In IKO Roofing Shingle Products Liability Litigation, the Seventh Circuit Court of Appeals reversed a denial of class certification in a products liability multidistrict litigation on the grounds that the plaintiffs’ two damages theories complied with the U.S. Supreme Court’s holding in Comcast Corp. v. Behrend, even though these theories would not allow for the calculation of damages on a class-wide basis. This holding is another step by lower courts towards limiting Comcast’s impact on Rule 23 and class-wide proof of damages at the certification stage.
The plaintiffs in IKO Roofing alleged, in consolidated class action claims, that the roofing company IKO Manufacturing misled customers about the quality of certain organic asphalt shingles. Due to the various differences in consumers’ experiences with TKO tiles (e.g., some failed to meet industry standards, some were poorly installed), the defendant argued that class certification was improper under Fed. R. Civ. P. 23(b)(3) and Comcast. The defendant argued that, under Comcast, damages were required to be provable on a class-wide basis (i.e., Comcast barred class actions where the damages question required many mini-trials). The district court agreed and denied certification.
On appeal, the Seventh Circuit rejected the district court’s “mistaken belief that ‘commonality of damages’ is legally indispensable.” Instead, the appellate court interpreted Comcast to mean that class treatment is appropriate where the theory of loss matches the theory of liability. As to the plaintiffs’ theories, the appellate court found that neither of their damages approaches ran “afoul of Comcast: both the uniform and buyer-specific remedies match the theory of liability, as Comcast requires.” For instance, the court found that the damages applied to all consumers who purchased the tiles could be calculated by the “difference in market price between a tile as represented and a tile that does not satisfy the D225 standard” – a diminution in value theory.
The Seventh Circuit’s view is that Comcast would permit class certification even when the calculation of class damages would require mini-trials. The court also ruled, however, that certification is still a discretionary exercise that may not be appropriate where significant manageability problems are evident: “A district judge has discretion to evaluate practical considerations that may make class treatment unwieldy despite the apparently common issues. On occasion the problems are so grave that it is an abuse of discretion to certify a class.”
Therefore, the prospect of many mini-trials could result in denial of class certification – but that would be decided on a case-by-case basis by the trial court in its discretion. Ultimately, the IKO Roofing decision makes clear that the Seventh Circuit does not require class-wide proof of damages. According to the appellate court, only in cases where manageability problems are particularly egregious should a court deny certification (i.e., because of the individual inquiries necessary to administer the class).