Expert Opinion in Class Certifications: Second Circuit Revisits, Disavows in Re Visa Check and Joins Majority Rule

IN VIRTUALLY every putative class action, entire case will turn on certification decision. Once a class is certified, an overwhelming majority of cases go on to settlements, many with large monetary recoveries. On other hand, those cases that do not survive class certification are typically dismissed, either by summary judgment or by a nuisance payment to named plaintiff. Accordingly, of utmost concern at certification stage is plaintiff's evidence of manageability of litigation, predominance of common issues and superiority of a class action over individual cases-elements required by Rule 23 of Federal Rules of Civil Procedure as prerequisites for class actions. In recent years, artillery of choice for class action attorneys at certification stage is utilization of expert testimony to either establish or challenge requirements for class certification. (1) Arguably, use of certain types of expert opinion at this stage of class litigation is inappropriate altogether, but nevertheless it has become an increasingly common practice. (2) Federal courts, with relatively minimal guidance from U.S. Supreme Court, have continuously struggled over exactly how, and in some cases whether, to consider expert testimony at class certification stage. In particular, federal courts have grappled with use of experts while at same time negotiating between a rigorous analysis of class certification requirements as required by General Telephone v. Falcon (3) and prohibition against an inquiry of into merits of plaintiff's claims proscribed by Eisen v. Carlisle & Jacquelin. (4) Indeed, as recently stated, the question of when an expert opinion is an appropriate tool in determining whether a class may be certified is a tricky one. (5) How courts interpret Supreme Court's guidance from Eisen and General Telephone has become inextricably tied to whether and to what extent courts allow expert testimony to be introduced at class certification stage. Courts relying on no-merits-inquiry mandate from Eisen significantly limit use of expert testimony, while courts that separate an inquiry into merits of case from inquiry into requirements of Rule 23 generally allow use of expert testimony from both parties. (6) A thoughtful and thorough discussion of this issue can be found in Second Circuit's recent detailed opinion on this subject, In re Initial Public Offering Securities Litigation (In re IPO), (7) in which court reversed its decidedly plaintiff-friendly construction of Rule 23-accepting plaintiffs' factual allegations as true and refusing to sift through disputed factual issues when considering class certification-as first articulated by that court in Visa Check. II. Visa Check Court's Construction of Rule 23 Established Fatally Flawed Standard A. Factual and Procedural Background In Visa Check, (8) plaintiffs, a number of merchants and three trade associations, brought an antitrust class action against defendants Visa and MasterCard, alleging that defendants created a tying arrangement in violation of federal antitrust laws, by means of their honor policy, which required stores that accept defendants' credit cards to accept their debit cards, as well. Plaintiffs further alleged that defendants attempted and conspired to monopolize debit card market in violation of Sherman Act. (9) Plaintiffs moved to certify a class consisting of all persons and business entities who have accepted Visa and/or MasterCard credit cards and therefore are required to accept Visa Check and/or MasterMoney debit cards under challenged tying arrangements, during fullest period permitted by applicable statutes of limitations. (10) Both parties introduced expert reports in support of their respective positions in favor of and in opposition to class certification. …