Is it time for the class action plaintiffs bar to skirt the 1st Circuit?

(Reuters) - Here’s a tip for class action defendants in New England and Puerto Rico: If you credibly threaten to turn your case into a series of mini-trials over class membership, you can probably beat class certification.

That’s the upshot of a new ruling from the 1st U.S. Circuit Court of Appeals in Bais Yaakov of Spring Valley v. ACT Inc, in which Judges Sandra Lynch, William Kayatta and David Barron affirmed the denial of class certification to a prospective class of schools that allegedly received fax advertisements from ACT, the educational testing company. The 1st Circuit concluded that ACT had offered a heap of evidence to show that many schools had consented to receive the allegedly improper faxes, so the class could not satisfy the federal procedural rule that requires classwide issues to predominate over individual inquiries.

The court’s opinion, by Kayatta, is straightforward. ACT’s lawyers at Perkins Coie argued that class membership hinged on individual issues of consent. To prove that point, the testing service provided declarations from nearly 80 schools that said they would have consented to receive the three faxes Bais Yaakov alleged violated the Telephone Consumer Protection Act. Fax recipients that expressly consented to receive ACT’s communiques didn’t belong in the class – but, according to the 1st Circuit, Bais Yaakov’s lawyers at Bellin & Associates did not offer an administratively feasible method to cull these consenting fax recipients from the prospective class.

The larger significance of the decision came in a concurrence from Barron, who rather wryly noted that the court’s discussion of predominance “will not go unnoticed.” That’s because, as Barron discussed, the ACT ruling doubles down on the 1st Circuit’s controversial 2018 decision in In re: Asacol Antitrust Litigation, which held that ulcerative colitis drug purchasers could not be certified as a class because the drug-company defendants had vowed to contest class members’ sworn affidavits attesting that they overpaid for brand-name drugs.

The Asacol decision, Barron acknowledged, prompted consternation from trial judges in the 1st Circuit, who worried that the appellate court’s interpretation of the predominance requirement would enable defendants to squelch valid class actions that relied on individual testimony to establish class membership.

Barron, who was on the panel that decided Asacol (as were Lynch and Kayatta), said the ACT decision “may increase the concern that we are mistakenly construing the predominance requirement to render Rule 23, at least in certain important categories of cases, incapable of protecting ‘the rights of groups of people who individually would be without effective strength to bring their opponents into court at all.’”

The judge insisted that concern was “misplaced, or, at least, premature.”

Yes, Barron wrote, the court’s precedent holds that defendants can defeat class certification by making “a seemingly credible promise to challenge the testimony that each class member would give if required to do so at a trial on that issue.” The judge maintained, however, that the 2018 Asacol opinion and the new ACT opinion do not give defendants a free ticket out of class certification just by vowing to contest plaintiffs’ declarations.

The court’s precedent, he said, instead requires plaintiffs to show how they would maintain fairness and efficiency in a trial of class claims despite defendants’ threatened individualized challenges to class membership. Barron emphasized that before ruling on class certification, trial judges must make case-by-case determinations about just how many individualized mini-trials they would actually have to conduct to reach a judgment.

Barron said the Asacol and ACT decisions leave open “various viable means” for class plaintiffs to meet the predominance requirement, even if defendants have promised to contest class members’ sworn testimony. By my reading, he didn’t really offer a lot of justification for that assertion. The judge said Bais Yaakov might have argued, for instance, that the 78 declarations ACT collected from purportedly consenting schools were only a small subset of the class, or that it would be possible to identify the subset without mini-trials. Barron also said that Bais Yaakov could have contended that ACT would not be capable of effectively contesting claims by more than a small number of class members. Generally speaking, the judge wrote, it's hard for a defendant to disprove plaintiffs' testimony about their own state of mind.

“There is still much to be decided when it comes to the predominance requirement, notwithstanding our important holdings to date,” Barron wrote. “I am confident that, as a consequence of this decision, our current precedent in this area continues to ensure that viable opportunities remain for securing class certification in cases involving claims that inherently depend on highly individualized means of proof.”

Really? If I were a plaintiffs lawyer, I’d think twice about making that bet – especially because future class action defendants can follow ACT’s lead and collect declarations that raise credible doubts about who is actually a member of the class. My guess is that after Asacol and ACT, the class action bar will instead avoid the 1st Circuit if it’s at all possible.

Bais Yaakov counsel Aytan Bellin at Bellin & Associates did not respond to my email about the 1st Circuit ruling.

ACT counsel Robert Burgoyne at Perkins Coie said by email that the court’s decision was well-reasoned. “We certainly thought it was important and appropriate for the district court and the court of appeals to consider the testimony of other schools in the putative class in determining whether class certification was warranted, where a single named plaintiff was seeking millions of dollars in damages under the TCPA based upon an assertion that our client had no permission from schools to send the faxes at issue,” he said.

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1st Circuit: No class certification if you can’t weed out uninjured class members

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