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In Butler v. Sears, Roebuck and Co., No. 11-8029 (7th Cir. Nov. 13, 2012), a decision authored by Judge Richard Posner, the Seventh Circuit ruled that the question of predominance in class actions “is a question of efficiency,” whether it’s more efficient to litigate issues on a class-wide basis or all issues in separate trials.  While stating that it intended to provide "clarity" to the meaning of Rule 23(b)(3)'s predominance requirement, the Seventh Circuit arguably eviscerated that rule by allowing cases with numerous individualized issues to go forward as classes.

In Butler, plaintiffs brought in one class action what were really two separate class actions against Sears for defects to washing machines sold by Sears in overlapping periods. One class of plaintiffs alleged that a defect caused mold to be generated in the machines (the "mold class") and the other alleged that a faulty control unit caused the machines to shut down “inopportunely”  (the "control unit class").  The trial court denied certification of the mold class and granted certification to the control unit class. In rule 23(f) petitions, plaintiffs appealed the denial of certification as to the mold class and Sears appealed the grant of certification as to the control unit class..

The Seventh Circuit decided that both classes should have been certified because in each, common questions predominated over questions affecting individual members.  As to the mold class, Sears argued, and the district court agreed, that the washing machines’ manufacturer made several changes to the design of the machines in the class period which created a number of different models that were defective in different ways, and some perhaps not defective at all.  However, the Seventh Circuit was dismissive of the individualized issues, holding that the common question—whether machines were defective in permitting mold to accumulate—predominated over any individualized issues. The court found that it would be more efficient to litigate liability on a class basis in this case, where a defect “may have imposed costs on tens of thousands of consumers, yet not a cost to any of them large enough to justify the expense of an individual suit.”  In such a case, the class action procedure “would be efficient not only in cost, but also in efficacy.”  In certifying the mold class, Judge Posner noted that the decision was consistent with the Sixth Circuit’s ruling in In re Whirlpool Corp. Front-Loading Washer Products Liability Litigation, 678 F.3d 409 (6th Cir. 2012), which certified an “identical” mold class against Whirlpool, the manufacturer of the washers sold by Sears.

As to the control unit class, the Seventh Circuit upheld the class certification finding that common issues predominated because it was more efficient to litigate the issue of whether the machines were defective in a single proceeding and then to resolve damages in individual proceedings, if necessary.

The upshot of this case, especially when viewed with Judge Posner's decision in McReynolds v. Merrill Lynch, 672 F. 3d 482, 491 (7th Cir. 2012)  (see our March 1, 2012 post), is that the Seventh Circuit appears inclined to certify classes on efficiency grounds, even when there are significant individualized issues at play in the litigation.

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Seventh Circuit Certifies Washing Machine Class Action on Efficiency Grounds