A District Court in Kansas added to an increasing debate in the federal courts over class ascertainability when it certified a class of 440,000 U.S. corn producers in a suit against Swiss global agribusiness Syngenta AG (Syngenta) over the company's commercialization of genetically modified corn seed products. In re: Syngenta Ag Mir 162 Corn Litig., No. 14-MD-2591-JWL, 2016 WL 5371856 (D. Kan. Sept. 26, 2016).
In the multi-district litigation, producers and nonproducers of corn in the U.S. brought claims against Syngenta and its affiliates under the Federal Lanham Act and various state laws in connection with Syngenta's commercialization of certain corn seed products. The products in question contained a genetic trait known as MIR 162 and were allegedly commingled throughout the U.S. corn supply. A major export market for corn is China, but Syngenta never obtained China's approval for MIR 162. China subsequently rejected MIR 162 corn for import, which caused a market oversupply that led to a dramatic drop in corn prices, thus allegedly causing significant losses to the plaintiffs' businesses.
Plaintiffs moved to certify a nationwide class and eight state law classes, comprising nearly half a million corn producers in the U.S. (for the nationwide class) or in a particular state (for the statewide classes) who "priced their corn for sale after November 18, 2013," excluding certain categories of producers such as those who purchased the seed product in question and those who had filed individual claims in state court.
Court holds that "ascertainability" does not require administrative feasibility
In its opinion, the court first took up the issue whether plaintiffs' proposed class definitions were properly "ascertainable." Noting the "critical importance" of a carefully crafted class definition, the court explained that the definition must be "precise, objective, and presently ascertainable." The Tenth Circuit, however, has not adopted a specific test for ascertainability and so the District Court sought guidance from other Circuits, which are split.
In the Seventh and Eighth Circuits, for example, ascertainability requires only that the proposed class be "readily identifiable," while the Second, Third and Eleventh Circuits adopt a stricter test that requires plaintiffs to show not only that the class can be defined by objective criteria, but also that class members may be determined in an economical and "administratively feasible" manner. Reasoning that this additional element of "administrative feasibility" was not necessary because that interest was already protected by other provisions of Federal Rule of Civil Procedure 23 (such as the "superiority" requirement), the court endorsed the weaker test. As long as a class definition is not too vague and class members can be identified through objective criteria, it will be sufficiently ascertainable.
Under this weaker test, the court held that plaintiffs' proposed class definitions were based on objective criteria and were not impermissibly vague. Syngenta had argued that the term "priced" was too vague because of the many different types of possible sale contracts involved in plaintiffs' sales of corn. But the court disagreed, explaining that "priced" simply means "the date on which the price for particular corn is agreed upon by the parties to the sale." Syngenta also argued that determination of the date on which a producer priced its corn would require cumbersome individual inquiries, but the court rejected this too, reasoning the producers only needed to show a single sale after that date, which they could do with their own records or, where necessary, by affidavit. Finally, Syngenta challenged plaintiffs' definition of "producer" and their reliance on the USDA's Farm Service Agency (FSA) Form 578 to identify those producers. The court, however, held that reliance on these forms was reasonable and that the forms' failure to capture every injured party within the class definition was not fatal.
Court declines to examine the merits of plaintiffs' expert opinion
The court also confronted Rule 23's "predominance" element, which requires that issues common to the putative class claims predominate over individualized issues.
To show that common issues predominated, plaintiffs submitted an expert opinion showing that Syngenta's commercialization of the corn seed products and their subsequent rejection by China caused the general market price of corn to decrease, affecting all class members in the same manner. Syngenta submitted a competing expert opinion disputing that conclusion.
One issue that has pervaded class action jurisprudence in recent years is the role of expert opinions at the certification stage, specifically whether such opinions are admissible to show predominance of common issues. Syngenta, relying on Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) and Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433, 185 L. Ed. 2d 515 (2013), argued that the court must conduct a merits-based weighing of the competing expert opinions because plaintiffs bear the burden of proving, by a preponderance of the evidence (rather than just pleading or making a prima facie case), that the requirements of Rule 23 are met.
The court, however, said that on certification, it was not the court's role to conduct a merits-based examination of the experts' opinions, and that plaintiffs could "rely on those opinions to show class-wide liability." Citing Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016), the court stated that while "Syngenta challenges the reliability of [plaintiffs'] experts' opinions, it, like the defendant in Tyson Foods, did not raise a Daubert challenge, and the Court assumes the admissibility of those opinions at this stage." Thus, because Syngenta had failed to challenge the admissibility of the opinion, the court held that its attacks on the reliability of the opinion were improper at certification and were more properly directed at the weight of the opinion at trial.
Syngenta also argued that under in Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433 (2013), plaintiffs must provide a damages model that "establish[es] that damages are susceptible of measurement across the entire class." The court rejected the argument that a class-wide damages model is required for certification under Rule 23(b)(3), and stated that plaintiffs did present a class-wide damages methodology: expert-created models that calculated the per-unit effect of Syngenta's commercialization of corn on class members' sales revenue. Further, the ultimate determination of the fact and amount of damage did not pose a risk that individual inquiries would predominate. Following Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1194 (2013), the court explained that if the jury rejects plaintiffs' theory of damages, the case will effectively be lost, as plaintiffs will be unable to prove the fact of injury. Thus, the case would stand or fall on that question and would not cause individual issues to predominate if that question was answered in the negative.
The case represents the latest battle over the role that expert opinions should play at the certification stage. See, e.g., Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014) (inviting class action defendants to submit expert reports at certification to show that their alleged misstatements did not impact a stock's price). Also, assuming the Tenth Circuit does not reverse the court's adoption of the weaker ascertainability test, Syngenta seemingly lowers the "ascertainability" hurdle to class certification. But, interestingly, Syngenta did not eliminate the requirement completely: As the court noted, Rule 23's requirement that the class action vehicle be "superior" to individual actions already entails some analysis of whether class members can be identified with relative logistical ease. The resolution of this debate will await future cases.
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