In December 2008, a major ice storm caused massive and lengthy power outages in several towns in Massachusetts. Twelve residential and business customers of Fitchburg Gas and Electric Light Company (“FG&E”) experienced outages lasting from four to twelve days. Some lost power because of damage to the utility’s subtransmission lines, while others lost power because of downed trees (for which the utility was not responsible). They claimed to have suffered various damages caused by the outages, ranging from lost profits to dead pet fish.
Plaintiffs brought a putative class action against FG&E, alleging gross negligence and violations of the Massachusetts Consumer Protection Act (G.L. c. 93A). Conceding that the storm would have caused widespread power outages regardless of any failures by FG&E, plaintiffs did not seek to certify a class on the basis of lost power. Instead, they pressed two other theories: 1) that the utility failed to restore power expeditiously, and 2) that they could not plan for the extended outages because of the utility’s allegedly unfair and deceptive communications. They sought certification both under Mass. R. Civ. P. 23 and under the more lenient class certification provisions of chapter 93A (which allows for certification of classes of persons who suffer similar injuries).
The trial court denied plaintiff’s motion for class certification, and on October 30, the SJC affirmed. With respect to the claim for the alleged delay in restoring power, the Court held a class could not be certified, in part because “distinct obstacles impeded restoration of [the customers’] power.” Even if plaintiffs could prove systemic failures, the Court said, each class member would still need to show that those failures caused the class member to experience a prolonged outage, which is an individualized issue. The Court rejected plaintiffs’ argument that such inquiries pertain only to damages, which may not preclude class certification, because “if customers did not suffer a longer outage than otherwise would have occurred, their claims must fail for lack of causation.”
The Court next examined plaintiffs’ claim that defendant’s alleged communications failures deprived customers of an ability to plan for an extended outage. Finding some ambiguity in plaintiffs’ theory, the Court approached it from two distinct angles: 1) that plaintiffs were claiming that the utility made affirmative statements that were false and misleading; and 2) that plaintiffs were claiming that the utility breached an affirmative duty to provide customers with useful information. With respect to the affirmative misstatement theory, the Court agreed that plaintiffs would not be able to “establish causation on a class-wide basis because not all class members were exposed to the same deceptive statements and because the announced time frames for restoration may have been accurate as to many class members.” With respect to the breach of duty theory, the Court held that, even if plaintiffs could prove a class-wide breach, the trial court did not abuse its discretion in denying class certification:
As reflected by the variety of ways that the plaintiffs contend they would have responded to better information, this theory of injury would necessitate individualized inquiry regarding counterfactual mental processes of each class member. Indeed, many class members — such as, perhaps, the approximately five hundred customers in downtown Fitchburg who lost power for only a few hours or those customers who already possessed power generators — may not have planned any differently and therefore suffered no injury under this theory. Although individualized inquiries regarding affirmative defenses and, especially, calculation of damages do not preclude class certification on the question of liability, . . . a judge retains discretion to deny certification based on such considerations. (Citations omitted.)
The Court’s class certification holding is interesting on many levels. For one thing, the Court correctly recognized that issues of damages and liability often overlap, and that even if courts may disregard individualized issues of damages in certifying class actions, they cannot ignore overlapping, individualized issues of causation, which really go to liability. Also, the decision demonstrates the difficulty of certifying a class action for deception when the plaintiffs’ claims are based on a variety of statements, not all of which were made to all class members. Similarly, the decision highlights the problems of certifying a class where class members’ states of mind are in issue. And finally, the case illustrates that, even if individualized defenses and damages issues might not bar certification in any given case, trial judges nevertheless have discretion to deny class certification based on such issues.
The SJC’s decision is encouraging for defendants because it shows that the Court is not adhering to a broadly permissive approach to class certification in consumer protection cases, as some earlier precedents had seemed to suggest. Rather, it appears that the Court is pursuing a reasoned approach that takes into account the practical problems of trying aggregate litigation where not all putative class members are truly similarly situated.
Written by former litigation partner, Donald R. Frederico.