In Neale v. Volvo Cars of North America, LLC, No. 14-1540, slip op. (July 22, 2015), the Court of Appeals for the Third Circuit reversed and remanded the district court’s certification of a class of car owners alleging a design defect. The Third Circuit held that the district court had failed to conduct the rigorous analysis required in making a class certification decision, failing, among other things, to detail the claims subject to class treatment. My first reaction hearing about the decision was “big deal, so what — the errors will be corrected and the class likely will be certified on remand.” But, then I read the opinion…
And an interesting opinion it is, as it highlights two key unanswered questions in class action law today: (1) must all members of a putative class have standing; and (2) is the holding of the Supreme Court’s Comcast decision — that damages must be susceptible to classwide determination — applicable outside Comcast’s antitrust context?
As to the first question, the Third Circuit noted that the Supreme Court may soon be deciding that question in Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146. That said, it held that “unnamed, putative class members need not establish Article III standing. Instead, the ‘cases or controversies’ requirement is satisfied so long as a class representative has standing, whether in the context of a settlement or litigation class.” Well, yes, that is surely a minimal requirement of Article III, but the Third Circuit fails to address the bigger question of why those who have not been injured and could not sue on their own should nevertheless have the right to proceed as a class.
The Third Circuit’s answer to the second question is equally unsatisfying. While the majority in Comcast did not confine its holding to the antitrust context, the Third Circuit took its lead from Justice Ginsburg’s dissent and held that Comcast only addressed damages in the antitrust context: “Comcast is inapposite to the case before us. Comcast held that an antitrust litigation class could not be certified because the plaintiffs’ damages model did not demonstrate the theory of antitrust impact that the district court accepted for class-action treatment.” As the Third Circuit recounted, numerous circuit courts appear to have so narrowed Comcast’s holding simply to antitrust claims. The Tyson Foods case currently before the Supreme Court may resolve this issue too, as that case addresses damages models in the context of the Fair Labor Standards Act.
Courts continue to struggle with basic issues of class action law, and the two issues the Third Circuit confronted in Neale cry out for definitive resolution.