Use and misuse of expert opinions at the class certification stage: use of expert opinions should not be permitted, but if courts continue to do so, defendants must attack the expert's qualifications and present their own.

• Author: Davis, Dwight J.
• Position: Class actions

AS THE number of class actions in the United States increases, so does the device of employing expert witnesses to give opinions at the class certification stage as to the ultimate legal issues of manageability, predominance and superiority, the elements required in federal court by Rule 23 of the Federal Rules of Civil Procedure. The use of experts at this stage of class litigation is inappropriate. They should be prohibited from testifying on the legal propriety of class certification, but there are ways of effectively countering their opinions if they are allowed to testify.

USING EXPERT TESTIMONY TO ESTABLISH PROPRIETY OF THE CLASS

Although case law has established that the proponent of class certification has the heavy burden of proving the elements of Rule 23 and that the decision to certify a class should be made only after the district court has conducted a "rigorous analysis," courts have provided little guidance on how a district court should conduct such an analysis. (1) In recent years, U.S. federal court judges have allowed class proponents to meet this burden by proffering any and all evidence or witnesses, including experts, into the class certification record. (2) Plaintiffs' attorneys are not the only ones offering experts' opinions at this stage. Many defendants are beginning to do the same to demonstrate that certification is inappropriate.

Generally, plaintiffs and defendants use experts at the class certification stage in two particular areas. First, whether variations of state substantive law will hinder a court's ability to manage a multistate class action, and second, whether the underlying facts of the claims common to the entire class predominate over individual claims in Rule 23(b)(3) class actions.

1. Rule 23

   Rule 23(a) provides that a class action may be maintained only if the proponent establishes that (1) the class is so numerous that the joinder of members is impracticable; (2) there are questions of law or fact common to the entire class; (3) the claims or defenses of the representative parties are typical of those of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. If the proponent establishes each of these four factors, the district court directs its inquiry into the propriety of the class under one of the subsections of Rule 23(b). (3)

   In the usual case, plaintiffs will attempt to proceed under either Rule 23(b)(2) if they seek injunctive and declaratory relief, or Rule 23(b)(3) if they seek monetary damages. Sometimes both are employed. While there is some overlap between the elements of Rule 23(a) and (b)(3), the plaintiff must meet the heavy burden under Rule 23(b)(3) of showing that the class action is the "superior" means of adjudicating the dispute and that common issues of law and fact "predominate" over individual issues.

2. Used to Establish that Variations in State Laws Does Not Create Manageability Problems

   In putative nationwide class actions, variations in state law often prevent a federal district court from finding the action manageable, which results in a denial of class certification. (4) The U.S. Supreme Court has cautioned that a district court "may not take a transaction with little or no relationship to the forum and apply the law of the forum in order to satisfy the procedural requirements that there be a common question of law." (5)

   Often, courts find that any variations among state laws defeat, the predominance of common legal issues and render a 23(b)(3) multistate class action unmanageable. (6) Defendants regularly defeat class certification on a showing that divergent state laws present "insuperable obstacles" because the federal district court would be required to apply different states' laws to the claims of class members and to instruct jurors so that they will know which laws apply to which claims. (7) As a result, plaintiffs have employed experts to opine that the variation among the laws of some 50 jurisdictions fail to predominate over common legal issues, therefore making the legal differences manageable--or even non-existent. (8)

   For example, in In re Bridgestone/ Firestone Inc. Tires Products Liability Litigation in the U.S. District Court for the Southern District of Indiana, plaintiffs' experts opined that the divergent laws of the states did not impinge on the manageability of the class action. (9) In this class action, customers brought a nationwide class action alleging that tires on sport utility vehicles were defectively designed or manufactured. The named plaintiffs were residents of 27 different states, and they sought to represent two classes: (1) the "tire class," persons and entities in the United States who own or lease or had owned or leased vehicles that are or were equipped with certain Firestone-brand tires; and (2) the "Explorer diminution class," those who own or lease or had owned or leased Ford Explorer sport-utility vehicles, regardless of the tires with which they were equipped.

   Given that the classes encompassed persons from numerous states with varying laws, the court invited the parties to present any facts relevant to the choice of law analysis for class certification. The plaintiffs offered the testimony of two experts, both of whom allegedly were legal scholars. One opined "that there [was] sufficient uniformity across the states in order to try the class claims in a singular proceeding." (10) The defendants sought to strike the experts' declarations, contending that it was "improper to offer `expert' opinions on legal issues relevant to class certification." (11)

   The district court ruled that the motion to strike was moot, since the court had established "sufficient boundaries" around the proffered experts' opinions, in order to prevent the submissions from "imping[ing] on [its] judgments or usurp[ing] [its] own application of legal principles to the facts and the issues." (12) The court ultimately concluded that the plaintiffs had met their burden under Rule 23. (13)

   Fortunately, however, the Seventh Circuit overruled the district court's decision to certify the classes, holding that the matter was unmanageable as a nationwide class action. (14) But unfortunately, while roundly criticizing the trial court, the court of appeals failed to address the use of experts at this phase of the case. In an opinion by Judge Easterbrook, it held that the district court erred in granting class certification, finding that Indiana's choice-of-law rule selects the laws of the 50 states and multiple territories where the buyers reside and not the place of the defendant's headquarters.

   Thus, the court rejected the trial court's application of one state's law to claims by plaintiffs throughout the nation. The claims, the court stated, must be adjudicated under the laws of several jurisdictions, thereby rendering the class unmanageable.

3. Used to Establish that Common Issues Predominate

   Another significant hurdle to class certification in a 23(b)(3) class action is whether one set of underlying facts predominates over individual facts that may be relevant to a particular claim. As with the case when legal variations exist, parties have employed the testimony of experts to opine on whether the facts underlying the cause of action are common to each plaintiff. A split among the federal courts of appeals has developed as to whether and how courts are to resolve factual disputes that may affect a given case's suitability for class treatment. (15)

   For example, the Second Circuit has adopted an extremely liberal construction of Rule 23, accepting plaintiffs' factual allegations as true and refusing to sift through disputed factual issues when considering class certification. In In re Visa Check/MasterMoney Antitrust Litigiation, (16) for example, the court articulated this principle.

   In the district court, both parties introduced expert reports to support their respective positions in favor of and in opposition to class certification. The experts gave competing views on whether a method could be devised to litigate the plaintiffs' complex antitrust claims, thus avoiding individualized trials. The court disregarded the fact that the experts who testified offered opposing views on whether the facts of the case were susceptible to class-wide proof. Instead, it held that the expert testimony offered by the plaintiffs was admissible for the "narrow purpose" of supporting their class certification motion. Moreover, the court stated, simply because the defendants and their expert disagreed with the plaintiffs' expert conclusions was not a basis for denying class certification. (17)

   The Second Circuit agreed with the district court, holding that a district court may not weigh the conflicting expert evidence at the class certification stage. (18) Rather, at that stage, the district court needs to inquire only "whether plaintiffs' expert evidence is sufficient to demonstrate common questions of fact warranting certification of the proposed class." The court also rejected the defendants' contention that the plaintiffs' expert evidence failed to provide a reliable basis for class certification. It concluded that on a finding that an expert's methodology is not fatally flawed, it is "sufficiently reliable for class certification purposes." The court neither defined "fatally flawed" nor provided an analysis as to how a district court should make such a determination.

   This Second Circuit opinion leads one to believe that all a plaintiff needs to do to get a class certified is to show up at the courthouse with a witness who will parrot the right phrases.

   Other U.S. courts of appeals have not been so lenient to class action plaintiffs in deciding a class certification motion. The Third (19) and Fifth (20) circuits have concluded that when parties dispute the facts central to class certification, judges "must make a preliminary inquiry into the merits ... to determine whether...