A new decision by the Third Circuit speaks to a number of important class certification issues.  Although it’s a case involving an alleged product defect, the court’s commentary on class certification law should have a broader reach to insurance class actions and beyond.

In Marcus v. BMW of North America, LLC, Nos. 11-1192 & 11-1193, 2012 U.S. App. LEXIS 16389 (3d Cir. Aug. 7, 2012), the plaintiffs filed a putative class action alleging that run-flat tires manufactured by Bridgestone and included as original equipment on certain BMW vehicles were purportedly defective because they were highly susceptible to flats, cannot be repaired when damaged, and expensive, without adequate disclosure on those issues.  The district court certified a class, and the Third Circuit vacated and remanded.  The Third Circuit’s opinion addresses several issues of broad application:

  • Class Definitions: The court found the definition for the proposed New Jersey statewide class to be “not clear and precise” because it did not make clear whether the putative class included people who did not buy their car from a BMW dealer, and potentially included those who bought their car outside New Jersey, if the car was originally purchased or leased in New Jersey.  The court flyspecked this class definition with great care.
  • Specification of Class Issues:  The Third Circuit also found the class certification order insufficient because “the certification order does not define the claims, issues, or defenses to be treated on a class basis at all.”  Id. at *15.  The Third Circuit’s decision echoes a recent Seventh Circuit decision on this point.  This is a sometimes-overlooked requirement of Rule 23(c)(1)(B) that defendants can potentially take advantage of – for more on this see my Feb. 3, 2012 blog post.
  • Ascertainability:  The Third Circuit expressly adopted a requirement that the members of a proposed class must be readily ascertainable by objective criteria, explaining that “[m]any courts and commentators have recognized that an essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3), is that the class must be currently and readily ascertainable based on objective criteria.”  Id. at *16.  The Third Circuit explained that, on remand:

[The district court] must resolve the critical issue of whether the defendants’ records can ascertain class members and, if not, whether there is a reliable, administratively feasible alternative.  We caution, however, against approving a method that would amount to no more than ascertaining by potential class’ members say so.  For example, simply having potential class members submit affidavits that their Bridgestone RFTs have gone flat and been replaced may not be “proper or just.”  BMW and Bridgestone will be able to cross-examine Marcus [i.e., the named plaintiff] at trial about whether and why his tires “have gone flat and been replaced.”  Forcing BMW and Bridgestonre to accept as true absent persons’ declarations that they are members of the class, without further indicia of reliability, would have serious due process implications.

Id. at *20 (emphasis added).  The due process rationale here is particularly significant because it could apply to state court class actions as well.  Where defendants’ records cannot readily identify the members of the putative class, this new appellate decision provides a powerful citation in opposing class certification.

  • Numerosity:  The Third Circuit found that there was insufficient evidence to establish numerosity for the proposed New Jersey state-wide class.  Although the plaintiff had developed evidence that BMW had received 582 complaints nationwide during the relevant time period about run-flat tires, 196 of which involved Bridgestone run-flat tires, this was insufficient because “we can only speculate as to how many 2006-2009 BMWs were purchased or leased in New Jersey with Bridgestone RFTs that have gone flat and been replaced.”  Id. at *26 (emphasis in original).  The court explained that “a plaintiff must show sufficient circumstantial evidence specific to the products, problems, parties, and geographic areas actually covered by the class definition to allow a district court to make a factual finding.  Only then may the court rely on ‘common sense’ to forgo precise calculations and exact numbers.”  Id. at *28.  The bottom line here?  While defendants sometimes concede numerosity, think twice (or thrice) before doing that.
  • Causation and Predominance:  The Third Circuit also emphasized that predominance of common issues of law and fact is lacking where causation requires an individualized inquiry.  This is particularly significant for insurance cases because often insurance coverage issues turn on causation.  The court explained that, on the facts of Marcus, “any tire can ‘go flat’ for myriad reasons,” and “[e]ven ‘defective’ tires can go flat for reasons completely unrelated to their defects,” and thus adjudication of the case would require an individual examination of every tire.  Id. at *50.

In short, Marcus is an opinion worth citing in defending many class actions, including insurance cases, regardless of whether you’re in the Third Circuit.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.