Court of Appeals Weighs in on Class Action Cert Issues Under Federal Standard Recently Adopted in WI
Last month, District I of the Wisconsin Court of Appeals was provided an opportunity to review a circuit court’s grant of a motion for class certification under the newly-revised version of Wis. Stat. § 803.08, which adopted the language and scope of FRCP 23, the federal class certification analogue. See Harwood v. Wheaton Franciscan Services, Inc., et al., Case No. 2018AP1836 (Aug. 20, 2019).
At issue were allegations that Wheaton Franciscan Services, Inc. and a number of affiliated entities (collectively, “Wheaton”) had violated Wis. Stat. § 146.83, which places strict limitations on what health care providers may charge for the production of certain medical records, including a prohibition on charging any certification or retrieval fees to any patients or persons authorized by the patient to access the records. Ms. Harwood alleged that she was one of many patients that had been charged with such fees in violation of this statute and accordingly filed a complaint on behalf of all such persons that had been charged by Wheaton in the past six years.
The circuit court granted Ms. Harwood’s class certification motion, concluding that the forty-plus Wheaton invoices submitted in support of her motion demonstrated that the proposed class met the requirements of Wis. Stat. § 803.08—Wheaton had charged numerous patients the fees in dispute, the patients had all been charged the same fees and would be entitled to the same statutory remedies if such fees amounted to a violation Ms. Harwood’s claim was typical and substantially similar to the claims of the unnamed class members, and the class shared predominantly the same issues given the straightforward nature of the damages calculations under the statute. Id. ¶¶ 31-39.
The Court of Appeals affirmed the circuit court’s decision in full, providing future litigants with a number of key takeaways in its written decision, including the following:
- The Court of Appeals affirmed that Wisconsin appellate courts will continue to review all circuit court 803.08 class certification decisions under an abuse of discretion standard, which is consistent with the deference afforded to federal district courts. Id. ¶ 41.
- When adopting the revisions to Wis. Stat. § 803.08, the Supreme Court left it up to the lower courts to determine whether application of the reformed statute to previously-filed matters (such as this one) “would not be feasible or would work injustice.” Id. ¶ 4, n.4. The Court of Appeals did not disturb the circuit court’s conclusion that application of the reformed statute here would actually benefit both parties in that Wheaton “get[s] the benefit of a more rigorous analysis, which in turn corresponds to less appellate risk for [Ms. Harwood].” Id. ¶ 34. Litigants should expect a similar adoption of the reformed standard in their pre-existing matters unless they can substantiate that it would result in one or more parties suffering significant and concrete prejudice.
- The Court of Appeals expressly agreed with the circuit court’s finding that public policy favors certifying a class when, as here, “the amount in controversy is so small that the wronged party is unlikely ever to obtain judicial review of the alleged violation without a class action.” Id. ¶ 58. Both courts appeared to find this reasoning especially persuasive and a core principle behind allowing individual aggrieved parties to litigate their claims collectively.
- The Court of Appeals rejected Wheaton’s reliance on federal Third Circuit precedent imposing a “heightened ascertainability” requirement upon proposed class members (which requires “a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition,” see Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015)), noting that the federal Seventh Circuit disagrees that FRCP 23 imposes such a rigorous requirement upon potential class members. Slip. Op. ¶ 64 (citing Mullins v. Direct Digital, LLC, 795 F.3d 654, 672 (7th Cir. 2015). This suggests that Wisconsin courts will interpret federal Seventh Circuit precedent as more persuasive than other circuits when addressing class certification issues under the newly-reformed version of Wis. Stat. § 803.08, and may even view such precedent as binding (as the next bullet point suggests).
- The Court of Appeals cited favorably to Szabo v. Bridgeport Machines, Inc., 249 F.3d 672 (7th Cir. 2001), for the proposition that it would be improper for a circuit court to certify a class based solely on the allegations raised in the complaint, as that would “‘move[] the court’s discretion to the plaintiff’s attorneys—who may use it in ways injurious to other class members, as well as ways injurious to defendants.’” Slip. Op. ¶ 62 (quoting Szabo, 249 F.3d at 677)). The Court of Appeals ultimately held that such circumstances were not present here, where the plaintiff had substantiated its claims by submitting the Wheaton invoices as evidence. Id. The Court further rejected Wheaton’s argument that it needed more discovery to properly respond to the plaintiff’s certification motion, noting that the parties had already had an opportunity to conduct discovery and that the crucial evidence to the analysis (i.e., the Wheaton invoices) were Wheaton’s own business records. Id. ¶ 64. Future litigants accordingly should take note that Wisconsin courts may be receptive to arguments seeking to delay class certification decisions under circumstances where discovery of potential evidence relevant to the analysis may be warranted.
