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From Products Liability Law Daily, August 23, 2013

Seventh Circuit reinstates class certification for washing machine purchasers on remand from Supreme Court

By John W. Scanlan, J.D.

On remand from the U.S. Supreme Court, the U.S. Court of Appeals for the Seventh Circuit reinstated its judgment in which the Seventh Circuit reversed the decision by a district court to deny certification to two classes of consumers who had purchased brand-name, front-loading washing machines and who claimed that an alleged defect in the design of the machines caused mold that emitted bad odors (Butler v. Sears, Roebuck & Co., August 22, 2013, Posner, R.). The Supreme Court had had vacated and remanded the Seventh Circuit’s decision for consideration in light of the Supreme Court’s decision in Comcast Corp. v. Behrend, 569 U.S. __ (2013), but the Court of Appeals determined that the holding of Comcast had not undermined the reasoning of its own decision.

Background. Consumers had filed a class action applying to all Kenmore-brand front-loading “high efficiency” washing machines manufactured by Whirlpool Corporation and sold by Sears since 2001. The purchasers who filed the mold claims stated that because of the low volume of water and the low temperature used in these high efficiency machines in comparison to the volume and temperature of the water in a traditional top-loading machine, the machines did not clean themselves adequately. As a result, a biofilm (a mass of microbes) formed in the machine’s drum creating a mold that emitted bad odors. A federal district court denied class certification, and the consumers appealed. In a second class action involving Kenmore washing machines, consumers complained of a failure of the machines control units that resulted in the machines stopping erroneously. The district court granted certification of this class. The consumers involved in the mold class action appealed.

Concluding that the question of whether the machines were defective in permitting mold to accumulate was common to all purchasers, the Seventh Circuit reversed the denial of class certification in the mold class action. The court held that a class action was the most efficient procedure for determining liability in such a case that involved a defect that could have imposed costs on tens of thousands of consumers, yet was not a large enough cost that would justify the expense of an individual lawsuit. Because the determination of the amount of damages owed a particular class member involved individual questions, the court of appeals found that individual hearings could be held to answer those questions. Further, the court commented that the fact that the defect might not yet have caused any harm did not negate claims for breach of warranty, provided state law allowed relief for an expected rather than a realized harm from a product defect covered by a warranty. The Seventh Circuit ruled that the defect claim was common to all participating class members who alleged the defect.

Sears then filed for certiorari, asking the Supreme Court to consider these two questions: (1) whether Federal Rule of Civil Procedure 23(b)(3)’s predominance requirement for class action certification can be satisfied based solely on a determination that it would be “efficient” to decide a single common question at trial, without considering any of the individual issues that would also need to be tried, and without determining whether the aggregate of common issues predominates over the aggregate of individual issues; and (2) whether a class may be certified on breach of warranty claims where it is undisputed that most members did not experience the alleged product defect and where fact of injury would have to be litigated on a member-by-member basis.

Comcast decision. Meanwhile, the Supreme Court decided Comcast Corp. v. Behrend, in which the U.S. Supreme Court reversed a class certification order by the U.S. Court of Appeals for the Third Circuit. A group of Comcast television subscribers failed to establish damages in their antitrust suit against the cable company that were capable of measurement on a class-wide basis, the High Court decided. According to the Court, the damages model failed to meet the requirements of Federal Rules of Civil Procedure 23(a) and (b) because it would require individual inquiries. Specifically, the court stated that the provision at issue was Rule 23(b)(3), which required a court to find that “the questions of law or fact common to class members predominate over any questions affecting only individual members.” The court asserted that it had repeatedly emphasized that it “may be necessary for the court to probe behind the pleadings before coming to rest on the certification question,” and indicated that a “rigorous analysis” was necessary to satisfy the prerequisites of Rule 23(a). The court stated that “Rule 23(b)(3)’s predominance criterion” was “even more demanding.”

The Supreme Court then vacated and remanded the present case to the Seventh Circuit to consider its decision in light of Comcast. On remand, Sears asked the Seventh Circuit either to remand the case to the district court for a new ruling on class certification or to deny certification to both the mold class and the control unit class. The consumers asked the court to reinstate its judgment and grant certification to both.

Class certification/predominance. Deciding not to wait until the district court further considered the factual record because the question presented on remand from the High Court was one of law, the Seventh Circuit reinstated its grant of class certification to the washing machine purchasers. Comcast held that a damages suit cannot be certified as a class action unless the damages sought are the result of the class-wide injury alleged by the suit, and a methodology that identifies damages that are not a result of that injury cannot be used to calculate class damages. The Seventh Circuit noted that, unlike in Comcast, there was no possibility that damages attributable to acts of the defendants were not the result of the class-wide injury. The plaintiffs in Comcast did not base all of their damages claim on the antirust theory of which they had complained, and the district court in the present case did not consider whether to determine damages on a class-wide basis, unlike the district court in Comcast.

The Seventh Circuit reasoned that the Supreme Court was concerned with the predominance requirement and the need to satisfy it at the class certification stage rather than later, and may have vacated the earlier decision to allow Sears to amend its submission on this issue. Sears’s reasoning was that predominance is a matter of considering how many of the issues in the case are common compared to individual issues, regardless of their importance, but in fact the issue of predominance is more than just “bean counting,” the Seventh Circuit cautioned. Predominance is not satisfied if individual questions overwhelm common questions, but an issue central to the validity of each of the claims in a class action can justify class treatment. Requiring all class members to have identical damages would destroy the class action device, and defendants would be able to escape harms of huge magnitude that were widely distributed if the harm to each plaintiff were too small to justify bringing an individual lawsuit. The single common issue in the present case is whether the washing machines were defective, although there were two separate classes for the separate defects for mold and for faulty control units. The creation of subclasses may be used to handle issues related to design changes and differing state warranty laws, the court concluded.

The case numbers are 11-8029; 12-8030.

Attorneys: Joel S. Neckers (Wheeler Trigg O’Donnell LLP) for Sears, Roebuck & Company. Jason L. Lichtman (Lieff, Cabraser, Heimann & Bernstein, LLP) for Alfred Blair.

Companies: Sears, Roebuck & Company

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