Creative Class Action Defense Strategies P. Russell Perdew Locke Lord LLP [email protected] (312) 443-1712 Douglas R. Sargent Locke Lord LLP [email protected] (312) 443-0384 TABLE OF CONTENTS I. Exhaust the benefits of Dukes v. Wal-Mart, 131 S. Ct. 2541 (2011). II. Take advantage of new decisions that lower the burden of proving the amount in controversy when removing (at least in the Seventh Circuit). III. Consider making an early and preemptive attack on class certification allegations. IV. Oppose class certification by citing individualized issues that Plaintiff raised to resist dismissal. V. Argue that the existence (not the amount) of damages is an individualized issue that precludes class certification. VI. Demand a trial plan as part of plaintiff’s showing of superiority. I. Exhaust the benefits of Dukes v. Wal-Mart, 131 S. Ct. 2541 (2011). a. Dukes is not just about statistical evidence of discrimination. There are a number of good holdings on class action fundamentals. b. First, the Court confirms what more and more circuit courts of appeal have been saying in the last few years—the plaintiff must make factual showing that elements of Rule 23 are met, and the court must make a rigorous analysis to confirm that the requirements are met. Just because that inquiry will overlap with the merits of the case is not a problem. Dukes, 131 S. Ct. at 2551-52 (“Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc.… Frequently that rigorous analysis will entail some overlap with the merits of the plaintiff’s underlying claim. That cannot be helped.…Nor is there anything unusual about that consequence: The necessity of touching aspects of the merits in order to resolve preliminary matters, e.g., jurisdiction and venue, is a familiar feature of litigation.”) (citations omitted). c. Next, Dukes sharply limits the ability of a plaintiff to certify a class under Rule 23(b)(2), which should be reserved for cases seeking class-wide injunctive relief. No Rule 23(b)(2) class can be certified where individual award of monetary relief are sought. Id. at 2557-58 (“Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant. Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.… Given that structure, we think it clear that individualized monetary claims belong in Rule 23(b)(3).”) Thus, more plaintiffs will be required to pursue certification under Rule 23(b)(3), which requires showing of predominance and superiority. d. Dukes imposes a higher threshold on demonstrating commonality. Typically, courts pay little attention to the issue of commonality, holding that it is supposed to be an easy standard to meet. Dukes holds that it should be more difficult. Showing commonality requires not just showing common questions, but showing an ability to generate common answers through class-wide proof. Id. at 2550-51 (“The crux of this case is commonality—the rule requiring a plaintiff to show that ‘there are questions of law or fact common to the class.’ Rule 23(a)(2). That 1 | Page language is easy to misread, since ‘[a]ny competently crafted class complaint literally raises common questions.’ For example: Do all of us plaintiffs indeed work for Wal–Mart? Do our managers have discretion over pay? Is that an unlawful employment practice? What remedies should we get? Reciting these questions is not sufficient to obtain class certification.… Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke. What matters to class certification ... is not the raising of common ‘questions'—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.”) 2 | Page II. Take advantage of new decisions that lower the burden of proving the amount in controversy when removing (at least in the Seventh Circuit). a. There have been multiple helpful Seventh Circuit decisions in 2011. Back Doctors, Ltd. v. Metro. Prop. & Cas. Ins. Co., 637 F.3d 827 (7th Cir. 2011) (reversing remand); Blomberg v. Serv. Corp. Int’l, 639 F.3d 761 (7th Cir. 2011) (same); ABM Sec. Serv., Inc. v. Davis, 646 F.3d 575 (7th Cir. 2011) (same); Keeling v. Esurance Ins. Co., 2011 WL 4448578 (7th Cir. Sept. 26, 2011) (same). b. The Back Doctors case holds that there is no presumption against removal or jurisdiction. Back Doctors, 637 F.3d at 830 (“There is no presumption against federal jurisdiction in general, or removal in particular. The Class Action Fairness Act must be implemented according to its terms, rather than in a manner that disfavors removal of large-stakes, multi-state class actions.”) c. The defendant is the proponent of jurisdiction, and the defendant’s “plausible” estimate of amount in controversy will control unless the plaintiff can show it is legally impossible for the amount in controversy requirement to be met. Id. at 830 (“When removing a suit, the defendant as proponent of federal jurisdiction is entitled to present its own estimate of the stakes; it is not bound by the plaintiff’s estimate. Once this has been done, and supported by proof of any contested jurisdictional facts, the presumption is the one stated in St. Paul Mercury: the estimate of the dispute’s stakes advanced by the proponent of federal jurisdiction controls unless a recovery that large is legally impossible.”); Blomberg, 639 F.3d at 764 (“[5] Once the proponent of federal jurisdiction has explained plausibly how the stakes exceed $5,000,000, cf. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.”); d. A removing defendant does need some evidence to support their “plausible” estimate of the amount in controversy, but not much. The decisions seem inconsistent regarding how strong a removing defendant’s initial showing of amount in controversy must be to control. Back Doctors clearly rejects the need for a defendant to prove amount in controversy by preponderance. 637 F.3d at 830 (“Only jurisdictional facts, such as which state issued a party's certificate of incorporation, or where a corporation's headquarters are located, need be established by a preponderance of the evidence.”). But Blomberg, decided two weeks later by a different panel, states the preponderance standard for amount in controversy. 639 F.3d at 763 (“If the party opposing federal jurisdiction contests the amount in controversy, the proponent must ‘prove those jurisdictional facts by a preponderance of the evidence.”) 3 | Page But multiple cases, including Blomberg, also seem to articulate a much lower standard, where the defendant simply needs to make a plausible or good faith estimate. Back Doctors, 637 F.3d at 832 (“the defendant is entitled to present a good-faith estimate of the stakes.”); Blomberg, 639 F.3d at 763 (“A good-faith estimate is acceptable if it is plausible and adequately supported by the evidence.… This burden thus is a pleading requirement, not a demand for proof.”); ABM, 646 F.3d at 478 (“[o]nce the proponent of federal jurisdiction has explained plausibly how the stakes exceed $5,000,000, the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much.”). e. A plaintiff’s statement in the complaint that less than the jurisdictional threshold is being sought does not control unless that statement is a binding limit on recovery. Back Doctors, 637 F.3d at 830 (“disclaimers in the complaint block removal only if state law makes them effective as caps on damages, which Illinois law does not”) citing Oshana v. Coca-Cola Co., 472 F.3d 506, 511-12 (7th Cir. 2006). f. And, even if the statement in the complaint is a binding limit on the plaintiff’s recovery, that may not control in a class action because the named plaintiff does not have total control over what the class ultimately receives. Back Doctors, 637 F.3d at 830-831 (“Back Doctors has a fiduciary duty to its fellow class members. A representative can't throw away what could be a major component of the class's recovery. Either a state or a federal judge might insist that some other person, more willing to seek punitive damages, take over as representative. What Back Doctors is willing to accept thus does not bind the class and therefore does not ensure that the stakes fall under $5 million.”) g. Other circuits impose a higher standard on removing defendants to prove an amount in controversy. Unlike the Seventh Circuit in Back Doctors, other circuits do impose a presumption against removal and federal jurisdiction. Barbour v. Intern.