Although the plaintiffs have told me they will find such an expert, they have not presented that expert or that expert’s opinion. Certainly I cannot take judicial notice that there will be such an expert.
The primary takeaway from this opinion is that brief discussion on damages. Plaintiffs will often characterize significant variations as "just damages," because if they can convince the court of that characterization, it will certify a class. But damages are often inextricably intertwined with causation and liability. It is worth remembering that when arguing against certification.