State of West Virginia ex rel. Health Care Alliance, Inc. and HCFS Health Care Financial Services v. Eric O'Briant and Kelsey Starr

FILED
June 15, 2021
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
No. 20-1029 – State of West Virginia ex rel. Health Care Alliance, Inc., and HCFS Health
Care Financial Services, LLC d/b/a Alcoa Billing Center v. The Honorable
Eric O’Briant, Judge of the Circuit Court of Logan County, and Kelsey
Starr
Justice Hutchison, concurring:
The central issue in this class-action case concerns certification-related
discovery to determine whether the plaintiff can meet the prerequisites of Rule 23 of the
West Virginia Rules of Civil Procedure and, if certification of a class is proper, the
boundaries of the class and the issues to be resolved in the action. I concur with the
majority’s opinion, but I write separately to assure the circuit judge below that his decision
was not wrong but was, instead, likely premature.
This Court has said that a class action may only be certified if the circuit
court is satisfied, after a rigorous and thorough analysis, that the four prerequisites of Rule
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23(a), and at least one of the subdivisions of Rule 23(b), have been satisfied. See Syl. pt.
1
I anticipate that every judge applies a proper legal analysis to every question
presented in his or her courtroom, and a judge does not need reminders from this Court to
be “rigorous,” “thorough,” or “reasonable.” When I see Court opinions that rely upon these
modifiers, I am reminded of a scene in the courtroom drama A Few Good Men (1992). As
the lawyers are standing in an empty courtroom at the close of proceedings, one lawyer
chides another lawyer over her failed “strenuous” objection to a witness’s testimony. The
lawyer (Lieutenant Weinberg) says, sarcastically:
“I strenuously object?” Is that how it works? Hm?
“Objection.” “Overruled.” “Oh, no, no, no [your honor]. No,
I strenuously object.” “Oh. Well, if you strenuously object
then I should take some time to reconsider.”
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8, In re W. Va. Rezulin Litig., 214 W. Va. 52, 585 S.E.2d 52 (2003); Syl. pt. 8, State ex rel.
Chemtall Inc. v. Madden, 216 W. Va. 443, 607 S.E.2d 772 (2004); Syl. pt. 7, State ex rel.
Surnaik Holdings of WV, LLC v. Bedell, 244 W. Va. 248, 852 S.E.2d 748 (2020). “Whether
the requisites for a class action exist rests within the sound discretion of the trial court.”
Syllabus Point 5, Mitchem v. Melton, 167 W. Va. 21, 277 S.E.2d 895 (1981).
When a plaintiff moves to certify a class and, in so doing, offers detailed and
undisputed facts, it is easier for a circuit court to determine the existence and boundaries
of the class under the terms of Rule 23. Having the parties confer and stipulate as to
relevant facts that are not genuinely disputed also assists a court in assessing whether the
Rule 23 prerequisites have been met and in refining the issues for class resolution. But
when the plaintiff has not clearly established the facts regarding class certification in the
pleadings, or when a party opposing a class action disputes the facts or asserts that the
claims raise individual issues, then a circuit court must consider whether certification-
related discovery is needed “to determine if the prerequisites of Rule 23 have been met
and, if so, how to define the class.” David F. Herr, Annotated Manual for Complex
Litigation § 21.14 (4th ed. 2021).
This Court approved of precertification discovery in the per curiam opinion
of Love v. Georgia Pacific Corporation, 214 W. Va. 484, 488, 590 S.E.2d 677, 681 (2003),
and said that “reasonable discovery related to class certification issues is appropriate,
particularly where the pleadings and record do not sufficiently indicate the presence or
absence of the requisite facts to warrant an initial determination of class action status.”
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Other courts have likewise held that “it is essential that a plaintiff be afforded a full
opportunity to develop a record containing all the facts pertaining to the suggested class
and its representatives. It is seldom, if ever, possible to resolve class representation
questions from the pleadings[.]” Int’l Woodworkers of Am., AFL-CIO, CLC v. Chesapeake
Bay Plywood Corp., 659 F.2d 1259, 1268 (4th Cir. 1981). The leading treatise on class-
action law provides that a class-action plaintiff
must demonstrate that the case meets all of the requirements of
Rule 23(a), [and] fits into one of the categories of Rule 23(b) .
. . If facts are contested with regard to any of these issues, the
plaintiff is entitled to develop those facts through the formal
discovery process. Correlatively, the defendant is entitled to
utilize those same discovery devices to demonstrate that the
facts cut against certification.
William B. Rubenstein, 3 Newberg on Class Actions § 7:14 (5th ed. 2021). See also, Vinole
v. Countrywide Home Loans, Inc., 571 F.3d 935, 942 (9th Cir. 2009) (“Our cases stand for
the unremarkable proposition that often the pleadings alone will not resolve the question
of class certification and that some discovery will be warranted.”); Landsman & Funk PC
v. Skinder-Strauss Assocs., 640 F.3d 72, 93 (3d Cir. 2011) (“[A]llowing time for limited
discovery supporting certification motions may . . . be necessary for sound judicial
administration.”); Joseph M. McLaughlin, 1 McLaughlin on Class Actions § 3:7 (17th ed.
2020) (“[I]n most cases discovery into issues relevant to class certification is warranted
and appropriate.”).
If certification-related discovery is needed, then the extent of that discovery
is at the discretion of the circuit court. See Heerwagen v. Clear Channel Commc’ns, 435
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F.3d 219, 233 (2d Cir. 2006) (“The amount of [class] discovery is generally left to the trial
court’s considerable discretion.”); Baldwin & Flynn v. Nat’l Safety Assocs., 149 F.R.D.
598, 600 (N.D. Cal. 1993) (“[T]he extent of pre-certification discovery is at the discretion
of the trial court.”); 5 Moore’s Federal Practice § 23.85[1] (“District courts have
considerable discretion to determine whether, and to what extent, to allow discovery with
respect to class certification issues.”). When the circuit court cannot fairly assess the
propriety of class certification without discovery, it is an abuse of discretion to deny it.
Doninger v. Pac. Nw. Bell, Inc., 564 F.2d 1304, 1312 (9th Cir. 1977) (“It is clear that under
some circumstances the failure to grant discovery before denying class treatment is
reversible error.”).
There is a theoretical distinction between discovery on the “merits” of a class
action and discovery into “certification issues,” but that distinction is often blurred in
practice:
Courts often bifurcate discovery between certification issues
and those related to the merits of the allegations. Generally,
discovery into certification issues pertains to the requirements
of Rule 23 and tests whether the claims and defenses are
susceptible to class-wide proof; discovery into the merits
pertains to the strength or weaknesses of the claims or defenses
and tests whether they are likely to succeed. There is not
always a bright line between the two. Courts have recognized
that information about the nature of the claims on the merits
and the proof that they require is important to deciding
certification. Arbitrary insistence on the merits/class discovery
distinction sometimes thwarts the informed judicial assessment
that current class certification practice emphasizes.
Annotated Manual for Complex Litigation, § 21.14.
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In the instant case, the plaintiff sought certification-related discovery from
the defendants regarding the existence and parameters of the class action. However, the
plaintiff also sought medical bills concerning individuals who are not parties – individuals
some cases call “putative class members” or “putative parties” – and sought the names,
addresses, and account information of those individuals. The circuit judge’s instinct that
this information is often discoverable was not entirely wrong. Let me explain.
Newberg’s treatise on class action law offers the following discussion
regarding the scope of certification-related discovery:
The certification motion requires a court to look at
issues of numerosity, commonality, typicality, adequacy of
representation, counsel’s adequacy, and, depending upon the
type of class suit, issues such as the limitations of a fund, the
need for injunctive relief, or the predominance of common
issues and the superiority of the class device.
Any of these inquiries may involve contested factual
questions. In developing those facts, the basic parameters of
Rule 26 apply in the first instance: the parties may discover any
relevant information that is not privileged.
3 Newberg on Class Actions § 7:16.
Rule 26(b) of our Rules of Civil Procedure provides that the “[p]arties may
obtain discovery regarding any matter, not privileged, which is relevant to the subject
matter involved in the pending action[.]” Unfortunately, on the facts of this case and, more
significantly, at this stage in the case, the plaintiff has not shown how the names, addresses,
and account information of the non-party individuals—that is, the putative class
members—were relevant. Specifically, the plaintiff sought to show that there were
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numerous putative class members in West Virginia who received allegedly fraudulent
billings from the defendants, so many that joinder of those individuals in one case would
be impractical; that there was some question of law or fact common to the plaintiff and
those putative class members; and that the plaintiff’s claims were typical of the claims
those putative class members could assert. See Rule 23(a). However, the names of these
other non-party individuals, these putative class members, would do nothing to prove these
elements. Aside from those persons’ residency in West Virginia, their actual addresses
would not prove these elements. Moreover, the sort of medical procedure they received,
or the name of the doctor who provided the medical service, is irrelevant to the factors in
Rule 23(a). The same goes for the three elements in Rule 23(b).
Our opinion in this case finds that the circuit judge’s discovery orders are not
“reasonable.” This is not because the information is not generally discoverable, but
because it is not discoverable at this stage of the proceedings. As I said, the circuit judge’s
instinct in requiring the defendant to provide this information was not wholly off the mark.
“The disclosure of names, addresses, and telephone numbers is a common practice in the
class action context.” Artis v. Deere & Co., 276 F.R.D. 348, 352 (N.D. Cal. 2011). The
United States Supreme Court has recognized the importance of permitting class counsel to
communicate with potential class members for the purposes of gathering information, even
prior to class certification. See Gulf Oil Co. v. Bernard, 452 U.S. 89, 102-03 (1981). “[A]s
a general rule, before class certification has taken place, all parties are entitled to equal
access to persons who potentially have an interest in or relevant knowledge of the subject
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of the action, but who are not yet parties.” Koo v. Rubio’s Restaurants, Inc., 135 Cal. Rptr.
2d 415, 428 (Cal. App. 2003).
But, at this early stage of the proceedings, the plaintiff failed to show how
the personal, medically related information sought is relevant to the circuit court’s
assessment of whether to certify a class action. Given the manner in which the plaintiff
has framed her case, she has failed to show an entitlement to the information. Hence,
although it was a close call, it was an abuse of discretion for the circuit court to have
required its production. Whether that information becomes discoverable down the road
remains to be seen.
I otherwise concur with the majority’s opinion.
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