Class Action Defense Cases–Madison v. Chalmette Refining: Fifth Circuit Court Reverses Class Action Certification Order For Failure Of District Court To Meaningfully Consider Trial Administration Issues

May 3, 2011 | By: Michael J. Hassen

District Court Failed to Consider the Manner in which a Class Action Trial would Proceed Prior to Granting Class Action Treatment, Requiring Reversal of Class Action Certification for Abuse of Discretion Fifth Circuit Holds

Plaintiffs filed a putative class action against Chalmette Refining following the release of petroleum coke dust from the Chalmette Refinery. Madison v. Chalmette Refining, L.L.C., ___ F.3d ___ (5th Cir. April 24, 2011) [Slip Opn., at 2]. According to the allegations underlying the class action complaint, plaintiffs (a group of school children and their parent and teachers) were exposed to the petroleum coke dust while reenacting a battle at the Chalmette National Battlefield, located adjacent to the refinery. _Id._ The class action complaint sought damages for “personal injury, fear, anguish, discomfort, inconvenience, pain and suffering, emotional distress, psychiatric and psychological damages, evacuation, economic damages, and property damages.” _Id._ Consistent with Fifth Circuit authority, the district court allowed the parties to conduct pre-certification discovery relevant to the propriety of class action treatment. _Id._ Defense attorneys deposed the five named plaintiffs, but plaintiffs’ counsel elected not to conduct discovery. _Id._ Plaintiffs then sought class action certification of a Rule 23(b)(3) class, which defendant opposed. _Id._, at 2-3. “Over two years later, the district court held a hearing on the motion to certify the class. At the conclusion of that hearing, and without any evidence being introduced, the district court orally granted Plaintiffs’ motion.” _Id._, at 3. Defendant petitioned the Fifth Circuit for leave to take an interlocutory appeal, which the Fifth Circuit granted. _Id._ Two months later (and after the Fifth Circuit had granted defendant’s petition for interlocutory appeal), the district court issued a written order granting class certification. _Id._ The Circuit Court reversed.

After summarizing the requirements for class action treatment under Rule 23, see Madison, at 3-4, the Circuit Court opened its analysis at page 4 with the following observation: “Recognizing the important due process concerns of both plaintiffs and defendants inherent in the certification decision, the Supreme Court requires district courts to conduct a rigorous analysis of Rule 23 prerequisites.” The Fifth Circuit stressed that the moving party bears the burden of satisfying the requirements of Rule 23, and that the district court must take “‘a close look at the case before it is accepted as a class action.’” Id., at 4 (quoting Amchem Prods. v. Windsor, 521 U.S. 591, 613 (1997)). The lower court, however, failed to perform such an analysis. Rather, the district court found it sufficient that “there is one set of operative facts that [will] determine liability” because “Plaintiffs were either on the battlefield and exposed to the coke dust or they were not.” Id., at 6.

The Fifth Circuit held that the district court abused its discretion in granting class action treatment because it failed to perform the “rigorous analysis” required of it in that the lower court failed to “meaningfully consider how Plaintiffs’ claims would be tried.” Madison, at 7. This analysis is essential, because it is through the examination of how the class action would be tried that the district court ensures that the trial will not “‘degenerat[e] into a series of individual trials.’” Id. (citation omitted). This is why “mass accidents” are generally unsuitable for class action treatment – because such “‘an action conducted nominally as a class action would degenerate in practice into multiple lawsuits separately tried.’” Id. (quoting Rule 23(b)(3) Advisory Committee’s Note). Here, however, the district court failed to provide any trial plan. Id., at 7-8.

The Fifth Circuit reversed, therefore, because the lower court failed to seriously consider trial administration issues, as required. Madison, at 9. “By failing to adequately analyze and balance the common issues against the individualized issues, the district court abused its discretion in determining that common issues predominated and in certifying the class.” Id. The Circuit Court did not hold that class action treatment was inherently inappropriate in the case, merely that the district court was required to perform “a far more rigorous analysis than the district court conducted” before deciding whether to class action certification was warranted. Id. Accordingly, the Fifth Circuit reversed the order granting class certification, id.

Download PDF file of Madison v. Chalmette Refining, L.L.C., ___ F.3d ___ (5th Cir. April 24, 2011)

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