Defense Research Institute

Authors: Colin E. Wrabley James C. Martin

Companies frequently face claims that a product and its labeling are defective and have harmed the product’s users. Faced with such claims, they may elect to recall the product. The recalls, in turn, often prompt a series of putative class action lawsuits, asserting claims for product mislabeling, false advertising, breach of warranty, or similar theories. Then comes extensive discovery and the run up to class certification. For these companies and their lawyers, conventional defenses to certification—for example, that common issues of law or fact do not predominate—will be considered and often take center stage. In light of several recent decisions, however, there now are other potential arguments, based on private relief provided as part of a product recall program, that can be resorted to in resisting class certification.

Indeed, with increasing frequency over the past several years, federal courts have considered whether defendants’ efforts to privately remedy injuries through recalls, refunds, and similar relief can preclude certification of a class action. Relying on such out-of-court remedies, defendants have successfully challenged class certification under Federal Rule of Civil Procedure 23 on grounds that (1) class litigation was not superior to the privately offered remedies, and (2) the class representative, by pursuing litigation despite the availability of privately offered relief, does not adequately represent the putative class.

Given these developments, companies should consider whether some form of privately offered remedy can be made available to purchasers or consumers in the wake of a product recall or simply as a response to filed class actions. The availability of that remedy then can impact Rule 23’s adequacy and superiority requirements and provide a cost-effective defense against a class action lawsuit.

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