UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 34, No. 2WINTER 2011
In re Hydrogen Peroxide: Reinforcing Rigorous Analysis for Class Action Certification
Sarah Rajski(fn*)
"[D]enying or granting class certification is often the defining moment in class actions (for it may sound the 'death knell' of the litigation on the part of plaintiffs, or create unwarranted pressure to settle nonmeritorious claims on the part of defendants)."(fn1)
I. Introduction
Despite district courts defining their own, and often conflicting, standards for evaluating class certification motions, the Supreme Court has remained silent on the question of what facts plaintiffs must show in support of a motion for class action certification.(fn2) Initially, the Supreme Court noted that "nothing in . . . [Federal Rule of Civil Procedure (FRCP) 23] gives a court any authority to conduct a preliminary inquiry into the merits of a suit . . . to determine whether it may be maintained as a class action." (fn3) Later, the Supreme Court somewhat clarified its position, stating that a "[c]lass action[] may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied."(fn4) To complete such a rigorous analysis, the Court continued, it "may be necessary for the court to probe behind the plead-ings."(fn5) But the Supreme Court has failed to provide any further guidance of what constitutes such a rigorous analysis and the role a court must take in responding to conflicting expert testimony.(fn6)
Recently, the Third Circuit announced a clearly defined rigorous analysis standard for class certification in In re Hydrogen Peroxide Antitrust Litigation (In re Hydrogen).(fn7) This standard, outlining a court's role and involvement, should be adopted by the Supreme Court. In reversing certification of a massive class action based on the absence of sufficient proof, the In re Hydrogen court held that a lower court has not conducted a rigorous analysis without inquiring into and resolving whether the requirements for class certification were met.(fn8) "Only upon a consideration of the elements underpinning [a plaintiff's] . . . claims" can a court determine whether the FRCP 23 requirements for a class action have been satisfied.(fn9) The In re Hydrogen court's application is just one example that illustrates the continuing struggle among courts addressing the requirements of class certification.(fn10)
While previous decisions have supported the need for a court to conduct a thorough examination of each FRCP 23 requirement, only In re Hydrogen held that a court should address and resolve any conflicting evidence as to whether the requirements have been satisfied.(fn11) Moreover, in clearly defining this rigorous analysis standard, the Third Circuit in In re Hydrogen concluded that a court should also evaluate the admis-sibility of expert testimony when determining whether the plaintiff can meet FRCP 23 requirements for class certification, even if it leads to threshold determinations about the credibility of competing expert opi-nions.(fn12)
In In re Hydrogen, direct purchasers of hydrogen peroxide and other chemicals brought an antitrust class action suit against various chemical manufacturers claiming a conspiracy of price-fixing spanning several years.(fn13) After extensive discovery, the plaintiffs moved to certify the suit as a class action.(fn14) Despite conflicting expert testimony presented by both sides regarding the class certification requirements, mainly concerning the predominance requirement-whether the issues common to the class predominated over individual issues-the district court certified the class.(fn15) The defendants then appealed the class certification order, arguing that the district court erred by failing to meaningfully consider the defendants' expert, applying too lenient of a standard of proof to the plaintiffs' expert, and inferring a presumption of impact.(fn16) The Third Circuit agreed that the district court failed to adequately consider expert testimony and applied too lenient a proof standard in evaluating the predominance requirement; the court then vacated and remanded the class certification order.(fn17)
In vacating the class certification order, the Third Circuit clarified three key aspects that courts within its circuit must apply when considering class certification motions.(fn18) First, a court must consider all relevant evidence and arguments, including expert testimony offered by either party.(fn19) While this may result in a "battle of the experts" to decide class certification, the Third Circuit emphasized that conflicting expert testimony, like the other requirements under FRCP 23, must be subject to a rigorous analysis.(fn20) Therefore, a court must resolve any relevant and possibly conflicting expert testimony at the certification stage.(fn21)
Second, decisions to certify a class action require more than a mere "threshold showing" that each FRCP 23 requirement is met.(fn22) Rather, factual determinations supporting each requirement must be based on a preponderance of the evidence.(fn23) The Third Circuit requires more than an "intention" to satisfy the procedural requirements: each FRCP 23 requirement must be met, "not just supported by some evidence."(fn24)
Finally, a court must resolve all factual and legal disputes relevant to class certification, even if these disputes overlap with the merits of the claim.(fn25) As noted by the Third Circuit, prior to In re Hydrogen a number of district courts applied a rigorous analysis including preliminary inquiry into the resolution of conflicting expert testimony as necessary to evaluate a FRCP 23 requirement.(fn26) But some courts declined to apply this analysis because of concern for the potential overlap with the merits of the plaintiffs' claim. Yet a court must first determine the legal elements of the plaintiffs' claim before it can determine whether the requirements of FRCP 23 have been met.(fn27) Therefore, in conducting a rigorous analysis, a court must make at least a preliminary decision on the merits of a case by applying the alleged facts to the legal elements, which requires more than a court's determination of whether a legal element of the plaintiffs' claim is satisfied.(fn28)
Although binding only in the Third Circuit, In re Hydrogen has the potential to substantially assist other circuit courts and the class certification process in general. The majority opinion was written by Chief Judge Anthony J. Scirica, a leading civil procedure scholar, who sets forth a persuasive argument for courts to take a heightened role in promoting efficient use of the legal system and curbing potential abuse of class actions.(fn29) The Third Circuit provides a clear and concise rigorous analysis standard for class certification that can easily serve as guidance for the circuits, in contrast to the Supreme Court's vague assertions and repeated avoidance of core FRCP 23 requirements for class certifica-tion.(fn30) In light of the current circuit split regarding class certification requirements and the Supreme Court's failure to articulate a clear standard for rigorous analysis, Supreme Court involvement is clearly needed to address the issue of a court's involvement and to adopt a reinforced rigorous analysis standard prior to class certification.
This Comment explores the reasons why the Third Circuit's high rigorous analysis standard, which increases a district court's role in the class certification process, should be reviewed and adopted by the Supreme Court. Part II contains an overview of the history of class actions, the class certification process, and the procedural requirements under FRCP 23. Part III analyzes the Third Circuit's rigorous analysis standard for certification of a class action and discusses the three standards that district courts must apply when considering class certification motions. Part IV explores other relevant federal court class certification decisions, examines the principal case at odds with the Third Circuit (the Ninth Circuit case Dukes v. Wal-Mart), and explains the need for further Supreme Court clarification. Part IV also explains why Supreme Court involvement is needed to resolve this class certification issue and why the Court should adopt the In re Hydrogen rigorous analysis standard. Part V summarizes this Comment and argues in support of a high rigorous analysis standard for class certification. Part VI concludes.
II. Overview of Class Actions and Procedural Requirements
A. History of Class Actions
A "class action" is a lawsuit in which a group of people with the same or similar injuries caused by a product, action, or omission sue as a group.(fn31) The action can be brought by one or more individuals on behalf of the larger group or the "class."(fn32) Because many of the individuals' same or similar injuries may be minor, providing little incentive to pursue legal redress on their own, the value of consolidated claims can be more attractive than individual lawsuits.(fn33) Moreover, the "promotion of efficiency and economy of litigation" are well-established as the most important benefits and goals of a class action suit.(fn34)
Class action suits have been popular judicial remedies because they are viable options for plaintiffs to seek redress. Although class actions became widely available with the promulgation of the Federal...
