This is a guest post by Seth Schmeeckle, a partner at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard in New Orleans and Baton Rouge, Louisiana. Seth and I have worked together on Hurricane Katrina and Rita litigation for the last six years. Seth and his partner, Ralph Hubbard, ran the defense group in the Eastern District of Louisiana for the flood exclusion-related class actions and the Louisiana Attorney General’s Road Home litigation. He is also a great resource if you need to know where to find the best gumbo (or other fantastic food of various varieties) in New Orleans.
In Price v. Martin, — So. 3d —, 2011 WL 6034519 (La. 12/6/11), a decision that could dramatically alter the landscape of class action litigation in Louisiana, the Louisiana Supreme Court recently adopted the “heightened commonality” requirement announced by the U.S. Supreme Court in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), requiring that plaintiffs present “significant proof” that common questions of law or fact exist before a district court may certify a putative class. While Price’s ultimate effect remains to be seen, at a minimum it provides lower courts with a new and powerful mechanism for denying certification to those purported classes where the plaintiffs advance only superficial or unsupported theories of common liability or causation.
In Price, a group of landowners living in the vicinity of a wood-treating facility brought a putative class action against past and present owners of that facility, alleging that those owners had engaged in environmentally-unsound practices that caused hazardous chemicals to be released into the surrounding environment. Id. at *1. Plaintiffs sought to define the class as essentially all persons or entities that had been present in the vicinity of the facility since 1940. Id. at *2. Although the district court initially certified the class and the appellate court later affirmed, the Louisiana Supreme Court reversed, relying on the U.S. Supreme Court’s recent decision in Wal-Mart to hold that the plaintiffs had not satisfied the requirements for class certification.
The Price court, citing Wal-Mart for the proposition that the rules for class action certification do not set forth a “mere pleading standard,” reversed on the grounds that the plaintiffs had not offered “significant proof” that the “commonality” requirement was satisfied. The plaintiffs had argued the requirement was satisfied by the existence of a common factual issue, namely, whether defendants’ chemical emissions had caused damage to the residences surrounding the facility. Id. at *6. Testing the validity of this assertion, the court analyzed the specific proof plaintiffs offered in support, finding that none of it was sufficient to establish the existence of a common question whose truth or falsity would resolve an issue that was central to the validity of each of plaintiffs’ claims. Id. at *9. Rather, the court found that plaintiffs’ proffered evidence belied the existence of a “myriad of property-specific facts” that would need to be resolved in order to determine defendants’ liability to individual plaintiffs. Id. at *9-10. Because the court’s “rigorous analysis” revealed an absence of “significant proof” of a common question, the court held the commonality requirement found in La. C.C.P. art. 591 was not satisfied and that the lower court had committed manifest error in granting certification. Id. at *12. On this same basis, the court also held that the predominance and superiority requirements found in La. C.C.P art. 591(b)(3) were necessarily not satisfied. Id.
By denying certification while at the same time embracing Wal-Mart’s “heightened commonality” requirement, the Louisiana Supreme Court appears to be sending a strong message to lower courts that the practice of certifying class actions on the basis of a subcutaneous common question of law or fact is over. Not only is the court providing a new tool for district courts to use to deny certification; it also appears to be encouraging the lower courts to employ this tool to minimize the number of class actions that are certified. Assuming the lower courts follow suit – which remains to be seen – class action litigation in Louisiana state courts could be resolved at an earlier stage in the proceedings, much in the same way the U.S. Supreme Court’s decisions in Twombly and Iqbal led to courts becoming more willing to resolve dispositive issues by way of motions under Fed. R. Civ. P. 12.
On its surface, it appears difficult to reconcile the Louisiana Supreme Court’s analysis on class certification in its Price decision with another recent of its class action decisions in Oubre v. Louisiana Citizens Fair Plan, No. 2011-C-0097, 2011 La. LEXIS 3014 (La. Dec. 16, 2011) (see Wystan’s recent blog post about Oubre). In Oubre, the Louisiana Supreme Court reinstated a $92 million summary judgment in favor of the class of policyholders against their insurer for its failure to timely initiate the adjustment of Hurricane Katrina losses in compliance with Louisiana law. But it must be remembered that the issue before the court in Oubre was not whether the class should have been certified. Rather, the issue concerned the application of Louisiana’s bad faith statutes concerning timely initiation of loss adjustment. Several years prior, the Louisiana Supreme Court decided to deny Louisiana Citizens’ writ application concerning the appropriateness of the lower courts’ decision to certify the class. See Oubre v. Louisiana Citizens Fair Plan, 964 So. 2d 363 (La. 2007). One has to wonder if the Louisiana Supreme Court would have granted the writ application at that time if it had the Wal-Mart decision available to it.