The Burden of Proof at Class Certification
In Wal-Mart v. Dukes, the Supreme Court held that “[class] certification is proper only if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied[.]”Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011) (internal quotation marks omitted and emphasis added); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982). The Supreme Court, however, has never addressed the burden of proof applicable to the Rule 23 requirements. Accordingly, based in part on the Court’s reference to the need to conduct a “rigorous analysis,” a circuit divide has ensued as to the proper burden of proof for the Rule 23 requirements: a preponderance of the evidence standard or an undefined approach, in line with the Supreme Court’s stated need to conduct a rigorous analysis.
In Olean—the latest in a series of circuit-level cases that are divided on the appropriate burden of proof—the Ninth Circuit unanimously held, as a matter of first impression, that the preponderance of evidence standard applies to the Rule 23 requirements for class certification. Olean, 31 F.4th at 664–65, 687 (so holding in the majority opinion and agreeing in the dissenting opinion). The court’s holding aligned with holdings of the majority of circuit courts that have examined the burden of proof required for class certification. Namely, the First, Second, Third, Fifth, and Seventh Circuits apply the preponderance of the evidence as the burden of proof for determining satisfaction of the Rule 23 requirements. See In re Nexium Antitrust Litig., 777 F.3d 9, 27 (1st Cir. 2015); Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 204 (2d Cir. 2008); In re Lamictal Direct Purchaser Antitrust Litig., 957 F.3d 184, 191 (3d Cir. 2020); Alaska Elec. Pension Fund v. Flowserve Corp., 572 F.3d 221, 228 (5th Cir. 2009); Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012). These circuits do not treat “rigorous analysis” and the preponderance of the evidence as exclusive of one another. Instead, they imply that a court must conduct a rigorous analysis to determine if the class litigants have met the Rule 23 requirements by a preponderance of the evidence. See, e.g., In re Lamictal Direct Purchaser Antitrust Litig., 957 F.3d at 191.
On the other hand, the Sixth Circuit, which champions the minority view, declined to state the evidentiary standard for class certification and instead leaves it to the judge’s discretion as to whether the class certification requirements are satisfied by a “rigorous analysis.” See Gooch v. Life Invs. Ins. Co. of Am., 672 F.3d 402, 418 n.8 (6th Cir. 2012). The burden of proof under such an approach is more amorphous and discretionary. As described by the Sixth Circuit, this approach appears to mean that a class litigant must “demonstrate . . . compliance with . . . Rule [23]” and the court must, at a minimum, probe behind the pleadings if there are disputed factual or legal issues that “strongly influence the wisdom of class treatment.” Id. at 417. Furthermore, a “limited factual inquiry” is insufficient. Id. District court decisions in the Sixth Circuit since Gooch have not made this standard more clear. Many district courts state they will conduct a “rigorous analysis” but do not elaborate on the burden of proof (see, e.g., Bond v. Antero Res. Corp., 328 F.R.D. 187, 191 (S.D. Ohio 2018) (“Absent further guidance from the Sixth Circuit, the Court applies the rigorous analysis requirement here.”)), or they imply “rigorous analysis” is the standard of proof (see, e.g., In re Polyurethane Foam Antitrust Litig., 314 F.R.D. 226, 236 (N.D. Ohio 2014) (describing Gooch as finding “no reason to superimpose on the Circuit’s longstanding ‘rigorous analysis’ standard a more specific standard”)), while others apply the preponderance of evidence standard anyway (see, e.g., Hosp. Auth. of Metro. Gov’t of Nashville & Davidson Cty., Tenn. v. Momenta Pharms., Inc., 333 F.R.D. 390, 411 (M.D. Tenn. 2019)).
Similarly, the Fourth, Eighth, Tenth, Eleventh, and District of Columbia Circuits do not articulate the burden of proof required under Rule 23 at class certification. But see Brown v. Nucor Corp., 785 F.3d 895, 931 (4th Cir. 2015) (applying the preponderance of evidence standard in the dissent). But in those circuits, many district courts apply the preponderance of evidence absent circuit court guidance. See, e.g., Kennicott v. Sandia Corp., No. CIV 17-0188 JB\GJF, 2019 WL 366883, at *19 (D.N.M. Jan. 30, 2019); In re Rail Freight Fuel Surcharge Antitrust Litig., 292 F. Supp. 3d 14, 41 (D.D.C. 2017), aff’d sub nom. In re Rail Freight Fuel Surcharge Antitrust Litig., MDL No. 1869, 934 F.3d 619 (D.C. Cir. 2019); Pieloor v. Gate City Bank, No. 1:12-CV-039, 2012 WL 4894683, at *9 n.10 (D.N.D. Oct. 15, 2012) (noting also that the Eighth Circuit impliedly adopted a preponderance standard); In re Titanium Dioxide Antitrust Litig., 284 F.R.D. 328, 336 (D. Md. 2012), amended, 962 F. Supp. 2d 840 (D. Md. 2013); In re HealthSouth Corp. Sec. Litig., 257 F.R.D. 260, 272 (N.D. Ala. 2009).
The Olean Decision
The underlying case in Olean involved tuna fish. Purchasers of tuna fish brought antitrust claims against major tuna suppliers for an alleged price-fixing scheme that raised prices for consumers. Olean, 31 F.4th at 662.
The tuna purchasers sought to certify three subclasses under Rule 23(a) and 23(b)(3), including “direct purchasers of the Tuna Suppliers’ products, such as nationwide retailers and regional grocery stores . . . (the ‘DPPs’)[.]” Id. And the district court certified all the subclasses without articulating the burden of proof required at class certification. Id.
The defendants appealed, and in April 2021, the Ninth Circuit vacated the district court’s order and remanded. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774, 794 (9th Cir. 2021), reh’g en banc granted, 5 F.4th 950 (9th Cir. 2021). But in August 2021, the Ninth Circuit vacated its previous decision and decided to rehear the case en banc. The circuit court reviewed the legal issues de novo and the district court’s determination of underlying factual questions for clear error.
As previewed above, the Ninth Circuit held that the preponderance of evidence standard applies to the Rule 23 requirements for class certification. Olean, 31 F.4th at 664–65, 687.
But in reaching this holding, the Ninth Circuit uniquely compared the common burdens of proof in civil cases: the preponderance of the evidence and the clear and convincing standards. The court noted that the “preponderance of the evidence standard allows both parties to ‘share the risk of error in roughly equal fashion[,]’ . . . while ‘[a]ny other standard expresses a preference for one side’s interests.’” Id. at 664. The court then gave the example of “clear and convincing evidence” as applicable where “particularly important interests or rights are at stake[.]” Id. Impliedly, the clear and convincing burden expresses a preference for those interests and is therefore not neutral.
With this in mind, the court reasoned that because class certification only alters how claims are processed and does not “change plaintiffs’ separate entitlements to relief nor abridge defendants’ rights[,]” class certification is “substantively neutral[.]” Id. Finding class certification “substantively neutral[,]” the court then found “no basis for applying a heightened standard of proof beyond the traditional preponderance standard.” Id.
Conclusion
In explicitly adopting the preponderance of the evidence burden of proof, the Ninth Circuit in Olean provided needed clarity to litigants and practitioners on all sides as to the standard by which evidence in support of class certification will be analyzed moving forward.