CLASS ACTIONS:
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Rule 23(a)(1)-(4): must be satisfied at the outset  Holland
Then, satisfy 23(b)(1), (2), or (3)  which way can the class be certified?
• Rule 23 (b)(1)(A): not relevant
• Rule 23 (b)(1)(b): limited fund
- Can certify as class if adjudicating in piecemeal fashion on individual basis may as a practical mater
produce injustice for class members who aren’t parties to the individual litigation
- To ensure equitable distribution – commonly arises when if you allow individuals to come forward,
then future claimants would not get as much or anything
- It’s not that D is going to run out of money, but because the law (Supreme Court excessiveness review)
is going to step in and limit how much D will be forced to pay, this creates a limited pool (“limited
punishment”)
- NON-OPT-OUT
- Cases:
ORTIZ V. FIBREBOARD
 What happened:
• Money that is coming into the fund: Fibreboard is going to have to contribute $10M to the fund, but all but
about $500,000 is going to come from other insurance proceeds
• Settlement: Fibreboard, Continental, and Pacific are going to establish this trust of money, and pay asbestos
wrongful death and PI claims out of it
• What is at stake: Fibreboard and its insurers are trying to buy “global peace;” trying to settle once and for
all  pending claims and all future claims
- In the background: separate litigation – Fibreboard against its insurers for what their exposure is –
whether or not the insurers are going to be on the line for these liabilities
- Settlement amount that Fibreboard has w/its insurers is contingent on these proceedings
 Choice of 23(b) class:
• (b)(3): opt-out  obviously, in a “global peace” attempt, don’t want individuals to have power to decide
whether they want to opt out. Fibreboard obviously would not want this
• (b)(2): not relevant – declaratory/injunctive relief class action
• (b)(1)(B): limited fund
- Analysis:
◦ Insufficiency of funds
◦ Whole fund is dedicated to claims at issue – inclusiveness of the class
◦ Claimants are treated equitably among themselves – fairness of distributions to those in the class
- Majority/dissent controversy: total liability and total assets of the fund
◦ Insufficiency of funds:
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Majority: don’t know how much total liability is – varying exposure, issue of present/future
claimants. Also, worry of conflicted counsel – some Ps’ counsel involved are also negotiating
separate settlements of other pending claims, whose payments depended on success of the
settlement
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Dissent: not worried about collusion – interests of Fibreboard and insurance companies are
actually adversarial
◦ Whole fund is dedicated to claims at issue:
◦ Claimants are treated equitably amongst themselves:
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Majority: not satisfied – didn’t include Ps who settled w/D with a reservation of rights to sue
(ex. upon development of asbestos-related injury). Class divided into holders of present and
future claims requires division in homogenous sub-classes under Rule 23(c)(4)(B), with
separate representation to eliminate conflict interests of counsel (presently injured want $
now, whereas exposure-only want a fund for the future). Class also included those exposed to
asbestos products before and after 1959 – policy w/one insurance company expired in 1959,
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therefore this class had more valuable claims and thus disparate interests w/other members of
the class
*Heart of the controversy:
◦ Majority: **Cautions courts not to certify a limited fund class action if the limited fund is itself a
creation of the certification – reading 23(b)(1)(B) properly (narrowly): it requires the existence of
a pre-existing limited fund
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Limited fund must not give D a better deal than individual litigation would have produced –
court feels that the particular situation in this case led to insider Ds and Ps’ counsel working
out a deal that might have given the class less than it should have received
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**Declined to reach the question of whether (b)(1)(B) could ever be used to aggregate
individual tort claims
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Committee didn’t envision mandatory class actions in cases like this one
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Because it’s settlement and not litigation, procedural protections built into the Rule to protect
rights of absent class members during litigation are never invoked in an adversarial setting
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Even assuming that a limited fund rationale could be applied to a settlement class of tort
claimants, the fund would have to be limited independently of the agreement of the parties to
the action; also, class would have to include all those w/claims unsatisfied at the time, with
intraclass conflicts addressed by recognizing independently recognized subclasses (here, no
structural protections, and counsel was conflicted)
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Cautions against a liberal application of (b)(1)(B), under Rules Enabling Act, 7 th Am, Due
Process concerns (pp. 58)
◦ Dissent:
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Huge costs of asbestos litigation – trying these cases would have immense transaction costs
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Asbestos cases: tort litigation – case suited to the courts and not the legislature – a problem of
scale, and when the legislature doesn’t do anything it, then judges can/should aggressively
search for ways to avoid delay and denial of justice (and here, district courts may take
advantage of experience that appellate courts do not have)
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Alternative to class-action settlement is not a fair opportunity for each potential P to have his
own day in court – high litigation costs, long delays, limitation on amount of resources
available for payment might mean that Ps don’t actually have a realistic alternative
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Conditions are satisfied
 Inadequacy: valuation came about as a result of arms-length bargaining between D and
insurance companies
 Equitable treatment: divided into subclasses has to be balanced against wisdom of letting
in additional counsel
 Whole of inadequate fund to be devoted to overwhelming claims: basic purpose is
substantial satisfaction of claims – not literal, the rule can be relaxed somewhat
IN RE SIMON II
 What’s going on: large-scale tobacco litigation; class is not seeking compensatory damages
 Requirements under Rule 23(a):
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Numerosity: satisfied
• Commonality: satisfied – numerous common questions of law and fact exist. Also, class is not seeking
compensatory relief; therefore, individual determinations of fact are largely unnecessary and common
questions strongly predominate. In the interest of commonality, Ps have excluded 2ndhand smoke and
“future harm” parties – no need for subclassing
• Typicality: satisfied
• Adequacy of representation: distinguishes from Alchem and Ortiz – named Ps do not have apparent
conflicts w/class members. Nature of the class is litigation, not settlement. No conflicts of interests
w/regard to counsel. *Generally, A and O were concerned about not trapping class individuals who might
have done better if they remained w/in traditional court litigation – this case, particularly because it relates
to punitive rather than compensatory, does not present the conflict
 “Limited punishment” under Rule 23(b)(1)(B):
• Appropriate – if action is successful, Ds might be forced to pay a huge sum, but this payment will limit
liability for future awards
Supreme Court punitive damages excessiveness review: court has power to limit punitive damages
D does not face unlimited PDs; rather, DP places a limit on PDs and in substances creates a limited
fund from which PDs may be awarded, creating a first-in-time problem (Ds like tobacco
company/Exxon don’t face limited fund through prospective bankruptcy – the Constitution itself through
limits placed on total punitive damages creates the limited fund)
- Limited punishment theory essentially provides the justification for certifying under (B)(1)(b) –
that way we don’t have to worry about opt-out problems. But it probably only works that well
for punitive damages because only PDs have these constitutional limits (that’s why no
compensatory damages sought here)
Why didn’t Ps try to certify a compensatory damages class?
• Opt-out problem: under (b)(3), Ps can opt out. If the idea behind this suit is that Ds can buy their “global
peace,” then it lies in opposition to this goal. Getting a (B)(1)(b) w/mandatory non-opt-out will allow Ds to
get everything settled
- Court calls this a “window of opportunity” for a variety of reasons: SOL (window closing for the
presently injured), and allegedly less difficulty going forward because there has been more full
disclosure (tobacco companies are admitting that they lied, etc.)
• Would require too much individual consideration; not well suited to class action (would need too many
subclasses): idea that individual compensatory damages need to be determined on an individual basis, and
this is contrasted with punitive damages
How does BMW/State Farm, on punitive damages side, come into play?
• What about ratio of compensatory to punitives, when the compensatory damages here are “virtual”?
Argument –key is actually to think of ratio of punitive damages to harm (not to compensatory damages) –
and compensatory damages determination serves as a proxy for harm
• Multiple punishments: danger of multiple punishments – by having a single non-opt-out clause, we will
prevent this problem (State Farm can be read broadly to preclude multiple punitive damages)
Idea of “entitlement”: State Farm – Ps have no “right”/entitlement to punitive damages; the idea is
deterrence/entitlement to society-type logic, then what’s the harm of the “late comer” problem? How is the
adjudication of one individual’s case going to impair the rights of another (which is the driving concern besides
Ortiz)? Not a matter of making Ps whole – punitives damages are about deterrence, D’s conduct!
Not allowing the class to go forward: allowing individual cases to proceed might lead to exhaustion of tobacco
company’s resources, and leave many people who are part of this presently certified class w/o any ability to
recover damages
Punitive damages as categorically distinct from compensatory when looking at it vis-à-vis right to jury
trial/7th amendment rights: Cooper Industries – can do de novo review of punitive damages, and the
justification was that punitives have a “moral” element as opposed to the more “factual” nature of
compensatory, so they are not being “redetermined” on appeal (Ginsberg had a sharp dissent, that it’s kind of a
crazy distinction to draw)
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Rule 23 (b)(2): permits certification of class actions where primarily relief is equitable in nature
- Two elements to satisfy:
◦ (1) Class must share general claim against non-class party
◦ (2) Must seek either final injunctive or declaratory relief
- Requires that relief sought is primarily equitable in nature, but no prohibition on added claims for
damages in (b)(2) class  therefore, not necessarily disabling if the suit also seeks damages
- The key to obtaining certification is court’s determination of relative importance of equitable relief to
damages sought
- *Robinson versus Alison approaches to determining the relative importance of equitable relief to
damages sought (discussed in Time Warner)
◦ When considering (b)(2) certification, court must make ad hoc determination that even in absence
of monetary claim, Ps would still bring suit for injunctive/declaratory relief sought. Seems to ease
burden on Ps trying to fit into this class, in rejecting predominance approach. Fact-intensive,
case-by-case basis…
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Ultimately it’s the role damages are playing in P’s case, not just the “value” of damages
NON-OPT-OUT
PARKER V. TIME WARNER
 Background: P is seeking punitive, actual, statutory damages, attorney’s fees, injunctive/declaratory relief.
Violation is for selling personal information to 3 rd parties by cable company (no explicit disclosure/consent);
subject company to statutory fine
• “Twist”: P wants to certify a class, which could potentially reach up to 12M subscribers, and statutory fine
was for $1,000 per violation (doesn’t address cap in class action context)  basically this class would
bankrupt the company, and it couldn’t have been what the statute intended
• Possible private attorney’s general motivation? $1,000 enables individual who might not otherwise have
incentive to bring the suit to bring the action; also the fact that this is not reflect of actual damages supports
this
 Rule 23(b)(2) issue:
• Predominantly declaratory relief, but P wants to seek money damages as well – can you bring this as a
(b)(2) case?
- 5th Circuit (Alison): issue is whether monetary damages are incidental  monetary relief predominates
over equitable relief “unless it is incidental to requested injunctive/declaratory relief”
- 2nd Circuit (Robinson): ad hoc analysis of relative importance of remedies sought, given circumstances
and facts of the case
- Court: goes w/Robinson, but this requires district court to have detailed info about circumstances
surrounding the certification issue, and have a certification hearing before ruling on the issue  need
class discovery
 Denial under Rule 23(b)(3): need class discovery before you can rule on the superiority of class certification
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Rule 23(b)(3)
- Often a last resort for litigants who can’t be certified under any other portion
- 2 requirements:
◦ (1) Common interests must predominate over individual interest (Amchem), versus that they just
“exist” as required in Rule 23(a)
◦ (2) Finding that class action is superior means of adjudicating the controversy
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Court has to make 4 findings (stated in (b)(3))
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While the court is required to make findings on 4 points listed, there is no requirement that
they must all be resolved in favor of certification – court can weigh its findings and decide
whether class action is the superior method of litigation the controversy.
- 4 findings:
◦ (b)(3)(A): individual interests in separate actions – desire of individual litigants to pursue their
own actions, and then balance that against interests of class as a whole. **OPT-OUT
◦ (b)(3)(B): pending litigation – court will consider effects of other pending litigation on the
proposed class action. If individual class members have already begun pursuing their claims then
judicial economy concerns, resolution through collateral estoppel.
◦ (b)(3)(C): proceeding w/class action when a lot of resources have already been invested, or
geography – where it is being heard
◦ (b)(3)(D): difficulties in managing a class action – courts can refuse to certify if too many
administrative complications arise (internal disputes w/in class, problems of notification of class
members, as well as impact of state law variations in multi-state case)
- 23(c)(2)(B): heightened notice requirement provision for (b)(3) suits, because individuals can opt out
of the class. Provides that individual members must receive best notice practicable – often mail
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service, on all class members whose identities are known. Class members notified who did not opt-out
will be bound by the judgment
(b)(2) versus (b)(3)
- When you are trying to get certified as (b)(2) but you’re also planning on requesting damages, perhaps
better to just seek certification as a (b)(3) class? But in that case, you should keep in mind the
heightened notice requirements of (b)(3), that you might not get (b)(3) in the end, so maybe better to
try and get certified under (b)(2) but not ask for damages. **NON-OPT-OUT!!!
- Is seeking certification under (b)(3) to avoid the damages issue just an end run?
- Seems like P’s counsel would ideally want (b)(2): less notice requirements, non-opt-out so you have
control over class and you have to worry about another P getting to court first, but the drawback may
be that you have to find a way to get damages within the claim
Fluid class remedies
EISEN V. CARLISLE & JACQUELIN
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What happened: antitrust suit for treble damages. Ds handled odd-lot transactions on NYSE (lot of less than
100 shares). P alleged that Ds had monopolized odd-lot trading and fixed commissions at an excessive level. P
sued on behalf of class of people who traded odd lots on the NYSE.
• Eisen I: Ct of App: “death knell doctrine” = because P claimed only $70 in individual damages, it was
economically impossible for the case to proceed on his behalf individually. SC later overturned “death
knell.”
• Eisen II: opinion on whether the case should proceed as class action – rejected emphasis on ratio between
P’s claim and claim of the class, and though notice might be a problem, the court could hold hearings to
determine whether it could devise some practical means to decide the case on a class basis.
• On remand, DC concluded that case could proceed on behalf of all people who had bought/sold an odd lot
between 5/1962 and 6/1966. Ds appeal.
Fluid recovery:
• Problem: P could not afford notice to all potential class members (6M members, 2.25M can be easily
identified, geographically dispersed)
• FR “solution”: don’t contact all possible class members – determine huge recovery, pay that into the court,
which later decides how to compensate potential Ps w/that money
• Advantage  because one of the main requirements of class action under (b)(3) for money damages:
must notify all potential Ps – fluid recovery would relieve this burden on P)
• Procedural innovation: to avoid expense of processing individual claims, DC planned to order Ds to
reduce their commissions below the competitive level until all illegal overcharges had been refunded by
discounting. Court recognized the Hatahle problem (discounts would not necessarily go to class members
who had paid the overcharges), but thought that some would benefit from future discounts, or at least class
that received the discount would be similar to that which paid the overcharges. Generally not an issue,
w/2nd Circuit’s swift rejection
• Is Eisen a license to steal, so long as D does so in small amounts? (p. 56)
• The current state of fluid recovery (pp. 56)
Unclaimed funds (cy pres, escheat…) (pp. 56)
Class actions, injunctions, and 3rd parties: (pp. 57)
• Affirmative action as a fluid class remedy
• Why is “race-conscious class relief” okay in this context, when reasons given are substantially the same,
and it is just as impractical to identify individual victims? Does this mean we should rethink Eisen or can
the court create a viable exception for discrimination cases?