Justice Scalia and Class Actions

No one has done more to shape class action law than Justice Antonin Scalia.  His unexpected passing yesterday, even while important class action cases remain under advisement, will spark a renewed push to tilt class action jurisprudence to a more plaintiff-friendly bent.

Justice Scalia authored two decisions during the Court’s 2010-2011 term that reshaped the class action landscape.  The first was AT&T Mobility LLC v. Concepcion.  There, a 5-4 majority overturned a California state court decision holding that a class action waiver in the arbitration clause of a consumer contract was unconscionable and, therefore, unenforceable.  The Supreme Court held that the Federal Arbitration Act’s policy favoring arbitration preempted the state court rule, even though the contractual provision not only mandated arbitration for consumer disputes, but also barred class arbitration, limiting the consumer’s remedy to arbitration of his or her individual claim.

After Concepcion, many companies that marketed goods and services to consumers rushed to make sure that their agreements contained similar class action waivers, and plaintiffs’ lawyers bemoaned what they feared would become the death of consumer class actions.  The battle over the scope of Justice Scalia’s Concepcion decision raged for several years, but each time the Court had an opportunity to narrow the ruling, it instead reaffirmed its broad impact.  Other branches of government have been working in their own way to limit Concepcion in such areas as consumer finance and labor law, but for now it remains a formidable obstacle to many types of consumer class actions.  And, in a nod to the principle of stare decisis, the Court this term reinforced Concepcion in the DirectTV case in an opinion authored by Justice Breyer and joined by Justice Kagan, Justice Scalia and most of the other conservative Justices.

Two months after his decision in Concepcion, Justice Scalia authored another groundbreaking decision, Wal-Mart Stores, Inc. v. Dukes.  Wal-Mart is perhaps best known for its holding that claims for monetary relief that are not merely incidental to a plaintiff’s claims for injunctive relief (in this case, back pay) could not be certified under Rule 23(b)(2).  This ruling alone was important because it meant that plaintiffs who seek substantial monetary relief cannot circumvent the predominance and superiority requirements of Rule 23(b)(3) by casting their claims as primarily injunctive.

But, characteristically, Justice Scalia surprised both sides of the class action bar with a new interpretation of the requirement of Rule 23(a)(2) that, in all class actions, there must be “questions of law or fact common to the class.”  Before Wal-Mart, commonality was considered to be a low bar, a weak sister to the more exacting requirement of Rule 23(b)(3) that common issues predominate over individual issues, and in all (b)(3) cases the need to show such predominance often supplanted the need to spend time examining whether common issues existed at all. But Wal-Mart was a (b)(2) case to which the predominance requirement did not apply, which gave Justice Scalia the opening he needed to redefine (a)(2) commonality.  And redefine it he did.  Relying heavily on a law review article by the late Vanderbilt Law Professor Richard Nagareda, Justice Scalia held that plaintiffs’ “claims must depend upon a common contention,” and that the common contention “must be of such a nature that it is capable of classwide resolution.”  He quoted Professor Nagareda’s now-famous comment that “[w]hat matters to class certification . . . is not the raising of common ‘questions’–even in droves–but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.”

With this holding, Justice Scalia raised the bar, breathing new life into what in practice had been a largely dormant and overlooked class certification requirement.  Some might argue that this reinvigoration of commonality has little practical significance in 23(b)(3) cases, where the still-higher bar of predominance continues to overshadow it.  But as a practical matter, the new light Justice Scalia shone on commonality reflected onto predominance as well, signaling to lower courts that they had better take a close look at these twin requirements.  Taken together with the Court’s holding regarding the inapplicability of Rule 23(b)(2) where monetary relief was at stake, it meant that plaintiffs’ efforts to inoculate individualized claims  from meaningful commonality review by requesting injunctive relief would be doomed to failure.  And, his additional expression of “doubt” at plaintiffs’ argument that Daubert does not apply at the class certification stage (an issue that the Court still has not directly decided) also continues to reverberate.

Justice Scalia’s more recent attempt in Comcast Corp. v. Behrend to curtail Rule 23(b)(3) class actions where issues of damages are individualized has so far gained little traction with the lower federal courts, some of which have chosen instead to follow the strident dissenting opinion of Justices Ginsburg and Breyer (see our several posts regarding the 2013 decision).  But with Concepcion and Wal-Mart, the conservative Justice left his strong imprint on class action jurisprudence, an imprint that is likely to long survive his passing.  Whatever one thinks of his opinions, there is no doubt that our country has lost a giant in the development of class action law.  We may not see his like again in our lifetimes.

Written by former litigation partner, Donald R. Frederico.