Source: http://www.lexology.com, May 31, 2016
By: Andrew H. Perellis, Patrick D. Joyce and Craig B. Simonsen, Seyfarth Shaw LLP
Seyfarth Synopsis: The Eighth Circuit found that a class action could not be sustained in an environmental pollution case because “the class lacks the requisite commonality and cohesiveness to satisfy Rule 23.”
In Karl Ebert v. General Mills, Inc., No. 15-1735 (8th Cir. May 20, 2016), the United States Court of Appeals for the Eighth Circuit found that the District Court erred in certifying a proposed class of plaintiffs in an environmental pollution case because “the class lacks the requisite commonality and cohesiveness to satisfy Rule 23.” The case was remanded for further proceedings at the District Court.
In this its appeal to the Eighth Circuit, General Mills, Inc., challenged the District Court’s grant of class certification because each plaintiff will need to prove individualized issues of injury, causation, and damages.
In the underlying litigation the plaintiffs, all owners of residential properties in a Minneapolis neighborhood near a General Mills facility, sued General Mills, alleging that the company caused trichloroethylene (TCE) to be released onto the ground and into the environment near the plaintiffs’ neighborhood. The plaintiffs claimed that, as a result of the contamination, TCE vapors migrated into the surrounding residential area, threatening the health of the residents and diminishing the value of their property.
For nearly thirty years, General Mills participated in groundwater clean-up and remediation efforts in the plaintiffs’ neighborhood under the direction of, and in conjunction with, the federal government and the State of Minnesota. In late 2011, in cooperation with the State of Minnesota, General Mills began to evaluate the potential of migration of TCE in the form of vapor from shallow groundwater to the soil above. As noted by the District Court, General Mills installed vapor mitigation systems (VMSs) in 118 homes in the neighborhood.
The plaintiffs first learned of the TCE vapor contamination in 2013, and each of the named plaintiffs received customized VMSs. Seeking to represent a class, the residents asserted five legal claims: (1) violation of CERCLA; (2) common law negligence; (3) private nuisance; (4) willful and wanton misconduct; and (5) violation of the Resource Conservation and Recovery Act. Personal injury claims were not included in the complaint, in a deliberate attempt to avoid class certification problems. This will be discussed below.
The District Court found that the requirements of Federal Rule of Civil Procedure 23 were satisfied, and certified the proposed class. However, the Eighth Circuit reversed, finding that the class lacked the requisite commonality and cohesiveness to satisfy Rule 23.
Specifically, the Eighth Circuit noted that the District Court had attempted to artificially narrow the issues and the class membership so as to create class standing by first excluding personal injury claims and any plaintiffs with identifiable personal injury claims, and then by limiting claims to whether injunctive relief would be warranted. The District Court had bifurcated the action into two phases. It first certified a class under Rule 23(b)(2) to determine whether injunctive relief was appropriate. It then set up a second phase under Rule 23(b)(3) to determine the money-damage portion of the case .
The Eighth Circuit noted that the use of this sort of “hybrid certification,” insulating the (b)(2) class from (b)(3) the money-damage portion of the case, is “an available approach that is gaining ground in class action suits.” Newberg on Class Actions § 4:38. While Rule 23(b)(3) requires common questions of law or fact to predominate over questions affecting only individual members, Rule 23(a)(2) requires only the establishment of a common question pertaining to an injury suffered by all class members. In this case, though, the Circuit Court concluded that this action could not proceed as a class under either Rule 23(b)(2) or Rule 23(b)(3).
As to Rule 23(b)(2), the Eighth Circuit found the central required element of “cohesiveness” to be lacking. For relief as a class, “the relief sought must perforce affect the entire class at once,” citing Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2558 (2011). As a result, the Eighth Circuit found that “[i]t is the disparate factual circumstances of class members that prevent the class from being cohesive and thus unable to be certified under Rule 23(b)(2).”
For Rule 23(b)(3), the Eighth Circuit concluded that individual issues would predominate the inquiry. Notwithstanding the District Court’s attempt to exclude questions on individualized exposure, the Eighth Circuit found: “any limitations in the initial action are, at bottom, artificial or merely preliminary to matters that necessarily must be adjudicated to resolve the heart of the matter.”