COREY PRANTIL; RONALD WHATLEY; BETTY WHATLEY; BRET SIMMONS; PHYLLIS SIMMONS; GREG NASON; LARRY ANDERSON; TANYA ANDERSON; KEITH LYONS; BEVERLY FLANNEL; ROLAND FLANNEL v. ARKEMA INCORPORATED
No. 19-20723
United States Court of Appeals for the Fifth Circuit
January 22, 2021
Lyle W. Cayce, Clerk
USDC No. 4:17-CV-2960
Before HIGGINBOTHAM, ELROD, and HAYNES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
As Hurricane Harvey deluged southeastern Texas with record floods, volatile chemicals at a facility in Crosby, Texas, combusted, releasing toxic ash and smoke into the surrounding communities and causing the evacuation of nearby residents. Seeking redress for the physical and financial effects of the incident, certain Crosby-area property owners brought a class action against the facility‘s owner—Arkema, Inc.—on behalf of themselves and
I.
Arkema‘s facility in Crosby, Texas, produces Luperox, a liquid organic peroxide used to make plastics and composites. Luperox is a volatile compound that decomposes and combusts unless refrigerated. The Crosby facility sits in a flood plain near the Gulf Coast, leaving it vulnerable to the approach of Hurricane Harvey. By August 24, 2017, it was clear that Harvey would make landfall and likely stall over Texas. Arkema continued production at Crosby until August 25, 2017, before implemеnting the facility‘s hurricane preparedness plan. Several days of heavy rain and rising flood waters at Crosby forced the facility‘s “ride-out” team to move nearly 350,000 pounds of combustible materials to refrigerated trailers set on higher ground. But the floodwaters’ continued rise eventually threatened the trailers’ cooling systems as well, and on August 29, 2017, Arkema alerted local authorities that a combustion event was imminent. The authorities responded by establishing a 1.5-mile evacuation zone around the facility. Between August 31 and September 4, nine refrigerated trailers burned in three separate ignitions, the last оf which was a controlled burn by emergency personnel. Further, two of the facility‘s wastewater tanks overflowed, dispersing contaminated water and bringing the count to five total emissions events. Shortly afterward, local residents saw clouds of white smoke and accumulating ash on their properties, and persons inside and outside of the established 1.5-mile evacuation zone reported physical symptoms including bodily rashes, headaches, eye irritation, blisters, and respiratory difficulty.
Plaintiffs are local property owners who seek to represent a class of all property owners within а seven-mile radius of the Crosby facility to pursue
After extended oral argument on Plaintiffs’ motion for class certification and Arkema‘s motions to exclude certain experts, the distriсt court granted Arkema‘s motion to exclude Plaintiffs’ damages expert, but it credited three of Plaintiffs’ experts and granted Plaintiffs’ motion for class certification.1 In granting certification, the district court held that the proposed class met the elements of
Arkema urges four arguments on appeal: (1) that the district court did not conduct the rigorous analysis required by Fifth Circuit and Supreme Court precedent, to ensure that the individual claims can be fairly and effectively adjudicated in a class action; (2) that the district court erred when
II.
We review the district court‘s decision to certify a class for abuse of discretion.4 Although a district court has broad discretion to certify a class, it must “rigorously analyze Rule 23‘s prerequisites” before doing so.5 Such analysis requires “the district court to go beyond the pleadings to determine whether the requirements of Rule 23 have been met: ‘a court must understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the cеrtification issues.‘”6 Additionally, the district court must consider “how a trial on the merits would be conducted” if the class were certified.7
We begin with the standard applicable to expert evidence at the class-certification stage. We then address the predominance of common questions
A. Daubert‘s Applicability to Class Certification
Since its early days, Rule 23 with its b(2) and b(3) classes has played an increasingly important role in addressing the challenges of aggregating large numbers of persons seeking recompense for a single event or for injuries suffered from a common set of facts—product failures, myriad disasters at the hand of man аnd nature. With all its difficulties in application, the class device has proven to be a powerful workhorse to the benefit of plaintiffs and defendants so as now to be essential.
Yet, certification changes the risks of litigation often in dramatic fashion.8 Thus, under
In so holding, we join three other federal courts of appeal.12 The Third Circuit‘s reasoning on this issue in In re Blood Reagents Antitrust Litigation, is particularly instructive, drawing as it does on recent Supreme Court precedent.13 The Third Circuit saw the need to apply Daubert at the certification stage as a natural extension of the Supreme Court‘s admonition in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011), and Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013), to conduct a “rigorous analysis” of the proposed class‘s conformity with Rule 23.14 In Dukes, the Supreme Court expressed “doubt” that ”Daubert did not apply to expert testimony at the certification stage of class-action proceedings.”15 And in Comcast, which concerned use of an expert‘s damages model to certify an antitrust class action, the Supreme Court reaffirmed that it is incumbent on plaintiffs to submit “evidentiary proof” of their compliance with Rule 23.16 As the Third Circuit observed, “[e]xpert testimony that is insufficiently reliable to satisfy the Daubert standard cannot ‘prove’ that the Rule 23(a) prerequisites have
Plaintiffs do not take issue with this reasoning; they do not contend that case law or practical considerations militate against using Daubert for class certification. Instead, they contend that Arkema has no grounds for complaint here because the district court applied a full-bore Daubert analysis when it assessed Plaintiffs’ experts. Our able district judge here was sensitive to the concerns presented by expert evidence. He heard arguments on each of Arkema‘s motions, and granted one, excluding Plaintiffs’ damages expert “because he has not actually built or tested any regression analyses that he suggests could be appropriate for determining damages on a class-wide basis.”19 The district court did not disregard its gate-keeping role, but its analysis of the expert reports reflect hesitation to apply Daubert‘s reliability standard with full force.
The district court began its discussion of the expert reports by observing that “[w]hether a full Daubert analysis at the class certification stage is required is unclear.”20 When discussing Plaintiffs’ evidence of chemical contamination, the district court observed that “[w]hile it certainly would have been better for Dr. Kaltofen additionally to include the
B. The Predominance of Questions Common to the Damages Class
The district court determinеd that the proposed damages class was suitable for certification under
The predominance requirement “tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.”24 It “calls
Courts should consider predominance on a claim-by-claim basis,27 and the district court did so here: for negligence, it found duty and breach to be common issues;28 for trespass, the question of unlawful entry was common to the class;29 for public nuisance, the question of unreasonable interference was common.30 Similarly, the district court concluded that all three elements of Plaintiffs’ RCRA claim presented common questions.31 As for CERCLA,
The district court then addressed whether Plaintiffs’ alleged damages, the diminution in their property values, would entail individual inquiries outweighing the common inquiries relating to liability. Plaintiffs proposed to calculate classwide damages through mass property appraisals, but the district court rejected the report of Plaintiffs’ damages expert because he failed to offer a reliable means of making these calculations. Neither the court nor Plaintiffs identified another means by which Plaintiffs could calculаte damages on a classwide basis. Nonetheless, the district court found that common legal and factual questions still predominated because “virtually every issue prior to damages is a common issue,” and Plaintiffs proposed to bifurcate the proceedings so that damages could be addressed separately, if at all.33
The district court identified elements of each claim that would present common questions, but its predominance inquiry then paused. With that pause, the district court‘s approach resembles that taken by the district court
Here, as in Madison, the district court‘s certification order did not discuss the considerations affecting the administration of trial, and it concluded that common questions would predominate without adequately addressing Arkema‘s arguments that causation, injury, and damages would
When considering the propriety of class certification, the district court must “respond to the defendants’ legitimаte protests of individualized issues that could preclude class treatment.”41 This is part of the district court‘s obligation to “understand the claims [and] defenses” at play.42 A
We find that the certification order is wanting in its answer to Arkema‘s arguments that a trial of class claims would devolve into individualized inquiries on causation, injury, and damages. For instance, the district court rejected Arkema‘s contention that causation would become too individualized by reasoning that becаuse “Plaintiffs focus only on chemicals with a strong link to the facility explosion, there are fewer hyper-localized alternative sources that would turn proof of causation into a series of mini-trials. . . . [and] alternative causes would likely apply to large chunks or all of the class area.”44 The basis for this conclusion that few alternative sources need be considered is unclear. Other parts of the order suggest that the district court may have relied on Plaintiffs’ expert, Dr. Kaltofen, to conclude that alternative sources for the chemicals in question would not be an issue. But the order also states that Dr. Kaltofen addressed only ”some of these alternative sources and ruled them out in his rebuttal report.”45 The difficulty is that we are uncertain whether alternative sources will be a factor at trial and whether these alternative sources can be dealt with in groups, as the district court suggested.
The district court also held that injury resulting from Arkema‘s alleged negligence, trespass, etc. could be proven on a classwide basis because “individuals’ exposure to contaminants results not just from contaminants
Much of the district court‘s predominance analysis proceeded from its view that “all injuries resulted from [a] single course of conduct,” and thus “the focus will be on Defendant‘s actions.”50 Of course, a case may be relatively more suitable for class treatment where only one defendant and one course of conduct are at issue.51 But what is needed here is discussion of how proof of Arkema‘s conduct will affect trial.52 Absent such analysis, we are
We do not exhaustively catalogue the matters deserving consideration under
C. The Cohesiveness of the Injunctive-Relief Class
Plaintiffs seek two separate forms of injunctive relief from Arkema: medical monitoring and property remediation.
The district court concluded that members of the proposed class had been harmed in essentially the same way because the injuries for which they seek injunctive relief arise from Arkema‘s conduct in preparing for and mitigating the effects of Hurricane Harvey on its Crosby facility. Concerning Plaintiffs’ request for medical monitoring, the district court found that “[i]f their allegations are true, Plaintiffs need to be repeatedly tested for health effects so that cancer or other diseases may be caught early and treated,” and “the injunctive relief sought will commonly address [Plaintiffs‘] injury.”58 The district сourt envisioned the medical monitoring injunction as an iterative process involving “early detection and treatment” through which “a more complete understanding of the potential consequences of exposure is attained and treatment plans are put into place.”59 But the district court did not discuss the range or types of medical monitoring the injunction would implement.
These discussions of the injunctions in their broad strokes do nоt satisfy the requirement that injunctive relief be reasonably specific. Our decisions make clear that more is needed than a common failure by the defendant and the prospect that all class members could realize some benefit if the defendant is compelled to act or desist.62 To be sure, ”
We do not agree with Arkema that our decision in M.D. ex rel. Stukenberg v. Perry necessarily precludes all possible forms of injunctive relief for the proposed class. In Stukenberg, a proposed class of foster care children sought “at least twelve broad, classwide injunctions, which would require the
Here, by contrast, there is stronger evidence that through its response to a specific event, Hurricane Harvey, Arkema “acted or refused to act on grounds that apply generally to the class.”67 The current record does not compel the conclusion that Plaintiffs’ medical and property injuries are incapable of being addressed by classwide injunctions. For instance, it is not necessarily fatal to a uniform scheme of property remediation that certain properties may contain higher concentrations of contaminants than others, provided Plaintiffs can identify a common method of remediation and some reasonable standard by which remediation might be assessed.68
III.
We do not here limit the tools necessary to the district court‘s management of complex litigation, such as the oft-deployed bifurcation of liability and damages. The reality of Rule 23 is that it depends upon the
We vacate the district court‘s order certifying the рroposed class and remand the case for further proceedings including certification of the class.
PATRICK E. HIGGINBOTHAM
UNITED STATES CIRCUIT JUDGE
