US Supreme Court Will Not Weigh In on Class Certification, Representative Evidence Questions

The US Supreme Court denied a certiorari petition seeking to resolve circuit court splits relevant to the litigation of class action matters, including if and when class certification is appropriate where a significant portion of the class may be uninjured and on the use of representative evidence in class actions.

Arising from the US Court of Appeals for the Ninth Circuit’s en banc decision in Olean v. StarKist, [1] the Supreme Court’s November 14, 2022, denial means that the Ninth Circuit decision will stand, leaving in place splits between the Ninth Circuit and other circuits regarding how and when to address the percentage of uninjured class members in class actions and the use of averaging assumptions as representative evidence of injury in class actions.

Background of Olean

On the heels of a criminal investigation into tuna producers’ pricing practices, several plaintiff buyers of tuna products initiated putative class actions alleging that major tuna producers had fixed prices. Plaintiffs sought certification of three separate classes.

The parties submitted expert analyses regarding the scope of the alleged classes. As to the direct purchaser class, the defendant tuna producers argued that the large number of uninjured putative class members—up to 28%—was not de minimis, or not insignificant, and, therefore, the class could not be certified. Defendants further argued that the averaging assumptions offered by the plaintiff tuna buyers to show injury failed to provide sufficient evidence to meet the Rule 23 requirements for certification. Nevertheless, the district court certified the direct purchaser class.

Defendants were permitted to appeal the class certification decision to the Ninth Circuit. A three-judge panel agreed with their arguments and concluded that the certification order could not stand, based in part on what is known as the “de minimis rule”—the view that the number of potentially uninjured putative class members defeated Rule 23 predominance and precluded certification. The panel also held that averaging assumptions could only be used to satisfy predominance when the assumptions have been sufficiently analyzed to determine whether they mask relevant differences among the individual class members.

The Ninth Circuit, of its own accord, granted an en banc rehearing and affirmed the district court’s class certification decision. Rejecting the de minimis rule, the en banc majority held that district courts cannot resolve an expert dispute on the number of uninjured class members because it is necessarily a “merits” question for a jury.

The en banc majority went on to hold that representative evidence—in this case, “averaging assumptions” on damages—could establish liability under Tyson Foods [2] as long as it is “plausible” to a jury.

Petition to Supreme Court

Defendant StarKist asked the Supreme Court to resolve circuit splits over two key issues that arise during the certification phase of many class actions; specifically: (1) how many uninjured members of the putative class is too many for a class to be certified (and, relatedly, whether it is a merits question); and (2) can representative evidence—including averages—be used to support damages of the class?

Uninjured Parties, the De Minimis Rule, and the Merits

The US Courts of Appeals for the DC Circuit [3] and the First Circuit [4] have both held that classes could not be certified where the number of uninjured putative class members exceeded a de minimis number. Because more than an insignificant number of uninjured class members could involve individual determinations of injury, these circuit courts have reasoned that the certification analysis necessarily requires that individual issues predominate over common ones, contrary to the requirement under Rule 23. Both courts have applied the de minimis rule and held that specific classes could not be certified where 10–12% of the putative classes may have been uninjured.

The initial Ninth Circuit panel—embracing and adopting the de minimis standard used by the DC and First Circuits—held that the direct purchaser class in Olean could not be certified because nearly one-third of the class (28%) may be uninjured and, thus, there was no classwide evidence capable of proving their claims. The en banc majority, however, subsequently rejected the de minimis standard. StarKist asserted in its petition to the Supreme Court that the en banc majority’s rejection of the de minimis rule, and approval of certification of a class with as many as 28% uninjured class members, created a circuit split that warranted review.

The en banc majority further held that the consideration of uninjured class members is ultimately a “merits” question for a jury. In its petition to the Supreme Court, StarKist argued that waiting to resolve the issue on the merits specifically contravenes decisions of the DC, First, and Third Circuits, which have held that the issue of classwide injury is part of the “hard look” and rigorous Rule 23 analysis required by the Supreme Court in Wal-Mart [5] and Comcast; [6] therefore, it must be resolved before certification. StarKist argued that the Ninth Circuit’s en banc holding created an additional circuit split that warranted Supreme Court review.

Representative Evidence and Averaging Assumptions

In seeking class certification, the plaintiff tuna buyers used representative evidence and relied on Tyson Foods to do so. Under the facts and law of that case, the Supreme Court held that representative evidence of damages was admissible in a collective action to establish classwide liability where it would be “sufficient to sustain a jury finding . . . if it were introduced in each [class member’s] individual action,” under the law governing that claim. [7]

Noting that circuit courts have interpreted Tyson Foods differently, Starkist further asserted in its petition that the Ninth Circuit’s holding allowing the averaging assumptions in that case creates a conflict with the Third Circuit, which has rejected this approach. [8]

Implications of Denial

The Supreme Court’s denial of Starkist’s certiorari petition in this matter carries important implications for class actions.

First, the Supreme Court appears to be content for the law to further develop in the circuit courts regarding the evaluation of uninjured class members at the class certification stage and the use of representative evidence to meet the Rule 23 requirements.

Second, the Supreme Court’s refusal to address these issues now means that both litigants and courts will be left without important Supreme Court guidance as to these critical issues. This, in turn, creates further room for widely divergent trial court and appellate court decisions.

Lastly, the en banc majority’s holdings on these issues is now the law in the Ninth Circuit, where plaintiffs may, in some cases, have an easier path to class certification than in other circuits for particular types of class actions.