National or multi-state class actions asserting violations of different states’ laws can present challenging questions for courts and practitioners from case inception. To obtain certification, plaintiffs must ultimately satisfy the requirements of Federal Rule of Civil Procedure 23 by showing, inter alia, that their claims are typical of the class, that they are adequate class representatives, and that the case presents common questions of law or fact. If plaintiffs seek monetary recovery, they must also show that common questions predominate and that a class trial will be manageable. These elements are sometimes tested early when plaintiffs bring putative class actions in federal court seeking certification of national or multi-state classes based on state law claims, such as unjust enrichment or breach of warranty.
In response to such lawsuits, defendants often move to strike or dismiss the class claims, at least as to out-of-state class members, on various grounds. For example, defendants may assert that named plaintiffs who are not themselves asserting a violation of a particular state’s law lack standing to represent absent class members from that state. Defendants also may argue that the class claims should be stricken because material variations in the respective states’ laws preclude any showing of commonality, predominance or manageability.
Although several cases have referred to motions to strike class allegations as disfavored, rulings on motions targeting national or multi-state classes based on state law claims reveal a more complex picture. Some courts have denied motions to strike on prematurity grounds, ruling that questions concerning whether the plaintiff can represent out-of-state class members or whether state law variations can be managed in a class proceeding are class certification issues best addressed at the class certification phase. Other courts have granted such motions, finding, for instance, that issues concerning differences in state law are unlikely to change after conducting discovery and are therefore ripe for resolution by motion to strike or dismiss.
In Phan v. Sargento Foods, Inc., No. 20-cv-09251-EMC, 2021 US Dist Lexis 103629 (N.D. Cal. June 02, 2021), Judge Chen of the Northern District of California jumped into the fray in a food labeling class action. The plaintiff in Phan challenged the defendant’s allegedly misleading cheese labels and sought certification of (1) national classes for unjust enrichment and breach of warranty and (2) a 10-state class based on state consumer protection statutes. The defendant moved to strike the class claims.
The court sided with the defense. As to the national unjust enrichment and breach of warranty classes, the court acknowledged certain cases that had declined to address the propriety of national state law classes at the pleadings stage in light of the fact-intensive nature of choice of law analyses. The court reasoned, however, that where an issue is purely legal in nature and does not require factual development through discovery, the court need not wait until the certification phase, particularly given the burdens of class proceedings. The court then struck the national class allegations without prejudice, finding that variations in state unjust enrichment and breach of warranty laws were well documented and that the case presented an “extreme situation,” i.e., a single plaintiff seeking certification of a national class, without disputing that 50 states’ laws would apply or attempting to establish that a fact-intensive choice of law analysis was required.
The court also ruled for the defendant as to the 10-state consumer protection class. In response to the defendant’s proof of variations in the consumer protection laws of the 10 states in question, the plaintiff urged certification of 10 separate state sub-classes. This argument, according to the court, raised the “vexing” question of whether the plaintiff’s standing to represent out-of-state class members was best addressed on the pleadings or as a question of commonality, typicality or predominance at the certification stage. After discussing several cases holding that standing questions generally should be resolved during—over even after—class certification, the court nevertheless granted the motion to strike, finding that the plaintiff could not represent absent class members outside of California given the substantial variations in the state laws at issue and the plaintiff’s lack of any connection to nine of the 10 states. However, the court also granted the plaintiff leave to add additional class representatives for the other nine states and to allege more narrow versions of the national classes.
Phan illustrates how courts have reached different results on motions to strike national or multi-state class allegations, with the outcomes sometimes depending on fairly nuanced distinctions. Although courts generally remain reluctant to dispose of such classes on the pleadings, a motion to strike may still succeed depending on the circumstances, including where a small number of plaintiffs allege geographically expansive classes but fail to sufficiently address state law variations or establish factual questions that arguably are more appropriately addressed at the certification stage.