Quest Defeats Class Certification at the Third Circuit

Grandalski v. Quest Diagnostics, Inc., 767 F.3d 175 (3d Cir. 2014).  Plaintiffs filed a putative class action in which they alleged that defendant, a company that performs medical lab tests, had overbilled patients in violation of state consumer protection laws.  The District Court denied class certification and also granted a motion for summary judgment against one plaintiff on her claim under a New York consumer protection statute, New York General Business Law §349.  Plaintiffs appealed, but the Third Circuit affirmed on all issues in an opinion by Judge Rendell.

Plaintiffs’ first argument as to the class certification issue was that the District Court should not have made a choice of law determination.  They relied on Sullivan v. DB Investments, Inc., 667 F.3d 273, 309 (3d Cir. 2011) (en banc) (“many courts find it inappropriate to decide choice of law issues incident to a motion for class certification”).  But Judge Rendell noted that Sullivan was a settlement case, and that in the context of a litigation class certification decision, where manageability is an issue, the District Court did not abuse its discretion by making a choice of law decision.

The District Court ruled that the law of each class member’s home state would apply to that class member. Plaintiffs claimed that this was error.  Judge Rendell disagreed, relying largely on Maniscalco v. Brother Int’l (USA) Corp., 709 F.3d 202 (3d Cir. 2013), which had applied the Restatement (Second) of Conflict of Laws and P.V. v. Camp Jaycee, 197 N.J. 132 (2008), and had likewise concluded that the laws of each consumer’s home states would apply.

Plaintiffs then argued that they had successfully grouped multiple state laws into a manageable construct that should have satisfied predominance, superiority, and manageability concerns and permitted class certification.  The panel did not agree.  Plaintiffs can demonstrate that multiple state laws can be sufficiently grouped or otherwise harmonized to obtain a multi-state or nationwide class, as the Third Circuit has previously stated in settlement cases such as Sullivan and In re Prudential Ins. Co. of America Sales Practices Litig., 148 F.3d 283 (3d Cir. 1998), which Judge Rendell cited here, and in the context of a litigation class in In re School Asbestos Litig., 789 F.2d 996 (3d Cir. 1986), which the panel did not cite.  But plaintiffs in this case did not do enough along those lines.  They offered only “their own ipse dixit, citation to a similar case, and a generic assessment of state consumer fraud statutes, to justify grouping.”  As a result, the District Court did not abuse its discretion in finding that a multi-state class was unworkable.  Plaintiffs in another case who do more to justify grouping may achieve a different result.

The Third Circuit affirmed the denial of a class on plaintiffs’ unjust enrichment claim for another reason:  individual inquiries would be necessary to determine whether any particular overbilling was “unjust or fraudulent.”  The District Court mistakenly viewed this question as one of ascertainability under Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), Judge Rendell said, correctly.  But the predominance test was not satisfied, so class certification failed for that reason.

Plaintiffs’ last class certification argument was that a separate Fair Debt Collection Practices Act class should have been certified.  But Judge Rendell observed that that class was defined in terms of persons who received a written demand for payment, while the only proposed representative of that class testified that he had never received anything in writing from a debt collector.  A class representative must be a member of the class that he or she seeks to represent in order to satisfy the typicality requirement of Federal Rule of Civil Procedure 23(a)(3).  That criterion was not met here.

Finally, Judge Rendell affirmed summary judgment against the one plaintiff who proceeded with her individual claim.  That claim was under New York GBL §349.  The panel found that this plaintiff had not shown any pecuniary harm, and that the only evidence of non-pecuniary harm was one line in her deposition where she stated that she had been “harassed and billed.”  Though non-pecuniary harm is compensable under GBL §349, as Judge Rendell noted, citing New York cases, there was insufficient evidence for a reasonable jury to find any non-pecuniary harm.