The NAM filed an amicus brief urging the Supreme Court to review a Seventh Circuit decision that makes it easier for trial lawyers to sue manufacturers using an unwieldy and unfair class action procedure. The lower court significantly relaxed the standards for class certification, especially in product defect and consumer fraud cases, undermining procedural and substantive rights of manufacturers and encouraging a dramatic increase in class action exposure of American businesses.
Rule 23(b)(3) of the Rules of Civil Procedure allow class actions only where common questions predominate over individual ones. The lower court here allowed a class to be certified as to a few common issues, disregarding individual liability issues relating to causation and injury. The case arose from allegations that certain windows had moisture-related problems, and that the failure to notify customers of the alleged defect violated various state consumer-fraud laws. The court allowed class certification on individual components of the class claims, but not all the elements necessary to prove liability.
Our amicus brief argued that the decision to certify a class representing plaintiffs in 50 different states, without analyzing the differences in state law or the need for individualized findings under each law, denies the defendant an opportunity to present valid individual defenses. For example, the company might be able to show that a particular plaintiff's problem with its windows was caused by improper installation or other factors -- evidence that might also be helpful to raise doubt about whether the windows were defective at all. If these defenses are not available in the first phase of the class action litigation, manufacturers could face settlement pressure that effectively denies them the opportunity ever to present their defenses. We also raised several questions about how the court's separate "issue" judgments would be used in subsequent proceedings.
On Jan. 18, 2011, the Court declined to review this appeal.