On the Horizon: Scrutiny of Class Certification Standards

Jane Dall
June 5, 2008 — 815 views  

A conflict appears to be ripening among the federal circuit courts as to the level of scrutiny which may be applied to class certification. Can courts resolve factual disputes and evaluate the reliability of expert testimony when determining whether the elements of class certification under Federal Rule of Civil Procedure 23 – numerosity, commonality, typicality and adequate representation – have been met?

The 9th Circuit says no in Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. 2007), a sex discrimination case. Upholding the district court's certification of a class of approximately 1.5 million women employed in 3,400 stores, a split panel of the 9th Circuit held that "arguments evaluating the weight of evidence or the merits of a case are improper at the class certification stage." Similarly, "courts need not apply the full Daubert 'gate-keeper' standard at the class certification stage." Rather, the 9th Circuit held that "a lower Daubert standard" was appropriate for the Rule 23 inquiry. A petition for rehearing is pending in Dukes.

The 2nd Circuit reached a different conclusion in In re IPO Securities Litigation, 471 F.3d 24 (2d Cir. 2006). The 2nd Circuit, analyzing prior Supreme Court case law as well as circuit law, determined that courts should undertake to determine factual disputes relevant to the Rule 23 certification requirements and that district courts have discretion as to both the extent of discovery and a hearing necessary to determine those requirements. All the while, the district court should ensure that "a class certification motion does not become a pretext for a partial trial of the merits."

Several circuits share the 2nd Circuit's approach, including the 7th Circuit. In an opinion by Judge Easterbrook, the 7th Circuit indicated that the "district court is free to pierce the allegations of the complaint," and that it may consequently find "good reasons to deny [the] request for class certification or certify a more limited class."  Szabo v. Bridgeport Machines, Inc., 249 F.3d 672 (7th Cir. 2001).

The emerging circuit split over the level of factual scrutiny to apply to the Rule 23 certification standards has received national attention in legal publications and may become ripe for Supreme Court resolution.

Cite for attorneys: Steven J. Mintz, "Federal Circuits Split on Proper Class Certification Standards:  How Far May Courts Go at Certification Stage?", Litigation News, ABA Section of Litigation, May 2007, at 1-2.

Jane Dall

Baker & Daniels LLP