The NAM filed an amicus brief with the Supreme Court encouraging the Court to review the Seventh Circuit’s decision in Butler v. Sears, Roebuck and Co. That decision deepened a split of authority among the federal circuits over the proper approach to analyzing class actions when the proposed class includes customers who have suffered no injury. Although the Supreme Court has recently raised the bar for class certification in antitrust and securities cases, this case presented aunique opportunity for the Court to resolve the considerable uncertainty surrounding consumer class actions involving alleged product defects and uninjured class members.
In this case, the Seventh Circuit certified a class action where class members are linked only by their purchases since 2001 of some 27 different models of the same brand of washing machine, which allegedly is more likely than other brands to allow mold to accumulate and emit odors. According to the court, even though most members of the class may not have experienced any mold problems or any other injury, the class should be certified and whether individual class members were actually harmed can be addressed at a later stage of proceedings. Class certification requirements are not mere conveniences for streamlining litigation, but crucial safeguards grounded in fundamental notions of constitutional due process. For a class to be properly certified, common questions must predominate over individual ones, and if adjudicated on a class basis, each one of the claims will be resolved in one stroke. The Seventh Circuit’s decision replaced the Supreme Court’s predominance test with a malleable question of efficiency.
Class certification in meritless circumstances where consumers have suffered no cognizable injury encourages class action abuse. Ultimately, consumers are harmed by these class certifications because businesses have little choice but to incorporate the cost of frivolous product liability litigation and litigation avoidance into the prices paid by their consumers.
On June 3, the Supreme Court vacated the 7th Circuit's decision and remanded the case back to them for further consideration in light of its decision on certifying class actions in Comcast Corp. v. Behrend.