A New Justice: Any Change For Class Actions?

This week, Justice Gorsuch donned his black robes and began hearing arguments alongside his new colleagues on the Supreme Court.  With his elevation to the high court, Justice Gorsuch assumes many new responsibilities.  Some, of the lighter kind, include opening the door during conferences with his colleagues and assuming oversight of the Court’s cafeteria menu.  More serious responsibilities will include weighing in on important class action cases that will undoubtedly be heard by the Court in the future.

Despite his lengthy judicial record from having served a decade on the Tenth Circuit, there are relatively few clues regarding Justice Gorsuch’s approach to class actions.  While on the court of appeals, he participated in only a few class action cases, which is not surprising given that the Tenth Circuit has not been a hotbed of class actions.  His handful of class action opinions, however, evidences not only his gift with the pen but also a restrained, textual approach to Rule 23.  These characteristics are evident in cases such as BP America v. Oklahoma and McClendon v. City of Albuquerque.  But three other opinions are particularly worth consideration.

Justice Gorsuch’s approach is perhaps best illustrated by Shook v. Board of County CommissionersIn that case, the Tenth Circuit considered a denial of certification of a Rule 23(b)(2) class of prisoners.  At the outset, then-Judge Gorsuch wrote that appellate review of a certification decision is limited: “While we very well may have made a different decision had the issue been presented to us as an initial matter, and while other district courts perhaps could have chosen, or could choose, to certify similar classes, we cannot say the district court’s assessment was beyond the pale.”  Turning then to the district court’s analysis, Judge Gorsuch emphasized that Rule 23(b)(2) requires that “final injunctive relief be appropriate for the class as a whole.”  Given the Rule’s language, Judge Gorsuch found that the Rule “demands a certain cohesiveness among class members with respect to their injuries.”  Judge Gorsuch went on to conclude that this requirement creates a “textually authorized” manageability requirement.  He then observed that individualized issues may render a class unmanageable – a problem that cannot be remedied “simply by formulating an injunction at a stratospheric level of abstraction” – and that a district court need not sua sponte construct subclasses to ease these manageability concerns.   While acknowledging that civil rights suits are “well suited” to (b)(2) certification, he observed that the court must still pay “careful attention to the requirements” of Rule 23.

A similar approach can be seen in Hammond v. Stamps.com Inc.  In that case, Judge Gorsuch considered the jurisdictional requirements of CAFA.  The plaintiff filed suit in state court, alleging that Stamps.com had deceptively advertised its fees.  Stamps.com removed, extrapolating from plaintiff’s asserted damages a total amount in controversy exceeding $5 million after considering all accounts that had been cancelled by customers.  The district court denied removal, reasoning that Stamps.com had not carried its burden because its calculation of damages assumed that all customers who had cancelled their accounts had done so because they “felt duped” by the company’s advertising rather than for any other reason.  Judge Gorsuch, writing for a unanimous panel, concluded that the district court had committed legal error “about the meaning of a key statutory term” – namely, “amount in controversy.” Referring to this as a term of “legal art,” Judge Gorsuch quoted Justice Frankfurter for the proposition that when “a word is obviously transplanted form another legal source, . . . . it brings the old soil with it.” Based on the “rich soil” of this term’s historical meaning, Judge Gorsuch concluded that the defendant seeking removal need only prove that “a fact finder might legally conclude” that damages exceeded the statutory amount, not that it would likely do so.  “To know that much is to know how our case must come out,” Judge Gorsuch wrote.  The court’s job, he observed, “is to abide Congress’ policy directions, not replace them with others of our own hand.”

Justice Gorsuch’s opinions also reveal some acknowledgement of the costs of the class action vehicle.  In Winzler v. Toyota Motor Sales USA Inc., he considered whether a defect class action was mooted by Toyota’s nationwide recall.  Noting that Toyota had “set into motion the great grinding gears of a statutorily mandated and administratively overseen national recall process,” Judge Gorsuch found the class action to be moot as a prudential matter.  He observed that continuance of the action would “surely add new transaction costs for Toyota,” but not “even a sliver of additional relief” for the plaintiff.  “Perhaps the lawyers would benefit if this would-be class action labored on through certification,” he wrote.  “But it’s hard to see how anyone else could.”  He noted that “things might be different” if the plaintiff could show some “cognizable danger” that she would not secure complete relief.  Without that, however, “expenditure of judicial resources” was not warranted.

Justice Gorsuch now fills the seat of Justice Scalia, widely regarded as an influential member of the Court when it came to class actions and the author of such decisions as Wal-Mart v. Dukes and Comcast v. Behrend.  Only time will tell how Justice Gorsuch will approach open class issues – like “no-injury” classes, the use of statistical evidence, or the “ascertainability” requirement – but his record suggests a balanced, textually-based approach.  One thing is certain, however: like those of Justice Scalia, his opinions will likely be interesting to read.