Rule 23(b)(2) Injunctive Relief Class Actions: Recent ...
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Rule 23(b)(2) Injunctive Relief Class Actions:
Recent Decisions, Approaches for Plaintiffs
and Defendants
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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
CLASS ACTIONSSome Examples
10
CLASS ACTIONSSome Examples
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.”
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Rule 23(b)(2) Injunctive Relief
Class Actions: Recent
Decisions, Approaches for
Plaintiffs and Defendants
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.
1515
Recent Cases Involving Rule 23(b)(2)
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
Recent Cases Involving Rule 23(b)(2)
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
Recent Cases Involving Rule 23(b)(2)
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.
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
Strategies for Defendants
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
Strategies for Defendants
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
Strategies for Defendants
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
Strategies for Defendants
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
Strategies for Defendants
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
Strategies for Defendants
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
Strategies for Defendants
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).