Win or lose, class actions that make it past the pleadings threaten businesses with enormous defense costs, especially the costs associated with class-wide discovery. As we've discussed before on this blog, one powerful tool for defendants to avoid these costs is to file an early motion to strike class allegations, taking a shot at nipping the class action in the bud when it is apparent from the pleadings that a class cannot be certified.
We were therefore pleased to see the Fifth Circuit recently join the growing ranks of courts that have endorsed pre-discovery motions to strike class allegations. In Elson v. Black, 56 F.4th 1002 (5th Cir. 2023), the court affirmed the district court's order striking plaintiffs' class allegations in their entirety. (The court also affirmed in large part the dismissal of the individual plaintiffs' claims.)
Elson involved a challenge to the marketing of a device called the "FasciaBlaster." According to the plaintiffs, the defendants falsely advertised the device's ability to reduce cellulite, help with weight loss, and relieve pain. Based on these allegations, the named plaintiffs sued under the consumer protection statutes of seven different states, as well as under the Magnuson-Moss Warranty Act, which incorporates state warranty laws. The plaintiffs sought to represent a single nationwide class, as well as seven single-state subclasses.
The defendants responded to the complaint by moving to strike the class allegations and to dismiss for failure to state a claim. The district court granted both motions, and the plaintiffs appealed.
The Fifth Circuit's Opinion
The Fifth Circuit affirmed in substantial part, concluding that the district court correctly struck the class allegations and correctly dismissed all but two of the claims.
Starting with the class allegations, the Fifth Circuit first held that the motion to strike class allegations was procedurally proper. As the court explained, district courts may strike class allegations "on the pleadings and before discovery is complete when it is apparent from the pleadings that a class action may not be maintained." In so holding, the court expressly joined ranks with the Sixth and Eighth Circuits, which have also approved of striking class allegations at the pleadings stage. See Donelson v. Ameriprise Fin. Servs., Inc., 999 F.3d 1080 (8th Cir. 2021); Pilgrim v. Universal Health Card, LLC, 660 F.3d 943 (6th Cir. 2011).
On the substance of the district court's order granting the motion to strike, the panel first faulted the district court for its "inappropriately brief" one-paragraph analysis. But the panel nonetheless affirmed the district court's conclusion as "sound" because it was clear "as a matter of law" that the plaintiffs could not satisfy their burden of demonstrating Rule 23(b)(3) predominance, for at least three reasons.
First-as is often the case for proposed nationwide classes whose members' claims are governed by different states' laws-variations among state laws swamped any common issues and defeated predominance for the nationwide class. For example, the "different reliance requirements of the state laws implicated in this suit" precluded nationwide class treatment.
Second, the plaintiffs' allegations on their face presented a host of individualized issues. For starters, the named plaintiffs alone were complaining about different alleged misrepresentations. Some expected the FasciaBlaster to help them lose weight, others expected it to relieve pain, and others expected it to reduce cellulite. More fundamentally, though, the panel held that "the possibility of class analysis disintegrates" due to the need for each class member to make an individualized showing of reliance.
Third, and relatedly, plaintiffs' alternative proposal for single-state subclasses could not salvage their bid to pursue a class action. Significantly, the panel emphasized that "'[s]ubclass' is not a magic word that remedies defects of predominance." The plaintiffs in this case had failed to make any attempt to satisfy their burden "to demonstrate how certain proposed subclasses would alleviate existing obstacles to certification." Nor could they have done so, given that their "claims are riddled with predominance issues and are unsuitable for class treatment."
Turning to the merits of the individual plaintiffs' claims, the Fifth Circuit affirmed the dismissal of all of the fraud-based consumer-protection claims based on plaintiffs' failure to plead their claims with the particularity required by Rule 9(b). That left only the express warranty claims asserted by two of the named plaintiffs. The Fifth Circuit faulted the district court for failing to "apply the law of a specific jurisdiction" in evaluating those claims and the parties for failing to brief that issue. The panel therefore remanded to the district court to reconsider those claims after determining the "applicable state law."
Elson provides further support for defendants that seek to strike class allegations at the outset. One of the more significant hurdles defendants sometimes face in bringing such motions is the assumption by some district courts-encouraged by plaintiffs-that the motion is premature and that challenges to class certification should await the conclusion of class discovery and the plaintiff's motion to certify the class. We have often pointed to the Sixth Circuit's foundational decision in Pilgrim in pushing back against that argument, and it is significant that two other circuits-the Eighth in Donelson and now the Fifth in Elson-have followed Pilgrim in approving of striking class allegations at the pleadings stage.
As this growing set of appellate decisions reflects, motions to strike class allegations are consistent with Rule 23, which both calls for a certification decision "[a]t an early practicable time" (Rule 23(c)(1)(A)) and expressly authorizes district courts to "require that the pleadings be amended to eliminate allegations about representation of absent persons" (Rule 23(d)(1)(D)).
Elson also serves as a helpful reminder of the types of cases in which a motion to strike class allegations may be especially appropriate. For example, a common tactic by class action plaintiffs and their lawyers to maximize the scope of their case-and the associated litigation costs and settlement pressure they seek to exert on defendants-is to aim to represent a nationwide class, even when the underlying claims are governed by disparate state-law standards. Elson and Pilgrim underscore the strength of the argument that, as a matter of law, variations among state laws overwhelm any common issues and cause the nationwide class to flunk Rule 23(b)(3)'s predominance requirement, and no amount of discovery has any hope of altering that conclusion.
One practice point is worth mentioning. Once the defendants in Elson raised the issue about variations among states' laws in their motion to strike, the Fifth Circuit, rightly in our view, placed the burden on plaintiffs to conduct an extensive state-law analysis to demonstrate that variations among state law would not defeat predominance. Other courts, however, have placed the burden on the defendants moving to strike (or opposing class certification) to detail the relevant differences among applicable states' laws and explain why they do defeat predominance. In many cases, therefore, defendants should strongly consider making the affirmative showing that state law differs in ways that preclude nationwide class treatment.
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