Karl Ebert v. General Mills, Inc. ( 2016 )

United States Court of Appeals
For the Eighth Circuit
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No. 15-1735
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Karl Ebert; Carol Krauze; Jackie Milbrandt, individually and on behalf of all
persons similarly situated
lllllllllllllllllllll Plaintiffs - Appellees
v.
General Mills, Inc.
lllllllllllllllllllll Defendant - Appellant
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: October 21, 2015
Filed: May 20, 2016
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Before WOLLMAN, BEAM, and GRUENDER, Circuit Judges.
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BEAM, Circuit Judge.
General Mills, Inc., challenges the district court's grant of class certification in
this environmental-contamination lawsuit.1 Plaintiffs, all owners of residential
properties in a particular neighborhood in Minneapolis, Minnesota, sued General
1
We have jurisdiction under 28 U.S.C. § 1292(e) and Federal Rule of Civil
Procedure 23(f).
Mills, alleging General Mills caused the chemical substance trichloroethylene (TCE)
to be released onto the ground and into the environment at a former General Mills
facility, located within the same neighborhood. The plaintiffs claim that as a result
of this contamination, TCE vapors migrated into the surrounding residential area,
threatening the health of the residents and diminishing the value of their property.
Finding the requisites of Federal Rule of Civil Procedure 23 satisfied, the district court
certified a proposed class. Because the class lacks the requisite commonality and
cohesiveness to satisfy Rule 23, we reverse.
I. BACKGROUND
General Mills owned and operated an industrial facility in the Como
neighborhood of Minneapolis from approximately 1930 to 1977. In 1977, Henkel
Corporation purchased the property from General Mills. From 1947 to 1962, General
Mills disposed of as much as one-thousand gallons of hazardous substances per year
by burying it in perforated drums in the ground at the General Mills facility. In
December 1980, Congress passed the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), which required current and former
owners of facilities at which chemicals were used to notify the Environmental
Protection Agency (EPA) of suspected onsite disposal so EPA could identify and
inventory hazardous sites and prioritize them on a national list for cleanup. Under this
rubric, without admitting liability, General Mills, in 1984, signed a Consent Order and
Remedial Action Plan with the Minnesota Pollution Control Agency (MPCA) in
which it agreed, in part, to address TCE presence, if any, in groundwater below and
near the facility. Accordingly, for nearly thirty years, General Mills participated in
groundwater clean-up and remediation efforts in the Como neighborhood under the
direction of, and in conjunction with, the federal government and the State of
Minnesota.
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In late 2011, in cooperation with the MPCA, General Mills began to evaluate
the potential for migration of TCE in the form of vapor from shallow groundwater to
the soil above. After discovering TCE in soil vapor in October 2013, General Mills
modified the consent order with the MPCA to address the investigation and mitigation
of vapor risk near the facility. Under that plan, General Mills contractors sampled soil
gas beneath building foundations ("sub-slab sampling") and discovered variation
among properties. Wherever the TCE concentration in sub-slab vapor exceeded a
particular threshold, General Mills installed vapor mitigation systems (VMSs) to
prevent TCE intrusion into the building above. As noted by the district court,
according to one of General Mills' experts, 327 homes in the Como neighborhood
have had soil vapor testing and do not have detectable TCE concentrations. General
Mills installed VMSs in 118 homes in the Como neighborhood.
In this action, Plaintiffs allege that in the past, "over the course of many years,"
General Mills released TCE onto the ground and into the environment surrounding its
former facility and that now the TCE, in the form of vapors, is threatening home and
business owners in the Como neighborhood. The chemical's presence, say the
plaintiffs, has decreased the neighborhood's property values.
The plaintiffs first learned of the TCE vapor contamination at issue in this suit
in 2013, and each of the named plaintiffs received customized VMSs. Seeking to
represent a class consisting of "all persons and non-governmental entities that own
residential property within the 'Class Area,'" these residents assert five legal claims:
(1) violation of CERCLA; (2) common law negligence; (3) private nuisance; (4)
willful and wanton misconduct; and (5) violation of the Resource Conservation and
Recovery Act (RCRA). According to the district court, Plaintiffs "appear[ed] to seek
certification of only the following narrow issues: (1) whether [General Mills] is liable
to owners of the properties in the defined Class Area; and (2) whether injunctive relief
is warranted to compel comprehensive remediation." Plaintiffs voluntarily excluded
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any personal injury claims and seek in this action only property damages and
injunctive relief not relating to personal-injury claims.
The district court granted class certification after analyzing the Rule 23 factors,2
and additionally denied General Mills' motion to exclude two of the plaintiffs' expert
witnesses. In its certification order the district court took painstaking steps to
delineate not only the issues to be determined, but the parties included in the class.
The court bifurcated the action into two phases, limiting the issue to be determined at
each phase (first liability, then damages) and specifically excluded all individual class
2
Federal Rule of Civil Procedure 23 "Class Actions" states, in relevant part:
(a) Prerequisites. One or more members of a class may sue or be sued
as representative parties on behalf of all members 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.
(b) Types of Class Actions. A class action may be maintained if Rule
23(a) is satisfied and if: . . . (2) the party opposing the class has acted or
refused to act on grounds that apply generally to the class, so that final
injunctive relief or corresponding declaratory relief is appropriate
respecting the class as a whole; or (3) the court finds that the questions
of law or fact common to class members predominate over any questions
affecting only individual members, and that a class action is superior to
other available methods for fairly and efficiently adjudicating the
controversy. The matters pertinent to these findings include: (A) the
class members' interests in individually controlling the prosecution or
defense of separate actions; (B) the extent and nature of any litigation
concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and (D) the likely difficulties in managing
a class action.
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members "who have a physical injury as a result of [General Mills'] conduct." This
was an attempt to avoid potential issues of res judicata and claim-splitting for those
class members who do not litigate personal injury claims. General Mills challenges
all of the district court's rulings on appeal. Stated very generally, General Mills
contends that the exceedingly complex issues of injury and causation unique to each
of the proposed plaintiffs in this class defeat considerations required for class
certification (e.g., commonality, numerosity, typicality, adequacy, predominance,
fairness) under Rule 23.
II. DISCUSSION
A class action serves to conserve the resources of the court and the parties by
permitting an issue that may affect every class member to be litigated in an
economical fashion. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 155 (1982). Rule
23 governs class certification and states that "[t]o be certified as a class, plaintiffs must
meet all of the requirements of Rule 23(a) and must satisfy one of the three
subsections of Rule 23(b)." In re St. Jude Med., Inc., 425 F.3d 1116, 1119 (8th Cir.
2005). Here, the district court certified both a Rule 23(b)(2) class for possible
declaratory or injunctive relief and a Rule 23(b)(3) class for possible money damages,
and did so in a "hybrid" fashion, bifurcating the action in two phases: "the first phase
[to] address[] the issue of liability under Rule 23(b)(2); and the second phase [to]
address[] the damages issue under the procedure for Rule 23(b)(3) once liability is
determined to exist." "In order to obtain class certification, a plaintiff has the burden
of showing that the class should be certified and that the requirements of Rule 23 are
met." Luiken v. Domino's Pizza, LLC, 705 F.3d 370, 372 (8th Cir. 2013) (quoting
Coleman v. Watt, 40 F.3d 255, 258 (8th Cir. 1994)).
The parties describe this case very differently and these varying views drive
each of their arguments on class certification. General Mills focuses intently on the
vast differences between the class plaintiffs on the issues of injury, causation, and
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damages. In response to General Mills' continued focus on the fact that many of the
proposed class plaintiffs may not have any injury-in-fact, plaintiffs claim that they
have all suffered the same injury (i.e., that General Mills contaminated this geographic
area) such that there is commonality and the injurious conduct is the same, no matter
that the resulting injurious effects (damages) are diverse. According to the class, they
brought this suit to require General Mills to clean up its contamination and "[t]he
jury's finding in the classwide trial concerning the geographical scope of
contamination caused by General Mills will resolve all liability issues for Plaintiffs
and the entire class." Accordingly, the class frames their claims as solely involving
questions about General Mills' initial wrongdoing.
A. Standard of Review
"The district court has 'broad discretion to decide whether certification is
appropriate.'" Smith v. ConocoPhillips Pipe Line Co., 801 F.3d 921, 925 (8th Cir.
2015) (quoting Prof'l Firefighters Ass'n of Omaha, Local 385 v. Zalewski, 678 F.3d
640, 645 (8th Cir. 2012)). "We will nonetheless reverse a certification where there
has been an abuse of discretion or an error of law." Id. Further, the district court's
factual findings underlying the certification ruling are reviewed under the "clearly
erroneous" standard. Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005).
B. Commonality Under Rule 23
Under Rule 23(a), a district court may certify a class only if it "is satisfied, after
a rigorous analysis," that the four threshold requirements are met: numerosity of
plaintiffs, commonality of legal or factual questions, typicality of the named plaintiff's
claims or defenses, and adequacy of representation by class counsel. Falcon, 475 U.S.
at 161; Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-15 (1997). In this case,
the district court held there was no dispute regarding numerosity and commonality,
and thus reviewed only the remaining factors of typicality (Rule 23(a)(3)) and
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adequacy (Rule 23(a)(4)). On appeal, General Mills discusses the lack of
commonality as it relates to the predominance question addressed under the Rule
23(b)(3) analysis.
The issue of commonality is the heart of the matter here. Rule 23(a)(2) first
requires a plaintiff to show that "there are questions of law or fact common to the
class." Fed. R. Civ. P. 23(a)(2). How one articulates the claims in any given case
could artfully carry the day on the issue of commonality, "since '[a]ny competently
crafted class complaint literally raises common "questions."'" Wal-Mart Stores, Inc.
v. Dukes, 131 S. Ct. 2541, 2551 (2011) (quoting Nagareda, Class Certification in the
Age of Aggregate Proof, 84 N.Y.U.L. Rev. 97, 131-32 (2009)); Parko v. Shell Oil Co.,
739 F.3d 1083, 1085 (7th Cir. 2014) ("Mere assertion by class counsel that common
issues predominate is not enough. That would be too facile."). But merely advancing
a question stated broadly enough to cover all class members is not sufficient under
Rule 23(a)(2). "Commonality requires the plaintiff to demonstrate that the class
members 'have suffered the same injury.'" Dukes, 131 S. Ct. at 2551 (quoting Falcon,
457 U.S. at 1571). In a similar vein, the Rule 23(b)(3) analysis requires that: (1)
common questions of law or fact predominate over questions affecting only individual
members; and (2) that proceeding as a class action is the superior method of
adjudication. Fed. R. Civ. P. 23(b)(3).
In Dukes, the Court acknowledged that a single common question "will do" for
purposes of Rule 23(a)(2). Dukes, 131 S. Ct. at 2556 (determining that the plaintiffs
failed in that matter to establish the existence of any common question). Here, the
district court recognized that the issues of General Mills' standardized conduct of
alleged contamination and the remedies sought by the class are common to all
plaintiffs for purposes of Rule 23(a)(2) and we do not necessarily disagree. Indeed,
as articulated, those are questions common to the class and we do not pause to quibble
with the broad brush stroke used to define the "questions" at issue for
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purposes of 23(a)(2) since we resolve the matter under 23(b)(3). Too, General Mills
appears not to have challenged the district court on its Rule 23(a)(2) determination.3
In contrast to Rule 23(a)(2), the issue of predominance under Rule 23(b)(3) is
qualitative rather than quantitative. Thus, that there is a common question does not
end the inquiry. "[T]he predominance criterion is far more demanding." Amchem,
521 U.S. at 624. The requirements of the Rule 23(b)(3) analysis readily demonstrate
why the district court must perform a rigorous analysis before determining that issues
common to the class predominate over issues that differ among the individual class
members. Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013).
The requirement of predominance under Rule 23(b)(3) is not satisfied if
"individual questions . . . overwhelm the questions common to the class." Amgen Inc.
v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1196 (2013). "An individual
question is one where 'members of a proposed class will need to present evidence that
varies from member to member,' while a common question is one where 'the same
evidence will suffice for each member to make a prima facie showing [or] the issue
is susceptible to generalized, class-wide proof.'" Tyson Foods, Inc. v. Bouaphakeo,
136 S. Ct. 1036, 1045 (2016) (quoting 2 W. Rubenstein, Newberg on Class Actions
§ 4:50, pp. 196-97 (5th ed. 2012)). The "predominance inquiry tests whether
proposed classes are sufficiently cohesive to warrant adjudication by representation,"
Amchem, 521 U.S. at 623, and "goes to the efficiency of a class action as an
alternative to individual suits." Parko, 739 F.3d at 1085.
The district court abused its discretion in determining that the individualized
issues in this case "do not predominate over the common issues for those questions
3
For purposes of this analysis, we concede that this action satisfies the
commonality requirement under Rule 23(a)(2), and we thus need not address whether
any argument by General Mills regarding Rule 23(a)(2) commonality was waived, as
the plaintiffs contend on appeal.
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for which certification is sought." Indeed, it is the deliberate limiting of issues by this
district court in this case that is problematic. Stated earlier, all actions can be
articulated so that there are common questions. Here, by bifurcating the case and
narrowing the question for which certification was sought, the district court limited
the issues and essentially manufactured a case that would satisfy the Rule 23(b)(3)
predominance inquiry. Concluding "that questions on individualized exposure will
not be addressed as part of [the] questions for which the Court will agree to certify the
class" complicates the litigation of the elements necessary to resolve the plaintiffs'
claims. The district court's narrowing and separating of the issues ultimately unravels
and undoes any efficiencies gained by the class proceeding because many individual
issues will require trial.
To successfully establish the alleged claims, there are individual issues that will
predominate on the matters of liability and damages. Adjudicating claims of liability
will require an inquiry into the causal relationship between the actions of General
Mills and the resulting alleged vapor contamination. This analysis will include many
additional considerations beyond the limited inquiry into General Mills' liability.
And, even on the certified issue of liability, there are determinations contained within
that analysis that are not suitable for class-wide determination. To resolve liability
there must be a determination as to whether vapor contamination, if any, threatens or
exists on each individual property as a result of General Mills' actions, and, if so,
whether that contamination is wholly, or actually, attributable to General Mills in each
instance. Accordingly, accompanying a determination regarding General Mills'
actions, there likely will be a property-by-property assessment of additional
upgradient (or other) sources of contamination, whether unique conditions and
features of the property create the potential for vapor intrusion, whether (and to what
extent) the groundwater beneath a property is contaminated, whether mitigation has
occurred at the property, or whether each individual plaintiff acquired the property
prior to or after the alleged diminution in value. This action is directed at TCE in
breathable air, where both its presence and effect differ by property. These matters,
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to name a few, will still need to be resolved household by household even if a
determination can be made class-wide on the fact and extent of General Mills' role in
the contamination, which determination is problematic. Thus, any limitations in the
initial action are, at bottom, artificial or merely preliminary to matters that necessarily
must be adjudicated to resolve the heart of the matter. See In re St. Jude Med., Inc.,
522 F.3d 836, 841 (8th Cir. 2008) (discussing conflicting authority on whether a class
may be certified as to specific issues and whether such a class may be effectively
maintained under Rule 23).
Although there may be common matters in this litigation that can be decided
on a class-wide basis, we think it is clear that individual issues predominate the
analysis of causation and damages that must be litigated to resolve the plaintiffs'
claims. This matter is thus unsuitable for class certification under Rule 23(b)(3) and
the district court therefore abused its discretion in certifying the class.
C. Rule 23(b)(2) Class
As previously noted, the district court bifurcated the action into two phases,
certifying classes under both Rule 23(b)(2) and (b)(3). The use of this sort of hybrid
certification, insulating the (b)(2) class from the money-damage portion of the case,
is an available approach that is gaining ground in class action suits. Newberg on Class
Actions § 4:38. However, in the instant case the (b)(2) class fails for reasons similar
to those already discussed.
Rule 23(b)(2) applies when "the party opposing the class has acted or refused
to act on grounds that apply generally to the class, so that final injunctive relief or
corresponding declaratory relief is appropriate respecting the class as a whole." Fed.
R. Civ. P. 23(b)(2). In Dukes the Supreme Court clarified that "Rule 23(b)(2) applies
only when a single injunction or declaratory judgment would provide relief to each
member of the class." 131 S. Ct. at 2557. Rule 23(b)(2) "does not authorize class
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certification when each class member would be entitled to an individualized award of
monetary damages." Id. Although a Rule 23(b)(2) class need not meet the additional
predominance and superiority requirements of Rule 23(b)(3), "it is well established
that the class claims must be cohesive." Barnes v. Am. Tobacco Co., 161 F.3d 127,
143 (3d Cir. 1998). In fact, cohesiveness is the touchstone of a (b)(2) class, as a (b)(2)
class "share[s] the most traditional justification[] for class treatment," in that "the
relief sought must perforce affect the entire class at once." Dukes, 131 S. Ct. at 2558
(emphasis added). Because a (b)(2) class is mandatory, the rule provides no
opportunity for (b)(2) class members to opt out, and does not oblige the district court
to afford them notice of the action, both of which are prescribed for (b)(3) classes. Id.
For these reasons, the cohesiveness requirement of Rule 23(b)(2) is more stringent
than the predominance and superiority requirements for maintaining a class action
under Rule 23(b)(3). Gates v. Rohm and Haas Co., 655 F.3d 255, 269 (3d Cir. 2011).
In this case we need not determine whether these plaintiffs' claims for relief
(i.e., comprehensive remediation efforts) lend themselves, even as bifurcated, to the
(b)(2) limitations generally excluding individualized injunctions, declaratory
judgments, and monetary damages, because at the outset the cohesiveness necessary
to proceed as a class under (b)(2) is lacking.4 Dukes, 131 S. Ct. at 2557 ("Rule
23(b)(2) applies only when a single injunction or declaratory judgment would provide
relief to each member of the class. It does not authorize class certification when each
individual class member would be entitled to a different injunction or declaratory
judgment against the defendant. Similarly, it does not authorize class certification
when each class member would be entitled to an individualized award of monetary
damages."). While a determination regarding General Mills' liability, in the broad
sense, could impact the entire class as a whole, as the district court advances, that
4
Also because of the lack of cohesiveness in the first instance, we do not
address General Mills' claim that the class plaintiffs are jurisdictionally barred from
seeking injunctive relief in this case because Section 113(h) of CERCLA, 42 U.S.C.
§ 9613(h), divests the federal courts of jurisdiction to award the relief plaintiffs seek.
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single determination, artificially narrowed by the district court to achieve class status,
does not advance the efficiencies necessary for such treatment in this case. The
resolution of that single question does not apply uniformly to the entire class, as in
reality, the issue of liability and the relief sought by these homeowners is, at bottom,
highly individualized.
It is the disparate factual circumstances of class members that prevent the class
from being cohesive and thus unable to be certified under Rule 23(b)(2). See Gates,
655 F.3d at 264. Here, as mentioned in our discussion of the (b)(3) certification, the
individual proof necessary to resolve the issues abound and thus the matter founders
for lack of cohesion. As noted in the (b)(3) analysis, there are myriad considerations
on the issues of liability and damages. The remediation sought is not even universal
and these distinctions matter at this stage under the rigorous analysis required, despite
the district court's determination that addressing these distinctions are "premature."
Remediation efforts on each of the affected properties, should they be awarded, will
be unique. This is most easily exemplified by the fact that some class members (and
all of the named plaintiffs) have received customized VMS systems and some have
not, some tested properties evidenced the existence of TCE soil vapors at widely
varying levels and some did not–these matters cannot be tried separately in order to
justify the certification of a class if any semblance of efficiency is to be touted in these
proceedings. For these reasons the district court abused its discretion in certifying the
class under Rule 23(b)(2) as well.
In view of our decision that the class certification is unsustainable under the
Rule 23 considerations discussed herein, we find it unnecessary to consider the other
arguments advanced by General Mills. "We believe it prudent not to decide issues
unnecessary to the disposition of the case, especially given the numerous
constitutional issues implicated in such an analysis." In re St. Jude Med., 522 F.3d at
841 (quoting In re St. Jude Med., 425 F.3d at 1120). Too, given the reversal of
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certification, the issue regarding the challenged expert witness testimony is moot at
this stage.
III. CONCLUSION
We reverse the certification order and remand the case to the district court with
directions to revisit the issues raised in conformity with this opinion.
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