For developers and builders of single-family communities and multi-family housing, an increasingly common tactic is for plaintiffs’ counsel to assert a class action, a procedural device that allows one person to sue on behalf of related persons who are not parties to the lawsuit. Plaintiffs’ counsel then relies on statistical extrapolation from limited inspections of a few homes or units to prove liability and damages. For example, a plaintiff’s expert may inspect three residences in a subdivision of one hundred single family homes, find water intrusion around windows in those three residences, and reach a conclusion that the windows and associated flashing must be removed and replaced in all one hundred homes.
The statistical extrapolation also occurs at each building inspected. For example, a plaintiff’s expert may perform test cuts at three locations on a building, find water intrusion, and conclude the entire exterior veneer must be replaced. In addition to making a statistically questionable generalized conclusion from a small sample, plaintiff’s experts also exhibit a selection bias by choosing for their sample those residences, units, or test locations they believe are most likely to exhibit damages. Among the many problems this tactic creates for developers and builders are the weaknesses of using statistical methods in this manner and the inevitable pressure defendants feel to settle when faced with a large class action claim even if the plaintiff’s claims are very weak. Continue Reading