Tag Archives: Damages

Claims Relating to Hospital Charges Must Proceed Individually, Business Court Says

View David Wright's Complete Bio at RBH.com The North Carolina Business Court today rebuffed an attempt by “self-pay” patients receiving emergency treatment to challenge the hospital’s charges on a class-wide basis. In Hefner et al. v. Mission Hospital, Inc., et al., No. 12-CVS-3088 (N.C. Business Court Dec. 8, 2014), Judge Gale found that there “is a panoply of potential issues factoring into the ultimate questions of reasonableness [of patient charges] because every patient treated at Mission received different services and was billed for different amounts.” A key consideration in deciding whether to certify a class, particularly in North Carolina state courts, is whether the forecasted individual issues relate exclusively to “damages” or whether they also relate to the core issue of liability, something we have discussed in another post. In the language of North Carolina appellate precedent, this determination depends upon whether the case fits within the Scylla of Beroth or the Charybdis of Faulkenbury. The key to Judge Gale’s decision was his finding that “this case is much more comparable to Beroth than Faulkenbury,” i.e., the reasonableness of hospital charges was found to be a liability issue.

In Wal-Mart Stores, Inc. v. Dukes, Justice Scalia rejected plaintiffs’ attempt to found a common question on statistical proof based on an aggregate disparity. Judge Gale did much the same thing, expressly rejecting “the notion that it would be appropriate or fair … to reduce the question of the reasonableness of individualized charges to some form of averaging.” And Judge Gale delivered an important exegesis of the recent Beroth decision: “Beroth makes it clear that a Plaintiff seeking class certification must produce evidence that each putative class member was affected the same way and at least to approximately the same extent by a defendant’s actions. If liability as to the proposed class can only be established after an individualized investigation into the circumstances of each class member, the class does not satisfy the commonality prerequisite.”

(Robert Fuller and Heyward Bouknight of our firm represented Defendants in this case).

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

Different View of the Predominance of “Damages” Issues Provokes Dissent in Court of Appeals

View David Wright's Complete Bio at RBH.com A recurrent question under Rule 23 is whether and when individual issues pertaining to damages can engulf otherwise common questions and make class litigation unwieldy. The dilemma is clear: On the one hand, doesn’t it make sense to try the common liability issue once rather than over and over again? On the other hand, trying a bunch of individual damages issues, that differ from plaintiff to plaintiff, doesn’t sound either like class litigation or a model of efficiency. The United States Supreme Court, in Comcast Corp. v. Behrend, has emphasized that lack of commonality in establishing damages can defeat class certification, and we have discussed here previously the North Carolina Supreme Court’s treatment of the issue in Beroth Oil Co. v. NC DOT.

Earlier this month in Sanders v. State Personnel Commission, a plain vanilla affirmance from the panel majority of a trial court’s ruling not to certify a class provoked a strong dissent from Judge Robert N. Hunter. Judge Hunter, citing Beroth, thought the majority had confused the predominance inquiry. Judge Hunter viewed the damages and liability issues separately and thought that the majority muffed the “predominance” inquiry because the “individual issues” related only to damages. He cited Newberg on Class Actions (without mentioning Comcast) for the proposition that “Rule 23(b)(3) predominance . . . is satisfied despite the need to make individualized damage determinations”).

This will likely go up to the North Carolina Supreme Court, so we’ll be watching for any clarification of Beroth.

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

Train Derailment Causes Estimated Damages in Excess of $13 Million

View Amanda Pickens’ Complete Bio at RBH.comLecroy v. CSX Transportation, Inc., No. 2:14-cv-02128 (D.S.C. June 2, 2014) arises from a CSX train derailment at the underpass of Cypress Gardens Road in Berkley County, South Carolina, which caused a bridge to collapse. A purported class of Berkley County citizens filed a negligence and strict liability action against CSX, seeking damages for the “cost for transportation,” including costs associated with a 22-mile detour route around the collapsed bridge. The lawsuit alleges a strict liability claim under South Carolina’s Anti-Blocking Statute, S.C. Code § 57-7-240, which imposes a fine of $5.00 to $20.00 per day per person against a railroad for blocking a public roadway. (Query, however, whether the state statute is preempted by Section 10501 of the Interstate Commerce Commission Termination Act, which confers exclusive jurisdiction over the regulation of railroad transportation to the Surface Transportation Board.)

CSX removed the action to the District Court of South Carolina pursuant to the Class Action Fairness Act, which permits removal of class actions where the putative class has at least 100 proposed members, the parties are of at least minimal diversity, and the aggregate amount in controversy exceeds $5 million. The first two requirements were undisputed, but the third requirement was more problematic because the complaint does not specify the amount of damages. CSX, in removing the action, stated that it had to prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional requirement. The District Court has not ruled on this issue, but CSX relied on Crosby v. CVS Pharmacy, Inc., 409 F. Supp. 2d 665, 668 (D.S.C. 2005) in coming to this conclusion. But see Bartnikowski v. NVR, Inc., 307 F. App’x 730, 734 (4th Cir. 2009) (applying the preponderance of the evidence standard to determine the jurisdictional amount for an unspecified damages claim upon the parties’ agreement, but recognizing that although other circuits employ a preponderance standard, it has not yet been adopted in the Fourth Circuit). To estimate damages, CSX relied on a South Carolina Department of Transportation report stating that it will take 180 days to replace the bridge and that the bridge had an average daily traffic count of 6,200 vehicles. CSX calculated the plaintiffs’ requested damages to be in excess of $13 million by multiplying the IRS mileage reimbursement rate of $0.56 by a 22-mile detour route for 180 days, which equaled $2,217.60 per class member and $13,749,120 total for a class of 6,200 members. This $13 million was enough to satisfy the $5 million removal threshold. CSX also offered an alternative justification to meeting the amount-in-controversy requirement for removal based on the South Carolina Anti-Blocking Statute fines.

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page

NC Supreme Court Issues Class Action Opinion

View David Wright's Complete Bio at RBH.comThe so-called “Northern Beltway” around Winston-Salem – in part from litigation efforts and in part from lack of funding – has never really gotten off the ground. But property owners whose land and homes are affected by the future project complained that the State’s actions in putting them on the map for the roadway constitute a “taking” under inverse condemnation principles. And they brought a multi-count class action challenging the DOT’s actions. The trial court denied class certification, and a unanimous Court of Appeals affirmed in Beroth Oil Company v. NC DOT, 725 S.E. 2d 651 (N.C. Ct. App. 2012). After accepting review, the Supreme Court – in an April 11 decision – affirmed the class certification decision, but chastised the trial court for going a bit too far in commenting on the merits of the claims. Beroth Oil Company v. NC DOT, No. 390PA11-2 (April 11, 2014).

How far a trial court can go in examining the merits of the claims in analyzing class certification issues is a perennial conundrum. Since 1974, the Supreme Court has made it clear that a determination is not a “merits” determination, Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974), but that determination does depend on a “rigorous analysis,” often “requires a court to probe behind the pleadings,” General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 160 (1982), and “involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978).

Winston-Salem SmallSo that means that the concept of a “taking” – and whether one occurred that affected Northern Beltway property owners – is a question that is integral to and must be considered in deciding whether class certification is appropriate in the case. What the majority didn’t like was that the trial court seemed to make a declarative, merits-based ruling related to the taking issue.

But the more lasting import of the 7-2 decision is that the Supreme Court reaffirmed the inappropriateness of class certification when the analysis of a “taking” depends upon consideration of individual issues affecting a myriad of different property owners. In so ruling, the Court clarified the meaning of the abuse of discretion standard of review in the Rule 23 context – reaffirming that legal errors are reviewable “de novo” and detailing that a ”competent evidence” standard, not ”clear error,” should be applied in reviewing factual determinations, citing Blitz v. Aegean, Inc., 197 N.C. App. 296 (2009). That discussion forecasts greater appellate scrutiny of otherwise discretionary decisions regarding class certification.

Notably, the court cited with approval the Fourth Circuit’s decision in Gariety v. Grant Thornton, LLP, 368 F.3d 356 (2004), which could provide an important precedent on commonality issues going forward.

A bone of contention between the dissent and the majority was whether the debate was really about another perennial issue – whether commonality or predominance is affected by individual damages issues. The majority “generally agreed” that differences in the amount of damages won’t preclude class certification, but – unlike the dissent – found that the liability issues were inextricably tied to the damages determination. State trial judges may be puzzled a bit by the Supreme Court’s declaration that the Superior Court erred in adopting “any test” to determine damages at “this stage of the proceedings.” And, since class certification decisions are conditional, it is unclear whether – at some later point in the proceedings – the class certification ruling might be revised after such a test is determined.

An infrequently analyzed issue under Rule 23 is the so-called “superiority” requirement, and that prong gets a boost from the Court’s decision. Citing Crow v. Citicorp Acceptance Co., 319 NC 274 (1987), the court reemphasizes that the “usefulness of the class action device must be balanced . . . against inefficiency or other drawbacks” and specifically notes the pendency of a consolidated Rule 2.1 case involving 52 landowners pending before Superior Court Judge John O. Craig III. The Court seemed troubled that plaintiffs’ counsel was simultaneously pursuing a series of individual, “exceptional” cases and still promoting the class action device as the most efficient way to resolve the claims.

Email this to someoneShare on FacebookTweet about this on TwitterShare on LinkedInPrint this page