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Supreme Court Attempts to Further Tighten Restrictions on Class Certification

Posted on Mon, Apr 22, 2013 @ 03:35 PM

by Jack B. HarrisonJack B. Harrison

Introduction

On March 27, 2013, the United States Supreme Court, in Comcast Corp. v. Behrend, Case No. 11-864 (U.S. Mar. 27, 2013), issued an important decision regarding the role of a district court in determining whether to certify a class under Federal Rule of Civil Procedure 23(b)(3).  Consistent with its prior decisions in this area, specifically Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. 2011), the Court reasserted its position that a district court must conduct a “rigorous analysis” as to whether a putative class satisfies the predominance requirement of Rule 23(b)(3), even where that “rigorous analysis” forces the district court to conduct some review of the merits of the underlying claim.  The Court further indicated that, in certain cases, the individualized nature of the damages claimed might preclude class certification.  The importance of this decision is that it provides defendants with a clearly articulable and reasonable defense to class certification.

Factual and Procedural Background

The original class action in Comcast had been brought by subscribers to Comcast’s cable television services.  The plaintiffs alleged that Comcast’s operations in the Philadelphia area violated federal antitrust laws, leading to the elimination of competition and anti-competitive pricing.  Ultimately, the plaintiffs asked the district court to certify a class containing approximately two million current and former Comcast subscribers.  While the plaintiffs asserted four different theories of injury in the case, the district court accepted only one of these theories – the “overbuilder theory” – as forming an allowable basis for class certification.  However, the damage model that was offered by the plaintiffs’ expert in support of class certification was based on calculated damages for all four theories of injury, rather than providing a damage calculation specifically related to the one theory of injury that the district court had accepted.  Despite this flaw in the analysis, the district court certified the class.

In reviewing the certification decision on appeal, the United States Court of Appeals for the Third Circuit rejected the argument that class certification was improper because plaintiffs’ damage calculation was not limited to the specific theory of injury on which class certification was based.  While the Court of Appeals was divided on this issue, the Court of Appeals affirmed the certification decision of the district court on the basis that the challenge to the methodology used for the calculation of damages required a review of the merits of the underlying substantive claim which had “no place in the class certification inquiry.” Behrend v. Comcast Corp., 655 F.3d 182, 207 (3d Cir. 2011).

Supreme Court Decision

The Supreme Court, in a 5-4 decision authored by Justice Scalia, reversed the decision of the Court of Appeals, holding that it was improper for the Court of Appeals to refuse to consider the individualized questions raised by the flaws in plaintiffs’ damage calculation simply because such a consideration would invariably force the district court to make some inquiry into the merits of the underlying substantive claim at the class certification stage.  The Supreme Court held that this approach by the Court of Appeals was inconsistent with its precedents, most recently in Wal-Mart, requiring a “rigorous analysis” into whether the requirements of Rule 23 are satisfied, even where that “rigorous analysis” forces the district court to inquire into the merits of the underlying substantive claim.

In its decision, the Court focused on four key areas that have important implications for future class certification decisions by district courts:

  1. The Court made it clear that it may well be legal error for a district court to refuse to review the evidence offered by the plaintiffs to determine whether the requirements of the class-certification rule have been satisfied on the basis that the evidence relates to the merits of the case.
  2. Building upon its decision in Wal-Mart, the Court stated that the “predominance” requirement of Rule 23 is more demanding in a Rule 23(b)(3) damages class action than in other types of class actions.
  3. The Court indicated that expert evidence that is offered in support of class certification, specifically evidence related to damage calculations, must be reasonably linked to the specific theory of liability on which a plaintiff seeks certification.
  4. Perhaps most importantly for future class certifications decisions, the Court concluded that the individualized nature of damages in a case such as this often “will inevitably overwhelm questions common to the class.” 

In dissent, Justice Ginsburg and Breyer sought to limit the reach of the majority opinion by asserting that because the briefing of the parties had focused on the standard for the admissibility of expert opinion at the class certification stage, the Court should not have expanded its review to include the question of the adequacy of the plaintiffs’ damage model to support class certification.  In seeking to limit the opinion of the Court, the dissent asserted that the opinion of the Court “should not be read to require, as a prerequisite to certification, that damages attributable to a classwide injury be measurable on a classwide basis.”

Importance of the Comcast Decision for Future Class Actions

This decision, following the trajectory from the Court’s decision in Wal-Mart, further clarifies the role district court’s must play in analyzing the requirements for certifying a class.  The Court makes it clear that the “rigorous analysis” to be conducted by the district court must indeed be rigorous, particularly in Rule 23(b)(3) damages class actions, even if it requires the district court to delve into the merits of the underlying claims.  The district court must conduct a thorough analysis of whether the damage calculation methodology put forth by plaintiffs in support of class certification is reasonably tied to the asserted theory of liability or whether it is simply speculative.  The Court also makes it clear that where damages are individualized, rather than subject to classwide proof, class certification may be inappropriate.  The result of this decision, along with the Court’s prior decision in Wal-Mart, is to continue a trend where it may become increasingly difficult and expensive for plaintiffs’ to obtain class certification in Rule 23(b)(3) damages class actions.

Facebook Postings: Used to Terminate Employee on FMLA Leave

Posted on Fri, Apr 19, 2013 @ 09:59 AM

Jack B. Harrisonby Jack B. Harrison

In Lineberry v. Detroit Medical Center, et al., Case No. 11-13752 (E.D. Mich., S.D. Feb. 5, 2013), a court was faced with the question of whether an employee’s posts on Facebook could form the basis for the employee’s termination for dishonesty, even when the employee was on a lawful FMLA leave.

In Lineberry, an RN, employed at the Detroit Medical Center, was on FMLA as a result of her claim that she could only walk or stand for limited periods of time.  However, the employee posted photos to Facebook of her vacation in Mexico, photos of her riding in a motorboat, photos of her lying on her side on a bed holding up two bottles of beer in one hand, and of her standing and holding both her infant grandchildren, one in each arm.  Additionally, she had made other postings indicating that she was far more active than she had represented when applying for FMLA leave.  These postings on Facebook were discovered by the employee’s coworkers, who reported them to hospital management.

While the Mexico vacation had been preapproved by the employee’s doctor, the employee had represented to her supervisor that she employed wheelchairs in all airports through which she travelled.  The employee’s supervisor responded to an email complaint from the employee regarding the fact that the employee had not received a get well card from staff by stating that “the staff were waiting until you came back from your vacation in Mexico to determine the next step. Since you were well enough to travel on a 4+ hour flight, wait in customs lines, bus transport, etc., we were assuming you would be well enough to come back to work.”  The employee responded to this email from her supervisor as follows:

As far as the airport, customs, etc., goes, I was in a wheelchair because I couldn’t stand that long. As far as the plane goes (3.5 hr. flight), I was up and down the entire flight, but sitting is so much easier on me than standing. I am able to walk short distances, but am unable to stand for more than 10 minutes at a time.

* * * * *

I want to come back to work as soon as possible and wouldn’t have went to Mexico if a wheelchair was not available at both airports so I would not have to stand for any length of time.

When the employee was subsequently asked at a meeting with hospital management about this trip, she reiterated her contention that she had used wheelchairs throughout the trip.  When the employee was then confronted with her Facebook postings and reminded that all airports have security cameras throughout, she admitted that she had lied about the use of wheelchairs on her trip and admitted that she had never used a wheelchair at all on the trip.  As a result of these admissions, the employee was terminated by the hospital for dishonesty, even though she was still on a lawful FMLA leave.

Following her termination, the employee filed suit against the hospital.  In her suit, the employee claimed that the hospital had violated her rights under the FMLA by refusing to reinstate her and by retaliating against her for taking the FMLA leave in the first instance.  The Court, in granting the hospital’s motion for summary judgment, held that the undisputed evidence, including the employee’s admissions and Facebook postings, supported the fact that she had been terminated for dishonesty, not in retaliation for taking the FMLA leave.

While prudent employers should always be cautious regarding the termination of an employee who is on a lawful FMLA leave, Lineberry does support the proposition that an employer may lawfully terminate an employee who is on FMLA leave when the employer has undisputed evidence that the employee has been dishonest as to the basis for the need for FMLA leave.

Tags: FMLA

Workplace Concealed Carry Laws: "Can I Come to Work Armed?"

Posted on Wed, Apr 17, 2013 @ 10:45 AM

Concealed Carryby Jack B. Harrison

Approximately forty states, including Ohio and Kentucky, have laws that allow individuals to obtain a permit to carry a concealed weapon.  Typically, these laws place some restrictions on where concealed weapons can be carried.  For example, in Ohio, concealed weapons are banned by statute from government buildings, schools, universities, day care centers and bars/restaurants with liquor licenses.

What is not always clear with concealed carry laws is the extent to which they place limits on individuals to carry concealed weapons in the workplace.  In many cases, concealed carry laws do not explicitly ban concealed weapons from a workplace, but do allow employers to ban concealed weapons from their property or premises.  However, some states limit an employer’s right to restrict employees from storing concealed weapons in vehicles that are parked on the employer’s property.  In almost all instances, if an employer wishes to prohibit employees from bringing concealed weapons into the workplace, the employer must place appropriate notices throughout the workplace and, in some states, those notices must contain specific language defined by statute.  (This (above left) is an example of a notice that the Ohio Attorney General recommends.)

Where a business is open to the general public and the business wishes to prohibit both employees and patrons from bringing concealed weapons onto the premises, the business must post a sign in a conspicuous location indicating that such weapons are prohibited.  Where a business posts such a prohibition, in some states, a person who then knowingly brings a concealed weapon onto the business property in violation of a posted notice may be criminally prosecuted for carrying a concealed weapon.

Whether or not employers post notices prohibiting concealed weapons from the business or the workplace, employers should consider including a written policy within their employee handbook or within their general employment policies that makes it clear that employees are prohibited from carrying concealed weapons onto the employer’s property and into the workplace.  This policy should be clearly conveyed to employees in orientation and subsequent training.  The policy should specifically identify those areas of the workplace in which an employee is prohibited from carrying a concealed weapon, keeping in mind that some state’s limit an employer’s ability to restrict an employee’s right to keep a weapon stored in their personal vehicle while on the employer’s property.

Given that the law in this area is constantly evolving, prudent employers should periodically review their policies and practices related to concealed weapons with their counsel, revising such policies where appropriate.

Tags: Employee Handbooks, Concealed Carry in the Workplace