Class Action Countermeasures : Class Action Lawyers & Attorneys : McGuireWoods Law Firm : Complex Litigation, Mass Torts

A common question new students of Rule 23(b)(2) ask is why it exists at all. After all, if an injunction truly offers indivisible relief, why would one seek to bring it on behalf of a class? Wouldn't the individual pursuing the injunction get relief for the class if she wins just by bringing the lawsuit in the first place?

There is an answer to this question, and it is one that has its roots in the desegregation era.  When blacks seeking desegregation orders sued for injunctions, they did so on behalf of a class to avoid the problem of racist school districts granting admission one at a time to the plaintiffs who sought the orders. At that point, there was a clear need for the class action device to ensure the real relief the plaintiffs sought (desegregation) could be accomplished.

As it turns out, the question of when a class action is necessary to effect injunctive relief has remained, and so a number of courts have imposed a "necessity" requirement (much like the "cohesiveness" requirement) on Rule 23(b)(2).

The most recent example of the "necessity" requirement came last week, in the case
M.R. v. Bd. of School Comm'ners of Mobile Cty., No. 11-0245-WS-C, 2012 U.S. Dist. LEXIS 154500 (S.D. Ala. Oct. 29, 2012).

M.R. involved ten student plaintiffs, who all alleged that they had been "long-term suspended" (suspended for more than two consecutive weeks) from their public schools without notice or a hearing, which they argued was a clear violation of their due process rights. Their lawsuit challenged Mobile County's suspension policy on behalf of all students of the school system. They sought no monetary relief.

The school system (after unsuccessfully challenging the lawsuit on standing grounds), opposed certification on the grounds that it was not necessary:

"The Board's point, quite simply, is that it would be superfluous to certify a class here because, if plaintiffs prevail on the merits, their requested injunctive declaratory and injunctive relief would have precisely the same scope and effect regardless of whether a class is certified or not."

(Emphasis added.)  Rather than dismiss the argument as chutzpah, the court did its research, and noted that

considerable authority demonstrates that, whether it is deemed a formal "requirement" or not, the necessity of the class mechanism to afford complete relief is a proper consideration in the Rule 23(b)(2) analysis. … In the typical case, the district court weighs the benefits (if any) of class certification under Rule 23(b)(2) against the inherent burdens associated with transforming ordinary litigation into a class action. Where the members of the proposed class would benefit from the relief sought by the individual plaintiffs even if no class were certified, those courts often find that the burdens outweigh the benefits and that class certification is properly denied as inappropriate.

While the court observed that the Eleventh Circuit had not yet ruled on this question, it pointed out that

the clear majority rule is that "need" is a proper consideration (even if not technically a "requirement" for class certification), and that class certification may be properly denied where a class is unnecessary to obtain the full measure of relief sought, such that it is not appropriate to bog down the litigation with the expense, delay, complexity and burden of class certification when there is no corresponding benefit to implementation of the resulting judgment.

(Emphases added.)  Since the only "need" the plaintiffs identified was additional discovery about the circumstances of other class members (which, the court noted, would only be necessary if the class was not in fact cohesive), the court refused to certify the class.

So what can we take from this case? First, despite the lack of any tests in the text, Rule 23(b)(2) certification does require the plaintiffs to meet at least three requirements: indivisible relief, cohesiveness, and necessity. Second, this case reiterates an important trend: courts are paying more attention to when the cost and complexity of a class action are actually required in a case. For defendants who find themselves opposing frivolous or ill-thought-out class actions, that's a welcome development.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 In the wake of Wal-Mart Stores, Inc. v. Dukes, plaintiffs and trial courts are still trying to determine exactly how to apply the clarified commonality standard of Rule 23(a)(2), and the standard for injunctive relief under Rule 23(b)(2). The good news for defendants, as demonstrated in the new case M.D. v. Perry, 2012 U.S. App. LEXIS 6061 (5th Cir. Mar. 23, 2012), the appellate courts are largely following the Supreme Court's lead in Dukes. (My apologies: Google Scholar doesn't have the opinion yet, and the Fifth Circuit website appears to be having difficulties.)

The plaintiffs challenged the state's long-term foster care program, known as the Permanent Managing Conservatorship ("PMC"). They alleged that Texas's mismanagement of the PMC had created a variety of problems for the 12,000 children under its care. They sought injunctive relief under Rule 23(b)(2).

The lower court acknowledged that different children would have been treated differently by the system, but certified the class anyway. It identified the "common question" uniting the class as the legality of the foster-child regime as administered in Texas. It reasoned that the Fifth Circuit had held that the commonality standard was not a demanding one, and that the plaintiffs' proposed common questions could apply to all class members, even if they yielded different answers for different class members.

The Fifth Circuit disagreed. First, it pointed out that that Dukes has changed its standard for commonality.

Thus, the commonality test is no longer met when the proposed class merely establishes that "there is 'at least one issue whose resolution will affect all or a significant number of the putative class members.'" Forbush, 994 F.2d at 1106 (emphasis added) (citation omitted). Rather, Rule 23(a)(2) requires that all of the class member's claims depend on a common issue of law or fact whose resolution "will resolve an issue that is central to the validity of each one of the [class member's] claims in one stroke."

(Emphasis in original.) And then it pointed out that, in this case, the alleged "common issues" had been pitched at too general a level to yield any common answers that would actually advance the litigation.

Accordingly, given the "amorphousness" of the proposed class's proffered common issues of fact and law, the district court should be particularly precise when explaining how the resolution of those claims "will resolve an issue that is central to the validity of each of the [individual class member's claims] in one stroke." Wal-Mart, 131 S. Ct. at 2551. The district court's present certification order failed to do so; thus, we conclude that it failed to perform the "rigorous analysis" that is required in order to find that the proposed class satisfied Rule 23(a)(2)'s commonality requirement.

(Emphasis added.)  But the Fifth Circuit did not stop there. After pointing out that a request for injunctive relief must be "specific," it also held that, because the plaintiffs had asked--indirectly--for individualized injunctive relief, that it was clear that the class lacked the cohesiveness to justify certification under Rule 23(b)(2).

"A proposed class cannot avoid Rule 23(b)(2)'s prohibition on claims for individualized relief by petitioning the district court to order the defendant to craft individualized "injunctive-type" relief for certain class members. See Jamie S., 668 F.3d at 499 (holding that proposed injunctive relief did not satisfy Rule 23(b)(2) when the district court's order "would merely initiate a process through which highly individualized determinations of liability and remedy are made; this kind of relief would be class-wide in name only, and it would certainly not be final"). Accordingly, we find that the requested individual relief implicitly establishes that at least some of the proposed class's underlying claims allege individual injuries that are not uniform across the class; thus, as currently pleaded, the proposed class lacks cohesiveness to proceed as a 23(b)(2) class.

(Emphasis added.)  The Fifth Circuit remanded the case for further consideration. (It reasoned that the plaintiffs might be able to allege a more limited class that could justify certification.)

The applications of this opinion to defense work are clear. First, like the Seventh Circuit in Jamie S., the Fifth Circuit has affirmed that a plaintiff may not simply plead around Rule 23(a)(2) by keeping her claims amorphous. And second, the Fifth Circuit has also affirmed the "cohesiveness" standard implicit in Rule 23(b)(2), and shown its importance in a world with a more rigorously-enforced commonality standard.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

To get lawsuits into court and past preliminary motions, plaintiffs often have to argue some pretty stupid things. They have to argue that they did not know coffee is hot or that they trusted Google Maps directions over their own eyes. Sometimes, to get a class action that far, plaintiffs' lawyers have to argue that entire populations that dumb, such as when they argue that people did not know that Nutella is fattening. What's a defense lawyer to do in situations like this?

The Third Circuit has offered some help. The lawsuit, McNair v. Synapse Group, Inc. (3d Cir. 2012), involved the high-stakes, high-pressure business of magazine subscriptions. Each of the named plaintiffs had bought a magazine subscription through Synapse, one of those offers that involved crazily low rates and--unless cancelled--automatic renewal. As most behavioral economists would tell you, making a default "automatic renewal" would be very profitable, because most people won't bother to cancel a magazine subscription. But the plaintiffs alleged that Synapse stacked the deck even further in its favor, by disguising its automatic renewal notices as just so much junk mail. (According to internal documents, Synapse had determined that fewer people cancelled after an unmarked notice than after one marked "Automatic Renewal.")

The plaintiffs had originally brought their case as a class action for damages, but the trial court determined that, since the lawsuit was based on allegations of fraud, individualized issues (like reliance) would predominate over common ones.

So the plaintiffs amended their complaint to seek injunctive relief instead. Synapse opposed, arguing that, since the plaintiffs would not suffer any future injury, they could not seek injunctive relief. (The plaintiffs' response was twofold: (1) it was not always clear which subscription deals were Synapse deals, and (2) given a good enough initial deal, they could not guarantee they would not subscribe again.) The trial court allowed the amendment, reasoning that it was possible one of the plaintiffs might wind up subscribing with Synapse again. Two years later, it declined to certify this new class as well, this time because those same individualized issues meant the proposed class was not cohesive enough to justify certification under Rule 23(b)(2).

The plaintiffs appealed under Rule 23(f). The central question the Third Circuit faced was whether plaintiffs in this situation (fooled once, might get fooled again) had standing to seek injunctive relief. In this case, it concluded they did not. It began by describing the "future injury" requirement for injunctive relief

When, as in this case, prospective relief is sought, the plaintiff must show that he is "likely to suffer future injury" from the defendant's conduct. Lyons, 461 U.S. at 105. In the class action context, that requirement must be satisfied by at least one named plaintiff.

And it then turned to what the plaintiffs had actually alleged about their harms.

Appellants have effectively acknowledged that they, unlike the class members they seek to represent, are not Synapse customers and are thus not currently subject to Synapse's allegedly deceptive techniques for obtaining subscription renewals. Unless they decide to subscribe again, then, there is no reasonable likelihood that they will be injured by those techniques in the future. They do not allege that they intend to subscribe again.

[Internal citations omitted.] Having set up the reasoning, the Third Circuit offered a very blunt assessment of the plaintiffs' argument that, despite having been allegedly deceived once, they would not be able to avoid the same problem in the future.

Perhaps [plaintiffs] may accept a Synapse offer in the future, but, speaking generally, the law accords people the dignity of assuming that they act rationally, in light of the information they possess. … If Appellants' suggestion is that they may not be able to help themselves when confronted with a really good subscription offer, they have still not provided a basis for standing. Pleading a lack of self-restraint may elicit sympathy but it will not typically invoke the jurisdiction of a federal court.

(Emphasis added.)  

The McNair opinion has some clear uses for defense counsel. The most obvious is its clear explication of the future injury rule, and its implicit affirmance of the cohesiveness requirement of Rule 23(b)(2). But it may serve even more use as an object lesson: from both a rhetorical and a practical standpoint, it still makes sense to argue to a court that your opponents are not stupid, and it's rarely a good idea to argue to a court that your clients are.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The last few weeks have been exceptionally busy for appellate decisions involving class actions. In addition to Judge Easterbrook's In re Aqua Dots opinion, the Sixth Circuit's Pipefitters opinion, the Second Circuit's Literary Works opinion, and the Ninth Circuit's reversal of the Bluetooth settlement, the Third Circuit has offered up a pair of opinions involving predominance and common evidence. In one, Behrend v. Comcast Corp., a panel appeared to limit the reach of In re Hydrogen Peroxide on expert evidence, affirming certification of an antitrust case again the cable provider in part because it held that a Daubert inquiry is not necessary at class certification. In the other, Gates v. Rohm & Haas Co., a different panel affirmed the denial of certification of an environmental class action. In doing so, it appeared to follow Hydrogen Peroxide in requiring a "rigorous analysis" of expert proof, even if the parties themselves had stipulated no Daubert hearing would be necessary.

In general, Gates is an extremely useful opinion for defendants. Leaving aside its implicit analysis of the Daubert issue (which is likely to be hotly contested for some time to come), the Third Circuit made a number of other statements explaining just how difficult it can be to demonstrate either cohesiveness (for a Rule 23(b)(2) class) or predominance (for a Rule 23(b)(3) class).

I blogged about this case last year when the trial court denied certification. So, since it remains applicable, I'll repeat the factual summary from there.

Gates is an environmental case, in which the plaintiffs sued Rohm & Haas for polluting the water and air around Ringwood, Illinois with chemicals including vinylidene chloride, a known carcinogen. The plaintiffs sued for violations of CERCLA and state law, and sought damages for medical monitoring and damage to property. The proposed class action – like many environmental class actions – would turn on questions of causation, which can pose a number of thorny individualized issues in toxic torts. So, in addition to seeking damages, the plaintiffs sought an injunction compelling Rohm & Haas to set up a medical monitoring regime.

The district court refused to certify a class, finding that the Rule 23(b)(2) class lacked "cohesiveness" and the 23(b)(3) class lacked predominance. The plaintiffs appealed.  The Third Circuit affirmed. Among its holdings:

The "cohesiveness" requirement for Rule 23(b)(2) is more stringent than the predominance requirement for Rule 23(b)(3).

As all class members will be bound by a single judgment, members of a proposed Rule 23(b)(2) injunctive or declaratory class must have strong commonality of interests.

The Third Circuit also noted that

Commentators have noted that certification requirements under Rule 23(b)(2) are more stringent than under (b)(3).

The plaintiffs could not rely on proof of a composite, "average" class member to establish factual predominance.

Plaintiffs cannot substitute evidence of exposure of actual class members with evidence of hypothetical, composite persons in order to gain class certification. … Averages or community-wide estimations would not be probative of any individual's claim because any one class member may have an exposure level well above or below the average.

Nor could plaintiffs use regulatory standards as shortcuts for common proof.

Although the positions of regulatory policymakers are relevant, their risk assessments are not necessarily conclusive in determining what risk exposure presents to specified individuals. … Thus, plaintiffs could not carry their burden of proof for a class of specific persons simply by citing regulatory standards for the population as a whole.

In short, the Third Circuit came out definitively against using some of the various shortcuts plaintiffs have employed to convince courts to certify a class despite the lack of actual common proof. As both a taxonomy of these shortcuts, and an explanation of why they don't work, this is a good opinion for class-action defense lawyers to keep in their toolkit.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

When faced with a complex factual issue, where it would be difficult to certify under Rule 23(b)(3) (because individual issues of causation or liability clearly predominate over common issues), plaintiffs will sometimes seek injunctive relief under Rule 23(b)(2) instead. From a rhetorical standpoint, seeking injunctive relief under Rule 23(b)(2) makes a powerful argument for certification – an injunction is true group relief; why wouldn’t it be appropriate to certify a class looking for an injunction?

This rhetorical technique has largely worked. A number of plaintiffs’ and defense counsel I’ve spoken with operate under the distinct impression that it is easier to certify a class under Rule 23(b)(2) than it is under Rule 23(b)(3), and that what holds plaintiffs back from seeking more injunctions is the lack of monetary relief on which to base a fee request.

This impression is wrong. To see just how wrong, take the case of Gates v. Rohm & Haas Co., --- F.R.D. ---, 2010 WL 774327 (E.D. Pa. March 5, 2010). Gates is an environmental case, in which the plaintiffs sued Rohm & Haas for polluting the water and air around Ringwood, Illinois with chemicals including vinylidene chloride, a known carcinogen. The plaintiffs sued for violations of CERCLA and state law, and sought damages for medical monitoring and damage to property. The proposed class action – like many environmental class actions – would turn on questions of causation, which can pose a number of thorny individualized issues in toxic torts. So, in addition to seeking damages, the plaintiffs sought an injunction compelling Rohm & Haas to set up a medical monitoring regime.

Rather than arguing that Rule 23(b)(2) did not apply because plaintiffs also sought money damages (a common argument), Rohm & Haas apparently directly challenged whether Rule 23(b)(2) would allow for certification in this case. And the trial court held that it did not:

While 23(b)(2) class actions have no predominance or superiority requirements, it is well established that the class claims must be cohesive. A (b) (2) class may require more cohesiveness than a (b)(3) class because in a (b)(2) action, unnamed members are bound by the action without the opportunity to opt out. The district court has the discretion to deny certification in Rule 23(b)(2) cases in the presence of disparate factual circumstances. The determination of whether a class involves individualized issues is important for two reasons: (1) unnamed members with valid individual claims are bound by the action without the opportunity to withdraw and may be prejudiced by a negative judgment in the class action; and (2) the suit could become unmanageable and little value would be gained in proceeding as a class action if significant individual issues were to arise consistently. At base, the (b)(2) class is distinguished from the (b)(3) class by class cohesiveness. Injuries remedied through (b) (2) actions are really group, as opposed to individual injuries. The members of a(b)(2) class are generally bound together through preexisting or continuing legal relationships or by some significant common treat such as race or gender. Indeed, a court should be more hesitant in accepting a(b)(2) suit which contains significant individual issues than it should under subsection 23(b)(3).

The individual issues that defeat the predominance requirement of Rule 23(b)(3) also defeat the cohesion requirement of Rule 23(b) (2).

(Multiple quotations, citations, and footnotes omitted; emphases added.)

The lesson here is a simple, but powerful one. A plaintiff cannot seek to avoid individualized issues by changing the rule under which she seeks certification. If individualized issues predominate, then the class will not be cohesive enough to certify under Rule 23(b)(2).

• Email This
• Print
• Comments
• Trackbacks
• Share Link