Duane Morris Class Action Review - 2023 - Report - Page 204
and did not address how the exemptions to the statutory prohibitions weight in the
certification analysis.” Id. at *2. The defendant filed an interlocutory appeal of the
certification decision, arguing that “the district court erred when it founds that common
issues predominated over individual ones without addressing the effect of the ERISA’s
statutory exemptions on liability classwide and without making any factual findings as to
the similarities of the loans.” Id. at *1.
The Second Circuit agreed with the defendant. Focusing on the Rule 23(b)(3)
requirement that questions of law or fact common to the putative class predominate
over questions affecting individuals, the Second Circuit held that the district court failed
to make the requisite findings to support its determination. The Second Circuit noted
that predominance is not a quantitative inquiry but a qualitative one “that entails careful
scrutiny of the nature and significance of a case’s common and individual issues.” Id. at
*4. Here, because one of the potentially applicable ERISA exemptions for the
challenged transactions required a focus on the conduct of fiduciaries in determining
loan program pricing, the facts needed for determining how each of the 8,000 plans did
so were necessarily individualized. In this respect, the Second Circuit noted that the
district court limited its analysis to stating that this question “is not quite as easy” to
resolve with common proof. Id. at *5. As to the other possible exemption the defendant
raised, the Second Circuit opined that “the district court’s decision gives us no indication
that the court factored it into its predominance analysis at all.” Id.
The Second Circuit explained that the fact that the exemption-related issues may have
overlapped with merits inquiries did “not absolve [the] district court from addressing
them at the certification stage when such determinations bear on assessing a Rule 23
requirement.” Id. at *5. The district court’s failure to analyze these issues meant that it
did not engage with the defendant’s evidence, and the district court “cannot simply take
the plaintiff’s word that no material differences exist.” For these reasons, the Second
Circuit vacated the class certification decision and remanded the case. Id. at *6.
G.
Rulings Denying Class Certification
Draney, et al. v. Westco Chemicals, Inc., 2022 U.S. Dist. LEXIS 143130 (C.D. Cal. Aug.
10, 2022), is one of the few decisions outright denying class certification in 2022, and
did so despite the fact that the parties jointly moved for class certification as part of a
jointly proposed class settlement. In so doing, the parties sought certification of a
mandatory, non-opt-out class under Rule 23(b)(1), under which certification is
appropriate only where prosecuting separate actions would risk “inconsistent or varying
adjudications with respect to individual class members that would establish incompatible
standards of conduct for the party opposing the class” or “adjudications with respect to
individual class members that . . . would be dispositive of the interests of the other
members not parties to the individual adjudications or would substantially impair or
impeded their ability to protect their interests.” Id. at *6 (citing Fed. R. Civ. P. 23(b)(1)(A)
and 23(b)(1)(B)).
The plaintiffs argued that Rule 23(b)(1) certification of a mandatory class was
appropriate because damages were sought “in a representative capacity on behalf of
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Duane Morris Class Action Review – 2023
