Did the Second Circuit Shut the Door on Future, Similar Consumer Class Actions?
Put another way, by overreaching, did Hausfeld provoke the Second Circuit into overreacting, thus producing a decision that shuts the door for future consumer class actions? I don’t think so. It is important to note that the Second Circuit went out of its way to distance itself from the Fifth Circuit’s 1996 decision in Castano v. Am. Tobacco Co,. which the Second Circuit described as imposing a “blanket rule” against class certification whenever issues of individual reliance exist. Furthermore, the phrase “material variation,” which the court used to map out the boundary between acceptable and unacceptable class-wide treatment, is not meaningless — although Hausfeld, in oral argument, seemed to suggest it was. Rather, “material variation” clearly contemplates that will be some individual differences between the reasons for reliance among the members of a class. Thus, it does not require, for certification, a presumption that all members of the class have identical reasons for acting
