In a recent decision, the Ninth Circuit offered a useful reminder that the need for individualized proof of causation can affect multiple elements of the Rule 23 test for class certification.

In Small v. Allianz Life Ins. Co. of N. Am., No. 23-55821, — F.4th —-, 2024 WL 5051192 (9th Cir. Dec. 10, 2024), resolving a District Court split, the Ninth Circuit adopted a “causation” theory of harm for claims asserting that an insurance company had violated the California Insurance Code, holding that plaintiffs must show not only that an insurance company violated the Code (violation-only theory), but also that the violation of the Code caused a plaintiff harm (causation theory).

Adopting the causation theory heightens the difficulty of class certification because whether the violation of the Code caused harm was an inquiry that needed to be assessed for each class member individually. As a result, the Ninth Circuit determined that the class in Small failed to meet the typicality and adequacy requirements of Rule 23(a), the predominance and superiority requirements of Rule 23(b)(3), and the appropriateness-of-relief provision of Rule 23(b)(2).

In its class certification analysis, the Ninth Circuit first considered the commonality of two questions: (1) whether the insurer’s policies complied with the Code, and (2) whether the insurer’s conduct caused each member of the class injury. While the former question was common to the class, the latter differed for each class member. The court found that the named plaintiff could not adequately represent the class because each member’s circumstances as to causation were unique, and the named plaintiff’s circumstances were atypical of many class members. Accordingly, plaintiffs failed to satisfy Rule 23(a).

Next, the Ninth Circuit determined that the individual questions of causation and injury predominated over common issues because causation “cannot be determined on a class-wide basis.” For this same reason, class action was not superior to individual action. Accordingly, plaintiffs failed to satisfy Rule 23(b)(3). The same reasoning also prevented a finding that common injunctive relief would be appropriate for the entire class. Thus, Rule 23(b)(2) was not satisfied either.

This decision offers a good reminder that a need for individualized proof of causation will stand as a significant obstacle to class certification under both Rule 23(a) and 23(b).