Saturday, November 7, 2009

Fourth District Upholds Denial of Certification in Evans v. Lasco Bathware

On November 6, 2009, the Fourth District (Division One) issued an opinion in Evans v. Lasco Bathware, __ Cal. App. 4th __ (2009), upholding denial of class certification of a design defect action relating to shower components.

In this case, the plaintiffs sought certification of claims based on the theory that defendant “manufactured defectively designed shower pans that caused the pans to leak and cause water damage to adjacent shower components.” See Slip Opinion, at 5. The crux of plaintiff’s certification theory rested upon the use of expert testimony to establish uniformity, not only as to the existence of a common defect, but also uniformity as to class member damages. See id., at 5-6. On the damages issue, Plaintiff’s expert opined that the uniqueness of damage attributable to the purported defect rendered it “distinguishable from water leakage damage attributable to other causes[,]” and that the amount of damages was calculable on a class-wide basis “through a formula that estimated the average cost to replace the shower pan….” See id., at 6. Defendant's expert claimed, however, that “actual costs of replacement were not amenable to estimation because the costs associated with removing and replacing each individual shower pan could vary widely from one class member to the next.” See id., at 7-9, 13.

The Court’s opinion identifies three distinct grounds for upholding the trial court’s denial of certification in this case – all of which are hallmark issues that generally arise when trying certify a mass tort as a class action.
 
First, the Court concluded that trial court did not abuse its discretion by finding that the inherently individualized nature of each class member’s damages destroyed predominance. While it is true that individualized damages inquiry relating to damage is generally no bar to certification under California law, this rule is subject to being stretched to the breaking point in the mass tort context, as wide variances in the presence, degree and uniqueness of each individual’s damage causes the damage issue to become so unwieldy that it begins to bleed into the issue of liability itself. Thus, the plaintiff’s claim that the trial court erred when it concluded that individualized issues relating to damages predominated was overcome by the fact that the record supported the trail court's conclusion that the complexity of the damages issue alone would require “individualized trials for each class member's damages ….” See id., at 12-16.
 
Similarly, the Court also concluded that plaintiffs could not predicate error based on the trial court’s refusal to permit the use of statistical damage modeling to overcome individualized damage issues. As reasoned by the Court, “although a trial court has discretion to permit a class action to proceed where the damages recoverable by the class must necessarily be based on estimations, the trial court equally has discretion to deny certification when it concludes the fact and extent of each member's injury requires individualized inquiries that defeat predominance.” See id., at 17-18 (emphasis in original).
 
Second, the Court also ruled that the trial court did not err in concluding that plaintiffs failed to establish adequacy by pursuit of a certification theory that expressly disclaimed any damage beyond the cost of replacing the shower pans. Plaintiffs' assertion that this issue could be resolved by way of the opt-out mechanism, post certification, was deemed insufficient grounds to establish error. While the Court acknowledged that in some cases the opt-out mechanism may be used to overcome unique damage issues, the decision of whether to use the opt-out device is vested generally within a trial court’s discretion. See id., at 22-23. As reasoned by the Court, the trial court here was reasonable in its conclusion that the opt-out mechanism "would not cure under the peculiar facts of this case” (i.e. the wide diversity of potential damages that could be claimed by the proposed class as a whole). See id., at 23-24.  Boiled to its essence, the Court's analysis underscores that the reality that there is a limit on the use of the opt-out mechanism to overcome issues posed by a fact pattern that does not readily lend itself to class treatment.
 
Finally, the Court concluded that the trial court did not err in refusing to certify a liability only class. From an appellate perspective, such an argument was long shot, and in fact, perhaps logically incompatible with any argument establishing err (indeed, such argument would itself only come into play after the CAP concluded that the trial court had acted within its discretion in discretion in denying certification). While the plaintiffs cited to Hicks v. Kaufman & Broad Home Corp., 89 Cal.App.4th 908 (2001) for the position that a liability only certification was permissible, the Court reasoned that plaintiffs argument completely ignored the fact that the Hicks court not only denied certification of the very claims pursued by plaintiffs (i.e. for strict liability and negligence), but did so specifically because such claims would require individualized trials to establish liability. See id., at 24-25.
 
In short, I do not believe that Evans necessarily ads much to the class action landscape. Rather, Evans is really a useful tool to demonstrate that some types of cases just are not appropriate for class adjudication. As a general rule of thumb, the more one needs to compromise a case to fit it within the class action framework, the less likely it is that the case is one amenable to class adjudication.

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