The Ninth Circuit’s decision not to grant en banc rehearing in Sali v. Corona Regional Medical Center should all but guarantee that the issue of expert testimony at the class certification stage is heading to the Supreme Court.
Sali involved a declaration that was created by a paralegal at one of the firms representing the plaintiffs and then offered to establish typicality under Rule 23(a)(3). The paralegal purported to analyze various time entries, and offered opinion testimony that the named plaintiffs’ claims were typical of the class members’ claims. Everyone agreed that the declaration was not admissible. The district court kept the spreadsheet out and, because the plaintiffs had no other evidence of typicality, declined to certify the class. The plaintiffs appealed.
The Ninth Circuit reversed. Instead of engaging directly on the issue of whether the declaration was inadmissible, it decided that the district court should not have considered the question of admissibility at all, stating “[i]nadmissibility alone is not a proper basis to reject evidence in support of class certification.” In place of the bright-line rule of admissibility, the Ninth Circuit proposed a sliding scale where the district court should consider whether the evidence could conceivably be offered in admissible form at trial—but that at the class certification stage, admissibility problems merely go to the weight of the evidence, not whether it should be considered.
The Ninth Circuit frequently referred to the admissibility standard as “formalistic” or overly restrictive. For example, in noting that the paralegal declaration was the only evidence of typicality, the Ninth Circuit called the district court’s evidentiary standard “narrow” and said the remaining evidence “tells us nothing about the satisfaction of the typicality requirement”—which is why the district court denied class certification for lack of evidence of typicality.
This decision has far-reaching consequences.
- First, the practice-point takeaway is that defendants in the Ninth Circuit cannot rely on evidentiary objections alone to avoid class certification. Instead, they must engage on the merits of the plaintiff’s evidence while simultaneously pointing out any admissibility problems that exist. Defendants must also consider making their own record affirmatively showing that the class cannot be certified.
- Second, allowing inadmissible evidence tilts what are supposed to be the neutral scales of justice decidedly in favor of class certification. By expanding the relevant record to include matters that could never be admitted as evidence or as expert testimony, the Ninth Circuit’s rule all but invites plaintiffs to rely on unfounded theories, unsupportable conclusions, or incompetent witnesses. While it is hoped that district courts will continue to use their discretion to certify only such classes as are supported by sufficient evidence, the Ninth Circuit’s decision will of course lead to more classes being certified in that circuit, particularly when that court seems to believe that the Rules of Evidence and Rules of Civil Procedure are excessively “formalistic” and “narrow” and therefore to be applied sparingly.
- Third, this issue is now likely to head to the United States Supreme Court because the circuits have irreconcilably split on this issue. The Ninth Circuit has adopted the loosest rule of admissibility, while the Eighth Circuit has also held evidence need not be admissible to be considered at class certification (In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 611 (8th Cir. 2011)). On the other side, the Third, Fifth, and Seventh Circuits have required district courts to decide admissibility questions at class certification—at least when it is critical to certification issues (In re Blood Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015) — “We join certain of our sister courts to hold that a plaintiff cannot rely on challenged expert testimony, when critical to class certification, to demonstrate conformity with Rule 23 unless the plaintiff also demonstrates, and the trial court finds, that the expert testimony satisfies the standard set out in Daubert”; Unger v. Amedisys Inc., 401 F.3d 316, 325 (5th Cir. 2005) — “When a court considers class certification based on the fraud on the market theory, it must… base its ruling on admissible evidence”; Messner v. Northshore Univ. Health Sys., 669 F.3d 802, 812 (7th Cir. 2012) — requiring a district court to make “a conclusive ruling on any challenge to that expert’s qualifications or submissions before it may rule on a motion for class certification” when the expert’s testimony is “critical”). Unpublished opinions from the Sixth and Eleventh Circuits also require admissibility as a threshold (see In re Carpenter Co., 2014 WL 12809636, at *3 (6th Cir. 2014); Sher v. Raytheon Co., 419 F. App’x 887, 890 (11th Cir. 2011)). Given that the Ninth Circuit’s opinion candidly acknowledges that “[o]ther circuits have reach varying conclusions” on this issue and that the dissent from the denial of en banc rehearing notes that Sali “puts our court on the wrong side of a lopsided circuit split,” this circuit split calls for resolution. Indeed, the Ninth Circuit appears to have split with itself in Sali, given that a different panel of the court had previously held that evidence must be admissible to be considered at class certification in Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011).
- Fourth, when the time comes, we anticipate that the Supreme Court will reject the Ninth Circuit rule. Analagous dicta from Wal-Mart Stores, Inc v. Dukes already signaled which way the court is likely leaning: “The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so….” Moreover, the Comcast decision turned on the evidentiary value of expert testimony admitted by the District Court. If the Supreme Court shared the Ninth Circuit’s view, it likely would not have attached such significance to the scope of the expert’s opinion in that case. Indeed, the Supreme Court has repeatedly stated that Rule 23 is not a mere pleading standard, yet the Ninth Circuit has effectively converted it to such.
- Lastly, hiding beneath the larger issues in this case is a lesson about the importance of local rules. It is possible that the Ninth Circuit’s analysis in this case is driven by the Central District of California’s local rules that require a plaintiff to move for class certification within 90 days of commencing a putative class action. That compressed timeline does not allow for much discovery on the evidence supporting the class certification prerequisites, and virtually requires a truncated evidentiary record. While Rule 23 requires deciding class certification as soon as practicable, 90 days is too fast for most cases, particularly those of any complexity. Class certification can be dipositive of a case in practice and so should not be rushed. Had the local rules allowed adequate time for discovery, the District Court could have relied on a more mature record and applied evidentiary standards more akin to summary judgment.