The opinion
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4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
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7 LINDA PARKER PENNINGTON, et al., Case No. 18-cv-05330-JD
8 Plaintiffs,
ORDER RE CLASS CERTIFICATION
9 v. AND EXCLUSION OF EXPERT
10 TETRA TECH, INC., et al.,
Defendants.
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13 This order resolves plaintiffs’ motion for class certification, Dkt. No. 265, and defendants’
14 related motion to exclude the declaration of plaintiffs’ expert Brett Reynolds. Dkt. No. 276. The
15 parties’ familiarity with the record is assumed, and the motions are denied.
16 DISCUSSION
17 I. MOTION TO EXCLUDE OPINIONS OF BRETT REYNOLDS
18 In support of certification, plaintiffs submitted a 9-page declaration of their proposed
19 expert, Brett Reynolds. Dkt. No. 265-17. Reynolds is a licensed appraiser with 18 years of
20 experience in the real estate industry. Id. He opined on “the two primary sources of economic
21 damages incurred by Class Members” in this case. Id. ¶ 33. These are said to be:
22 (1) “appreciation impairment / diminution in value” of the Parcel A homes owned by the putative
23 class members, and (2) “excess [tax] charges / Mello-Roos damages.” Id. ¶¶ 5-32.
24 For the appreciation impairment damages, Reynolds stated that he was “provided with a
25 list of 241 market-rate homes that had been sold on Parcel A as of August 2, 2018,” and concluded
26 that, “[a]ssuming an average appreciation impairment of 20.4%, those units have suffered a total
27 appreciation impairment of $55,523,536.00.” Id. ¶ 30. Reynolds also “calculated the amount of
1 August 2, 2018.” Id. ¶ 32. Assuming certain Communities Facilities District (CFD) rates as
2 specified in his declaration, Reynolds opined that the Parcel A homeowners have incurred
3 $8,393,735.00 in Mello-Roos liabilities. Id.
4 Defendants ask to exclude the opinions in Reynolds’ declaration under Federal Rule of
5 Evidence 702. Dkt. No. 276 at 1. They say that Reynolds “lacks the expertise to give the
6 opinions” in his declaration, and the “methodology underlying his opinions is fundamentally
7 flawed.” Id.
8 Exclusion is denied. “A witness who is qualified as an expert by knowledge, skill,
9 experience, training, or education may testify in the form of an opinion or otherwise if the
10 proponent demonstrates to the court that it is more likely than not that: (a) the expert’s scientific,
11 technical, or other specialized knowledge will help the trier of fact to understand the evidence or
12 to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony
13 is the product of reliable principles and methods; and (d) the expert’s opinion reflects a reliable
14 application of the principles and methods to the facts of the case.” Fed. R. Evid. 702. The Rule
15 702 inquiry is “a flexible one,” with no “definitive checklist or test.” Daubert v. Merrell Dow
16 Pharmaceuticals, Inc., 509 U.S. 579, 593-95 (1993). The Court’s task is to “ensur[e] that an
17 expert’s testimony both rests on a reliable foundation and is relevant to the task at hand.” Id. at
18 597.1
19 Defendants say that Reynolds “has no relevant expertise on which to base his opinion on
20 the cutoff date plaintiffs use for the class definition.” Dkt. No. 276 at 5. This misses the mark.
21 Reynolds did not express a substantive opinion about the cutoff date for plaintiffs’ class definition.
22 Reynolds mentions events that took place in 2018, see, e.g., Dkt. No. 265-17 ¶¶ 16-18, but that is
23 not in the context of giving an opinion as to why August 2, 2018, and not, say, another date in
24 2018, might be the proper cut-off date. Consequently, this objection is overruled.
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1 As the Court recently concluded, the amendments to Rule 702 in December 2023 did not
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fundamentally change the determination of admissibility, or the application of prior cases
1 For Reynolds’ methodology, defendants’ main contention is that Reynolds’ choice of
2 index was wrong because it “measures different types of homes than those present at the shipyard”
3 and also “measures non-representative neighborhoods.” Dkt. No. 276 at 8-11. That is not a basis
4 for exclusion. The details of what Reynolds “did or didn’t take into account in running his
5 analysis . . . may be grist for a good cross-examination at trial, but they do not play a material role
6 in deciding whether [Reynolds’] work should be admitted under Rule 702.” In re Capacitors
7 Antitrust Litigation (No. III), No. 17-md-02801-JD, 2018 WL 5980139, at *6 (N.D. Cal. Nov. 14,
8 2018).
9 Overall, plaintiffs have carried their burden under Rule 702 of establishing that it is more
10 likely than not that Reynolds’ opinion “is the product of reliable principles and methods,” and
11 “reflects a reliable application of the principles and methods to the facts of the case.” Fed. R.
12 Evid. 702. Defendants have not shown otherwise.
13 II. MOTION FOR CLASS CERTIFICATION
14 Plaintiffs propose to certify under Rule 23(a) and 23(b)(3) of the Federal Rules of Civil
15 Procedure a class defined as: “All individuals or entities who held title to one or more market-rate
16 units on Parcel A at the Shipyard in San Francisco on August 2, 2018.” Dkt. No. 265 at 1. They
17 seek certification for their first, second, fifth, sixth, and seventh causes of action, which are:
18 permanent public and private nuisance; negligence; and negligent and intentional
19 misrepresentation. Dkt. No. 157 (TAC).2
20 “Before it can certify a class, [the Court] must be ‘satisfied, after a rigorous analysis, that
21 the prerequisites’ of both Rule 23(a) and 23(b)(3) have been satisfied.” Olean Wholesale Grocery
22 Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 664 (9th Cir. 2022) (en banc) (citations
23 omitted). “Plaintiffs wishing to proceed through a class action must actually prove -- not simply
24 plead -- that their proposed class satisfies each requirement of Rule 23, including (if applicable)
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2 Plaintiffs are no longer pursuing their third and fourth causes of action for “statutory fraud”
under the Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200 et seq., and the False
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Advertising Law (FAL), Cal. Bus. & Prof. Code §§ 17500 et seq. See Dkt. No. 290 at 4 n.1. The
1 the predominance requirement of Rule 23(b)(3), and must carry their burden of proof before class
2 certification.” Id. (cleaned up; emphasis in original). “Plaintiffs bear the burden of proving by a
3 preponderance of the evidence that the proposed classes satisfy all four requirements of Rule 23(a)
4 and at least one of the subsections of Rule 23(b).” Schneider v. YouTube, LLC, 674 F. Supp. 3d
5 704, 716 (N.D. Cal. 2023). The predominance inquiry under Rule 23(b)(3) asks “whether the
6 common, aggregation-enabling[] issues in the case are more prevalent or important than the non-
7 common, aggregation-defeating, individual issues.” Id. at 716 (quoting Olean, 31 F.4th at 664).
8 A. Elements of Plaintiffs’ Claims
9 The Rule 23(b)(3) predominance inquiry is guided by the “elements of the underlying
10 cause[s] of action.” In re Google Play Store Antitrust Litigation, No. 21-md-02981-JD, 2022 WL
11 17252587, at *8 (N.D. Cal. Nov. 28, 2022) (quoting Erica P. John Fund, Inc. v. Halliburton Co.,
12 563 U.S. 804, 809 (2011)). For the negligence claim, plaintiffs “allege that Tetra Tech withheld
13 material information about the contamination of the Shipyard” and that “Tetra Tech breached their
14 duty to warn home buyers about the contamination and to properly remediate HPNS.” Dkt.
15 No. 265 at 7. The elements of the negligence claim are “duty, breach, causation, and damages.”
16 Conroy v. Regents of Univ. of Cal., 45 Cal. 4th 1244, 1250 (2009).
17 For the nuisance claims, plaintiffs allege that “Tetra Tech created a permanent public and
18 private nuisance which has, among other things, resulted in the diminution of value of, and future
19 harm to, their property.” Dkt. No. 265 at 7 (citing Cal. Civ. Code §§ 3479, 3480, 3481). Plaintiffs
20 acknowledge that, to prevail on their public nuisance claim, they will need to prove “(1) that Tetra
21 Tech created a condition or permitted a condition to exist that was, among other alternatives,
22 harmful to health, (2) that the condition affected a substantial number of people at the same time,
23 (3) that an ordinary person would be reasonably annoyed or disturbed by the condition, (4) that the
24 seriousness of the harm outweighs the social utility of the defendant’s conduct, (5) that Plaintiffs
25 did not consent to Tetra Tech’s conduct, (6) that Plaintiffs suffered harm that was different from
26 the type of harm suffered by the general public, and (7) that Tetra Tech’s conduct was a
27 substantial factor in causing the plaintiff’s harm.” Id. at 13 (citing CACI No. 2020 and Birke v.
1 plaintiffs need to prove that “(1) Plaintiffs owned or leased the property; (2) Tetra Tech created a
2 condition that was harmful to health or offensive to the senses; (3) Tetra Tech’s conduct was
3 negligent, or the condition was the result of an abnormally dangerous activity; (4) Plaintiffs did
4 not consent to Tetra Tech’s conduct that created the condition; (5) the condition substantially
5 interfered with Plaintiffs[’] use or enjoyment of the property; (6) an ordinary person would be
6 reasonably annoyed or disturbed by the interference Plaintiffs experienced; (7) Tetra Tech’s
7 conduct was a substantial factor in causing the interference with Plaintiffs’ use or enjoyment of the
8 property; and (8) the seriousness of the interference Plaintiffs experienced outweighs the public
9 benefit of Tetra Tech’s conduct.” Id. at 14 (citing CACI No. 2021).
10 For the misrepresentation claims, plaintiffs allege that “Tetra Tech committed fraud by
11 omission in its failure to properly remediate HPNS. Plaintiffs also allege that Tetra Tech engaged
12 in negligent and intentional misrepresentations on chain of custody forms and other documents
13 related to testing.” Id. at 7. For their intentional misrepresentation claim, plaintiffs will need to
14 prove “(1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual
15 and justifiable reliance, and (5) resulting damage.” Chapman v. Skype Inc., 220 Cal. App. 4th 217,
16 230-31 (2013). The elements for plaintiffs’ negligent misrepresentation claim “are the same
17 except that [negligent misrepresentation] does not require knowledge of falsity but instead requires
18 a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true.”
19 Id. at 231.
20 B. Rule 23(b)(3) Certification
21 Certification of a class under Rule 23(b)(3) is denied. Plaintiffs did not demonstrate that
22 the proposed class satisfies each requirement of Rule 23 including the predominance requirement
23 of Rule 23(b)(3). Olean, 31 F.4th at 664. To obtain certification, plaintiffs must establish that the
24 essential elements of their causes of action “are capable of being established through a common
25 body of evidence, applicable to the whole class.” Id. at 666. To be sure, plaintiffs need not prove
26 that “[e]ach element” of their claims is “susceptible to classwide proof,” and “the important
27 questions apt to drive the resolution of the litigation are given more weight in the predominance
1 the class.” Schneider, 674 F. Supp. 3d at 716 (quotations omitted). “Rule 23(b)(3) permits
2 certification when ‘one or more of the central issues in the action are common to the class and can
3 be said to predominate.’” Id. at 717 (quoting Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 453
4 (2016)).
5 The problem here is that plaintiffs have not identified any common evidence that might
6 warrant certification. See Dkt. No. 265. This shortfall is particularly problematic for causation,
7 which is a necessary element of each of the claims for which they are seeking certification.
8 Plaintiffs rely solely on the Reynolds declaration as the ostensible common proof of causation.
9 For example, with respect to the negligence claim, plaintiffs say that the “expert report of Brett
10 Reynolds proves that causation and damages are susceptible to class-wide proof.” Id. at 12. For
11 the nuisance claims, plaintiffs say the Reynolds declaration provides common proof that “Tetra
12 Tech’s conduct was a substantial factor in causing Class members’ harm.” See id. at 14-15. The
13 Reynolds declaration is also identified as the only common evidence of the damages the class
14 suffered because of defendants’ alleged fraud and negligent misrepresentation. See id. at 15, 18-
15 19 (“The real property damages of the proposed class are susceptible to class-wide proof. See
16 Reynolds Decl. According to Mr. Reynolds, each home has suffered appreciation impairment
17 caused by the Tetra Tech scandal and the aborted development of the Shipyard.”).
18 But the Reynolds’ declaration did not even try to supply class-wide proof on these issues.
19 Reynolds did not offer any opinions whatsoever about causation. He said that he was retained “to
20 analyze whether CPM’s clients, homeowners at the Shipyards development in San Francisco, have
21 suffered harm to their property values because of the environmental fraud scandal at the
22 Shipyards.” Dkt. No. 265-17. But nothing in the declaration spoke to causation issues in a
23 meaningful way. He did not, for example, consider alternate possible causes. Rather, he simply
24 assumed the conclusion. In performing a “paired sales analysis,” he divided the sales into two
25 categories, “non-impacted sales and impacted sales.” Id. ¶¶ 9-10. Without any substantive
26 explanation, Reynolds stated that “[n]on-impacted sales are homes that were not impacted by the
27 environmental fraud at the Shipyards because they were re-sold before the fraud was widely
1 “were sold by the developer to the original owner, and then re-sold to a second owner after the
2 environmental fraud was reported widely to the public.” Id. ¶ 15. In support of the statement in
3 the declaration that “[t]he environmental fraud at the Shipyards was not widely reported by the
4 media until 2018,” Reynolds mentioned one post on a San Francisco real estate website in January
5 2018; that the San Francisco Chronicle reported “by August 2, 2018” that Congresswoman Nancy
6 Pelosi had called for a federal investigation into the Shipyards, after which there was “substantial
7 media coverage” about “the fraud”; that on August 22, 2018, “SF Weekly ran a story titled ‘Toxic
8 Relationship: The Fraud at Hunters Point’”; and “[b]y December 2018, Curbed San Francisco, the
9 real estate publication, reported that major banks (Wells Fargo, Citi, Chase) had stopped lending at
10 the Shipyards.” Id. ¶¶ 11, 16-18.
11 These scattered and disjointed observations do not justify Reynolds’ decision to look only
12 at “impacted” sales that took place after “the August 2, 2018 article about Nancy Pelosi’s call for a
13 federal investigation into the Shipyards cleanup” for purposes of his damages analysis. Id. ¶ 29.
14 Nor did Reynolds provide any support for his assumption that any appreciation impairment for
15 Parcel A homes after August 2, 2018, could only be attributable to Tetra Tech’s alleged
16 misconduct at Hunters Point.
17 Plaintiffs themselves underscored the inadequacy of the Reynolds declaration as common
18 evidence that could support certification. They say that “[a]ccording to Brett Reynolds, a certified
19 appraiser, HPNS homes sold prior to 2018 were outperforming the market,” while “[h]omes sold
20 after January 1, 2018 underperformed the market.” Dkt. No. 290 at 5 (emphases omitted).
21 “Common sense,” plaintiffs suggest, “says that something happened in 2018 that caused HPNS
22 home prices to suffer.” Id. “According to Mr. Reynolds, the evidence shows that the real estate
23 market did not incorporate the Tetra Tech fraud until the Steven Rolfe and Justin Hubbard
24 criminal cases were unsealed, Nancy Pelosi called for a federal investigation, and other high-
25 publicity events.” Id.
26 The problem for plaintiffs is that “common sense” is not common proof they can rely on to
27 prove their case at trial on a classwide basis. Even accepting that “something happened in 2018
1 eliminate other possible options for what that “something” might have been. Plaintiffs further
2 weakened their position by suggesting that Reynolds did not choose the August 2, 2018 cutoff
3 date at all, but merely “accept[ed]” it “from class counsel.” Id. at 5. In effect, plaintiffs
4 acknowledged that Reynolds simply assumed causation in the damages calculations he provided in
5 his declaration. Overall, Reynolds’ declaration does not provide evidence that he is “capable of
6 answering [the] common question” of causation “on a class-wide basis.” Olean, 31 F.4th at 665
7 (citations omitted).
8 Without “any sort of representative evidence,” each class member will need to provide
9 individual testimony about the possible causes of the relative lack of appreciation in the value of
10 their Parcel A home. Bowerman v. Field Asset Servs., Inc., 60 F.4th 459, 469 (9th Cir. 2023). The
11 number of possible reasons for a lack of appreciation is myriad, and will be informed by all sorts
12 of factors such as type of design and quality of construction, the age of the home, the degree of
13 maintenance over time, code status, the number of bedrooms and bathrooms, individual events
14 such as fires and water leaks, the location of the lot, and a host of other concerns familiar to any
15 home buyer or seller. Such questions would necessarily result in hundreds of “individualized
16 mini-trials,” thereby defeating predominance. Id. at 470.
17 So too for the misrepresentation claims. Plaintiffs wave at “Tetra Tech’s affirmative and
18 intentional misrepresentations about its clean-up efforts,” Dkt. No. 265 at 15, without any
19 substantive specifics or evidentiary support. Consequently, the Court cannot say that questions
20 such as “[w]hether these misrepresentations or omissions were material,” id. at 16, can be tried on
21 a class basis without knowing what those misrepresentations or omissions are, or what common
22 proof plaintiffs intend to offer to resolve that issue on a classwide basis.
23 Overall, plaintiffs have offered almost no evidence to meet their burden for any of their
24 claims, and their motion is bereft of any class-wide evidence they propose to use to prove the
25 common questions “in one stroke.” Schneider, 674 F. Supp. 3d at 716 (quoting Alcantar v.
26 Hobart Serv., 800 F.3d 1047, 1052 (9th Cir. 2015)). There were other deficiencies with plaintiffs’
27 class certification motion but the Court need not get into them here. The same goes for the other
1 Rule 23(a) factors, as plaintiffs’ failure to meet their burden under Rule 23(b)(3) mandates that
2 their motion must be denied.
3 C. Plaintiffs’ Alternative Request for Certification of Issues Under Rule 23(c)(4)
4 Plaintiffs make an abbreviated request for certification of issues under Rule 23(c)(4) if a
5 Rule 23(b)(3) class is denied. See Dkt. No. 265 at 20-22. Rule 23(c)(4) states that, “[w]hen
6 appropriate, an action may be brought or maintained as a class action with respect to particular
7 issues.” Fed. R. Civ. P. 23(c)(4).
8 While predominance is not required for certifying an issues class under Rule 23(c)(4), the
9 individualized questions of proof already discussed make a Rule 23(c)(4) class inefficient. An
10 issues class must “have proper representatives and otherwise comply with Rule 23’s
11 requirements.” Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1192 n.8 (9th Cir. 2001).
12 In addition, plaintiffs did not demonstrate that certifying an issues class would materially advance
13 the disposition of the litigation as a whole.
14 Rule 23(c)(4) certification is not a consolation prize in the event certification under Rule
15 23(b)(3) is denied. See Schneider, 674 F. Supp. 3d at 727. It was clearly an afterthought here, and
16 plaintiffs “did not explain why an issues class might advance the litigation as a whole, particularly
17 in light of all the individualized questions” and insufficiency of classwide proof “that foreclosed
18 certification of a (b)(3) class.” Id. Certification under Rule 23(c)(4) is denied.
19 As a closing observation, the Court notes that plaintiffs did not file on the ECF docket an
20 unredacted version of their motion for class certification. See Dkt. No. 264. This did not impede
21 the Court’s analysis of plaintiffs’ motion in any way but it was a failure to comply with the
22 District’s local rules. See Civil L.R. 79-5(e)(2). In any event, no party has requested the
23 continued sealing of the materials the plaintiffs provisionally filed under seal, and so the sealing
24 request in Dkt. No. 264 is denied. Plaintiffs are directed to file an unredacted version of their
25 motion for class certification on the ECF docket by January 6, 2025.
26 The parties indicated that, following a decision on certification, they would “meet and
27 confer regarding the case and . . . submit a stipulation and proposed order that will tailor the
1 Dkt. No. 313. The parties are directed to meet and confer, and to jointly file by January 24, 2025,
2 a proposed case schedule with dates for pre-trial filings, the final pretrial conference, and trial.
3 IT IS SO ORDERED.
4 Dated: December 23, 2024
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JAME NATO
7 Unitedfptates District Judge
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