Castano v. American Tobacco Co ( 1996 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 95-30725
_______________
DIANNE CASTANO, et al.,
Plaintiffs-Appellees,
VERSUS
THE AMERICAN TOBACCO COMPANY, et al.,
Defendants-Appellants.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________
May 23, 1996
Before SMITH, DUHÉ, and DeMOSS, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
In what may be the largest class action ever attempted in
federal court, the district court in this case embarked “on a road
certainly less traveled, if ever taken at all,” Castano v. American
Tobacco Co., 160 F.R.D. 544, 560 (E.D. La. 1995) (citing EDWARD C.
LATHAM, THE POETRY OF ROBERT FROST, “THE ROAD NOT TAKEN” 105 (1969)), and
entered a class certification order. The court defined the class
as:
(a) All nicotine-dependent persons in the United States
. . . who have purchased and smoked cigarettes manufac-
1
tured by the defendants;
(b) the estates, representatives, and administrators of
these nicotine-dependent cigarette smokers; and
(c) the spouses, children, relatives and “significant
others” of these nicotine-dependent cigarette smokers as
their heirs or survivors.
Id. at 560-61. The plaintiffs limit the claims to years since
1943.1
This matter comes before us on interlocutory appeal, under
28 U.S.C. § 1292(b), of the class certification order. Concluding
that the district court abused its discretion in certifying the
class, we reverse.
I.
A. The Class Complaint
The plaintiffs2 filed this class complaint against the
defendant tobacco companies3 and the Tobacco Institute, Inc.,
1
The court defined “nicotine-dependent” as:
(a) All cigarette smokers who have been diagnosed by a medical
practitioner as nicotine-dependent; and/or
(b) All regular cigarette smokers who were or have been advised by
a medical practitioner that smoking has had or will have adverse
health consequences who thereafter do not or have not quit smoking.
Id. at 561. The definition is based upon the criteria for “dependence” set forth
in AMERICAN PSYCHIATRIC ASSOCIATION, DIAGNOSTIC AND STATISTICAL MANUAL OF MENTAL DISORDERS (4th
ed.).
2
The original class plaintiffs were Ernest R. Perry, Sr., T. George
Solomon, Jr., and Dianne A. Castano. The class representatives include Perry,
Gloria Scott, and Deania Jackson, all current cigarette smokers. Dianne Castano
is a class representative on behalf of her deceased husband, Peter Castano.
3
The defendant tobacco companies are The American Tobacco Company, Inc.,
R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, Phillip
Morris, Inc., Liggett & Meyers, Inc., Lorillard Tobacco Company, Inc., and United
(continued...)
2
seeking compensation solely for the injury of nicotine addiction.
The gravamen of their complaint is the novel and wholly untested
theory that the defendants fraudulently failed to inform consumers
that nicotine is addictive and manipulated the level of nicotine in
cigarettes to sustain their addictive nature. The class complaint
alleges nine causes of action: fraud and deceit, negligent
misrepresentation, intentional infliction of emotional distress,
negligence and negligent infliction of emotional distress,
violation of state consumer protection statutes, breach of express
warranty, breach of implied warranty, strict product liability, and
redhibition pursuant to the Louisiana Civil Code.
The plaintiffs seek compensatory4 and punitive damages5 and
attorneys’ fees.6 In addition, the plaintiffs seek equitable
relief for fraud and deceit, negligent misrepresentation, violation
of consumer protection statutes, and breach of express and implied
warranty. The equitable remedies include a declaration that
defendants are financially responsible for notifying all class
members of nicotine’s addictive nature, a declaration that the
(...continued)
States Tobacco Company. Prior to oral argument, Liggett & Meyers, Inc., filed
in this court a motion conditionally to dismiss, without prejudice, its appeal
because of a pending settlement with the plaintiffs. We have declined to enter
the requested dismissal.
4
The plaintiffs seek compensatory damages for fraud and deceit, negligent
misrepresentation, intentional infliction of emotional distress, breach of
express and implied warranty, strict products liability, and redhibition.
5
The plaintiffs seek punitive damages for fraud and deceit, intentional
infliction of emotional distress, negligence, and negligent infliction of
emotional distress.
6
The plaintiffs seek attorneys’ fees for violations of consumer protection
statutes and redhibition.
3
defendants manipulated nicotine levels with the intent to sustain
the addiction of plaintiffs and the class members, an order that
the defendants disgorge any profits made from the sale of ciga-
rettes, restitution for sums paid for cigarettes, and the estab-
lishment of a medical monitoring fund.
The plaintiffs initially defined the class as “all nicotine
dependent persons in the United States,” including current, former
and deceased smokers since 1943. Plaintiffs conceded that
addiction would have to be proven by each class member; the
defendants argued that proving class membership will require
individual mini-trials to determine whether addiction actually
exists.
In response to the district court’s inquiry, the plaintiffs
proposed a four-phase trial plan.7 In phase 1, a jury would
determine common issues of “core liability.” Phase 1 issues would
include8 (1) issues of law and fact relating to defendants’ course
of conduct, fraud, and negligence liability (including duty,
standard of care, misrepresentation and concealment, knowledge,
intent); (2) issues of law and fact relating to defendants’ alleged
conspiracy and concert of action; (3) issues of fact relating to
the addictive nature/dependency creating characteristics and
properties of nicotine; (4) issues of fact relating to nicotine
7
The district court did not adopt the plaintiffs’ trial plan, but its
order certifying the class incorporates many elements of it.
8
For purposes of clarity, those issues that the district court did not
certify as common have been left out of this summary of the plaintiffs’ trial
plan.
4
cigarettes as defective products; (5) issues of fact relating to
whether defendants’ wrongful conduct was intentional, reckless or
negligent; (6) identifying which defendants specifically targeted
their advertising and promotional efforts to particular groups
(e.g. youths, minorities, etc.); (7) availability of a presumption
of reliance; (8) whether defendants’ misrepresentations/suppression
of fact and/or of addictive properties of nicotine preclude
availability of a “personal choice” defense; (9) defendants’
liability for actual damages, and the categories of such damages;
(10) defendants’ liability for emotional distress damages; and
(11) defendants’ liability for punitive damages.
Phase 1 would be followed by notice of the trial verdict and
claim forms to class members. In phase 2, the jury would determine
compensatory damages in sample plaintiff cases. The jury then
would establish a ratio of punitive damages to compensatory
damages, which ratio thereafter would apply to each class member.
Phase 3 would entail a complicated procedure to determine
compensatory damages for individual class members. The trial plan
envisions determination of absent class members’ compensatory
economic and emotional distress damages on the basis of claim
forms, “subject to verification techniques and assertion of
defendants’ affirmative defenses under grouping, sampling, or
representative procedures to be determined by the Court.”
The trial plan left open how jury trials on class members’
personal injury/wrongful death claims would be handled, but the
trial plan discussed the possibility of bifurcation. In phase 4,
5
the court would apply the punitive damage ratio based on individual
damage awards and would conduct a review of the reasonableness of
the award.
B. The Class Certification Order
Following extensive briefing, the district court granted, in
part, plaintiffs’ motion for class certification, concluding that
the prerequisites of FED. R. CIV. P. 23(a) had been met.9 The court
rejected certification, under FED. R. CIV. P. 23(b)(2), of the
plaintiffs’ claim for equitable relief, including the claim for
medical monitoring. 160 F.R.D. at 552. Appellees have not cross-
appealed that portion of the order.
The court did grant the plaintiffs’ motion to certify the
class under FED. R. CIV. P. 23(b)(3),10 organizing the class action
issues into four categories: (1) core liability; (2) injury-in-
fact, proximate cause, reliance and affirmative defenses;
9
Rule 23(a) states:
One or more members of a class may sue or be sued
as representative parties on behalf of all only if
(1) the class is so numerous that joinder of all members
is impracticable, (2) there are questions of law or fact
common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or
defenses of the class, and (4) the representative
parties will fairly and adequately protect the interests
of the class.
10
Rule 23(b)(3) states, in pertinent part, that a class action may be
maintained if
the court finds that the questions of law or fact common
to the members of the class predominate over any
questions affecting only individual members, and that a
class action is superior to other available methods for
the fair and efficient adjudication of the controversy.
6
(3) compensatory damages; and (4) punitive damages. Id. at 553-58.
It then analyzed each category to determine whether it met the
predominance and superiority requirements of rule 23(b)(3). Using
its power to sever issues for certification under FED. R. CIV.
P. 23(c)(4), the court certified the class on core liability and
punitive damages, and certified the class conditionally pursuant to
FED. R. CIV. P. 23(c)(1).
1. Core Liability Issues
The court defined core liability issues as “common factual
issues [of] whether defendants knew cigarette smoking was addic-
tive, failed to inform cigarette smokers of such, and took actions
to addict cigarette smokers. Common legal issues include fraud,
negligence, breach of warranty (express or implied), strict
liability, and violation of consumer protection statutes.”
160 F.R.D. at 553.
The court found that the predominance requirement of rule
23(b)(3) was satisfied for the core liability issues. Without any
specific analysis regarding the multitude of issues that make up
“core liability,” the court found that under Jenkins v. Raymark
Indus., 782 F.2d 468 (5th Cir. 1986), common issues predominate
because resolution of core liability issues would significantly
advance the individual cases. The court did not discuss why “core
liability” issues would be a significant, rather than just common,
part of each individual trial, nor why the individual issues in the
remaining categories did not predominate over the common “core
7
liability” issues.
The only specific analysis on predominance analysis was on the
plaintiffs’ fraud claim. The court determined that it would be
premature to hold that individual reliance issues predominate over
common issues. Relying on Eisen v. Carlisle & Jacquelin, 417 U.S.
156 (1974), the court stated that it could not inquire into the
merits of the plaintiffs’ claim to determine whether reliance would
be an issue in individual trials. 160 F.R.D. at 554. Moreover,
the court recognized the possibility that under state law, reliance
can be inferred when a fraud claim is based on an omission.
Accordingly, the court was convinced that it could certify the
class and defer the consideration of how reliance would affect
predominance.
The court also deferred substantial consideration of how
variations in state law would affect predominance. Relying on two
district court opinions,11 the court concluded that issues of fraud,
breach of warranty, negligence, intentional tort, and strict
liability do not vary so much from state to state as to cause
individual issues to predominate. The court noted that any
determination of how state law variations affect predominance was
premature, as the court had yet to make a choice of law determina-
tion. As for the consumer protection claims, the court also
11
The court cited In re Asbestos Sch. Litig., 104 F.R.D. 422, 434 (E.D.
Pa. 1984) (discussing the similarity of negligence and strict liability in U.S.
jurisdictions), aff’d in part and reversed in part sub nom. School Dist. of
Lancaster v. Lake Asbestos, Ltd. (In re Sch. Asbestos Litig.) (“School
Asbestos”), 789 F.2d 996, 1010 (3d Cir.), cert. denied, 479 U.S. 852, and cert.
denied, 479 U.S. 915 (1986), and In re Cordis Cardiac Pacemaker Prod. Liability
Litig., No. C-3-90-374 (S.D. Ohio Dec. 23, 1992) (unpublished) (discussing
similarities among negligence, strict liability, and fraud).
8
deferred analysis of state law variations, because “there has been
no showing that the consumer protection statutes differ so much as
to make individual issues predominate.” Id.The court also concluded that a class action is superior to
other methods for adjudication of the core liability issues.
Relying heavily on Jenkins, the court noted that having this common
issue litigated in a class action was superior to repeated trials
of the same evidence. Recognizing serious problems with manage-
ability, it determined that such problems were outweighed by “the
specter of thousands, if not millions, of similar trials of
liability proceeding in thousands of courtrooms around the nation.”
Id. at 555-56.
2. Injury-in-fact, Proximate Cause, Reliance,
Affirmative Defenses, and Compensatory Damages
Using the same methodology as it did for the core liability
issues, the district court refused to certify the issues of injury-
in-fact, proximate cause, reliance, affirmative defenses, and
compensatory damages, concluding that the “issues are so overwhelm-
ingly replete with individual circumstances that they quickly
outweigh predominance and superiority.” Id. at 556. Specifically,
the court found that whether a person suffered emotional injury
from addiction, whether his addiction was caused by the defendants’
actions, whether he relied on the defendants’ misrepresentations,
and whether affirmative defenses unique to each class member
precluded recovery were all individual issues. As to compensatory
damages and the claim for medical monitoring, the court concluded
9
that such claims were so intertwined with proximate cause and
affirmative defenses that class certification would not materially
advance the individual cases.
3. Punitive Damages
In certifying punitive damages for class treatment, the court
adopted the plaintiffs’ trial plan for punitive damages: The class
jury would develop a ratio of punitive damages to actual damages,
and the court would apply that ratio in individual cases. As it
did with the core liability issues, the court determined that
variations in state law, including differing burdens of proof, did
not preclude certification. Rather than conduct an independent
review of predominance or superiority, the court relied on Jenkins
and on Watson v. Shell Oil Co., 979 F.2d 1014 (5th Cir. 1992),
vacated for rehearing en banc, 990 F.2d 805 (5th Cir. 1993), appeal
dismissed, 53 F.3d 663 (5th Cir. 1994), for support of its
certification order.12
II.
A district court must conduct a rigorous analysis of the
rule 23 prerequisites before certifying a class. General Tel. Co.
v. Falcon, 457 U.S. 147, 161 (1982); Applewhite v. Reichold Chems.,
12
The panel opinion in Watson has no precedential weight in this circuit.
While the case was awaiting rehearing en banc, it settled. According to the
Internal Operating Procedure accompanying 5TH CIR. R. 35, “the effect of granting
a rehearing en banc is to vacate the previous opinion and judgment of the Court
and to stay the mandate.” See de Aguilar v. Boeing Co., 47 F.3d 1404, 1411 (5th
Cir.), cert. denied, 116 S. Ct. 180 (1995).
10
67 F.3d 571, 573 (5th Cir. 1995). The decision to certify is
within the broad discretion of the court, but that discretion must
be exercised within the framework of rule 23. Gulf Oil Co. v.
Bernard, 452 U.S. 89, 100 (1981). The party seeking certification
bears the burden of proof. Horton v. Goose Creek Ind. Sch. Dist.,
690 F.2d 470, 486 (5th Cir. 1982), cert. denied, 463 U.S. 1207(1983); In re American Medical Sys., 75 F.3d 1069, 1086 (6th Cir.
1996) (concluding that district court reversed the proper burden of
proof by asking defendants to show cause why the court should not
certify the class).
The district court erred in its analysis in two distinct ways.
First, it failed to consider how variations in state law affect
predominance and superiority. Second, its predominance inquiry did
not include consideration of how a trial on the merits would be
conducted.
Each of these defects mandates reversal. Moreover, at this
time, while the tort is immature, the class complaint must be
dismissed, as class certification cannot be found to be a superior
method of adjudication .13
A. Variations in State Law
Although rule 23(c)(1) requires that a class should be
13
The defendants raise a number of additional challenges to the district
court’s order, including claims that individual issues predominate, that the use
of a punitive damage ratio violates due process, that a multi-state class action
inevitably will violate Erie R.R. v. Tompkins, 304 U.S. 64 (1938), and that
bifurcation of core liability issues in a class action violates article III of
the Constitution. Given our conclusion that this matter cannot proceed as a
class action in any event, we find it unnecessary to address those issues.
11
certified “as soon as practicable” and allows a court to certify a
conditional class, it does not follow that the rule’s requirements
are lessened when the class is conditional. As a sister circuit
explained:
Conditional certification is not a means whereby the
District Court can avoid deciding whether, at that time,
the requirements of the Rule have been substantially met.
The purpose of conditional certification is to preserve
the Court’s power to revoke certification in those cases
wherein the magnitude or complexity of the litigation may
eventually reveal problems not theretofore apparent. But
in this case the District Court seemed to brush aside one
of the requirements of Rule 23(b)(3) by stating that at
this time “analysis of the individual versus common
questions would be for the Court to act as a seer.”
However difficult it may have been for the District Court
to decide whether common questions predominate over
individual questions, it should not have sidestepped this
preliminary requirement of the Rule by merely stating
that the problem of individual questions “lies far beyond
the horizon in the realm of speculation.”
In re Hotel Tel. Charges, 500 F.2d 86, 90 (9th Cir. 1974).
In a multi-state class action, variations in state law may
swamp any common issues and defeat predominance. See Georgine v.
Amchem Prods., 1996 WL 242442, at *2 (3d Cir. May 10, 1996)
(decertifying class because legal and factual differences in the
plaintiffs’ claims “when exponentially magnified by choice of law
considerations, eclipse any common issues in this case.”); American
Medical Sys., 75 F.3d at 1085 (granting mandamus in a multi-state
products liability action, in part because “[t]he district court
. . . failed to consider how the law of negligence differs from
jurisdiction to jurisdiction”).
Accordingly, a district court must consider how variations in
state law affect predominance and superiority. Walsh v. Ford Motor
12
Co., 807 F.2d 1000 (D.C. Cir. 1986) (Ruth Bader Ginsburg, J.),
cert. denied, 482 U.S. 915 (1987). The Walsh court rejected the
notion that a district court may defer considering variations in
state law:
Appellees see the “which law” matter as academic. They
say no variations in state warranty laws relevant to this
case exist. A court cannot accept such an assertion “on
faith.” Appellees, as class action proponents, must show
that it is accurate. We have made no inquiry of our own
on this score and, for the current purpose, simply note
the general unstartling statement made in a leading
treatise: “The Uniform Commercial Code is not uniform.”
Id. at 1016-17 (footnotes omitted).
A district court’s duty to determine whether the plaintiff has
borne its burden on class certification requires that a court
consider variations in state law when a class action involves
multiple jurisdictions. “In order to make the findings required to
certify a class action under Rule 23(b)(3) . . . one must initially
identify the substantive law issues which will control the outcome
of the litigation.” Alabama v. Blue Bird Body Co., 573 F.2d 309,
316 (5th Cir. 1978).
A requirement that a court know which law will apply before
making a predominance determination is especially important when
there may be differences in state law. See In re Rhone-Poulenc
Rorer, Inc. (“Rhone-Poulenc”), 51 F.3d 1293, 1299-1302 (7th Cir.)
(mandamus) (comparing differing state pattern instructions on
negligence and differing formulations of the meaning of negli-
gence), cert. denied, 116 S. Ct. 184 (1995); In re “Agent Orange”
Prod. Liability Litig., 818 F.2d 145, 165 (2d Cir. 1986) (noting
possibility of differences in state products liability law), cert.
13
denied, 484 U.S. 1004 (1988). Given the plaintiffs’ burden, a
court cannot rely on assurances of counsel that any problems with
predominance or superiority can be overcome. Windham v. American
Brands, Inc., 565 F.2d 59, 70 (4th Cir. 1977), cert. denied, 435
U.S. 968 (1978).
The able opinion in School Asbestos demonstrates what is
required from a district court when variations in state law exist.
There, the court affirmed class certification, despite variations
in state law, because:
To meet the problem of diversity in applicable state law,
class plaintiffs have undertaken an extensive analysis of
the variances in products liability among the jurisdic-
tions. That review separates the law into four catego-
ries. Even assuming additional permutations and combina-
tions, plaintiffs have made a creditable showing, which
apparently satisfied the district court, that class
certification does not present insuperable obstacles.
Although we have some doubt on this score, the effort may
nonetheless prove successful.
789 F.2d at 1010; see also Georgine, 1996 WL 242442, at *12 & n.13
(distinguishing School Asbestos because it involved few individual-
ized questions, and class counsel had made a credible argument that
the applicable law of the different states could be categorized
into four patterns); Walsh, 807 F.2d at 1017 (holding that
“nationwide class action movants must creditably demonstrate,
through an ‘extensive analysis’ of state law variances, ‘that class
certification does not present insuperable obstacles’”).
A thorough review of the record demonstrates that, in this
case, the district court did not properly consider how variations
in state law affect predominance. The court acknowledged as much
in its order granting class certification, for, in declining to
14
make a choice of law determination, it noted that “[t]he parties
have only briefly addressed the conflict of laws issue in this
matter.” 160 F.R.D. at 554. Similarly, the court stated that
“there has been no showing that the consumer protection statutes
differ so much as to make individual issues predominate.” Id.14
The district court’s review of state law variances can hardly
be considered extensive; it conducted a cursory review of state law
variations and gave short shrift to the defendants’ arguments
concerning variations. In response to the defendants’ extensive
analysis of how state law varied on fraud, products liability,
affirmative defenses, negligent infliction of emotional distress,
consumer protection statutes, and punitive damages,15 the court
14
The defendants contend that this statement shows that the court
erroneously placed the burden on them to show that the various state statutes
differ, rather than on the plaintiffs to show that they do not. See American
Medical Systems, 75 F.3d at 1085.
15
We find it difficult to fathom how common issues could predominate in
this case when variations in state law are thoroughly considered. The Georgine
court found that common issues in an asbestos class action did not predominate:
However, beyond these broad issues, the class
members’ claims vary widely in character. Class members
were exposed to different asbestos-containing products,
for different amounts of time, in different ways, and
over different periods. Some class members suffer no
physical injury or have only asymptomatic pleural
changes, while others suffer from lung cancer, disabling
asbestosis, or from mesotheliomaSSa disease which,
despite a latency period of approximately fifteen to
forty years, generally kills its victims within two
years after they become symptomatic. Each has a
different history of cigarette smoking, a factor that
complicates the causation inquiry.
. . .
These factual differences translate into signifi-
cant legal differences. Differences in amount of
exposure and nexus between exposure and injury lead to
disparate applications of legal rules, including matters
of causation, comparative fault, and the types of
(continued...)
15
examined a sample phase 1 jury interrogatory and verdict form, a
(...continued)
damages available to each plaintiff.
Furthermore, because we must apply an individual-
ized choice of law analysis to each plaintiff’s claims,
the proliferation of disparate factual and legal issues
is compounded exponentially. . . . In short, the number
of uncommon issues in this humongous class action, with
perhaps as many as a million class members, is colossal.
1995 WL 242442, at *11 (citations omitted).
The Castano class suffers from many of the difficulties that the Georgine
court found dispositive. The class members were exposed to nicotine through
different products, for different amounts of time, and over different time
periods. Each class member’s knowledge about the effects of smoking differs, and
each plaintiff began smoking for different reasons. Each of these factual
differences impacts the application of legal rules such as causation, reliance,
comparative fault, and other affirmative defenses.
Variations in state law magnify the differences. In a fraud claim, some
states require justifiable reliance on a misrepresentation, see Allgood v. R.J.
Reynolds Tobacco Co., 80 F.3d 168, 171 (5th Cir. 1996); Burroughs v. Jackson
Nat’l Life Ins. Co., 618 So. 2d 1329, 1332 (Ala. 1993), while others require
reasonable reliance, see Parks v. Morris Homes Corp., 141 S.E.2d 129, 132 (S.C.
1965). States impose varying standards to determine when there is a duty to
disclose facts. See Sugarhouse Fin. Co. v. Anderson, 610 P.2d 1369, 1373 (Utah
1980) (finding no duty when transaction was made at arm’s length); Dodd v. Nelda
Stephenson Chevrolet, Inc., 626 So. 2d 1288, 1293 (Ala. 1993) (using a flexible
standard based on the transaction and relationship of the parties).
Products liability law also differs among states. Some states do not
recognize strict liability. E.g., Cline v. Prowler Indus., 418 A.2d 968, 979-80
(Del. 1980). Some have adopted RESTATEMENT (SECOND) OF TORTS § 402A. E.g., O.S.
Stapley Co. v. Miller, 447 P.2d 248, 251-52 (Ariz. 1968). Among the states that
have adopted the Restatement, there are variations. See 5 STUART M. SPEISER ET AL.,
THE AMERICAN LAW OF TORTS §§ 18.31, 18:34-18:35 (Law Co-op 1996).
Differences in affirmative defenses also exist. Assumption of risk is a
complete defense to a products claim in some states. E.g., S.C. CODE ANN.
§ 15-73-20 (Law Co-op 1976). In others, it is a part of comparative fault
analysis. E.g., COLO. REV. STAT. § 13-21-111.7 (1986). Some states utilize “pure”
comparative fault, e.g., ARIZ. REV. STAT. ANN. § 12-2503-09 (1984); others follow
a “greater fault bar,” e.g., CONN. GEN. STAT. ANN. § 52-572h (West 1988); and still
others use an “equal fault bar,” e.g., ARK. CODE ANN. § 16-64-122 (Michie 1991).
Negligent infliction of emotional distress also involves wide variations.
See Douglas B. Marlow, Negligent Infliction of Mental Distress: A Jurisdictional
Survey of Existing Limitation Devices and Proposal Based on an Analysis of
Objective Versus Subjective Indices of Distress, 33 VILL. L. REV. 781 (1988).
Some states do not recognize the cause of action at all. See Allen v. Walker,
569 So. 2d 350, 352 (Ala. 1990). Some require a physical impact. See OB-GYN
Assocs. v. Littleton, 386 S.E.2d 146, 148 (Ga. 1989).
Despite these overwhelming individual issues, common issues might
predominate. We are, however, left to speculate. The point of detailing the
alleged differences is to demonstrate the inquiry the district court failed to
make.
16
survey of medical monitoring decisions, a survey of consumer fraud
class actions, and a survey of punitive damages law in the
defendants’ home states. The court also relied on two district
court opinions granting certification in multi-state class actions.
The district court’s consideration of state law variations was
inadequate. The surveys provided by the plaintiffs failed to
discuss, in any meaningful way, how the court could deal with
variations in state law. The consumer fraud survey simply quoted
a few state courts that had certified state class actions. The
survey of punitive damages was limited to the defendants’ home
states. Moreover, the two district court opinions on which the
court relied did not support the proposition that variations in
state law could be ignored.16 Nothing in the record demonstrates
that the court critically analyzed how variations in state law
would affect predominance.
The court also failed to perform its duty to determine whether
16
Both the plaintiffs and the district court cite Cordis and School
Asbestos for the definitive proposition that state law does not vary enough in
negligence, strict liability, or fraud to prevent certification. See Castano,
160 F.R.D. at 554. Putting aside the obvious objection that a court must
independently analyze the case before it to determine predominance, such reliance
is misplaced.
In Cordis, the court specifically recognized that there are differences in
the law of strict liability and fraud in different jurisdictions. The court
certified the class despite those differences because the differences did not
eliminate predominance in that particular case. Such a finding cannot be
reflexively applied to the case sub judice.
The same is true of School Asbestos. Like the court in Cordis, the
district court there found little variation in state negligence law. The Third
Circuit agreed that the variations in strict liability would not make the class
unmanageable. 789 F.2d at 1009. See also Georgine, 1996 WL 242442, at *12 &
n.13 (acknowledging that the court in School Asbestos certified the class despite
variations in state law, but limiting the reach of the decision to cases where
variations can be broken down into a small number of patterns). It is a stretch
to characterize these two cases as standing for the proposition that state law
does not vary on negligence, strict liability, or fraud.
17
the class action would be manageable in light of state law
variations. The court’s only discussion of manageability is a
citation to Jenkins and the claim that “[w]hile manageability of
the liability issues in this case may well prove to be difficult,
the Court finds that any such difficulties pale in comparison to
the specter of thousands, if not millions, of similar trials of
liability proceeding in thousands of courtrooms around the nation.”
Id. at 555-56.
The problem with this approach is that it substitutes case-
specific analysis with a generalized reference to Jenkins. The
Jenkins court, however, was not faced with managing a novel claim
involving eight causes of action, multiple jurisdictions, millions
of plaintiffs, eight defendants, and over fifty years of alleged
wrongful conduct. Instead, Jenkins involved only 893 personal
injury asbestos cases, the law of only one state, and the prospect
of trial occurring in only one district. Accordingly, for purposes
of the instant case, Jenkins is largely inapposite.
In summary, whether the specter of millions of cases outweighs
any manageability problems in this class is uncertain when the
scope of any manageability problems is unknown. Absent considered
judgment on the manageability of the class, a comparison to
millions of individual trials is meaningless.
B. Predominance
The district court’s second error was that it failed to
consider how the plaintiffs’ addiction claims would be tried,
18
individually or on a class basis. See 160 F.R.D. at 554. The
district court, based on Eisen v. Carlisle & Jacquelin, 417 U.S.
156, 177-78 (1974), and Miller v. Mackey Int’l, 452 F.2d 424 (5th
Cir. 1971), believed that it could not go past the pleadings for
the certification decision. The result was an incomplete and
inadequate predominance inquiry.
The crux of the court’s error was that it misinterpreted Eisen
and Miller. Neither case suggests that a court is limited to the
pleadings when deciding on certification. Both, instead, stand for
the unremarkable proposition that the strength of a plaintiff’s
claim should not affect the certification decision. In Eisen, the
Court held that it was improper to make a preliminary inquiry into
the merits of a case, determine that the plaintiff was likely to
succeed, and consequently shift the cost of providing notice to the
defendant. 417 U.S. at 177. In Miller, this court held that a
district court could not deny certification based on its belief
that the plaintiff could not prevail on the merits. 452 F.2d
at 427.
A district court certainly may look past the pleadings to
determine whether the requirements of rule 23 have been met.17
17
See Falcon, 457 U.S. at 160 (“Sometimes the issues are plain enough from
the pleadings . . . and sometimes it may be necessary for the court to probe
behind the pleadings before coming to rest on the certification question.”);
Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978) (reasoning that “the class
determination generally involves considerations that are ‘enmeshed in the factual
and legal issues comprising the plaintiff’s cause of action.’”); id. at 469 n.12
(“‘Evaluation of many of the questions entering into determination of class
action questions is intimately involved with the merits of the claims. The
typicality of the representative’s claim or defenses . . . and the presence of
common questions of law or fact are obvious examples. The more complex
determinations required in Rule 23(b)(3) class actions entail even greater
(continued...)
19
Going beyond the pleadings is necessary, as a court must understand
the claims, defenses, relevant facts, and applicable substantive
law in order to make a meaningful determination of the certifica-
tion issues. See MANUAL FOR COMPLEX LITIGATION § 30.11 (3d ed. 1995).
The district court’s predominance inquiry demonstrates why
such an understanding is necessary. The premise of the court’s
opinion is a citation to Jenkins and a conclusion that class
treatment of common issues would significantly advance the
individual trials. Absent knowledge of how addiction-as-injury
cases would actually be tried, however, it was impossible for the
court to know whether the common issues would be a “significant”
portion of the individual trials. The court just assumed that
because the common issues would play a part in every trial, they
must be significant.18 The court’s synthesis of Jenkins and Eisen
would write the predominance requirement out of the rule, and any
common issue would predominate if it were common to all the
(...continued)
entanglement with the merits.’”); Love v. Turlington, 733 F.2d 1562, 1564 (11th
Cir. 1984) (“While it is true that a trial court may not properly reach the
merits of a claim when determining whether the class certification is warranted,
this principle should not be talismanically invoked to artificially limit a trial
court’s examination of the factors necessary to a reasoned determination of
whether a plaintiff has met her burden of establishing each of the Rule 23 class
action requirements.”); Huff v. N.D. Cass Co., 485 F.2d 710, 713 (5th Cir. 1973)
(en banc) (“It is inescapable that in some cases there will be overlap between
the demands of [rule] 23(a) and (b) and the question of whether plaintiff can
succeed on the merits.”).
18
The district court’s approach to predominance stands in stark contrast
to the methodology the district court used in Jenkins. There, the district judge
had a vast amount of experience with asbestos cases. He certified the state of
the art defense because it was the most significant contested issue in each case.
Jenkins, 109 F.R.D. at 279. To the contrary, however, the district court in the
instant case did not, and could not, have determined that the common issues would
be a significant part of each case. Unlike the judge in Jenkins, the district
judge a quo had no experience with this type of case and did not even inquire
into how a case would be tried to determine whether the defendants’ conduct would
be a significant portion of each case.
20
individual trials.19
The court’s treatment of the fraud claim also demonstrates the
error inherent in its approach.20 According to both the advisory
committee’s notes to Rule 23(b)(3) and this court’s decision in
Simon v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 482 F.2d 88019
An incorrect predominance finding also implicates the court’s
superiority analysis: The greater the number of individual issues, the less
likely superiority can be established. American Medical Sys., 75 F.3d at 1084-85(distinguishing a single disaster mass tort from a more complex mass tort). The
relationship between predominance and superiority in mass torts was recognized
in the Advisory Committee’s note to rule 23(b)(3), which states:
A “mass accident” resulting in injuries to numerous persons is
ordinarily not appropriate for a class action because of the
likelihood that significant questions, not only of damages but of
liability and defenses to liability, would be present, affecting the
individuals in different ways. In these circumstances an action
conducted nominally as a class action would degenerate in practice
into multiple lawsuits separately tried.
FED. R. CIV. P. 23(b)(3) advisory committee’s note (citation omitted), reprinted
in 39 F.R.D. 69, 103 (1966). See also Georgine, 1996 WL 242442, at *12-*13
(relying on the Advisory Committee’s note); American Medical Sys., 73 F.3d at
1084-85.
The plaintiffs assert that Professor Charles Allen Wright, a member of the
Advisory Committee has now repudiated this passage in the notes. See H. NEWBERG,
3 NEWBERG ON CLASS ACTIONS § 17.06 (3d ed. 1992). Professor Wright’s recent
statements, made as an advocate in School Asbestos, must be viewed with some
caution. As Professor Wright has stated:
I certainly did not intend by that statement to say that a
class should be certified in all mass tort cases. I merely wanted
to take the sting out of the statement in the Advisory Committee
Note, and even that said only that a class action is “ordinarily not
appropriate” in mass-tort cases. The class action is a complex
device that must be used with discernment. I think for example that
Judge Jones in Louisiana would be creating a Frankenstein’s monster
if he should allow certification of what purports to be a class
action on behalf of everyone who has ever been addicted to nicotine.
Letter of Dec. 22, 1994, to N. Reid Neureiter, Williams & Connolly, Washington,
D.C.
20
The court specifically discussed reliance in the context of a fraud
claim. Reliance is also an element of breach of warranty claims in some states,
see, e.g., Modern Farm Serv., Inc. v. Ben Pearson, Inc., 308 F.2d 18, 23 (5th
Cir. 1962) (Arkansas); Caruso v. Celsius Insulation Resources, Inc., 101 F.R.D.
530, 536 (M.D. Pa. 1984), and an element of consumer protection statutes in
others, see, e.g., Louisiana ex rel. Guste v. General Motors Corp., 370 So. 2d
477, 489 (La. 1979).
21
(5th Cir. 1973), a fraud class action cannot be certified when
individual reliance will be an issue. The district court avoided
the reach of this court’s decision in Simon by an erroneous reading
of Eisen; the court refused to consider whether reliance would be
an issue in individual trials.
The problem with the district court’s approach is that after
the class trial, it might have decided that reliance must be proven
in individual trials. The court then would have been faced with
the difficult choice of decertifying the class after phase 1 and
wasting judicial resources, or continuing with a class action that
would have failed the predominance requirement of rule 23(b)(3).210.
Rule 23(b)(3) states:
An action may be maintained as a class action if . . . the court
finds that the questions of law or fact common to the members of the
class predominate over any questions affecting only the individual
members, and that a class action is superior to other available
methods for the fair and efficient adjudication of the controversy.
Rule 23(c)(4) states:
When appropriate . . . an action may be brought or maintained as a
class action with respect to particular issues, . . . and the
provisions of this rule shall the be construed and applied accord-
21
Severing the defendants’ conduct from reliance under rule 23(c)(4) does
not save the class action. A district court cannot manufacture predominance
through the nimble use of subdivision (c)(4). The proper interpretation of the
interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as
a whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is
a housekeeping rule that allows courts to sever the common issues for a class
trial.
22
22
ingly.
III.
In addition to the reasons given above, regarding the district
court’s procedural errors, this class must be decertified because
it independently fails the superiority requirement of
rule 23(b)(3). In the context of mass tort class actions,
certification dramatically affects the stakes for defendants.
Class certification magnifies and strengthens the number of
unmeritorious claims. Agent Orange, 818 F.2d at 165-66. Aggrega-
tion of claims also makes it more likely that a defendant will be
found liable and results in significantly higher damage awards.
MANUAL FOR COMPLEX LITIGATION § 33.26 n.1056; Kenneth S. Bordens and
Irwin A. Horowitz, Mass Tort Civil Litigation: The Impact of
Procedural Changes on Jury Decisions, 73 JUDICATURE 22 (1989).
In addition to skewing trial outcomes, class certification
creates insurmountable pressure on defendants to settle, whereas
individual trials would not. See Peter H. Schuck, Mass Torts: An
Institutional Evolutionist Perspective, 80 CORNELL L. REV. 941, 958
See In re N.D. Cal. Dalkon Shield IUD Prods. Liability Litig., 693
F.2d 847, 856 (9th Cir. 1982) (balancing severed issues against the
remaining individual issues), cert. denied, 459 U.S. 1171 (1983);
see also Jenkins, 109 F.R.D. at 278 (comparing state of the art
defense to individual questions of exposure and degree of injury in
a class action certified only on the common issue of the state of
the art defense). Reading rule 23(c)(4) as allowing a court to
sever issues until the remaining common issue predominates over the
remaining individual issues would eviscerate the predominance
requirement of rule 23(b)(3); the result would be automatic
certification in every case where there is a common issue, a result
that could not have been intended.
23
(1995). The risk of facing an all-or-nothing verdict presents too
high a risk, even when the probability of an adverse judgment is
low. Rhone-Poulenc, 51 F.3d at 1298. These settlements have been
referred to as judicial blackmail.23
It is no surprise then, that historically, certification of
mass tort litigation classes has been disfavored.24 The traditional
23
In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liability Litig.,
55 F.3d 768, 784-85 (3d Cir.), cert. denied, 116 S. Ct. 88 (1995); Rhone-Poulenc,
51 F.3d at 1299-1300. See also Georgine, 1996 WL 242442, at *10 n.10 (rejecting
the argument that the possibility of settlement should be factored positively in
applying rule 23(b)(3)). But see In re A.H. Robins Co., 880 F.2d 709, 740 (4th
Cir. 1985) (treating the fact that certification may foster settlement as a
positive factor when applying rule 23(b)(3)) (dicta), cert. denied, 493 U.S. 959(1989).
24
At the time rule 23 was drafted, mass tort litigation as we now know it
did not exist. Schuck, supra, at 945. The term had been applied to single-event
accidents. Id. Even in those cases, the advisory committee cautioned against
certification. See supra note 19. As modern mass tort litigation has evolved,
courts have been willing to certify simple single disaster mass torts, see
Sterling v. Velsicol Chem. Corp., 855 F.2d 1188, 1197 (6th Cir. 1987), but have
been hesitant to certify more complex mass torts, see Georgine, 1996 WL 242442,
at *12-*14, *19 (discussing the trend in certification and decertifying an
asbestos class action); American Medical Sys., 75 F.3d at 1084-85. See also
Rhone-Poulenc, 51 F.3d 1293 (decertifying class); In re Joint E. & S. Dist.
Asbestos Litig., 14 F.3d 726 (2d Cir. 1993) (vacating limited fund class action);
In re Bendectin Prod. Liability Litig., 749 F.2d 300 (6th Cir. 1984) (granting
mandamus reversing class certification); Dalkon Shield IUD Prods. Liability
Litig., 693 F.2d at 856 (decertifying class for lack of commonality and
superiority); Harding v. Tambrands Inc., 165 F.R.D. 623, ___, 1996 WL 138057,
at *5 (D. Kan. 1996) (denying certification of nationwide class of persons
alleging toxic shock syndrome); Kurczi v. Eli Lilly & Co., 160 F.R.D. 667 (N.D.
Ohio 1995) (denying nationwide class certification); Hurd v. Monsanto Co., 164
F.R.D. 234 (S.D. Ind. 1995) (refusing to certify class of persons alleging PCB
exposure at one plant); Bethards v. Bard Access Sys., Inc., 1995 WL 75356 (N.D.
Ill. 1995) (recommending denial of class certification in products liability
action regarding catheters); Ikonen v. Hartz Mountain Corp., 122 F.R.D. 258 (S.D.
Cal. 1988) (denying class certification in flea and tick spray products liability
action); In re Tetracycline Cases, 107 F.R.D. 719 (W.D. Mo. 1985) (denying
certification because class action is not superior method of adjudication);
Mertens v. Abbott Laboratories, 99 F.R.D. 38 (D.N.H. 1983) (denying certification
of class in DES litigation); Ryan v. Eli Lilly & Co., 84 F.R.D. 230 (D.S.C. 1979)
(denying certification of class of women who took synthetic estrogen during
pregnancy); Yandle v. PPG Indus., 65 F.R.D. 566 (E.D. Tex. 1974) (denying
asbestos claims class certification). But see Central Wesleyan College v. W.R.
Grace & Co., 6 F.3d 177 (4th Cir. 1993) (affirming certification of class of
colleges in suit against asbestos manufacturer); Agent Orange, 818 F.2d at 166-67
(certifying class despite manageability difficulties because of centrality of
military contractor defense); School Asbestos, 789 F.2d 996; In re Teletronics
Pacing System, Inc., Acufix Atrail “J” Leads Prod. Liability Litig., No. C-1-95-
(continued...)
24
concern over the rights of defendants in mass tort class actions is
magnified in the instant case. Our specific concern is that a mass
tort cannot be properly certified without a prior track record of
trials from which the district court can draw the information
necessary to make the predominance and superiority requirements
required by rule 23. This is because certification of an immature
tort results in a higher than normal risk that the class action may
not be superior to individual adjudication.
We first address the district court’s superiority analysis.
The court acknowledged the extensive manageability problems with
this class. Such problems include difficult choice of law
determinations, subclassing of eight claims with variations in
state law, Erie guesses, notice to millions of class members,
further subclassing to take account of transient plaintiffs, and
the difficult procedure for determining who is nicotine-dependent.
Cases with far fewer manageability problems have given courts
pause. See, e.g., Georgine, 1996 WL 242442, at *19; In re Hotel
Tel., 500 F.2d at 909.
The district court’s rationale for certification in spite of
such problemsSSi.e., that a class trial would preserve judicial
resources in the millions of inevitable individual trialsSSis based
(...continued)
094 (S.D. Ohio, Nov. 17, 1995) (certifying class against manufacturer of alleged
defective pacemaker leads) (unpublished); In re Copley Pharmaceutical, Inc., 161
F.R.D. 456 (D. Wyo. 1995) (certifying nationwide class for limited threshold
liability issues regarding prescription drug albuterol, but refusing to certify
class for individual issues of liability and causation or punitive damages);
Craft v. Vanderbilt Univ., No. 3:94-0090 (M.D. Tenn. July 14, 1994) (certifying
class for exposure to a radioactive isotope in medical experiments)
(unpublished); In re Cordis Cardiac Pacemaker Prod. Liability Litig., No. C-3-90-
374 (S.D. Ohio Dec. 23, 1992) (unpublished).
25
on pure speculation. Not every mass tort is asbestos, and not
every mass tort will result in the same judicial crises.25 The
judicial crisis to which the district court referred is only
theoretical.
What the district court failed to consider, and what no court
can determine at this time, is the very real possibility that the
judicial crisis may fail to materialize.26 The plaintiffs’ claims
25
There is reason to believe that even a mass tort like asbestos could
be managed, without class certification, in a way that avoids judicial meltdown.
See Georgine, 1996 WL 242442, at *21 (suggesting methods, short of a nationwide
class action, that would be more efficient than individual trials); John A.
Siliciano, Mass Torts and the Rhetoric of Crisis, 80 CORNELL L. REV. 980, 1010-12
(1995) (suggesting that stringent “gate keeping” by courts at the outset would
have prevented asbestos from becoming a monstrous mass tort). In a case such as
this one, where causation is a key element, disaggregation of claims allows
courts to dismiss weak and frivolous claims on summary judgment.
Where novel theories of recovery are advanced (such as addiction as
injury), courts can aggressively weed out untenable theories. See, e.g., Allgood
v. R.J. Reynolds Tobacco Co., 80 F.3d 168, 172 (5th Cir. 1996) (rejecting
failure-to-warn claim against tobacco companies based on inadequate proof of
reliance and, alternatively, on “common knowledge” theory). Courts can use case
management techniques to avoid discovery abuses. The parties can also turn to
mediation and arbitration to settle individual or aggregated cases.
26
The plaintiffs, in seemingly inconsistent positions, argue that the lack
of a judicial crisis justifies certification; they assert that the reason why
individual plaintiffs have not filed claims is that the tobacco industry makes
individual trials far too expensive and plaintiffs are rarely successful. The
fact that a party continuously loses at trial does not justify class
certification, however. See American Medical Systems, 75 F.3d at 1087 and n.20
(granting mandamus in part because judge’s comments that class treatment was
warranted because the defendant had greater litigation resources than the
plaintiff demonstrated a bias in favor of certification by the judge). The
plaintiffs’ argument, if accepted, would justify class treatment whenever a
defendant has better attorneys and resources at its disposal.
The plaintiffs’ claim also overstates the defendants’ ability to outspend
plaintiffs. Assuming arguendo that the defendants pool resources and outspend
plaintiffs in individual trials, there is no reason why plaintiffs still cannot
prevail. The class is represented by a consortium of well-financed plaintiffs’
lawyers who, over time, can develop the expertise and specialized knowledge
sufficient to beat the tobacco companies at their own game. See Francis E.
McGovern, An Analysis of Mass Torts for Judges, 73 TEX. L. REV. 1821, 1834-35
(1995) (suggesting that plaintiffs can overcome tobacco defendants’ perceived
advantage when a sufficient number of plaintiffs have filed claims and shared
discovery). Courts can also overcome the defendant’s alleged advantages through
coordination or consolidation of cases for discovery and other pretrial matters.
See MANUAL FOR COMPLEX LITIGATION at §33.21-25.
26
are based on a new theory of liability and the existence of new
evidence. Until plaintiffs decide to file individual claims, a
court cannot, from the existence of injury, presume that all or
even any plaintiffs will pursue legal remedies.270. See Allgood v. R.
J. Reynolds Tobacco Co., No. 95-20363, 1996 WL 146250, at *2 (5th Cir. Apr. 16,
1996) (holding that common knowledge is a defense to a duty to warn and warranty
claim).28 Nor can a court make a superiority determination based on
such speculation. American Medical Sys., 75 F.3d at 1085 (opining
that superiority is lacking where judicial management crisis does
not exist and individual trials are possible).
Severe manageability problems and the lack of a judicial
crisis are not the only reasons why superiority is lacking. The
most compelling rationale for finding superiority in a class
actionSSthe existence of a negative value suitSSis missing in this
case. Accord Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809
(1985); Rhone-Poulenc, 51 F.3d at 1299.
As he stated in the record, plaintiffs’ counsel in this case
has promised to inundate the courts with individual claims if class
certification is denied. Independently of the reliability of this
self-serving promise, there is reason to believe that individual
27
There are numerous reasons why plaintiffs with positive-value suits opt
out of the tort system, including risk aversion to engaging in litigation,
privacy concerns, and alternative avenues for medical treatment, such as
Medicaid. See McGovern, supra, at 1827-28. In a case where comparative
negligence is raised, plaintiffs have the best insight into their own relative
fault.
Ultimately, a court cannot extrapolate, from the number of
potential plaintiffs, the actual number of cases that will be
filed. See id. at 1823 & n.8 (contending that only 10 to 20% of
persons who suffer harm actually invoke the tort litigation
process).
27
suits are feasible. First, individual damage claims are high, and
punitive damages are available in most states. The expense of
litigation does not necessarily turn this case into a negative
value suit, in part because the prevailing party may recover
attorneys’ fees under many consumer protection statutes. See Boggs
v. Alto Trailer Sales, 511 F.2d 114, 118 (5th Cir. 1974) (acknowl-
edging that the availability of attorneys’ fees is a common basis
for finding non-superiority).
In a case such as this one, where each plaintiff may receive
a large award, and fee shifting often is available, we find Chief
Judge Posner’s analysis of superiority to be persuasive:
For this consensus or maturing of judgment the district
judge proposes to substitute a single trial before a
single jury . . . . One jury . . . will hold the fate of
an industry in the palm of its hand. . . . That kind of
thing can happen in our system of civil justice . . . .
But it need not be tolerated when the alternative exists
of submitting an issue to multiple juries constituting in
the aggregate a much larger and more diverse sample of
decision-makers. That would not be a feasible option if
the stakes to each class member were too slight to repay
the cost of suit . . . . But this is not the case
. . . . Each plaintiff if successful is apt to receive
a judgment in the millions. With the aggregate stakes in
the tens or hundreds of millions of dollars, or even in
the billions, it is not a waste of judicial resources to
conduct more than one trial, before more than six jurors,
to determine whether a major segment of the international
pharmaceutical industry is to follow the asbestos
manufacturers into Chapter 11.
Rhone-Poulenc, 51 F.3d at 1300. So too here, we cannot say that it
would be a waste to allow individual trials to proceed, before a
district court engages in the complicated predominance and
superiority analysis necessary to certify a class.
Fairness may demand that mass torts with few prior
verdicts or judgments be litigated first in smaller
28
unitsSSeven single-plaintiff, single-defendant trialsSS
until general causation, typical injuries, and levels of
damages become established. Thus, “mature” mass torts
like asbestos or Dalkon Shield may call for procedures
that are not appropriate for incipient mass tort cases,
such as those involving injuries arising from new
products, chemical substances, or pharmaceuticals.
MANUAL FOR COMPLEX LITIGATION § 33.26.
The remaining rationale for superioritySSjudicial efficiency29SS
is also lacking. In the context of an immature tort, any savings
in judicial resources is speculative, and any imagined savings
would be overwhelmed by the procedural problems that certification
of a sui generis cause of action brings with it.
Even assuming arguendo that the tort system will see many more
addiction-as-injury claims, a conclusion that certification will
save judicial resources is premature at this stage of the litiga-
tion. Take for example the district court’s plan to divide core
liability from other issues such as comparative negligence and
reliance. The assumption is that after a class verdict, the common
issues will not be a part of follow-up trials. The court has no
basis for that assumption.
It may be that comparative negligence will be raised in the
individual trials, and the evidence presented at the class trial
will have to be repeated. The same may be true for reliance.30 The
29
See Sterling, 855 F.2d at 1196 (“The procedural device of Rule 23(b)(3)
class action was designed not solely as a means for assuring legal assistance in
the vindication of small claims but, rather, to achieve the economies of time,
effort, and expense.”).
30
See, e.g., Allgood, 80 F.3d at 171 (holding that under Texas law,
reliance is an essential element of both affirmative fraud and fraudulent
concealment).
29
net result may be a waste, not a savings, in judicial resources.
Only after the courts have more experience with this type of case
can a court certify issues in a way that preserves judicial
resources. See Jenkins, 782 F.2d 468 (certifying state of the art
defense because experience had demonstrated that judicial resources
could by saved by certification).
Even assuming that certification at this time would result in
judicial efficiencies in individual trials, certification of an
immature tort brings with it unique problems that may consume more
judicial resources than certification will save. These problems
are not speculative; the district court faced, and ignored, many of
the problems that immature torts can cause.
The primary procedural difficulty created by immature torts is
the inherent difficulty a district court will have in determining
whether the requirements of rule 23 have been met. We have already
identified a number of defects with the district court’s predomi-
nance and manageability inquires, defects that will continue to
exist on remand because of the unique nature of the plaintiffs’
claim.
The district court’s predominance inquiry, or lack of it,
squarely presents the problems associated with certification of
immature torts. Determining whether the common issues are a
“significant” part of each individual case has an abstract quality
to it when no court in this country has ever tried an injury-as-
addiction claim. As the plaintiffs admitted to the district court,
“we don’t have the learning curb [sic] that is necessary to say to
30
Your Honor ‘this is precisely how this case can be tried and that
will not run afoul of the teachings of the 5th Circuit.’”
Yet, an accurate finding on predominance is necessary before
the court can certify a class. It may turn out that the defen-
dant’s conduct, while common, is a minor part of each trial.
Premature certification deprives the defendant of the opportunity
to present that argument to any court and risks decertification
after considerable resources have been expended.
The court’s analysis of reliance also demonstrates the
potential judicial inefficiencies in immature tort class actions.
Individual trials will determine whether individual reliance will
be an issue. Rather than guess that reliance may be inferred, a
district court should base its determination that individual
reliance does not predominate on the wisdom of such individual
trials. The risk that a district court will make the wrong guess,
that the parties will engage in years of litigation, and that the
class ultimately will be decertified (because reliance predominates
over common issues) prevents this class action from being a
superior method of adjudication.
The complexity of the choice of law inquiry also makes
individual adjudication superior to class treatment. The plain-
tiffs have asserted eight theories of liability from every state.
Prior to certification, the district court must determine whether
variations in state law defeat predominance. While the task may
not be impossible, its complexity certainly makes individual trials
a more attractive alternative and, ipso facto, renders class
31
treatment not superior. See Georgine, 1996 WL 242332, at *21
(recommending that Congress solve the problems inherent in multi-
state class actions by federalizing choice of law rules, but
rejecting such legislation when it masquerades as judicial
innovation).
Through individual adjudication, the plaintiffs can winnow
their claims to the strongest causes of action.31 The result will
be an easier choice of law inquiry and a less complicated predomi-
nance inquiry. State courts can address the more novel of the
plaintiffs’ claims, making the federal court’s Erie guesses less
complicated. It is far more desirable to allow state courts to
apply and develop their own law than to have a federal court apply
“a kind of Esperanto [jury] instruction.” Rhone-Poulenc, 51 F.3d
at 1300; MANUAL FOR COMPLEX LITIGATION § 33.26 (discussing the full
cycle of litigation necessary for a tort to mature).
The full development of trials in every state will make
subclassing an easier process. The result of allowing individual
trials to proceed is a more accurate determination of predominance.
We have already seen the result of certifying this class without
individual adjudications, and we are not alone in expressing
discomfort with a district court’s certification of a novel theory.
31
State courts are more than capable of providing definitive statements
regarding the validity of addiction-as-injury claims. See, e.g., Joseph E.
Seagram & Sons v. McGuire, 814 S.W.2d 385 (Tex. 1991) (accepting “common
knowledge” theory and holding no cause of action for alcohol addiction claim
based on products liability, misrepresentations, negligence, breach of implied
warranties of merchantability and fitness, violations of consumer protection
statutes, and conspiracy); see also Allgood, 80 F.3d at 171-72 (rejecting
failure-to-warn claim against tobacco companies based on inadequate proof of
reliance and, alternatively, on “common knowledge” theory) (citing Joseph E.
Seagram).
32
See Rhone-Poulenc, 51 F.3d at 1300.
Another factor weighing heavily in favor of individual trials
is the risk that in order to make this class action manageable, the
court will be forced to bifurcate issues in violation of the
Seventh Amendment. This class action is permeated with individual
issues, such as proximate causation, comparative negligence,
reliance, and compensatory damages. In order to manage so many
individual issues, the district court proposed to empanel a class
jury to adjudicate common issues. A second jury, or a number of
“second” juries, will pass on the individual issues, either on a
case-by-case basis or through group trials of individual plain-
tiffs.
The Seventh Amendment entitles parties to have fact issues
decided by one jury, and prohibits a second jury from reexamining
those facts and issues.32 Thus, Constitution allows bifurcation of
issues that are so separable that the second jury will not be
called upon to reconsider findings of fact by the first:
[T]his Court has cautioned that separation of issues is
not the usual course that should be followed, and that
the issue to be tried must be so distinct and separable
from the others that a trial of it alone may be had
without injustice. This limitation on the use of
bifurcation is a recognition of the fact that inherent in
the Seventh Amendment guarantee of a trial by jury is the
general right of a litigant to have only one jury pass on
a common issue of fact. The Supreme Court recognized
this principle in Gasoline Products . . . . The Court
explained . . . that a partial new trial may not be
“properly resorted to unless it clearly appears that the
issue to be retried is so distinct and separable from the
others that a trial of it alone may be had without
32
“[N]o fact tried by jury, shall be otherwise re-examined in any Court
of the United States. . .” U.S. CONST. amend. VII.
33
injustice.” Such a rule is dictated for the very
practical reason that if separate juries are allowed to
pass on issues involving overlapping legal and factual
questions the verdicts rendered by each jury could be
inconsistent.
Alabama v. Blue Bird Body Co., 573 F.2d 309, 318 (5th Cir. 1978)
(citations and footnotes omitted).
The Seventh Circuit recently addressed Seventh Amendment
limitations to bifurcation. In Rhone-Poulenc, 51 F.3d at 1302-03,
Chief Judge Posner described the constitutional limitation as one
requiring a court to “carve at the joint” in such a way so that the
same issue is not reexamined by different juries. “The right to a
jury trial . . . is a right to have juriable issues determined by
the first jury impaneled to hear them (provided there are no errors
warranting a new trial), and not reexamined by another finder of
fact.” Id. at 1303.
Severing a defendant’s conduct from comparative negligence
results in the type of risk that our court forbade in Blue Bird.
Comparative negligence, by definition, requires a comparison
between the defendant’s and the plaintiff’s conduct. Rhone-
Poulenc, 51 F.3d at 1303 (“Comparative negligence entails, as the
name implies, a comparison of the degree of negligence of plaintiff
and defendant.”). At a bare minimum, a second jury will rehear
evidence of the defendant’s conduct. There is a risk that in
apportioning fault, the second jury could reevaluate the defen-
dant’s fault, determine that the defendant was not at fault, and
apportion 100% of the fault to the plaintiff. In such a situation,
the second jury would be impermissibly reconsidering the findings
34
of a first jury. The risk of such reevaluation is so great that
class treatment can hardly be said to be superior to individual
adjudication.33
The plaintiffs’ final retort is that individual trials are
inadequate because time is running out for many of the plaintiffs.34
They point out that prior litigation against the tobacco companies
has taken up to ten years to wind through the legal system. While
a compelling rhetorical argument, it is ultimately inconsistent
with the plaintiffs’ own arguments and ignores the realities of the
legal system. First, the plaintiffs’ reliance on prior personal
injury cases is unpersuasive, as they admit that they have new
evidence and are pursuing a claim entirely different from that of
past plaintiffs.
Second, the plaintiffs’ claim that time is running out ignores
the reality of the class action device. In a complicated case
involving multiple jurisdictions, the conflict of law question
33
The plaintiffs argue that any risk that a bifurcation order would
violate the Seventh Amendment is speculative, as the plaintiffs may prevail on
causes of action that either do not require bifurcation or do not contain issues
that are so intertwined that the Seventh Amendment will be implicated. In
essence, plaintiffs’ argument boils down to a repudiation of the class
complaint’s negligence and strict products liability claims.
34
This contention is disingenuous at best. At oral argument, the
plaintiffs asserted that time is of the essence, because plaintiffs who die
cannot partake in a medical monitoring fund. What the plaintiffs failed to
mention was that the district court refused to certify a medical monitoring fund,
and the plaintiffs have not cross-appealed that decision. Moreover, for the
remainder of the claims a plaintiff’s family or estate can sue based on
survivorship statutes. The plaintiffs’ class complaint envisions survivor
lawsuits. In fact, the named plaintiff in this case, Dianne Castano, is a non-
smoker who is suing both for the wrongful death of her husband and as a
representative in a survival action.
35
itself could take decades to work its way through the courts.35
Once that issue has been resolved, discovery, subclassing, and
ultimately the class trial would take place. Next would come the
appellate process. After the class trial, the individual trials
and appeals on comparative negligence and damages would have to
take place. The net result could be that the class action device
would lengthen, not shorten, the time it takes for the plaintiffs
to reach final judgment.
IV.
The district court abused its discretion by ignoring varia-
tions in state law and how a trial on the alleged causes of action
would be tried. Those errors cannot be corrected on remand because
of the novelty of the plaintiffs’ claims. Accordingly, class
treatment is not superior to individual adjudication.
We have once before stated that “traditional ways of proceed-
ing reflect far more than habit. They reflect the very culture of
the jury trial. . . .” In re Fibreboard Corp., 893 F.2d 706, 711
(5th Cir. 1990). The collective wisdom of individual juries is
necessary before this court commits the fate of an entire industry
35
The plaintiffs rely on School Asbestos for the proposition that
variations in state law do not preclude predominance. Putting that issue aside,
the case is instructive for what happened after the Third Circuit remanded to the
district court. Almost nine years after the first complaint was filed, and eight
years after the court of appeals had affirmed certification, the conflict of law
issues had yet to be resolved. See In re Sch. Asbestos Litig., 977 F.2d 764, 771
(3d Cir. 1992) (granting mandamus to disqualify judge but refusing to address
whether district court’s trial plan properly resolved any problems with
variations in state law because new judge may adopt a different trial plan).
36
or, indeed, the fate of a class of millions, to a single jury. For
the forgoing reasons, we REVERSE and REMAND with instructions that
the district court dismiss the class complaint.
37