Rule 23(b)(2) Injunctive Relief Class Actions: Recent ...

Rule 23(b)(2) Injunctive Relief Class Actions:

Recent Decisions, Approaches for Plaintiffs

and Defendants

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Presenting a live 90-minute webinar with interactive Q&A

Wystan M. Ackerman, Partner, Robinson & Cole, Hartford, Conn.

Alexandra S. (Xan) Bernay, Partner, Robbins Geller Rudman & Dowd, San Diego

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5

RULE 23(B)(2) INJUNCTIVE RELIEF CLASS ACTIONS:

RECENT DECISIONS, APPROACHES FOR PLAINTIFFS

AND DEFENDANTS

Alexandra Bernay

Partner

Robbins Geller Rudman & Dowd LLP

6

CLASS ACTIONSCentral Themes Of Class-Action Litigation

• Class actions are an exception to the general rule that parties

may not be bound to a judgment in which they were not a

party.

• Class actions ensure that certain wrongs can be vindicated

that otherwise might not be.

• A tool to hold the powerful accountable or a money grab by

lawyers?

• Under Rule 23(b)(3) plaintiffs seek money damages.

• Under Rule 23(b)(2) plaintiffs seek primarily injunctive relief.

7

CLASS ACTIONSA Few Basics

• Federal Rule of Civil Procedure 23 governs

• Allows plaintiffs to pool claims that would otherwise not be litigated

due to small size or where joinder might be impractical.

• Must satisfy the four prerequisites in Rule 23(a): numerosity,

commonality, typicality, and adequacy.

• Rule 23(b)(2),requires that the relief sought be primarily injunctive

and be applicable to the class as a whole.

• Rules 23(b)(3) requires that there be common “questions of law or

fact” that predominate over individual issues and that class

adjudication be “superior to other available methods" of adjudicating

the controversy

8

CLASS ACTIONSSome Examples

Classic Rule 23(b)(2) case – civil rights where the class seeks an end

to discriminatory practices.

Recent example - Mielo v. Steak 'N Shake Operations, Inc., 897 F.3d

467

Disability rights advocates sue Steak 'n Shake under the Americans

with Disabilities Act Alleging they have personally experienced

difficulty ambulating in their wheelchairs through two sloped parking

facilities. Plaintiffs sue on behalf of all physically disabled individuals

who may have experienced similar difficulties at Steak 'n Shake

restaurants throughout the country.

Result – Certification denied

9

Classic Rule 23(b)(3) – Action alleging scheme to defraud

investors in violation of federal securities laws.

Recent example - W. Va. Pipe Trades Health & Welfare Fund

v. Medtronic, Inc., 325 F.R.D. 280 (D. Minn. 2018)

Plaintiffs alleged that the defendants manipulated clinical

studies which wrongly touted Medtronic’s INFUSE product. As a

result of the alleged manipulations, the company’s stock was

inflated and investors overpaid for the company’s stock.

Result - Class Certified


10


Cases seeking certification under both 23(b)(3) and 23(b)(2)

Holt v. Noble House Hotels & Resort, Ltd., 2018 U.S. Dist.

LEXIS 177940 (S.D. Cal October 16, 2018)

Rule 23(b)(2) and (b)(3) classes certified where surcharge at

restaurant not disclosed.

Relief sought was primarily injunctive. Plaintiff also sought to

certify an “incidental damages class.”

11

CLASS ACTIONSPayment Card Case

In re Payment Card Interchange Fee & Merch. Disc. Antitrust

Litig., 827 F.3d 223 (2d Cir. 2016)

In brief - Second Circuit rejected largest antitrust settlement of all

time because of tensions between 23(b)(3) and 23(b)(2)

representation.

- 12 million merchants

- 10+ years of litigation

- Settlement of more than $5 billion in cash, plus injunctive relief

regarding rules.

key problem according to the Second Circuit because the same

counsel were “in the position to trade diminution of (b)(2) relief for

increase of (b)(3) relief” the settlement could not be approved.

“We expressly do not impugn the motives or acts of class counsel”

12

CLASS ACTIONSPayment Card Case

In re Payment Card Interchange Fee & Merch. Disc.

Antitrust Litig., 827 F.3d 223 (2d Cir. 2016)

cont…

“None of this is to say that (b)(3) and (b)(2) classes cannot be

combined in a single case, or that (b)(3) and (b)(2) classes

necessarily and always require separate representation.

Problems arise when the (b)(2) and (b)(3) classes do not

have independent counsel, seek distinct relief, have non-

overlapping membership, and (importantly) are certified as

settlement-only.”

1414

Recent Cases Involving Rule 23(b)(2)

Jennings v. Rodriguez, 138 S. Ct. 830, 851-52

(2018)“The Court of Appeals should also consider whether a Rule 23(b)(2)

class action continues to be the appropriate vehicle for respondents’

claims in light of Wal-Mart Stores, Inc. v. Dukes, 564 U. S. 338

(2011). We held in Dukes that “Rule 23(b)(2) applies only when a single

injunction or declaratory judgment would provide relief to each member

of the class.” Id., at 360. That holding may be relevant on remand

because the Court of Appeals has already acknowledged that some

members of the certified class may not be entitled to bond hearings as

a constitutional matter. . . . Assuming that is correct, then it may no

longer be true that the complained-of “‘conduct is such that it can be

enjoined or declared unlawful only as to all of the class members or as

to none of them.’” Dukes, supra, at 360.



https://advance.lexis.com/document/teaserdocument/?pdmfid=1000516&crid=8bd65b65-deac-48d3-b335-c9dbbc9c4026&pdteaserkey=h5&pditab=allpods&ecomp=5pkLk&earg=sr0&prid=80847ced-19fc-4f9a-91fc-5f877dc2e2b7

1515


Shelton v. Bledsoe, 775 F.3d 554, 563 (3d Cir.

2015) – “ascertainability is not a requirement for

certification of a (b)(2) class seeking only injunctive

and declaratory relief”

Ebert v. Gen. Mills, Inc., 823 F.3d 472, 481 (8th Cir.

2016) – “It is the disparate factual circumstances of

class members that prevent the class from being

cohesive and thus unable to be certified

under Rule 23(b)(2).”



1616


Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70,

98 (2d Cir. 2015) – injunctive relief would benefit all

class members; named plaintiffs could demonstrate

likelihood of future harm

In re Payment Card Interchange Fee & Merch.

Disc. Antitrust Litig., 827 F.3d 223 (2d Cir. 2016) –

adequacy of representation in settlement with both

(b)(2) and (b)(3) classes



1717


W. Morgan-East Lawrence Water & Sewer Auth. v.

3M Co., 737 F. App'x 457 (11th Cir. 2018) –

settlement under Rule 23(b)(2) improperly released

monetary damages claims without notice and

opportunity to opt out

In re Subway Footlong Sandwich Mktg. & Sales

Practices Litig., 869 F.3d 551 (7th Cir. 2017) – Rule

23(b)(2) settlement disapproved



18

RECENT CASES

United States ex rel. Terry v. Wasatch Advantage Grp.,

LLC, 2018 U.S. Dist. LEXIS 128368 (E.D. Cal 2018)

Additionally, "it is appropriate for the [c]ourt to certify one

class for injunctive relief under Rule 23(b)(2) and a separate

class for other remedies under Rule 23(b)(3)." Nozzi v. Hous.

Auth. of the City of Los Angeles, No. CV 07-380 PA (FFMX),

2016 U.S. Dist. LEXIS 62996.

19

RECENT CASES

Cox v. Porsche Fin. Servs., 2018 U.S. Dist. LEXIS 192707

(S.D. Fla November 9, 2018)

Granting class certification of classes in litigation regarding

car lease transactions.

Plaintiff seeks class-wide injunctive relief for Porsche to halt

its practice of accepting leases that fail to disclose net trade-

in allowance and fail to reduce the capitalized cost by net

trade-in allowance. Should the Court grant this injunctive

relief, it would apply to every class member of both classes.

• “Hybrid”

20

WAL-MART V. DUKES

We also conclude that respondents’ claims for backpay were

improperly certified under Federal Rule of Civil Procedure

23(b)(2). Our opinion in Ticor Title Ins. Co. v. Brown, 511

U.S. 117, 121, 114 S. Ct. 1359, 128 L. Ed. 2d 33 (1994) (per

curiam), expressed serious doubt about whether claims for

monetary relief may be certified under that provision. We

now hold that they may not, at least where (as here) the

monetary relief is not incidental to the injunctive or

declaratory relief.

Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 360 (2011)

21

WAL-MART V. DUKES

cont…

NOTE: - In Wal-Mart, the Court viewed back pay as

a form of individualized relief that was not merely

incidental to the injunctive and declaratory relief

sought. Therefore the plaintiffs could not use (b)(2) to

recover their back pay but instead had to meet the

requirements of (b)(3).

Court’s concern - Class members with claims for

individualized monetary relief should receive the

additional protections that (b)(3) provides, such as

notice and opt-out rights – these are Due Process

concerns.

22

Some Courts have grafted on an “an implicit ‘cohesiveness’

requirement, which precludes certification when individual issues

abound.”

See, e.g., Thompson v. Am. Tobacco Co., Inc., 189 F.R.D. 544, 557 (D.

Minn. 1999).

The Third Circuit first established the cohesiveness requirement

reasoning that “courts must determine whether a proposed (b)(2) class

implicates individual issues” because (1) a “suit could become

unmanageable . . . if significant individual issues were to arise

consistently” and (2) “it would be unjust to bind absent class members

to a negative decision where the class representatives’ claims present

different individual issues than the claims of the absent members

present.” Barnes v. Am. Tobacco Co., 161 F.3d 127, 143 (3d Cir. 1998)

OTHER ISSUES Cohesiveness

23

OTHER ISSUES Standing

Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir.

2018)

A previously deceived consumer may have standing to seek

an injunction against false advertising or labeling, even though

the consumer now knows or suspects that the advertising was

false at the time of the original purchase, because the

consumer may suffer an "actual and imminent, not conjectural

or hypothetical" threat of future harm. ... Knowledge that the

advertisement or label was false in the past does not equate to

knowledge that it will remain false in the future.

24

OTHER ISSUESStanding in Consumer Class Actions

Schneider v. Chipotle Mexican Grill, Inc., 2018 U.S. Dist. LEXIS

169554

• Classes under Rule 23(b)(2) and 23(b)(3) certified.

• False Ads regarding non-GMO products.

Defendant contends that Plaintiffs’ claims for restitution are

“predominantly for money damages,” and therefore improper

for 23(b)(2)certification. …Defendant appears to argue that Plaintiffs'

attempt to certify a damages class pursuing restitution under Rule

23(b)(3) bars certification under Rule 23(b)(2). The Court finds no such

bar to 23(b)(2) certification. See In re ConAgra Foods, Inc., 302 F.R.D.

537, 573 (C.D. Cal. 2014)("Ninth Circuit precedent indicates that the

court can separately certify an injunctive relief class and if appropriate,

also certify a Rule 23(b)(3)damages class.").

NOTE - A showing of irrefutable and total cessation of the

challenged conduct prior to a final judgment may be grounds for a

decertification motion.

25

NEW RULES

The recent amendments to Rule 23 that went into effect on

December 1, 2018 do not specifically reference 23(b)(2), but the

changes regarding notice and objectors may affect Rule 23(b)(2) cases

.

- Too soon to tell.

ONE FIRM. GLOBAL REACH.

1 . 8 0 0 . 4 4 9 . 4 9 0 0

Xan Bernay | [email protected]

2727

Strategies for Defendants

Rule 23(b)(2) “applies only when a single injunction or

declaratory judgment would provide relief to each member

of the class. It does not authorize class certification when

each individual class member would be entitled to a

different injunction or declaratory judgment against the

defendant. Similarly, it does not authorize class

certification when each class member would be entitled to

an individualized award of monetary damages.” Dukes,

564 U.S. at 360-61 (emphasis added).

The Supreme Court has further explained that “we think it

clear that individualized monetary claims belong in Rule

23(b)(3).” Id. at 361.



2828


Determining whether to issue injunctive/declaratory

relief may depend on facts of individual putative

class members’ claims.

Proposed declaratory/injunctive relief that is

essentially damages by another name may be

improper. Robinson v. Metro-North Commuter R.R.

Co., 267 F.3d 147, 162 (2d Cir. 2001) (“Insignificant

or sham requests for injunctive relief should not

provide cover for (b)(2) certification of claims that are

brought essentially for monetary recovery.”).



2929


Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d

883, 889 (7th Cir. 2011) -- rejecting, in analyzing class

certification issues, plaintiffs’ “technique of recasting a

straightforward claim for damages as a claim for

damages and injunctive relief”

Permitting plaintiffs to obtain a declaration of

liability on a claim for damages under Rule 23(b)(2)

would allow plaintiffs to prosecute a class claim for

damages without the procedural protections (notice

and opt-out rights) set forth in Rule 23(b)(3).



3030


Named plaintiffs may not have standing to pursue

injunctive/declaratory relief if they cannot show a likelihood of being

harmed in the future.

Ciraolo v. City of New York, 216 F.3d 236, 248 (2d Cir. 2000)

(“[s]tanding doctrine . . . generally precludes a . . . plaintiff from

obtaining injunctive relief unless she can demonstrate that she is likely

to be subjected to the same conduct in the future”).

Grendell v. Ohio Supreme Court, 252 F.3d 828, 833 (6th Cir. 2001)

(plaintiff had no standing to pursue declaratory and injunctive relief

because “the threat of [plaintiff’s] future injury is highly conjectural,

resting on a string of actions the occurrence of which is merely

speculative”)



3131


Rule 23(b)(2) not satisfied if proposed

injunctive/declaratory relief does not apply to all

class members. Castro Valley Union 76, Inc. v.

Vapor Sys. Techs., Inc., No. C 11-0299 PJH, 2012

U.S. Dist. LEXIS 151734, at *37-38 (N.D. Cal. Oct.

22, 2012) (denying certification of a 23(b)(2) class on

the grounds that some class members had suffered

a product defect within the warranty period and

some had not).



3232


Where claim-by-claim determinations are required,

Rule 23(b)(2) certification is improper. Romberio v.

UNUMProvident Corp., 385 Fed. Appx. 423, 433 (6th

Cir. 2009) (a Rule 23(b)(2) class must be “cohesive

and homogeneous such that the case will not

depend on adjudication of facts particular to any

subset of the class nor require a remedy that

differentiates materially among class members”)

(quoting Lemon v. Int’l Union of Operating Eng’rs,

216 F.3d 577, 580 (7th Cir. 2000))



3333


Rule 23(b)(2) not satisfied if proposed injunctive or

declaratory relief would not be “final.”

Kartman, 634 F.3d at 893 (injunctive relief would

not be “final” as required by Rule 23(b)(2) where it

would lead to further “individualized proceedings”).



3434


Requirements for injunctive/declaratory relief may

not be satisfied – irreparable harm; no adequate

remedy at law; Rule 65 requirement of specificity

“the plaintiffs have not suffered irreparable harm”

because “[t]heir injury . . . is easily remedied by an

award of money damages, a fully adequate remedy.”

Kartman, 634 F.3d at 892

Kaczmarek v. IBM, 186 F.R.D. 307, 313 (S.D.N.Y.

1999) (denying certification under Rule 23(b)(2)

because money damages were an adequate remedy

at law).



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