Opinion ID: 2783876
Heading Depth: 2
Heading Rank: 4

Heading: Predominance and Superiority

Text: Once it is established that the substantive law of each class member’s state will apply to his or her claims, the case for finding the predominance of common 19 In other cases where the district court conducted an inadequate choice‐ of‐law analysis, we have remanded for further consideration. E.g., Abdullahi v. Pfizer, Inc., 562 F.3d 163, 191 (2d Cir. 2009). We conclude here, however, based on our de novo review, that a proper choice‐of‐law analysis leads to the ineluctable conclusion that the substantive law of each class member’s individual states applies. See Rationis Enters. Inc. of Panama v. Hyundai Mipo Dockyard Co., 426 F.3d 580, 585 (2d Cir. 2005). Remand on the choice‐of‐law analysis is therefore unnecessary. 41 issues and the superiority of trying this case as a class action diminishes to the vanishing point. As we have already intimated, in order to address the malpractice and breach of fiduciary duty claims for a significant fraction of the plaintiff class – the 164 LMB clients from Colorado – the trier of fact will have to determine whether the conflict of interest presented by the DRSA was knowingly waived on a case‐by‐case basis. That will require individualized inquiries into such questions as: What information was provided to each client about the DRSA? What information was provided with respect to each client’s option not to participate in the dispute resolution process? What, if any, advice did LMB attorneys give to each client regarding the probability of success in individual settlement versus participation in the dispute resolution process? These questions are not collateral issues that could be determined in individual hearings after common questions are resolved for the class – they go to the heart of defendants’ liability for each class member’s alleged injury. Nor could the class members whose home‐state laws permit waiver of the conflict be sensibly segregated from the larger class by means of the creation of a subclass. Even assuming that Colorado is the only state for which waiver of the 42 conflict of interest will be an issue,20 that issue is so individualized and client‐ specific, for the reasons discussed above, that creating a Colorado subclass would not achieve any economies of scale. See In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1018‐19 (7th Cir. 2002) (holding that individual issues within state subclasses would render class action impracticable, even if litigated state‐by‐ state). Because, at a minimum, more than one quarter of the class members will require individualized trials to determine liability for the tort claims, the litigation will not be advanced by trying these issues on a classwide basis. To be sure, Nextel’s role in the negotiation and execution of the DRSA is, as the district court correctly noted, a piece of every class member’s claim. But that piece, in and of itself, does not resolve the whole of any of the class members’ cases without further individualized consideration of waiver of the conflict of interest. Moreover, there is no great advantage in trying the common issues in this case as a class action. A single bellwether trial that establishes Nextel’s role 20 The parties have not briefed, and we do not venture to decide, whether any of the other states represented in the class would permit waiver of the conflict of interest or, like New York, would hold the conflict non‐consentable. Nor do we address whether a viable class could be certified involving only class members residing in states that would not permit waiver of the conflict, a question that is not before us. 43 through special interrogatories would have the same consequence as trying common issues on a classwide basis through its collateral estoppel effect on subsequent cases. A class action that requires the application of the substantive law of twenty‐seven different states to an issue at the heart of liability neither “promote[s] judicial economy” nor makes the case more manageable. Robinson, 267 F.3d at 168; accord, In re Bridgestone/Firestone, Inc., 288 F.3d at 1018 (“Because these claims must be adjudicated under the law of so many jurisdictions, a single nationwide class is not manageable.”). And a class trial limited to issues affecting Nextel’s role, as noted, offers no particular advantages in resolving the case. Variations in state law similarly affect the feasibility and purported benefit of trying the contract claims on a classwide basis. We have held that the fact that contract terms must be interpreted according to multiple different state laws does not necessarily make individual issues predominate over common ones, because state contract laws generally define breach consistently. See In re U.S. Foodservice Inc., Pricing Litig., 729 F.3d at 127; see also Klay, 382 F.3d at 1263 (“A breach is a breach is a breach, whether you are on the sunny shores of California or enjoying a sweet autumn breeze in New Jersey.”). Here, however, the alleged 44 breach of the retainer agreements is closely related to, and overlaps heavily with, the alleged legal malpractice. Thus, to the extent the states represented in the class recognize an independent contract claim in addition to the tort claims,21 the factfinder will have to decide (a) whether a state that permits a client to waive a conflict of interest would hold that a lawyer breaches a standard retainer contract by seeking such a waiver; and (b) whether the individual agreements to participate in the dispute resolution here validly modified the original retainer agreements.22 Similar to the tort claims, these questions will require individual assessments of, for example, whether individual class members knowingly agreed that their representation by LMB would be governed by the DRSA, in lieu of the firm’s obligation to pursue individual settlements in the retainer agreements. Accordingly, as to liability for the contract claims, the individual 21 But see PPX Enters., Inc. v. Fredericks, 5 F. App’x 25, 28 (2d Cir. 2001) (summary order) (noting that, under New York law, claim of breach of retainer agreement is duplicative of legal malpractice claim); Oehlerich v. Llewellyn, 285 Ga. App. 738, 741 (Ga. Ct. App. 2007) (same under Georgia law). 22 See Grizzly Bar, Inc. v. Hartman, 169 Colo. 178, 185 (1969) (en banc) (under Colorado law, proof of modification of contract requires same evidence of meeting of the minds as contract formation). 45 issues similarly overwhelm the common ones.23 The application of the different jurisdictions’ laws therefore renders individual issues predominant and undercuts the superiority of trying the common issues on a classwide basis. Although “the specter of having to apply different substantive laws does not necessarily warrant refusing to certify a class,” Rodriguez v. It’s Just Lunch, Int’l, 300 F.R.D. 125, 140 (S.D.N.Y. 2014) (alterations and internal quotation marks omitted), where, as here, the variations in state law present “insuperable obstacles” to determining liability based on common proof, such variations defeat the predominance of common issues and the superiority of trying the case as a class action. In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d at 127, quoting Walsh v. Ford Motor Co., 807 F.2d 1000, 1017 (D.C. Cir. 1986). Rule 23(b)(3) is designed to “cover cases in which a class action would achieve economies of time, effort, and expense, and promote 23 In addition, the parties agree that damages for the contract claims will have to be assessed individually. Under the law of our Circuit, see supra note 11, if damages were the only issue requiring individualized treatment, then bifurcation from classwide liability issues might well provide an expeditious way to conduct the litigation. But because many of the liability issues are not susceptible to common proof, the individualized nature of the damages inquiry in this case further weighs against class certification. See McLaughlin, 522 F.3d at 231. 46 uniformity of decision as to persons similarly situated.” Amchem Prods., 521 U.S. at 615 (alteration and internal quotation marks omitted). Because liability for a significant bloc of the class members and damages for the entire class must be decided on an individual basis, common issues do not predominate over individual ones and a class action is not a superior method of litigating the case. Accordingly, we vacate the district court’s certification of the class.