Practice Tip: The Scope of Daubert in Product Liability Class Actions

Background

Rule 23 of the Federal Rules of Civil Procedure sets forth several requirements that plaintiffs must prove for a court to certify a case as a class action, including that the central facts of the case can be proven on a class-wide basis and that the damages are susceptible to being awarded on a class-wide basis. Expert testimony may be considered by courts in deciding whether to certify a class under Rule 23. Federal Rule of Evidence 702 and the Supreme Court's case in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), govern the admissibility of expert testimony at trial.

American Honda Motor Company, Inc. v. Allen

The plaintiffs in American Honda were motorcycle purchasers who alleged that the motorcycles they purchased from the defendant had a design defect that made the motorcycle “wobble” or oscillate from side-to-side while steering. American Honda Motor Co., Inc., v. Allen, 264 F.R.D. 412 (N.D. Ill. 2009). The plaintiffs alleged “breaches of express and implied warranties arising from Honda's deceptive and unlawful conduct in designing, manufacturing, marketing, distributing, selling, servicing and/or failing to service” their motorcycles, and moved for class certification pursuant to Fed. R. Civ. P. 23(b)(3).

At the class certification hearing, the plaintiffs relied on the report of an expert who opined that any wobble of the steering of a motorcycle should dissipate within ' to ' of a second, which he called the “wobble decay standard.” The expert tested one of the defendants' motorcycles and found that it failed this standard.

The plaintiffs argued that common issues predominated the class members' claims because “this case involves one common defect in one model of one manufacturer's motorcycle each of which is covered under the same written warranty” and that common defect “is the use of ball bearings in the steering assembly that fails to adequately dampen naturally-occurring wobble.” The defendants countered that it had received “only isolated complaints of wobble which do not reflect a fleet-wide problem” with the motorcycle. The defendants thus challenged whether the plaintiffs satisfied the Rule 23 requirements of commonality and predominance.

The defendants moved to strike the expert's report under Daubert, arguing that the expert's wobble decay standard was unreliable because it was not supported by empirical testing, was not conceived through independent research, and was not generally accepted in the relevant scientific community. The defendants also argued that even if the standard was reliable, the expert did not reliably apply it because he tested only one motorcycle. The plaintiffs disagreed that Daubert applied “at this stage of the proceedings, particularly because the court bifurcated discovery as to class issues and the merits.”

The district court decided that it was proper to apply Daubert because “most of Plaintiffs' predominance arguments rest upon the theories advanced by [the expert].” The district court purported to follow the “full-blown” Daubert analysis that other courts in the Seventh Circuit had used and stated that the inquiry could be maintained without merits discovery.

Despite noting that it had “definite reservations about the reliability of [the expert's] wobble decay standard,” the district court denied the defendants' motion to exclude “without prejudice,” after finding that the plaintiffs' expert passed muster under Daubert “at this early stage of the proceedings.”

The defendants appealed, and the Seventh Circuit held that “when an expert's report or testimony is critical to class certification . . . a district court must conclusively rule on any challenge to the expert's qualifications or submissions prior to ruling on a class certification motion.” American Honda Motor Co., Inc., v. Allen, 600 F.3d 813, 815-16 (7th Cir. 2010) (emphasis added). The Seventh Circuit concluded that “a full Daubert analysis” was needed because “expert testimony that is not scientifically reliable should not be admitted, even at this early stage of the proceedings.”

The Seventh Circuit held further that the district court did not perform a full Daubert analysis in that it did not make a final “statement of admissibility.” The district court's decision, the Seventh Circuit found, “leaves open the questions of what portions of [the expert's] testimony it may have decided (or will decide) to exclude, whether [the expert] reliably applied the standard to the facts of the case, and ultimately, whether Plaintiffs have satisfied Rule 23(b)(3)'s predominance requirement.” Because the expert's testimony was “necessary to show that Plaintiffs' claims are capable of resolution on a class-wide basis and that the common defect in the motorcycle predominates over the class members' individual issues,” the district court erred in failing to “clearly resolve” the issue of admissibility.

The Seventh Circuit also held that when the Daubert analysis was applied to the facts of the case, the expert's testimony must be excluded. The Seventh Circuit concluded that “there is no indication that [the expert's] wobble decay standard has been generally accepted by anyone other than [the expert],” that the principles and methodology underlying the expert's findings were “questionable,” and that the sample size used by the expert was too small. Without the expert's testimony that “the factory-installed ball bearings are responsible for an 'increased wobble mode decay time' in all [the motorcycles in question],” the Seventh Circuit held, the plaintiffs could not satisfy Rule 23's predominance requirement.

In re: Zurn Pex Plumbing Products Liability Litigation

The plaintiffs in Zurn were a group of homeowners who alleged that brass fittings used in plumbing systems they purchased from the defendants were defective and caused water damage to their properties. In re: Zurn Pex Plumbing Products Liability Litigation, 267 F.R.D. 549, 555 (D. Minn. 2010). The plaintiffs also alleged that the defendants falsely represented that the systems were reliable and of high quality and that the defendants knew or should have known that the fittings were likely to fail prematurely during the warranty period. Their claims included violations of Minnesota's consumer protection statutes, negligence, negligent failure to warn, breach of implied warranty of merchantability, and breach of express warranty. The plaintiffs sought to certify the class under Fed. R. Civ. P. 23(b)(3).

The plaintiffs offered the testimony of two experts at the class certification hearing, who opined that the defendants' plumbing fittings would fail within the 25-year warranty period. The defendants argued that the plaintiffs' expert testimony failed the Daubert test. Specifically, the defendants argued that the plaintiffs' first expert was not qualified as a “metallurgist or chemist” and his “calculation of the mean time to failure has no basis in fact.” As to the plaintiffs' second expert, defendants argued that he “assumed an input factor” in his testing that skewed the results. The plaintiffs argued that Daubert did not apply at the class certification stage and that expert testimony need only be examined for whether it was “so flawed it cannot provide any information as to whether the requisites of class certification have been met.”

The district court stated that it would apply Daubert, but would “tailor[] [it] to the purpose for which the expert opinions are offered, e.g., plaintiffs' claim that the action is capable of resolution on a class-wide basis and that the common defect in Zurn's brass fittings predominates over the class members' individual issues.” The district court found that the defendants' challenges as to the plaintiffs' first expert were insufficient to exclude his testimony at that stage of the litigation, in part because the expert was required to assume certain facts because of the lack of merits discovery. The district court noted that as merits discovery unfolds and more information becomes available, it may rule that the expert's testimony is not admissible. As to the first expert's qualifications, the district court held that his lack of practical experience in plumbing products went to the weight of his testimony, not its admissibility

As to the plaintiffs' second expert, the district court held that the defendants challenge went to the accuracy of the expert's results, not the general scientific validity of his methods. This type of challenge, the district court noted, was suitable for cross-examination, not a Daubert inquiry. The district court hinted that that the expert testimony as to the defect might not satisfy Daubert when all the facts were provided in discovery. The district court noted that the expert's approach of estimating certain figures in his calculation, rather than calculating them, was acceptable at the class certification stage in part because the defendants had not produced all of the warranty claims data needed to calculate the figures.

On appeal, the defendants argued that the district court's limited Daubert inquiry was inappropriate and that the district court should have determined “not just whether or not expert evidence is sufficient to support class certification under Rule 23, but also whether that evidence will ultimately be admissible at trial.” In re: Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604, 611 (8th Cir. 2011). The Eighth Circuit disagreed and approved of the district court's “focused” Daubert approach, that is, its examination of “the reliability of the expert opinions in light of the available evidence and the purpose for which they were offered,” i.e., to establish the Rule 23 requirements.

The Eighth Circuit reasoned that “[the defendants'] desire for an exhaustive and conclusive Daubert inquiry before the completion of merits discovery cannot not be reconciled with the inherently preliminary nature of pretrial evidentiary and class certification rulings.” The Eighth Circuit specifically refused to fault the plaintiffs' expert for the preliminary estimates because the defendants had asked for bifurcated discovery: “[i]t was after all [the defendants] which sought bifurcated discovery which resulted in a limited record at the class certification stage, preventing the kind of full and conclusive Daubert inquiry [the defendants] later requested.”

The Eighth Circuit noted that the main purpose of Daubert is “to protect juries from being swayed by dubious scientific testimony.” At the class certification stage, the Eighth Circuit noted, the judge, not a jury, is the decision maker, and therefore a less stringent analysis is required. Furthermore, the Eighth Circuit held, class certification is a “tentative” and “preliminary” determination, and therefore the Daubert inquiry at this procedural stage need only “scrutinize[] the reliability of expert testimony in light of the criteria for class certification and the current state of the evidence.” The Eighth Circuit distinguished the approach adopted by the Seventh Circuit in American Honda, stating that it was “not convinced that the approach of American Honda would be the most workable in complex litigation or that it would serve case management better.”

One Eighth Circuit judge on the panel dissented in Zurn and stated that he would have held that courts must “conduct a full Daubert analysis before certifying a class whenever an expert's opinion is central to class certification and the reliability of that opinion is challenged.” The dissenting judge stated that the district court failed to decide conclusively whether the testimony was admissible and argued that classes should not be certified “on the basis of inadmissible, unreliable expert testimony.”

The dissent also stated that district courts should allow full discovery and delay a certification if that is what is needed to conduct a full Daubert hearing. The dissent noted the reality that class certification is often the end of litigation and reasoned that “requiring a district court to conduct a full Daubert analysis before certifying a class discourages plaintiffs who may have no intention of proceeding to a trial on the merits from submitting unreliable expert testimony for settlement purposes.”

Going Forward

The difference between Zurn and American Honda is subtle, but may be case-determinative in many other cases. The Seventh Circuit held that a court must decide conclusively whether expert testimony will be admissible at trial before making a Rule 23 determination. The Eighth Circuit held that a tentative Daubert decision could be made based on the available evidence and that the temporarily-approved expert testimony could be utilized by the court only to decide whether the claims were capable of resolution on a class-wide basis and/or whether the alleged defect predominates over class members' individual issues.

The Supreme Court's decision in Comcast v. Behrend may provide guidance on what it means for expert testimony to be “admissible” to prove whether a plaintiff class satisfies the Rule 23 requisites. The Court could tailor its decision narrowly to the antitrust or damages contexts. Even a narrow ruling, however, could be applied more broadly.

If district courts must rule conclusively whether expert testimony will be admissible at trial before making a Rule 23 determination, parties may have to engage in considerable discovery before class certifications can be made. This might push class certifications further along in the litigation process and thwart Rule 23's requirement that certification happen “[a]t an early practicable time after a person sues or is sued.” Fed. R. Civ. P. 23(c)(1)(A). As we wait for Supreme Court guidance, product liability practitioners should develop strategies regarding how much discovery to agree on prior to class certification proceedings and whether to make Daubert challenges that may require expanded discovery.

Elizabeth Latif is counsel in the Commercial Litigation department in Day Pitney LLP's Hartford, CT, office. Her practice focuses on representing companies and individuals in connection with the defense of regulatory, white-collar criminal and complex civil-litigation matters. James H. Rotondo, a member of this newsletter's Board of Editors, is a Partner in the same office. He is co-chair of the firm's Commercial Litigation Department, and represents corporate clients in product liability, negligence, insurance coverage, and commercial litigation matters.

A court's decision to certify a class often constitutes the end of the litigation because of the increased settlement pressure faced by defendants. Apparently recognizing that trend, federal courts have applied increasingly rigorous standards of proof at the class certification stage. The Supreme Court has granted certiorari in Comcast Corp. v. Behrend on the following question: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the class is susceptible to awarding damages on a class-wide basis?”

There, the petitioners are arguing that the plaintiffs' expert's damages model does not have the requisite Daubert “fit” with the plaintiffs' theory of antitrust impact. Nevertheless, the case may answer whether a district court must engage in a full Daubert inquiry before utilizing an expert's testimony at the class certification stage under Federal Rule of Civil Procedure 23. Accordingly, the decision could have far-reaching implications for all class actions.

Two recent product liability cases illustrate two different approaches federal circuit courts have taken in applying Daubert to class certification proceedings. The Seventh Circuit in American Honda Motor Company, Inc. v. Allen , 600 F.3d 813 (7th Cir. 2010), held that trial courts must engage in a “full Daubert ” inquiry and rule conclusively on whether the expert testimony would be admissible at trial before using the testimony to decide class certification. The Eighth Circuit, on the other hand, in In re: Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604 (8th Cir. 2011), held that district courts may engage in a more limited, or “focused” Daubert analysis when analyzing the reliability of expert testimony in the context of the criteria for class certification. This article examines the two decisions and explains the difference between a “full” and a “focused” Daubert inquiry.

Background

Rule 23 of the Federal Rules of Civil Procedure sets forth several requirements that plaintiffs must prove for a court to certify a case as a class action, including that the central facts of the case can be proven on a class-wide basis and that the damages are susceptible to being awarded on a class-wide basis. Expert testimony may be considered by courts in deciding whether to certify a class under Rule 23. Federal Rule of Evidence 702 and the Supreme Court's case in Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579 (1993), govern the admissibility of expert testimony at trial.

American Honda Motor Company, Inc. v. Allen

The plaintiffs in American Honda were motorcycle purchasers who alleged that the motorcycles they purchased from the defendant had a design defect that made the motorcycle “wobble” or oscillate from side-to-side while steering. American Honda Motor Co., Inc., v. Allen , 264 F.R.D. 412 (N.D. Ill. 2009). The plaintiffs alleged “breaches of express and implied warranties arising from Honda's deceptive and unlawful conduct in designing, manufacturing, marketing, distributing, selling, servicing and/or failing to service” their motorcycles, and moved for class certification pursuant to Fed. R. Civ. P. 23(b)(3).

At the class certification hearing, the plaintiffs relied on the report of an expert who opined that any wobble of the steering of a motorcycle should dissipate within ' to ' of a second, which he called the “wobble decay standard.” The expert tested one of the defendants' motorcycles and found that it failed this standard.

The plaintiffs argued that common issues predominated the class members' claims because “this case involves one common defect in one model of one manufacturer's motorcycle each of which is covered under the same written warranty” and that common defect “is the use of ball bearings in the steering assembly that fails to adequately dampen naturally-occurring wobble.” The defendants countered that it had received “only isolated complaints of wobble which do not reflect a fleet-wide problem” with the motorcycle. The defendants thus challenged whether the plaintiffs satisfied the Rule 23 requirements of commonality and predominance.

The defendants moved to strike the expert's report under Daubert, arguing that the expert's wobble decay standard was unreliable because it was not supported by empirical testing, was not conceived through independent research, and was not generally accepted in the relevant scientific community. The defendants also argued that even if the standard was reliable, the expert did not reliably apply it because he tested only one motorcycle. The plaintiffs disagreed that Daubert applied “at this stage of the proceedings, particularly because the court bifurcated discovery as to class issues and the merits.”

The district court decided that it was proper to apply Daubert because “most of Plaintiffs' predominance arguments rest upon the theories advanced by [the expert].” The district court purported to follow the “full-blown” Daubert analysis that other courts in the Seventh Circuit had used and stated that the inquiry could be maintained without merits discovery.

Despite noting that it had “definite reservations about the reliability of [the expert's] wobble decay standard,” the district court denied the defendants' motion to exclude “without prejudice,” after finding that the plaintiffs' expert passed muster under Daubert “at this early stage of the proceedings.”

The defendants appealed, and the Seventh Circuit held that “when an expert's report or testimony is critical to class certification . . . a district court must conclusively rule on any challenge to the expert's qualifications or submissions prior to ruling on a class certification motion.” American Honda Motor Co., Inc., v. Allen , 600 F.3d 813, 815-16 (7th Cir. 2010) (emphasis added). The Seventh Circuit concluded that “a full Daubert analysis” was needed because “expert testimony that is not scientifically reliable should not be admitted, even at this early stage of the proceedings.”

The Seventh Circuit held further that the district court did not perform a full Daubert analysis in that it did not make a final “statement of admissibility.” The district court's decision, the Seventh Circuit found, “leaves open the questions of what portions of [the expert's] testimony it may have decided (or will decide) to exclude, whether [the expert] reliably applied the standard to the facts of the case, and ultimately, whether Plaintiffs have satisfied Rule 23(b)(3)'s predominance requirement.” Because the expert's testimony was “necessary to show that Plaintiffs' claims are capable of resolution on a class-wide basis and that the common defect in the motorcycle predominates over the class members' individual issues,” the district court erred in failing to “clearly resolve” the issue of admissibility.

The Seventh Circuit also held that when the Daubert analysis was applied to the facts of the case, the expert's testimony must be excluded. The Seventh Circuit concluded that “there is no indication that [the expert's] wobble decay standard has been generally accepted by anyone other than [the expert],” that the principles and methodology underlying the expert's findings were “questionable,” and that the sample size used by the expert was too small. Without the expert's testimony that “the factory-installed ball bearings are responsible for an 'increased wobble mode decay time' in all [the motorcycles in question],” the Seventh Circuit held, the plaintiffs could not satisfy Rule 23's predominance requirement.

In re: Zurn Pex Plumbing Products Liability Litigation

The plaintiffs in Zurn were a group of homeowners who alleged that brass fittings used in plumbing systems they purchased from the defendants were defective and caused water damage to their properties. In re: Zurn Pex Plumbing Products Liability Litigation, 267 F.R.D. 549, 555 (D. Minn. 2010). The plaintiffs also alleged that the defendants falsely represented that the systems were reliable and of high quality and that the defendants knew or should have known that the fittings were likely to fail prematurely during the warranty period. Their claims included violations of Minnesota's consumer protection statutes, negligence, negligent failure to warn, breach of implied warranty of merchantability, and breach of express warranty. The plaintiffs sought to certify the class under Fed. R. Civ. P. 23(b)(3).

The plaintiffs offered the testimony of two experts at the class certification hearing, who opined that the defendants' plumbing fittings would fail within the 25-year warranty period. The defendants argued that the plaintiffs' expert testimony failed the Daubert test. Specifically, the defendants argued that the plaintiffs' first expert was not qualified as a “metallurgist or chemist” and his “calculation of the mean time to failure has no basis in fact.” As to the plaintiffs' second expert, defendants argued that he “assumed an input factor” in his testing that skewed the results. The plaintiffs argued that Daubert did not apply at the class certification stage and that expert testimony need only be examined for whether it was “so flawed it cannot provide any information as to whether the requisites of class certification have been met.”

The district court stated that it would apply Daubert, but would “tailor[] [it] to the purpose for which the expert opinions are offered, e.g., plaintiffs' claim that the action is capable of resolution on a class-wide basis and that the common defect in Zurn's brass fittings predominates over the class members' individual issues.” The district court found that the defendants' challenges as to the plaintiffs' first expert were insufficient to exclude his testimony at that stage of the litigation, in part because the expert was required to assume certain facts because of the lack of merits discovery. The district court noted that as merits discovery unfolds and more information becomes available, it may rule that the expert's testimony is not admissible. As to the first expert's qualifications, the district court held that his lack of practical experience in plumbing products went to the weight of his testimony, not its admissibility

As to the plaintiffs' second expert, the district court held that the defendants challenge went to the accuracy of the expert's results, not the general scientific validity of his methods. This type of challenge, the district court noted, was suitable for cross-examination, not a Daubert inquiry. The district court hinted that that the expert testimony as to the defect might not satisfy Daubert when all the facts were provided in discovery. The district court noted that the expert's approach of estimating certain figures in his calculation, rather than calculating them, was acceptable at the class certification stage in part because the defendants had not produced all of the warranty claims data needed to calculate the figures.

On appeal, the defendants argued that the district court's limited Daubert inquiry was inappropriate and that the district court should have determined “not just whether or not expert evidence is sufficient to support class certification under Rule 23, but also whether that evidence will ultimately be admissible at trial.” In re: Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604, 611 (8th Cir. 2011). The Eighth Circuit disagreed and approved of the district court's “focused” Daubert approach, that is, its examination of “the reliability of the expert opinions in light of the available evidence and the purpose for which they were offered,” i.e., to establish the Rule 23 requirements.

The Eighth Circuit reasoned that “[the defendants'] desire for an exhaustive and conclusive Daubert inquiry before the completion of merits discovery cannot not be reconciled with the inherently preliminary nature of pretrial evidentiary and class certification rulings.” The Eighth Circuit specifically refused to fault the plaintiffs' expert for the preliminary estimates because the defendants had asked for bifurcated discovery: “[i]t was after all [the defendants] which sought bifurcated discovery which resulted in a limited record at the class certification stage, preventing the kind of full and conclusive Daubert inquiry [the defendants] later requested.”

The Eighth Circuit noted that the main purpose of Daubert is “to protect juries from being swayed by dubious scientific testimony.” At the class certification stage, the Eighth Circuit noted, the judge, not a jury, is the decision maker, and therefore a less stringent analysis is required. Furthermore, the Eighth Circuit held, class certification is a “tentative” and “preliminary” determination, and therefore the Daubert inquiry at this procedural stage need only “scrutinize[] the reliability of expert testimony in light of the criteria for class certification and the current state of the evidence.” The Eighth Circuit distinguished the approach adopted by the Seventh Circuit in American Honda, stating that it was “not convinced that the approach of American Honda would be the most workable in complex litigation or that it would serve case management better.”

One Eighth Circuit judge on the panel dissented in Zurn and stated that he would have held that courts must “conduct a full Daubert analysis before certifying a class whenever an expert's opinion is central to class certification and the reliability of that opinion is challenged.” The dissenting judge stated that the district court failed to decide conclusively whether the testimony was admissible and argued that classes should not be certified “on the basis of inadmissible, unreliable expert testimony.”

The dissent also stated that district courts should allow full discovery and delay a certification if that is what is needed to conduct a full Daubert hearing. The dissent noted the reality that class certification is often the end of litigation and reasoned that “requiring a district court to conduct a full Daubert analysis before certifying a class discourages plaintiffs who may have no intention of proceeding to a trial on the merits from submitting unreliable expert testimony for settlement purposes.”

Going Forward

The difference between Zurn and American Honda is subtle, but may be case-determinative in many other cases. The Seventh Circuit held that a court must decide conclusively whether expert testimony will be admissible at trial before making a Rule 23 determination. The Eighth Circuit held that a tentative Daubert decision could be made based on the available evidence and that the temporarily-approved expert testimony could be utilized by the court only to decide whether the claims were capable of resolution on a class-wide basis and/or whether the alleged defect predominates over class members' individual issues.

The Supreme Court's decision in Comcast v. Behrend may provide guidance on what it means for expert testimony to be “admissible” to prove whether a plaintiff class satisfies the Rule 23 requisites. The Court could tailor its decision narrowly to the antitrust or damages contexts. Even a narrow ruling, however, could be applied more broadly.

If district courts must rule conclusively whether expert testimony will be admissible at trial before making a Rule 23 determination, parties may have to engage in considerable discovery before class certifications can be made. This might push class certifications further along in the litigation process and thwart Rule 23's requirement that certification happen “[a]t an early practicable time after a person sues or is sued.” Fed. R. Civ. P. 23(c)(1)(A). As we wait for Supreme Court guidance, product liability practitioners should develop strategies regarding how much discovery to agree on prior to class certification proceedings and whether to make Daubert challenges that may require expanded discovery.

Elizabeth Latif is counsel in the Commercial Litigation department in Day Pitney LLP's Hartford, CT, office. Her practice focuses on representing companies and individuals in connection with the defense of regulatory, white-collar criminal and complex civil-litigation matters. James H. Rotondo, a member of this newsletter's Board of Editors, is a Partner in the same office. He is co-chair of the firm's Commercial Litigation Department, and represents corporate clients in product liability, negligence, insurance coverage, and commercial litigation matters.