Class Actions — Can Court Use Rule 23(c)(4) to Certify a (b)(3) Class as to Parts of a Claim without Finding That Whole Claim Satisfies Predominance Requirement? Circuit Split
In re Motor Fuel Temperature Sales Practices Litig., 2012 U.S. Dist. LEXIS 6433 (D. Kan. Jan. 19, 2012):
III. Rule 23 Requirements
Rule 23, Fed. R. Civ. P., governs class certification. Under Rule 23(a), the party seeking class certification must first demonstrate that:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses [*79] of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Fed. R. Civ. P. 23(a). Second, the proposed class must satisfy at least one of the three requirements listed in Rule 23(b). Plaintiffs initially sought class certification under both 23(b)(2) and (b)(3), but the Court relied only on Rule 23(b)(2) in certifying the classes as to the liability and injunctive relief aspects of plaintiffs' claims.
Rule 23(b)(2) applies only when "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." Rule 23(b)(3) applies when "the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." To determine predominance and superiority, the Court considers:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3).
A. Rule 23(c)(4) Issue Classes
The Court has already certified classes under Rule 23(b)(2) as to the liability and injunctive relief aspects of plaintiffs' claims. Defendants ask the Court to reconsider that ruling and to clarify what constitutes the "liability aspects" of plaintiffs' claims. In response, plaintiffs ask the Court to certify limited (b)(3) issue classes under Rule 23(c)(4) as to the liability aspects of their three claims. The circuits are split on whether courts can use issue certification under Rule 23(c)(4) to certify a (b)(3) class as to parts of a claim without first finding that the whole claim satisfies the predominance requirement (and presumably all the requirements) of Rule 23(b)(3). Hohider v. United Parcel Serv., Inc., 574 F.3d 169, 202 n.25 (3d Cir. 2009). The Tenth Circuit has not addressed the question.
The Fifth Circuit has held that a "district court cannot manufacture predominance through the nimble use of subdivision (c)(4)." Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996); see Allison v. Citgo Petroleum Corp, 151 F.3d 402, 421-22 (5th Cir. 1998). In the Fifth Circuit, the "the proper interpretation of the interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is a housekeeping rule that allows courts to sever the common issues for a class trial." Id. The Fifth Circuit was motivated by a concern that "allowing a court to sever issues until the remaining common issue predominates over the remaining individual issues would eviscerate the predominance requirement of rule 23(b)(3)" and would lead to "automatic certification in every case where there is a common issue, a result that could not have been intended." Id.
The Second, Seventh and Ninth Circuits have taken a different view, holding that in appropriate cases Rule 23(c)(4) authorizes district courts "to isolate the common issues . . . and proceed with class treatment" of those issues "[e]ven if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted." In re Nassau Cnty. Strip Search Cases, 461 F.3d 219, 227 (2d Cir. 2006) (quoting Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996)) (quotation marks omitted); In re Allstate Ins. Co., 400 F.3d 505, 508 (7th Cir. 2005); Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir. 2004). The First and Fourth Circuits have indicated that they agree. Tardiff v. Knox Cnty., 365 F.3d 1, 7 (1st Cir. 2004); Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 427-28 (4th Cir. 2003); see also Gates v. Rohm & Haas Co., 655 F.3d 255, 272 (3d Cir. 2011); Hohider, 574 F.3d at 202 n.25.
Although the Tenth Circuit has not addressed the question, this Court has generally followed the approach of the Second, Seventh and Ninth Circuits, and has used Rule 23(c)(4) to certify only parts of claims where doing so "would materially advance the disposition of the litigation of the whole." Fulghum v. Embarq Corp., No. 07-2602-EFM, 2011 WL 13615, at *2 (D. Kan. Jan. 4, 2011) (Melgren. J.); Emig v. Am. Tobacco Co., Inc., 184 F.R.D. 379, 395 (D. Kan. 1998) (Belot, J.); see also Law v. Nat'l Collegiate Athletic Ass'n, 167 F.R.D. 178, 184-85 (D. Kan. 1996) (Vratil, [*83] J.). Defendants note that the District of Kansas decided these cases before Dukes, but they do not argue that Dukes undermines their rationale or persuasive value. The Court therefore declines to adopt the strict Fifth Circuit interpretation of Rule 23(c)(4).
Rule 23(c)(4), however, is not a panacea. As defendants argue, it should be used only "where resolution of the particular common issues would materially advance the disposition of the litigation as a whole," and should not be used "if noncommon issues are inextricably entangled with common issues or . . . the noncommon issues are too unwieldy or predominant to be handled adequately on a class action basis." Fulghum, 2011 WL 13615, at *2. For particular issues to be certified using Rule 23(c)(4), the requirements of Rules 23(a) and (b) must be satisfied only with respect to those issues. Id. As with any class certification, certification of a issue classes under Rule 23(c)(4) must be supported by rigorous analysis. Gates, 655 F.3d at 272; see Dukes, 131 S. Ct. at 2551-52.
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