Ninth Circuit Holds that Unexecuted Damages Model is Sufficient for Class Certification

In a recent decision, the Ninth Circuit concluded that a damages model that had been developed, but not actually applied to the underlying data, sufficiently showed that damages were susceptible to common proof for purposes of class certification.

The case, Lytle v. Nutramax Lab'ys, Inc., - F.4th- 2024 WL 1710663 (9th Cir. Apr. 22, 2024) concerns allegations that the defendants misled purchasers of their dog supplement-marketed as improving dogs' joints and mobility-when allegedly no such benefits exist. To support class certification, the plaintiffs put forward an expert who had created a conjoint survey that they claimed could calculate damages on a class-wide basis. However, the plaintiffs conceded that the expert had not yet applied his analysis, relying instead on the expert's prediction that his analysis could successfully measure the damages suffered by the class.

The Ninth Circuit affirmed the district court's grant of certification, rejecting two arguments relating to the expert's report. First, the panel held that because class action plaintiffs are not required to actually prove their case at the class certification stage, a showing that a damages model could generate common answers to whether there are class-wide damages was sufficient for class certification. Reasoning that a different rule would "improperly conflate the class certification inquiry with the merits," id. at *7, the court noted that while some assessment of the adequacy of the claims can be appropriate at the certification stage, no precedent demanded that plaintiffs actually prove damages or prohibits them from relying on an unexecuted but reliable damages model.

Second, the panel held that the plaintiff's expert satisfied the appropriate Daubert standard. Recognizing that the case law has indicated two approaches, a "full" Daubert standard, under which the typical Daubert inquiry is used, and a "limited" Daubert standard that uses the Daubert factors to assess the weight of the evidence, the court reasoned that the proper approach may depend on the timing of class certification. Where discovery is closed, there would be no reason to delay assessing admissibility at trial. On the other hand, where discovery is ongoing at the time of class certification (as it was here) a limited Daubert analysis would be appropriate. The court then determined that, having made a finding that the expert analysis was sufficiently reliable, the district court did not err in certifying the class.

While the Ninth Circuit's decision is plaintiff-friendly, the court reaffirmed that the defendant had the right to subject the plaintiff's expert's study to all appropriate Daubert and summary judgment arguments once the analysis had been run. Because much of the court's analysis hinged on the fact that discovery was ongoing at the time of class certification, it may be easier within the Ninth Circuit to mount a full challenge to an unexecuted expert report at the class certification stage if all relevant discovery has been completed.