A recent Ninth Circuit decision illustrates how defendants can use evidence on an individualized defense to potentially defeat class certification.
In Van v. LLR, Inc., — F.4th –, 2023 WL 2469909 (9th Cir. Mar. 13, 2023), the defendant allegedly charged sales tax that was not owed by Alaska purchasers on online purchases. While the defendant later refunded the amounts, it did not pay interest on the amounts refunded. The Ninth Circuit concluded that, even if this interest was a fraction of a cent for some class members, that was sufficient for Article III standing. However, the Ninth Circuit vacated and remanded the district court’s certification of the class because the defendant had introduced evidence of eighteen examples of discounts to class members that offset the sales tax. Given that a total of 13,680 class members had received discounts, “an inquiry into the circumstances and motivations behind each of the 13,680 discounts might be necessary … which could potentially involve up to 13,680 depositions and months of trial.”
The Ninth Circuit explained that “[w]hen a defendant substantiates such an individualized issue in this way,” in evaluating predominance, “the district court must determine … whether a class-member-by-class-member assessment of the individualized issue will be unnecessary or workable.”
This case is a good example of how a defendant can potentially defeat class certification by developing, through analysis of its own records, an individualized defense to a substantial number of putative class members’ claims.