In a 28-page opinion, a panel of the Ninth Circuit overturned a district court’s denial of class certification, in part, because the lower court required supporting evidence to be admissible. This decision certainly represents a split among the circuits and is also arguably contrary to the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).
Writing for the majority in Sali v. Corona Regional Medical Center, No. 15-56460 (9th Cir. May 3, 2018), Judge Salvador Mendoza Jr. found that the district court had abused its discretion in denying certification of classes involving registered nurses. Those nurses claimed they were underpaid because of the Medical Center’s rounding of time, regular-rate calculations, wage statements and waiting time issues.
The most important portion of the opinion involved whether class certification was required to be premised upon admissible evidence. Plaintiffs Marlyn Sali and Deborah Spriggs submitted a declaration, prepared by a paralegal from their counsel’s firm, to support class certification. The paralegal reviewed time and payroll records for the named plaintiffs to ascertain if they were properly compensated under the Medical Center’s rounding pay practice. The paralegal used Excel spreadsheets to compare the impact of the rounding policy on Sali and Spriggs individually, using a random sampling of their time sheets. The Medical Center objected on a number of grounds, which led the district court to find that the declaration was inadmissible and to strike it.
The Ninth Circuit panel prefaced its review of the district court’s determination with the comment: “We have never equated a district court’s ‘rigorous analysis’ at the class certification stage with conducting a mini-trial.” The panel supported this statement by noting that a certification order was “preliminary” and under Rule 23(c)(1)(C) could be “altered or amended before final judgment.” Consequently, “[t]he court’s consideration should not be limited to only admissible evidence.”
The Muddy Waters of Class Certification
The appellate court acknowledged, however, that other circuit courts have reached “varying conclusions” on the requirements of admissible evidence. For example, the Fifth Circuit requires that admissible evidence support class certification. See Unger v. Amedisys Inc., 401 F.3d 316, 319 (5th Cir. 2005). And the Seventh Circuit has declared that expert evidence supporting class certification must be admissible. Messer v. Northshore Univ. Health Sys., 669 F.3d 802, 812 (7th Cir. 2012). Indeed, that circuit reached a similar conclusion − that a full Daubert v. Merrill Dow Pharms., Inc. analysis of critical testimony was required before granting certification. See Am. Honda Motor Co., Inc. v. Allen, 600 F.3d 813, 819 (7th Cir. 2010). The Third Circuit determined that to meet the requirements of Rule 23, expert testimony must comply with Daubert’s evidentiary requirements. See In re Blood Reagents Antitrust Litig., 783 F. 3d 183, 187 (3d Cir. 2015).
But the Eighth Circuit sees it differently, finding a district court need not only consider admissible evidence in determining if Rule 23’s requirements are met. In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 612-13 (8th Cir. 2011). The Ninth Circuit panel followed the Eighth, giving “greater evidentiary freedom at the class certification stage” and rejecting the district court’s “formalistic evidentiary objections.” The panel did not decide whether the plaintiffs demonstrated typicality, but left that initial determination to the district court.
Of course, in the seminal case of Wal-Mart Stores, Inc. v. Dukes, the Supreme Court at least touched upon the issue of whether evidence in support of certification must meet Daubert standards. In noting the Ninth Circuit’s determination that Daubert admissibility standards did not apply in this context, Justice Scalia commented, “[w]e doubt that is so.”
The Ninth Circuit in Corona Regional Medical Center also resolved other issues raised by the district court’s order. It found that while Spriggs was not an adequate class representative because she was not a full-time employee, Sali was. The panel also found that the district court erred in excluding attorneys from the Bisnar Chase firm as class counsel. The panel did not know what standard the lower court used in evaluating “adequacy,” and felt the district court’s determination – apparently based on failure to attend four scheduled depositions, to produce plaintiffs expert for deposition when ordered to do so by a magistrate judge and to produce sworn testimony from plaintiffs in support of the class certification motion – was “premature.” This was true, according to Judge Mendoza, in part because of the plaintiff’s counsel’s other work in the case, the thousands of dollars in costs they incurred and the time they invested.
Further, the panel also disagreed with the district court’s predominance analysis pursuant to Rule 23(b)(3), with respect to the rounding-time and wage-statement classes. As to rounding time, the appellate court found that the compensable-time standard also covered employees “under the control” of their employer. And if RNs were under the Medical Center’s control during the grace period, the claims were susceptible to class-wide resolution. The second issue involving wage statements also met the predominance standard, because Cal. Lab. Code §226(a)(8) specifies an amount of damages for violation of the required listing of the name and address of the legal entity that is the employer.
The Corona Regional Medical Center opinion further illustrates the division among circuits concerning the required evidentiary standards at class certification. Unfortunately, this is unlikely to be resolved soon.
The recent certiorari petition in Taylor Farms Pacific, Inc. v. Pena, No. 17-395 raised the question of “[w]hether a district court may certify a class action based on information that does not meet the standards of admissibility set forth in the Federal Rules of Evidence and Civil Procedure,” but it was denied on Feb. 20, 2018. Hence, what is required to support the impactful class certification decisions varies across the federal courts. And, while the Ninth Circuit viewed the certification decision as “preliminary,” that decision has a major impact on settlement of the case. As the Supreme Court has acknowledged: “A district court’s ruling on the certification issue is often the most significant decision rendered in” class proceedings. Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980); see also Coopers & Lybrand, 437 U.S. at 476 (“Certification of a large class may so increase the defendant’s potential damages liability and litigation costs that he may find it economically prudent to settle and to abandon a meritorious defense.”).
BOTTOM LINE: In the Ninth Circuit, admissible evidence is not required to support class certification.