An Upside-Down Class Certification Decision

May 10, 2017

class certification

In a recent decision, the Court of Appeals for the Seventh Circuit upended its usual approach for class actions, deciding the merits of the claims before resolving class certification. This decision is a departure from Rule 23(c)(1) — which calls for a class certification ruling “at an early practicable time” — and it is a break from the Court’s long-standing customs for managing class litigation. A brief discussion of the case shows how it got off-track.

The plaintiffs in Eike v. Allergan sued several manufacturers of prescription eye drops. The plaintiffs alleged a deceptive business practice because the eye droppers dispensed drops that were too large, wasting more than half of the expensive medication in each bottle. In 2014, the trial court denied a motion to dismiss, finding that the plaintiffs had pled enough of an injury when they paid for wasted product.[1]

In 2016, the trial court certified the plaintiffs’ claims for class action treatment, finding that the case met all of the requirements of Rule 23 and finding that the named plaintiffs  could fairly and efficiently bring the claims on a class-wide basis.[2] The trial court said that it was not yet reaching the merits of the claims, holding only that the claims were certified as a class action under Rule 23.

Under Rule 23(f), the Court of Appeals agreed to hear an appeal from the class certification order. But after briefing and argument, the Court of Appeals issued an opinion that did not decide whether the trial court had correctly certified the class under Rule 23.[3] Rather, the Court of Appeals found that the plaintiffs received exactly what they bargained for — and therefore they suffered no loss from the defendant’s packaging — so they had no standing to sue. On that basis, the Court of Appeals dismissed the claims with prejudice.

There are several remarkable aspects of the Court of Appeals opinion.

  • The opinion never considers whether Rule 23 was satisfied, even though the appeal was supposed to focus on that question under Rule 23(f)

 

  • The opinion discusses whether the plaintiffs could ever prove any injury or damages, ostensibly framing that as a discussion of standing, yet the opinion reads more like a ruling on whether the plaintiffs should succeed on the merits.

 

  • The opinion ignores a long line of cases that prohibit courts from reaching the merits before deciding class certification.[4] As a result, it is hard to tell if the Court’s decision even applies to the entire class.

 

  • And the opinion cites almost no legal research, instead relying on a discussion of how eye droppers work.

 

The overall impression from the Eike opinion is that the Court of Appeals was so unimpressed with the plaintiffs’ theory of the case — the matter seemed so trivial — that the Court of Appeals set out to end the lawsuit summarily.

For all of its quirks, the Eike decision offers two pointed lessons for practitioners who are arguing Rule 23(f) appeals in the Seventh Circuit. First, be ready for anything, including the merits, even if it seems like those issues are not ripe for appellate review. Second, be prepared to explain how the case is a serious dispute that has important consequences for the class.

As the Eike opinion shows, the Court of Appeals might choose to resolve more than what is technically up on appeal.

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1.          Eike v. Allergan Inc., 2014 U.S. Dist. LEXIS 34894 (S.D. Ill. March 18, 2014).

2.           Eike v. Allergan Inc., 2016 U.S. Dist. LEXIS 96854 (S.D. Ill. July 25, 2016).

3.           Eike v. Allergan Inc., 850 F.3d 315 (7th Cir. 2017).

4.           See, e.g., Amgen Inc. v. Connecticut Retirement Plans, 133 S.Ct. 1184, 1191 (2013), and Premier Electric v. Nat’l. Elec. Contr. Ass’n., 814 F.3d 358, 368 (7th Cir. 1987).


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