By Jessica Davidson Miller and Nina Ramos Rose
(Jessica D. Miller is a Washington, D.C.-based partner in Skadden, Arps, Slate, Meagher & Flom LLP’smass torts and insurance litigation practice. She has broad experience in the defense of purported class actions and other complex civil litigation with a focus on product liability matters and multidistrict litigation proceedings. Nina R. Rose is an associate in Skadden's Washington, D.C. office.)
Facing a potential class action is never a pleasant prospect. Even the most frivolous class action can force a company to undertake a massive document hold and can result in onerous, expensive discovery. In addition, because class actions mean potential liability to hundreds, thousands or hundreds of thousands of plaintiffs, they create enormous pressure to settle.
As a result, more and more class action defendants are striking back, using an important tool for stopping potential class actions in their tracks — a motion to strike class allegations on the pleadings. This article addresses the pros and cons of motions to strike and how to maximize a defendant’s likelihood of success on such a motion.
WHAT IS A MOTION TO STRIKE?
A motion to strike is akin to a motion to dismiss class action claims — i.e., it is a motion that seeks to dismiss class allegations based on the pleadings alone. It has long been recognized that such motions are appropriate where a plaintiff is proposing a patently uncertifiable class, Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982) (“[s]ometimes the issues are plain enough from the pleadings” to show that a class should not be certified). However, in recent years, they have gained more popularity.
The rationale behind motions to strike has been best articulated by the courts themselves:
[G]iven that Rule 23(c)(1)(A) instructs courts to determine whether a class may be certified ‘[a]t an early practicable time,’ courts may—and should—address the plaintiff’s class allegations when the pleadings are facially defective and definitively establish that a class action cannot be maintained. Wright v. Family Dollar Inc., No. 10-C-4410, 2010 WL 4962838(N.D. Ill. Nov. 30, 2010).
Consistent with this principle, courts have recognized that class allegations should be stricken where “no proffered or potential factual development offers any hope of altering th[e] conclusion” that the proposed class does not satisfy the requirements for class certification under Rule 23. Pilgrim v. Universal Health Card LLC, 660 F.3d 943, 949 (6th Cir. 2011); see also Thompson v. Merck & Co., No. 2:01cv1004, 2004 WL 62710 (E.D. Pa. Jan. 6, 2004) (striking class allegations where “[n]o amount of additional class discovery [would] alter” conclusion that plaintiffs’ claims could not meet Rule 23 requirements); Ross-Randolph v. Allstate Ins. Co., No. DKC 99-3344, 2001 WL 36042162 (D. Md. May 11, 2001) (striking class allegations and refusing to permit class discovery because “[i]n determining whether a party complies with Rule 23, a court does not have to wait until class certification is sought”).
TO STRIKE OR NOT TO STRIKE
The obvious benefit of a motion to strike is that if it is successful, it essentially ends the case. After all, most class actions are so-called negative-value suits, and plaintiffs’ lawyers generally have no interest in moving forward with individual suits that do not pose a likelihood of substantial payout.
In addition, even if a motion to strike is only granted in part, it can still have the positive effect of drastically narrowing the proposed class. For example, the court may decide that a proposed class is overbroad as defined and require the plaintiff to amend the class definition right out of the box. Similarly, the court could hold that some portion of the plaintiff’s claims cannot, as a matter of law, be tried on a classwide basis.
In either of these scenarios, the court’s order would limit — drastically, in some cases — the defendant’s potential liability and allow the defendant to make a more targeted attack on the plaintiff’s claims at the class-certification stage. It may also substantially narrow the defendant’s document-retention and discovery obligations.
Further, filing a motion to strike can be beneficial even if it is ultimately denied. A major benefit of a motion to strike is getting in the first word before the judge with regard to the validity of plaintiffs’ proposed class and explaining to the court why it should be very skeptical of any future motion for class certification.
At the same time, however, it is important to remember that a motion to strike also has its risks. A court faced with a slam-dunk motion to strike may grant the motion, but in so doing, explain to the plaintiff how he or she could fix the problem with the proposed class. For example, a court may be forced to hold that a plaintiff’s proposed class definition is inappropriate or would create serious predominance problems, but at the same time note in its opinion that a different or narrower class definition would be workable.
Moreover, in the event that the court denies a motion to strike, it may be more inclined to grant class certification down the line based on a feeling that it has already considered and “resolved” the issue. This is especially true where a motion to strike is wide-ranging and makes many of the same arguments that will be offered in opposition to class certification.
In light of this potential pitfall, it important for defense counsel to use targeted motions to strike that attack only those aspects of the class that truly can be resolved on the pleadings, while holding back those arguments that a court may believe will benefit from class discovery, such as factual predominance.
PITCHING WITH PRECISION
In light of these considerations — and recent caselaw addressing requests to strike class allegations — we have found that motions to strike are most effective when they focus on: (1) unascertainable classes; (2) overbroad classes; (3) nationwide classes; (4) personal injury classes; and (5) fatally flawed named plaintiffs.
Unascertainable Classes: Many recent opinions granting motions to strike have done so on the ground that the plaintiff’s class definition was not ascertainable. This includes proposed classes that are “fail-safe,” as well as class definitions that would make it administratively difficult to identify class members.
A fail-safe class is one whose members would be impossible to identify without an inquiry into the merits of the class members’ claims. These classes are ideal targets for a motion to strike because they present an insurmountable legal problem.
In Brazil v. Dell, 585 F. Supp. 2d 1158, 1167 (N.D. Cal. 2008), for instance, the court granted a motion to strike a class defined as including every consumer who purchased a product that “Dell falsely advertised as discounted.” According to the court, identifying class members would require the court to first determine whether the defendant “falsely advertised” any of its products. Because this was a legal question that implicated the merits of the underlying claims, the proposed class was not ascertainable.
Similarly, in Bauer v. Dean Morris LLP, Nos. 08-5013, 08-5014, 2011 WL 3924963 (E.D. La. Sept, 7, 2011), the court struck two proposed classes defined as including “[a]ll Louisiana residents . . . who were charged excessive fees and/or expenses by” the defendants.” As the court explained, “resolving whether a particular individual falls within the class definition would require ascertaining whether [defendants] had in fact charged that individual excessive fees or expenses.” Because such a “factual determination could be made in each case only after reviewing the merits of each individual’s claim,” the proposed classes were not certifiable.
Most recently, in In re Vioxx Products Liability Litigation, No. 09-3713, 2012 WL 2061883 (E.D. La. June 6, 2012), the court granted a motion to strike a proposed class consisting of “all litigants who had personal-injury actions pending in any jurisdiction of the United States” but agreed to participate in the nationwide settlement of the Vioxx litigation with Merck “for fear of losing their retained counsel.” According to the court, “[n]o such class could ever be certified” because “ascertaining the class cannot be done by any objective method or without impinging on the merits of any particular class member’s claim.”
Instead, “the [c]ourt would have to examine the specific circumstances of a purported class member’s attorney-client relationship and individualized decision” to enroll in the settlement. This would include an investigation of “whether that particular claimant was coerced, which is a primary factual dispute between the parties, and resolution of that issue in Merck’s favor with respect to any particular individual would simply exclude that individual from the class.” Accordingly, the court held that “the class definition is fatally flawed.”
Overbroad Classes. Another good target is the overbroad class. InSanders v. Apple, 672 F. Supp. 2d 978, 991 (N.D. Cal. 2009), the Court struck a proposed class because the “class definition includes all persons within the United States who own” a certain product. According to the court, “[t]his definition necessarily include[d] individuals who did not purchase [the product], individuals who either did not see or were not deceived by advertisements, and individuals who suffered no damages” and therefore was impermissibly overbroad.
Similarly, in Hedgepeth v. Blue Cross & Blue Shield, No. 1:05CV142-D-A, 2006 WL 141624 (N.D. Miss. Jan. 18, 2006), the court struck class claims because the plaintiff “defined the class to include plans potentially not covered by ERISA, while not stating a substantive claim other than under ERISA.” See also Lyons v. Bank of Am., No. C 11-1232 CW, 2011 WL 6303390 (N.D. Cal. Dec. 16, 2011) (granting defendants’ motion to strike class allegations in action arising from plaintiffs’ attempt to modify their home loan agreement “[b]ecause the proposed class include[d] many members who have not been injured”); Green v. Green Mt. Coffee Roasters Inc., No. 11-2067 (SDW)(MCA), 2011 WL 6372617 (D.N.J. Dec. 20, 2011) (striking class allegations because not “all individuals in New Jersey who purchased the [coffee maker] experienced . . . pump failure” and therefore “the putative class include[d] individuals who d[id] not presently have a claim against Defendants”) (internal quotation marks omitted).
Some may ask whether it is worth challenging such a class because the plaintiff can simply come back with an amended class definition, but in most instances the amended class action definition will simply raise other problems. For example, once the class is narrowed, it may become obvious that the claims are highly individualized. In addition, as noted above, a narrower class definition may also mean narrower discovery obligations for the defendant during the class-certification stage.
Nationwide Classes. Courts have also made it clear that proposed nationwide classes involving the laws of multiples states are susceptible to motions to strike. As the 6th U.S. Circuit Court of Appeals recently explained in upholding an order striking a nationwide consumer-fraud class: where the “laws of many States . . . govern [plaintiff’s] claims . . . a class action [is] neither efficient nor above all consistent with the requirement of Rule 23” and therefore class claims should be stricken. Pilgrim, 660 F.3d at 945.
Other courts have held similarly. See Rikos v. Procter & Gamble Co., No. 1:11-cv-226, 2012 WL 641946 (S.D. Ohio Feb. 28, 2012) (striking proposed nationwide class alleging claims under California law because California’s consumer-fraud statutes “cannot be constitutionally applied to the claims of class members who neither reside in California nor purchased the product there” and therefore plaintiffs’ claims would be governed by different states’ laws); In re Yasmin & Yaz Prods. Liab. Litig., 275 F.R.D. 270, 276 (S.D. Ill. 2011) (striking proposed nationwide personal-injury class alleging negligence, strict liability and other claims; “[B]ecause governing choice of law principles require application of the substantive laws of the fifty states and the District of Columbia – laws which vary amongst jurisdictions – the case cannot be maintained as a nationwide class action.”).
Personal-Injury Classes. Courts have also been willing to strike class allegations in personal-injury cases because such claims are necessarily based on the specific circumstances of each plaintiff’s alleged injury and therefore cannot be adjudicated en masse based solely on common facts.
For example, in In re Yasmin & Yaz, the court — in addition to striking nationwide class allegations — also struck plaintiff’s proposed statewide personal-injury class, holding that “almost every element of the asserted claims will require highly individualized factual inquiries unique not only to each class member but also to each class member’s prescribing physician.”
Similarly, in In re Phenylpropanolamine (PPA) Products Liability Litigation, 211 F.R.D. 435, 439 (W.D. Wash. 2002), the court noted that plaintiff’s proposed personal-injury class included “a multitude of individuals with different backgrounds, personal characteristics, medical histories, health problems, and lifestyles,” all of whom ingested PPA-containing products “at different times, in different amounts, and with varying results.” “Given these differences,” the court held that it would be impossible to assess the issue of specific causation on a classwide basis and struck plaintiffs’ class allegations.
Classes Represented By Atypical and Inadequate Representatives. Finally, certain courts have held that class claims fail as a matter of law — and should be stricken — where it is clear from the pleadings that the named plaintiff’s claims are subject to unique defenses that render him/her atypical of the absent class members or unable to adequately represent them.
For instance in Wright v. Family Dollar, Inc., No. 10-C-4410, 2010 WL 4962838 (N.D. Ill. Nov. 30, 2010), the court struck class claims brought on behalf of all employees of the defendant based on the allegation that the defendant company failed to pay actual and overtime compensation.
There, one of the employer’s defenses to the suit was that managerial employees (including the named plaintiff) promoted overtime work without the employer’s knowledge and in violation of the employer’s official policy. Thus, the court noted that the named plaintiff would be subject to “unique defenses” not applicable to those members of the class who did not have managerial responsibilities.
For this reason, the court held that the named plaintiff’s claim was not “typical” of the claims of all absent class members; nor could she adequately represent the interests of the entire class. See also Innovative Physical Therapy Inc. v. MetLife Auto & Home, No. 07-5446 (JAP), 2008 WL 4067316 (D.N.J. Aug. 26, 2008) (striking class claims because the named plaintiffs’ contract[s] required them to “submit their claim[s] to binding arbitration” and therefore they could not “adequately represent an entire class of insureds and medical providers before the court”).
THROW STRIKES — NOT BALLS
In our experience, courts are generally skeptical of motions to strike that take on predominance and other fact-intensive issues too early, finding that such motions are premature because of the need for discovery to resolve the certification question.
In Lang v. DirecTV, Inc., 735 F. Supp. 2d 421, 439-40 (E.D. La. 2010), for example, the court denied defendants’ motion to strike a proposed class of persons who installed DirecTV systems and alleged that their employer illegally deducted amounts from their paychecks that they were owed under state law. There, the defendant moved to strike the class allegations on the ground that plaintiffs’ claims raised individualized factual questions that precluded a finding of predominance.
The court rejected this argument as “premature,” noting that “the Court presently lacks the information to evaluate” whether “individualized determinations of liability and damages will be required.” According to the court, “[w]hether common questions will predominate over individual question depends upon how plaintiffs intend to prove their case, but plaintiffs are not required to present their trial plan in the complaint.” Thus, the court refused to consider plaintiffs’ class claims until plaintiffs “moved for class certification” and the record was “sufficiently developed.”
Similarly, in Barghout v. Bayer Healthcare Pharmaceuticals, No. 11-cv-1576(DMA)(JAD), 2012 WL 113973 (D.N.J. Mar. 30, 2012), the court denied defendants’ motion to strike class claims brought by female employees alleging gender discrimination. The defendant in Barghout argued that plaintiffs’ proposed class could not possibly go forward in light of the U.S. Supreme Court’s decision rejecting a very similar class in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011), because, as in Wal-Mart, plaintiffs’ claims did not turn on common questions. The court disagreed, noting that it did not yet have the information “required to identify the nature of the issues that actually will be presented at trial” and whether or not they were common.
Given the “procedural posture” of the case, the court held that the defendant’s motion to strike was premature. See also Howell v. Rush Copley Med. Group NFP, No. 11 C 2689, 2012 WL 832830 (N.D. Ill. Mar. 12, 2012) (denying defendant’s motion to strike class allegations as premature because it was not apparent from the face of the complaint that the class could not satisfy the predominance requirement).
Of greater concern is the risk that a court will respond negatively to an overreaching motion to strike — essentially putting the plaintiff on base, in the direction of class certification. In one case, for example, the court denied a motion to strike for lack of predominance, noting that “several of the issues which Defendant characterizes as individual, such as whether any late payments were made ‘willfully,’ are actually common questions under the legal theory put forward by Plaintiff” and may be amenable to class wide proof. See Labriola v. Bank of Am., N.A., No. C 12-79 CW, (N.D. Cal. May 10, 2012); see also Chen-Oster v. Goldman, Sachs & Co., No. 10 Civ. 6950 (LBS) (JCF), 2012 WL 205875 (S.D.N.Y. Jan. 19, 2012) (denying motion to strike class claims on commonality grounds and noting that “plaintiffs ha[d] identified a number of specific employment practices by the defendants,” which contributed to “systemic discrimination against female employees of Goldman Sachs”; “with further discovery, the plaintiffs may be able to show that the combination of some or all of these practices [met] the requirement of Rule 23(a)(2)”).
While a few courts have recently granted motions to strike class allegations based on predominance arguments, these were unique cases where the procedural posture of the action gave the court particular insight into the facts at issue. For example, in Baker v. Microsoft Corp., No. 11-cv-00722-RSM, 2012 WL 1021227 (W.D. Wash. Mar. 27, 2012), the court granted a motion to strike class allegations made on behalf of purchasers of allegedly defective Xbox360 gaming consoles.
There, the court noted that the plaintiffs had previously moved for certificationof a substantively identical class but that motion had been denied because “the alleged defect did not manifest in the majority of Xbox360 consoles sold” and therefore “individual issues of damages and causation . . . likewise precluded class certification.” Plaintiffs then brought a new suit, arguing that one of the cases on which the original class certification denial was based was no longer good law.
The court disagreed and struck plaintiffs’ class claims on the ground that the same predominance problems that plagued the initial class proposal doomed the new class. See also Novak v. Boeing Co., No. SACV 09-01011-CJC(ANx), 2012 WL 1020043 (C.D. Cal. Dec. 19, 2011) (granting a dualmotion to deny class certification and strike employment class where the parties already had access to class action discovery – including declarations by putative class members detailing their very different employment histories – that made clear that plaintiffs’ claims would turn on different facts).
In short, the motion to strike is an important tool for class-action defendants but also one that should not be overused. In particular, making arguments that could potentially benefit from class discovery at this early stage might ultimately undermine the defendant’s ability to effectively fight class certification down the road.
At the same time, when used properly, these motions can save a defendant from substantial litigation and discovery costs — and concerns by jittery investors and boards of directors about the potential for massive class-action liability, concerns that often force companies to settle even the most meritless class actions.