A recent Sixth Circuit case addressed an issue that tends to arise frequently in various types of class actions, such as property insurance and environmental cases: whether property valuation issues are appropriate for class treatment. The answer here was “no,” and the opinion could be useful to defendants in other contexts.

Tarrify Properties, Inc. v. Cuyahoga County, — F.4th –, 2022 WL 2128816 (6th Cir. June 14, 2022) involved a constitutional challenge to a tax foreclosure procedure in Ohio that allowed a county to place foreclosed properties into a “land bank” without allowing the property owner to receive any excess equity. The plaintiff filed a putative class action challenging this foreclosure procedure under takings clauses in the federal and state constitutions. The district court denied class certification, and the Sixth Circuit affirmed.

The proposed class was defined as owners of relevant tax-foreclosed properties who had excess equity at the time of the foreclosure. That was likely the only viable way to define the proposed class because if there was no excess equity, the property owner would have no claim. But this posed what the Sixth Circuit concluded was an insurmountable problem for ascertainability (identifying the class members) and predominance. Class members could not be identified without determining the fair market value of their property at the relevant time, and experts on both sides agreed that this would depend on many factors. And if the defendants’ expert was correct, the named plaintiff had no excess equity, presenting an adequacy of representation problem as well.

The plaintiff argued that this problem could be overcome by relying on the properties’ assessment values, or on the basis that the county was bound by the value it had used for foreclosure purposes under collateral estoppel or judicial estoppel. The Sixth Circuit rejected these arguments, explaining that, although the assessment values were a “default valuation,” they were not “unrebuttable” or a “conclusive answer.” The assessments were up to six years old, and in any event could be challenged in the litigation. As to estoppel, the county board had not made findings on the fair market value of properties in its foreclosure order.

The plaintiff also suggested that the valuation issues could be resolved by a special master, subclasses or through a new “mass appraisal” for litigation purposes. The Sixth Circuit rejected those options as well because they would still require “mini-trials over each property’s value.”

This decision seems helpful to defendants faced with class actions in other contexts where the claims involve property values, such as property insurance cases, and cases alleging that an environmental nuisance such as an odor or dust from a facility has impacted property values in the area.

The Fifth Circuit recently addressed the scope of appellate jurisdiction under the Class Action Fairness Act (CAFA). CAFA allows federal courts of appeals to hear, on a discretionary basis, appeals from “an order of a district court granting or denying a motion to remand a class action.” 28 U.S.C. § 1453(c)(1). The Fifth Circuit has held, contrary to some other circuits (such as the Seventh Circuit), that on such an appeal it can only consider whether federal jurisdiction exists under CAFA, not any other basis for the district court’s order. The Fifth Circuit recently maintained the same position notwithstanding a recent Supreme Court decision reaching a different outcome under an analogous statute.

In Stewart v. Entergy Corporation, No. 22-30177, — F.4th –, 2022 WL 1711659 (5th Cir. May 27, 2022), the defendant argued that in a CAFA appeal, the court of appeals could consider an additional ground for federal jurisdiction (bankruptcy jurisdiction), relying on BP P.L.C. v. Mayor of Baltimore, 141 S. Ct. 1532 (2021). In BP P.L.C., the Supreme Court addressed 28 U.S.C. § 1447(d), which permits appellate review of a remand “order” if the removal was under Section 1442 (applicable to suits against federal officers or agencies) or Section 1443 (applicable to certain federal civil rights claims). The Supreme Court held that under the plain text of Section 1447(d), the entire “order” is appealable, not merely the part of it that addresses Section 1442 or 1443. The Court has reached the same result under Section 1292(b), which allows interlocutory appeals from an “order” certified by the district court as involving a “controlling question of law” on which there is a “substantial ground for difference of opinion.” Under that statute, the Court previously held that the entire order is appealable, not merely the question(s) identified.

In Stewart, the Fifth Circuit concluded that B.P. P.L.C. had not “unequivocally overruled our precedent or established a law inconsistent with it,” and thus the panel was bound by prior circuit precedent limiting CAFA appeals to CAFA issues. The Fifth Circuit also reasoned that CAFA’s requirement that petitions for permission to appeal be filed within 10 days, and that appeals be decided within 60 days of permission to appeal being granted, would make it difficult, as a practical matter, to decide appeals involving multiple issues. The Fifth Circuit also noted that appeals are discretionary under CAFA, unlike under the statute construed by the Supreme Court in B.P. P.L.C.

I have doubts about whether Stewart will hold up if reviewed en banc or if this issue reaches the Supreme Court. Distinguishing CAFA from other statutes that allow appeals from an “order” is difficult. Although not addressed in Stewart, Section 1453(c)(1) allows appeals from remand orders in a “class action”; it does not exclude bases other than CAFA for jurisdiction in a class action. Given that CAFA appeals are discretionary, a court of appeals might have discretion to limit the issues to be addressed in an order granting leave to appeal, as the Supreme Court does sometimes when granting certiorari. It may not be easy for defendants to obtain interlocutory appellate review of issues unrelated to CAFA jurisdiction in a class action, but it seems a stretch to conclude that CAFA makes that impossible.

A recent Sixth Circuit decision caught my eye because it addressed an important issue on which I have not seen any other appellate decisions (and none were cited in the opinion). The plaintiff argued that the Class Action Fairness Act (CAFA) should be interpreted as overriding the Federal Arbitration Act (FAA), effectively precluding the enforcement of class action waiver provisions in consumer contracts. The Sixth Circuit rejected the argument, finding no clear congressional intent to displace the FAA.

In Adell v. Cellco Partnership, No. 21-3570, 2022 WL 1487765 (6th Cir. May 11, 2022), the plaintiff brought a putative class action involving a Verizon Wireless mobile phone contract, claiming that a monthly administrative charge of about $1 was not permitted by the contract. The defendant filed a motion to compel arbitration, which the district court granted. The arbitrator ruled for the defendant, the district court confirmed the award, and the plaintiff appealed.

The plaintiff argued that “CAFA guaranteed her right to federal adjudication of her claim,” asserting support for this position in the statutorily-expressed purpose of CAFA and its legislative history. She also argued that Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), which held that the National Labor Relations Act did not displace the FAA in the employment context, supported her position.

The Sixth Circuit rejected the argument, noting that courts construing two statutes should give effect to both when possible. Construing one statute as displacing another is generally appropriate only if there is “clear and manifest congressional intention” to do so. The Sixth Circuit explained that “CAFA undoubtedly discusses class actions, but it neither mentions arbitration nor offers the ‘clear and manifest congressional intention’ signaling FAA displacement.” While CAFA’s “findings and purposes” “express the importance of class action lawsuits … [t]hese are not clear statements displacing the FAA.” The court also found no support for the plaintiff’s position in CAFA’s legislative history.

Federal district court orders remanding cases to state court are generally not appealable, as provided by 28 U.S.C. § 1447(d). One exception to this is that the Class Action Fairness Act (CAFA) allows a court of appeals, in its discretion, to accept an appeal from an order granting or denying a motion to remand a putative class action. 28 U.S.C. § 1453(c). The courts of appeals can decline to hear an appeal under § 1453(c), and they are selective about hearing these appeals, particularly because if they accept one, they have to rule within 60 days (subject to an extension of time if either agreed by the parties or limited to ten days). A recent Eleventh Circuit decision pointed out, however, that there are narrow circumstances where a party can appeal as of right from a remand order in a putative class action — where the order is based on CAFA’s “local controversy” or “home state” exception.

In Simring v. Greensky, LLC, — F.4th –, 2022 WL 894206 (11th Cir. Mar. 28, 2022), the district court remanded a putative class action based on the “local controversy” exception, which provides that a district court shall decline jurisdiction where more than two-thirds of the members of all proposed classes are citizens of the state where suit is filed and certain other requirements are satisfied (there is at least one in-state defendant from which significant relief is sought and whose contact forms a significant basis for the claims alleged, the principal injuries were incurred in that state, and no other class action asserting the same or similar factual allegations against any of the defendant has been brought within the last three years). 28 U.S.C. § 1332(d)(4). In Simring, the district court interpreted the complaint as limiting the proposed class to Florida citizens, and because the other requirements for the “local controversy” exception applied, remanded the case to state court.

The Eleventh Circuit held that the district court’s decision was appealable as of right because “CAFA’s local controversy exception does not implicate subject matter jurisdiction” and thus 28 U.S.C. § 1447(c) and (d), which generally prohibit appeals of remand orders, were not applicable. Rather, “the local controversy exception is ‘akin’ to abstention,” a basis for remand that is appealable, “because it requires courts to decline jurisdiction that otherwise exists.”

The Eleventh Circuit went on to reverse the district court’s order because the class definition was not limited to Florida citizens, despite the fact that other allegations in the complaint indicated that suit was being brought “on behalf of all other Floridians similarly situated.” The plaintiff had the burden of proof on the applicability of the local controversy exception, and did not present any evidence of the citizenship of the putative class members.

The key point here for class action practitioners is that there are circumstances where a remand order is appealable as of right under CAFA. Where that is the case, you would not want to file a petition for permission to appeal, which could be denied for any number of reasons. This decision is also significant in emphasizing that the definition of the class, rather than other allegations in the complaint, may control the analysis of whether the local controversy (or home state) exception applies.

A recent Seventh Circuit decision makes an important point about how the principle that a court generally need not resolve the merits to decide class certification is bilateral – it applies to both affirmative claims and defenses. The plaintiff argued that the district court erred in denying class certification because there was one key defense that was central to the case, and the defendant had not established that it had a viable defense to even a single class member’s claim. But that made no difference because the evidence showed that the process for resolving the defense would require individualized adjudication.

Gorss Motels, Inc. v. Brigadoon Fitness, Inc., No. 21-1358, — F.4th –, 2022 WL 872639 (7th Cir. Mar. 24, 2022), was brought under the Telephone Consumer Protection Act (TCPA), seeking to hold the defendant liable for sending unsolicited advertisements by fax. (One would think these cases would come to an end given that fax machines seem like ancient technology that is hardly ever used today. But these cases live on.) The key issue here, as in many TCPA cases, was consent—whether class members had provided prior express permission for the ads. The defendant or relevant third parties from which it obtained the fax numbers had different agreements with the class members who received the faxes, and some fax numbers were obtained through personal contact. The district court denied class certification because common issues of law or fact would not predominate over individual issues with respect to this key defense at the heart of the case.

On appeal, the plaintiff argued primarily that the defendant had failed to establish consent by even a single class member, pointing to a district court opinion in another case that had focused on whether there was permission given for the fax advertisements by a “significant percentage” of the class. The Seventh Circuit rejected that argument, explaining that “it is not the final merits of the permission inquiry that matter for Rule 23(b)(3) purposes; it is the method of determining the answer and not the answer itself that drives the predominance consideration.” Moreover, “[t]his analysis applies not only to the elements that plaintiffs must prove but also to affirmative defenses like prior express permission.” Regardless of whether the defendant could establish the merits of its defense, the district court reasonably concluded that it could not be resolved with “generalized proof.”

 

A recent Seventh Circuit decision made two rulings on issues arising under the Class Action Fairness Act (CAFA) that defendants may find useful in other cases. First, potential punitive damages exceeding a single-digit ratio may be considered in determining whether the class claims satisfy the $5 million threshold if compensatory damages are small or where a statute provides for punitive damages. Second, the local controversy exception does not apply if another class action asserted the “same or similar factual allegations” against any defendant within the last three years, even if the claims in the prior suit were under a different state’s law and there is no overlap between putative class members.

In Schutte v. Ciox Health, LLC, No. 22-1087, 2022 WL 792258 (7th Cir. Mar. 16, 2022), the plaintiff alleged that the defendant improperly charged for copies of electronic medical records, in violation of a Wisconsin statute that the Wisconsin Court of Appeals held does not allow any such fees. The defendant removed the case under CAFA, the district court denied the plaintiff’s motion to remand, and the Seventh Circuit agreed to hear the plaintiff’s appeal from that order.

On the amount in controversy issue, the plaintiff argued that since her individual claim was for only $61, under Supreme Court precedent generally limiting punitive damages awards to a single-digit ratio, it was unlikely that the punitive damages per claim would reach the point where a class of several thousand class members would recover more than $5 million. Rejecting that argument, the Seventh Circuit explained that “a higher punitive damages ratio may be warranted in cases where compensatory damages are too low to provide meaningful deterrence,” and the statute expressly provides for up to $25,000 for a “knowing and willful” violation, which could be an obstacle to a due process challenge. In any event, “[w]hat matters is the amount ‘in controversy’—not the amount that plaintiffs are most likely to recover.” The court of appeals emphasized that “it is critical for courts to focus on the phrase ‘in controversy’ and to remember the difference between even highly unlikely results and truly impossible results, and to avoid prematurely trying the merits of the case in deciding jurisdiction.” The court’s holding on this issue will be useful to defendants because this is not an uncommon scenario in class actions – the potential individual damages are quite small but punitive damages are sought (or potentially available on the claims alleged).

The second issue focused on CAFA’s local controversy exception, which requires a district court to decline jurisdiction where over two-thirds of proposed class members are citizens of the state where suit was filed, at least one “significant” defendant (satisfying certain requirements) is a citizen of that state, the principal injuries or defendant’s conduct were in that state, and “during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.” 28 U.S.C. § 1332(d)(4) (emphasis added). Most of the requirements for the local controversy exception apparently were satisfied here. The dispute was over whether there had been a class action brought against the defendant within the three-year period involving the “same or similar factual allegations” and “on behalf of the same or other persons.” The defendant pointed to a prior case filed in Montana alleging that it had improperly charged for electronic medical records under Montana law. The plaintiff argued that the Montana case was brought under a different state’s law and involved class members in a different state. Rejecting that argument, the Seventh Circuit emphasized that the statute requires only “the same or similar factual allegations,” not an overlapping legal theory. Moreover, “[i]f geographic differences could render two otherwise identical complaints dissimilar for CAFA’s purposes, then plaintiffs would be able to avoid federal jurisdiction by filing individual actions based on the same kind of misconduct in all fifty states.”

The plaintiff further argued that if the statutory language requiring that the prior suit be brought “on behalf of the same or other persons” did not require any overlap in the proposed classes, the quoted language would be superfluous because in the context of a class action, the second suit would always be brought on behalf of “the same or other persons.” Not so, said the Seventh Circuit, because statutes often have redundancies, and if CAFA had not included the language at issue, courts might wonder whether Congress intended that the proposed classes in the prior and subsequent cases must overlap. The court also pointed to indications that the intent of this three-year exception to the local controversy requirement was so that a series of class actions in multiple states (except for the first one) might be considered for a multidistrict litigation where appropriate.

Overall, the Seventh Circuit appeared to make clear that plaintiffs cannot evade federal jurisdiction under CAFA by bringing similar single-state cases for small individual amounts, if punitive damages are potentially recoverable such that the amount in controversy requirement is satisfied.

A recent Eleventh Circuit decision on the Class Action Fairness Act (CAFA) caught my eye. It involves the kind of question legislators (and their staffs) probably never think about when drafting a statute. Law professors dream up these types of questions when trying to find a way to puzzle their students on an exam. It’s of interest only to nerds of the law.

In Ruhlen v. Holiday Haven Homeowners, Inc., No. 21-90022, — F.4th –, 2022 WL 701622 (11th Cir. Mar. 9, 2022), the question was whether the trial court’s order remanding the case to state court “sua sponte” — Latin for “of its own volition” — could be appealed. Under CAFA, federal appeals courts can hear appeals, in their discretion, “from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed.” 28 U.S.C. § 1453(c)(1) (emphasis added). This case was removed to federal court based on both the inclusion of a federal statutory claim in the complaint and under CAFA. The federal claim was withdrawn in an amended complaint, and the district court then remanded the case sua sponte, concluding that the particular type of state law claim brought under a Florida rule of civil procedure allowing a mobile homeowners’ association to sue on behalf of homeowners was not a “class action” within the meaning of CAFA. The defendants asked the Eleventh Circuit to hear an appeal from the remand order.

The Eleventh Circuit, in a 2-1 decision, concluded it did not have jurisdiction to hear the appeal because there was no “motion to remand” filed in the district court. The majority concluded that the plain language of CAFA requires a “motion” made by a party and does not apply to a remand ordered by the court without a motion being filed. Although Black’s Law Dictionary and some court opinions refer to “sua sponte” as meaning “on its own motion,” the majority held that a “motion” requires a party’s request, and when the court acts sua sponte, “the court … does not actually ‘request[]’ anything of itself, nor does it grant or deny anyone else’s request.” The majority acknowledged that Congress may have intended otherwise, and that this was an “odd” result, but felt it was bound by the plain meaning of the text, citing Justice Scalia and Brian Garner’s book Reading Law: The Interpretation of Legal Texts. The majority suggested Congress would have to fix this if they intended otherwise.

Unless Congress fixes this or the Supreme Court takes the issue and reaches a different result, those defending class actions in the Eleventh Circuit better hope that if a jurisdictional issue arises, the plaintiff files a motion to remand. If the court questions its own jurisdiction, you might try suggesting that a briefing schedule be set on a motion to remand the plaintiff might wish to file. Otherwise you could have no chance to appeal.

Judge Rosenbaum dissented, finding the majority’s reading of CAFA “hypertechnical,” inconsistent with the surrounding statutory context and expressed Congressional purpose, and leading to an absurd result. “I can conceive of no logical reason,” she wrote, “why the same action should be exposed to two opposite results, depending on whether a party made a motion before the court issued its order.” Judge Rosenbaum identified a circuit split, citing a decision by the Ninth Circuit, holding that CAFA allowed an appeal of a sua sponte remand, and cases where the Seventh and Eighth Circuits had reviewed sua sponte remands without raising the jurisdictional issue.

Perhaps the Supreme Court will take this case, if a petition for certiorari is filed. It would not be heavy lifting for them. Assuming Judge Jackson is confirmed, this one could be a good candidate for her first opinion, which are traditionally “easy” ones that are of little interest to anyone other than lawyers in a particular practice area.

 

Last week the Fifth Circuit issued a short opinion that made an important point that does not arise often in class certification decisions. Class certification failed because the plaintiffs’ proposed theory of liability would benefit only some class members and disadvantage others, who would be overpaid if the plaintiffs’ theory were correct. For that reason alone, the plaintiffs could not adequately represent the class.

Prudhomme v. Government Employees Insurance Company, No. 21-30157, 2022 WL 510171 (5th Cir. Feb. 21, 2022) (per curiam) was similar to another case I recently wrote about—the plaintiffs claimed that their insurer undervalued their vehicles that were deemed total losses, in violation of Louisiana statutes. Sidestepping questions about commonality and predominance, which are usually the focus of class certification decisions, the Fifth Circuit affirmed the denial of class certification because the adequacy of representation requirement was not met. This was because “a portion of the proposed class members received payments above (that is, benefitted from) the allegedly unlawful valuation.” According to the district court opinion, an expert witness opined that approximately one-fifth of the class would have received less on the plaintiffs’ theory than they received from GEICO. While the plaintiffs argued that class members who were overpaid on their theory might still be entitled to some damages under Louisiana law, that would likely create a typicality problem. Class representatives cannot adequately represent a class if they offer “a theory of liability that disadvantages a portion of the class they allegedly represent.”

Look out for this type of issue the next time you are litigating a class action. It might be lurking in your case when you peel back the onion.

Numerous class action suits have been filed against auto insurers regarding the valuation of vehicles that are total losses. These cases typically allege that insurers are undervaluing vehicles in some common way or in violation of a state regulation. The Ninth Circuit recently affirmed the denial of class certification in a published decision that I expect will be helpful to insurers defending these cases and others involving different lines of insurance but similar issues.

In Lara v. First National Insurance Company of America, No. 21-35126, — F.4th –, 2022 WL 414691 (9th Cir. Feb. 11, 2022), the plaintiffs sued Liberty Mutual companies and CCC Intelligent Solutions, a vendor that assists insurers in valuing vehicles, alleging breach of contract as to Liberty Mutual and an unfair trade practices claim against all defendants. The insurance policy required payment of the “actual cash value” of the vehicle, which was defined by a Washington regulation as “fair market value.” CCC researches the prices at which used vehicles sell at car dealers, and then makes adjustment based on the pre-loss condition of the insured vehicle and the difference between prices paid for vehicles purchased from private parties rather than dealerships. The insurance adjuster then in some cases adjusts the value shown on the CCC report. Plaintiffs claimed that the “condition adjustments” on the CCC reports violated a Washington regulation. The case survived a motion to dismiss, but the district court denied class certification under Rule 23(b)(3), based on lack of predominance of common issues and because a class action would not be a superior method of resolving the dispute.

In affirming, the Ninth Circuit concluded that whether the condition adjustment violated the regulation was a common question, but liability and injury would require individualized adjudication of each claim. The court explained that “[b]ecause Liberty owed each putative class member the actual cash value of his or her car, if a putative class member was given that amount or more, then he or she cannot win on the merits,” and determining that “would involve looking into the actual pre-accident value of the car and then comparing that with what each person was offered.” In other words, there would have to be a minitrial on the value of each vehicle.

As plaintiffs often do in these cases, the plaintiffs here argued that the value of the vehicles involved “damages issues,” and some courts have said that if the only individualized issues involve damages, that should not defeat class certification. But, as the Ninth Circuit explained here, “if there’s no injury, then the breach of contract and unfair trade practices claims must fail,” and “[t]hat’s not a damages issue; that’s a merits issue.” In other words, if the ultimate amount paid was sufficient, it doesn’t matter how you get there. As the court put it, “the district court was correct to apply ‘the old basketball phrase, ‘no harm, no foul.’” The court also agreed with the district court that the superiority requirement was not satisfied because individual trials would be preferable given the nature of the issues to be decided.

Insurers will want to cite this opinion in cases involving other lines of insurance as well, such as property. Property insurance class actions often involve disputes over actual cash value or replacement cost value, and the same principle should apply. Disputes over whether a few hundred dollars more were owed for damage from a hail storm, for example, are individualized. As in this case, those disputes may be best resolved by the appraisal process provided for in these policies, or in small claims court, and often fail to satisfy the requirements for a class action.

On August 30, 2021, the U.S. Court of Appeals for the First Circuit issued a decision in Bais Yaakov of Spring Valley v. ACT, Inc. that addresses how plaintiffs can satisfy the predominance requirement in federal class actions. (The opinion (“Op.”) is available here). The decision held that on the facts of this case, the plaintiff could not establish predominance because individualized proof would be required on at least one element of the claim. The decision follows on the heels of an earlier decision where the First Circuit ruled against plaintiffs on a predominance dispute. In re Asacol Antitrust Litig., 907 F.3d 42 (1st Cir. 2018). These two cases create a high bar for plaintiffs to overcome defendants’ submission of declarations or other evidence substantiating an actual need to litigate an issue using individualized evidence.

Bais Yaakov arose under the Telephone Consumer Protection Act (TCPA). The TCPA prohibits sending advertisements by fax, unless the advertisement was either 1) sent pursuant to prior express permission or invitation of the recipient; or 2) the advertisement meets certain formatting requirements, including the presence of an opt-out notice in the advertisement. See 47 U.S.C. § 227(a)(5), 227(b)(1)(C). The statute provides for penalties of up to $1,500 per violation, which can quickly add up given the usually high volume of fax advertisements. 47 U.S.C. § 227(b)(3). Plaintiff, a small private high school, sent a request form to ACT in order to permit students’ ACT test scores to be reported to the school. Op. at 3. The school provided its fax number on the form and checked a box stating that the school wanted to receive SAT and ACT publications. Id.  Seven years later, ACT sent three faxes to Bais Yaakov. Id.  Two of the faxes promoted registration to take the ACT, while the third invited the school to sign up as an ACT test administration venue. Id. at 3-4. Bais Yaakov then brought a TCPA suit against ACT on behalf of a putative class of approximately 7,000 schools. Id. at 4. Bais Yaakov alleged that ACT sent approximately 28,000 faxes that transgressed the TCPA. Id.

The district court denied Bais Yaakov’s motion for class certification. Id. at 8. The court concluded that determining whether the faxes were sent with the prior express permission of the recipients would require individualized examination of the class members’ individual communications with ACT. Id. at 7. Thus, common issues would not predominate and the class could not be certified pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure. Op. at 7. The court reached this conclusion in large part based on declarations (submitted by ACT) from seventy-eight putative class members stating that they provided ACT with their fax numbers, that they received communications via fax that were integral to their relationship with ACT, and that they would have given permission to send such information via fax. Id. at 20-21.

Bais Yaakov appealed and the First Circuit affirmed the denial of class certification. The court held that the predominance inquiry turned on whether “the record reasonably shows that some putative class members” gave ACT permission to send the faxes and, if so, whether “there is a fair and efficient method for culling those consenting recipients from the class.” Id. at 16. The court emphasized the importance of the declarations from the seventy-eight putative class members, which highlighted the differing positions of different putative class members regarding whether they had given ACT permission to send faxes. Id. at 20-21. The court concluded that, based on this evidence, the district court did not abuse its discretion in holding that there would be putative class members that consented to the faxes. Id. at 24. The First Circuit further held that Bais Yaakov raised no argument that there was a feasible way to cull those members from the class. Id. at 24-25.

In a concurring opinion, Circuit Judge Barron addressed the implications of the court’s decision on plaintiffs’ ability to satisfy the predominance requirement more generally. In light of the First Circuit’s decision and its earlier, similar decision in In re Asacol Antitrust Litig., 907 F.3d 42 (1st Cir. 2018), some commentators have questioned whether plaintiffs could ever satisfy the predominance requirement if the defendant merely contends that it needs to challenge class members’ testimony on an individual basis. Judge Barron’s concurrence pushes back against that argument and identifies potential situations where he might hold that a plaintiff can establish predominance even though the defendant contends that individual proof is required. He contends that Asacol and Bais Yaakov do not establish a per se rule that predominance cannot be satisfied whenever a defendant announces an intent to contest class members’ testimony individually. Op. at 40. Rather, in Judge Barron’s view, the court must make a “predictive assessment” of how the case would actually be litigated. Id. at 41. In making that assessment, the concurrence says that the court must look at whether such litigation would actually result in inefficiency (such as a large number of class members needing to testify about individual issues) or unfairness (such as infringing defendants’ rights to present individualized evidence in order to avoid inefficiency). Id.

After Asacol, many commentators viewed the First Circuit as a difficult place for class action plaintiffs to win class certification. The Bais Yaakov decision will likely reinforce that view. ACT effectively used declarations from putative class members to establish that different class members were differently situated regarding an element of the claim and to illustrate that individualized proof would be required on that element. By observing that courts should not just rest on defendants’ word that individualized issues defeat predominance, the concurring opinion further highlights how important it is for defendants to supplement their class certification evidence with declarations or other supporting evidence, where appropriate. Whether and if plaintiffs can successfully rebut an argument against certification that is supported with such evidence remains to be seen in future cases. But the First Circuit’s decisions so far suggest that where defendants’ evidence demonstrates a real need for individualized assessments, the predominance standard is difficult for class action plaintiffs to satisfy.