A Circuit Split and Considerable Debate
District courts initially split as to whether and how Daubert should be applied at class- certification proceedings. Because the court, and not a jury, determines whether plaintiffs satisfy the Rule 23 requirements, there has been considerable debate concerning the question of whether the court should scrutinize the expert's opinion pursuant to Daubert—which is generally considered much later in the case at the summary judgment or trial stage—orwhether a less searching analysis is appropriate at the early class-certification level. Some district courts, apparently concerned about delving too far into the merits of the plaintiffs' case, have declined to conduct a Daubert analysis at the class-certification level. See, e.g., In re Bulk [extruded] Graphite Prods. Antitrust Litig., 2006 U.S. Dist. LEXIS 16619 (D.N.J. Apr. 4, 2006).
Other courts, while refusing to rigorously apply Daubert at the class-certification stage, at least reviewed the expert testimony to ensure that the basis of the expert opinion was not "so flawed that it would be inadmissible as a matter of law." Walsh v. Principal Life Ins. Co., 266 F.R.D. 232, 237 (S.D. Iowa 2010). However, these courts judged the expert opinion on the basis of whether it supported class certification but not on the basis of whether it met the standard for admission at trial.
Nevertheless, a few circuits have applied a Daubert analysis at the class-certification stage. One of the seminal decisions came from the Court of Appeals for the Seventh Circuit. In American Honda Motor Co. v. Allen, 600 F.3d 813 (7th Cir. 2010), plaintiffs were purchasers of a Honda motorcycle. They alleged that the motorcycle contained a design defect that caused the steering assembly to shake excessively and wanted Honda to fix the problem. Plaintiffs moved for class certification pursuant to FRCP 23(b)(3), and they relied heavily on the report of an expert to demonstrate the predominance of common issues. The Seventh Circuit ruled that the district court must conduct a full Daubert analysis and rule on any challenge to the expert's qualifications or submissions prior to certifying a class because the expert's opinions were critical to the issues raised at the class-certification stage. This analysis includes a review of the qualifications and reliability of the information provided to the expert if such information is relevant to establishing any of the Rule 23 requirements for class certification. In American Honda, one glaring problem with the expert's methodology was his small sample size. The expert tested only one motorcycle and attempted to extrapolate his conclusions to an entire fleet of motorcycles produced over a seven-year time span. Once this unreliable testimony was struck, the plaintiffs were left with insufficient evidence to satisfy Rule 23 requirements. The Seventh Circuit then vacated the district court's denial of Honda's motion to strike the expert testimony and order certifying the class action.
Wal-Mart v. Dukes: Supreme Court Expresses "Doubt"
Until Wal-Mart v. Dukes, 131 S. Ct. 2541, 2551 (U.S. 2011), the Supreme Court had not directly addressed whether Daubert or Federal Rule of Evidence 702 requirements apply to expert opinions presented at the class certification stage. Based on the procedural history in Dukes, practitioners believed the Supreme Court would specifically address this issue. However, rather than directly tackling the Daubert issueas applied to class certifications, the Supreme Court instead merely commented in dicta that "[t]he District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so . . ." 131 S. Ct. at 2553-54 (citations omitted) (emphasis added).
While the Supreme Court's expression of "doubt" signals that a full Daubert analysisshould probably apply during class certification, the Supreme Court refused to provide clear guidance on this matter. Thus, the circuit courts are left to debate the level of scrutiny applied to an expert's opinion when faced with class-certification proceedings.
Post-Dukes: Courts Develop a Focused Daubert Analysis
The essential holding in Dukes explained that courts must delve into the merits at the class- certification stage to the extent that issues necessary to resolve the merits are also necessary to resolve an element of FRCP 23. The question, then, is whether Daubert is part of that rigorous analysis. Following Dukes, the proper scope of a court's inquiry into an expert's testimony at the class-certification stage remains unclear as the circuit courts have continued to struggle with this issue.
For instance, just two weeks after the Dukes opinion, the Eighth Circuit held that a full Daubert analysis is not applicable at the class-certification stage, and instead affirmed the district court's application of a "focused" Daubert analysis that "examined the reliability of the expert opinions in light of the available evidence and the purpose for which they were offered." In re: Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604, 612 (8th Cir. 2011).
In re Zurn involved a class action against a manufacturer of polyethylene plumbing systems, alleging that the brass fitting used in the systems were inherently defective. The plaintiffs proffered two experts in their class certification motion. The Eighth Circuit affirmed a tailored Daubert analysis that scrutinized the reliability of the expert testimony in light of the criteria for class certification and the current state of the evidence. In support of their holding, the Eighth Circuit reasoned that the defendant sought bifurcated discovery between class certification and merits issues, which prevented the kind of full and conclusive Daubert inquiry that the defendant requested later. Id. at 613-14. Thus, the expert's opinions based on the available evidence at the class certification stage would need to adapt as the gaps in information were filled by merits discovery. Importantly, the Eighth Circuit also noted that as those evidentiary gaps are filled in, the district court could reexamine its Daubert rulings.
This focused-analysis was also adopted in Bruce v. Harley-Davidson Motor Co., Inc., 2012 U.S. Dist. LEXIS 36723 (C.D. Cal. Jan. 23, 2012). Bruce involved allegations of design defect in touring motorcycles. The district court, comparing the American Honda and Zurn holdings, concluded that the more limited approach is the "appropriate application of Daubert at the class certification stage." Id. at *13. Bruce, like Zurn, bifurcated discovery, and thus evaluated the expert's opinions in light of the evidence currently available. Even though the court applied a more liberal standard than required by Daubert, the court excluded the expert's opinion. Just as in American Honda, without expert testimony the plaintiffs were unable to establish that common questions of law and fact predominated over individual inquiries. Thus, the district court denied the plaintiff's motion for class certification without prejudice.
When to Launch Daubert Challenges at the Class-Certification Stage
Practitioners do not need to reinvent the wheel when challenging expert testimony at the class- certification stage. For example, in Bruce, the court noted the expert failed to adequately explain the scientific basis for his proposed standard, had formed his opinions exclusively for the purposes of litigation, and had not sufficiently accounted for other potential causes of the alleged product defect. Thus, practitioners may rely upon the Daubert progeny in attacking or supporting expert testimony at the class-certification stage, which may dispose of the class-based claims because the plaintiffs will be unable to use common evidence to demonstrate the defective nature of the product.
Defense attorneys should note that defense experts are not immune from Daubert challenges at the class-certification stage. Indeed, the rules of evidence, including Rule 702, apply to plaintiffs and defendants alike. The Seventh Circuit, which previously indicated a district court must perform a full Daubert analysis, continued that trend in ruling again that expert testimony must be reliable if material to a class-certification decision. As opposed to the usual challenges to plaintiffs' experts, Messner v. Northshore University Healthsystem, 2012 U.S. App. LEXIS 731 (7th Cir. Jan. 13, 2012),involved a challenge to the defendant's expert presented in opposition to class certification. The Seventh Circuit again held that whenever an expert's report or testimony is critical to a class certification decision, a district court must rule on a challenge to the expert's qualifications or opinions before ruling on class certification. Thus, when expert testimony is critical to the class-certification analysis, the court must rule on the Daubert challenges before granting or denying class certification, regardless of which side presents the challenge.
Because very few circuits have addressed this issue post-Dukes, practitioners should consider the impact of bifurcating discovery. If a full Daubert standard applies in your jurisdiction, the plaintiff may request more expert and factual discovery early in the case; whereas if the court applies a focused analysis, then the court would likely not require substantial discovery in order to conduct a review. Similarly, if discovery is bifurcated, the Daubert ruling may not be binding because the evidence is not fully developed. Compare Cholakyan v. Mercedes-Benz USA, LLC, 2012 U.S. Dist. LEXIS 44073. *19 (C.D.Cal. Mar. 28, 2012) ("Any Daubert analysis conducted in connection with class certification should be for purposes of that proceeding only.") with Stone v. Advance America, Cash Advance Centers Inc., 2011 U.S. Dist. LEXIS 142464 (S.D. Cal. Dec. 12, 2011) ("This case is at an advanced stage . . . the Court conducts a full Daubert analysis now to avoid a duplicative motion in limine.").
Clarity on the Horizon?
On June 25, 2012, the U.S. Supreme Court granted a petition for a writ of certiorari seeking review of the Third Circuit's decision in Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011). In Behrend, plaintiffs used expert testimony to prove that damages could be calculated on a class-wide basis. The district court examined the methodology, conclusions, and criticisms of the experts on both sides. In reviewing the certification, the Third Circuit briefly commented that "although the Supreme Court recently hinted that Daubert may apply for evaluating expert testimony at the class-certification stage, it need not turn class certification into a mini-trial. We understand the court's observation to require a district court to evaluate whether an expert is presenting a model which could evolve to become admissible evidence, and not requiring a district court to determine if a model is perfect at the certification stage." Id. at 204, n. 13. The dissent, however, opined that Dukes implicitly held that an expert must satisfy Daubert at the class certification stage. Id. at 215, n. 18.
In granting certiorari, the Supreme Court limited the scope of its review to "Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis" (emphasis added). This may indicate the Supreme Court plans to address its dicta in Dukes.
For now, the full effect of the Dukes ruling remains unclear. Thus, in the face of that uncertainty, practitioners should be prepared to defend or attack the reliability and relevancy of the expert evidence offered in support of or against class certification and to consider whether early discovery concerning an expert's opinions or bifurcating discovery would help or hurt their overall litigation strategy.
Keywords: litigation, products liability, Daubert, class certifications, expert testimony, evidence, Supreme Court, Wal-Mart v. Dukes