Damages testimony undergoes Daubert treatment in class certification stage

In re Stericycle, Inc., 2017 U.S. Dist. LEXIS 21861 (Feb. 16, 2017)

Class actions have their own rules, including when it comes to expert testimony. An unresolved issue is whether damages expert testimony is subject to a Daubert inquiry at the class certification stage, before the court has approved the request to proceed as a class action. The U.S. Supreme Court has yet to give clear guidance, but defendants are increasingly proactive and move to exclude the testimony at the beginning of the litigation in an attempt to thwart class certification and knock the case out early. A recent contract dispute shows how the challenge over admissible expert testimony may play out.

A number of medical facilities filed suit on behalf of hundreds of thousands of customers claiming the defendant, a large medical waste disposal company, breached consumer contracts by applying “automated price increases” (API) without providing notice or justification to the customer.

The plaintiffs sought class certification. They engaged an accomplished CPA and business valuator to show it was possible to determine damages on a classwide basis. For his analysis and calculation, the expert relied on the defendant’s own data.

In opposing a class action, the defendant contended there was too much variance in its customer contracts and customer treatment. The defendant filed a Daubert motion to exclude the testimony. Its primary argument was that the expert’s analysis was inadmissible because it relied on the defendant’s unreliable data.

The court clarified that the question at this stage in the litigation was “whether plaintiffs’ expert evidence is sufficient to demonstrate common questions of fact warranting certification of the proposed class, not whether the evidence will ultimately be persuasive.”

But the court applied a Daubert inquiry and found the testimony was admissible. In Step 2 of the analysis, the court determined class certification was appropriate because the plaintiff expert’s testimony showed there was a reliable common formula for calculating damages on a classwide basis.

Find more on In re Stericycle, Inc., 2017 U.S. Dist. LEXIS 21861 (Feb. 16, 2017), in the recent BVWire.