defeating class certification by attacking plaintiffs...

Defeating Class Certification by Attacking

Plaintiffs' Classwide Damages Models

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THURSDAY, AUGUST 8, 2019

Presenting a live 90-minute webinar with interactive Q&A

Cedric D. Logan, Partner, Wheeler Trigg O'Donnell, Denver

Eric L. Robertson, Attorney, Wheeler Trigg O'Donnell, Denver

Dawn B. Williams, Partner, Drinker Biddle & Reath, Washington, D.C.

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Comcast v. Behrend: Where we’ve been and where we’re going

Dawn B. Williams

Drinker Biddle & Reath

(202) 230-5226

[email protected]

August 8, 2019

Comcast Recap

6 |

▪ “Rigorous analysis” of predominance

▪ Theory of damages must be tied to liability theory

▪ Damages “capable of measurement on a classwide basis” ???

Post-Comcast: Second Circuit

7 |

▪ What types of cases in the Second Circuit?

▪ Stock-drop / securities fraud

▪ Consumer fraud, often including statutory claims

▪ Antitrust

▪ Employment


8 |

▪ Trio of Seminal Second Circuit Opinions

▪ Sykes v. Mel S. Harris & Assoc., 780 F.3d 70 (2d Cir. Feb. 10, 2015).

▪ Roach v. T.L. Cannon Corp., 778 F.3d 401 (2d Cir. Feb. 10, 2015).

▪ Waggoner v. Barclays PLC, 875 F.3d 79 (2d Cir. Nov. 6, 2017).


9 |

▪ That damages may have to be ascertained on an individual basis is a factor in the

predominance analysis, but will not in and of itself defeat certification

▪ Calculations need not be exact at class certification stage

▪ Daubert-like inquiry

Post-Comcast: District Courts in the Second Circuit

10 |

▪ Purported classwide financial suitability analysis rejected (Fernandez v. UBS AG)

▪ Invasion of privacy insufficient as classwide damages model (Jensen v. Cablevision)

▪ Increased utility costs (due to misreps or antitrust activity) rejected as a theory

(Famular, Jensen)

Post-Comcast: Ninth Circuit

11 |

▪ What types of cases in the Ninth Circuit?

▪ Consumer fraud / false labeling, often including statutory claims

▪ Employment

▪ Antitrust


12 |

▪ Nguyen v. Nissan N. Am., 2019 WL 3368918 (9th Cir. July 26, 2019).

▪ Zakaria v. Gerber Prods., Co., 755 F. App’x 623 (9th Cir. Nov. 14, 2018).

▪ Lambert v. Nutraceutical Corp., 870 F.3d 1170 (9th Cir. Sept. 15, 2017), rev’d on other

grounds, 139 S. Ct. 710 (Feb. 26, 2019).

▪ Just Film, Inc. v. Buono, 847 F.3d 1108 (9th Cir. Feb. 7, 2017).

▪ Doyle v. Chrysler Grp., 663 F. App’x 576 (9th Cir. Oct. 24, 2016).

▪ Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150 (9th Cir. June 8, 2016).

▪ Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979 (9th Cir. Sept. 21, 2015).


13 |

▪ Individualized damage calculations alone cannot defeat class certification

▪ Plaintiff must allege that the class suffered damages traceable to the same injurious

course of conduct underlying plaintiff’s legal theory

▪ Daubert-lite: the court must evaluate admissibility under Daubert, but “admissibility

must not be dispositive” (Sali v. Corono Regional Med. Cntr.)

Post-Comcast: District Courts in the Ninth Circuit

14 |

▪ Whether “manifestation” of defect is significant depends on liability theory (compare

Nguyen v. Nissan to Davidson v. Apple)

▪ Plaintiffs must set forth some kind of “workable model” at certification / decertification

(Hamilton v. Wal-Mart)

▪ Even flawed models, if tied to liability theory, may be accepted at certification (Grace

v. Apple)

Comcast cited 1st Cir. only twice, lowest in nation.

In re Nexium Antitrust Litig., 297 F.R.D. 168 (D. Mass. 2013)

“Now, into the wild . . .”

In re Nexium Antitrust Litig., 777 F.3d 9 (1st Cir. 2015) (affirming)

De minimus potentially uninjured class members does not defeat cert.

In re Asacol Antitrust Litig., 907 F.3d 42, 57 (1st Cir. 2018)

Suppression of generic drugs

Reversed class cert.

Individual inquiries to determine uninjured class members

Not de minimus

16

1st Circuit

MA, ME, NH, RI

In re Dial Complete Mktg. & Sales Practices Litig., 320 F.R.D. 326,

(D.N.H. 2017)

Levecque v. Argo Mktg. Grp., Inc., 2015 WL 3672647 (D. Me.

June 12, 2015)

Baker v. Equity Residential Mgmt., L.L.C., 2019 WL 2719963 (D.

Mass. July 1, 2019)

In re Loestrin 24 Fe Antitrust Litig., 2019 WL 3214257 (D.R.I. July

2, 2019)

17

1st Circuit

MA, ME, NH, RI

Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353 (3d Cir. 2015)

Vacated cert., but minimized Comcast in the process

“Specific to the antitrust claim at issue”

Quotes dissent: “individual damages calculations do not preclude

class certification under Rule 23(b)(3) is well nigh universal”

In re Modafinil Antitrust Litig., 837 F.3d 238, 260 (3d Cir. 2016), as

amended (Sept. 29, 2016)

Model that calculates savings to the class had generic drugs been

introduced earlier

Individual conspiracies contributed to overall market conditions

18

3d Circuit

PA, NJ, DE

But Don’t Forget . . .Harrnish v. Widener University School of Law,

833 F.3d 298 (3d Cir. 2016):

Not only must damages model measure damages attributable solely

to Plaintiffs’ theory of liability, but it must measure a legally cognizable

theory of damages pursuant to underlying state law.

A flawed damages model can prevent certification, even without

Comcast.

Did not cite Comcast.

Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013)

19

3d Circuit

PA, NJ, DE

Only cited five times, mostly in passing

Nucor Corp. v. Brown, 760 F.3d 341 (4th Cir. 2014)

Brown v. Nucor Corp., 785 F.3d 895 (4th Cir. 2015)

Krakauer v. Dish Network, L.L.C., 925 F.3d 643 (4th Cir. 2019)

Am. Sales Co., LLC v. Pfizer, Inc., 2017 WL 3669604 (E.D. Va.

July 28, 2017)

Adair v. EQT Prod. Co., 320 F.R.D. 379, 416–17 (W.D. Va. 2017)

20

4th Circuit

MD, WV, VA, NC, SC

Also only cited five times, but the discussions are substantive

In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014)

“nothing in Comcast mandates a formula for classwide measurement

of damages in all cases”

Comcast has “no impact on cases such as the present one, in which

predominance was based not on common issues of damages but on

the numerous common issues of liability”

Slade v. Progressive Sec. Ins. Co., 856 F.3d 408

Ludlow v. BP, P.L.C., 800 F.3d 674, 683–89 (5th Cir. 2015)

(5th Cir. 2017)

21

5th Circuit

TX, LA, MS

In re Whirlpool Corp., 722 F.3d 838 (6th Cir. 2013)

Remanded by SCOTUS after Comcast

Liability only class

“recognition that individual damages calculations do not preclude

class certification under Rule 23(b)(3) is well nigh universal.”

Rikos v. Procter & Gamble Co., 799 F.3d 497 (6th Cir. 2015)

Full refund model OK’d for allegation that product is valueless

22

6th Circuit

MI, OH, KY, TN

Ohio Pub. Employees Ret. Sys. v. Fed. Home Loan Mortg. Corp.,

2018 WL 3861840 (N.D. Ohio Aug. 14, 2018)

Damages expert struck under Daubert

“model that is vague, indefinite, and unspecific, or simply asserts . . .

that there are unspecified ‘tools’ available to measure damages, the

model amounts to no damages model at all”

Chapman v. Tristar Prod., Inc., 2017 WL 2643596 (N.D. Ohio

June 20, 2017)

Would not decertify based on potential problems with damages

model, but did persuade the court to bifurcate

23

6th Circuit

MI, OH, KY, TN

Butler v. Sears, 727 F.3d 796 (7th Cir. 2013)

Remanded by SCOTUS after Comcast

Liability only class

Kleen Prod. LLC v. Int'l Paper Co., 831 F.3d 919 (7th Cir. 2016)

Parko v. Shell Oil Co., 739 F.3d 1083, 1086–87 (7th Cir. 2014)

Rule 23 not mere pleading requirement

Not sufficient for “plaintiffs [to] intend to rely on common evidence and

a single methodology to prove both injury and damages”

“The judge should have investigated the realism of the plaintiffs' injury

and damage model”

24

7th Circuit

WI, IL, IN

Ebert v. Gen. Mills, Inc., 823 F.3d 472 (8th Cir. 2016)

Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016).

Donning and doffing case under the Fair Labor Standards Act.

Plaintiff introduced expert testimony with representative evidence

Held: “Representative evidence that is statistically inadequate or

based on implausible assumptions could not lead to a fair or accurate

estimate[.] Petitioner, however, did not raise a challenge to

respondents’ experts’ methodology under Daubert.”

Concurrence: What about the completely uninjured class members?

This may be the next Comcast, as there appears to be a circuit split

25

8th Circuit

MN, ND, SD, NE, IA, MO, AR

Wallace B. Roderick Revocable Living Trust v. XTO Energy, 725

F.3d 1213 (10th Cir. 2013)

The Tenth Circuit reversed certification and remanded to the district

court to “consider the extent to which material differences in damages

determinations will require individual inquiries.”

Naylor Farms, Inc. v. Chaparral Energy, LLC, 923 F.3d 779 (10th

Cir. 2019)

Models not always necessary

Question is do individual damages overwhelm common questions

Friedman v. Dollar Thrifty Auto. Grp., Inc., 304 F.R.D. 601 (D.

Colo. 2015)

Alleged deceptive conduct about “add-on products” presented

individualized inquiry about liability and damages

26

10th Circuit

WY, UT, CO, KS, NM, OK

Brown v. Electrolux Home Products, 817 F.3d 1225 (11th Cir.

2016)

Noted that the predominance issue is qualitative, and the individual

issues raised by damages determinations are often easy issues to

resolve when damages calculations are formulaic.

Recognized that an “exception” to the blackletter rule when

computing individual damages will be complex and fact-specific.

Remand to consider whether common issues of liability and damages

together predominate over individual issues.

27

11th Circuit

AL, GA, FL

In re: Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d

244 (D.C. Cir. 2013)

“No damages model, no predominance, no class certification.”

In re McCormick & Co., Inc., Pepper Prod. Mktg. & Sales

Practices Litig., 2019 WL 3021245, at *1 (D.D.C. July 10, 2019)

MDL re slack fill pepper products

Court rejected challenges to classwide model, but acknowledged that

“it may well be a challenge to figure out how to identify class

members and to allocate damages among them”

28

DC Circuit

Early Circuit Court Decisions

In re: Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d

244 (D.C. Cir. 2013)

“No damages model, no predominance, no class certification.”

Wallace B. Roderick Revocable Living Trust v. XTO Energy, 725 F.3d

1213 (10th Cir. 2013)

The Tenth Circuit reversed certification and remanded to the district

court to “consider the extent to which material differences in damages

determinations will require individual inquiries.”

29

Must Damages be Measureable on a

Classwide Basis?

The need for individual damages calculations alone does not

defeat a finding of predominance:

Leyva v. Medline Industries, Inc., 716 F.3d 510 (9th Cir. 2013)

In re Whirlpool Corp., 722 F.3d 838 (6th Cir. 2013)

Butler v. Sears, 727 F.3d 796 (7th Cir. 2013)

In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014)

In re Nexium Antitrust Litig., 777 F.3d 9 (1st Cir. 2015)

Roach v. T.L. Cannon, 778 F.3d 401 (2d Cir. 2015)

Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353 (3d Cir. 2015)

Brown v. Electrolux Home Products, 817 F.3d 1225 (11th Cir. 2016)

30

But the Door is Still Open

First, Fourth, Eighth, Tenth, Eleventh, and DC still developing

Fifth, Sixth and Seventh Circuits: those cases involved liability

only classes.

First, Second and Ninth Circuits all noted that there was an easy

way to calculate individual damages in those cases.

Still an open question after these cases about how to evaluate a

putative class where damages are not measureable on a

classwide basis and individual damages are not readily calculable.

31

The Next Frontier

Will SCOTUS revisit Comcast to reiterate/restate core holding?

Apparent circuit split over existence of completely uninjured class

members

Tyson Foods concurrence

1st Cir.: In re Nexium Antitrust Litig.: de minimus uninjured class

members OK, but more than that defeats cert.

Models to prove classwide injury as an element of liability

Harnish

32

Three Key Points

First, the “rigorous analysis” of damages evidence includes

considering whether class damages experts satisfy FRE 702 and

Daubert.

Second, although individual damage calculations alone will not

defeat predominance in most circuits, courts are generally willing

to consider the need for such inquiry as a factor in deciding

whether common issues outweigh individual issues.

Third, proof of class damages must measure only those damages

attributable to Plaintiffs’ theory of liability.

33

Arguments Under Comcast That

Have Been Successful

1. Insufficiently developed model.

District court cannot perform its “rigorous analysis” without substance.

2. Model fails to eliminate the need for individual inquiry.

Courts have recognized that the need for such inquiries can defeat

predominance.

3. Model fails to measure damages flowing from the alleged injury.

Or the method does not measure damages in a way that is

cognizable under the underlying substantive law.

34

36

The Damages Element

Breach of Warranty

UCC: difference between “value of the goods accepted and

the value they would have had if they had been as warranted.”

UCC § 2-714(2)

“Value” = “fair market value”

Chatlos Systems, Inc. v. Nat’l Cash Register Corp., 635 F.2d 1081, 1088

(3d Cir. 1980)

In re Fluidmaster, Inc., Water Connector Components Prod. Liab. Litig.,

2017 WL 1196990, at *57 (N.D. Ill. Mar. 31, 2017)

37

The Damages Element

Consumer Protection

UCL, CLRA: difference between “market price actually paid by

consumers and the true market price that reflects the impact of

the unlawful, unfair, or fraudulent business practices.”

In re NJOY, Inc. Consumer Class Action Litig., 120 F. Supp. 3d 1050,

1122 (C.D. Cal. 2015)

38

The Damages Element

“[F]air market value is the “price that a seller is

willing to accept and a buyer is willing to pay

on the open market and in an arm's-length

transaction; the point at which supply and

demand intersect.”Saavedra v. Eli Lilly & Co., 2014 WL 7338930, at *4 (C.D. Cal. Dec. 18, 2014)

39

The Damages Element

Damages are “[t]he difference between what

the plaintiff paid and the value of what the

plaintiff received,” which “requires evidence of

the actual value of what the plaintiff received.”In re POM Wonderful LLC Mktg. & Sales Practices Litig., 2014 WL 1225184,

at *3 (C.D. Cal. Mar. 25, 2014).

40

Market Price

Quantity

Price

Demand

Curve

Supply

Curve

41

Price Premium

Actual

Price

“True”

Price

42

Three Models

Conjoint Analysis

Contingent Valuation

Hedonic Regression

43

Conjoint Analysis

Survey respondents make choices between different combinations

of product attributes.

Statistical methods used to estimate the separate value for each

product attribute.

Attribute can be computed as a percentage of the purchase

price—it was “worth” X% of the purchase price.


1073 (C.D. Cal. 2015)

44

Conjoint Analysis

“Conjoint analysis is a statistical technique

capable of using survey data to determine how

consumers value a product’s individual

attributes—often called the market’s

willingness to pay.”Saavedra v. Eli Lilly & Co., 2014 WL 7338930, at *4 (C.D. Cal. Dec.

18, 2014)


1073 (C.D. Cal. 2015)

45

Willingness to Pay

Quantity

Price

Demand

Curve

46

Willingness to Pay

Saavedra, 2014 WL 7338930, at *4-5:

“Plaintiffs’ theory of injury is distinct from the typical benefit-of-

the bargain claim because it focuses only on the demand side

of the equation, rather than on the intersection of supply and

demand.”

“By looking only to consumer demand while ignoring supply,

[the] method of computing damages converts the lost-

expectation theory from an objective evaluation of relative fair

market values to a seemingly subjective inquiry of what an

average consumer wants.”

47

Willingness to Pay

In re NJOY, Inc., 120 F. Supp. 3d at 1119:

The model looks only “to the demand side of the market

equation,” converting what is properly “an objective evaluation

of relative fair market values [in]to a seemingly subjective

inquiry of what an average consumer wants.”

48

Supply Side

Conjoint analysis appropriate when:

(1) Prices used in surveys reflect actual market price

(2) Quantities used reflect actual quantities sold

In re Dial Complete Mktg. & Sales Practices Litig., 320 F.R.D. 326, 336–

37 (D.N.H. 2017)

Hadley v. Kellogg Sales Co., 324 F. Supp. 3d 1084, 1105 (N.D. Cal.

2018)

Hisley v. Ocean Spray Cranberries, Inc., 2019 WL 3006465, at*3-4 (S.D.

Cal. July 10, 2019)

49

Other Issues

Davidson v. Apple, 2018 WL 2325426, at *22 (N.D. Cal. May 8,

2018):

Proposed damages model failed to measure “how much

consumers overpaid for iPhones assuming a roughly 5.6

percent or less chance that consumers would experience the

touchscreen defect.”

Compare to what expert actually measured: “how much

consumers overpaid for a touchscreen defect that is certain to

manifest in all iPhones.”

50

Other Issues

Davidson v. Apple, 2019 WL 2548460, at *13-16 (N.D. Cal. June

20, 2019):

Second proposed model also fails Comcast because survey

(i) failed to measure how purchasers would value a

defect that could be remedied for free within the one-

year warranty period, and

(ii) used incorrect manifestation rates, resulting in

survey respondents thinking the manifestation rate

was 8 times higher than it actually was.

51

Contingent Valuation

Environmental litigation

Quantifies value of non-market goods

Cannon v. BP N. Am., Inc., 2013 WL 5514284, at *12 (S.D. Tex.

Sept. 30, 2013) (contingent valuation “attempts to value things that do

not typically have a market price, such as the presence of absence of

environmental contamination”)

52

Non-Market Goods

Miller v. Fuhu, Inc., 2015 WL 7776794, at *21 (C.D. Cal. Dec. 1,

2015)

Expert said model was appropriate because the subject of his survey

was a “nonmarket good” in the sense that the alleged defect had

never been disclosed in connection with any real-world sales

In re Scotts EZ Seed Litigation, 304 F.R.D. 397, 413 (S.D.N.Y.

2015)

53

Hedonic Regression

Data-based, not survey based

Measures implicit values of product attributes

Expert observes market prices for products with different

combinations of attributes

Uses a statistical tool to measure the implicit value of each

attribute in that market

If attributes are missing or cannot be disentangled, their value

cannot be measured

54

Omitted Variables

Werdebaugh, 2014 WL 7148923, at *12 (N.D. Cal. Dec. 15, 2014)

Brazil, 2014 WL 5794873, at *11-12 (N.D. Cal. Nov. 6, 2014)

In re Live Concert Antitrust Litig., 863 F. Supp. 2d 966, 974 (D.C.

Cal. 2012)

55

Multicollinearity

Werdebaugh, 2014 WL 7148923, at *11 (N.D. Cal. Dec. 15, 2014):

Perfect collinearity problem here renders the damages model

insufficient

Model measures the “combined effect ” of Blue Diamond's

brand value and Blue Diamond's use of “evaporated cane

juice” and/or “All Natural” on the prices of the challenged

products

Compare Brazil, 2014 WL 5794873, at *9-10

56

Using Two ModelsIn re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 1025 (C.D. Cal.

2015 (Morrow, J.):

Proposed hedonic regression alone did not satisfy Comcast

Hedonic regression and conjoint analysis in combination

meet Comcast

defeating class certification by attacking plaintiffs...

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