While some feared that Comcast signaled the end to consumer fraud actions, the Seventh Circuit demonstrated in a recent decision in In re IKO Roofing Shingle Prods. Liability Litig, No. 14-1532, that such actions can proceed, consistent with Comcast, if a workable damages model permits damages to be determined on a classwide basis.
Recall that Justice Scalia’s opinion in Comcast held that damages calculations must be capable of a classwide methodology: “under the proper standard for evaluating certification, respondents’ model falls short of establishing that damages are capable of measurement on a classwide basis…. respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage calculations will inevitably overwhelm questions common to the class.”
IKO Roofing involved consumer fraud claims with respect to roofing shingles. The district court refused to certify a class because of disparate damages, reasoning that plaintiffs needed to show “commonality of damages” among the class. Judge Easterbrook held that the district court misconstrued Comcast’s meaning: “If this is right, then class actions about consumer products are impossible, and our post-Comcast decision in Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013), must be wrong. Pella Corp. v. Saltzman, 606 F.3d 391 (7th Cir. 2010), which approved class treatment of litigation asserting defects in casement windows, another product used in home construction or renovation, also would be wrongly decided under the district court’s reading of Comcast and Wal-Mart. Indeed, we could not affirm the district court’s decision in this case without overruling Pella, so close are the circumstances of the two home-product-defect suits.”
Judge Easterbrook went on to explain: “Comcast, …, does discuss the role of injury under Rule 23(b)(3), though not in the way the district court thought. Plaintiffs filed an antitrust suit and specified four theories of liability. The district judge certified a class limited to one of these four. The plaintiffs’ damages expert, however, estimated harm starting with the assumption that all four theories had been established. The Court held that this made class treatment inappropriate: without a theory of loss that matched the theory of liability, the class could not get anywhere.”
In IKO Roofing, the Court held that the theories of damages do match the theory of liability, and thus, Comcast does not present an obstacle to certification: “Plaintiffs in our litigation have two theories of damages that match their theory of liability. The first is that every purchaser of a tile is injured (and in the same amount per tile) by delivery of a tile that does not meet the quality standard represented by the manufacturer. Damages reflect the difference in market price between a tile as represented and a tile that does not satisfy the D225 standard. …The second theory is that purchasers whose tiles actually failed are entitled to recover damages, if nonconformity to the D225 standard caused the failure. That sort of remedy would require buyer-specific hearings along the lines discussed in Butler, 727 F.3d 798. The problems encountered in an effort to settle Pella (see Eubank v. Pella Corp., No. 13-2091 (7th Cir. June 2, 2014)) imply the wisdom of using the first approach to damages.”
IKO Roofing is an early case showing the impact of Comcast. But the case is also part of the continuing development of Seventh Circuit class action law, as that Circuit continues to be a trailblazer in class action jurisprudence.