By Andrew H. Perellis, Alex W. Karasik, and Patrick D. Joyce

Seyfarth Synopsis: In a toxic tort class action stemming from automotive and dry cleaning facilities’ alleged contamination of groundwater near Dayton, Ohio, the Sixth Circuit affirmed an Ohio federal district court’s grant to certify seven common issues for classwide treatment under Rule 23(c)(4). Shortly thereafter, the four Defendant companies filed a petition for a rehearing en banc, arguing that the Sixth Circuit misapplied Rules 23(b)(3) and 23(c)(4).

This ruling is important for businesses to have on their radar since it represents another federal appellate court relaxing the barriers to issue-class certification.

Case Background

In Martin et al. v. Behr Dayton Thermal Products LLC, et al, No. 17-3663 (6th Cir. 2018), the Plaintiff residents alleged that the company Defendants released volatile organic compounds and other hazardous substances into the groundwater beneath their properties. The complaint alleged eleven causes of action: (1) trespass; (2) private nuisance; (3) unjust enrichment; (4) strict liability; (5) negligence; (6) negligence per se; (7) battery; (8) intentional fraudulent concealment; (9) constructive fraud; (10) negligent misrepresentation; and (11) civil conspiracy. Id. at *4. Plaintiffs sought Rule 23(b)(3) class certification as to liability for five of their eleven causes of action—private nuisance, negligence, negligence per se, strict liability, and unjust enrichment. In the alternative, they requested Rule 23(c)(4) certification of seven common issues.

The District Court held although Plaintiffs’ proposed classes satisfied Rule 23(a)’s prerequisites, Ohio law regarding injury-in-fact and causation meant that Plaintiffs could not meet Rule 23(b)(3)’s predominance requirement. Id. Accordingly, the District Court denied certification of the two proposed liability-only classes. The District Court then addressed Plaintiffs’ alternate request for issue-class certification under Rule 23(c)(4), considering whether predominance constituted a threshold requirement that must be satisfied with respect to the entire action before a court may certify certain issues, Id. at 4-5. Noting that this question has resulted in a conflict between several other circuits, the District Court adopted the “broad view,” and rejected treating predominance as a threshold requirement and certified seven issues for class treatment. Id. at 5. The District Court concluded its class certification decision by stating that it would “establish procedures by which the remaining individualized issues concerning fact-of-injury, proximate causation, and extent of damages can be resolved” and noting that any such procedures would comply with the Reexamination Clause of the Seventh Amendment. Id.  

Thereafter, Defendants filed a Rule 23(f) petition, arguing that the District Court reached the wrong conclusion on the interaction between Rules 23(b)(3) and 23(c)(4) and that, even under the broad view, the issue classes were insufficient. Defendants also raised Seventh Amendment arguments, citing the District Court’s mention of a potential procedure involving the use of a Special Master to resolve remaining issues. On appeal, the Sixth Circuit’s review was limited to the District Court’s decision to certify issue classes under Rule 23(c)(4). Id. at 6.

The Sixth Circuit’s Decision

The Sixth Circuit affirmed the District Court’s certification of issue classes under Rule 23(b)(3). As an initial matter, the Sixth Circuit explained that appellate courts across the country have disagreed about how Rule 23(b)(3)’s requirements interact with Rule 23(c)(4). Id. at 7. Under the “broad view,” which has been adopted by the Second, Fourth, Seventh, and Ninth Circuits, courts applied the Rule 23(b)(3) predominance and superiority prongs after common issues had been identified for class treatment under Rule 23(c)(4). Id. The broad view permits utilizing Rule 23(c)(4) even where predominance has not been satisfied for the cause of action as a whole. Id. (citations omitted). In contrast, the “narrow view,” adopted by the Fifth and Eleventh Circuits, prohibits issue classing if predominance has not been satisfied for the cause of action as a whole. Id. at 8 (citations omitted). Other circuits, including the Third and Eighth Circuits, have adopted a functional, superiority-like analysis instead of either view.

After evaluating the above approaches, the Sixth Circuit elected to adopt the “broad view” approach, holding (1) it does not risk undermining the predominance requirement since it instructs courts to engage in the predominance inquiry after identifying issues suitable for class treatment; (2) it flows naturally from Rule 23’s text, which provides for issue classing “[w]hen appropriate,” and (3) the concomitant application of Rule 23(b)(3)’s superiority requirement ensures that courts will not rely on issue certification where there exist only minor or insignificant common questions, but instead where the common questions render issue certification the superior method of resolution. Id. at 9. Accordingly, the Sixth Circuit held that a requirement that predominance must first be satisfied for the entire cause of action would undercut the purpose of Rule 23(c)(4) and nullify its intended benefits. Id. at 10.

Applying the “broad view” approach, the Sixth Circuit held that because each issue may be resolved with common proof and because individualized inquiries do not outweigh common questions, the seven issue classes that the district court certified satisfy Rule 23(b)(3)’s predominance requirement. Id. at 12. Further, regarding the superiority requirement, the Sixth Circuit held that the district court correctly noted that issue certification will ensure that property owners in the affected area will have an opportunity to litigate their claims, and that by trying these common questions to a single jury, this procedure also saves time and scarce judicial resources. Id. at 14. Accordingly, the Sixth Circuit held that the District Court did not abuse its discretion by certifying issue classes under Rule 23(c)(4) since the predominance and superiority requirements were met.

The Sixth Circuit also rejected the Defendants’ Seventh Amendment arguments, noting that the district court has not formalized any procedures for resolving either the common issues or the remaining individualized inquiries. Id. at 14-15. As such, the Sixth Circuit affirmed the District Court’s issue-class certification decision.

On July 31, 2018, the Defendant companies filed a petition for rehearing en banc, requesting that the entire appeals court reconsider Sixth Circuit’s affirmation of the District Court’s issue-class certification.

Implications For Businesses

For businesses located in states within the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee) that are facing class action lawsuits, these companies must be cognizant that the Sixth Circuit has adopted the “broad view” of Rule 23, meaning it will be easier for plaintiffs to obtain certification of issue classes. This ultimately affords the plaintiffs’ class action bar some leverage in regards to expanding their cases and potentially increasing exposure.

From an environmental law perspective, harm to property or bodily injury, and the amount of compensation due, are almost always highly individualized and will predominate other issues.  Under the “narrow view,” class actions for toxic tort actions would be inappropriate.  However, under the “broad view,” the toxic tort class can proceed and litigate broad issues establishing the defendant’s release of contaminants and the extent of contamination.  After the issues are resolved on a class-wide basis, mini-trials or alternate proceedings are needed to establish the individualized damages incurred by each class member.  The broad view, now adopted by the Sixth Circuit, provides a plaintiff group with significant leverage against the allegedly polluting company because the contamination issues can be litigated as a class.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of Seyfarth’s Environmental Compliance, Enforcement & Permitting Team.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

iStock_000042612884_MediumSeyfarth Synopsis: The Eighth Circuit found that a class action could not be sustained in an environmental pollution case because “the class lacks the requisite commonality and cohesiveness to satisfy Rule 23.”

In Karl Ebert v.  General Mills, Inc., No. 15-1735 (8th Cir. May 20, 2016), the United States Court of Appeals for the Eighth Circuit found that the District Court erred in certifying a  proposed class of plaintiffs in an environmental pollution case because “the class lacks the requisite commonality and cohesiveness to satisfy Rule 23.” The case was remanded for further proceedings at the District Court.

In this its appeal to the Eighth Circuit, General Mills, Inc., challenged the District Court’s grant of class certification because each plaintiff will need to prove individualized issues of injury, causation, and damages.

In the underlying litigation the plaintiffs, all owners of residential properties in a Minneapolis neighborhood near a General Mills facility, sued General Mills, alleging that the company caused trichloroethylene (TCE) to be released onto the ground and into the environment near the plaintiffs’ neighborhood. The plaintiffs claimed that, as a result of the contamination, TCE vapors migrated into the surrounding residential area, threatening the health of the residents and diminishing the value of their property.

For nearly thirty years, General Mills participated in groundwater clean-up and remediation efforts in the plaintiffs’ neighborhood under the direction of, and in conjunction with, the federal government and the State of Minnesota. In late 2011, in cooperation with the State of Minnesota, General Mills began to evaluate the potential of migration of TCE in the form of vapor from shallow groundwater to the soil above. As noted by the District Court, General Mills installed vapor mitigation systems (VMSs) in 118 homes in the neighborhood.

The plaintiffs first learned of the TCE vapor contamination in 2013, and each of the named plaintiffs received customized VMSs. Seeking to represent a class, the residents asserted five legal claims: (1) violation of CERCLA; (2) common law negligence; (3) private nuisance; (4) willful and wanton misconduct; and (5) violation of the Resource Conservation and Recovery Act. Personal injury claims were not included in the complaint, in a deliberate attempt to avoid class certification problems. This will be discussed below.

The District Court found that the requirements of Federal Rule of Civil Procedure 23 were satisfied, and certified the proposed class. However, the Eighth Circuit reversed, finding that the class lacked the requisite commonality and cohesiveness to satisfy Rule 23.

Specifically, the Eighth Circuit noted that the District Court had attempted to artificially narrow the issues and the class membership so as to create class standing by first excluding personal injury claims and any plaintiffs with identifiable personal injury claims, and then by limiting claims to whether injunctive relief would be warranted. The District Court had bifurcated the action into two phases. It first certified a class under Rule 23(b)(2) to determine whether injunctive relief was appropriate. It then set up a second phase under Rule 23(b)(3) to determine the money-damage portion of the case  .

The Eighth Circuit noted that the use of this sort of “hybrid certification,” insulating the (b)(2) class from (b)(3) the money-damage portion of the case, is “an available approach that is gaining ground in class action suits.” Newberg on Class Actions § 4:38. While Rule 23(b)(3) requires common questions of law or fact to predominate over questions affecting only individual members, Rule 23(a)(2) requires only the establishment of a common question pertaining to an injury suffered by all class members. In this case, though, the Circuit Court concluded that this action could not proceed as a class under either Rule 23(b)(2) or Rule 23(b)(3).

As to Rule 23(b)(2), the Eighth Circuit found the central required element of “cohesiveness” to be lacking. For relief as a class, “the relief sought must perforce affect the entire class at once,” citing Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2558 (2011). As a result, the Eighth Circuit found that “[i]t is the disparate factual circumstances of class members that prevent the class from being cohesive and thus unable to be certified under Rule 23(b)(2).”

For Rule 23(b)(3), the Eighth Circuit concluded that individual issues would predominate the inquiry. Notwithstanding the District Court’s attempt to exclude questions on individualized exposure, the Eighth Circuit found: “any limitations in the initial action are, at bottom, artificial or merely preliminary to matters that necessarily must be adjudicated to resolve the heart of the matter.”

By Geoffrey C. Westbrook and Joshua M. Henderson

Just when one might have thought California employment law couldn’t get any stickier for employers, in January 2014 the California Legislature turned up the heat by expanding meal and rest break penalty provisions. Now there’s a new penalty for failure to provide “cool-down,” or recovery, periods to prevent heat illness.

Before, heat illness prevention laws were enforced only by the limited resources of Cal-OSHA. Now, newly amended Labor Code Section 226.7 authorizes private enforcement through class, individual, and multi-plaintiff actions, as well as by the DLSE. Monetary incentives, in addition to ambiguities on many aspects of the law, will likely trigger increased Cal-OSHA enforcement and new litigation, just as the remedies for meal and rest break violations have produced a heat wave of class action litigation. Talk about a scorcher!

But What is a “Cool-down” Period? California employers with “outdoor places of employment” must implement a heat illness prevention program, including allowing and encouraging employees to take a “cool-down rest in the shade for a period of no less than five minutes at a time when they feel the need to do so to protect themselves from overheating.” During these periods, employees must get continuous access to shade and drinking water.

While these obligations existed for almost a decade under Cal-OSHA’s oversight, private enforcement officially began January 1, 2014 with the amendment to Labor Code Section 226.7. Now, “an employer shall not require an employee to work during a meal or rest or recovery period” required by law. As a penalty, employers must pay non-exempt employees one additional hour of pay for each workday in which a meal or rest or recovery period is not provided. Penalties are cumulative, meaning it is thus now possible under Section 226.7 for an employer to incur three penalties in a given workday for each affected employee.

So, What are “Outdoor Places of Employment?” This term, not defined in the regulations, may seem self-evident. “Outdoor” really means “out of doors” in an open air environment. But how much time must one spend out of doors to make it a “place” of employment? Reasonable minds could differ here: is 50% of a workday spent outdoors sufficient to trigger the law, or will a mere 25% suffice?

Recovery Periods: A “Hotbed” for Litigation? There are no published decisions yet on cool-down periods, and the law is ripe with ambiguities that only litigation will resolve. These uncertainties, and the prospect of penalties that will be very large when considered on a cumulative basis, may prompt private litigants to initiate civil actions against unsuspecting employers in industries with some outdoor work that haven’t traditionally been the focus of enforcement initiatives. These industries may include engineering, warehousing, carwash, outdoor recreation, automotive sales, security, country clubs, valets, summer camps, and janitorial businesses.

The following are areas where employers may face “cooling down” challenges:

  • Proper Access to Sufficient Amounts of Shade. The regulations provide detailed rules on the amount of shade provided to employees during a recovery period, the location of shade to work areas, and access to shade in days even when outdoor temperatures do not exceed 85 degrees. Failure to meet these requirements may lead to a claim that the employer failed to provide recovery periods within the meaning and intent of Cal-OSHA regulations.
  • Frequency and Length of Recovery Periods. Employees must be permitted to take a cool-down rest “when [employees] feel the need to do so to protect themselves from overheating.” Unlike meal and rest periods, the law does not identify the minimum number of recovery periods an employee must receive in a workday or if recovery periods can be scheduled to avoid business interruption. And, while recovery periods can be “no less than five minutes,” the regulation does not provide guidance on the maximum duration of a recovery period: must employers, for instance, provide a paid 30-minute work-free recovery period to all employees upon request?
  • Failure to “Encourage” Recovery Periods. Heat illness prevention regulations go beyond meal and rest break laws and require employers to “encourage” employees to take recovery periods. Other than satisfying the law’s training and written policy and procedure requirements, it is unclear what efforts employers must take to encourage recovery periods. So a failure to “encourage” recovery periods might also lead to a Section 226.7 claim.

Workplace Solutions. As a threshold issue, California employers in industries not expressly subject to heat illness prevention laws should carefully consider whether their operations may be construed as an “outdoor place of employment.” Employers with “outdoor places of employment” should review their policies, record-keeping practices, and training to ensure compliance and proper integration with recovery period and other heat illness prevention requirements. Such precautions will help keep employers burn-free for the remaining warm months of the year.

By Andrew H. Perellis

Where individual questions overwhelm questions common to the class, a class action cannot be maintained. This simple concept has met with mixed results when applied to the question of whether a class action can proceed for claims based on contaminated groundwater underlying the property of putative class members.

The determination of whether individual questions overwhelm often rests on disputed facts. In such instance, according to the Seventh Circuit, it is error for the trial court to make the class determination without first receiving evidence on the dispute. Parko v. Shell Oil Co., No. 13-8023 (Jan. 17, 2014).

The relevant facts in Parko were, first, that there may have been multiple sources of contamination other than from the named defendants and, second, the contaminated groundwater was ­not the drinking water supply for the putative class members. The lower court certified the class without receiving evidence.

The Seventh Circuit reversed. It found that class members could have experienced different levels of contamination caused by different polluters, thus implying different damages. In addition, if the value of properties varied significantly, then the diminution would vary by property either in terms of absolute dollars or by percentage of market value, which would need to be considered by the trial court to determine if individual issues predominated.

Of particular significance to the Court was the fact that the groundwater was not being used as a drinking water supply. As such, it was uncertain as to whether that contamination could cause any diminution in property value at all. (“As long as there is no danger…[its] underground presence should not affect property values.”) The lower court’s certification rested on the untested opinion of the plaintiff’s expert that benzene levels in the groundwater were the common cause of the loss of property values alleged by the plaintiff. Defendants were entitled to contest that assertion, according to the Seventh Circuit, since if the expert’s evidence was rejected, there would be no basis for the claim to support the class. (“Benzene in the water supply is one thing; benzene in the groundwater that does not feed into the water supply is quite another.”)

The Parko case is a welcome development to counterbalance the Seventh Circuit’s prior ruling in Mejdreck v. Met Coil Systems Corp., 319 F.3d. 910 (7th Cir. 2003), a case upholding class certification for damages arising from groundwater contamination. In that case, however, there was a single source of groundwater contamination and the contamination impacted the drinking water supply. While Parko distinguished its fact situation from that in Mejdreck, it remains uncertain whether in future cases, merely using contaminated groundwater as a drinking water supply will be adequate to support class certification, i.e., the common question of damage is established. Even in such cases, there are significant individual issues that could overwhelm common class questions of liability and the existing damages. Stay tuned.

By Andrew H. Perellis

Can a toxic tort class action be maintained where class certification was denied in a materially similar case?

As noted in an item posted by our partners in The Workplace Class Blog, in Baker v Home Depot USA, Inc., No 11-CV-06768 (N.D. Illinois, Jan. 24, 2013), the court granted a motion striking the class allegations at the pleadings stage based upon the principle of comity. As a result of the ruling, plaintiffs were unable to pursue a class claim alleging that Home Depot falsely promoted as safe the purchase and use of wood treated with Chromium Copper Arsenate for residential use. Absent the class allegations, plaintiffs’ action reduced to simple claims based on products liability and negligence.

We wanted to take a short break from our regular blogging as congratulations are in order. Our colleagues in Seyfarth’s Wage and Hour Litigation Practice Group have authored the first-of-its-kind treatise on wage and hour litigation. The book, titled “Wage & Hour Collective and Class Litigation,” has been published by American Lawyer Media’s Law Journal Press and now is available both in print and on-line at www.lawcatalog.com. The 912-page volume is the most comprehensive guide published to date that focuses on litigation strategy through all phases of wage and hour lawsuits, the area of high-stakes litigation that, as many of you already know, have plagued employers in recent years. It can be purchased at an introductory price by using coupon code 212898.

Early reviews have been strong. The guide has already received praise from the Honorable Elaine L. Chao, the 24th U.S. Secretary of Labor, who stated: “Given the recent explosion of wage and hour litigation, both management- and plaintiff-side attorneys will find this publication to be an invaluable reference. With its painstaking attention to the law and procedure, this treatise will certainly be the go-to resource when practitioners ponder questions of strategy and substance in the context of wage and hour cases.”

The book was authored by Seyfarth partners Noah Finkel, Brett Bartlett and Andrew Paley, and Richard Alfred, the Boston-based chair of  Seyfarth’s national Wage & Hour Litigation Practice, served as senior editor.  More than 70 other Seyfarth attorneys contributed to the book, which will be regularly updated to keep readers abreast of all major developments in wage and hour law. Congratulations to all who were involved in the authorship of this thoughtful, leading-edge work.