Bar News - October 5, 2007
Supreme Court Decision Illuminates Class Action Requirements of Rule 27-A
By: C. Kevin Leonard
To many practitioners, the technical requirements of class action lawsuits under New Hampshire law are a mystery. At the urging of the Supreme Court, Superior Court Rule 27-A was adopted in 1983 outlining the standards and procedures for certifying a case as a class action. Now, almost 25 years later, the Supreme Court has removed some of the mystery by issuing its first decisions offering significant interpretation of the class certification requirements set forth in Superior Court Rule 27-A.
C. Kevin Leonard
In Cantwell v. J. & R. Properties Unlimited, Inc., 155 N.H. ___ (decided May 30, 2007), the Supreme Court reversed a trial court’s denial of class certification because the trial court did not permit the plaintiff to conduct class certification-related discovery on the prerequisites to maintaining a class action.
Not surprisingly, because Superior Court Rule 27-A is similar to Federal Rule of Civil Procedure 23, the Supreme Court looked to federal cases interpreting the federal rule for guidance. Relying on opinions from several federal circuit courts of appeal, the Supreme Court directed that trial courts must conduct a “rigorous analysis” of the prerequisites established by the Rule 27-A before certifying a case as a class action. This “rigorous analysis” involves going beyond the allegations of the plaintiff’s complaint. Specifically, the plaintiff has the burden of proving that each of the elements of Rule 27-A is met. These elements are: numerosity of class members; commonality of legal and factual issues; predominance of common issues over individual issues; typically of the representation of plaintiff’s claims to the rest of the class, adequacy of representation by the plaintiff and counsel; and superiority of the class action mechanism to individual lawsuits.
Because a plaintiff cannot satisfy the burden of proof by relying on unsupported allegations from the complaint alone, the Cantwell court held that plaintiffs should have the opportunity to conduct discovery on the class certification question before the court rules on whether to certify a class, following the prevailing view from federal case law. Plaintiffs can therefore obtain through the discovery process supporting evidence for a class certification motion. For such a motion to be decided favorably for the plaintiff, the trial court must receive sufficient evidence, “by affidavits, documents, or testimony,” to be satisfied that each class certification requirement has been met.
In the second case, Petition of Bayview Crematory, LLC, 155 N.H. ___ (decided August 8, 2007), the Supreme Court reversed the trial court’s order certifying the matter as a class action. The plaintiffs in Bayside brought a class action lawsuit on behalf of hundreds of putative class members asserting negligence and negligent infliction of emotional distress (NIED). Under the NIED claim, the plaintiffs alleged that the defendants’ negligent handling of next-of-kin or loved ones’ cremation caused them and each putative class member emotional distress. The trial court certified the issue of liability for class treatment and left damages as the only issue not certified.
On appeal, the Court began by establishing the standard of review for a trial court’s class certification order. Prior to Bayview, the Court had not articulated the standard of review. As in Cantwell, the Court acknowledged the similarity of Superior Court Rule 27-A and Federal Rule of Civil Procedure 23 and relied on federal cases for guidance. Relying on the First Circuit Court of Appeals’ reasoning, the Court adopted the “unsustainable exercise of discretion standard” when reviewing the trial court’s decisions on class certification, with de novo review on matters of law.
On appeal, the defendants argued that the individual issues among the putative class members predominated over common ones on the issue of liability, because prosecuting a claim for NIED would require each class member to prove “severe” emotional distress and physical manifestations of that distress through expert testimony. Looking to federal cases, the Court noted that satisfying the “commonality” requirement is a relatively low threshold. The “predominance” requirement of Rule 27-A is far more demanding, however. To satisfy the predominance test, the Court held that “the issues common to the proposed class must outweigh the issues that are particular to the individual class members.” Slip. Op. at 5.
The Supreme Court ruled that the trial court erred because its class certification order on liability essentially removed from the assessment of liability for NIED the requirement of proving “severe emotional distress” through expert testimony. In other words, the putative class members could not meet the predominance requirement because each individual plaintiff would have to demonstrate as an element of liability, and through expert testimony, physical symptoms that he or she suffered. This individualized inquiry would require reviewing each potential plaintiff’s prior medical and psychological history and the qualifications of each member’s expert, thereby undermining the economies of time, effort and expense that class actions are designed to promote.
These two decisions are the tip of the iceberg on class action law in this State, but they are important opinions by the Court because they clarify a complex and previously undeveloped area of New Hampshire law.
C. Kevin Leonard is a partner at Douglas Leonard & Garvey PC in Concord. He has been a member of the NH Bar since 1993.