The Sixth Circuit Court of Appeals’ recent opinion in Lyngaas v. Curaden AG (“Lyngaas”), has important implications for federal class actions regarding personal jurisdiction and the use of non-admissible evidence to support class certification.
In Lyngaas, a plaintiff brought a class action against Curaden AG, a Swiss entity, and its U.S. subsidiary, Curaden USA, for allegedly violating the TCPA. The basis for the plaintiff’s allegations were two unsolicited fax advertisements sent on behalf of Curaden USA to the plaintiff and 46,000 other individuals across the country. These advertisements did not mention Curaden AG.
Curaden AG argued the district court lacked personal jurisdiction over it, while the plaintiff relied on an “alter ego” theory to support the exercise of personal jurisdiction. The district court rejected the “alter ego” theory but found that it had specific personal jurisdiction over Curaden AG on other grounds. The district court also granted class certification, rejecting Curaden’s argument that the plaintiff failed to support his motion for class certification with admissible evidence.
On appeal, the Sixth Circuit first disregarded the plaintiff’s “alter ego” theory. While it recognized that such a theory can subject a parent company to personal jurisdiction where the “the parent company exerts so much control over the subsidiary that the two do not exist as separate entities,” the Sixth Circuit held that Curaden USA was not Curaden AG’s alter ego. Plaintiff produced no evidence, the court reasoned, that Curaden AG exercised the requisite degree of control over Curaden USA “to pursue some unlawful end.” The Sixth Circuit made clear that the creation of an entity to avoid personal jurisdiction does not, by itself, undermine the separation of corporate form.
Nevertheless, the Sixth Circuit found that personal jurisdiction over Curaden AG was proper pursuant to Federal Rule of Civil Procedure 4(k)(2), the federal long-arm statute. The Sixth Circuit emphasized that Curaden AG had sufficient, related contacts with the forum—the United States. Specifically, Curaden AG “purposefully availed itself of the American market” by creating Curaden USA and directing the subsidiary to promote its products throughout the country. Finding the exercise of jurisdiction to be reasonable, the Sixth Circuit held the district court properly exercised personal jurisdiction “due to Curaden AG’s contacts with the United States as a whole.”
Finally, the Sixth Circuit held—as a matter of first impression—that evidence used to certify a class action does not necessarily have to be admissible at trial. Central to the court’s holding was a recognition that a trial court’s decision over class certification involves a “rigorous analysis,” in which traditional evidentiary objections would “transform a preliminary stage into an evidentiary shooting match.” Reasoning that a certification order is “inherently tentative,” the Sixth Circuit held the district court “did not abuse its discretion in granting class certification when it relied on evidence that had yet to be authenticated.”
The Sixth Circuit’s holding regarding the use of non-admissible evidence to support class certification will likely spark controversy in forums across the country, although it is not the first Circuit Court of Appeals to hold as such. See In re Zurn Pex Plumbing Prod. Liab. Litig., 644 F.3d 604, 611 (8th Cir. 2011); Sali v. Corona Reg’l Med. Ctr., 909 F.3d 996, 1004 (9th Cir. 2018). As the topic remains a subject of great debate and uncertainty, class action defendants should continue to contest class certification arguments based on non-admissible evidence.