The Ninth Circuit Declares That Individualized Damages Issues Alone Never, Ever Preclude Certification Of A Rule 23(B)(3) Class

In Pulaski & Middleman, LLC v. Google, Inc., No. 12-16752, 2015 U.S. App. LEXIS 16723 (9th Cir. Sept. 21, 2015), a Ninth Circuit panel held that individualized damages (or restitution) calculations cannot alone defeat Rule 23(b)(3)'s predominance element. The opinion is significant because the district court below had determined that an exceedingly high degree of individualized proof would be needed to calculate each putative class member's restitution award and plaintiffs had failed to propose a "workable method" to reduce this complexity. Notably, the panel also defined the measure of restitution in false advertising cases brought under California's Unfair Competition Law (UCL) and False Advertising Law (FAL) in a manner that plaintiffs will likely argue expands the remedy.

In Pulaski, plaintiffs, internet advertisers who purchased Google's ad-placement service known as AdWords, alleged that Google falsely touted AdWords, causing plaintiffs to unwittingly pay for advertising placed on less valuable "parked domain and/or error page websites." Plaintiffs alleged they would not have paid for this advertising (or not paid as much) had they known the truth. They moved to certify a purchaser class under Rule 23(b)(3) on the ground that common issues of law and fact predominated over individual issues.

The district court denied the motion, finding common questions did not predominate. Specifically, it found that Google's use of a non-uniform auction process to sell, price and place ads on behalf of each putative class member defied any class-wide approach to restitution. Moreover, evidence showed that some advertisers derived economic benefits from ads placed on the websites in question which, according to the district court, posed the risk that the class might include members who lacked "entitlement" to restitution. Although the district court, citing Yokoyama v. Midland National Life Insurance Co., 594 F.3d 1087 (9th Cir. 2010), acknowledged that damage calculations alone do not defeat class certification, it held that this rule did not apply in this instance because of the complexity of the individual calculations, and the absence of any proposed method to render the individual calculations sufficiently formulaic.

The Ninth Circuit reversed. The panel first found the district court erred to the extent it believed it had to conduct individual inquiries to identify each class member's "entitlement" to restitution. The panel identified...