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Legal Update

California Appellate Court Upholds Order Denying Class Certification, Primarily Relying on Individualized Nature of Damages Inquiry

13 November 2009
Mayer Brown Legal Update

In Evans v. Lasco Bathware, Inc., the California Court of Appeal affirmed the denial of class certification in a lawsuit over allegedly defective products. Specifically, the appellate court held that the trial court did not abuse its discretion in denying class certification when individualized questions of damages predominated over a single common question, and the proposed plaintiffs did not adequately represent the interests of the class.

Plaintiffs sought to represent a class of homeowners whose homes contained shower pans manufactured by defendant Lasco Bathware, Inc. The plaintiffs alleged that Lasco manufactured shower pans that were designed defectively, causing them to leak and create water damage to shower components. The lawsuit “sought to recover only the costs of removing and replacing the shower pans”; it “expressly excluded any consequential damages to adjacent shower components.”

The trial court denied class certification, and the court of appeal affirmed. First, the appellate court approved the trial court’s finding that “individualized trials” would be needed for each class member to determine the appropriate amount of damages. The plaintiffs had offered an expert’s proposed formula for calculating the average cost of replacing the shower pan per class member, but the appellate court determined that such formula-based estimates did not help in assessing the actual cost of removing and replacing each class member’s shower pan, because that cost depended on a number of variables. As the court put it, given the “wide variety of construction materials and methods used to install shower pans, as well as a wide variety in the type of finish materials that would be used,” “it would be necessary to conduct individualized damage determinations for the costs to replace the pans.”

The court also held that the plaintiffs were not adequate class representatives because, “by limiting the recovery to the cost of replacing the shower pans,” they had forfeited a class member’s right to recovery for consequential damages to other shower components. Because “the trial court could reasonably determine the interests of the class members were potentially diverse, an insufficient community of interest existed and class certification should be denied.” The court of appeal also rejected the alternative argument that the trial court should have “certif[ied] the class solely as to the common issues of liability and causation,” accepting the trial court’s conclusion that a “liability only approach could be not be implemented in this action.”

The decision in Evans is notable because of its reliance on the existence of individualized damages issues to deny class certification. California state courts often have been reluctant to deny class certification when individual damages—as opposed to liability—issues predominate over common legal and factual questions. But as the court of appeal explained, no such blanket rule exists under California law; instead, appellate courts will generally defer to a trial court’s judgment on these issues: “[A]lthough a trial court has discretion to permit a class action to proceed where the damages recoverable by the class must necessarily be based on estimations, the trial court equally has discretion to deny certification when it concludes the fact and extent of each member’s injury requires individualized inquiries that defeat predominance.” Evans therefore makes clear that defendants seeking to defeat class certification should make a strong evidentiary showing before the trial court of the presence of individualized damages issues.

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