Rule 23(c)(4) Issue Certification: Reconciling the...

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

Rule 23(c)(4) Issue Certification:

Reconciling the Conflict With

Rule 23(b)(3)'s Predominance Requirement

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, NOVEMBER 14, 2017

William J. Anthony, Principal, Jackson Lewis, Albany, N.Y.

Timothy Congrove, Partner, Shook, Hardy & Bacon, Kansas City, Mo.

Gerald L. Maatman, Jr., Partner, Seyfarth Shaw, Chicago

Jennifer L. Mesko, Counsel, Tucker Ellis, Cleveland

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“Seyfarth Shaw” refers to Seyfarth Shaw LLP (an Illinois limited liability partnership). Seyfarth Shaw LLP

Rule 23(c)(4) Issue Certification: Key

Issues For Corporate Counsel And Practitioners

Gerald L. Maatman, Jr.

November 14, 2017

©2017 Seyfarth Shaw LLP. All rights reserved. Private and Confidential

Gerald L. Maatman, Jr.


@g_maatman (https://twitter.com/g_maatman)

Gerald Maatman (https@//www.linkedin.com/in/geraldmaatman/)

Mr. Maatman is a senior partner at Seyfarth Shaw LLP, and chair of

the firm’s class action practice group. He is the editor of the firm’s

Annual Workplace Class Action Litigation Report.

6

What We Will Cover At Today’s Webinar

I. The Emergence Of Issue Classes Under Rule

23(c)(4)

II. Key Court Decisions On Issue Class

Certification

III. Pending Changes To Rule 23(c)(4)

IV. Best Practices For Class Counsel For Litigating

Cases Involving Issue Class Certification


7

The Emergence Of Issue Classes Under Rule 23(c)(4)

• Rule 23(c)(4): “Particular Issues. When appropriate, an action may be

brought or maintained as a class action with respect to particular issues.”

• An Issue Class refers to breaking down a discrete aspect of a

class action lawsuit into smaller, more specific classes or issues.

• Strategic Uses Of Rule 23(c)(4)

– Reduces pressure sometimes put on the Court and the

Defendant during a large class action

– Highlights individual issues, which can assist in identifying

“case drivers” on both sides of a class action

– Enables Plaintiffs’ counsel to “certify something,” so as to

increase settlement pressure


8

The Emergence Of Issue Classes Under Rule 23(c)(4)


• Potential Grey Areas

– An issue class can often clash with the predominance test

found in Rule 23(b)(3):

“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. The

matters pertinent to these findings include:

(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”

9

Key Court Decisions On Issue Class Certification

• In Re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995)

– Judge Posner writes first major opinion on use of issue

certification, promoting its usage in class actions

• McReynolds v. Merrill Lynch, 672 F.3d 482 (7th Cir. 2012)

– 7th Circuit certifies an issues class after Wal-Mart

• Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996)

– 9th Circuit approves certification of an issue class,

encouraging District Courts to consider the option of Rule 23

(c)(4)


10

Walmart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)


• One of the most important decisions regarding class actions

ever; decided by the Supreme Court in 2011.

• Involved a small group of women alleging a wage gap based

on gender, who were trying to represent a class of over 1.5

million female Walmart employees.

• In a 5-4 decision, the Supreme Court decided that the small

group of women could not represent the largest attempted

employment discrimination class in history.

• Implications on issue certification

11


2017 Publications

http://www.workplaceclassaction.com/

12

http://www.workplaceclassaction.com/

Jennifer L. Mesko – Counsel

[email protected]

Key Decisions Interpreting Rule 23(c)(4)

13

Diverging approaches to the relationship between Rule 23(b)(3)

Predominance Requirement and Rule 23(c)(4) Issue Certification

14

“Need common questions predominate over individual ones merely in the specific issues

that are certified, or need the common questions predominate in

the entire cause of action?”

2 NEWBERG ON CLASS ACTIONS § 4:91 (5th ed.)

15

• Majority Approach: – Second, Seventh, and Ninth Circuits interpret Rule 23(c)(4)

broadly and will certify an issue class even if the claim as a whole does not satisfy Rule 23.

– The First, Fourth, Sixth, and Tenth Circuits appear to agree

• Third Circuit – Uses ALI principles

• Fifth Circuit – Issue certification for housekeeping though post-Comcast cases indicate a retreat from this position

16

Second Circuit • In re Nassau Cnty. Strip Search Cases, 461 F.3d 219, 226 (2d

Cir. 2006)

– “[C]ourts may use subsection (c)(4) to single out issues for class treatment when the action as a whole does not satisfy Rule 23(b)(3).”

• Adkins v. Morgan Stanley, 656 Fed. Appx. 555 (2d Cir. 2016)

– Affirming the district court’s conclusion that plaintiffs failed to satisfy the typicality requirement of 23(a)(3) and predominance requirement of 23(b)(3) where:

• There were 33 different combinations of risk factors, each of which affected plaintiffs’ loans differently and would require individual proof to establish a particular combination's harmfulness

• Causation is not subject to class-wide proof

17

Ninth Circuit

• Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996) • “Even if the common questions do not predominate over the

individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)(A) and proceed with class treatment of these particular issues.”

• Cobb v. BSH Home Appliances Corp., No. No. 13-cv-80000, 2013 U.S. App. LEXIS 7023 (9th Cir. Apr. 1, 2013). • Certified liability issue class despite the need for individualized

damages hearings

18

• Avilez v. Pinkerton Gov't Servs., 596 Fed. Appx. 579 (9th Cir. Cal. 2015).

• “We need not decide whether these subclasses, as modified, would satisfy the predominance requirement of Rule 23(b)(3).”

• Rahman v. Motts LP, No. 15-15579, 2017 WL 2858805 (9th Cir. July 5, 2017)

– “Certification of an issues class under Rule 23(c)(4) is ‘appropriate’ only if it ‘materially advances the disposition of the litigation as a whole.’” (quoting William B. Rubenstein, 2 Newberg on Class Actions 4:90 (5th ed. 2012)).

19

Seventh Circuit

• Butler v. Sears Roebuck & Co., 727 F.3d 796 (7th Cir. 2013)

• Invoked Rule 23(c)(4) and rejected the defendant’s argument that that common issues did not predominate because individual inquiries would be needed to determine whether any particular class member’s machine grew mold or experienced control unit failure.

• “a class action limited to determining liability on a class-wide basis, with separate hearings to determine—if liability is established—the damages of individual class members, or homogeneous groups of class members, is permitted by Rule 23(c)(4) and will often be the sensible way to proceed.”

20

• McMahon v. LVNV Funding, LLC, 807 F.3d 872 (7th Cir. 2015)

– Vacating the district court’s denial of class certification because the proposed class includes persons seeking actual damages and would therefore involve issues of individual causation and damages

– “It is well established that, if a case requires determinations of individuals issues of causation and damages, a court may “bifurcate the case into a liability phase and a damages phase.” (quoting Mullins v. Direct Digital, LLC, 795 F.3d 654, 671 (7th Cir. 2015))

21

• McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 491 (7th Cir. 2012).

• While the individual nature of damage determinations would likely have prevented the class from satisfying Rule 23(b)(3)'s predominance requirement, the Seventh Circuit approved the use of Rule 23(c)(4) to certify the class under Rule 23(b)(2) only on the issue of liability.

• Judge Posner: the greatest efficiency and fairness would be achieved by “carving at the joints” of the parties' dispute and resolving the issue of liability on a class-wide basis.

• Cert denied

22

Sixth Circuit • Olden v. LaFarge Corp., 383 F.3d 495, 509 (6th Cir. 2004).

• Approved the use of issues classes to bifurcate class trials into separate liability and damages phases.

• In re Whirlpool Corp. Front-Loading Washer Prod. Liab. Litig., 722 F.3d 838 (6th Cir. 2013) • Amgen and Comcast stand for the principle that “to satisfy Rule

23(b)(3), named plaintiffs must show, and district courts must find that questions of law or fact common to members of the class predominate over any questions that affect only individual members.”

• Once the district court resolves the “common liability questions that are likely to generate common answers,” the court will “either enter judgment for Whirlpool or proceed to the question of plaintiffs' damages.”

• Cert. denied

23

Fourth Circuit • Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 441

(4th Cir. 2003) – Acknowledges the split in approaches but notes “we have

no need to enter that fray”

– BUT then precedes to embrace a broad reading of (c)(4) certification, explaining that efficiency can be achieved by adjudicating certain common issues “even though other issues in the case may have to be litigated separately by each class member.”

• See also Parker v. Asbestos Processing, LLC, 2015 WL 127930 (D.S.C. 2015) (stating that Gunnells appears “to follow the practice of the Second, Seventh, and Ninth Circuits”)

24

First and Tenth Circuits

• Tardiff v. Knox Cnty., 365 F.3d 1, 7 (1st Cir. 2004)

• Holding predominance was not defeated merely by the need for individualized damage decisions where there were still disputed common issues as to liability

• Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213, 1220 (10th Cir. 2013)

• After Comcast, class certification under Rule 23(c)(4) remains one way "to preserve the class action model in the face of individualized damages"

25

Third Circuit

• Gates v. Rohm & Haas, 655 F.3d 255, 272 (3d Cir. 2011) • Declined to “join[] either camp in the circuit disagreement”

• Adopted a multi-factor balancing test (ALI): • the type of claim(s) and issue(s);

• complexity of the case;

• efficiencies to be gained in light of realistic procedural alternatives;

• substantive law including choice-of-law and carving at the joint;

• constitutional and statutory rights of class members and defendant(s);

• preclusion or lack thereof;

• fairness;

• the risk subsequent triers of fact will need to reexamine evidence and findings from resolution of the common issue(s).

26

Fifth Circuit

• Castano v. Am. Tobacco, 84 F.3d 734, 745 n.21 (5th Cir. 1996)

• Rule 23(c)(4) is considered a “housekeeping” mechanism available to the district court to sever common issues for a class trial, “not a vehicle to facilitate certification.”

• “A district court cannot manufacture predominance through the nimble use of subdivision (c)(4)” , but one that cannot circumvent the need for the plaintiffs’ “cause of action, as a whole,” to satisfy the predominance requirement of Rule 23(b)(3).

27

Post-Comcast Fifth Circuit

• In re Deepwater Horizon, 739 F.3d 790, 815-17 (5th Cir. 2014) • Signals a retreat from the Court’s earlier narrow

reading of (c)(4) • Noting that “predominance [in this case] was not

based on common issues of damages but on numerous common issues of liability”

• Expressing no concern that “determinations on liability and damages [were] bifurcated” in accordance with Rule 23(c)(4)

• No cite to or discussion of Castano

28

Eighth Circuit • In re St. Jude Medical, Inc., 522 F.3d 836, 841 (8th Cir. 2008)

– Recognizing the circuit split but declining to adopt an approach because “limited class certification would do little to increase the efficiency of the litigation”

• In re: Simply Orange Orange Juice Mktg. & Sales Practices Litig., No. 4:12-md-02361, 2017 WL 3142095 (W.D. Mo. July 24, 2017) – Finding that an issues class may be certified under Rule 23(c)(4) where

“determining particular issues on a representative basis might prove efficient and economical” and the “ultimate analytical process followed” in determining whether an issue class will materially advance a the disposition of a litigation is “quite different than in the usual application” of Rule 23(b).

– Certifying issues class to answer the following, whether: • the orange juice products contain added flavors not permitted by federal law; • the orange juice products omit disclosure of added flavors as required by federal labeling laws; • the orange juice products conformed to representations on the labels of the products; • the orange juice products omitted material information; • Defendant warranted that the orange juice products would conform to the label representations; and • Defendants breached those representations

– Appeal filed

29

Eleventh Circuit • Borrero v. United Healthcare of New York, Inc., 610 F.3d 1296,

1310 (11th Cir. 2010) – The Eleventh Circuit has not “directed address[ed] the propriety of [issue]

certification” where the cause of action as a whole does not meet the predominance requirement

• In re Atlas Roofing Corp. Chalet Shingle Prod. Liab. Litig., No. 1:13-md-2495 (N.D. Ga. June 9, 2017) – Noting the circuit split and the lack of “clear guidance” – Finding Castano persuasive that Rule 23(c)(4) “is a housekeeping

rule that allows courts to sever common issues for a class trial.” – Individual issues of causation, notice, and statute of limitations

predominate • “Plaintiffs’ case for certification collapses when it confronts the fact

that certification of a common issues class will not dispose of a single case or eliminate the need for a single trial.”

30

Proposed Changes to Rule 23(c)(4)

Tim Congrove, Esq.

[email protected]

2010: American Law Institute

• PRINCIPLES OF THE LAW: AGGREGATE LITIGATION

• The ALI proposed the following test for issue classes:

o§ 2.02(a) The court should exercise discretion to authorize

aggregate treatment of a common issue by way of a class action

if the court determines that resolution of the common issue would

(1) materially advance the resolution of multiple civil claims by

addressing the core of the dispute in a manner superior to other

realistic procedural alternatives, so as to generate significant

judicial efficiencies; [ . . . ]

o Am. Law Inst., Principles of the Law: Aggregate Litig., § 2.02(a) (2010) (emphasis added).

• The ALI proposal borrows, in part, from In re Tetracycline Cases *

o *The Reporters’ Notes to section 2.02 indicate that the ALI borrowed the material advancement language from the Manual for Complex Litigation and the

McLaughlin case. Principles of the Law: Aggregate Litigation § 2.02, Reporters’ Notes at 94-95, citing Manual for Complex Litigation (Fourth) § 21.24, at 273,

n. 138, and, McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 234 (2d Cir. 2008). These two authorities, in turn, cited to footnote 12 of Robinson v. Metro-N.

Commuter R.R., 267 F.3d 147, 167 (2d Cir. 2001), which quotes Tetracycline exclusively for the material advancement language.

33


• “This Section proceeds on the premise that both the

predominance requirement of Rule 23(b)(3) and the

authorization for issue classes in Rule 23(c)(4) are

worthwhile components of the law of aggregate

litigation. The framework set forth here contemplates

neither the abandonment of these provisions in

existing law nor, for that matter, the necessity of rule

amendment.”

• Principles of the Law: Aggregate Litig. § 2.02, Reporters’ Notes, cmt. a.

34


• Does the ALI Proposal Encompass Predominance?

o“The present Section draws upon experience with on-the-

ground application of the existing law of class actions so

as to frame both the predominance concept and the

authorization for issue classes in a more coherent fashion.

In particular, this Section as a whole—not just the phrase

‘materially advance’ in subsection (a)(1)—delineates the

multifaceted inquiries presently encapsulated under the

predominance concept.”

oPrinciples of the Law: Aggregate Litig. § 2.02, cmt. a.

35


•The Goal:

o“The approach offered here is designed to lend

precision to the inquiry presently undertaken by

courts within the vocabulary of existing procedural

law, particularly the predominance requirement and

the authorization for issue classes found in Rule 23.”

o Principles of the Law: Aggregate Litig. § 2.02, Reporters’ Notes, cmt. i.

36


• Did ALI succeed in integrating Rules 23(b)(3) and (c)(4)?

oTetracycline acknowledged that its “material

advance[ment]” approach undermined the predominance

requirement of R. 23(b)(3).

“The admitted effect of this determination is to lessen – for Rule

23(c)(4)(A) purposes – the importance of the predominance

requirement, as such.” In re Tetracycline Cases, 107 F.R.D. 719,

727 (W.D. Mo. 1985).

oOther scholars have classified the “material advancement”

test as “predominance lite.” See Laura J. Hines, Codifying the Issue Class

Action, 16 Nev. L.J. 625, 641-42 (2016).

37

Federal Judicial Center: Manual for Complex Litigation (4th Ed.)

• “Certification of an issues class is appropriate only if it

permits fair presentation of the claims and defenses and

materially advances the disposition of the litigation as a

whole. If the resolution of an issues class leaves a large

number of issues requiring individual decisions, the

certification may not meet this test.”

• “Selectively used, this provision may enable a court to

achieve the economies of class action treatment for a portion

of a case, the rest of which may either not qualify under Rule

23(a) or may be unmanageable as a class action.”

• FED. J. CENTER: MANUAL FOR COMPLEX LITIGATION, § 21.24 at 272-73 (2017).

39

Federal Judicial Center: Manual for Complex Litigation (4th Ed.)

•“Before certifying an issues class under Rule

23(d), the judge should be satisfied that

common questions are sufficiently separate

from other issues and that a severed trial will

not infringe any party’s constitutional right to a

jury trial and will permit all the parties fairly to

present the claims and defenses.”

• FED. J. CENTER: MANUAL FOR COMPLEX LITIGATION, § 21.24 at 274 (2017).

40

2015: Federal Rules Advisory Committee Deliberations

• Predominance should not be a prerequisite to 23(c)(4)

certification:

oRule 23(b)(3): “the court finds that the questions of law or

fact common to class members predominate over any

questions affecting only individual members, subject to Rule

23(c)(4), and that a class action is superior to other

available methods for fairly and efficiency adjudicating the

controversy [ . . . ]”

• “The goal of placement here is to say that

predominance, but not superiority, is subject to Rule

23(c)(4).”

• Rule 23 Subcomm. Mem., at 39 (Apr. 9-10, 2015).

42


• Considered revising 23(f) to allow courts of appeals to

review a decision on common issues immediately:

oRule 23(f): A court of appeals may permit an appeal from

an order granting or denying class-action certification

under this rule, or from an order deciding an issue with

respect to which [certification was granted under Rule

23(c)(4)] (a class action was allowed to be maintained

under Rule 23(c)(4)) [if the district court expressly

determines that there is no just reason for delay], if a

petition for permission to appeal [ . . . ]”

o Rule 23 Subcommittee Mem., at 40 (Apr. 9-10, 2015).

43


• Restraints on Use of Issue Classes?

o“We have not thought of an action as an issue class if the

court sets the questions of defect and general causation

for initial determination, but contemplates creation of a

structure for processing individual claims by class

members if liability is found as a general matter.”

oNoted divergent views as to whether predominance is

required for issue classes

oRule 23 Subcomm. Draft Mins., at 39 (Apr. 9-10, 2015).

44


• “The Subcommittee has developed a sketch of a

change to Rule 23(b)(3) designed to show that a court

may resort to issue certification under (c)(4) even

though it cannot conclude that, overall, common

issues predominate.”

o Report to the Standing Comm., at 25 (May 2, 2015).

• Major reason: “[T]here has seemed to be a split in the

circuits about whether [issue classes] can only be

allowed if (b)(3) predominance is established.”

o R. 23 Subcomm. Mem., at 39 (Apr. 9-10, 2015).

45


•The Committee was not going to recommend a

rule amendment as to 23(b)(3) or 23(c)(4) if the

committee determined that the Circuits were not

split

•But, it observed that the amendment for

immediate appellate review may still be in order o R. 23 Subcomm. Mem., at 39 (Apr. 9-10, 2015).

46

Civil Rules Advisory Committee Minutes: November 5, 2015

• Rule 23 Subcommittee recommended that issue

classes be removed from present work

• They found recent Fifth Circuit decisions indicated that

“[d]issonance in the courts has subsided.”

oThere is thus, “little need to undertake work to clarify the

law. And any attempt might well create new

complications.”

• Issue class questions can be addressed in case-

specific ways

o Civil R. Advisory Comm. Mins., at 23 (Nov. 5, 2015).

47

2017: Fairness in Class Action Litigation Act

• In March 2017, the “Fairness in Class Action

Litigation Act of 2017” was passed in the House of

Representatives

•The bill is comprised of seven sections expanding

on the Class Action Fairness Act of 2005 (CAFA)

•§ 1720 – Issues Classes

•Sponsor: Rep. Bob Goodlatte [R-VA]

•H.R. 985

49

2017: Fairness in Class Action

Litigation Act

• §1720 – Issues Classes:

o (a) IN GENERAL. – A Federal court shall not issue an order granting

certification of a class action with respect to particular issues pursuant to Rule

23(c)(4) of the Federal Rules of Civil Procedure unless the entirety of the

cause of action from which the particular issues arise satisfies all the class

certification prerequisites of Rule 23(a) and Rule 23(b)(1), Rule 23(b)(2), or

Rule 23(b)(3) (emphasis added).

o (b) CERTIFICATION ORDER. – An order issued under Rule 23(c)(4) of the

Federal Rules of Civil Procedure that certifies a class with respect to particular

issues shall include a determination, based on rigorous analysis of the

evidence presented, that the requirement in subsection (a) of this section is

satisfied.

o Fairness in Class Action Litig. Act of 2017, H.R. 985, 115th Cong., § 1720 (1st Sess.

2017).

50


•§ 1723 – Includes a proposed amendment

to R. 23(f) establishing a mandatory right of

appeal to a Federal court of appeals of the

grant or denial of a motion to certify a class.

• Fairness in Class Action Litig. Act of 2017, H.R. 985, 115th Cong., § 1723 (1st Sess. 2017).

51


• Groups in Favor of the Bill: DRI and U.S. Chamber of

Commerce

• Primary Concerns:

oCourts are certifying classes based on a particular issue,

and are circumventing other Supreme Court mandated

requirements

oClass certification becomes “the rule” and not the

exception under R. 23(c)(4) if 23(a) & (b) are not observed

o See Letter from John E. Cuttino, DRI President, to Bob Goodlatte, Chairman of the House Judiciary Comm. (Mar. 3,

2017).

o See Letter from Lisa R. Rickard, U.S. Chamber Inst. for Legal Reform President, to Bob Goodlatte, Chairman of the

House Judiciary Comm. (Feb. 14, 2017).

52


• Groups Against the Bill: Committee on Rules of Practice

and Procedure of the Judicial Conference, The American

Bar Association, & a Coalition of Civil Rights Groups

• Primary Concerns:

The bill makes it difficult for a large number of injured

parties to seek redress

The bill circumvents the Rules Enabling Act

Judicial Efficiency See Letter from Thomas M. Susman, Dir. of Gov’t Affairs Office of the Am. Bar Ass’n, to Bob Goodlatte, Chairman of the House Judiciary Comm. (Feb.

14, 2017).

See Letter from David G. Campbell, U.S. Dist. J., and John D. Bates, U.S. Dist. J., to Bob Goodlatte, Chairman of the House Judiciary Comm. (Feb.

14, 2017).

53


• §1720: Judiciary Committee’s Rationale for 23(c)(4) Rule

Changes:

oClass actions are the exception to the ordinary rules of litigation,

which means the system can only be used when the rules are

strictly followed

Particular issues must predominate over all individual issues

Agrees with Castano – severing issues eviscerates the

predominance requirement and would allow for automatic

certification in every case where there is a common issue

Concerned with classes that include consumers who have no

injury

o See H.R. Rep. No. 115-25, at 24-25 (2017).

54


• Dissenting Views on § 1720 Presented to the House of

Representatives:

oDevastating impact on civil rights class actions

oJudicial efficiency

Civil rights class actions certified under R. 23(c)(4) promote

efficiency, fairness, and enforcement of civil rights laws by

allowing class certification for the core question of liability.

oSee H.R. Rep. No. 115-25, at 55-56 (2017).

55


•The future of FICALA

oThe bill was passed by the House of

Representatives on March 9, 2017 (220 –

201).

oThe Senate has not taken up the legislation

or scheduled hearings.

56

©2017 Jackson Lewis P.C.

Best Practices for Issue

Certification

William Anthony

Jackson Lewis P.C. | Albany, NY

[email protected]

Plaintiffs Burden to Prove

Plaintiffs bear the burden of establishing that the requirements of Rule 23(c)(4) have been met.

The Court has no sua sponte obligation to employ Rule 23(c)(4).

• See e.g., U.S. Parole Comm’n v. Geraghty, 445 U.S. 388, 408 (1980) (holding the District Court had no sua sponte obligation to construct subclasses, since the burden is on the party seeking to represent a class to construct subclasses and submit proposals to such effect to the District Court).

But note– plaintiffs’ proposed designation of class is not binding; court empowered to redefine class.

58

Some Courts view as Efficient Means to

Dispose of Certain Questions

See, e.g., Butler v. Sears, Roebuck & Co., 727 F.3d

796, 800 (7th Cir. 2013).

• Judge Posner of the Seventh Circuit (arguably the

leading proponent of the practice) has called issue

certification a “sensible way to proceed” under certain

circumstances.

Gunnells v. Healthplan Servs., Inc., 348 F.3d 417,

441 (4th Cir. 2003)(citing efficiency justification for

issue certification).

59

But, Most Courts are Still Careful to Limit

Application

Judge Posner has stressed that Rule 23(c)(4)

has a “limited” application that should “carve at

the joint” and is not appropriate if “enormous

consequences ride on that resolution.”

• Brian Anderson & Andrew Trask, The Class Action

Playbook § 2.10 (2017).

What does this mean in practice?

60

Must “Materially Advance” the Litigation

Resolution of the certified issue must

“materially advance” the litigation

• See, e.g. In re Motor Fuel Temp. Sales Pracs. Litig.,

292 F.R.D. 652, 667 (D. Kan. 2013)

61

Issues Require Clear and Specific

Enumeration

Fed. R. Civ. P. 23(c)(1)(B)

Gates v. Rohm & Haas Co., 655 F. 3d 255,

273 (3d Cir. 2011)

• “When certifying an issue class the court should

clearly enumerate the issue(s) to be tried as a

class as required by [the FRCP].”

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Know the Law in Your Jurisdiction

A sharp split exists among the circuits regarding how to

treat issue certification.

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Second, Fourth, and Ninth Circuits

• Issue certification is possible even if certification of the

class in general would not be possible under Rule 23

- In re Nassau Cty. Strip Search Cases, 461 F.3d 219, 223 (2d Cir.

2006) (“a court may employ Rule 23(c)(4)[] to certify a class as to an

issue regardless of whether the claim as a whole satisfied the

predominance test….”)

- Gunnells v. Health plan Servs., Inc., 348 F.3d 417, 439 (4th Cir.

2003) (Rule 23(c)(4) applies before Rule 23(b)(3)).

- Avilez v. Pinkerton Gov’t Servs., Inc., 2015 US App. LEXIS 3657

(9th Cir. Mar. 9, 2015) (remands for issue certification to try liability).

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Sixth, Seventh, Tenth, and D.C. Circuits have all held

that a court may certify a class to determine liability while

leaving complex damages questions for later individual

proceedings.

• Olden v. LaFarge Corp., 383 F.3d 495, 509 (6th Cir. 2004)(noting

district court can bifurcate the issue of liability from the issue of

damages).

• Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800-01 (7th Cir.

2013)(holding “a class action limited to determining liability on a

class-wide basis, with separate hearings to determine- if liability

is established- the damages of individual class members, or

homogeneous groups of class members, is permitted by Rule

23(c)(4) and will often be the sensible way to proceed”).

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• Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc.,

725 F.3d 1213, 1220 (10th Cir. 2013) (“after Comcast, class

certification under Rule 23(c)(4) remains one way to preserve

the class action model in the face of individualized damages”)

(internal quotation omitted).

• In re Johnson, 760 F.3d 66, 74 (D.C. Cir. 2014) (declining appeal

of certification of employment discrimination class action

because “district court did not make a manifest error in certifying

the class solely to resolve the questions concerning

discrimination”).

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Third Circuit

• Has adopted approach recommended by the American Law

Institute

• Imposes multi-factor test to determine when issue certification is

appropriate.

- Gates v. Rohm and Haas Co., 655 F.3d 255, 273 (3d Cir. 2011)

Essentially, complex issues of liability and/or causation will make issue

certification inappropriate.

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Fifth Circuit

• Has explicitly rejected issue certification other than as a

“housecleaning” tool

- See Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir.

1996); but see In re Deepwater Horizon, 739 F. 3d 790 (5th Cir.

2014).

Eighth Circuit

• Has not substantively addressed issue

- In re St. Jude Medical, Inc., 522 F.3d 836, 841 (8th Cir. 2008)

(denying request for issue certification but did not rule on underlying

legal question).

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Essentially, the courts that consider issue certification

want to know whether it will move the litigation forward

and save time, money, and judicial resources.

Valenzuela v. Union Pacific Railroad Company, et al.

case discussion

• Arguments raised by Defendants

• Court’s analysis

- Issue class will not materially advance the litigation

- Additional concerns (class definition, class notice)

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Practical Issues Raised

How would resolution of the proposed issues materially

advance the litigation?

How would damages be calculated?

What would the course of discovery, motion practice,

and trial look like?

What will notice look like? Who gets the notice? How will

it describe the claims?

Can there be an appeal?

• Is this a “full and final judgment?”

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Practical Reminders

7th Amendment- Reexamination clause

• Forbids two separate jury trials for the same claims and facts

Rules Enabling Act

• Forbids the Federal Rules of Civil Procedure from abridging or

modifying any substantive right

• Cannot deprive defendant of legitimate defenses

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Thank you! Questions?

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