Kennicott et al v. Sandia Corporation
Filing
190
MEMORANDUM OPINION AND ORDER granting in part and denying in part 187 188 Status Report by District Judge James O. Browning. (vv)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
LISA A. KENNICOTT, LISA A. GARCIA,
SUE C. PHELPS, and JUDI DOOLITTLE, on
behalf of themselves and a class of those
similarly situated,
Plaintiffs,
vs.
No. CIV 17-0188 JB\GJF
SANDIA CORPORATION d/b/a SANDIA
NATIONAL LABORATORIES,
Defendant.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on: (i) the Plaintiffs’ Letter from Anne B. Shaver,
Lieff, Cabraser, Heimann & Bernstein, LLP, to the Court (dated November 12, 2018), filed
November 12, 2018 (Doc. 187)(“Letter”); and (ii) the Letter from Krissy A. Katzenstein, Morgan
Lewis, to the Court (dated November 15, 2018), filed November 15, 2018 (Doc. 188)(“Letter
Response”). The primary issues are: (i) whether the Court should, at this time, decide Defendant’s
Motion to Dismiss Plaintiffs’ Class Claims, filed August 9, 2018 (Doc. 155)(“MTD”); (ii) whether
the Court should grant the proposed case schedule in the Plaintiffs’ Letter, which modifies pretrial
deadlines to which the parties stipulated in the Joint Proposed Case Schedule at 4, filed October
11, 2018 (Doc. 183), by requiring Defendant Sandia Corporation (“Sandia Labs”) to complete
electronically stored information (“ESI”) production by January 4, 2019, and the Plaintiffs to
submit their motion for class certification and expert reports by April 5, 2019, to accommodate a
July 1, 2019, class certification hearing deadline; and (iii) whether the Court should grant the
proposed case schedule in Sandia Labs’ Letter Response, which modifies pretrial deadlines for the
same reason and requires Sandia Labs to complete ESI production by February 1, 2019, and the
Plaintiffs to submit their motion for class certification and expert reports by March 25, 2019. The
Court will not, at this time, decide the MTD, because the Court will address the MTD after the
class certification hearing. The Court will amend the Joint Proposed Case Schedule as described
below and require Sandia Labs to complete ESI production on January 15, 2019, and the Plaintiffs
to submit their motion for class certification and expert reports by March 25, 2019.
FACTUAL BACKGROUND
Plaintiffs Lisa A. Kennicott, Lisa A. Garcia, Sue C. Phelps, and Judi Doolittle allege that
Sandia Labs, “a federally-funded research and development contractor operating under contract
for the Department of Energy and managed by Sandia Corporation,” First Amended Class Action
Complaint ¶ 1, at 1, filed July 5, 2018 (Doc. 146)(“First Amended Complaint”), has “policies,
patterns, and practices,” which result in female employees earning lower compensation and fewer
promotions than “their male counterparts,” First Amended Complaint, ¶ 3, at 2. According to the
Plaintiffs, Sandia Labs applies uniform policies in its offices throughout the United States of
America. See First Amended Complaint ¶¶ 22-23, at 5-6. The Plaintiffs allege that Sandia Labs’
employee performance evaluation process, see First Amended Complaint ¶¶ 26-30, at 6-7, initial
salary calculations, see First Amended Complaint ¶¶ 31-35, at 7-8, and promotion system, see First
Amended Complaint ¶¶ 36-40, at 8-9, disadvantage women, see First Amended Complaint ¶¶ 2640, at 6-9.
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PROCEDURAL BACKGROUND
Kennicott, Garcia, and Phelps sue Sandia Labs on behalf of themselves and a class of those
similarly situated. See Class Action Complaint, filed February 7, 2017 (Doc. 1)(“Complaint”).1
Doolittle joined Kennicott, Garcia, and Phelps as a named plaintiff when the Plaintiffs amended
their Complaint. See First Amended Complaint at 1. In the First Amended Complaint, the
Plaintiffs assert: (i) that Sandia Labs engages in intentional discrimination, violating Title VII of
the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-15 (“Title VII”); and (ii) that Sandia
Labs engages in disparate impact discrimination in violation of Title VII. See Amended Complaint
¶¶ 85-99, at 21-23. Kennicott asserts individual Title VII claims against Sandia Labs for retaliation
and constructive discharge. See Amended Complaint ¶¶ 100-08, at 23-24. Sandia Labs filed its
MTD on August 9, 2018, arguing that the Plaintiffs are on a fishing expedition, because the First
Amended Complaint is inconsistent with the Complaint; that the Plaintiffs cannot satisfy rule 23(a)
of the Federal Rules of Civil Procedure’s commonality requirement, or rule 23(b)(2)’s or (b)(3)’s
requirements for class action certification; and that the Plaintiffs have not identified specific
actions resulting in a disparate impact. See MTD at 1-3. Simultaneously, Sandia Labs requests
that, to conserve resources, the Court stay discovery until the Court decides the MTD. See Motion
to Stay Discovery Pending Ruling on Defendant’s MTD Class Claims at 4, filed August 9, 2018
(Doc. 156). The Plaintiffs respond, averring that the First Amended Complaint satisfies the
pleading requirements and that Sandia Labs’ MTD mainly addresses class certification, which the
parties will address when the Plaintiffs move to certify a class. See Plaintiffs’ Response in
1
The Court dismissed the Plaintiffs’ state-law claims -- the Complaint’s Counts III, IV, V,
and VII of the Complaint -- under the federal enclave doctrine. See Order at 1, filed March 31,
2018 (Doc. 106). For the Court’s reasoning for the dismissal, see generally Memorandum
Opinion, 314 F. Supp. 3d 1142 (D.N.M. 2018)(Browning, J.), filed May 14, 2018 (Doc. 113).
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Opposition to Defendant’s MTD Plaintiffs’ Class Claims at 1, filed August 23, 2018 (Doc. 157).
In response to Sandia Labs’ request to stay discovery, the Plaintiffs accuse Sandia Labs of
attempting to delay discovery and argue that, because Sandia Labs will lose the MTD, discovery
will continue regardless the MTD. See Plaintiffs’ Response in Opposition to Defendant’s Motion
to Stay Discovery at 1, filed August 23, 2018 (Doc. 158).
On October 11, 2018, the Plaintiffs filed a Joint Proposed Case Schedule. See Joint
Proposed Case Schedule at 4. As part of the Joint Proposed Case Schedule, the parties stipulated
to a discovery stay to end on December 14, 2018. See Joint Proposed Case Schedule at 2. The
Joint Proposed Case Schedule provides for the following deadlines:
Event
Stipulated discovery stay ends
Sandia completes production of ESI, including
final privilege log
Pre-class certification discovery deadline
Plaintiffs submit motion for class certification
and expert reports
Sandia submits opposition to class certification
and expert reports
Plaintiffs submit reply motion and expert
reports
Proposed Deadline
December 14, 2018
March 1, 2019
April 12, 2019
May 9, 2019
July 25, 2019
September 13, 2019
Joint Proposed Case Schedule at 2.
The Court held a hearing on the MTD on October 17, 2018. See Draft Transcript of
Hearing at 1 (taken October 17, 2018)(“Tr.”).2 At the hearing, the Court said it thought the MTD
was an attempt to preempt and shortcut the Plaintiffs’ upcoming motion for class certification
without allowing the Plaintiffs to conduct discovery, and the Court said it would “sit” on the MTD
2
The Court’s citations to the transcript of the hearing refer to the court reporter’s original,
unedited version. Any final transcript may contain slightly different page and/or line numbers.
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for a while, planning to decide the MTD at or after the class certification hearing.3 Tr. at 4:5-4:12
(Court). Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1234 (11th Cir. 2000)(“Going
beyond the pleadings is necessary, as a court must understand the claims, defenses, relevant facts,
and applicable substantive law in order to make a meaningful determination of the certification
issues.”). “In determining the propriety of a class action, the question is not whether the plaintiff
or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the
requirements of Rule 23 are met.” Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10th Cir.
1982)(citing Fed. R. Civ. P. 23). See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-52
(2011)(“Wal-Mart”); Vallario v. Vandehey, 554 F.3d 1259, 1267 (10th Cir. 2009). In response to
the Court’s declination to decide the MTD immediately or promptly, the Court and the parties
agreed that the parties and the Court would schedule a class certification hearing for July 1, 2019,
and that the parties would modify the Joint Proposed Case Schedule to account for the July 1,
2019, class certification hearing. See Tr. at 37:25-38:12 (Court, Shaver, Katzenstein).
1.
The Letter.
The Plaintiffs filed the Letter to notify the Court that the parties could not agree to a
modified case schedule. See Letter at 1. The Plaintiffs state that they will struggle to meet the
3
As Sandia Labs filed its MTD on August 9, 2018, the MTD appears on the six-month list
for September, 2019. The six-month list is “a semiannual report showing, by U.S. district judge
and magistrate judge, all motions pending more than six months . . . . The reporting
requirements . . . are designed to help reduce both costs and delays in civil litigation in the district
courts.”
Civil
Justice
Reform
Act
Report,
United
States
Courts,
http://www.uscourts.gov/statistics-reports/analysis-reports/civil-justice-reform-act-report
(last
visited November 19, 2018). The Court set the hearing on July 1, 2019, because the parties did
not indicate that they plan to submit documents after the class certification hearing. See Tr. at
36:13-37:24. The Court wants to have time to decide the motion for class certification and the
MTD by the end of September, 2019.
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July 1, 2019, class certification hearing deadline and explain that Sandia Labs has refused to
withdraw its MTD or speed its ESI production to allow the Plaintiffs to meet the July 1, 2019,
class certification hearing deadline. See Letter at 2. According to the Plaintiffs, the parties each
proposed a modified case schedule, and the Plaintiffs summarize the proposed schedules:
Event
Stipulated discovery stay ends
Sandia completes production
of ESI, including final
privilege log
Pre-class certification
discovery deadline
Plaintiffs submit motion for
class certification and expert
reports
Sandia submits opposition to
class certification and expert
reports
Plaintiffs submit reply motion
and expert reports
Class certification hearing
Sandia’s Proposed
Deadline
November 30, 2018
Plaintiffs’ Proposed
Deadline
November 26, 2018
February 1, 2019
January 4, 2019
March 24, 2019
April 4, 2019
March 25, 2019
April 5, 2019
May 16, 2019
May 16, 2019
June 18, 2019
June 18, 2019
July 1, 2019
July 1, 2019
Letter at 5.
The Plaintiffs ask for “a minimum of three months after ESI is produced” to file the class
certification motion and expert reports, but, according to the Plaintiffs, Sandia Labs wants to limit
the Plaintiffs to seven weeks for the task. See Letter at 3. The Plaintiffs justify their request,
explaining that Sandia Labs has refused to provide relevant compensation documents, promotion
policy documents, and email information; that the Plaintiffs intend to compel Sandia Labs to
produce these documents; and that the Plaintiffs anticipate needing to compel additional
information, because Sandia Labs has been slow to provide discovery documents. See Letter at 3.
The Plaintiffs also expect that the parties will “need to litigate a number of privilege-related
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disputes,” because Sandia Labs produced an incomplete privilege log and has refused to produce
“an augmented privilege log.” Letter at 4. The Plaintiffs further explain that the parties agreed to
defer litigating the privilege log issues until after Sandia Labs completes ESI production and that
the Plaintiffs anticipate other litigation following the ESI production’s completion. See Letter at
4.
According to the Plaintiffs, they will “have to review potentially millions of pages of
documents, identify witnesses for fact depositions, and schedule and take those depositions” before
filing their class certification motion and expert reports, and that the parties anticipate logistical
difficulties scheduling witness meetings, because they must accommodate the witnesses’ and the
parties’ schedules. Letter at 4. The Plaintiffs complain that Sandia Labs’ schedule allows the
Plaintiffs only seven weeks to complete the tasks listed above, and it grants Sandia Labs two
months for ESI production, and six weeks for drafting responses to the class certification motion
and expert reports. See Letter at 4. Accordingly, the Plaintiffs request either that the Court dismiss
Sandia Labs’ MTD or that the Court grant the Plaintiffs’ proposed case schedule. See Letter at 5.
2.
The Letter Response.
Sandia Labs responded to the Plaintiffs’ Letter on November 15, 2018. See Letter
Response at 1. In the Letter Response, Sandia Labs explains that, following the October 17, 2018,
hearing, Sandia Labs proposed a case schedule that maintained the discovery stay, reduced Sandia
Labs’ time to complete ESI production, and reduced proportionately the parties’ time to complete
the class certification responses and replies. See Letter Response at 1. According to Sandia Labs,
the Plaintiffs, in response, suggested that Sandia Labs complete ESI production by December 14,
2018, the date that the parties’ stipulated discovery stay ends. Sandia Labs depicts this proposal
as an attempt to “back out of the stipulated discovery stay.” Letter Response at 1. Sandia Labs
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explains that it then proposed two months for its ESI production and two months for pre-class
certification discovery. See Letter Response at 2.
Sandia Labs complains that the Plaintiffs’ proposed case schedule requires Sandia Labs to
complete ESI production, involving “millions of pages of documents,” in six weeks “during the
holiday season.” Letter Response at 2. Sandia Labs also worries that the Plaintiffs’ proposed case
schedule shortens Sandia Labs’ time for responding to the Plaintiffs’ class certification motion and
expert reports from seventy-five to forty-one days, but gives the Plaintiffs thirty-two days for
replying to the response; this change shortens Sandia Labs’ response time by forty-five percent
and the Plaintiffs’ reply time by thirty-six percent. See Letter Response at 2. Sandia Labs avers
that the Plaintiffs’ request for additional time for discovery and preparation before their class
certification motion reflects that the Plaintiffs “have no idea what this case is about or who the
relevant witnesses are.” Letter Response at 2.
Sandia Labs also responds to the Plaintiffs’ complaints about its discovery production.
See Letter Response at 3. Addressing the Letter’s allegations, Sandia Labs indicates that: (i) the
parties have disputed the 2018 policy document production since May, 2018, and the Plaintiffs
could move to compel the information; (ii) the Plaintiffs identified their concerns about
deficiencies regarding other policy, compensation, and correspondence production shortly before
the stipulated discovery stay, and Sandia Labs is prepared to address these issues; (iii) the Plaintiffs
addressed their concerns about the privilege log shortly before the parties agreed to the stipulated
discovery stay, although Sandia Labs produced the privilege log more than nine months before the
Plaintiffs mentioned their concerns; (iv) the Plaintiffs could have challenged Sandia Labs’
attorney-client privilege assertions earlier. See Letter Response at 3. Accordingly, Sandia Labs
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asks the Court to grant its MTD or adopt Sandia Labs’ proposed case schedule. See Letter
Response at 4.
3.
The Letter Reply.
The Plaintiffs replied on November 15, 2018, to Sandia Labs’ Letter Response. See Letter
from Anne B. Shaver, Lieff, Cabraser, Heimann & Bernstein, LLP, to the Court at 1-2 (dated
November 15, 2018), filed November 15, 2018 (Doc. 189)(“Letter Reply”). First, the Plaintiffs
dispute Sandia Labs’ allegations that the Plaintiffs have delayed in bringing motions to compel.
See Letter Reply at 1. The Plaintiffs explain that the parties agreed, and informed the Court, that
the parties would resolve the motions to compel “once the ESI custodians are resolved or ESI
production is complete.” Letter Reply at 1. Second, the Plaintiffs aver that the parties have
recognized since the case’s beginning that the Plaintiffs require ESI production, and that
commonsense dictates that ESI production will help the Plaintiffs identify witnesses to depose.
See Letter Reply at 2. Third, the Plaintiffs explain that they identified discovery deficiencies well
before agreeing to the stipulated discovery stay in October, 2018. See Letter Reply at 2. Finally,
the Plaintiffs note that Sandia Labs has offered no reason why it cannot complete ESI production
by January 4, 2019, the Plaintiffs’ proposed ESI production deadline. See Letter Reply at 2. The
Plaintiffs summarize:
[A]ssuming Sandia has a good faith reason for not completing ESI production by
January 4, the appropriate remedy is not simply to move that date in a way that
prejudices Plaintiffs by unfairly squeezing their review time but to adjust the
remainder of the schedule so that neither side is prejudiced.
Letter Reply at 2.
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LAW REGARDING RULE 12(b)(6)
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a court to dismiss a
complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).
“The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four
corners of the complaint after taking those allegations as true.” Mobley v. McCormick, 40 F.3d
337, 340 (10th Cir. 1994). The Complaint’s sufficiency is a question of law, and, when considering
a rule 12(b)(6) motion, a court must accept as true all well-pled factual allegations in the complaint,
view those allegations in the light most favorable to the nonmoving party, and draw all reasonable
inferences in the plaintiff’s favor. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308,
322 (2007)(“[O]nly if a reasonable person could not draw . . . an inference [of plausibility] from
the alleged facts would the defendant prevail on a MTD.”); Smith v. United States, 561 F.3d 1090,
1098 (10th Cir. 2009)(“[F]or purposes of resolving a Rule 12(b)(6) motion, we accept as true all
well-pled factual allegations in a complaint and view these allegations in the light most favorable
to the plaintiff.” (citing Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006))).
A complaint need not set forth detailed factual allegations, yet a “pleading that offers labels
and conclusions or a formulaic recitation of the elements of a cause of action” is insufficient.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. at 678. “Factual allegations must be
enough to raise a right to relief above the speculative level, on the assumption that all the
allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550
U.S. at 555.
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To survive an MTD, a plaintiff’s complaint must contain sufficient facts that, if assumed
to be true, state a claim to relief that is plausible on its face. See Bell Atl. Corp. v. Twombly, 550
U.S. at 570; Mink v. Knox, 613 F.3d 995, 1000 (10th Cir. 2010). “A claim has facial plausibility
when the pleaded factual content allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. at 678 (citing Bell Atl.
Corp. v. Twombly, 550 U.S. at 556). “Thus, the mere metaphysical possibility that some plaintiff
could prove some set of facts in support of the pleaded claims is insufficient; the complainant must
give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual
support for these claims.” Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007)(emphasis omitted). The United States Court of Appeals for the Tenth Circuit has stated:
“[P]lausibility” in this context must refer to the scope of the allegations in a
complaint: if they are so general that they encompass a wide swath of conduct,
much of it innocent, then the plaintiffs “have not nudged their claims across the line
from conceivable to plausible.” The allegations must be enough that, if assumed to
be true, the plaintiff plausibly (not just speculatively) has a claim for relief.
Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)(citations omitted)(quoting Bell Atl.
Corp. v. Twombly, 550 U.S. at 570). See Gallegos v. Bernalillo Cty. Bd. of Cty. Comm’rs, 278
F. Supp. 3d 1245, 1259 (D.N.M. 2017)(Browning, J.).
“When a party presents matters outside of the pleadings for consideration, as a general rule
‘the court must either exclude the material or treat the motion as one for summary judgment.’”
Brokers’ Choice of Am., Inc. v. NBC Universal, Inc., 861 F.3d 1081, 1103 (10th Cir.
2017)(quoting Alexander v. Oklahoma, 382 F.3d 1206, 1214 (10th Cir. 2004)). There are three
limited exceptions to this general principle: (i) documents that the complaint incorporates by
reference, see Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. at 322; (ii) ”documents
referred to in the complaint if the documents are central to the plaintiff’s claim and the parties do
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not dispute the documents’ authenticity,” Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th
Cir. 2002); and (iii) ”matters of which a court may take judicial notice,” Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. at 322. See Brokers’ Choice of Am., Inc. v. NBC Universal, Inc.,
861 F.3d at 1103 (holding that the district court did not err by reviewing a seminar recording and
a TV episode on a rule 12(b)(6) motion, which were “attached to or referenced in the amended
complaint,” central to the plaintiff’s claim, and “undisputed as to their accuracy and authenticity”).
“[T]he court is permitted to take judicial notice of its own files and records, as well as facts which
are a matter of public record.” Van Woudenberg v. Gibson, 211 F.3d 560, 568 (10th Cir. 2000),
abrogated on other grounds by McGregor v. Gibson, 248 F.3d 946, 955 (10th Cir. 2001).
In Gee v. Pacheco, 627 F.3d 1178 (10th Cir. 2010), the defendants “supported their motion
with numerous documents, and the district court cited portions of those motions in granting the
[MTD].” 627 F.3d at 1186. The Tenth Circuit held that “[s]uch reliance was improper” and that,
even if “the district court did not err initially in reviewing the materials, the court improperly relied
on them to refute Mr. Gee’s factual assertions and effectively convert the motion to one for
summary judgment.” 627 F.3d at 1186-87. In other cases, the Tenth Circuit has emphasized that,
“[b]ecause the district court considered facts outside of the complaint . . . it is clear that the district
court dismissed the claim under Rule 56(c) and not Rule 12(b)(6).” Nard v. City of Okla. City,
153 F. App’x 529, 534 n.4 (10th Cir. 2005)(unpublished).4 In Douglas v. Norton, 167 F. App’x
4
Nard v. City of Okla. City is an unpublished opinion, but the Court can rely on an
unpublished opinion to the extent its reasoned analysis is persuasive in the case before it. See 10th
Cir. R. 32.1(A), 28 U.S.C. (“Unpublished decisions are not precedential, but may be cited for their
persuasive value.”). The Tenth Circuit has stated:
In this circuit, unpublished orders are not binding precedent, . . . [a]nd we
have generally determined that citation to unpublished opinions is not favored.
However, if an unpublished opinion or order and judgment has persuasive value
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698 (10th Cir. 2006)(unpublished), the Tenth Circuit addressed an untimely filed charge with the
Equal Employment Opportunity Commission -- which the Tenth Circuit analogized to a statute of
limitations -- and concluded that, because the requirement was not jurisdictional, the district court
should have analyzed the question under rule 12(b)(6), and “because the district court considered
evidentiary materials outside of Douglas’ complaint, it should have treated Norton’s motion as a
motion for summary judgment.” 167 F. App’x at 704-05.
The Court has previously ruled that, when a plaintiff references and summarizes
defendants’ statements in a complaint, the Court cannot rely on documents containing those
statements that the defendants attach in their briefing. See Mocek v. City of Albuquerque, No.
CIV 11-1009 JB/KBM, 2013 WL 312881, at *50-51 (D.N.M. Jan. 14, 2013)(Browning, J.). The
Court reasoned that the statements were neither incorporated by reference nor central to the
plaintiff’s allegations in the complaint, because the plaintiff cited the statements only to attack the
defendant’s reliability and truthfulness. See 2013 WL 312881, at *50-51. The Court has also
previously ruled that, when determining whether to toll a statute of limitations in an action alleging
fraud and seeking subrogation from a defendant, the Court may not use interviews and letters
attached to an MTD, which show that a plaintiff was aware of the defendant’s alleged fraud before
the statutory period expired. See Great Am. Co. v. Crabtree, No. CIV 11-1129 JB/KBM, 2012
WL 3656500, at *3, *22-23 (D.N.M. Aug. 23, 2012)(Browning, J.)(“Crabtree”). The Court in
with respect to a material issue in a case and would assist the court in its disposition,
we allow a citation to that decision.
United States v. Austin, 426 F.3d 1266, 1274 (10th Cir. 2005). The Court concludes that Nard v.
City of Oklahoma City and Douglas v. Norton, 167 F. App’x 698 (10th Cir. 2006), Rhoads v.
Miller, [352 F. App’x 289 (10th Cir. 2009), and Hamilton v. Water Whole International Corp., 302
F. App’x 789, 798 (10th Cir. 2008), have persuasive value with respect to a material issue, and
will assist the Court in its disposition of this Memorandum Opinion and Order.
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Crabtree determined that the documents did not fall within any of the Tenth Circuit’s exceptions
to the general rule that a complaint must rest on the sufficiency of its contents alone, as the
complaint did not incorporate the documents by reference or refer to the documents. See 2012
WL 3656500, at *22-23; Mocek v. City of Albuquerque, 2013 WL 312881, at *50 (refusing to
consider statements that were not “central to [the plaintiff’s] claims”).
On the other hand, in a securities class action, the Court has ruled that a defendant’s
operating certification, to which plaintiffs refer in their complaint, and which was central to
whether the plaintiffs adequately alleged a loss, falls within an exception to the general rule, so the
Court may consider the operating certification when ruling on the defendant’s MTD without
converting the motion into one for summary judgment. See Genesee Cty. Emps.’ Ret. Sys. v.
Thornburg Mortg. Secs. Tr. 2006-3, 825 F. Supp. 2d 1082, 1150-51 (D.N.M. 2011)(Browning, J.).
See
also
Sec.
&
Exch.
Comm’n
v.
Goldstone,
952
F. Supp. 2d 1060,
1217-18
(D.N.M. 2013)(Browning, J.)(considering, on a MTD, electronic mail transmissions referenced in
the complaint as “documents referred to in the complaint,” which are “central to the plaintiff’s
claim” and whose authenticity the plaintiff did not challenge); Mata v. Anderson, 760 F. Supp. 2d
1068, 1101 (D.N.M. 2009)(Browning, J.)(relying on documents outside of the complaint because
they were “documents that a court can appropriately view as either part of the public record, or as
documents upon which the Complaint relies, and the authenticity of which is not in dispute”).
LAW REGARDING MODIFICATION OF SCHEDULING ORDERS
Rule 16 of the Federal Rules of Civil Procedure provides that courts will, with some
exceptions, issue scheduling orders in each case:
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(b) Scheduling.
(1) Scheduling Order. Except in categories of actions exempted by local
rule, the district judge -- or a magistrate judge when authorized by local rule
-- must issue a scheduling order:
(A) after receiving the parties’ report under Rule 26(f);5 or
(B) after consulting with the parties’ attorneys and any
unrepresented parties at a scheduling conference.
(2) Time to Issue. The judge must issue the scheduling order as soon as
practicable, but unless the judge finds good cause for delay, the judge must
issue it within the earlier of 90 days after any defendant has been served
with the complaint or 60 days after any defendant has appeared.
(3) Contents of the Order.
(A) Required Contents. The scheduling order must limit the time to
join other parties, amend the pleadings, complete discovery, and file
motions.
(B) Permitted Contents. The scheduling order may:
(i) modify the timing of disclosures under Rules 26(a)6 and
26(e)(1);7
(ii) modify the extent of discovery;
(iii) provide for disclosure, discovery, or preservation of
electronically stored information;
(iv) include any agreements the parties reach for asserting
claims of privilege or of protection as trial-preparation
5
Rule 26(f) requires parties to provide the court with a discovery plan. See Fed. R. Civ. P.
26(f).
6
Rule 26(a) enumerates disclosures required under the Federal Rules of Civil Procedure.
See Fed. R. Civ. P. 26(a).
7
Rule 26(e)(1) requires parties to supplement or correct information provided in their
required disclosures. See Fed. R. Civ. P. 26(e)(1).
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material after information is produced, including agreements
reached under Federal Rule of Evidence 502;8
(v) direct that before moving for an order relating to
discovery, the movant must request a conference with the
court;
(vi) set dates for pretrial conferences and for trial; and
(vii) include other appropriate matters.
Fed. R. Civ. P. 16(b).
“The District Court has wide discretion in its regulation of pretrial matters.” Si-Flo, Inc.
v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir. 1990). Scheduling orders, however, “may be
modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). Accord
Street v. Curry Bd. of Cty. Comm’rs, No. CIV 06-0776 JB/KBM, 2008 WL 2397671, at *6
(D.N.M. Jan. 30, 2008)(Browning, J.). The advisory committee notes to rule 16 observe:
[T]he court may modify the schedule on a showing of good cause if it cannot
reasonably be met despite the diligence of the party seeking the extension. Since
the scheduling order is entered early in the litigation, this standard seems more
appropriate than a “manifest injustice” or “substantial hardship” test. Otherwise, a
fear that extensions will not be granted may encourage counsel to request the
longest possible periods for completing pleading, joinder, and discovery.
Fed. R. Civ. P. 16(b)(4) advisory committee’s note to 1983 amendment.
The Tenth Circuit has held that the concepts of good cause, excusable neglect, and
diligence are related. “The Tenth Circuit . . . has recognized the interrelation between ‘excusable
neglect’ and ‘good cause.’” Pulsecard, Inc. v. Discover Card Servs. Inc., 168 F.R.D. 295, 301
(D. Kan. 1996)(Rushfelt, J.)(citing Broitman v. Kirkland (In re Kirkland), 86 F.3d 172, 175 (10th
8
Rule 502 of the Federal Rules of Evidence allows parties to reach agreements about the
effects of accidentally disclosing attorney-client-privileged or work-product information. See Fed.
R. Evid. 502.
- 16 -
Cir. 1996)(“In re Kirkland”)). “Properly construed, ‘good cause’ means that scheduling deadlines
cannot be met despite a party’s diligent efforts.” Street v. Curry Bd. of Cty. Comm’rs, 2008 WL
2397671, at *6 (quoting Fed. R. Civ. P. 16(b)). See Advanced Optics Elecs., Inc. v. Robins, 769
F. Supp. 2d 1285, 1313 (D.N.M. 2010)(Browning, J.)(noting that the “rule 16(b) good-cause
inquiry focuses on the diligence of the party seeking [to] amend the scheduling order.”). In In re
Kirkland, the Tenth Circuit dealt with the definition of “good cause” in the context of a predecessor
to modern rule 4(m) of the Federal Rules of Civil Procedure,9 and noted:
[W]ithout attempting a rigid or all-encompassing definition of “good cause,” it
would appear to require at least as much as would be required to show excusable
neglect, as to which simple inadvertence or mistake of counsel or ignorance of the
rules usually does not suffice, and some showing of “good faith on the part of the
party seeking the enlargement and some reasonable basis for noncompliance within
the time specified” is normally required.
86 F.3d at 175 (emphasis in original)(internal quotation marks omitted)(quoting Putnam v. Morris,
833 F.2d 903, 905 (10th Cir. 1987)). The Tenth Circuit explained that Putnam v. Morris “thus
recognized that the two standards, although interrelated, are not identical and that ‘good cause’
requires a greater showing than ‘excusable neglect.’” In re Kirkland, 86 F.3d at 175.
9
Rule 4(m) provides:
If a defendant is not served within 120 days after the complaint is filed, the
court -- on motion or on its own after notice to the plaintiff -- must dismiss the
action without prejudice against that defendant or order that service be made within
a specified time. But if the plaintiff shows good cause for the failure, the court
must extend the time for service for an appropriate period. This subdivision (m)
does not apply to service in a foreign country under Rule 4(f) or 4(j)(1).
Fed. R. Civ. P. 4(m). The Tenth Circuit in In re Kirkland interpreted rule 4(j), which was
substantially identical. See 86 F.3d at 174 (“Rule 4(j) requires the court to dismiss a proceeding
if service has not been made upon the defendant within 120 days after filing and the party
responsible for service cannot show good cause why it was not made.”).
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Where a party is diligent in its discovery efforts and nevertheless cannot comply with the
scheduling order, the Court has found good cause to modify the scheduling order if the requesting
party timely brings forward its request. In Advanced Optics Electronics, Inc. v. Robins, the Court
concluded that, where the defendant did not conduct discovery or make any good-faith discovery
requests, and where the defendant did not make efforts “diligent or otherwise” to conduct
discovery, the defendant did not, therefore, show good cause to modify the scheduling order. 769
F. Supp. 2d at 1313 n.8. In Street v. Curry Board of County Commissioners, No. CIV 06-0776
JB/KBM, 2008 WL 2397671 (D.N.M. Jan. 30, 2008)(Browning, J.), however, the Court concluded
that the plaintiff had “shown good cause for a delay in seeking leave to amend,” because she “was
diligent in pursuing discovery . . . [and] brought to the Court’s attention her identification of an
additional claim in a timely manner,” where she discovered the claim through “documents
provided in discovery.” 2008 WL 2397671, at *11. In Montoya v. Sheldon, No. CIV 10-0360
JB/WDS, 2012 WL 5353493 (D.N.M. Oct. 7, 2012)(Browning, J.), the Court did not find good
cause to modify the scheduling order and reopen discovery, and refused to grant the plaintiffs’
request to do so, where the plaintiffs’ excuse for not disclosing their expert before the close of
discovery was that they thought that the case would settle and they would thus not require expert
testimony. See 2012 WL 5353493, at *14. The Court noted:
The [plaintiffs] filed this case on April 15, 2010. Because [Plaintiff] D. Montoya
had seen the physician before that date, the fact that the [plaintiffs] are only now
bringing the physician forward as a newly identified expert witness, over two years
later, and over one and a half years after the deadline to disclose expert witnesses,
does not evidence circumstances in which the Court can find excusable neglect nor
good cause.
2012 WL 5353493, at *14.
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In Scull v. Management & Training Corp., No. CIV 11-0207 JB/RHS, 2012 WL 1596962
(D.N.M. May 2, 2012)(Browning, J.), the Court denied a plaintiff’s request for an extension of
time to name an expert witness against a defendant. 2012 WL 1596962, at *9. The plaintiff
asserted that he had waited to name an expert witness until a second defendant joined the case, but
a scheduling order was in effect before the second defendant entered the case. 2012 WL 1596962,
at *4, *8-9. The Court concluded that the plaintiff should have known that he would need to name
an expert witness against the defendant already in the case. See 2012 WL 1596962, at *8. The
Court determined that the plaintiff was seeking “relief from his own disregard” for the deadline.
2012 WL 1596962, at *8. “Despite his knowledge that [defendant] PNA had yet to enter the case,
[plaintiff] Scull chose to allow the deadline to pass without naming expert witnesses against
[defendant] MTC.” 2012 WL 1596962, at *8. Regarding the defendant who entered the case at a
later date, however, the Court allowed the plaintiff an extension of time to name an expert witness,
because it “was not unreasonable for Scull to expect a new deadline to name expert witnesses upon
PNA’s entrance into the case because he had not yet had the opportunity to engage in discovery
against PNA as he had against MTC.” 2012 WL 1596962, at *9. The Court also noted that not
naming an expert witness “is a high price to pay for missing a deadline that was arguably
unrealistic when it was set,” as Scull could not have determined the need for an expert witness
until after PNA entered the case. 2012 WL 1596962, at *9.
In Stark-Romero v. National Railroad Passenger Co. (AMTRAK), 275 F.R.D. 544 (D.N.M.
2011)(Browning, J.), the Court concluded that a lawyer had shown excusable neglect when he
missed a scheduling deadline because, soon after his son’s wedding, his father-in-law developed a
tumor in his chest, and the lawyer arranged his father-in-law’s medical care, and only after the
lawyer returned to his work did he realize that a deadline passed. See 275 F.R.D. 549-50. The
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Court noted that the lawyer could have avoided missing the deadline had he not left his work until
the last minute, just before his son’s wedding, but concluded that the lawyer had demonstrated
good faith and missed the deadline because of “life crises,” and not because of his inadvertence.
275 F.R.D. 549-50. In West v. New Mexico Taxation and Revenue Department, No. CIV 09-0631
JB/CEG, 2010 WL 3834341 (D.N.M. July 29, 2010)(Browning, J.), the Court allowed a plaintiff
extended time to file a response to a defendant’s motion for summary judgment, in part because
of the difficulty that the plaintiff’s counsel experienced attempting to obtain depositions with
certain defense witnesses, and thus it was not her fault, and in part because cross-motions on
summary judgment are particularly helpful for the Court:
[C]ross-motions tend to narrow the factual issues that would proceed to trial and
promote reasonable settlements. In some cases, it allows the Court to determine
that there are no genuine issues for trial and thereby avoid the expenses associated
with trial. The Court prefers to reach the merits of motions for summary judgment
when possible.
2010 WL 3834341, at *4-5. On the other hand, in Liles v. Washington Tru Solutions, LLC, No.
CIV 06-854 JB/CEG, 2007 WL 2298440 (D.N.M. June 13, 2007)(Browning, J.), the Court denied
a plaintiff’s request for additional time to respond to a defendant’s motion for summary judgment,
when the only rationale that the plaintiff provided was that its counsel’s “family and medical
emergencies” precluded the plaintiff from timely responding. 2007 WL 2298440, at *2. See
Gallegos v. Wood, No. CIV 13-1055 JB/KBM, 2017 WL 3701866, at *38 (D.N.M. Aug. 25,
2017)(Browning, J.)(determining that the plaintiffs established “good cause” when the plaintiffs
relied on the United States’ initial assurances that it would not object to an extension for
designating expert witnesses); Trujillo v. Rio Arriba Cty., No. CIV 15-0901 JB/WPL, 2016 WL
4035340, at *10 (D.N.M. June 15, 2016)(Browning, J.)(concluding that “good cause” existed for
extending discovery when a plaintiff missed a discovery deadline, because the plaintiff relied on
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the defendants’ assertions while working with the defendants’ schedule to organize depositions);
Upky v. Lindsey, No. CIV 13-0553 JB/GBW, 2015 WL 3543058, at *6-7 (D.N.M. May 14,
2015)(Browning, J.)(granting a scheduling modification to obtain a firm trial date, and stating that
the Court would not modify a pretrial schedule because a witness’ deposition could only be done
by videotape); Peshlakai v. Ruiz, No. CIV 13-0752 JB/ACT, 2013 WL 6503604, at *14-15
(D.N.M. Nov. 20, 2013)(Browning, J.)(allowing a scheduling modification where the plaintiffs
shaped “their initial expert strategy around apparent misinformation” and later discovered that they
required an expert, and rejecting the argument that postponing trial and requiring the defendants’
to revise their summary judgment briefing would incurably prejudice the defendants); United
States v. Hopkins, No. CIV 11-0416 JB/CG, 2012 WL 6846400, at *6 (D.N.M. Dec. 22,
2012)(Browning, J.)(concluding that, where a plaintiff proceeded “pro se, from federal prison,”
and sought information from the United States, which possessed the information sought, the
plaintiff showed good cause).
LAW REGARDING GOOD CAUSE AND EXCUSABLE NEGLECT
The Tenth Circuit has “recognized the interrelation between ‘excusable neglect’ and ‘good
cause.’” Pulsecard, Inc. v. Discover Card Servs. Inc., 168 F.R.D. at 301 (citing In re Kirkland, 86
F.3d at 175). In general, the phrases “good cause” and “excusable neglect” are assumed to have
the same meaning in various statutory contexts. Courts generally presume that a drafter of a statute
intends identical language in statutes with similar purposes to have the same meaning. See Merrill
Lynch, Pierce, Fenner & Smith v. Dabit, 547 U.S. 71, 85-86 (2006)(Stevens, J.). Moreover, “[t]he
rules of statutory construction apply to the Federal Rules.” In re Kubler, No. MC 11-0048 JB,
2012 WL 394680, at *11 (D.N.M. Jan. 25, 2012)(Browning, J.). Accord Leatherman v. Tarrant
Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993)(applying the expressio
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unius est exclusio alterius canon10 to interpret rule 9(b) of the Federal Rules of Civil Procedure);
Hillis v. Heineman, 626 F.3d 1014, 1017-18 (9th Cir. 2010)(“This same principle of statutory
construction applies to interpreting the Federal Rules of Civil Procedure.”). The Court, for
example, has relied upon the meaning of “good cause” under rule 16 of the Federal Rules of Civil
Procedure -- which concerns amendments of scheduling orders -- when interpreting “good cause”
under rule 32 of the Federal Rules of Criminal Procedure -- which concerns criminal sentencing
and judgment. United States v. Jones, No. CR 14-0769 JB, 2016 U.S. Dist. LEXIS 9938, at *8-11
(D.N.M. Jan. 15, 2016)(Browning, J.).
In the civil rule 16 context, the Court has stated that the good-cause inquiry focuses on the
diligence of the party seeking to amend a scheduling deadline. See Walker v. THI of N.M. at
Hobbs Ctr., 262 F.R.D. 599, 602-03 (D.N.M. 2009)(Browning, J.); Guidance Endodontics, LLC
v. Dentsply Int’l, Inc., No. CIV 08-1101 JB/RLP, 2009 WL 3672505, at *2-3 (D.N.M. Sept. 29,
2009)(Browning, J.); Trujillo v. Bd. of Educ. of the Albuquerque Pub. Schs., Nos. CIV 02-1146
JB/LFG, CIV 03-1185 JB/LFG, 2007 WL 2296955, at *3 (D.N.M. June 5, 2007)(Browning, J.).
The Court has concluded that, “[p]roperly construed, ‘good cause’ means that scheduling deadlines
cannot be met despite a party’s diligent efforts.” Advanced Optics Elecs., Inc. v. Robins, 769
F. Supp. 2d at 1313. Accord Gerald v. Locksley, No. CIV 10-0721 JB/LFG, 2011 WL 3510845,
at *13-14 (D.N.M. Aug. 1, 2011)(Browning, J.). Thus, “the moving party [must] show that it has
been diligent in attempting to meet the deadlines, which means it must provide an adequate
explanation for any delay.” Minter v. Prime Equip. Co., 451 F.3d 1196, 1205 n.4 (10th Cir. 2006).
Expressio unius est exclusio alterius is “the canon that expressing one item of a
commonly associated group or series excludes another left unmentioned.” United States v. Vonn,
535 U.S. 55, 65 (2002).
10
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Where a party is diligent in its discovery efforts and nevertheless cannot comply with the
scheduling order, the Court has found good cause to modify the scheduling order if the requesting
party timely brings forward its request. For example, in Advanced Optics Electronics, Inc. v.
Robins, the Court found that, where the defendant did not conduct discovery or make any goodfaith discovery requests, and where the defendant did not make efforts “diligent or otherwise” to
conduct discovery, the defendant did not show good cause to modify the scheduling order. 769
F. Supp. 2d at 1313 n.8. By contrast, in Street v. Curry Board of County Commissioners, the Court
found that the plaintiff had “shown good cause for a delay in seeking leave to amend,” because
she “was diligent in pursuing discovery . . . [and] brought to the Court’s attention her identification
of an additional claim in a timely manner,” where she discovered the claim through “documents
provided in discovery.” 2008 WL 2397671, at *11. The Court arrived at a similar determination
in Abraham v. WPX Production Productions, LLC, No. CIV 06-0776 JB/KBM, 2016 WL 548251
(D.N.M. Jan. 25, 2016)(Browning, J.). There, the Court found good cause to amend a pleading
when the plaintiffs had a very short amount of time to amend the pleadings, “even though
discovery had only just begun.” 2016 WL 548251, at *20. “The Plaintiffs may not have obtained
or reviewed all of the documents that might reveal their conspiracy claim’s existence before the
deadline to amend passed.” 2016 WL 548251, at *20. Furthermore, the delay was minimal and
would not prejudice the defendants. See 2016 WL 548251, at *20.
Overall, good cause requires diligence and a conscientious attempt to comply with the
Court’s scheduling order. When parties have not done so, the Court has not found good cause. In
Montoya v. Sheldon, the Court did not find good cause to modify the scheduling order and reopen
discovery where the plaintiffs’ excuse for not disclosing their expert before the close of discovery
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was that they thought the case would settle and they would thus not require expert testimony. See
2012 WL 5353493, at *14. The Court noted:
The [plaintiffs] filed this case on April 15, 2010. Because [Plaintiff] D. Montoya
had seen the physician before that date, the fact that the [plaintiffs] are only now
bringing the physician forward as a newly identified expert witness, over two years
later, and over one and a half years after the deadline to disclose expert witnesses,
does not evidence circumstances in which the Court can find excusable neglect nor
good cause.
2012 WL 5353493, at *14.
The Tenth Circuit has previously considered the meaning of “excusable neglect” in the
context of relief from a final judgment, order, or proceeding under rule 60(b) of the Federal Rules
of Civil Procedure. United States v. Timers Pres., 999 F.2d 452, 454 (10th Cir. 1993). “[T]hree
requirements . . . must be met when setting aside a default judgment under Rule 60(b): (1) the
moving party’s culpable conduct did not cause the default; (2) the moving party has a meritorious
defense; and (3) the non-moving party will not be prejudiced by setting aside the judgment.”
United States v. Timers Pres., 999 F.2d at 454 (citing Meadows v. Dominican Republic, 817 F.2d
517, 521 (9th Cir. 1987); INVST Fin. Grp., Inc. v. Chem-Nuclear Sys., Inc., 815 F.2d 391, 398
(6th Cir. 1987); 6 James W. Moore, et al., Moore’s Federal Practice ¶ 55.10[1] (2d ed. 1992)). In
determining whether a party’s neglect is excusable, the question
“is at bottom an equitable one, taking account of all relevant circumstances
surrounding the party’s omission.” Relevant factors include “the danger of
prejudice to the [opposing party], the length of the delay and its potential impact on
judicial proceedings, the reason for the delay, including whether it was within the
reasonable control of the movant, and whether the movant acted in good faith.”
Jennings v. Rivers, 394 F.3d 850, 856-57 (10th Cir. 2005)(quoting Pioneer Inv. Servs. Co. v.
Brunswich Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993)(“Pioneer”)). In this context, as in others,
the Tenth Circuit has stated that the reason for delay is an important, if not the most important,
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factor in this analysis. See Hamilton v. Water Whole Int’l Corp., 302 F. App’x 789, 798 (10th Cir.
2008)(unpublished)(citing United States v. Torres, 372 F.3d 1159, 1163 (10th Cir.
2004)(analyzing the excusable neglect standard in the context of rule 4(b)(4) of the Federal Rules
of Appellate Procedure, where the party filed an untimely notice of appeal)).
The relevant factors that the Tenth Circuit used in Jennings v. Rivers with regard to
60(b)(1) have been used to determine whether excusable neglect exists in a number of other
contexts. See Pioneer, 507 U.S. at 395 (discussing application of the excusable neglect standard
to Federal Rules Bankruptcy Procedure 9006(b)(1)); In re Kirkland, 86 F.3d at 175 (concluding
that in Pioneer “the Supreme Court [ of the United States] relied upon use of the term ‘excusable
neglect’ in a broad sense in Rules 6(b), 13(f), 60(b)(1), and 60(b)(6),” but that the Pioneer factors
did not apply to the “good cause” standard under rule 4(j)); City of Chanute v. Williams Nat. Gas
Co., 31 F.3d 1041, 1046 (10th Cir. 1994)(“Thus, we apply the Pioneer test for ‘excusable neglect’
under Fed. R. App. P. 4(a)(5).”); United States v. Torres, 372 F.3d at 1162 (“We now likewise
conclude that the Supreme Court’s construction of ‘excusable neglect’ in Pioneer also applies to
the term ‘excusable neglect’ as it is used in Federal Rule of Appellate Procedure 4(b)(4).”).
Deliberate tactics do not create excusable neglect; “‘[e]xcusable litigation mistakes are not those
which were the result of a deliberate and counseled decision by the complaining party . . . . ;’
rather, they are the ‘kinds of mistakes that a party could not have protected against.’” Thompson
v. THI of N.M. at Casa Arena, No. CIV 05-1331 JB/LCS, 2008 WL 5999653, at *18 (D.N.M. Dec.
24, 2008)(Browning, J.)(quoting Yapp v. Excel Corp., 186 F.3d 1222, 1231 (10th Cir. 1999)).
The Court has applied the Pioneer factors to find that a party demonstrated excusable
neglect when its attorney failed to respond to a motion for summary judgment, because its attorney
mistakenly thought that the Court’s vacating a scheduling order meant there was no deadline for
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filing responsive pleadings. See Estate of Anderson v. Denny’s, Inc., No. CIV 12-0605 JB/GBW,
2013 WL 690809, at *13-14 (D.N.M. Feb. 7, 2013)(Browning, J.). The Court noted that the
attorney’s failure to file a responsive pleading was not unintentional, as the attorneys’
misunderstanding of local court rules caused him to think that he did not need to respond. See
2013 WL 690809, at *14. The Court also noted that the attorney was honest with his reason for
not filing, as he did not make up an excuse of catastrophic circumstances precluding him from
responding. See 2013 WL 690809, at *14. The Court recognized that granting the party leave to
file a late response was “generous,” and that the attorney’s failure to respond was “barely
excusable.” 2013 WL 690809, at *14. The Court also explained that it is bound by Tenth Circuit
precedent requiring the Court to determine motions for summary judgment on their merits, rather
than granting such motions for procedural defaults. See 2013 WL 690809, at *14 (citing Reed v.
Bennett, 312 F.3d 1190, 1196 (10th Cir. 2002)). The Court also found that the prejudice to the
party requesting summary judgment was little, as the only costs the party would incur are those it
would also have incurred had the attorney timely responded. See Estate of Anderson v. Denny’s,
Inc., 2013 WL 690809, at *14-15.
By contrast, the Court has denied a plaintiff’s request for an extension of time to name an
expert witness against a defendant, when the plaintiff asserted that he had waited to name an expert
witness until a second defendant joined the case, because, before the second defendant entered the
case, a scheduling order was in effect, and the plaintiff should have known that he would need to
name an expert witness against the defendant already in the case. See Scull v. Mgmt. & Training
Corp., 2012 WL 1596962, at *8. The Court stated that the plaintiff was seeking “relief from his
own disregard” for the deadline. 2012 WL 1596962, at *8. “Despite his knowledge that
[Defendant] PNA had yet to enter the case, [Plaintiff] Scull chose to allow the deadline to pass
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without naming expert witnesses against [Defendant] MTC.” 2012 WL 1596962, at *8. Regarding
the defendant who entered the case at a later date, however, the Court allowed the plaintiff an
extension of time to name an expert witness, as it “was not unreasonable for Scull to expect a new
deadline to name expert witnesses upon PNA’s entrance into the case because he had not yet had
the opportunity to engage in discovery against PNA as he had against MTC.” 2012 WL 1596962,
at *9. The Court also noted that not naming an expert witness “is a high price to pay for missing
a deadline that was arguably unrealistic when it was set,” as Scull could not have determined the
need for an expert witness until after PNA entered the case. 2012 WL 1596962, at *9.
In Stark-Romero v. National Railroad Passenger Co. (AMTRAK), the Court found that a
lawyer had shown excusable neglect when his reason for missing a scheduling deadline was that
soon after his son’s wedding, his father-in-law developed a tumor in his chest, the lawyer arranged
his father-in-law’s medical care, and only after the lawyer returned to his work did he realize that
a deadline passed. See 275 F.R.D. at 549-50. The Court noted that the lawyer could have avoided
missing the deadline had he not left his work until the last minute, just before his son’s wedding,
but found that the lawyer had demonstrated good faith and missed the deadline because of “life
crises,” and not his own inadvertence. 275 F.R.D. at 549-50. On the other hand, in Liles v.
Washington Tru Solutions, LLC, the Court denied a plaintiff’s request for additional time to
respond to a defendant’s motion for summary judgment, when the plaintiff’s only rationale was
that its counsel’s “family and medical emergencies” -- without further explanation -- precluded the
plaintiff from timely responding. 2007 WL 2298440, at *2.
LAW REGARDING MOTIONS FOR SUMMARY JUDGMENT
Rule 56(a) of the Federal Rules of Civil Procedure states: “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and the
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movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The movant bears the
initial burden of ‘show[ing] that there is an absence of evidence to support the nonmoving party’s
case.’”
Herrera v. Santa Fe Pub. Sch., 956 F. Supp. 2d 1191, 1221 (D.N.M.
2013)(Browning, J.)(quoting Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th
Cir. 1991)). See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)(“Celotex”).
Before the court can rule on a party’s motion for summary judgment, the moving
party must satisfy its burden of production in one of two ways: by putting evidence
into the record that affirmatively disproves an element of the nonmoving party’s
case, or by directing the court’s attention to the fact that the non-moving party lacks
evidence on an element of its claim, “since a complete failure of proof concerning
an essential element of the nonmoving party’s case necessarily renders all other
facts immaterial.” Celotex, 477 U.S. at 323-25. On those issues for which it bears
the burden of proof at trial, the nonmovant “must go beyond the pleadings and
designate specific facts to make a showing sufficient to establish the existence of
an element essential to his case in order to survive summary judgment.” Cardoso
v. Calbone, 490 F.3d 1194, 1197 (10th Cir. 2007).
Plustwik v. Voss of Nor. ASA, No. CIV 11-0757, 2013 WL 1945082, at *1 (D. Utah May 9,
2013)(Sam, J.). “If the moving party will bear the burden of persuasion at trial, that party must
support its motion with credible evidence -- using any of the materials specified in Rule 56(c) -that would entitle it to a directed verdict if not controverted at trial.” Celotex, 477 U.S. at 331
(Brennan, J., dissenting)(emphasis in original).11 Once the movant meets this burden, rule 56
requires the nonmoving party to designate specific facts showing that there is a genuine issue for
trial. See Celotex, 477 U.S. at 324; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986)(“Liberty Lobby”). In American Mechanical Solutions, LLC v. Northland Process Piping,
11
Although the Honorable William J. Brennan, Jr., Associate Justice of the Supreme Court
of the United States, dissented in Celotex, this sentence is widely understood to be an accurate
statement of the law. See 10A Charles Allen Wright & Arthur R. Miller, Federal Practice and
Procedure § 2727, at 470 (3d ed. 1998)(“Although the Court issued a five-to-four decision, the
majority and dissent both agreed as to how the summary-judgment burden of proof operates; they
disagreed as to how the standard was applied to the facts of the case.”).
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Inc., 184 F. Supp. 3d 1030 (D.N.M. 2016)(Browning, J.), the Court granted summary judgment
for the defendant when the plaintiff did not offer expert evidence supporting causation or
proximate
causation
in
its
breach-of-contract
or
breach-of-the-implied-warranty-of-
merchantability claims. 184 F. Supp. 3d at 1075. The Court reasoned that the plaintiff could prove
neither the breach-of-contract claim’s causation requirement nor the breach-of-the-impliedwarranty-of-merchantability claims’ proximate-causation requirement with mere common
knowledge, and the plaintiff provided no expert testimony bolstering its arguments. See 184
F. Supp. 3d at 1075, 1079. Without the requisite evidence, the plaintiff, the Court determined,
failed to prove “an essential element of the nonmoving party’s case,” rendering “all other facts
immaterial.” 184 F. Supp. 3d at 1075 (quoting Plustwik v. Voss of Nor. ASA, 2013 WL 1945082,
at *1).
The party opposing a motion for summary judgment must “set forth specific facts showing
that there is a genuine issue for trial as to those dispositive matters for which it carries the burden
of proof.” Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.
1990). See Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10th Cir. 1993)(“However, the nonmoving
party may not rest on its pleadings but must set forth specific facts showing that there is a genuine
issue for trial as to those dispositive matters for which it carries the burden of proof.” (internal
quotation marks omitted)(quoting Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912
F.2d at 1241)). Rule 56(c)(1) provides: “A party asserting that a fact . . . is genuinely disputed
must support the assertion by . . . citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits or declarations, stipulations
(including those made for purposes of the motion only), admissions, interrogatory answers, or
other materials.” Fed. R. Civ. P. 56(c)(1). It is not enough for the party opposing a properly
- 29 -
supported motion for summary judgment to “rest on mere allegations or denials of his pleadings.”
Liberty Lobby, 477 U.S. at 256. See Abercrombie v. City of Catoosa, 896 F.2d 1228, 1231 (10th
Cir. 1990); Otteson v. United States, 622 F.2d 516, 519 (10th Cir. 1980)(“[O]nce a properly
supported summary judgment motion is made, the opposing party may not rest on the allegations
contained in his complaint, but must respond with specific facts showing the existence of a genuine
factual issue to be tried.” (internal quotation marks omitted)(quoting Coleman v. Darden, 595
F.2d, 533, 536 (10th Cir. 1979)).
Nor can a party “avoid summary judgment by repeating conclusory opinions, allegations
unsupported by specific facts, or speculation.” Colony Nat’l Ins. v. Omer, No. CIV 07-2123, 2008
WL 2309005, at *1 (D. Kan. June 2, 2008)(Robinson, J.)(citing Fed. R. Civ. P. 56(e); Argo v. Blue
Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199 (10th Cir. 2006)). “In responding to a
motion for summary judgment, ‘a party cannot rest on ignorance of facts, on speculation, or on
suspicion and may not escape summary judgment in the mere hope that something will turn up at
trial.’” Colony Nat’l Ins. v. Omer, 2008 WL 2309005, at *1 (quoting Conaway v. Smith, 853 F.2d
789, 794 (10th Cir. 1988)).
To deny a motion for summary judgment, genuine factual issues must exist that “can be
resolved only by a finder of fact because they may reasonably be resolved in favor of either party.”
Liberty Lobby, 477 U.S. at 250. A mere “scintilla” of evidence will not avoid summary judgment.
Vitkus v. Beatrice Co., 11 F.3d at 1539 (citing Liberty Lobby, 477 U.S. at 248). Rather, there
must be sufficient evidence on which the fact finder could reasonably find for the nonmoving
party. See Liberty Lobby, 477 U.S. at 251 (citing Vitkus v. Beatrice Co., 11 F.3d at 1539;
Schuylkill & Dauphin Improvement Co. v. Munson, 81 U.S. 442, 448 (1871)). “[T]here is no
evidence for trial unless there is sufficient evidence favoring the nonmoving party for a jury to
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return a verdict for that party. If the evidence is merely colorable . . . or is not significantly
probative, . . . summary judgment may be granted.” Liberty Lobby, 477 U.S. at 249 (citations
omitted)(citing First Nat. Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 290 (1968); Dombrowski
v. Eastland, 387 U.S. 82, 87 (1967)). Where a rational trier of fact, considering the record as a
whole, cannot find for the nonmoving party, there is no genuine issue for trial. See Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
When reviewing a motion for summary judgment, the court should keep in mind certain
principles. First, the court’s role is not to weigh the evidence, but to assess the threshold issue
whether a genuine issue exists as to material facts requiring a trial. See Liberty Lobby, 477 U.S.
at 249. Second, the ultimate standard of proof is relevant for purposes of ruling on a summary
judgment, such that, when ruling on a summary judgment motion, the court must “bear in mind
the actual quantum and quality of proof necessary to support liability.” Liberty Lobby, 477 U.S.
at 254. Third, the court must resolve all reasonable inferences and doubts in the nonmoving party’s
favor, and construe all evidence in the light most favorable to the nonmoving party. See Liberty
Lobby, 477 U.S. at 255 (“The evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.”); Hunt v. Cromartie, 526 U.S. 541, 550-55 (1999). Fourth,
the court cannot decide any issues of credibility. See Liberty Lobby, 477 U.S. at 255.
There are, however, limited circumstances in which the court may disregard a party’s
version of the facts. This doctrine developed most robustly in the qualified immunity arena. In
Scott v. Harris, 550 U.S. 372 (2007), the Supreme Court concluded that summary judgment is
appropriate where video evidence “quite clearly contradicted” the plaintiff’s version of the facts.
550 U.S. at 378-81. The Supreme Court explained:
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At the summary judgment stage, facts must be viewed in the light most
favorable to the nonmoving party only if there is a “genuine” dispute as to those
facts. Fed. Rule Civ. Proc. 56(c). As we have emphasized, “[w]hen the moving
party has carried its burden under Rule 56(c), its opponent must do more than
simply show that there is some metaphysical doubt as to the material facts . . . .
Where the record taken as a whole could not lead a rational trier of fact to find for
the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita Elec.
Indus[.] Co. v. Zenith Radio Corp., 475 U.S. [at] 586-587 . . . (footnote omitted).
“[T]he mere existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact.” Anderson v. Liberty
Lobby, Inc., 477 U.S. [at] 247-248 . . . . When opposing parties tell two different
stories, one of which is blatantly contradicted by the record, so that no reasonable
jury could believe it, a court should not adopt that version of the facts for purposes
of ruling on a motion for summary judgment.
That was the case here with regard to the factual issue whether respondent
was driving in such fashion as to endanger human life. Respondent’s version of
events is so utterly discredited by the record that no reasonable jury could have
believed him. The Court of Appeals should not have relied on such visible fiction;
it should have viewed the facts in the light depicted by the videotape.
550 U.S. at 380-81 (emphasis in original).
The Tenth Circuit applied this doctrine in Thomson v. Salt Lake County, 584 F.3d 1304
(10th Cir. 2009), and explained:
[B]ecause at summary judgment we are beyond the pleading phase of the litigation,
a plaintiff’s version of the facts must find support in the record: more specifically,
“[a]s with any motion for summary judgment, when opposing parties tell two
different stories, one of which is blatantly contradicted by the record, so that no
reasonable jury could believe it, a court should not adopt that version of the facts.”
York v. City of Las Cruces, 523 F.3d 1205, 1210 (10th Cir. 2008)(quoting Scott[
v. Harris], 550 U.S. at 380); see also Estate of Larsen ex rel. Sturdivan v. Murr, 511
F.3d 1255, 1258 (10th Cir. 2008).
584 F.3d at 1312 (brackets omitted). “The Tenth Circuit, in Rhoads v. Miller, 352 F. App’x 289
[, 291] (10th Cir. 2009) . . . [(unpublished),] explained that the blatant contradictions of the record
must be supported by more than other witnesses’ testimony[.]” Lymon v. Aramark Corp., 728
F. Supp. 2d 1222, 1249 (D.N.M. 2010)(Browning, J.), aff’d, 499 F. App’x 771 (10th Cir. 2012).
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LAW REGARDING CLASS CERTIFICATION UNDER RULE 23
Rule 23 sets forth the requirements for certifying a class action under the Federal Rules of
Civil Procedure. See Fed. R. Civ. P. 23. All classes must satisfy: (i) all the requirements of rule
23(a); and (ii) one of the three sets of requirements under rule 23(b), where the three sets of
requirements correspond to the three categories of classes that a court may certify. See Fed. R.
Civ. P. 23(a)-(b). The plaintiff12 bears the burden of showing that the requirements are met, see
Rex v. Owens ex rel. Okla., 585 F.2d 432, 435 (10th Cir. 1978); Pueblo of Zuni v. United States,
243 F.R.D. 436, 444 (D.N.M. 2007)(Johnson, J.), but, in doubtful cases, class certification is
favored, see Esplin v. Hirschi, 402 F.2d 94, 101 (10th Cir. 1968)(“[T]he interests of justice require
that in a doubtful case, . . . any error, if there is to be one, should be committed in favor of allowing
the class action.”); Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 563 (2d Cir. 1968)(“[W]e hold
that . . . rule [23] should be given a liberal rather than a restrictive interpretation, and that [denying
certification] is justified only by a clear showing to that [end]. . . .”). In ruling on a class
certification motion, the Court need not accept either party’s representations, but must
independently find the relevant facts by a preponderance of the evidence. 13 See Rutstein v. Avis
12
Technically, it is the party seeking certification, i.e., the movant, who bears the burden of
proof, and defendants may also move for class certification. See William B. Rubenstein, Newberg
on Class Actions § 7:20 (5th ed.). As a practical matter, however, motions for class certification
are made almost exclusively by plaintiffs.
13
As the Court has previously noted, Tenth Circuit precedent suggests that the Court must
show some level of deference to the Complaint’s factual allegations when ruling on a rule 23
motion: “The Court must accept a plaintiff’s substantive allegations as true,” but it “need not
blindly rely on conclusory allegations which parrot Rule 23,” and “may consider the legal and
factual issues presented by plaintiff’s complaints.” In re Thornburg Mortg., Inc. Sec. Litig., 912
F. Supp. 2d 1178, 1120 (D.N.M. 2012)(Browning, J.)(citing Shook v. El Paso Cty., 386 F.3d 963,
968 (10th Cir. 2004); J.B. v. Valdez, 186 F.3d 1280, 1290 n.7 (10th Cir. 1999); Eisen v. Carlisle
& Jacquelin, 417 U.S. at 178). Since the Court’s statement in In re Thornburg Mortgage, Inc.
Securities Litigation, however, the Tenth Circuit issued an opinion stating that district courts
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Rent-A-Car Sys., Inc., 211 F.3d at 1234 (“Going beyond the pleadings is necessary, as a court
must understand the claims, defenses, relevant facts, and applicable substantive law in order to
make a meaningful determination of the certification issues.”). “In determining the propriety of a
class action, the question is not whether the plaintiff or plaintiffs have stated a cause of action or
will prevail on the merits, but rather whether the requirements of Rule 23 are met.” Anderson v.
City of Albuquerque, 690 F.2d at 799. See Vallario v. Vandehey, 554 F.3d at 1267 (“We, of
course, adhere to the principle that class certification does not depend on the merits of a suit.”).
Still, the Court must conduct a rigorous analysis of the rule 23 requirements, even if the facts that
the Court finds in its analysis bear on the merits of the suit:
Rule 23 does not set forth a mere pleading standard. A party seeking class
certification must affirmatively demonstrate his compliance with the Rule -- that is,
he must be prepared to prove that there are in fact sufficiently numerous parties,
common questions of law or fact, etc. We recognized in [General Telephone Co.
of the Southwest v.] Falcon that “sometimes it may be necessary for the court to
probe behind the pleadings before coming to rest on the certification question,” and
that certification is proper only if “the trial court is satisfied, after a rigorous
analysis, that the prerequisites of Rule 23(a) have been satisfied. Actual, not
presumed, conformance with Rule 23(a) remains indispensable.” Frequently that
“rigorous analysis” will entail some overlap with the merits of the plaintiff’s
underlying claim. That cannot be helped. The class determination generally
involves considerations that are enmeshed in the factual and legal issues comprising
the plaintiff’s cause of action. Nor is there anything unusual about that
should apply a “strict burden of proof” to class certification issues. Wallace B. Roderick
Revocable Living Tr. v. XTO Energy, Inc., 725 F.3d 1213, 1218 (10th Cir. 2013). This request is
consistent with the general trend in the federal judiciary toward using an ordinary preponderance
standard to find facts at the class certification stage. See, e.g., Teamsters Local 445 Freight Div.
Pension Fund v. Bombardier, Inc., 546 F.3d 196, 202 (2d Cir. 2008); In re Hydrogen Peroxide
Litig., 552 F.3d 305, 318-20 (3d Cir. 2008); William B. Rubenstein, Newberg on Class Actions
§ 7.21 (5th ed. 2017)(“Newberg”)(tracing the shift in the case law from deferring to plaintiffs’
representations to adopting an ordinary preponderance standard, and disclaiming the Court’s
statement from In re Thornburg Mortgage, Inc. Securities Litigation -- a statement that earlier
versions of the treatise espoused). Thus, although the Tenth Circuit has not yet explicitly adopted
the preponderance standard for fact-finding in class certification analyses, it most likely will, and
the Court will employ that standard here.
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consequence: The necessity of touching aspects of the merits in order to resolve
preliminary matters, e.g., jurisdiction and venue, is a familiar feature of litigation.
Wal-Mart, 564 U.S. at 350-52. In a subsequent, seemingly contradictory admonition, however,
the Supreme Court cautioned district courts not to decide the case’s merits at the class certification
stage:
Although we have cautioned that a court’s class-certification analysis must be
“rigorous” and may “entail some overlap with the merits of the plaintiff’s
underlying claim,” Rule 23 grants courts no license to engage in free-ranging merits
inquiries at the certification stage. Merits questions may be considered to the extent
-- but only to the extent -- that they are relevant to determining whether the Rule 23
prerequisites for class certification are satisfied.
Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 465-66 (2013). To reconcile these
two directives, the Court will find facts for the purposes of class certification by the preponderance
of the evidence but will allow the parties to challenge these findings during the subsequent merits
stage of this case. This approach is analogous to preliminary injunction practice, and many circuits
have endorsed it. See Abbott v. Lockheed Martin Corp., 725 F.3d 803, 810 (7th Cir. 2013); In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 313 (3d Cir. 2008); Gariety v. Grant Thornton,
LLP, 368 F.3d 356, 366 (4th Cir. 2004). Because of the res judicata effect a class judgment has
on absent parties, a court may not simply accept the named parties’ stipulation that class
certification is appropriate, but must conduct its own independent rule 23 analysis. See Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 620-22 (1997). In taking evidence on the question of class
certification, the Federal Rules of Evidence apply, albeit in a relaxed fashion. See Anderson Living
Trust v. WPX Energy Production LLC, 306 F.R.D. 312, 378 n.39 (D.N.M. 2015)(Browning, J.).
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1.
Rule 23(a).
All classes must satisfy the prerequisites of rule 23(a):
(a)
Prerequisites. One or more members of a class may sue or be sued as
representative parties on behalf of all members only if:
(1)
the class is so numerous that joinder of all members is
impracticable;
(2)
there are questions of law or fact common to the class;
(3)
the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and
(4)
the representative parties will fairly and adequately protect
the interests of the class.
Fed. R. Civ. P. 23(a). “A party seeking to certify a class is required to show . . . that all the
requirements of [rule 23(a)] are clearly met.” Reed v. Bowen, 849 F.2d 1307, 1309 (10th Cir.
1988). “Although the party seeking to certify a class bears the burden of proving that all the
requirements of Rule 23 are met, the district court must engage in its own ‘rigorous analysis’ of
whether ‘the prerequisites of Rule 23(a) have been satisfied.’” Shook v. El Paso Cty., 386 F.3d
963, 968 (10th Cir. 2004)(quoting Gen. Tel. Co. of the S.W. v. Falcon, 457 U.S. 147, 161 (1982),
and citing Reed v. Bowen, 849 F.2d at 1309). These four requirements are often referenced as
numerosity, commonality, typicality, and adequacy, respectively. See Fed. R. Civ. P. 23(a).
Rule 23(a)(2) requires that “there are questions of law or fact common to the class.” Fed.
R. Civ. P. 23(a)(2). Even “factual differences in the claims of the individual putative class
members should not result in a denial of class certification where common questions of law exist.”
In re Intelcom Grp. Sec. Litig., 169 F.R.D. 142, 148 (D. Colo. 1996)(Daniel, J.). See Adamson v.
Bowen, 855 F.2d 668, 676 (10th Cir. 1988)(“That the claims of individual putative class members
may differ factually should not preclude certification under Rule 23(b)(2) of a claim seeking the
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application of a common policy.”); Lopez v. City of Santa Fe, 206 F.R.D. 285, 289 (D.N.M.
2002)(Vázquez, J.)(“Commonality requires only a single issue common to the class, and the fact
that ‘the claims of individual putative class members may differ factually should not preclude
certification under Rule 23(b)(2) of a claim seeking the application of a common policy.’”
(citations omitted)(citing In re Am. Med. Sys., Inc., 75 F.3d 1069, 1080 (6th Cir. 1996); Adamson
v. Bowen, 855 F.2d at 676)). A single common question will suffice to satisfy rule 23(a)(2), but
the question must be one “that is central to the validity of each one of the claims.” Wal-Mart, 564
U.S. at 349.
“Where the facts as alleged show that Defendants’ course of conduct concealed material
information from an entire putative class, the commonality requirement is met.” In re Oxford
Health Plans, Inc. Sec. Litig., 191 F.R.D. 369, 374 (S.D.N.Y. 2000)(Brieant, J.).
The commonality requirement was widely perceived to lack teeth before the Supreme
Court’s decision in Wal-Mart, which grafted the following requirements onto rule 23(a)(2): (i) that
the common question is central to the validity of each claim that the proposed class brings; and
(ii) that the common question is capable of a common answer. See Wal-Mart, 564 U.S. at 348-52.
In that case, a proposed class of about 1.5 million current and former Wal-Mart employees sought
damages under Title VII for Wal-Mart’s alleged gender-based discrimination. See 564 U.S. at
342. Wal-Mart, however, had no centralized company-wide hiring or promotion policy, instead
opting to leave personnel matters to the individual store managers’ discretion. See 564 U.S. at
343-45. The plaintiffs argued that, although no discriminatory formal policy applied to all
proposed class members, “a strong and uniform ‘corporate culture’ permits bias against women to
infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s
thousands of managers -- thereby making every [proposed class member] the victim of one
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common discriminatory practice.” 564 U.S. at 345. The Supreme Court disagreed that such a
theory constitutes a common question under rule 23(a)(2).
The crux of this case is commonality -- the rule requiring a plaintiff to show
that “there are questions of law or fact common to the class.” Rule 23(a)(2). That
language is easy to misread, since “[a]ny competently crafted class complaint
literally raises common ‘questions.’” Nagareda, Class Certification in the Age of
Aggregate Proof, 84 N.Y.U. L. Rev. 97, 131-132 (2009). For example: Do all of
us plaintiffs indeed work for Wal-Mart? Do our managers have discretion over
pay? Is that an unlawful employment practice? What remedies should we get?
Reciting these questions is not sufficient to obtain class certification. Commonality
requires the plaintiff to demonstrate that the class members “have suffered the same
injury,” [Gen. Tel. Co. of the S.W. v. Falcon, 457 U.S. at 157]. This does not mean
merely that they have all suffered a violation of the same provision of law. Title
VII, for example, can be violated in many ways -- by intentional discrimination, or
by hiring and promotion criteria that result in disparate impact, and by the use of
these practices on the part of many different superiors in a single company. Quite
obviously, the mere claim by employees of the same company that they have
suffered a Title VII injury, or even a disparate-impact Title VII injury, gives no
cause to believe that all their claims can productively be litigated at once. Their
claims must depend upon a common contention -- for example, the assertion of
discriminatory bias on the part of the same supervisor. That common contention,
moreover, must be of such a nature that it is capable of classwide resolution -- which
means that determination of its truth or falsity will resolve an issue that is central
to the validity of each one of the claims in one stroke.
What matters to class certification . . . is not the raising of
common “questions” -- even in droves -- but, rather the capacity of
a classwide proceeding to generate common answers apt to drive the
resolution of the litigation. Dissimilarities within the proposed class
are what have the potential to impede the generation of common
answers.
Wal-Mart, 564 U.S. at 349-50 (emphasis in original)(quoting Nagareda, supra, at 132). In EQT
Production Co. v. Adair, 764 F.3d 347 (4th Cir. 2011), the United States Court of Appeals for the
Fourth Circuit stated:
We first review the aspects of the district court’s analysis that apply to all
five royalty underpayment classes.
At bottom, the district court believed that both the commonality and
predominance requirements of Rule 23 were satisfied by the same basic fact: the
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defendants employed numerous uniform practices related to the calculation and
payment of CBM [coalbed methane gas] royalties. These common practices are
not irrelevant to Rule 23(b)’s predominance requirement. But we hold that the
district court abused its discretion by failing to consider the significance of this
common conduct to the broader litigation.
The district court identified numerous common royalty payment practices.
For example, it noted that EQT sells all of the CBM it produces in Virginia to an
affiliate, EQT Energy, and that “all royalty owners within the same field have been
paid royalties based on the same sales price for the CBM.” With respect to CNX,
it noted that CNX “has uniform policies and procedures which governed its
calculation of CBM revenues,” and that “it has deducted severance and license
taxes when calculating royalties since January 1, 2004.”
That the defendants engaged in numerous common practices may be
sufficient for commonality purposes. As noted above, the plaintiffs need only
demonstrate one common question of sufficient importance to satisfy Rule
23(a)(2).
764 F.3d at 366 (citations omitted).
In Wal-Mart, the Honorable Antonin Scalia, Associate Justice of the Supreme Court of the
United States, stated: “Wal-Mart is entitled to individualized determinations of each employee’s
eligibility for backpay.” 564 U.S. at 366. From this observation, he then concluded:
Because the Rules Enabling Act forbids interpreting Rule 23 to “abridge, enlarge
or modify any substantive right,” 28 U.S.C. § 2072(b), a class cannot be certified
on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to
individual claims. And because the necessity of that litigation will prevent backpay
from being “incidental” to the classwide injunction, respondents’ class could not
be certified even assuming, arguendo, that “incidental” monetary relief can be
awarded to a 23(b)(2) class.
Wal-Mart, 131 U.S. at 367. Thus, the common question or questions cannot be “incidental,” nor
can the plaintiff submit a long list of “incidental” questions or issues, and say that they predominate
over the real issues to be used.
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2.
Rule 23(b).
Once the court concludes that the threshold requirements have been met, “it must then
examine whether the class falls within at least one of three categories of suits set forth in Rule
23(b).” Adamson v. Bowen, 855 F.2d at 675. See DG ex rel. Stricken v. Devaughn, 594 F.3d
1188, 1199 (10th Cir. 2010)(“In addition to satisfying Rule 23(a)’s requirements, the class must
also meet the requirements of one of the types of classes described in subsection (b) of Rule 23.”).
Rule 23(b) provides that a class action is appropriate if the threshold requirements are satisfied,
and the case falls into one or more of three categories:
(b)
Types of Class Actions. A class action may be maintained if Rule 23(a) is
satisfied and if:
(1)
prosecuting separate actions by or against individual
putative class members would create a risk of:
(A)
inconsistent or varying adjudications with
respect to individual putative class members
that would establish incompatible standards
of conduct for the party opposing the class; or
(B)
adjudications with respect to individual
putative class members that, as a practical
matter, would be dispositive of the interests
of the other members not parties to the
individual
adjudications
or
would
substantially impair or impede their ability to
protect their interests;
(2)
the party opposing the class has acted or refused to act on
grounds that apply generally to the class, so that final
injunctive relief or corresponding declaratory relief is
appropriate respecting the class as a whole; or
(3)
the court finds that the questions of law or fact common to
putative class members predominate over any questions
affecting only individual members, and that a class action is
superior to other available methods for fairly and efficiently
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adjudicating the controversy. The matters pertinent to these
findings include:
(A)
the putative class members’ interests in
individually controlling the prosecution or
defense of separate actions;
(B)
the extent and nature of any litigation
concerning the controversy already begun by
or against putative class members;
(C)
the desirability or undesirability of
concentrating the litigation of the claims in
the particular forum; and
(D)
the likely difficulties in managing a class
action.
Fed. R. Civ. P. 23(b). “Only one of rule 23(b)’s subdivisions must be satisfied to meet the classaction requirements.” Gonzales v. City of Albuquerque, No. CIV 09-0520 JB/RLP, 2010 WL
4053947, at *11 (D.N.M. Aug. 21, 2010)(Browning, J.)(citing Carpenter v. Boeing, Co., 456 F.3d
1183, 1187 (10th Cir. 2006)(stating that the district court must determine whether a suit “falls
within one of the categories of actions maintainable as class actions”)).
The three categories of class actions -- really four, as rule 23(b)(1) contains two
subcategories, known as (b)(1)(A) and (b)(1)(B) class actions -- are not of equal utility. Class
actions under (b)(1) can be certified only in very particular circumstances. Class actions under
(b)(2) are broadly available, but are only capable of seeking injunctive or declaratory relief, and
not damages. Far and away the most controversial class action category, (b)(3), can be brought
for class-wide damages, injunctive relief, declaratory relief, or any combination thereof. Class
actions under (b)(3) always require notice to all proposed class members of certification of the
class, and those individuals must be given the opportunity to opt out if they so desire. See Fed. R.
Civ. P. 23(c)(2)(B); Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 812 (1985)(“[W]e hold that due
- 41 -
process requires at a minimum that an absent plaintiff be provided with an opportunity to remove
himself from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to
the court.”). The other class action categories, however, are ordinarily mandatory, and neither
notice nor opportunity to opt out needs to be given. See Fed. R. Civ. P. 23(c)(2)(B); Phillips Petrol.
Co. v. Shutts, 472 U.S. at 811 n.3 (limiting the constitutional requirement of an opt-out notice “to
those class actions which seek to bind known plaintiffs concerning claims wholly or predominately
for money judgments”). The Court will focus on the most important form of class action, the
(b)(3) damages class action.14
14
The Court will briefly address the other class-action types. Rule 23(b)(1) contains two
subcategories of class action, (b)(1)(A) actions and (b)(1)(B) actions; a class need satisfy the
requirements of only one to be certified. See Fed. R. Civ. P. 23(b)(1). Class actions under
(b)(1)(A) are designed to avoid the situation in which a defendant subject to suit by multiple
plaintiffs is ordered to undertake incompatible courses of conduct as a result of the non-centralized
nature of the adjudication. See Fed. R. Civ. P. 23(b)(1)(A). “Incompatible” means more than
simply inconsistent. A situation in which, for example, a defendant was ordered to pay ten
thousand dollars to a plaintiff in one case, was ordered to pay ten million dollars to another plaintiff
in an identical or similar case, and was found to not be at fault at all in yet another case, may be
inconsistent, but it does not create “incompatible standards of conduct for the party opposing the
class.” Fed. R. Civ. P. 23(b)(1)(A). Such alleged inconsistency is a normal and expected part of
the system of individualized adjudication used by the judiciary to apply a uniform set of laws to
varied factual settings. What (b)(1)(A) is designed to avoid is injunctive or declaratory
“whipsawing,” in which, e.g., one court orders a school district to close an underperforming innercity school and bus its students to suburban schools, and another court orders the district to keep
the school open and bus suburban students in to the school. Class actions under (b)(1)(B) serve a
similar role, but apply when varying adjudications would result in practically -- rather than legally
-- incompatible judgments. See Fed. R. Civ. P. 23(b)(1)(B). Rule 23(b)(1)(B) applies when the
defendant has possession or control of a res -- a pot of money or thing that constitutes the relief
that the proposed class seeks -- and the relief sought by all the individual members of the proposed
class would more than exhaust the res. For example, if a Ponzi scheme operator took ten billion
dollars of investors’ money, and, upon law enforcement’s discovery of the scheme, had only six
billion dollars remaining, then the individual investors’ claims to recover their rightful share would
add up to four billion dollars more than existed in the res. Thus, the court might certify a (b)(1)(B)
class action to ensure that the custodian of the res does not pay out the entire res to the first
investors to file suit, but, instead, distributes the res fairly among all investors.
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The two subcategories of (b)(1) class action have other things in common as well. Both
exist, in a sense, for the benefit of the defendant -- at least relative to (b)(2) and (b)(3) class actions
-- and are rarely brought, in part because plaintiffs have little incentive to bring them. In the
(b)(1)(B) example, each investor hopes to recover the full value of his or her investment, not a
60% value, and thus is incentivized to file as an individual. In the (b)(1)(A) example, the plaintiff
seeking to close down the school (i) does not care about the inconsistent obligations of the school
district, and (ii) would rather not be joined in a class action with plaintiffs who want to keep the
school open. Last, (b)(1) class actions, along with (b)(2) class actions, are mandatory: if certified,
no person covered under the class definition may opt out of it or pursue his or her own individual
claim. As such, no notice needs to be given to the class members that they are part of ongoing
litigation, although the certifying court may elect to direct notice in appropriate circumstances.
See Fed. R. Civ. P. 23(c)(2)(A). Class actions under (b)(2) provide for injunctive or declaratory
relief when a defendant has “acted or refused to act on grounds that apply generally to the class.”
Fed. R. Civ. P. 23(b)(2).
The key to the (b)(2) class is “the indivisible nature of the injunctive or declaratory
remedy warranted -- the notion that the conduct is such that it can be enjoined or
declared unlawful only as to all of the class members or as to none of them.”
Nagareda, supra, at 132. In other words, Rule 23(b)(2) applies only when a single
injunction or declaratory judgment would provide relief to each member of the
class. It does not authorize class certification when each individual class member
would be entitled to a different injunction or declaratory judgment against the
defendant. Similarly, it does not authorize class certification when each class
member would be entitled to an individualized award of monetary damages.
Wal-Mart, 564 U.S. at 360-61 (emphasis in original). The (b)(2) class action was invented for the
purpose of facilitating civil rights suits, and much of its use is in that field today. See Newberg
§ 4:26. The (b)(2) class action allows civil rights litigants to advocate on behalf of all similarly
situated individuals, such as a disenfranchised black voter representing a class of all black voters
within an unconstitutionally drawn district or a jail inmate representing all inmates in an
overcrowding case. Anyone familiar with the nation’s seminal civil rights cases, however, knows
that many of them are not brought as class actions, which raises a question:
[W]hy would anyone ever bring one? . . . Th[is] inquiry is generated because if an
individual litigant pursues an individual case for injunctive relief and prevails, she
can generally get all of the remedy that she needs without going through the hurdles
of certifying a class. For example, to return to Brown v. Board of Education, once
Linda Brown prevailed on her race discrimination claim, her remedy -- a
desegregated school -- was hers to pursue. Although that remedy would affect
many other persons not a part of her litigation, hence making class certification
appropriate, there is no requirement that to secure that remedy, she had to file a
class action.
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To satisfy rule 23(b)(3), the court must find “that the questions of law or fact common to
the members of the class predominate over any questions affecting only individual members, and
that a class action is superior to other available methods for the fair and efficient adjudication of
the controversy.” Fed. R. Civ. P. 23(b)(3). Rule 23(b)(3) provides that “[t]he matters pertinent to
these findings include”: (i) the class members’ interest in individually controlling the prosecution
or defense of separate actions; (ii) the extent and nature of any litigation concerning the
controversy already commenced by or against members of the class; (iii) the desirability or
undesirability of concentrating the litigation of the claims in the particular forum; and (iv) the
Nonetheless, social change advocates tend to pursue class certification
under Rule 23(b)(2) for several reasons. First, and perhaps most importantly, Linda
Brown will likely graduate from school long before her case ends; if hers is simply
an individual action, it will become moot and risk dismissal. Class certification,
however, constitutes an exception to the mootness doctrine in certain
circumstances. Second, the scope of the plaintiff’s relief is likely augmented by
certifying a class. It is arguable that all that Linda Brown would have been able to
secure as a remedy for her individual claim was a desegregated school for herself,
not for students throughout the entire school district; there is some relationship
between the scope of the class and the scale of the remedy. Third, it is often the
case that the attorneys pursuing civil rights actions are doing so as public interest
lawyers paid by an organization like the NAACP Legal Defense Fund or the
American Civil Liberties Union (ACLU); they may therefore have a financial
incentive to pursue a class’s case rather than a series of individual cases as they
have limited resources, and the economies of scale may argue for a class action suit.
Most generally, many civil rights cases are brought as class suits because the
attorneys and clients pursuing them conceptualize their efforts in group, not
individual, terms. Thus, while an individual civil rights plaintiff might be able to
secure the relief that she seeks without a (b)(2) class, a series of factors may
encourage the pursuit of one.
Newberg § 4:26 (footnotes omitted). Like (b)(1) class actions, (b)(2) class actions are mandatory
-- individuals covered under the class definition may not opt out -- and do not require notice to be
given to the class. See Fed. R. Civ. P. 23(c)(2)(A).
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difficulties likely to be encountered in the management of a class action. Fed. R. Civ. P.
23(b)(3)(A)-(D).
Rule 23(b)(3)’s first requirement is that questions common to the class predominate over
those that are individualized. See Fed. R. Civ. P. 23(b)(3). A question is common when “the same
evidence will suffice for each member to make a prima facie showing,” Blades v. Monsanto Co.,
400 F.3d 562, 566 (8th Cir. 2005)(citing In re Visa Check/MasterMoney Antitrust Litig., 208 F.3d
124, 136-40 (2d Cir. 2001)), or when the issue is “susceptible to generalized, class-wide proof,”
In re Nassau Cty. Strip Search Cases, 461 F.3d 219, 227 (2d Cir. 2006). A question is individual
when “the members of a proposed class will need to present evidence that varies from member to
member,” Blades v. Monsanto Co., 400 F.3d at 566. Although a case need not present only
common questions to merit certification, and the presence of some individual questions does not
destroy predominance, the rule 23(b)(3) predominance requirement is much stricter than the rule
23(a)(1) commonality requirement: the latter requires only that a common question or questions
exist; the former requires that the common question or questions predominate over the individual
ones. See Amchem Prods., Inc. v. Windsor, 521 U.S. at 623-24; In re Thornburg Mortg., Inc. Sec.
Litig., 912 F. Supp. 2d 1178, 1225 (D.N.M. 2012)(Browning, J.)(“The predominance criterion of
rule 23(b)(3) is ‘far more demanding’ than rule 23(a)(2)’s commonality requirement.”). As the
Tenth Circuit, addressing a Title VII claim, put it:
The myriad discriminatory acts that Plaintiffs allege (e.g., failure to promote, failure
to train, unequal pay, disrespectful treatment, etc.) each require independent legal
analysis, and similarly challenge the predominance requirement of Rule 23(b)(3) if
not also the commonality requirement of Rule 23(a).
....
Although we do not rest our decision upon Rule 23(a), cases that interpret
. . . the commonality requirement of Rule 23(a) illustrate the instant Plaintiffs’
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inability to satisfy Rule 23(b)(3)’s “far more demanding” requirement that common
issues predominate.
Monreal v. Potter, 367 F.3d 1224, 1237 (10th Cir. 2004)(footnote omitted).
The predominance question applies to both macro damages -- the total class damages -and to the micro damages -- the individual damages. In Comcast Corp. v. Behrend, 569 U.S. 27
(2013), the Supreme Court held that it could not accept the regression model which the plaintiffs’
expert had developed as evidence that damages were susceptible of measurement across an entire
class -- as rule 23(b)(3) requires. The plaintiffs argued four theories of antitrust violations; one
theory was that Comcast Corp.’s activities had an antitrust impact, because Comcast Corp.’s
activities reduced the level of competition from “overbuilders,” companies that build competing
cable networks in areas where an incumbent cable company already operates. 569 U.S. at 31. The
district court found, among other things, that the damages resulting “from overbuilder-deterrence
impact could be calculated on a classwide basis.” 569 U.S. at 31-32.
To establish such damages, [the plaintiffs relied] solely on the testimony of
Dr. James McClave. Dr. McClave designed a regression model comparing actual
cable prices in the Philadelphia [Designated Market Area] with hypothetical prices
that would have prevailed but for [Comcast Corp.’s] allegedly anticompetitive
activities. The model calculated damages of $875,576,662.00 for the entire class.
As Dr. McClave acknowledged, however, the model did not isolate damages
resulting from any one theory of antitrust impact. The district court nonetheless
certified the class.
569 U.S. at 31-32 (citations omitted).
The United States Court of Appeals for the Third Circuit affirmed the district court
decision. The Third Circuit concluded that the plaintiffs “provided a method to measure and
quantify damages on a classwide basis,” finding it unnecessary to decide “whether the
methodology was a just and reasonable inference or speculation.” 569 U.S. at 32 (quoting 655
F.3d 182, 206 (3d Cir. 2011)). The Supreme Court granted certiorari on the question of “[w]hether
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a district court may certify a class action without resolving whether the plaintiff class had
introduced admissible evidence, including expert testimony, to show that the case is susceptible to
awarding damages on a class-wide basis.” 569 U.S. at 39. Justice Scalia criticized the Third
Circuit’s reluctance to entertain arguments against the plaintiffs’ damages model “simply because
those arguments would also be pertinent to the merits determination.” 569 U.S. at 34. Justice
Scalia said that
it is clear that, under the proper standard for evaluating certification, respondents’
model falls far short of establishing that damages are capable of measurement on a
classwide basis. Without presenting another methodology, respondents cannot
show Rule 23(b)(3) predominance: Questions of individual damage calculations
will inevitably overwhelm questions common to the class.
569 U.S. at 34. Justice Scalia stated that, under the Third Circuit’s logic, “at the class-certification
stage, any method of measurement is acceptable so long as it can be applied classwide, no matter
how arbitrary the measurements may be. Such a proposition would reduce rule 23(b)(3)’s
predominance requirement to a nullity.” 569 U.S. at 35 (emphasis in original).
It is clear that Comcast Corp. v. Behrend applies to classwide damages. It is less clear that
Comcast Corp. v. Behrend’s language applies to the determination of individual damages. There
are three ways that the Court could deal with Comcast Corp. v. Behrend and the determination of
individual damage awards. First, the Court could decide that Comcast Corp. v. Behrend applies
only to classwide damages and is not controlling at all in the determination of individual damages.
Second, the Court could decide that everything that Justice Scalia said about classwide damages
also applies to the determination of individual damages. Third, the Court could decide that Justice
Scalia said some things relating to the determination of individual damages, but not the same things
that apply to classwide damages. As to the first option, while much could be said of limiting
Justice Scalia’s opinion to classwide damages -- even from the language of the opinion and from
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the wording of the question presented -- the Court is reluctant to say that it has nothing to say that
might be relevant to the determination of individual damages awards. Some of Justice Scalia’s
concerns about admissible evidence to determine damages -- whether classwide or individual
damage awards -- still seem relevant to whether damages are classwide or individual. While
Justice Scalia was not addressing the determination of individual damage awards, some of what
he said -- and how he said it -- causes the Court to be cautious in determining a methodology for
calculating individual damage awards. On the other hand, the Court is not convinced that it should
or even can apply Comcast Corp. v. Behrend’s language to the individual determination of
damages as it does to classwide damages. The dissent stated that “[r]ecognition that individual
damages calculations do not preclude class certification under Rule 23(b)(3) is well nigh
universal.” 569 U.S. at 42 (Ginsburg, J., dissenting). Justice Scalia did not refute this proposition,
and the Court has no reason to think the dissent’s statement -- which is accurate -- does not remain
good law. Accordingly, just because each plaintiff and class member may get a different amount
and there has to be a separate calculation of each plaintiff’s damages does not defeat class
certification.
What the Court thinks that Comcast Corp. v. Behrend says that is relevant to the individual
determination of damages is threefold. First, at the class certification stage, the Court cannot
ignore how individual damages, if any are appropriate, are to be decided. In other words, the Court
cannot ignore the possible complexities of the individual damages determinations in making the
predominance calculation. A class can have individual damage calculations, but the Court has to
look at the issues of individual damages calculations at the class certification stage. Second, the
methodology for all class members needs to be common or, if there are different methodologies
for some plaintiffs and class members, the Court must take these differences into account at the
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class certification stage in the predominance analysis. In other words, if the Court is going to use
different methodologies for different class members, it must decide: (i) whether these differences
create questions affecting only individual members; and (ii) whether these individual questions
predominate over the questions of law or fact common to the class. Third, even if the methodology
is common to the class, the Court must decide whether it will operate in a consistent way for each
individual class member. The law and methodology may be the same, but when applied to the
class, they may create issues for one class member or group of class members that they do not
create for other class members or groups. The predominance analysis must identify precisely the
common issues and uncommon issues that application of the class methodology or methodologies
raise, and then determine whether, in the total issue mix, the common issues predominate over the
individual ones.
A defendant’s desire to assert individual counterclaims15 does not typically defeat
predominance. See Phillips Petrol. Co. v. Shutts, 472 U.S. at 810; Allapattah Servs., Inc. v. Exxon
Corp., 333 F.3d 1248, 1260 (11th Cir. 2003). A defendant’s desire to assert individual affirmative
defenses also often does not defeat predominance, see Smilow v. Sw. Bell Mobile Sys., Inc., 323
F.3d 32, 39 (1st Cir. 2003)(“Courts traditionally have been reluctant to deny class action status
under Rule 23(b)(3) simply because affirmative defenses may be available against individual
members.”), but this statement is less true after Wal-Mart.16 Other recurring individual issues
15
Generally speaking, counterclaims, even common ones, are not permitted against absent
class members at all.
16
Limitations defenses are an especially common breed of affirmative defense. Limitations
defenses generally present common questions, rather than individual ones, because a limitations
defense’s merits rest on two facts: (i) the date on which the claim accrued; and (ii) the date on
which the action was filed. Fact (ii) is a common issue in virtually every class action, because the
entire class gets credit for the filing date of the class action complaint. Fact (i) may not be truly
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present more serious challenges to predominance, such as: (i) the prima facie element of reliance
or due diligence in common-law fraud and other cases;17 (ii) differences in the applicable law in a
common, but it might be, if, for example, the discovery rule delays accrual of a claim until the
cause of action is discovered, and all class members’ causes of action are discovered at the same
time, or if a single act by the defendant breached contracts with all class members at once. Even
if the question is individual -- for example, if a class is defined as only encompassing preexisting
filed claims, or if the discovery rule might delay the accrual of the claim for some class members
but not others -- it still typically does not defeat predominance.
Although a necessity for individualized statute-of-limitations determinations
invariably weighs against class certification under Rule 23(b)(3), we reject any per
se rule that treats the presence of such issues as an automatic disqualifier. In other
words, the mere fact that such concerns may arise and may affect different class
members differently does not compel a finding that individual issues predominate
over common ones. As long as a sufficient constellation of common issues binds
class members together, variations in the sources and application of statutes of
limitations will not automatically foreclose class certification under Rule 23(b)(3).
Predominance under Rule 23(b)(3) cannot be reduced to a mechanical, single-issue
test.
Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 296 (1st Cir. 2000)(citing 5 James W.
Moore et al., Moore’s Federal Practice ¶ 23.46[3] (3d ed. 1999)). See Newberg § 4:57 (confirming
that the above passage “reflects the law in most circuits” (footnote omitted)).
17
The advisory committee’s notes to rule 23 state that
a fraud perpetrated on numerous persons by the use of similar misrepresentations
may be an appealing situation for a class action, and it may remain so despite the
need, if liability is found, for separate determination of the damages suffered by
individuals within the class. On the other hand, although having some common
core, a fraud case may be unsuited for treatment as a class action if there was
material variation in the representations made or in the kinds or degrees of reliance
by the persons to whom they were addressed.
Fed. R. Civ. P. 23 advisory committee’s notes (citing Miller v. Nat’l City Bank of N.Y., 166 F.2d
723 (2d Cir. 1948); Oppenheimer v. F. J. Young & Co., Inc., 144 F.2d 387 (2d Cir. 1944)).
Despite the generalized concern about the individual nature of the
misrepresentations and/or reliance inquiry in fraud cases, there are at least three
recurring situations in which courts have found common issues predominant in
fraud cases: (1) those in which reliance is common across the class; (2) those in
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multi-state, state-law-based class actions,18 see Castano v. Am. Tobacco Co., 84 F.3d 734, 741
(5th Cir. 1996); and (iii) the need to determine individual personal injury damages, which presents
which courts have excused a showing of individual reliance; and (3) those in which
the underlying law does not require a showing of individual reliance.
Newberg § 4:58. Reliance may be a common issue when the same misrepresentation is made to
the entire class; some circuits have held that written misrepresentations may be common issues
while oral misrepresentations are presumed to be individualized. See, e.g., Moore v. PaineWebber,
Inc., 306 F.3d 1247, 1253 (2d Cir. 2002)(“[T]he Third, Fourth, Fifth, Sixth, and Seventh
Circuits . . . have held that oral misrepresentations are presumptively individualized.”); In re
Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 319 (3d Cir.
1998)(certifying class where alleged misrepresentations were written and uniform); Spencer v.
Hartford Fin. Servs. Grp., Inc., 256 F.R.D. 284, 297 (D. Conn. 2009)(Hall, J.)(certifying class
where class definition was narrowed to include only those who had received written
communications from defendant). The requirement that plaintiffs show reliance is most often
presumed or excused in so-called fraud-on-the-market securities cases, in which class members -investors in the defendant company -- are presumed to be rational, fully informed actors who use
all of the information available to the general public, but are also presumed to not possess insider
information.
We have found a rebuttable presumption of reliance in two different circumstances.
First, if there is an omission of a material fact by one with a duty to disclose, the
investor to whom the duty was owed need not provide specific proof of reliance.
Second, under the fraud-on-the-market doctrine, reliance is presumed when the
statements at issue become public. The public information is reflected in the market
price of the security. Then it can be assumed that an investor who buys or sells
stock at the market price relies upon the statement.
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148, 159 (2008)(citing Affiliated Ute
Citizens of Utah v. United States, 406 U.S. 128, 153 (1972); Basic Inc. v. Levinson, 485 U.S. 224,
245 (1988)).
18
In In re Bridgestone/Firestone, Inc., 288 F.3d 1012 (7th Cir. 2002), The Honorable Frank
H. Easterbrook, United States Circuit Judge for the Seventh Circuit, in an opinion that predates
Wal-Mart and Comcast, stated:
No class action is proper unless all litigants are governed by the same legal
rules. Otherwise the class cannot satisfy the commonality and superiority
requirements of Fed. R. Civ. P. 23(a), (b)(3). Yet state laws about theories such as
those presented by our plaintiffs differ, and such differences have led us to hold
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that other warranty, fraud, or products-liability suits may not proceed as nationwide
classes
288 F.3d at 1015. Judge Easterbrook then discussed how variations in tires defeat class treatment:
Because these claims must be adjudicated under the law of so many
jurisdictions, a single nationwide class is not manageable. Lest we soon see a Rule
23(f) petition to review the certification of 50 state classes, we add that this
litigation is not manageable as a class action even on a statewide basis. About 20%
of the Ford Explorers were shipped without Firestone tires. The Firestone tires
supplied with the majority of the vehicles were recalled at different times; they may
well have differed in their propensity to fail, and this would require sub-subclassing
among those owners of Ford Explorers with Firestone tires. Some of the vehicles
were resold and others have not been; the resales may have reflected different
discounts that could require vehicle-specific litigation. Plaintiffs contend that many
of the failures occurred because Ford and Firestone advised the owners to
underinflate their tires, leading them to overheat. Other factors also affect heating;
the failure rate (and hence the discount) may have been higher in Arizona than in
Alaska. Of those vehicles that have not yet been resold, some will be resold in the
future (by which time the tire replacements may have alleviated or eliminated any
discount) and some never will be resold. Owners who wring the last possible mile
out of their vehicles receive everything they paid for and have claims that differ
from owners who sold their Explorers to the second-hand market during the height
of the publicity in 2000. Some owners drove their SUVs off the road over rugged
terrain, while others never used the “sport” or “utility” features; these differences
also affect resale prices.
Firestone’s tires likewise exhibit variability; that’s why fewer than half of
those included in the tire class were recalled. The tire class includes many buyers
who used Firestone tires on vehicles other than Ford Explorers, and who therefore
were not advised to underinflate their tires.
....
When courts think of efficiency, they should think of market models rather than
central-planning models.
Our decision in Rhone-Poulenc Rorer made this point, and it is worth
reiterating: only “a decentralized process of multiple trials, involving different
juries, and different standards of liability, in different jurisdictions” (51 F.3d at
1299) will yield the information needed for accurate evaluation of mass tort claims.
....
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such a challenge to predominance that class certification of mass tort claims is now exceedingly
rare, see Amchem Prods., Inc. v. Windsor, 521 U.S. at 625. There is little uniform guidance on
how to assess when common issues predominate over individual ones, and the Court’s statements
to this point have, obviously, done more to disavow various tempting but fallacious rules than they
have to set forth a usable standard.
There is currently a split of authority between the United States Courts of Appeals over the
proper way to analyze predominance. The Honorable Richard A. Posner, United States Circuit
Judge for the Seventh Circuit, concludes that the predominance inquiry boils down to “a question
of efficiency.” Butler v. Sears, Roebuck & Co., 702 F.3d 359, 362 (7th Cir. 2012), vacated, 569
U.S. 1015 (2013). Judge Posner poses the predominance question as: “Is it more efficient, in terms
both of economy of judicial resources and of the expense of litigation to the parties, to decide some
issues on a class basis or all issues in separate trials?” Butler v. Sears, Roebuck & Co., 702 F.3d
at 362. In Butler v. Sears, Roebuck & Co., the Seventh Circuit reversed a district court’s denial of
No matter what one makes of the decentralized approach as an original
matter, it is hard to adopt the central-planner model without violence not only to
Rule 23 but also to principles of federalism. Differences across states may be costly
for courts and litigants alike, but they are a fundamental aspect of our federal
republic and must not be overridden in a quest to clear the queue in court. See
BMW v. Gore, 517 U.S. [559, 568-73 (1996)]; Szabo[v. Bridgeport Machines, Inc.,
249 F.3d 672 (7th Cir. 2001)](reversing a nationwide warranty class certification);
Spence v. Glock, Ges.m.b.H., 227 F.3d 308 (5th Cir. 2000)(reversing a nationwide
tort class certification); Larry Kramer, Choice of Law in Complex Litigation, 71
N.Y.U. L. Rev. 547, 579 (1996); Linda S. Mullenix, Mass Tort Litigation and the
Dilemma of Federalization, 44 DePaul L. Rev. 755, 781 (1995); Robert A. Sedler,
The Complex Litigation Project’s Proposal for Federally-Mandated Choice of Law
in Mass Torts Cases: Another Assault on State Sovereignty, 54 La. L .Rev. 1085
(1994). Tempting as it is to alter doctrine in order to facilitate class treatment,
judges must resist so that all parties’ legal rights may be respected.
288 F.3d at 1018-20.
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certification of a class of washing-machine owners who alleged that Sears’ washing machines were
prone to cultivate mold and affirmed the district court’s certification of the same class to pursue a
claim that the machines’ control units were defective. See 702 F.3d at 360-61. The Seventh Circuit
certified the class -- which spanned six states -- to pursue its mold claim under state breach-ofwarranty law:
A class action is the more efficient procedure for determining liability and damages
in a case such as this, involving a defect that may have imposed costs on tens of
thousands of consumers yet not a cost to any one of them large enough to justify
the expense of an individual suit. If necessary a determination of liability could be
followed by individual hearings to determine the damages sustained by each class
member (probably capped at the cost of replacing a defective washing machine -there doesn’t seem to be a claim that the odors caused an illness that might support
a claim for products liability as distinct from one for breach of warranty). But
probably the parties would agree on a schedule of damages based on the cost of
fixing or replacing class members’ mold-contaminated washing machines. The
class action procedure would be efficient not only in cost, but also in efficacy, if
we are right that the stakes in an individual case would be too small to justify the
expense of suing, in which event denial of class certification would preclude any
relief.
....
[T]he district court will want to consider whether to create different subclasses of
the control unit class for the different states. That should depend on whether there
are big enough differences among the relevant laws of those states to make it
impossible to draft a single, coherent set of jury instructions should the case ever
go to trial before a jury.
Butler v. Sears, Roebuck & Co., 702 F.3d at 362. Along with numerous other class actions pending
appeal before the Supreme Court, the Supreme Court vacated Butler v. Sears, Roebuck & Co., and
remanded it to the Seventh Circuit “for reconsideration in light of Comcast Corp. v. Behrend.”
Butler v. Sears, Roebuck & Co., 727 F.3d 796, 797 (7th Cir. 2013). On reconsideration, the
Seventh Circuit reaffirmed its prior decision, again in an opinion written by Judge Posner:
Sears thinks that predominance is determined simply by counting noses:
that is, determining whether there are more common issues or more individual
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issues, regardless of relative importance. That’s incorrect. An issue “central to the
validity of each one of the claims” in a class action, if it can be resolved “in one
stroke,” can justify class treatment. [Wal-Mart, 564 U.S. at 338]. That was said in
the context of Rule 23(a)(2), the rule that provides that class actions are permissible
only when there are issues common to the members of the class (as of course there
are in this case). But predominance requires a qualitative assessment too; it is not
bean counting. In Amgen Inc. v. Connecticut Retirement Plans & Trust Funds,
[568 U.S. at 468], the Court said that the requirement of predominance is not
satisfied if “individual questions . . . overwhelm questions common to the class,”
and in Amchem Products, Inc. v. Windsor, 521 U.S. . . . [at] 623 . . . , it said that
the “predominance inquiry tests whether proposed classes are sufficiently cohesive
to warrant adjudication by representation.” And in In re Inter-Op Hip Prosthesis
Liability Litigation, 204 F.R.D. 330, 345 (N.D. Ohio 2001), we read that “common
issues need only predominate, not outnumber individual issues.” . . .
As we noted in Carnegie v. Household Int’l., Inc., 376 F.3d 656, 661 (7th Cir.
2004), “the more claimants there are, the more likely a class action is to yield
substantial economies in litigation. It would hardly be an improvement to have in
lieu of this single class 17 million suits each seeking damages of $15 to
$30. . . . The realistic alternative to a class action is not 17 million individual suits,
but zero individual suits, as only a lunatic or a fanatic sues for $30” (emphasis in
original). The present case is less extreme: tens of thousands of class members,
each seeking damages of a few hundred dollars. But few members of such a class,
considering the costs and distraction of litigation, would think so meager a prospect
made suing worthwhile.
There is a single, central, common issue of liability: whether the Sears
washing machine was defective. Two separate defects are alleged, but remember
that this class action is really two class actions. In one the defect alleged involves
mold, in the other the control unit. Each defect is central to liability. Complications
arise from the design changes and from separate state warranty laws, but can be
handled by the creation of subclasses. See, e.g., Johnson v. Meriter Health Services
Employee Retirement Plan, 702 F.3d [364,] 365[ 7th Cir. 2012] (10 subclasses).
Butler v. Sears, Roebuck & Co., 727 F.3d at 801-02 (emphasis in original).19
19
In addition to articulating the Seventh Circuit’s construction of the predominance inquiry,
Judge Posner addressed Comcast Corp. v. Behrend’s impact on the Seventh Circuit’s case:
So how does the Supreme Court’s Comcast decision bear on the rulings . . . in our
first decision?
Comcast holds that a damages suit cannot be certified to proceed as a class
action unless the damages sought are the result of the class-wide injury that the suit
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alleges. Comcast was an antitrust suit, and the Court said that “if [the plaintiffs]
prevail on their claims, they would be entitled only to damages resulting from
reduced overbuilder competition, since that is the only theory of antitrust impact
accepted for class-action treatment by the District Court. It follows that a model
purporting to serve as evidence of damages in this class action must measure only
those damages attributable to that theory. If the model does not even attempt to do
that, it cannot possibly establish that damages are susceptible of measurement
across the entire class for purposes of Rule 23(b)(3).” “[A] methodology that
identifies damages that are not the result of the wrong” is an impermissible basis
for calculating class-wide damages. [569 U.S. at 37](emphasis added). “For all we
know, cable subscribers in Gloucester County may have been overcharged because
of petitioners’ alleged elimination of satellite competition (a theory of liability that
is not capable of classwide proof).” And on the next page of its opinion the Court
quotes approvingly from Federal Judicial Center, Reference Manual on Scientific
Evidence 432 (3d ed. 2011), that “the first step in a damages study is the translation
of the legal theory of the harmful event into an analysis of the economic impact of
that event.” (emphasis the [Supreme] Court’s). None of the parties had even
challenged the district court’s ruling that class certification required “that the
damages resulting from . . . [the antitrust violation] were measurable ‘on a classwide basis’ through use of a ‘common methodology.’”
Unlike the situation in Comcast, there is no possibility in this case that
damages could be attributed to acts of the defendants that are not challenged on a
class-wide basis; all members of the mold class attribute their damages to mold and
all members of the control-unit class to a defect in the control unit.
Sears argues that Comcast rejects the notion that efficiency is a proper basis
for class certification, and thus rejects our statement that “predominance” of issues
common to the entire class, a requirement of a damages class action under Rule
23(b)(3), “is a question of efficiency.” But in support of its argument Sears cites
only the statement in the dissenting opinion in Comcast that “economies of time
and expense” favor class certification, -- a statement that the majority opinion does
not contradict. Sears is wrong to think that anything a dissenting opinion approves
of the majority must disapprove of.
Sears compares the design changes that may have affected the severity of
the mold problem to the different antitrust liability theories in Comcast. But it was
not the existence of multiple theories in that case that precluded class certification;
it was the plaintiffs’ failure to base all the damages they sought on the antitrust
impact -- the injury -- of which the plaintiffs were complaining. In contrast, any
buyer of a Kenmore washing machine who experienced a mold problem was
harmed by a breach of warranty alleged in the complaint.
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The United States Court of Appeals for the Sixth Circuit handled essentially the same case
-- a class action against Sears for defective washing machines -- in In re Whirlpool Corp. FrontLoading Washing Products Liability Litigation, 678 F.3d 409 (6th Cir. 2012), and also elected to
certify the mold-based claim.20
[W]e have no difficulty affirming the district court’s finding that common questions
predominate over individual ones and that the class action mechanism is the
superior method to resolve these claims fairly and efficiently. This is especially
true since class members are not likely to file individual actions because the cost of
litigation would dwarf any potential recovery. See Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 617 (1997)(finding that in drafting Rule 23(b)(3), “the
Advisory Committee had dominantly in mind vindication of ‘the rights of groups
of people who individually would be without effective strength to bring their
opponents into court at all’”). Further, [as] the district court observed, any class
member who wishes to control his or her own litigation may opt out of the class
under Rule 23(b)(3)(A).
In re Whirlpool Corp. Front-Loading Washing Prods. Liab. Litig., 678 F.3d at 421 (citation
omitted). That case was also vacated after Comcast Corp. v. Behrend, and, like the Seventh
Circuit, the Sixth Circuit reaffirmed its prior decision, fleshing out the predominance inquiry in
more detail than it had done in its prior opinion:
Whirlpool does not point to any “fatal dissimilarity” among the members of
the certified class that would render the class action mechanism unfair or inefficient
Furthermore and fundamentally, the district court in our case, unlike
Comcast, neither was asked to decide nor did decide whether to determine damages
on a class-wide basis. As we explained in McReynolds v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 672 F.3d 482, 491-92 (7th Cir. 2012), a class action limited
to determining liability on a class-wide basis, with separate hearings to determine - if liability is established -- the damages of individual class members, or
homogeneous groups of class members, is permitted by Rule 23(c)(4) and will often
be the sensible way to proceed.
Butler v. Sears, Roebuck & Co., 727 F.3d at 799-800 (emphasis in Butler v. Sears, Roebuck & Co.
but not Comcast Corp. v. Behrend, except as noted)(citations omitted).
The Sixth Circuit’s class “did not involve the other claim in [the Seventh Circuit’s] case,
the control unit claim.” Butler v. Sears, Roebuck & Co., 727 F.3d at 802.
20
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for decision-making. Instead, Whirlpool points to “a fatal similarity --[an alleged]
failure of proof as to an element of the plaintiffs’ cause of action.” That contention,
the Supreme Court instructs, “is properly addressed at trial or in a ruling on a
summary-judgment motion. The allegation should not be resolved in deciding
whether to certify a proposed class.” Tracking the Supreme Court’s reasoning, we
conclude here that common questions predominate over any individual ones.
Simply put, this case comports with the “focus of the predominance inquiry” -- it
is “sufficiently cohesive to warrant adjudication by representation.”
In re Whirlpool Corp. Front-Loading Washing Prods. Liab. Litig., 722 F.3d 838, 859 (7th Cir.
2013)(citations omitted). The Seventh Circuit and Sixth Circuit, thus, define predominance in
much the same way: if the district court can design a mechanism for trying the case that is fair to
the defendants and more efficient than individual litigation of the same dispute, then predominance
is satisfied. See Butler v. Sears, Roebuck & Co., 727 F.3d at 802. This styling of the predominance
inquiry is in keeping with that given, many years earlier, by a leading class-action treatise:
[A] court addressing predominance must determine whether the evidence about the
putative class representative’s circumstances and the opposing evidence from the
defense will enable a jury to make across-the-board “yes” or “no” factual
determinations that fairly resolve the claims of the entire class. Where the right to
recover for each class member would “turn . . . on facts particular to each individual
plaintiff,” class treatment makes little sense. If the resolution of the common issues
devolves into an unmanageable variety of individual issues, then the lack of
increased efficiency will prohibit certification of the class.
The predominance and efficiency criteria are of course
intertwined. When there are predominant issues of law or fact,
resolution of those issues in one proceeding efficiently resolves
those issues with regard to all claimants in the class. When there are
no predominant issues of law or fact, however -- as in the instant
case -- class treatment would be either singularly inefficient, as one
court attempts to resolve diverse claims from around the country in
its own courtroom, or unjust, as the various factual and legal nuances
of particular claims are lost in the press to clear the lone court’s
docket.
McLaughlin on Class Actions § 5:23 (11th ed. 2016)(omission in original)(footnotes omitted).
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Although the Seventh Circuit and the Sixth Circuit may agree about the definition of
predominance, the Third Circuit, Tenth Circuit, and United States Court of Appeals for the
Eleventh Circuit stake out a different test.
“Whether an issue predominates can only be determined after considering
what value the resolution of the class-wide issue will have in each class member’s
underlying cause of action.” Common issues of fact and law predominate if they
“‘ha[ve] a direct impact on every class member’s effort to establish liability’ that
is more substantial than the impact of individualized issues in resolving the claim
or claims of each class member.” If “after adjudication of the classwide issues,
plaintiffs must still introduce a great deal of individualized proof or argue a number
of individualized legal points to establish most or all of the elements of their
individual claims, [their] claims are not suitable for class certification under Rule
23(b)(3).”
Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Serv., Inc., 601 F.3d 1159, 1170
(11th Cir. 2010)(emphasis in original)(citations omitted).21 The Eleventh Circuit, however,
21
The Eleventh Circuit first adopted this test -- relying on district court decisions -- in 2004
in Klay v. Humana, Inc., 382 F.3d 1241 (11th Cir. 2004), and gave renewed articulations of the
test in 2009 in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009), and in 2010, in Sacred
Heart Health Systems, Inc. v. Humana Healthcare Services, Inc. In each case, the Eleventh Circuit
made some reference to additionally adopting a United States Court of Appeals for the Fifth Circuit
rule-of-thumb test:
An alternate formulation of this test was offered in Alabama v. Blue Bird
Body Co., 573 F.2d 309 (5th Cir. 1978). In that case, we observed that if common
issues truly predominate over individualized issues in a lawsuit, then “the addition
or subtraction of any of the plaintiffs to or from the class [should not] have a
substantial effect on the substance or quantity of evidence offered.” Put simply, if
the addition of more plaintiffs to a class requires the presentation of significant
amounts of new evidence, that strongly suggests that individual issues (made
relevant only through the inclusion of these new class members) are important.
Alabama v. Blue Bird Body Co., 573 F.2d at 322 (“If such addition or subtraction
of plaintiffs does affect the substance or quantity of evidence offered, then the
necessary common question might not be present.”). If, on the other hand, the
addition of more plaintiffs leaves the quantum of evidence introduced by the
plaintiffs as a whole relatively undisturbed, then common issues are likely to
predominate.
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imposes a different, more rigorous, second step: the district court’s trial plan must spend more time
adjudicating the common questions than it does adjudicating the individual questions. The
Eleventh Circuit’s test may not be the greatest -- the Court sees little reason why negative-value
cases that can be fairly and efficiently adjudicated via class action should not be certified 22 -- but
Klay v. Humana, Inc., 382 F.3d at 1255. See Sacred Heart Health Sys., Inc. v. Humana Military
Healthcare Serv., Inc., 601 F.3d at 1170 (“In practical terms, while ‘[i]t is not necessary that all
questions of fact or law be common,’ ‘the addition or subtraction of any of the plaintiffs to or from
the class [should not] have a substantial effect on the substance or quantity of evidence offered.’”);
Vega v. T-Mobile USA, Inc., 564 F.3d at 1270 (quoting the above portion of Klay v. Humana,
Inc.).
The Fifth Circuit, however, was not setting forth a test for when predominance is satisfied
so much as a test for when an issue is common versus individualized. The Fifth Circuit’s full quote
-- without the Eleventh Circuit’s alterations -- is:
We only point out that in a situation wherein one seeks to represent a
nationwide class in order to obtain redress for harm done from a nationwide
conspiracy consideration should be given to whether the addition or subtraction of
any of the plaintiffs to or from the class will have a substantial effect on the
substance or quantity of evidence offered. If such addition or subtraction of
plaintiffs does affect the substance or quantity of evidence offered, then the
necessary common question might not be present.
Alabama v. Blue Bird Body Co., 573 F.2d at 322 (footnote omitted).
22
In fairness to the Eleventh Circuit, Judge Posner’s test merges the predominance and
superiority inquiries -- effectively reading out predominance -- in negative-value cases. Thus, the
Eleventh Circuit’s test is truer to rule 23’s text than Judge Posner’s. “Predominate,” the word that
rule 23 uses, means “[t]o be of greater power, importance, or quantity; be most important or
outstanding.” The American Heritage Dictionary of the English Language, supra, at 1032. Rule
23’s text thus arguably suggests a direct comparison of common and individual issues, and not -as Judge Posner suggests -- an indirect comparison that decides the predominance question on the
basis of a fancy economic analysis. There are, however, two other rule 23 provisions whose impact
on predominance is not often discussed: (i) the issue class-action clause, see Fed. R. Civ. P.
23(c)(4) (“When appropriate, an action may be brought or maintained as a class action with respect
to particular issues.”); and (ii) the subclassification clause, see Fed. R. Civ. P. 23(c)(5) (“When
appropriate, a class may be divided into subclasses that are each treated as a class under this rule.”).
These provisions are unfortunate for those who wish to read rule 23 as containing the seeds of its
own destruction. Rule 23(c)(4) allows for adjudication of common issues, even if these issues do
not add up to a common claim. Rule 23(c)(5) allows for collective adjudication, even if it falls
short of being completely “classwide” adjudication. Judge Posner’s test explicitly admits of
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subclasses and issue classes. Even if it had not allowed for these classes, their impact in Judge
Posner’s analysis would be obvious: the district court uses the tools of subclassification and issue
classification -- along with other management tools, such as polyfurcation -- to design a classaction management plan, and then decide whether the plan is more or less efficient than separate
trials.
The impact that these provisions have on the Eleventh Circuit’s approach is less clear. The
Eleventh Circuit’s best discussion of subclasses comes from Sacred Heart Health Systems, Inc. v.
Humana Military Healthcare Services, Inc.:
[W]e cannot accept the district court’s proposal to use subclasses
corresponding to the hospitals’ six categories of payment clauses. We recognize
the long and venerated practice of creating subclasses as a device to manage
complex class actions, but the six subclasses proposed here mask a staggering
contractual variety. The sixth proposed subclass -- a miscellaneous residue of
numerous payment clauses that are insusceptible of ready classification -- alone is
fatal to predominance. When this “potpourri” subclass, as Humana has termed it,
is broken down into its disparate component parts, the illusion of uniformity gives
way to nearly thirty subclasses.
Common sense tells us that “[t]he necessity of a large number of subclasses
may indicate that common questions do not predominate,” Manual for Complex
Litigation § 21.23 (4th ed. 2004); see also Harding v. Tambrands Inc., 165 F.R.D.
623, 630 (D. Kan. 1996)(“The potential for numerous different subclasses weighs
against a finding of predominance of common issues.”). Here, the necessary
recourse to a “miscellaneous” subclass readily indicates the lack of a predominant
question.
Ultimately, after examining the many individualized payment clauses
contained in the network agreements, we perceive a “distinct possibility that there
was a breach of contract with some class members, but not with other class
members.” Subclasses are no answer to this problem, meaning that the efficiency
of a class action will be lost entirely unless the hospitals are allowed “to stitch
together the strongest contract case based on language from various [contracts],
with no necessary connection to their own contract rights. The hospitals, however,
may not lawfully “amalgamate” their disparate claims in the name of convenience.
The Rules Enabling Act, 28 U.S.C. § 2072 -- and due process -- prevents the use of
class actions from abridging the substantive rights of any party. Yet, from the
record before us, an abridgment of the defendant’s rights seems the most likely
result of class treatment. By glossing over the striking differences in the material
terms of the agreements, the district court created an “unnecessarily high risk,” of
such unlawful results, and thereby abused its discretion.
601 F.3d at 1176 (citations omitted). These statements imply that, but for the sixth “category” of
payment clauses -- really a catchall for all contracts that did not fit into one of the five real
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categories -- the class would be certifiable. The only “abridgement of the defendant’s rights” that
the district court’s plan would produce would be the “‘amalgamat[ion]’” of different contractual
language into a single category -- the sixth category. 601 F.3d at 1176. That case, thus, leaves
open the question whether subclassification and issue certification can aid in satisfying
predominance, or if these techniques are separate from the predominance inquiry.
The Fifth Circuit staked out a clear answer to this question in its much-discussed Castano
v. American Tobacco Company, 84 F.3d 734 (5th Cir. 1996) case, deciding the issue in a way one
might expect:
Severing the defendants’ conduct from reliance under rule 23(c)(4) does not
save the class action. A district court cannot manufacture predominance through
the nimble use of subdivision (c)(4). The proper interpretation of the interaction
between subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must
satisfy the predominance requirement of (b)(3) and that (c)(4) is a housekeeping
rule that allows courts to sever the common issues for a class trial. Reading rule
23(c)(4) as allowing a court to sever issues until the remaining common issue
predominates over the remaining individual issues would eviscerate the
predominance requirement of rule 23(b)(3); the result would be automatic
certification in every case where there is a common issue, a result that could not
have been intended.
84 F.3d at 745 n.21 (citations omitted). This logic is hardly unassailable. Namely, the
result of reading rules 23(c)(4) and (c)(5) as bearing on the predominance inquiry would not be
“automatic certification in every case where there is a common issue,” because superiority must
still be satisfied. Castano v. Am. Tobacco Co., 84 F.3d at 745 n.21. If a proposed class action is
superior -- e.g., if it lacks the value to be brought on an individual basis -- and individual issues
can be pared away via rules 23(c)(4) and (c)(5) then it is not clear why certification “could not
have been intended” by the rule. Castano v. Am. Tobacco Co., 84 F.3d at 745 n.21. Moreover, it
is a poor reading of the rule’s text. Presumably, even if rules 23(c)(4) and (c)(5) are mere
“housekeeping rule[s],” they would still alleviate “likely difficulties in managing a class action.”
Castano v. Am. Tobacco Co., 84 F.3d at 745 n.21; Fed. R. Civ. P. 23(b)(3)(D). Because rule 23
directs that “[t]he matters pertinent to these findings [predominance and superiority] include: . . .
the likely difficulties in managing a class action,” the Court, if it were writing on a clear slate
would think that rules 23(c)(4) and (c)(5) would play a part in the predominance determination,
Fed. R. Civ. P. 23(b)(3), and that this result thus “could not have been intended.” Castano v. Am.
Tobacco Co., 84 F.3d at 745 n.21. The Fifth Circuit’s approach attracted the adherence of a revered
jurist on the Fourth Circuit -- although not the Fourth Circuit itself. The Honorable Paul V.
Niemeyer, United States Circuit Judge for the Fourth Circuit, endorsed the Fifth Circuit’s view in
an opinion concurring in part and dissenting in part from an opinion in which the Fourth Circuit
adopted the opposing view:
Despite the overwhelming predominance of these individualized issues and
claims over the common issue that the majority now certifies for class treatment,
the majority has adopted an inventive approach to Rule 23 that allows certification
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of a class where the predominance requirement of Rule 23(b)(3) is admittedly
unmet in the context of the case as a whole. According to the majority, to require
the certified issue in this case to predominate over the individualized issues in the
action as a whole ignores Rule 23(c)(4)(A), which it appears to view as a fourth
avenue for class certification, on equal footing with Rules 23(b)(1), 23(b)(2), and
23(b)(3). In doing so, the majority glorifies Rule 23(c)(4)(A) -- a housekeeping
rule that authorizes a court to certify for class treatment “particular issues” in a case
that otherwise satisfies Rule 23(a) and 23(b) -- with the effect of materially
rewriting Rule 23 such that Rule 23(b)(3)’s requirements no longer need be applied
to “[a]n action,” see Fed. R. Civ. P. 23(b), but rather to any single issue, no matter
how small.
Not only does the majority’s approach expand Rule 23 beyond its intended
reach, but it also creates a direct conflict with the Fifth Circuit which has held:
A district court cannot manufacture predominance through
the nimble use of subdivision (c)(4). The proper interpretation of the
interaction between subdivisions (b)(3) and (c)(4) is that a cause of
action, as a whole, must satisfy the predominance requirement of
(b)(3) in that (c)(4) is a housekeeping rule that allows courts to sever
the common issues for a class trial.
Castano v. American Tobacco Co., 84 F.3d [at ]745 n.21 . . . .
Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 446-47 (4th Cir. 2003)(Niemeyer, J., concurring
in part and dissenting in part). Despite Judge Niemeyer’s concern with creating a circuit split, the
United States Court of Appeals for the Second Circuit, the United States Court of Appeals for the
Ninth Circuit, and, of course, the Seventh Circuit have all held that subclasses can be used to satisfy
predominance concerns since at least 2001, two years before Gunnells v. Healthplan Services, Inc.
See Zinser v. Accufix Research Inst., Inc. 253 F.3d 1180, 1189-90, 1192 n.8 (9th Cir. 2001). See
Robinson v. Metro-North Commuter R.R., 267 F.3d 147, 167-69 (2d Cir. 2001); Jefferson v.
Ingersoll Int’l Inc., 195 F.3d 894, 898 (7th Cir. 1999).
The Eleventh Circuit has refrained from taking a side on this question:
Some have been critical of the piecemeal certification of class action status
for claims within a case. See Gunnells v. Healthplan Servs., Inc., 348 F.3d 417,
446-47 (4th Cir. 2003)(Niemeyer, J., dissenting)(arguing that the predominance
requirement in Fed. R. Civ. P. 23(b) applies to the action as a whole, not to
individual subclasses or claims); Castano v. Am. Tobacco Co., 84 F.3d . . . 745
n.21 . . . (“The proper interpretation of the interaction between [Fed. R. Civ. P. 23]
subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must satisfy the
predominance requirement of (b)(3) and that (c)(4) is a housekeeping rule that
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it is commendable in that it is a test that district courts can use, rather than yet another meaningless
recitation, see CGC Holding Co. v. Broad & Cassel, 773 F.3d 1076, 1087 (10th Cir. 2014)(“[T]he
predominance prong ‘asks whether the common, aggregation-enabling, issues in the case are more
prevalent or important than the non-common, aggregation defeating, individual issues.” (quoting
William B. Rubenstein, Newberg on Class Actions § 4:49 (5th ed. 2017)(“Newberg”))), circular
axiom, see, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. at 623 (“The Rule 23(b)(3)
predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant
adjudication by representation.”), obvious guidepost, see Reed v. Bowen, 849 F.2d at 1309 (“Each
case must be decided on its own facts, on the basis of ‘practicalities and prudential
considerations.’”), self-evident comparison, see Monreal v. Potter, 367 F.3d at 1237 (“[T]he
predominance criterion of Rule 23(b)(3) [i]s ‘far more demanding’ tha[n] the Rule 23(a)
commonality requirement[.]” (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. at 623-24)), or
allows courts to sever the common issues for a class trial.”). We did not directly
address the propriety of such partial certification in Klay.
Borrero v. United Healthcare of N.Y., Inc., 610 F.3d 1296, 1310 n.5 (11th Cir. 2010)(alterations
in original). The Tenth Circuit also appears to have refrained from taking a side:
Plaintiffs urge us to consider a “hybrid” certification whereby the liability
stage might be certified for class treatment under Rule 23(b)(2) even if the damages
stage does not qualify for such treatment. See Robinson v. Metro-North Commuter
R.R., 267 F.3d 147, 167-69 (2d Cir. 2001). Compare Lemon v. Int’l Union of
Operating Engr’s, Local No. 139, AFL-CIO, 216 F.3d 577, 581 (7th Cir. 2000), and
Jefferson v. Ingersoll Int’l Inc., 195 F.3d 894, 898 (7th Cir. 1999), with Allison v.
Citgo Petroleum Corp., 151 F.3d 402, 420-22 (5th Cir. 1998). We do not need to
rule on a hybrid possibility because in the instant case, the liability stage does not
satisfy either Rules 23(b)(2) or 23(b)(3). The district court’s ruling that plaintiffs
did not allege a sufficient policy, practice or pattern of discrimination to warrant
class treatment for liability determination is not an abuse of discretion.
Monreal v. Potter, 367 F.3d at 1237 n.12.
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worthless slogan, see Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 600 (3d Cir.
2012)(exhorting district courts to examine claims “‘through the prism’ of Rule 23(b)(3)”).
The Tenth Circuit followed the Eleventh Circuit’s approach in CGC Holding Co., LLC v.
Broad and Cassel.
Predominance regularly presents the greatest obstacle to class certification,
especially in fraud cases. Accordingly, the issues disputed in this case are not
unusual. And given our obligation to ensure that the district court did not err in
conducting its rigorous analysis, we must characterize the issues in the case as
common or not, and then weigh which issues predominate. Here, that task requires
us to survey the elements of the class’s RICO claims to consider (1) which of those
elements are susceptible to generalized proof, and (2) whether those that are so
susceptible predominate over those that are not. Stated another way, consideration
of how the class intends to answer factual and legal questions to prove its claim -and the extent to which the evidence needed to do so is common or individual -will frequently entail some discussion of the claim itself.
In this context, it is worth reiterating that our review on appeal is limited.
For the purposes of class certification, our primary function is to ensure that the
requirements of Rule 23 are satisfied, not to make a determination on the merits of
the putative class’s claims. But it is impractical to construct “an impermeable wall”
that will prevent the merits from bleeding into the class certification decision to
some degree. So, although class certification does not depend on the merits of the
suit, “[e]valuation of many of the questions entering into determination of class
action questions is intimately involved with the merits of the claims.”
With these legal principles in mind, “[c]onsidering whether ‘questions of
law or fact common to class members predominate’ begins, of course, with the
elements of the underlying cause of action.” For this limited purpose, we consider
the proposed class’s claim for a RICO conspiracy.
CGC Holding Co., LLC v. Broad and Cassel, 773 F.3d at 1087-88.
ANALYSIS
The Court will address the MTD at or after the class certification hearing, and so the Court
will deny the Plaintiffs’ and Sandia Labs’ invitations to consider the MTD at this point. After
considering both the Plaintiffs’ and Sandia Labs’ proposed case schedules, the Court concludes
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that it will provide the parties with a case schedule varying slightly from both proposed case
schedules. The Court will modify the Joint Proposed Case Schedule as follows:
Event
Original Deadline
Stipulated discovery stay ends
November 26, 2018
Sandia completes production of ESI, including January 15, 2019
final privilege log
Pre-class certification discovery deadline
March 11, 2019
Plaintiffs submit motion for class certification and March 25, 2019
expert reports
Sandia submits opposition to class certification and May 16, 2019
expert reports
Plaintiffs submit reply motion and expert reports
June 18, 2019
Class certification hearing
July 1, 2019
The Court recognizes that condensing the case schedule to accommodate a July 1, 2019,
class certification hearing challenges both parties. The parties have expressed their concerns about
shortened deadlines: Sandia Labs worries about completing ESI production, see Letter Response
at 2; the Plaintiffs have concerns about completing discovery, litigating discovery issues, and
preparing the class certification motion and expert reports, see Letter at 4; and both proposed case
schedules reflect attempts to maximize the parties’ time to respond to class certification and expert
briefings, see Letter at 2, Letter Response at 2.
The Court concludes that the revised case schedule will best address its and the parties’
concerns. The revised case schedule allows Sandia Labs slightly over six weeks and time after the
holidays to complete its ESI production. The Court is disinclined to grant Sandia Labs additional
time for ESI production, because the Court hesitates to reduce the time between the ESI
production’s completion and the pre-class certification discovery, class certification motion, and
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expert reports deadlines to a degree that would disallow the Court and the parties time for litigation,
which the Plaintiffs have indicated they will seek, about the discovery. See Letter at 4; Letter
Reply at 1-2. The Court’s experience with Sandia Labs’ discovery production has not been the
best, and the Court fears it better build in time for and anticipate forthcoming discovery disputes.
See generally Memorandum Opinion and Order Overruling the Defendant’s Objections and
Affirming the Magistrate Judge’s Order, 2018 WL 4148423, filed August 30, 2018 (Doc. 160).
As the July 1, 2019, class certification hearing deadline responds to the Court’s scheduling needs
and the Court wants to address discovery litigation before the class certification hearing, the
Court’s schedule reflects an attempt to leave time for the Court and the parties to address the
discovery litigation without interfering with the class certification deadline. Sandia Labs can
always withdraw the MTD to relieve pressure on its ESI production; if Sandia Labs withdraws its
MTD, the Court has no need to set aside the case schedule to which the parties previously agreed.
As long as Sandia Labs insists on keeping its MTD on file, the Court must rule on it before the
six-month deadline, and the Court thinks it would be best to rule on it with the Plaintiffs’ upcoming
class certification motion. The March deadline for the class certification motion and expert reports
allows the Plaintiffs over two months for discovery and preparation for the motion and reports.
The initial stipulated time between the ESI production completion, and the class certification
motion and expert reports deadline was similarly just over two months. See Joint Proposed Case
Schedule at 2. The revised case schedule will also reduce Sandia Labs’ response time and the
Plaintiffs’ reply time proportionately, by forty percent, giving Sandia Labs forty-five days to
respond to the Plaintiffs’ class certification motion and expert reports, and the Plaintiffs thirty days
to reply to Sandia Labs’ responses. Fairness demands that the parties face equal reductions in their
response and reply times.
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IT IS ORDERED that: (i) the requests in the Plaintiffs’ Letter from Anne B. Shaver, Lieff,
Cabraser, Heimann & Bernstein, LLP, to the Court (dated November 12, 2018), filed November
12, 2018 (Doc. 187), are granted in part and denied in part; and (ii) the requests in the Defendant’s
Letter from Krissy A. Katzenstein, Morgan Lewis, to the Court at 1 (dated November 15, 2018),
filed November 15, 2018 (Doc. 188), are granted in part and denied in part.
________________________________
UNITED STATES DISTRICT JUDGE
Counsel:
Gretchen Mary Elsner
Elsner Law & Policy, LLC
Santa Fe, New Mexico
--and-Rachel Bien
Outten & Golden LLP
San Francisco, California
--and-Adam T. Klein
Cheryl-Lyn D. Bentley
Elizabeth V. Stork
Outten & Golden LLP
New York, New York
--and-David Lopez
Outten & Golden LLP
Washington, D.C.
--and--
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Anne Brackett Shaver
Kelly Maureen Dermody
Lin Yee Chan
Michael Ian Levin-Gesundheit
Shira J. Tevah
Tiseme Gabriella Zegeye
Lieff Cabraser Heimann & Bernstein, LLP
San Francisco, California
Attorneys for the Plaintiffs
Justin E. Poore
Cindy Jean Lovato-Farmer
Sandia Corporation
Albuquerque, New Mexico
--and-Michael S. Burkhardt
Grace E. Speights
Krissy A. Katzenstein
Morgan, Lewis & Bockius LLP
Washington, D.C.
--and-Scott D. Gordon
Theresa W. Parrish
Jeffrey L. Lowry
Paola Viviana Jaime
Stephanie L. Latimer
Rodey, Dickason, Sloan, Akin & Robb, P.A.
Albuquerque, New Mexico
Attorneys for the Defendant
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