Class Certification

  • A a series of mid-2012 opinions the Fifth Circuit engaged Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011).  In the first, after a 3-day hearing, a bankruptcy court certified a class for injunctive relief about foreclosure-related fees during the debtors’ bankruptcy proceedings.  Rodriguez v. Countrywide Home Loans, 695 F.3d 360 (5th Cir. 2012).  The Court affirmed, finding that Countrywide’s acts were “generally applicable” to the “narrowly certified . . . class of approximately 125 individuals.” Id. at 365-66 (distinguishing Wilborn v. Wells Fargo, 609 F.3d 748 (5th Cir. 2010)).  The Court also found that the relevant records were readily searched and that Countrywide had a consistent “practice” even though it had no formal company policy as to the fees, thereby distinguishing DukesId. at 368.
  • In the second, a consumer group sued under the Clayton Act about the market for funeral caskets, and then settled all compensatory damages with one of the defendants.  Funeral Consumers Alliance v. Service Corp. Int’l, 695 F.3d 330 (5th Cir. 2012).  Among other holdings, the Court affirmed the denial of class certification, finding that the scope of the putative nationwide class fit poorly with the evidence of localized market activity for funeral services and casket sales.  Id. at 349 (distinguishing United States v. Grinnell Corp., 384 U.S. 563 (1996)).
  • Finally, in Ahmad v. Old Republic National Title Insurance, the Court reversed a grant of class certification in a case about title insurance premiums.  690 F.3d 698 (5th Cir. 2012).  The Court relied on Benavides v. Chicago Title, 636 F.3d 699 (5th Cir. 2011), which declined to certify a similar class of title insurance buyers because “[t]he resulting trial would require the factfinder to determine whether each individual qualified for the discount based on the evidence in his or her file.”  Id. at 703.  The Court declined to distinguish Benavides even though a particular discount was mandatory once “the requirements of R-8 [a Texas Insurance Code provision]” were satisfied, because each plaintiff would present unique facts about those requirements.  Id. at 704.  Therefore, the class did not meet the commonality requirement of Fed. R. Civ. P. 23(a)(2).
  • A recent case reversed the certification of a class when the members had to comply with a Louisiana statute about retention of outside counsel by a governmental entity, finding that the procedure gave the class an impermissible “opt in” structure.  Ackal v. Centennial Beauregard Cellular, 700 F.3d 212 (5th Cir. 2012).
  • In the bankruptcy context, the Court recently addressed the interplay between rules governing class claims in adversary proceedings, on the one hand, and the management of class proofs of claim.  The opinion also offers a thorough analysis of the Rule 23 factor of “numerosity,” as well as the appropriateness of considering issues unique to bankruptcy proceedings in the class certification context.   Teta v. Chow, 712 F.3d 886 (5th Cir. 2013).  A similar analysis by the author recently appeared in the Texas Law Book.
  • In the spring of 2013, the Court addressed putative plaintiff class claims about alleged violations of federal securities law with alleged misstatements about asbestos liabilities, the quality of certain receivables and the claimed benefits of a merger.  Erica P. John Fund Inc. v. Halliburton, Inc., 718 F.3d 423 (5th Cir. 2013). Reviewing several recent Supreme Court cases about relevant evidence at the certification stage, including one that reversed the Fifth Circuit about proof of loss causation, the Court held: “price impact fraud-on-the-market rebuttal evidence should not be considered at class certification. Proof of price impact is based upon common evidence, and later proof of no price impact will not result in the possibility of individual claims continuing.”  The Court rejected a policy argument about the potential “in terrorem” effect of not considering such potentially dispositive evidence about the merits at the certification stage.  The district court ruling about this evidence, and the resulting class certification, were affirmed.