One area that continues to cause confusion with respect to expert witnesses is the role (if any) of a Daubert analysis at the certification phase of a class action lawsuit. The confusion arises from the competing obligations imposed on district courts. On one hand, Rule 23(c)(1)(A) requires district courts to address certification questions "at an early practicable time," Fed. R. Civ. P. 23(c)(1)(C), which can occur early in, if not before, merits discovery in a case. On the other hand, "actual, not presumed, conformance with Rule 23(a) remains, however, indispensable" to a party's class certification motion. General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 160 (1982). Thus district courts often find themselves confronted with class certification motions early in litigation that are premised on or opposed by expert opinion testimony that then becomes the subject of Daubert challenges.Some courts have resolved this tension by holding, in effect, that there is "no authority establishing a court must perform a Daubert inquiry of scientific evidence at this early stage of a class action proceeding." Drayton v. Western Auto Supply Co., 2002 WL 32508918, at *6 n.13 (11th Cir. Mar. 11, 2002).
However, it appears that an increasing number of courts are becoming open to Daubert challenges during the certification stage of litigation. For example, in In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008), the Third Circuit held that "[e]xpert opinion with respect to class certification, like any matter relevant to a Rule 23 requirement, calls for rigorous analysis." Id. at 323. There the district court had refused to grant the defendants' Daubert motion reasoning that "because the evidence is here offered for the limited purpose of class certification, our inquiry is perhaps less exacting than it might be for evidence to be presented at trial." Id. at 313 n.13. The defendant did not challenge that ruling on appeal, and thus the propriety of a Daubert challenge during the certification phase of the case was not directly at issue. Nevertheless, the Third Circuit held that "opinion testimony should not be uncritically accepted as establishing a Rule 23 requirement merely because the court holds the testimony should not be excluded, under Daubert or for any other reason." Id. at 323.
District courts in the Third Circuit now plainly are open to Daubert challenges during the certification stage of a lawsuit though their decisions on such motions "while conclusive with respect to class certification, do not bind the fact-finder on the merits." Behrend v. Comcast Corp., 2010 WL 46856, at *2 (E.D. Pa. Jan. 7, 2010) (referring in passing to Daubert challenges during certification process); Lewis v. Ford Motor Co., 2009 WL 2355744 (W.D. Pa. July 30, 2009) (conducting a Daubert analysis during certification process).
The Second Circuit also seems to have adopted a similar rule. In In re Initial Public Offerings Sec. Lit., 471 F.3d 24, 40 (2d Cir. 2006), the Second Circuit rejected its holding of just five years earlier when it held that a district court need only "ensure that the basis of the expert opinion is not so flawed that it would be inadmissible as a matter of law" for purposes of a class certification motion. In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124, 134-35 (2d Cir. 2001). In making that change the court first reviewed the law in other jurisdictions and then acknowledged "the need for some clarification" regarding the extent to which district courts should evaluate at the certification stage, not just Daubert issues, but rather all certification issues that overlap with the merits of the case. In re Initial Public Offerings Sec. Lit., 471 F.3d at 39-40. With respect to Daubert challenges during the certification process the court held that "[o]bviously, we can no longer continue to advise district courts . . . that an expert's report will sustain a plaintiff's burden so long as it is not 'fatally flawed.'" Id. at 40. District courts in the Second Circuit now recognize the appropriateness of Daubert analyses during the certification phase of litigation, but only "as far as they bear on the Rule 23 determination." In re NYSE Specialists Sec. Litig., 260 F.R.D. 55, 65-66 (S.D.N.Y. 2009).
These rulings from the Second and Third Circuits appear to be consistent with the law in the Fifth Circuit as well. See, e.g., Unger v. Amedisys Inc., 401 F.3d 316, 323-24 n.6 (5th Cir. 2005) (adopting a district court's reasoning that, although courts are "not to insist upon a 'battle of the experts' . . . it makes sense to consider the admissibility of the testimony of an expert proffered to establish one of the Rule 23 elements in the context of a motion to strike prior to considering class certification"). Moreover, some district courts in other circuits have been reaching similar conclusions. See, e.g., Allen v. American Honda Motor Co., 2009 WL 4823894 at * 11 (N.D. Ill. Dec. 8, 2009)(rejecting plaintiffs' argument that they did not need to engage in "full blown Daubert analysis at the class certification stage, and citing other district court decisions reaching the same conclusion).
From this non-scientific review of recent case law it appears that courts increasingly are accepting the appropriateness of Daubert challenges during the certification process. However, there plainly still is not a uniform rule on the subject. Plaintiffs continue to argue that at the class certification stage their experts "need not survive a full Daubert analysis[,]" Allen, 2009 WL 4823894 at *11, and some courts still seem amenable to that line of argument. See, e.g., In re Netbank, Inc. Securities Litigation, 259 F.R.D. 656, 670 n.8 (N.D. Ga. 2009) (citing Drayton for the proposition that "performing Daubert analyses at this stage of the litigation, in the context of class certification, would be inappropriate"); Natchitoches Parish Hosp. Service Dist. v. Tyco Intern., Ltd., 247 F.R.D. 253, 270 (D. Mass. 2008) (holding that "[t]he important question in a class certification context is whether after a sneak preview of the issues, the expert approach appears fundamentally flawed-an issue usually vetted more fully at a Daubert hearing based on a more detailed record").
Thus, although some uniformity does seem to coming to this area of the law, right now there still is enough "play in the joints" that litigants in most jurisdictions will be able to mount defensible positions for, or against, a Daubert review of expert testimony during the certification stage of litigation. For that reason, trial counsel should stay tuned to this developing area of the law.
As always, if you have any thoughts, questions, comments or suggestions on this topic or for making this a more useful resource, please feel free to contact me directly.
