William DeVinney | Baker & Hostetler | March 19, 2019
Expert testimony plays a critical role in nearly all putative class actions, including at the class certification stage where parties rely on expert evidence to address the requirements of Federal Rule of Civil Procedure 23. The Supreme Court has repeatedly held that trial courts must look beyond the pleadings and conduct a searching inquiry to resolve factual disputes about Rule 23’s requirements. But the Supreme Court has not explicitly held whether that searching inquiry requires expert testimony to satisfy the Daubert requirements before being considered in deciding a motion to certify. In Wal-Mart Stores, Inc. v. Dukes, the Supreme Court noted that “the District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings.” 564 U.S. 338, 354 (2011). The Supreme Court expressed skepticism about that holding but did not reject it outright: “We doubt that is so.” Id. As we wrote here, the Supreme Court again addressed expert testimony at the class certification stage in Comcast v. Behrend, 569 U.S. 27 (2013), but deferred the specific question of whether that evidence must satisfy Daubert in order to be considered. Id. at 35 (Ginsburg, J., dissenting).
The lack of explicit guidance from the Supreme Court has left lower courts to determine whether, and how, to apply Daubert at the class certification stage. The Second, Third, Fifth and Seventh Circuits all require that expert testimony be admissible under Daubert in order to be considered. See In re Blood Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015); In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108, 129 (2d Cir. 2013); Messner v. Northshore Univ. Health Sys., 669 F.3d 802, 812 (7th Cir. 2012); Unger v. Amedisys Inc., 401 F.3d 316, 319 (5th Cir. 2005). The Eighth and Ninth Circuits, however, impose less stringent requirements. The Eighth Circuit, in In re Zurn Pex Plumbing Products Liability Litigation, held that class certification rulings are “inherently preliminary” and thus that expert testimony, to be considered at the class certification stage, need not be admissible at trial under Daubert. 644 F.3d 604, 613 (8th Cir. 2011). Rather, only a “focused Daubert analysis which scrutinize[s] the reliability of the expert testimony in light of the criteria for class certification and the current state of the evidence” is needed. Id. at 614. Similarly, the Ninth Circuit held that “a district court should evaluate admissibility under the standard set forth in Daubert … [b]ut admissibility must not be dispositive.” Sali v. Corona Regional Med. Ctr., 909 F.3d 996, 1006 (2018). Rather, “the Daubert inquiry should go to the weight that evidence is given at the class certification stage.” Id.
The United States District Court for the Western District of Pennsylvania recently wrestled with the practical aspects of applying Daubert at class certification in Cole’s Wexford Hotel, Inc. v. Highmark, Inc., No. 10-1609, 2019 WL 988655 (W.D. Pa. Mar. 1, 2019). The plaintiff alleged defendants violated the Sherman Act by conspiring to monopolize the markets for health insurance and health care. The plaintiff moved for class certification and submitted expert testimony to show that it could prove class-wide antitrust impact and damages. In response, the defense presented expert evidence challenging the reliability and methodology underlying the plaintiff’s expert’s testimony.
During the class certification hearing, the defendant denied it was “challenging [the plaintiff’s expert’s] report and testimony under Daubert” and also argued that a Daubert analysis was not required for the court to decide the motion. 2019 WL 988655, at *2. Rather, the defendant argued the court could resolve factual disputes between the dueling experts without excluding the plaintiff’s expert under Daubert. The court, however, disagreed on both counts. First, the court found that the defendant’s challenge was, in effect, a Daubert challenge because the defendant presented its expert “to prove … that the proposed methodology set forth by [the plaintiff’s expert] is not reliable.” Id. at *5.
Second, the court held that it was required to resolve any Daubert challenge before it ruled on class certification. The court refused to “assume [the plaintiff’s expert’s] opinions are admissible [under Daubert] in order to decide the motion to certify a class.” 2019 WL 988655, at *6. Thus, the trial court held that it “must undertake a rigorous analysis of the evidence, which includes a threshold determination under Daubert about whether the evidence is admissible at trial.” Id.
But because the parties had not briefed the Daubert requirements prior to or along with the class certification motion, the court denied the plaintiffs’ class certification motion as premature. The court informed the parties that it would issue a briefing schedule and set a Daubert hearing. Id. at *7. The court acknowledged that postponing the decision would delay the case and increase the expense to the parties. Id. But the court found no alternative because it “cannot resolve the motion to certify class without first conducting a Daubert inquiry.” Id.
The takeaway from Cole’s Wexford is threefold. First, know the Circuit law on challenging expert testimony at class certification. Second, counsel and the court should discuss the court’s expectations for timely raising and resolving challenges to the reliability or methodology of expert testimony relevant to class certification. Third, a court may consider any challenge to the reliability or methodology of expert evidence to be a Daubert challenge, regardless of whether it was intended to be, and thus counsel should be prepared to make the challenge under the Daubert rubric.