The Eighth Circuit recently weighed in on the debate about whether Daubert motions challenging expert testimony should be decided prior to class certification and whether a “full” Daubert analysis is appropriate. This was a 2-1 decision with thorough opinions and interesting points made by the majority and dissent.
In re Zurn Pex Plumbing Products Liability Litigation, No. 10-2267 (8th Cir. July 6, 2011) (copy available on the Eighth Circuit website) is a putative class action against a manufacturer of polyethylene (PEX) plumbing systems, alleging that brass fittings used in the systems, which are installed in homes throughout the United States, are “doomed to leak” because they are susceptible to stress corrosion cracking. (Incidentally, this is an issue that likely has led to insurance claims for water damage, and insurance company subrogation departments should be making sure that they take appropriate steps to either participate in or opt out of this class action.) The class certification motion practice focused heavily on two experts proffered by the plaintiffs: one expert who tested the fittings and opined that stress corrosion cracking would occur rapidly, and a statistical expert who opined based on the test results that 99% of homes would have a leak within 25 years. According to the dissent, the expert analysis was largely based on assumptions and actual test results showed no failures after 40 years’ worth of water passed through the fittings.
The majority held that “the district court did not err by conducting a focused Daubert analysis which scrutinized the reliability of the expert testimony in light of the criteria for class certification and the current state of the evidence,” but did not make a ruling as to the admissibility of the expert testimony at trial. The majority reasoned that: (1) the defendant sought bifurcated discovery between class and merits issues, “preventing the kind of full and conclusive Daubert inquiry [the defendant] later requested”; (2) “[t]he main purpose of Daubert exclusion is to protect juries from being swayed by dubious scientific testimony” and that is not relevant where a judge is the decision maker on class certification; and (3) “a court’s inquiry on a motion for class certification is ‘tentative,’ ‘preliminary’ and ‘limited.’”
Judge Gruender’s dissent emphasized that: (1) the Supreme Court in Wal-Mart indicated, albeit in dicta, that Daubert should apply at the class certification stage, somewhat contrary to the majority opinion; (2) both the Seventh and Eleventh Circuits have applied Daubert fully on class certification; and (3) although class certification is decided by judges not juries, courts should be concerned about proceeding with class litigation where expert testimony does not satisfy Daubert.
This is a key issue for insurers because, like product defect cases, most insurance class actions focus heavily on expert testimony at the class certification stage. Given the divided panel opinion and split with the Seventh and Eleventh Circuits, it will be interesting to see if this decision is reviewed en banc or by the Supreme Court. One key lesson here is to be careful in structuring bifurcation of discovery. It’s often necessary to bifurcate, but you don’t want to hamstring plaintiff’s counsel in a way that allows them to argue that Daubert cannot be applied because the expert did not have access to information he or she desired.
I’m not sure that the majority’s reasoning here about Daubert’s focus on jury trials or the “tentative” nature of class certification decisions make sense. The trial judge ruling on class certification is supposed to envision how the case would be tried, so if a jury trial has been demanded, the judge envisioning how the case would be tried should be looking at the evidence that would go to the jury. Allowing expert testimony for purposes of class certification and then throwing it out later, possibly leading to decertification, is a waste of substantial resources of the parties and the court. The majority’s statement that class certification is “tentative, preliminary and limited,” citing to the Supreme Court’s Coopers & Lybrand opinion from 1978, seems inconsistent with modern class action practice. While a class can always be decertified later, the type of rigorous analysis contemplated by Wal-Mart and other recent decisions is hardly “tentative” or “limited.” My guess is that Judge Gruender’s dissent in this case and the Seventh and Eleventh Circuit opinions he cites will probably ultimately prevail as the law develops further in this area. A judge performing a Daubert analysis at the class certification stage, however, does not need to analyze the admissibility of testimony that is not relevant to class certification issues. To the extent that is what the majority in Zurn Pex is driving at, I agree.